PETALING JAYA: United Malacca Bhd
’s (UMB) fundamental value remains above the RM6.10 per share mandatory general offer (MGO) price, prompting TA Research to advise minority shareholders against accepting the offer while maintaining a “buy” recommendation on the plantation group.
The research house said the takeover offer could provide a mild boost to near-term share price sentiment by offering shareholders a cash exit alternative, but it does not fully reflect the company’s underlying value.
“We view the MGO as mildly positive for near-term share price sentiment, with no direct impact expected on earnings,” it said.
TA Research maintained a target price of RM6.74, implying a potential upside of 12.9% from the last traded price of RM5.97.
The valuation is based on a calendar year 2027 price-to-earnings ratio of 12 times, with a 3% premium for environmental, social and governance considerations.
The research house also made no changes to its earnings forecasts for UMB, projecting net profit of RM110.3mil for the financial year ending April 30, 2027 (FY27), before rising to RM116.1mil in FY28.
The mandatory offer follows Prosper Trading Sdn Bhd’s acquisition of a 13.44% stake, comprising 28.19 million shares, from Great Eastern Life Assurance for RM171.9mil, or RM6.10 per share.
The offer could involve a maximum cash consideration of RM669.8mil if all eligible shareholders accept.
However, the MGO is conditional upon the offerors and persons acting in concert securing more than 50% of the company’s voting shares or voting rights.
TA Research noted that the offer also addresses an earlier mandatory takeover obligation arising on Sept 26, 2024, when the group’s combined shareholding increased from 32.63% to 33.7%, exceeding the 33% threshold.
No offer was made at that time.
To address the earlier breach, the offerors will introduce a cash compensation scheme for eligible shareholders who held UMB shares as at Sept 26, 2024, or bought shares between Sept 25 and Sept 26, 2024, and subsequently sold them below RM6.10 between Sept 26, 2024, and Oct 9, 2026.
On the possibility of privatisation, an analyst told StarBiz that it had previously been identified UMB as a potential candidate given its ownership structure and underlying asset value.
However, the offerors have reportedly indicated that they do not intend to privatise the company under the current exercise.
“The offer was primarily intended to fulfil the takeover obligations arising from the recent acquisition and the earlier threshold breach, although further ownership consolidation remained possible depending on the level of acceptances,” he said.
UMB’s earnings are forecast to moderate from FY26 when net profit reached RM144.7mil, to RM110.3mil in FY27, before recovering to RM116.1mil in FY28.
The group is also projected to remain in a net cash position over the forecast period.
TA Research reiterated that the RM6.10 offer price falls short of its valuation.
“Hence, minority shareholders are advised not to accept the offer,” it said.
