Tuesday January 15, 2013
Research: MPHB appeal likely to be successful
By YVONNE TAN
PETALING JAYA: Multi-Purpose Holdings Bhd (MPHB) is expected to be successful in its appeal to amend Bank Negara and Securities Commission's (SC) conditional listing requirements for MPHB Capital Bhd, a spin-off of MPHB's non-gaming assets.
Although this has caused the listing timeline to be delayed to the second quarter of this year from the first quarter, it was more likely a listing delay than a scuttled deal, said UOB Kay Hian Research in a report.
Investors will recall that MPHB had made specific appeals on Dec 12 on Bank Negara and SC's conditional approvals for the listing of MPHB Capital.
The first appeal was for the central bank not to impose the same restrictions that apply to the governance of an insurance company on MPHB Capital's entire operations, as its non-financial assets such as its property division do not come under the purview of Bank Negara.
MPHB's insurance arm Multi-Purpose Insurans Bhd (MPIB) is parked under MPHB Capital.
The second appeal relates to obtaining flexibility to the SC's requirement of MPHB Capital incorporating a land revaluation exercise in its audited accounts, UOB Kay Hian said.
The research house opined that MPHB was still a valid capital management play regardless of whether or not MPHB Capital got listed.
“The plan for MPHB's crown jewel which is its gaming arm Magnum Corp Sdn Bhd to adopt a minimum dividend payout ratio of 80% starting in 2013 will proceed, although a scuttled listing plan would eliminate the post-listing capital repayment plan of 50 sen per share,” it added.
Public Investment Bank Research analyst Siew Jin Ling said in a report on MPHB last month that another revaluation requested by the SC should not affect its asset values much as MPHB had just revalued its assets a year ago.
“We would like to point out that most of MPHB's property assets have in fact just undergone revaluation last year.
“Hence, we believe another revaluation would not make a significant difference to the asset values, though it would most likely delay the listing process,” Siew said.
She did not discount the possibility of the spin-off exercise being called off but said it would not shake the underlying operations and fundamental values of the group.
In a two-pronged exercise announced in May last year, MPHB announced that it would divest its non-gaming assets and businesses to MPHB Capital for RM905.3mil to be satisfied by RM190.3mil in cash and 715 million new shares which have been offered for sale to shareholders of MPHB.
Upon completion of the share sale, MPHB will carry out a capital repayment exercise where the net proceeds of the share sale would be paid out to shareholders.
Shares of MPHB finished 2 sen down to RM3.50 yesterday.