Tuesday March 5, 2013

MISC advances to a high of RM5.39 on report EPF seeking a higher price from Petronas


PETALING JAYA: MISC Bhd's share price rose to an intraday high of RM5.39 yesterday on hopes of a higher buyout price, following a report quoting the Employees Provident Fund's (EPF) chief executive officer Tan Sri Azlan Zainol as seeking a higher price from Petroliam Nasional Bhd (Petronas).

RHB Research analyst Ahmad Maghfur Usman maintained a “reject” recommendation on the offer, with a higher fair value of RM6.12 on a sum-of-parts valuation.

The new fair value is nine sen higher than the previous RM6.03 after factoring in MISC's stake in NCB Holdings Bhd. Ahmad maintained a “buy” call on the shipping giant.

The fair value, given at RM6.12, implies a 15.47% upside to the offer price of RM5.30.

“We remain upbeat on MISC's overall outlook.

One of MISC’s petroleum tankers One of MISC’s petroleum tankers

“Although its petroleum and chemical tanker segment would still be in the red, its losses are expected to narrow.

“Furthermore, growth would still be driven by higher earnings from liquefied natural gas, offshore, tank terminals, subsidiary Malaysia Marine and Heavy Engineering Holdings Bhd and 50%-owned Gemusut Kakap, which will commence operations some time in the third quarter,” he said.

MISC shares rose 11 sen from RM5.28 to RM5.39 yesterday, coming down to RM5.31 on closing, with 9.85 million shares changing hands.

Petronas had on Feb 21 made a general offer for all the shares in MISC at a price of RM5.30 per share.

The EPF is the single largest non-interested shareholder with a 9.63% stake and holds the key to the success of the buyout.

This is because Petronas would need 90% of the shares it does not own in MISC, amounting to 33.57% of the latter.

An analyst told StarBiz that he would still advise investors to accept the offer at RM5.30 per share.

He said it would be better for the company to undergo restructuring and undertake a further kitchen-sinking exercise.

Commenting on the higher offer price expected by the EPF, he pointed out that Petronas might not offer a much higher price, as the national oil and gas company foresaw a weaker business outlook for shipping going forward.

“If Petronas were to reconsider the offer price, I think it would only be slightly higher than the 1.1 times offered, probably in the range of 1.3 to 1.4 times price-to-book,” he said.

Another analyst said investors would hope for a better price, but whether Petronas would up its offer was another matter altogether.

“If I were the EPF, I would hope the offer price to be at RM7 per share to match the rights issue I had forked out for (in 2010),” he noted.

Earlier, in an interview with a weekly, Petronas president and chief executive officer Tan Sri Shamsul Azhar Abbas said: “I'm not forcing them (shareholders) to take up the offer the privatisation exercise was trying to save them (from incurring more losses).”

Petronas said the reason it wanted to privatise MISC was because the uncertain outlook of the shipping business made efforts to sustain and transform the business challenging.

The oil and gas heavyweight also said it would be able to obtain full control and provide greater flexibility in deciding MISC's strategic direction by taking it private.

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