MPHB stock up on SC’s green light

Business & Markets 2013
Written by Joan Fam
Wednesday, 08 May 2013 10:22
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PETALING JAYA: MULTI-PURPOSE HOLDINGS BHD []’s (MPHB)
stock has gained 24 sen (up almost 7%) over the last two days to touch
RM3.70 — having just received the green light from the Securities
Commission (SC) to register the listing prospectus of a special purpose
vehicle (SPV) that will hold the group’s non-gaming assets following a
demerger exercise.
It has been a year since MPHB announced that it would separate its
non-gaming and gaming operations. With the SC’s approval, the group
is one crucial step closer to such an exercise that will see its
non-gaming assets listed separately from its numbers forecast
operations under Magnum Corp Bhd.
According to a senior executive with MPHB, the demerger exercise is on
track with June being the target date to list the non-gaming entity. “We hope to have the prospectus out by end of May or
early June,” he said.
The exercise was originally targeted for completion towards the end of last year or the first quarter of this year but was
delayed due to additional requests made by the SC, sources said.
The demerger exercise will see MPHB retaining the jewel in its crown — wholly owned unit Magnum Corp, a numbers
forecast operator (NFO) — and all its other non-gaming assets transferred into an SPV for a separate listing on Bursa
Malaysia. The non- gaming assets comprise insurance, financial services, hospitality and other investments.
“We understand MPHB has submitted the application for listing [the SPV] on Bursa Malaysia and is currently awaiting
approval. We do not expect any major hiccups on obtaining such approval since it is more procedural in nature. The group
plans to list [the SPV] by end of June and that looks possible right now. The latest probably could be by July,” Alliance
Research’s gaming analyst Cheah King Yoong told The Edge Financial Daily.
“We believe that besides overall bullish market sentiments, the run up in MPHB’s stock price over the past two days is the
emergence of investor interest to price-in the approval given by the SC, which implies that the group remains on track to list
the non-gaming entity by late second quarter. We have a strong ‘buy’ recommendation on MPHB with a target price of
RM4.21 based on our sum-of-parts valuation,” he added.
Despite its recent run up, MPHB’s stock remains attractive as it offers pure exposure to the NFO sector post-demerger and
has deep asset value, particularly its huge land bank in Johor.
“Furthermore, with a minimum 80% payout ratio from its gaming business post the demerger exercise, MPHB offers an
appealing dividend yield of around 5% based on its current share price,” he noted.
On Dec 10 last year, MPHB received the SC’s approval for the demerger exercise but with the condition that it conducts an
independent valuation of the group’s material property assets and incorporate disclosures relating to the valuation and its
financial effects in the listing prospectus.
As these were additional requirements from the SC, there were initially concerns that the proposed corporate exercise would
be delayed, hence causing a sell down on MPHB shares from the end of last year until early this year.
However, the approval in principle from SC on May 6 indicates that MPHB has fulfilled all conditions imposed by the regulator
and the company looks set to list its non-gaming entity over the next few months.