Hot Stock HELP rises 9% on takeover offer

by **hlk** Fri 06 Dec 2013, 12:14

Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Friday, 06 December 2013 11:37
A + A - Reset
KUALA LUMPUR (Dec 6): HELP International Corporation Bhd rose as much
as 9% today after receiving a take-over offer from Better Education Enterprise
Sdn Bhd (BEE) at RM2.53 per share.
BEE is a unit of Southern Capital Partners III Ltd, in which Tan Sri Tan Teong
Hean is a shareholder. Tan is Southern Capital’s chairman, ex-CEO of
Southern Bank and a son-in-law of Genting Bhd founder the late Tan Sri Lim
Goh Tong.
At 11.07 am today, shares of the education group rose 20 sen or 8.7% to trade
at RM2.49 – just four sen below the offer price. The third top gainer saw some
1.1 million shares done.
In a note today, Kenanga Research said compared to HELP’s last closing share
price of RM2.29, the cash offer price of RM2.53 is at a 10.4% premium, valuing
HELP at RM360 million.
The offer price implies price earnings ratios of 27.7 times and 21.7 times to
house forecasts of FY13 and FY14 earnings per share, said the research
house.
“The offer price also translates into price to book value ratios (PER) of 2.5
times and 2.2 times of our estimated FY13 and FY14 book value of equity per
share.
“The offer price is 34.6% and 25.2% above our target price (TP) of RM1.88
and the consensus TP of RM2.02 respectively. As such, the offer price is
deemed attractive in our view,” the research team said.
In light of this, the research team said it raised TP to RM2.53 as per the offer price although they continue to value the stock at RM1.88,
based on unchanged FY14 targeted PER of 16.1 times. The research team, however, maintained its FY13-FY14 earnings forecasts.
Additionally, Kenanga said it understood the change of majority shareholder will not impact the group’s business operations. HELP’s
co-founders, Datuk Dr Paul Chan Tuck Hoong, Datin Chan-Low Kam Yoke and the group’s key management would remain unchanged
after the take-over.
The research house also pointed out that BEE does not intend to maintain the listing status of HELP should it receive acceptance of 75%.
Meanwhile, CIMB Investment Bank Research’s analyst Nigel Foo said: “The takeover offer price looks fair, close to our RM2.52 TP, which
is based on a 10% discount to revised net asset value.”
Foo said HELP has a strong brand in the higher education sector and is expanding.
He said: “It makes business sense for private equity to take HELP private if one has a three-to-five year investment horizon.
“With Southern Capital’s financial support, we believe this could help the company expand faster in both the domestic and regional
markets over the next few years.”