KUCHING: The recent adjustment to Multi-Purpose Holdings Bhd’s (MPHB) share price after the shares went ex-entitlement for its Offer-for-Sale of MPHBC share is presenting yet another buying opportunity as the company is still viewed as being undervalued after the demerger.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) highlighted that the share price of MPHB has declined 12 per cent from its recent high of RM4.09 after the share went ex-entitlement for the Offer-for-Sale for MPHB Capital Bhd’s (MPHBC) on May 27.
This offers a buying opportunity as the gaming only MPHB is valued at RM4.37 per share, which comes with a 48 sen per share capital repayment to be paid in three months’ time.
The research house have then adjusted its earnings model to reflect the just-concluded demerger exercise and cut the company’s financial year 2013 (FY13) to FY14 estimates but raised the net dividend per share (NDPS) by 25 per cent to 45 per cent to match its dividend policy.
The FY14 estimates were for the number forecast operator (NFO) only operation where the dividend payout ratio has been raised to 80 per cent from our previous assumption of 50 per cent.
“We expect 28 per cent to 27 per cent interest savings of RM31 million and RM27 million in FY13 to FY14 respectively.
“We also now expect MPHB to turn to a net cash position of RM183 million in FY13 from a net debt position of RM473 million in our previous estimates,” it stated.
Post-demerger, Kenanga Research expected the risk profile of MPHB to be the same as that of Berjaya Sports Toto Bhd (Berjaya Sports Toto) given its relatively stable NFO business.
The beta of MPHB has increased to 1.201 from 1.092 a year ago largely due to the increased volatility in the trading of its shares ever since the announcement of its demerger exercise last year.
In contrast, note that Berjaya Sports Toto’s Beta has been fairly stable at 0.655 from 0.599 previously.
As such, the firm underlined, “we believe that in the longer run, MPHB should trade at Berjaya Sports Toto’s Beta level given its current status as a pure NFO player.
“At 0.655 Beta, MPHB should be valued at RM4.37 per share or at an excapital repayment target price of RM3.89 per share.”
On another note, MPHBC prospectus has revealed the latest value for its property assets.
The audited net book value (NBV) for the property assets is RM1.03 per share.
On the other hand, based on the latest market values as at 28 Feb, the property assets are valued at RM1.44 per share.
That said, in any case, subscribers would pay RM1 per share for the MPHBC share and get its financial services business for free.