Maybank IB: Buy MPHB on dividends and rising land value

KUALA LUMPUR (Nov 12): Maybank Investment Bank Research has upgraded its call on number forecast operator (NFO) Multi-Purpose Holdings Bhd to “buy” from “hold”, on expectations of dividend payouts, appreciating landbank value and the listing of its MPHB Capital Bhd next year.

In its note Monday, the research house said it has been assured that MPHB will be paying dividends in the second half of the financial year ending Dec 31, 2012 (FY12), and has pegged a forecast of 15 sen dividend per share for FY12.

“MPHB did not announce any ordinary dividends in the first half of 2012, compared to the 5 sen less tax dividend per share in the first half of 2011. We have been reassured that MPHB will pay dividends in the second half of 2012 and we maintain our total forecast for 2012 of 15 sen dividend per share less tax,” said Maybank IB.

According to Maybank IB, 2,800 acres of MPHB’s 4,600 acre land bank in Pengerang Johor had been compulsorily acquired for the Petrochemicals Integrated Development (RAPID) at 93 sen per square feet, well below its assumed value of RM1.68 per square feet which could see MPHB seeking arbitration for the land price.

“Our on-the-ground research indicates that the great majority of  land in the vicinity was compulsorily acquired at RM2.80 to RM8.00 per square feet. Therefore, we do not rule out the possibility that MPHB may seek arbitration in order to increase the price at which its land is acquired,” it said.

The rapid infrastructure development in Southeast Penang has also benefited MPHB, as its 81-acre land in Teluk Tempoyak can now command double its value at RM100 per square feet.

The research house also highlighted that MPHB is slated to issue the listing prospectus of MPHBC by year-end which will see the non-gaming arm listed on Bursa Malaysia’s main market by January 2013.

“We recall that MPHB’s non-gaming businesses (under MPHBC) will be de-merged from its gaming business. MPHBC listing is slated for January 2013. We understand that MPHBC’s prospectus will be issued by year-end and that it will be listed in Jan 2013,” it said.

As such, Maybank IB has upgraded MPHB to “buy” and increased its target price to RM4.43 from RM3.77 previously.

“Rather than valuing MPHB wholesale and ascribing a 10% discount to the resulting valuation as we did before, we now value  its gaming and non-gaming businesses separately. We believe that this methodology best reflects MPHB’s breakup value,” said Maybank IB.

“At current levels, investors who buy MPHB will get its property assets for free. With an upside of  more than 100% for MPHBC, we encourage MPHB shareholders to subscribe for the MPHBC shares,” it added.

At 11.10am today, MPHB share was down 1 sen at RM3.63 with 88,900 shares traded.

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