Thursday, 19 April 2012
Offer for Esso: not fair and not reasonable
Today the independent advice of Kenanga Investment Bank regarding the mandatory take-over offer of Esso (RM 3.59 per share) was published on the website from Bursa Malaysia.
The advice was rather remarkable: "not fair and not reasonable" and recommend the shareholders to reject the offer. Remarkable since this advice is very rarely given in Malaysia.
The offer does indeed look rather stingy, PE of only 6.3, 1.1 times book value, net dividend yield of 3.8% and at a discount to its recent traded price. Those multiples do not look good compared to other companies in the same industry, either in Malaysia (Shell) or in neighboring countries.
Esso is regarded one of the better companies on Bursa Malaysia, although its earnings can be quite volatile, it has sometimes even booked losses in the past.
Are we going to see more similar advices on Bursa Malaysia? Is the quality of independent advices improving? One swallow doesn't make a summer, but I definitely am hoping for a positive trend.