Wednesday, 24 May 2017

Wing Tai GO: Pangolin not happy

Article in The Edge: "Wing Tai general offer seems unattractive".

Some snippets:

Controlling shareholders of Wing Tai Malaysia Bhd (WTM) want to take the property developer and apparel retailer private at RM1.80 per share.

The offer price is a 52% premium over its last traded price of RM1.18 on Monday before the stock was suspended from trading yesterday. However, it is 34% below its net tangible assets of RM2.73 per share as at March 31.

“WTM is massively undervalued at the takeover price of RM1.80,” said Pangolin Investment Management director James Hay. The asset management firm currently holds a 2% stake in WTM at an investment cost above RM2.

“Don’t forget there was a rights issue [in 2015 at RM1.15 per share],” said Hay, who pegs the fair value of WTM at RM3.63 per share.

His fair value is derived from sum-of-parts valuation, pricing the company’s retail unit (excluding its joint venture [JV] that operates Uniqlo stores) at RM132.8 million, or 28 sen per share, plus the 45% stake in the Uniqlo chain at RM211 million or 44 sen per share.

Also, Hay reckons that WTM’s high-end residential project Le Nouvel here could generate profit of RM100 million, or 21 sen per share.

Besides unsold properties and land bank, WTM manages a portfolio of 12 international fashion brands such as Topshop, Topman, Dorothy Perkins, Miss Selfridge, Warehouse, Burton and Furla. The company also owns a 45% stake in the JV with Japan’s Fast Retailing Co Ltd that operates 36 Uniqlo outlets in Malaysia.

Given the high premium offered, I think there is a serious chance that most minority shareholders will accept the offer and thus that the company will be delisted. That would mean the exit of another good company from Bursa.

Regarding the independent advise (still to be drafted), may I suggest another case of the intriguing "not fair but reasonable"?

1 comment:

  1. Shares have already jumped to RM1.78/1.79 - wonder if this implies expectations of a higher bid?