Ekovest Bhd

Re: Ekovest Bhd

Postby winston » Wed Nov 01, 2017 7:17 pm

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UOB Kay Hian sees near-term impact on Ekovest share price

PETALING JAYA: UOB Kay Hian Research foresee negative near-term impact on Ekovest Bhd share price following its proposal to takeover of Iskandar Waterfront City Bhd (IWC).

“Ekovest’s proposal to acquire a 62% stake in IWC comes as a negative surprise. The proposal could see Ekovest forking out up to RM764mil cash for the stake (at RM1.50 per share).

“While the proposal would need to be deliberated by the board (and approved by shareholders), we foresee negative near-term impact on share price. Downgrade to ‘sell’ with a lower target price of RM1.04,” UOB Kay Hian said in a report.

At 11.40am, Ekovest tumbled 16.38%, or 19 sen to 97 sen with 251.3 million shares done.

Ekovest has received a proposal letter from Tan Sri Lim Kang Hoo, the major shareholder of Ekovest, in relation to a reorganisation exercise which involves Ekovest acquiring all the ordinary shares in IWC held by the existing shareholders of IWC, excluding shares held by Iskandar Waterfront Holdings (IWH).

Minorities own approximately 62% of the issued and paid-up share capital of IWC. The proposal would see Ekovest offering minorities of IWC for either a cash consideration of RM1.50 per share, or swap one IWC share for Ekovest share at RM1.50 per share.

Currently, about 62% of IWC is held by minorities, worth about RM713mil (based on IWC’s share price of RM1.40).

UOB Kay Hian said the proposal to merge the two entities came as a “negative surprise”. It said assuming that the minorities take up the cash offer (instead of the share swap), Ekovest would have to fork out up to RM764mil in cash for the 62% stake.

“Acquisition implies a P/B of 1.5 times but is at a 65% discount to company’s assessed market value of lands which sits on 1,052 acres in Johor. Nevertheless, acquisition of assets which cannot be monetised in the near term even at big discounts is negatively perceived by institutional investors,” the research house said.

Assuming only cash acceptances are received, UOB Kay Hian said Ekovest’s gearing would rise up to 1.1 times (from 0.8 times), and could cost the group RM38mil in financing cost per year (at a 5% rate).

While equity fundraising could be an option, EPS would be diluted given the long-term nature of IWC’s business, which focuses mainly on land disposals, making earnings delivery rather lumpy.

Additionally, it said Ekovest’s prospective PE could rise to 18.5 times assuming 50% of IWC shareholders accept share swap.

“We downgrade Ekovest to ‘sell’ after raising our SOTP discount to 50% (from 30%), anticipating a potential negative reaction to shareholders sentiment post proposal announced.

“Nevertheless our target price could potentially be revised upwards (but not fully restored) should the deal be blocked and no longer pursued by management,” UOB Kay Hian said.

Source: The Star

https://www.thestar.com.my/business/bus ... are-price/
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Re: Ekovest Bhd

Postby winston » Sun Nov 05, 2017 9:50 am

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Kang Hoo has his say

By Tee Lin Say

IWC is turning profitable in its upcoming third quarter to September.

There are also cashflows coming in from IWC’s existing property business and the payment from the land we sold to the Greenland Group.

The first payment for Lot 1A has come in on July 15. That will be reflected in our September results”.

“The vendor is the Shanghai government, so these are solid paymasters. They will be paying us in tranches from now until May 2020”.

Lim controls more than 50% of Ekovest and 38% of IWH.


For the second quarter to June 30, IWC turned around with a small profit of RM147,000 from a previous loss of RM3.82mil. Revenue dropped to RM12.51mil from RM21.41mil previously.

For the six-month period, it recorded losses of RM56.31mil from a previous loss of RM8.61mil. This was on the back of 11.07% drop in revenue to RM26.16mil.

As for the Greenland deal, recall that back in 2015, IWC had proposed to sell three pieces of land measuring 51.8ha in Plentong, Johor, held by IWC subsidiary Tebrau Bay Sdn Bhd, to Greenland Tebrau Sdn Bhd (GTSB) for RM2.37bil cash.


Based on the schedule of payments starting July 15, 2017 until May 5, 2020, GTSB needs to pay a grand total of RM2.13bil. The first payment of RM46.32mil for Lot 1A was completed on July 15. The entire Lot 1A will be completely paid by July 15, 2018, and cumulatively, IWC should have received RM231.62mil by then.

China-based Greenland is also IWC’s partner in a waterfront city project in Johor with an estimated gross development value of RM18.4bil.


Ekovest shares, which are currently priced at 99 sen, should theoretically be trading at RM1.50 should shareholders decide to exchange their IWC shares for Ekovest shares instead.


Source: The Star

https://www.thestar.com.my/business/bus ... s-his-say/
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