KUALA LUMPUR: Analysts are giving the thumbs up for minority shareholders to accept the mandatory general offer (MGO) made by Sime Darby Bhd
for shares in UMW Holdings Bhd for RM5 a share.
This comes following yesterday's announcement that Sime Darby will acquire Permodalan Nasional Bhd's entire 61.18% stake in UMW from before undertaking an MGO to purchase the rest of the shares it does not own from other shareholders.
According to Kenanga Research, the MGO price of RM5 is a good exit price for minority shareholders.
"This deal offers shareholders a chance to exit UMW as the major shift towards electric vehicle (EV) space could spark a price war which could affect its margin in the longer term, taking note from the current challenging operating environment in China.
"Furthermore, UMW Toyota and Perodua do not have affordable EV offerings to challenge the influx of China EV cars as well as the EV leader, Tesla," it said in its latest company update.
It added that based on UMW's FY24 core net profit forecast of RM442.4mil, the proposed price-earnings ratio (PER) and price-book value (PBV) of the acquisition works out to 13.2x and 1.2x respectively, which are at premium valuations to passenger automobile peers' average PER of 11x and PBV of 1x
Meanwhile, Hong Leong Investment Bank (HLIB) Research said in its own report it is overall positive on the acquisition offer pricing UMW at RM5 a share, which is 29.9% higher than its current target price of RM3.85.
"The offer price is valued at price-earnings of 13-14x of FY24 earnings and price-book of 1.3x on FY23 book value per share.
"We advise minority shareholders to accept the offer," it said.
Following the lifting of the trading suspension this morning, Sime Darby's shares opened nine sen higher at RM2.11 a share while UMW jumped 19 sen to RM4.81.
