AmInvestment: Offer price for MTD unfair

Friday January 21, 2011

By SHARIDAN M. ALI 

sharidan@thestar.com.my

PETALING JAYA: AmInvestment Bank said the takeover offer of MTD Capital Bhd by four firms at RM9.50 per share was not reflective of the potential of the group.

Based on the profile of the MTD group, which was involved in toll concession, property development as well as engineering and contruction, “it would be appropriate to value the business segment separately to arrive at the aggregate valuation of the group on sum-of-parts basis,” the independent adviser said.

“We have computed the sum-of-parts valuation (SPOV) of MTD group to be about RM3.1bil. And based on MTD's issued and paid-up capital of 247.5 million shares, the value attributable to each MTD share is at RM12.72.

“Thus, the cash offer price of RM9.50 per share represents a discount of RM3.22 or approximately 25% to the SPOV of RM12.72.

“Based on this, we are of the view that the offer price is not fair due to the significant discount accorded to the indicative SPOV per MTD share.”

AmInvestment said to realise the full RM12.72, investors would have to maintain their shareholding in MTD for the entire duration of the concession with the assumption that MTD distributed all its net cash flow derived from businesses and realisation of all its assets.

“The indicative SPOV is derived based on the present value of all the net cash flows of MTD's existing businesses and assets are being realised at the same point of time,” it said.

MTD non-interested directors also concurred with the recommendation of AmInvestment and advised shareholders to reject the offer.

MTD, the country's second largest highway operator and owner, has received an offer from four companies to take it private on Dec 20, 2010, effectively valuing it at RM2.35bil.

The companies which held a total stake of 53.13% in MTD, made a conditional takeover offer to acquire the remaining 116.02 million shares or 46.87% of the issued and paid-up capital of MTD for a cash offer of RM9.50 per share, or a total of RM1.1bil.

The joint offerors are Nikvest Sdn Bhd, Alloy Consolidated Sdn Bhd (Alloy),Alloy Concrete Engineering Sdn Bhd (ACE) and Alloy Capital Sdn Bhd (AC) which hold 131.48 million MTD shares in total.

Alloy, ACE and AC hold direct interest of 26.01%, 3.40% and 0.91%, respectively, in the company while Nikvest currently holds a 22.81% stake.

Nevertheless, AmInvestment said the offer provided a chance for MTD shareholders to unlock the value of their shareholding at a premium of RM1.18 or 14.2% against RM8.32 - the five-day volume weighted average market price (VWAP) to Dec 17, 2010, being the last full market day prior to the notice of the takeover.

“The offer price also represents a premium of 6.7% to the closing market price of MTD shares on Dec 17, of RM8.90.

“Also, based on historical market prices of MTD shares, there is no assurance that the price of MTD shares will remain at the current level after the close of the offer,” it said.

MTD share price closed at RM9.61, up 11 sen on Jan 19.

In terms of the premium to precedent privatisation transactions, AmInvestment said the premium of 14.2% over MTD five-day VWAP up to Dec 17, 2010 was within the range when compared with the premiums paid for successful local privatisation over last two years of between 5% and 29.9%.

MTD sees big payoff from Manila highway

MTD sees big payoff from Manila highway
By Zuraimi Abdullah
Published: 2008/09/27
BTimes

MTD Capital Bhd's top executives have hinted that it should reap handsome returns from its RM800 million highway venture in Manila from as early as March 2009.Income from its power plant venture in Sri Lanka, meanwhile, should start streaming in from November this year.Company executives said MTD will keep focusing on securing more construction, property, engineering, toll, power plant and port jobs in the 12 countries where it has a presence.They also asked the government to review the contract for the RM1.2 bilion East Coast Expressway 2, given rising material costs.
Executive chairman Datuk Dr Nik Hussain Abdul Rahman is excited with MTD's Philippine prospects.The 35km South Luzon Expressway toll project, Nik Hussain said, should start generating income from March next year."With a daily traffic of 120,000 vehicles, the road is as busy as our Federal Highway," Nik Hussain said after MTD's annual general meeting in Batu Caves, Selangor, yesterday.MTD holds an 80 per cent stake in the privatised project on a build, operate and transfer basis with a 30-year concession."We can start collecting toll once construction of the two sections under Phase One completes by February," he said.The two sections have a combined stretch of 28km, managing director Datuk Azmil Khalili Khalid said. The remaining 7km under Phase Two should be ready by the year-end.

MTD: Cost of Jakarta toll road to top RM1b

BTimes
By Sharen Kaur
Published: 2008/09/26

The construction and toll road operator had earlier allocated RM858 million for the Cibitung-Cilincing highway, but the project cost could be 35 per cent more.

MTD Capital Bhd (MTD), a construction and toll road operator, said the 37km Cibitung-Cilincing toll road in Jakarta, Indonesia, will cost the company over RM1.1 billion to build or more than 35 per cent than originally budgeted.When MTD signed a 30-year concession agreement with the Indonesian government early last year, it allocated US$250 million (RM858 million) for the highway."The cost has built up with the increase in fuel and material prices. Land acquisition by the Indonesian government is also pending. We are hoping to start work by the second half of next year," MTD chairman Datuk Dr Nik Hussain Abdul Rahman told Business Times after the company's annual general meeting in Selangor yesterday.He said the project cost will be reviewed if there is a further price rise.

Nik Hussain said while there is no cost variation for the project, it will work out a price mechanism with the Indonesian government for toll collection over the concession period to mitigate the higher cost.MTD is targeting a return on investment of 20 per cent to 30 per cent from all its overseas toll operations.Besides the toll road in Indonesia, where it holds a 95 per cent interest, MTD has a 80 per cent stake in the 11.3 billion peso (RM875 million) South Luzon Expressway toll project in Manila, the Philippines."We hope to complete Phase 1 by the first quarter of next year and Phase 2 by 2010, which is when it will start to contribute to group revenue and profit," Nik Hussain said.It also holds less than 20 per cent interest in a consortium comprising IJM Corp, Bumi Hiway, WCT and CIDB, which has a 30-year highway concession in Andhra Pradesh, India.MTD aims to build its toll concession business and will move to Sri Lanka and China and look for new projects in the Philippines and Indonesia.

In Malaysia, it holds four toll concessions -
the Kuala Lumpur-Karak Highway,
the East Coast Expressway 1,
the East-West Link Expressway and
the Kuala Lumpur-Seremban Expressway, which are held via its subsidiary MTD Infraperdana Bhd (MTD Infra).

"The roads are profitable. We have made our money from operating them," Nik Hussain said.Combined daily traffic at the four highways is 330,000 and is expected to rise by two per cent to four per cent per year.Nik Hussain also said MTD Infra is expected to do better this year as more cars use the highways.For the 12 months to March 31 2008, it achieved a net profit of RM68.4 million on a revenue of RM277.5 million.