It is time to bid farewell to Tanjong plc, one of Malaysia’s best-loved institutional stocks. But if history is any indication, this could only be a temporary parting.
So perhaps we should not bid goodbye forever, but “au revoir” — French for until we meet again. T Ananda Krishnan’s well-guarded move for Tanjong may not be the last for the company’s assets.
Last week, MEASAT Global Bhd’s shareholders saw it coming, but Tanjong’s obviously didn’t. Rumours of an impending privatisation of MEASAT sent its shares soaring before its suspension, but Tanjong’s shares were stable.
After a three-day suspension, Ananda’s private vehicle Usaha Tegas Sdn Bhd (UTSB) last Friday announced the proposed privatisation of Tanjong at RM21.80 cash per share, a decent 24% premium over its last traded price of RM17.58 on July 27, 2010.
Tanjong Capital Sdn Bhd (TCSB), a special-purpose vehicle set up by UTSB and parties acting in concert, on Friday served a notice of conditional takeover offer on Tanjong to acquire the remaining 53.04% it did not already own.
Based on the offer price of RM21.80 per share, Tanjong is valued at RM8.8 billion. The minorities’ shares are valued at RM4.7 billion.
For those who bought the stock at its 12-month low of RM14.30 on Aug 19, 2009 and had held it since, the offer price represented a thumping 52% gain over a period of less than a year. It also represents a premium of 24.5% over the volume-weighted average share price of RM17.51 over the six months to July 27.
The offer price is two times its net assets per share of RM10.59 as at April 30, 2010. Based on the 12-month rolling earnings before interest, tax, depreciation and amortisation (Ebitda) up to Jan 31, it represents an implied enterprise value over Ebitda of eight times.
While a handsome profit could be had, faithful long-term investors would sorely miss the presence of Tanjong, a quality large-cap counter on Bursa Malaysia that offered the combination of defensive earnings, high dividend yields and reasonable low-teens price-to-earnings valuation.
This is particularly so at a time when foreign fund participation is badly needed on the local bourse.
However, if Ananda’s savvy corporate moves and the recent relisting of Maxis, although only involving the Malaysian operations, is any indication, Tanjong’s absence may not be for long. Indeed, some observers believe a return to the local bourse is inevitable after a restructuring that would see its units being listed separately.
Tanjong is involved in power generation, gaming, leisure and property investment.
In its statement last Friday, TCSB said the group had ambitions of being a global player in the power generation industry, by pursuing development opportunities in the Middle East and North Africa, and South and Southeast Asia.
“Tanjong... will need to be restructured and recapitalised in order to meet the prospective long-term investment and debt profile, which will result in higher borrowing costs and translate into medium-term earnings volatility,” it said, adding that minority shareholders would then not be subjected to associated risks of its next growth phase.
This means, just like Maxis, Ananda could be seeking high-profile global investors to participate in its leap to the next level. This time around, the government’s investment arm Khazanah Nasional Bhd could potentially fit into that investment strategy, particularly for its power business.
TCSB also said Tanjong suffered from a conglomerate discount valuation, while Syariah-compliant and many Malaysia-based institutional investors were not able to invest in the group’s growing power assets, given its gaming business.
The past predicts the future?
While Tanjong as a listed entity will soon disappear from the local bourse, investors can bet it could return later, possibly in as many as three separate parts — as power, gaming, and leisure and property investment entities.
Indeed, since Ananda’s entry into the local corporate scene, the Malaysian public has become all too familiar with his corporate manoeuvrings, moving companies on and off the local bourse, while recouping sizable gains for himself in the process.
Powertek Bhd, a power generator with exposure to local and foreign markets, was listed on the local stock exchange in 1996, only to be taken private by Tanjong Energy Holdings Sdn Bhd in 2003.
Bumi Armada Bhd, owner and operator of offshore support vessels is now part of the Usaha Tegas Group. Bumi Armada was privatised in 2003, by Ananda and Tan Sri Wan Azmi Wan Hamzah, who was the controlling shareholder of Bumi Armada back then via property player Land & General Bhd.
Bumi Armada is being primed for a listing on Bursa Malaysia soon, after an absence of seven years.
Maxis Bhd, a major player in the local telecommunications industry, went public in 2002 under the Maxis Communications Bhd banner but delisted five years later in 2007. In 2009, however, Maxis saw its second initial public offering (IPO).
While the IPO was indisputably the listing of 2009, given its sheer size and position as Ananda’s figurehead company, there was a bitter aftertaste in that it contained only the mature Malaysian operations and none of the overseas ventures.
The fast-growing Indian and Indonesian operations are under Maxis Communications Bhd, an unlisted entity controlled by him.
There was also the issue of him hiving off a 25% stake in Maxis to Saudi Telecom Co for US$3 billion (RM9.57 billion) shortly after privatising the entire company (40% of which he didn’t own) for RM16 billion or US$4.6 billion.
Astro All-Asia Networks plc was privatised and delisted from the Main Market of Bursa Malaysia Securities Bhd on June 14, 2010.
Last week, it was the turn of MEASAT and Tanjong. History repeats itself, so the saying goes. If the past is an indicator of the future, then we could see Tanjong’s assets relisted again one day.
This article appeared in The Edge Financial Daily, August 2, 2010.
No comments:
Post a Comment