The unconditional cash offer of RM1.80 per share or a total of RM290.7 million by Singapore’s Cheng family to acquire the 33.9 percent stake it does not already own in Wing Tai Malaysia Bhd is undervalued, said a minority shareholder in a report by The Star.
The offer was made via Singapore-listed Wing Tai Holdings Ltd (WTH) and its fully-owned subsidiary Wing Tai Investment & Development Pte Ltd (WTID). The Cheng family controls both entities, which altogether holds a 66.1 percent stake in Wing Tai Malaysia.
The offer of RM1.80 per share translates to a 52.5 percent premium over RM1.18, Wing Tai Malaysia’s last traded price before the takeover offer was announced on 22 May. It is also 57.9 percent higher than the firm’s three-month volume weighted average market price.
However, it is 34 percent lower than the company’s net asset value per share of RM2.73 as of 31 March 2017, meaning it only represents 66 percent of Wing Tai Malaysia’s book value. In addition, its net assets per share reached RM3.44 as of end-June 2015 before it completed the rights issuance for the fiscal year ended 30 June 2016.
“The offer is a significant discount to Wing Tai’s book value… there is a disconnect between the company’s share price and underlying business,” said James Hay, Director of Pangolin Investment Management, the second largest stockholder with a two percent stake in Wing Tai Malaysia.
The company currently operates a portfolio of 12 global fashion brands in Malaysia, such as Topman, Topshop, Warehouse, Karen Millen, Miss Selfridge and Dorothy Perkins. Its 45 percent partnership with Japan-based Fast Retailing Co Ltd also presently runs an online store for Uniqlo and 38 branches dedicated to this brand.
Moreover, Wing Tai Malaysia has some land in Klang Valley and Penang’s Bukit Mertajam area. It also owns some upscale developments in Kuala Lumpur like Kondominium No 8, Ambassador Row Hotel Suites, Lanson Place Bukit Ceylon Serviced Residences, and the 195-unit luxury project Le Nouvel KLCC adjacent to the iconic Petronas Twin Towers.
Given these lucrative assets, Hay estimated that the fair market value of Wing Tai’s stocks should be RM3.42 apiece, and this could rise to up to RM3.63 if it finds a buyer for one of Le Nouvel’s two towers.
Among Wing Tai’s projects in Klang Valley are:
1. Verticas Residensi, Bukit Ceylon
Image sourced from Business Times
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email radin@propertyguru.com.my
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