Analysts advise investors to accept takeover offer

KUCHING: Analysts have advised investors to accept the takeover offer for Unisem ( M) Bhd made by joint offerors from Malaysia and China.

In a filing on Bursa Malaysia, Unisem announced that the Board had on September 12, 2018, received a notice together with a pre- conditional announcement from Maybank Investment Bank Bhd in relation to the voluntary conditional take- over offer to be undertaken by Chinese offerors Huatian Electronics Group ( HK) Ltd ( Huatian Electronics HK) and Huatian Technology ( Malaysia) Sdn Bhd ( Huatian Technology Malaysia) and Malaysian Offerors John Chia Sin Tet, Alexander Chia Jhet-Wern, Jayvest Holdings Sdn Bhd and SCQ Industries Sdn Bhd.

This is upon satisfaction of all the pre- conditions stipulated in Section 2 of the Pre- Conditional Offer Announcement, to acquire all the issued shares in the company, not already held by the joint offerors, in accordance with the rules on take- overs, mergers and compulsory acquisitions.

Huatian Electronics HK is directly wholly- owned by Tianshui Huatian Electronics Group Co, Ltd while Huatian Technology Malaysia is indirectly wholly- owned by Tianshui Huatian Technology Co, Ltd (TSHT).

“The joint offerors will pay holders who accept the offer a cash consideration of RM3.30 for each offer share,” the pre- conditional announcement read.

The research arm of Kenanga Investment Bank Bhd was believed that this latest development will be a win-win for all parties.

“Unisem would complement TSHT with its vast network of customers in Europe and North America TSHT which has a significant presence in China would enable Unisem to expand more rapidly in Chengdu; a positive synergy that would be created, in our view,” Kenanga Research said.

Kenanga Research deemed the offer price of RM3.30 per share to be fair as the implied 16.2-fold financial year 2019 estimate (FY19E) price earnings ratio ( PER), at circa one-fold SD above its five-year average Fwd. PER, was also in line with the Malaysian’s OSAT current two-year Fwd. PER.

The research arm’s previous target price was RM2.65 per share at 13-fold FY19E PER, with a ‘market perform’ rating.

The research arm of MIDF Investment Bank Bhd ( MIDF Research) also highlighted that the offer price translates into an attractive premium of 11.1 per cent and 73.7 per cent, based on Unisem’s last closing price of RM2.97 per share and its own fair value of RM1.90 per share respectively.