Integrax shareholders must evaluate best immediate benefits, say analysts
KUALA LUMPUR: With Tenaga Nasional Bhd (TNB) sticking to its guns on the share offer price for port operator Integrax Bhd, the latter’s shareholders will have to weigh carefully investment decisions that will bring on the best immediate benefits.
In light of the current market outlook, some analysts have cited the “unexciting future expected earnings of Integrax” as an opportunity to take profit and exit the investment.
On Jan 9 this year, TNB announced that it planned to acquire the remaining 78 per cent stake in Integrax that it does not already own at RM2.75 a share, and forwarded the offer documents to Integrax shareholders on Jan 28.
The privatisation exercise is conditional upon TNB, which currently holds 22.1 per cent of Integrax’s shares, securing at least 50 per cent of the port operator’s shares.
Integrax runs two terminals at Lumut port, namely, the Lebir Bulk Terminal (LBT) which mainly handles coal, and Lumut Maritime Terminal (LMT), dry and liquid bulk.
An analysts’ report from Maybank Kim Eng indicated that the proposed takeover by TNB was for strategic reasons, given the importance of LBT to TNB’s Janamanjung coal-fired plant in Seri Manjung, Perak.
While TNB has not budged from its RM2.75 a share offer, Integrax’s Independent Adviser’s report has valued Integrax shares at RM3.60. This was based on the revalued net asset valuation (RNAV) method that includes the LBT and LMT at Lumut Port and land for future expansion.
It had also recommended to Integrax’s shareholders to reject TNB’s offer, describing the offer price of RM2.75 as “not fair” but “reasonable”.
Ontheotherhand,RHBResearch has called on Integrax shareholders to sell and take profit as the port operator’s earnings outlook “does not justify the IAC’s revalued net asset value (RNAV) of RM3.60 to RM3.62 per share.”
While stressing that it did not argue the IAC’s view that Integrax’s replacement cost of its asset reflecting RNAV could amount to RM3.60 to RM3.62 per share, RHB Research said in its analysts’ report that the port operator’s earnings outlook did not justify that price range.
RHB Research, in citing several reasons for this, said firstly it expected that Integrax’s revenue and earnings to weaken by 11.9 and 10.1 per cent respectively this year.
In addition it argued that although the earnings of RM38 million in 2014 was within expectations, they also reflected a reduction of seven per cent compared with 2013.
RHB Research is especially concerned with the earnings of Integrax for this year upon the expiry of the facility payment or revenue stream from the Jetty Terminal Usage Agreement 1 (JTUA1) this year, estimated at RM36.1 million annually.
However, it said the drop in earnings could be partly cushioned with the coming on stream of JTUA2, estimated at RM27.2 million annually.
A cursory look at the estimated income streams of the two different JTUAs will see a disparity of almost RM9 million annually.
As earnings should be unexciting for Integrax until it manages to secure a sizeable customer, RHB Research advised minority shareholders to take profit as the share price was currently above the offer price of RM2.75.
“This is to avoid the risk of the deal collapsing, as it is unlikely that the offer price will be raised (by TNB) to one that guarantees a successful takeover,” it said.
Perak Corporation Bhd, which has a 15.74 per cent stake in Integrax, is to decide on Monday whether to accept TNB’s offer.
If the Perak state governmentowned entity is to accept TNB’s offer, it will push the latter’s holding on Integrax’s equity to 38 per cent. — Bernama