Wednesday, November 24, 2010

3.65 and 2.30

Update: The best laid plans can still be thwarted if we do not manage to grasp all the available info. I thought this would be completed within a couple of month but apparently they are projecting this to be mid-2011, which is a terribly long time as a lot of things could occur from now till then. The gap will narrow every time they go through board approval and as more concrete offers come in for how they will treat the IJM Land warrant. Have to hold I guess to get max value.

Blogger Buyer said...


Hi S.Dali,

IJMLand will resume trading tomorrow, and since the rm3.65 is fixed, what is the expectation under this condition?? will it be only trading around 3.6 range?
Pls advise
Thanx in advance

5:19 PM



buyer,

thats a loaded question which plenty of ppl will pay good money to know ...lol ; )

if its a straight out G.O. ... then it should trade slightly below 3.65, maybe 3.60 because many ppl will give a bit discount so that they don't have to wait n go thru the exercise.. but in a G.O. there is an end buyer willing to pay at a fixed price

this is a swap exercise, and unlike the uemland sunrise deal, it will be swapped into a newco... one will notice that ijmland valuation has a higher premium than mrcb, which is fair considering mrcb's higher PB

does it mean that ijmland will go to 3.65??? well, maybe ... its not as straight forward .... as u can see, what if both parties just pull a figure from thin air and say ijmland swap at 5.00 and mrcb swap at 4.00, does that mean both will still go to those levels? its a swap, which means u will get something for the swap, in this case u get shares in the newco which will be listed as well

the key IS will everybody clamour to have shares in the newco ... if the swap was at 5.00 for ijmland, even krishnan tan won't want the shares in the newco, and will sell even at 4.80 or 4.50 or even 4.00 ... hence the key is whether ppl want to own shares in the newco

collectively, the newco will have a pb of around 2.1x, which is highly acceptable ... the merged entity will be a force to be reckoned with, and this merger basically confirms that the newco will get the mega Sg Buloh project, which will underpin strong interest, plus the newco will have very good liquidity, hence the controlling stakeholders and substantial shareholders will be silly to just offload shares at 2.30 and 3.65 for MRCB and IJMLAND respectively as that will mean they will get zero shares in the newco ... EPF won't sell, IJM Corp won't sell and definitely Krishnan Tan won't sell because they all know after the exercise, the newco will move even higher

if anything, the stakeholders will want to own more shares plus the merged entity is really a 1+1=3 just like uemland-sunrise

methinks both ijm land and mrcb will trade around 3.50 and 2.25 for the first hour to digests the traders and contra players .... before moving to 3.65 and 2.30, and then surge past those levels in a day or two ... because seriously, none of the stakeholders will be selling, they want shares in the newco .. you add in institutions and foreign funds into the fray who want to own a key property vehicle ... there are a lot more buyers out there than genuine sellers


NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

9 comments:

Buyer said...

S.Dali,

Many Thanks!
Truely appreciated!!
Have a clearer picture now!

Regards,
Buyer

asd said...

Thanks Dali.

I owe you one!

Cheers!

bill said...

thanks !
so, it might be more rewarding to see thru with the swap :)

Geoff said...

Dear Dali, at current prices MRCB is trading @ 9% discount to its newco share swap price. For IJM Land its 18.9%, come swap date or ex swap date the prices will converge to the theorectical swap ratio. Based on this premise is IJM Land the better horse to bet on?

hkloon said...

Dali,

What's your view on IGB if they have the potential to do a corporate exercise like Sunrise, IJMLand or Suncity? a possible midvalley reit perhaps?

regards

Ivan said...

Dali, why property company nowadays love to M&A? wat is the real reason behind to merger and create a GIANT property company?

Smurf said...

well, I also think its better to keep the shares and go for the swap. One thing though, the market seems to be less optimistic on the merger... any idea, Dali?

Teakada said...

listing of Newco will b in June 2011, ppl don't favour such long wait? uncertainty market in 2H 2011?

micheal said...

I think mrcb & epf are stupid to agreed on this ie with the price of 2.3 & 3.65 respectable. this is unfair to mrcb minority shareholder. the price shld mirror the pre announcement price.
guess krishnan tan is the shrewdder one