Thursday, June 09, 2011

MAA Clarified

I was going through some comments in some forums, most were negative on the news of selling 100% of MAAB for RM344m. Do not mistake MAAB for MAAH, the listed vehicle. The listed vehicle is MAAH.

MAA Holdings Bhd owns:

100% MAA Berhad
75% MAA Takaful
100% MAA Corp Sdn Bhd
49% MAA Bancwell Trustee

http://img42.imageshack.us/img42/7077/img2744sm.jpg

The deal does not include MAAH's Islamic insurance unit, MAA Takaful Bhd and the rest, which are quite attractive on its own. However, it is learnt that both parties may talk about the takaful business once the latest deal is concluded.

Zurich FS' acquisition of MAAB may spell the end of its alliance with Koperasi MCIS Bhd through their joint venture, MCIS Zurich Insurance Bhd. Koperasi MCIS holds a 43.69 per cent stake in the joint venture, while Zurich FS owns 40 per cent. In 2009, Business Times reported that Zurich FS, Switzerland's biggest insurer, may sell its shares in MCIS Zurich after a failed plan to expand the business had strained relationship between the major shareholders.

http://www.jpopasia.com/img/album-covers/1/7440-oliviaong-ysf8.jpg

"It is well known that Zurich FS has been planning to reposition its operation here since early 2009. It has considered several options, including acquiring an alternative licence and gaining control of another insurer such as MAA," said the source.

Nevertheless, Zurich FS could also merge MAAB with MCIS Zurich and retain management control of the enlarged entity, or sell MCIS Zurich and transfer its business and expertise to MAAB.

Zurich Insurance's 70 per cent stake in MAAB is the maximum allowed under Bank Negara Malaysia's (BNM) relaxed foreign ownership rules. BNM does not allow insurers to own two insurance companies in Malaysia. This means that Zurich FS must sell its MCIS Zurich's insurance business or merge the insurers.

Though MAA Holdings got the approval to sell 100% of MAAB to Zurich, that would contravene the 70% rule, unless Zurich gets an exemption, or a time frame to sell down the 30%.

It is also understood that Zurich FS may have had prior engagement with BNM to explain its intention and address its concerns.

As at end of 2010, MAA Holdings has a net asset per share of RM0.94. Its paid up is 304.3m shares. There are no major liabilities that is not covered by its net assets.

http://pic.pimg.tw/hada/4bcf044f17486.jpg

Verdict: The deal is very good for MAA Holdings, with their remaining Takaful business and cash, they could go into takaful in a big way, possible merging or buying a listed/unlisted takaful business ... I would think RM1.50-1.60 is the fair value as the game plan unfolds.

5 comments:

clearwater said...

You still seem to have faith TY and the MAA controlling shareholders will do good by the minorities. Alas, I have no such illusions. Past memories of TY make one cynical. With good reason.

Jeff said...

Dali,
TY did it again.........selling MAAB on the cheap. How to trust him. Yes done deal which is a ggod thing but price is shitty comparing with other similar without life insurance.

TY needs to explain on the finner details on the pricing. So far no reasearch house is covering MAA. I wonder whether is there any backhander from Zurich.

Dali.....if u can do some service to your blog readers, pls try to find out on the valuation details. I believe the insiders sold yesterday & are buying today.

Thanks

KC said...

Dali,

How do u derive the rm1.50-1.60 figure?

Pls do a detail valuations of the cash & takaful assets.

Thx.

Jeff said...

Dali,
TY deserves an oscar. Selling MAAB cheap & failure to disclose the details of the pricing.

Sales proceeds plus NTA works out to be approx. RM2.20
Applying a discount factor of 30% fair value should be RM 1.54 in line with your valuation.

Mkt unhappy with cheap sale hence the sell down. Buyer retailer nah. The wolf & gang laughing at us all. Why??? cos the omission of material fact..... Zurich assumes the liability of RM200m syndicated loan.

TY will is not telling lies as MAAH will get RM344m as Zurich will pay the RM200m loan directly to the bankers.

Hence the NTA ramps up to RM 2.80 as actual sale proceeds will be RM544m.........smart wool eh.

Watch the unfolding of the drama.

山下聖人 said...

Actually TY has no says on how much to sell, it's BNM choice now, BNM want it sold fast because the due date set is already keep on dragging, so 340million consider generous to TY.
Congrats to him by selling all his father's hard work cheaply.