Genting had recently indicated that it may spend RM200m to build a theme park and hotel in southern Johor to compliment its flagship high-end retail outlet in southern Johor based on the Chelsea Premium outlet concept. Earlier, the Genting group via its 54.7% subsidiary, Genting Plantations and US listed Simon property group, had formed a 50:50 JV called Genting Chelsea Sdn Bhd to invest in and operate Premium Outlet centres in Malaysia. The relatively small initial investment sum of RM200m for the theme park and hotel vs Genting Highlands’ annual maintenance CAPEX of RM300m p.a alone, suggests that scope, scale and diversity of the attractions of this proposed venture is unlikely to pose any competitive risk to RWS. In fact, the proposed investment could be seen as a complementary to RWS by possibly expanding the captive tourism pool in Southern Johor for RWS to tap on.
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Yesterday HLB anounced to buy EONCAP at 7.10 cash a piece for EONCAP shares.
ReplyDeleteDo u think we should accept the offer or bargain to get better price?
I personally think the price has not fairly valueing EONCAP.
According the announcement, 7.10 is arised from premium of 31.5% to the 180-day volume weighted average price ("VWAP") of EON Capital shares as at 16 December 2009.
This is no fair because they use 180VWAP instead of 30VWAP,because the past 6 months is the tough time for financial sector dampened by economy crisis. And secondly, calculation are as at 16 DEC, which is a month ago, they ignore the current performance by EON bank and those bought its share recently.
7.10 is just merely 1.4times Price to Book value of EONCAP as EONCAP has more than RM5 book value per share.
In comparison when CIMB bought the Southern Bank, CIMB paid 2.1times PBV.
I need your professinal opinions regarding this.
Thanks
It's very hard to determine the EONCAP price based on P/BV. Quek Leng Chai is smart investor, he always buy cheap stock. I believe he is offer the price @discount, not really premium.
ReplyDeleteYou must look at earning power(P/E) of EONCAP carefully. Higher P/BV, represent higher visibility of earning power. Need to really investigate the past performance on EONCAP.
I personally don't really invest in EONCAP because i believe EON management is not so good position in its business.
EONCAP PE is only 14 times based on annualised EPS of 50 sen. This is cheap compare to average PE of 21 listed banks in Malaysia.
ReplyDeleteQuek saw the opportunity and future in EONCAP, but he is not willing to pay high for it. Banks in thereotically wont lose money, so its a safe place to invest our money, we dont really like to be paid 7.10 apiece only and our long term investment disappear like that!
Remember Quek sure got an investment team, to help him hunt for stocks. No doubt. he is also banker. What u can do?
ReplyDeleteVote No !
Nowadays, Value Investing by Cash is very slow. I'm highly leverage on value investing strategy, which can produce higher profits.If you good enuf, you can retire early with such strategy. Opportunities are anywhere. I personally foreseen slow growth, oil crisis in Msia. I changed my porfolio to overweight Hong Kong/China, Singapore, US to lower my risk.
ReplyDeleteAnother great post.
ReplyDelete