Berjaya Capital privatisation will boost BCorp: Analysts

[Stockist]

"BERJAYA Corp Bhd's (BCorp) plan to take private its subsidiary Berjaya Capital Bhd could help strengthen the holding company's financial standing after the exercise, analysts said.

They said Berjaya Capital was a thinly-traded stock which did not garner too much attention from investors, but its healthy cash flow could help strengthen BCorp after the planned delisting.

Based on Berjaya Capital's last closing price of RM2.44, BCorp will have to pay RM115.7 million to buy the remaining 34.78 per cent it does not own before taking the subsidiary private.

"If it's a good company, taking it private will let the owner subsequently enhance its value," Phillip Capital Management Sdn Bhd chief investment officer Ang Kok Heng said.

"Berjaya Capital is quite clean, with a lot of cash, and its general insurance business is also doing well," he added.

BCorp, a gaming and property group controlled by Tan Sri Vincent Tan Chee Yioun, announced last Friday plans to delist its 65.22 per cent- owned subsidiary.

Berjaya Capital has been suspended for two days from yesterday morning on the request of BCorp, as it works to finalise the proposal.

"BCorp will release full details of the proposal once it has been finalised," Berjaya Capital told the stock exchange yesterday.

Berjaya Capital, listed on Bursa Malaysia since 1995, is involved mainly in general insurance. Other activities include stock and futures broking, hire-purchase, lease and loan financing, and property investment.

"So far, the stock is pretty quiet since it is not a strong growth stock ... just undervalued, that's all," said Ang.

Berjaya Capital had mostly traded slightly below RM1 in the past five years.

Although the stock had started to move up since September last year, with a 61 per cent gain so far this year, it was still trading below its net tangible assets of RM3.04 per share.

BCorp recently announced similar exercises to restructure the group, including privatising its 68 per cent- owned multi-level marketing firm Cosway Corp Bhd - another stock regarded by analysts as being undervalued that generated good cash flow.

BCorp is also selling its 56.75 per cent stake in Dunham-Bush (Malaysia) Bhd to a Russian entre- preneur, which will raise RM180.5 million.

Dunham-Bush has a wide range of business, including the making and trading of electrical equipment.

"Deals like Dunham- Bush's are value-creating within the group. In general, they are also beneficial to minority shareholders as the offer price is higher than market, which provides a reasonable chance for small investors to exit," said head of research at M&A Securities, Wee Kim Hong."

By Chong Pooi Koon (pooikoon@nstp.com.my @ www.btimes.com.my
http://www.btimes.com.my/Current_New...0.txt/Article/


Related websites:-

Berjaya Corporation Berhad (www.berjaya.com)

Berjaya Capital Berhad (www.berjaya.com.my)

Beritajaya (www.beritajaya.com.my)
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