KUALA LUMPUR (Dec 20): RHB Research Institute has downgraded its recommendation on YTL Cement to Market Perform due to the recent run-up in share price and limited upside to its fair value.
“In the near term, we believe YTL Cement shares are likely to track YTL Corp’s share price due to the proposed share exchange,” it said on Monday.
YTL Corp has proposed to acquire the remaining shares of YTL Cement that it does not own via a share exchange on the basis of 3.17 YTL Corp shares for every YTL Cement share.
“We believe some minority shareholders might take this opportunity to exit due to the low liquidity issues of YTL Cement shares. At the reference price of RM4.50, YTL Cement is valued at about 6x EV/EBITDA on a fully-diluted basis, lower than Lafarge current valuation of about 8.5x EV/EBITDA,” it said.
RHB Research said minority shareholders would receive the more liquid YTL Corp shares, which then provides the more attractive exit route.
“In the near term, we believe YTL Cement shares are likely to track YTL Corp’s share price due to the proposed share exchange,” it said on Monday.
YTL Corp has proposed to acquire the remaining shares of YTL Cement that it does not own via a share exchange on the basis of 3.17 YTL Corp shares for every YTL Cement share.
“We believe some minority shareholders might take this opportunity to exit due to the low liquidity issues of YTL Cement shares. At the reference price of RM4.50, YTL Cement is valued at about 6x EV/EBITDA on a fully-diluted basis, lower than Lafarge current valuation of about 8.5x EV/EBITDA,” it said.
RHB Research said minority shareholders would receive the more liquid YTL Corp shares, which then provides the more attractive exit route.
