Monday, 13 February 2012

Investors warm up to Tebrau Teguh

KUALA LUMPUR: Tebrau Teguh Bhd could be seeing better times as the stock saw increases in both its price and trading volume last Friday, surging far ahead of its takeover offer price of 76 sen to hit a six-month high.

The stock price closed at 89 sen last Friday with a whopping 151 million shares traded. The closing price was 8.5 sen higher, or a 10.56% increase from its previous day’s close at 80.5 sen. The stock saw a 1,516% increase in volume traded.

A proposed general offer was announced on Jan 31, and Tebrau’s share price has been on the rise since it resumed trading on Feb 2, staying between 80 sen and 81.5 sen for the four days before Friday’s leap.

With Tebrau’s current share price at 89 sen, the general offer exercise at 76 sen each is not expected to attract any acceptance, said market observers.

The Edge Financial Daily reported on Feb 3 that even though the exercise could see a poor take-up rate as a result of this, there are two factors which could attract the attention of investors.

The first would be the possibility of further corporate developments with the entry of Ekovest Bhd’s Datuk Lim Kang Hoo into the Tebrau picture, while the second would be the group’s rich landbank.

Tebrau’s current book value of 75 sen per share seems understated, given that the bulk of its land was last revalued nine years ago.

The jewel in the company’s crown is its landbank in Iskandar Malaysia, Johor, which according to its 2010 annual report, measures about 413.53ha and has a book value of RM591.93 million, based on 2003 prices.

This values the land at RM13.30 per sq ft, a price which market observers note may be on the low side, given that land values there have appreciated substantially over the past nine years.

An analyst said, assuming the price has risen 50% to RM20 psf, Tebrau could be sitting on potential revaluation gains of RM296 million.

Based on Tebrau’s issued base of 669.73 million shares, those potential revaluation gains could be worth 44 sen on top of the company’s current book value of 75 sen per share, he estimated, citing that there could still be potential upside in the stock.

This article appeared in The Edge Financial Daily, February 13, 2012.

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