OSK Property Holdings Bhd (-ve)

SHARES of OSK Property (OSKP) (Fundamental: 1.9/3, Valuation: 3.0/3) closed 0.5% higher at RM1.95 yesterday as volume traded more than doubled to 975,700 shares. 

On Monday, OSK Holdings (OSKH) announced that it has despatched the unconditional take-over offer document to the shareholders and warrantholders of OSKP. 

To recap, shareholders of OKSH had, on July 6, approved the acquisition of 72.4% equity interest in OSKP for RM346.4 million or RM1.95 per share. The acquisition has been completed with the issuance of 177.6 million new OSKH shares at RM1.95 each.

Consequently, OSKH will extend the unconditional take-over offer to acquire all the remaining shares and outstanding warrants of OSKP at RM1.95 per share (satisfied either by cash or share swap) and RM1.00 per warrant (satisfied by cash), respectively.

The offer is open for acceptances until 5.00 p.m. on September 1. OSKH intends to maintain the listing status of OKSP. However, in the event OSKH receives 90% acceptances of the shares not already owned, it intends to compulsorily acquire any remaining shares and delist OSKP from Bursa. 

OSKH is also acquiring the remaining shares and warrants of another related company, PJ Development. Upon completion of the entire exercise, OSKH will emerge as a first tier property group in Malaysia.

OSKP has total landbank of 1,274 acres, mainly in Sungai Petani and Seremban, with potential gross development value (GDV) of RM4.7 billion. Unbilled sales stood at RM800 million at end-April 2015, equivalent to 1.2 times sales in 2014.

For 1Q15, revenue jumped 103.3% y-o-y to RM284.0 million while net profit more than doubled to RM48.3 million, mainly due to the disposal of freehold land to PR1MA Corporation Malaysia and higher progress billings. 

The stock is trading at a low trailing 12-month P/E of 3.7 times and 0.88 times book.

This article first appeared in digitaledge Daily, on August 12, 2015.