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KUALA LUMPUR: M&A Securities has advised minority shareholders not to accept a takeover offer by Tenaga Nasional Bhd (TNB) for port operator Integrax Bhd, saying the offer is “not fair” as it is at a discount to the value of Integrax shares ranging from RM3.60 to RM3.62.

“Given that the value of Integrax (fundamental: 1.65; valuation: 0.8) shares of RM3.60 to RM3.62 is 30.9% to 31.6% higher than the offer price, M&A Securities is of the opinion that its “not fair” view outweighs its “reasonable” view.

“As such, M&A Securities recommends that holders reject the offer,” said the independent adviser in a circular to Integrax shareholders yesterday.

TNB had offered to acquire the remaining shares in Integrax at RM2.75 per share. M&A Securities is of the view that the offer is “reasonable”, given that the trading liquidity of Integrax shares is relatively illiquid compared with the trading of the shares of the FBM KLCI. As such, trading liquidity of Integrax shares may further deteriorate if the offeror’s Integrax’s shareholding increases.

“Further, the board does not intend to seek another person to make an alternative take-over offer for the offer shares,” it added.

M&A Securities also noted that prospects for Integrax are optimistic. The view took into account the jetty terminal usage agreement M4 and jetty terminal usage agreement M5 contracts, which are pending execution.

However, M&A Securities said there was no assurance that Integrax would be able to realise and execute its business plan successfully.

“Integrax continues with its plans to expand Lumut Port to a multi-user port and logistics hub and to secure new contracts for the import, blending and export of coal.

“Further more Integrax is also subject to various external factors, which are not within its control, and which may dampen any of its planned initiatives,” M&A Securities noted.

Meanwhile, Integrax saw its net profit for the fourth quarter ended December 2014 (4QFY14) grow 14.35% to RM12.27 million from RM10.73 million a year ago on other gains and higher profits of its associated company Lumut Maritime Sdn Bhd (LMTSB).

However, the group said part of the gain was offset by higher depreciation and administrative overheads.

Its revenue for the quarter expanded by 29.88% to RM30.6 million from RM23.56 million in 4QFY13, Integrax told Bursa Malaysia in a separate filing yesterday.

Earnings per share (EPS) rose to 4.08 sen from 3.57 sen a year earlier. 

For the full year (FY14), Integrax’s net profit declined 5.4% to RM38.7 million from RM40.91 million, while revenue climbed 7.4% to RM99.79 million from RM92.93 million in FY13.

EPS was lower at 12.86 sen against 13.6 sen in FY13.

On prospects, Integrax expects its cargo throughput at Lekir Bulk Terminal and Lumut Maritime Terminal to remain resilient.

Apart from this, the group said it is currently in negotiations with TNB Manjung Five Sdn Bhd on the terms and conditions which will govern the provision of coal handling services for coal imported for the M5 power plant.

“The Lumut-Manjung corridor is expected to benefit from the M4 and M5 power plant projects and Vale’s investment to set up an iron ore transhipment hub and pelletisation plant in Teluk Rubiah,” the group said.

“We are currently in discussions with Vale to determine Integrax’s level of participation in its projects. Negotiations are also currently underway to secure new customers,” it added.

TNB shares closed 0.57% higher at RM14.02 yesterday, while Integrax’s share price was down 1.41% to RM2.80.

 

This article first appeared in The Edge Financial Daily, on February 17, 2015.

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