Friday 29 Mar 2024
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Tenaga Nasional Bhd
(March 31, RM14.36)
Maintain neutral with a target price (TP) of RM14.64:
As expected, Tenaga Nasional (TNB) has received more than 50% acceptances for its revised offer of Integrax shares at RM3.25 per share, deeming the offer now unconditional. Also, the closing date has been further extended until April 13. Though we do not expect any financial contributions from this takeover, we nevertheless concede that with management owning Integrax, it will provide full control of the Lumut Port, and therefore enhance security of coal supply to its Janamanjung power plants located nearby, especially with the scheduled capacity expansion plans.

From its first announcement to acquire Integrax on Jan 9, TNB has increased its shareholding in the company from 22.12% to the current 28.32%, indicating its seriousness in owning the port operations. TNB has also received another 22.5% valid acceptances resulting in TNB holding 50.82% of Integrax shares as at Monday. Another 6.33% of Integrax has been transferred into TNB’s account but is pending acceptance or verification of the acceptance forms, hence the possibility of pushing the shareholding to a total of 57.15%.

We believe more minority shareholders will surrender their Integrax shares ahead of the extended closing date as TNB had indicated earlier of their intention not to maintain the listing status of Integrax.

Should TNB’s shareholding in Integrax reach 75%, it might trigger a suspension of trading due to lack of public shareholding spread. TNB will therefore need another 17.85% (if 6.33% acceptance forms are valid) to reach the said threshold. Amin Halim Rasip, another significant shareholder, who has to date refused to countenance TNB’s offer, currently owns 23.15% indirect and 1.61% direct shareholdings in Integrax, leaving him in a position to thwart the suspension should he be able to secure the additional shares to hit a collective 25% shareholding.

That said, should TNB successfully secure all the remaining shares, and eventually leave only two shareholders, the risk of suspension returns. What then? Talk of a separate voluntary general offer by Amin could possibly end in futility.

We maintain our “neutral” call on TNB with a TP of RM14.64 as Integrax’s financial year of 2014 (FY14) net profit of RM38.7 million is only 0.6% of TNB’s net profit of over RM6 billion in FY14. — PublicInvest Research, March 31

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This article first appeared in The Edge Financial Daily, on April 1, 2015.

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