AmWatch - JT International : Privatisation: Offer price of RM7.80/share is fair OFFER PRICE:RM7.80 (ACCEPT GO), 1 Apr 2014

STOCK FOCUS OF THE DAY

JT International : Privatisation: Offer price of RM7.80/share is fair                                             OFFER PRICE:RM7.80 (ACCEPT GO)

               

JT International Bhd (JTI) announced it has received a conditional offer from its parent and major shareholder, JT International Holding B.V. (JTIH), for the remaining 39.63% equity stake it does not currently own. JTIH is offering RM808.5mil or RM7.80/share to take the company private. This is a 20% premium to its last traded price of RM6.50/share and 8.3% above our DCF-derived fair value of RM7.20/share. The purchase consideration will be satisfied by way of cash. While it may have come as a surprise, we recommend investors accept the offer as we deem the exit price of RM7.80/share to be fair. The offer price values JTI at an FY14F PE of 15.6x. This is above both our implied forward PE of 14.4x, and the group’s 5-year trend average PE of 11.5x. JTI appears to be operating in an increasingly challenging and mature environment, as evidenced by its moderate 5-year revenue and earnings CAGR of +4%. Its yields have also been declining, from an average of 20% in the 5 years to FY08 to 8.6% from FY09-FY13. Following this announcement and JTIH’s intention to delist JTI, BAT will remain the only listed tobacco manufacturer in Malaysia. We have a HOLD recommendation on the stock, with a fair value of RM62.00/share.

Others :

Astro Malaysia : High depreciation offsets decent revenue growth           HOLD

Banking Sector : Unexciting February banking statistics                  NEUTRAL

Economic Update : Money supply moderates further in February

QUICK TAKE

Banking Sector : Unexpected increase in auto loan rates               NEUTRAL

NEWS HIGHLIGHTS

Public Bank : Set to keep earnings momentum

Star Publications : i.Star sees RM150mil sales

IHH Healthcare Bhd : Undergoes internal reorganisation

Banking Sector : Interest on car loans has increased quietly

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