FW: Newsflash: MMS Ventures (MMSV MK; BUY; TP: MYR2.02) - Imminent transfer to Main Board?

 

 

Good afternoon,

 

Just want to flash out some updates on MMSV’s transfer to listing to the Main Board.

Initiation: MMS Ventures (MMSV MK; BUY; TP: MYR2.02) - Imminent transfer to Main Board?

• Update from Bursa announcement. With regards to MMSV’s application to transfer its listing to the Main Board, the approval for this exercise now depends on:

(i)            MMSV providing an undertaking to the Securities Commission (SC) that it will take appropriate action to remedy the non-compliance with the Bumiputera Employment Condition (see Note 1 below) in the event a notice to remedy is served by land administrator to MMSV or any of its subsidiaries; and

(ii)           MMSV making an announcement on Bursa Malaysia Securities Berhad on the SC’s decision in relation to the Proposed Transfer, MMSV’s non-compliance with the Bumiputera Employment Condition and MMSV’s application to Pejabat Daerah dan Tanah, Daerah Barat Daya, Pulau Pinang (Land Office) for the rescission of the Bumiputera Employment Condition from the Land Title.

For this, MMSV had on 17 January 2018 submitted an application to the Land Office to rescind the Bumiputera Employment Condition as an express condition in the Land Title (as defined in Note 1 below). The outcome of the said application is pending as at the date of this announcement.

Note 1:

The Bumiputera Employment Condition is relating to one of the express conditions stated in the land title of a piece of land in Bayan Lepas Industrial Park, Pulau Pinang held by Micro Modular System Sdn Bhd (MMS), a wholly-owned subsidiary of MMSV, under PN 3840, Lot 14018 (formerly known as HSD 20150, PT5109), Mukim 12, District of Barat Daya, State of Pulau Pinang (“Land Title”). MMS must ensure that 30% of the workforce engaged in the enterprise conducted on the said land, at every management level, is Bumiputera. MMSV Group has yet to fully comply with the Bumiputera Employment Condition as at the date of this announcement.

• Our thoughts – Just one last step. We believe that the Land office would be able to either (i) waive the condition on Note 1 or (ii) sets a structure or condition for MMSV to attempt compliance in the matter. As we understand from the technology manufacturing listed companies under our coverage, the Land Office would likely waive the condition on Note 1 as the Bayan Lepas Industrial Park is deemed a high-technology industrial zone with high needs of foreign worker and highly-skilled expatriates to contributed to multiple FDIs in this zone.

With this new development, we believe that the next step for this corporate exercise, pending further updates from the Land Office, would be shareholder’s approval in the next EGM/AGM. We are positive on this news as the imminent transfer of MMSV’s listing to the Main Board would enhance its visibility among institutional investors; this could narrow its valuation gap to its closest peer, Elsoft Research (ELSR MK, Not Rated) which is currently trading at 17x CY19 PER (based on consensus earnings) vs MMSV’s 10x CY19 PER.

 

Link to Bursa announcement: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5755789

 

 

Ivan Yap | Analyst, Equity Research

Maybank Investment Bank Berhad (15938-H)
7^th Floor, Tower C, Dataran Maybank, 1, Jalan Maarof, 59000, Kuala Lumpur, Malaysia

Tel: +603 2297 8612 | Fax: +603 2284 2137
Email: ivan.yap@maybank-ib.com

 

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