Wednesday, March 23, 2011

MPHB ... Mar11

Investors will now be watching if diversified MPHB acts according to expectations or springs another surprise.

The moves to transform into a pure gaming company may soon result in the divestment of MPHB’s non core assets such as its stockbroking, general insurance and hospitality businesses.

The company plans to raise up to rm1 billion from the disposal of non core assets. The best tack for the company is now to wait for the right time to seek the highest possible for its non core assets.

MPHB has not won over many investors because its non core businesses have had little earnings visibility. But should it embark on a divestment programme, investors would have more confidence in the company and this will lead to a re rating of the stock. This will unlock cash from the businesses, leaving MPHB an NFO counter.

It is worth noting that MPHB Surin also owns a 32.48% indirect state in another listed entity. MWE Holdings Bhd, which is also fairly diversified in nature. MWE has businesses covering garments, electronics, a golf and country club, plantation and properties. Surin’s non independent non executive director and had served as MD of its spinning mills division in 1974.

Three other MWE directors also have served at MPHB or its subsidiaries, namely MWE executive director Lim Kong Yew, independent non executive director Lawrence Lam who is currently Magnum Corp Sdn Bhd’s CEO and Datuk Yogesvaran who also sits on the board of Muli-Purpose Insurans.

Multi Purpose Insurans is one of MWE’s 30 top largest shareholders, with a 3.45% stake equity stake while MPHB itself owns a 1.29% stake.

Industry observers says that MWE may be a convenient place to house MPHB’s property division, as there are no immediately apparent synergies between MPHB’s stockbroking and insurance businesses with MWE’s own divisions.

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