Maybank Investment Bank Issues 4 New Call Warrants
Kuala Lumpur, 16 August 2013 – Maybank Investment Bank Berhad (“Maybank IB”) is issuing four new European style cash-settled call warrants over ordinary shares of MBM Resources Berhad (MBMR), Tan Chong Motor Holdings Berhad (TCHONG), UEM Sunrise Berhad (formerly known as UEM Land Holdings Berhad) (UEMS) and UOA Development Berhad (UOADEV). The warrants will be listed on Tuesday, 20 August 2013 with an issue size of 100 million each.
MBMR, TCHONG, UEMS and UOADEV warrants have an exercise ratio of 8, 10, 6 and 4 for each underlying share and a gearing of 3.03 times, 4.45 times, 2.98 times and 4.05 times (based on the pricing date on the 31 July 2013) respectively. All of these call warrants have approximately 12 months to expiry and will be listed via the market making route.
This tranche has two themes. The first is the ongoing strength of the Malaysian property sector, especially in the high growth areas such as Iskandar in Johor and the Klang Valley, while the second is the continued positive outlook for the local automobile industry.
UEMS is one of the largest listed property development companies on Bursa Malaysia and is a proxy to Iskandar, Johor as it is the master developer of Nusajaya, one of the five flagship zones of Iskandar, Johor. The issuance of call warrants over UEMS is to ride on the expectation that UEMS will benefit from a re- rating of the land banks at Iskandar, Johor due to rising investments and job opportunities as well as better connectivity via the proposed Johor Bahru- Singapore Rapid Transit System. Maybank IB has maintained a buy call on UEMS as of 29 May 2013, with a target price of RM3.88.
UOADEV is a niche developer in mid-range residential properties, and has recently acquired 6 parcels of land at Jalan Ipoh in Kuala Lumpur. Due to scarcity of land in the Klang Valley region, any future development in this prime location is likely to benefit UOADEV. The company’s strategy to develop fast turnaround projects in matured locations has been well-received, and its ongoing projects have enjoyed strong take-up rates.
The Malaysian Automotive Association is projecting a total industry volume (“TIV”) of 640,000 units for 2013. The issuance of call warrants over TCHONG is to take advantage of the growing automobile industry in Malaysia and also to leverage on TCHONG’s new launch of the Nissan Serena S-Hybrid. In addition, TCHONG will also be releasing a refreshed Grand Livina and Livina X-Gear as well as the brand new EV Leaf in 3Q2013 which are expected to contribute to TCHONG’s growth. Maybank IB has maintained a buy call on TCHONG since 16 May 2013 with a target price of RM8.05.
MBMR’s prospects remain positive as it undergoes a transition period to grow its businesses. With its 1m-unit alloy wheel manufacturing plant gearing up for full scale production in second half of 2013, it is expected to boost its group earnings from financial year 2014 onwards. Also, with an unutilised greenfield manufacturing license on hand, MBMR remains a potential candidate for further positive re-ratings. Maybank IB has maintained a buy call on MBMR since 30 May 2013 with a target price of RM4.85.
The consensus estimate of analysts’ target price on MBMR and TCHONG are RM4.44 and RM7.49, whereas UOADEV and UEMS are RM2.66 and RM3.701.
The call warrants offer is aimed at sophisticated investors who want to trade on the direction and volatility of the MBMR, TCHONG, UEMS and UOADEV. The terms and conditions of the above call warrants are stated in their respective term sheets and investors should read the term sheets together with the Base Prospectus dated 19 September 2012.