KUALA LUMPUR: United Malacca Bhd's conditional mandatory general offer (MGO) at RM6.10 per share undervalues its plantation landbank and potential asset monetisation opportunities.
CIMB Securities Sdn Bhd analyst Ivy Ng Lee Fang described the offer as unattractive, noting that it represents a mere 2.2 per cent premium to United Malacca's closing price before the announcement.
"This values the company at just 8.8 times its historical financial year 2026 price-to-earnings ratio and 0.81 times its price-to-net asset value.
"The offer also implies an enterprise value of RM33,449 per hectare," she said in a note.
The MGO was triggered after Prosper Trading Sdn Bhd acquired Great Eastern Life Assurance (Malaysia) Bhd's 13.44 per cent stake in United Malacca for RM171.9 million, raising the offerors' combined shareholding to 47.66 per cent.
Ng said the offerors also intend to settle an outstanding MGO obligation dating back to September 2024 through the current offer and a cash compensation scheme.
She said the offer price did not fully reflect the potential value of United Malacca's estates in Melaka, Negri Sembilan and Segamat, Johor, spanning a combined 2,834 hectares.
The estates have a net book value of RM188.1 million, equivalent to just 62 sen per square foot.
"United Malacca's net cash position of RM312.8 million, or RM1.59 per share, provides further support to its balance sheet," she said.
While the MGO provides a near-term exit opportunity, Ng said the offerors' intention to retain United Malacca's listing would allow investors to benefit from potential future land monetisation.
CIMB Securities maintained its "Buy" call on the stock with an unchanged target price of RM6.93, representing a 13.6 per cent upside from the offer price.
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