Magnum Bhd
(July 25, RM3.93)
Maintain neutral at RM3.91 with a target price of RM3.60: Magnum Bhd, formerly known as Multi-Purpose Holdings Bhd (MPHB), announced that the group has secured the High Court’s approval for its proposed capital repayment of RM696.5 million, representing about 48.79 sen per share.

The ex-date of the capital repayment will be on Aug 2 while the entitlement date for the capital repayment is set for Aug 6. The capital repayment is expected to be made by Aug 20.

Upon returning RM696.5 million to its entitled shareholders through the capital repayment, the group’s share premium account will be reduced by the same amount.

To recap, Magnum’s demerger exercise, which was unveiled in May last year, consists of four phases: (i) internal reorganisation; (ii) offer for sale and subsequent listing of MPHB Capital; (iii) capital repayment; and (iv) change of name from MPHB to “Magnum”.

With the announcement of its capital repayment details, we observe that the group has nearly completed its entire demerger exercise.

While we believe that firming up its capital repayment date could attract near-term interest in the group, particularly from institutional investors who track its performance on a “cash realisation basis”, we are maintaining our “neutral” recommendation for the group with an unchanged target price of RM3.60, comprising  RM3.12 for its pure gaming operations and capital repayment of 48.8 sen.

At the current price, the impending capital repayment has already been priced in. — Alliance Research, July 24

This article first appeared in The Edge Financial Daily, on July 26, 2013.