KUALA LUMPUR (Oct 13): Kenanga Research has recommended that shareholders of United Malacca Bhd (KL:UMCCA) not accept the Mandatory Take-over Offer (MGO) of RM6.10 per share, which is only 2.5% higher than the company’s closing price of RM5.97 and far below the fund house’s target price (TP) of RM7.

The Tee family is making a MGO for UMCCA after acquiring a 13.4% stake to hold 47.7% of UMCCA. 

The Tee family will also be compensating shareholders who sold shares between Sept 2024 and Oct 2026 for not making an MGO in Sept 2024 after having triggered an MGO unknowingly.

"... we would recommend affected shareholders to pursue the compensation offer but not to accept the MGO ...," Kenanga Research said in a note on Tuesday while maintaining its "outperform” rating for UMCCA.

The palm oil producer’s shares have steadily climbed since June 2025, rising to a record high of RM6.08 on Sept 15, according to Bloomberg. At the time of writing, the counter was at RM6.05.

Kenanga's optimism is backed up by crude palm oil (CPO) prices likely to stay high as supply is expected to tighten in the coming six to 12 months due to severe El Niño conditions.

Kenanga Research estimates 2027 CPO prices to be RM4,700 and 2028’s to be RM4,800.

This leads to the fund house seeing continued value in UMCCA as its Indonesian sites mature, adding yield and increasing revenue.

Because of this, the fund house highly recommends shareholders pursue compensation closer to its TP, or even its actual net tangible asset value for the 2026 financial year of RM7.44, over the proposed MGO.

In a separate note, TA Securities kept its buy call on the stock with a  TP of RM6.74, which is 10.4% higher than the MGO price.

"... the offer does not fully reflect UMCCA's fundamental value. Hence, minority shareholders are advised not to accept the offer," it added.