KUALA LUMPUR (Oct 21): Shareholders of Mudajaya Group Bhd (KL:MUDAJYA) have been advised to vote in favour of the proposed disposal of a 45% stake in Real Jade Ltd to major shareholder Minyi Holdings Ltd (MHL) for HK$234 million (RM118.45 million), to settle debts owned to MHL.
In a circular to shareholders dated Oct 21, independent adviser SCS Global Advisory (M) Sdn Bhd said the proposed disposal was “fair and reasonable and not detrimental to the interests” of non-interested shareholders.
It therefore recommended that they vote in favour of the resolution at the company’s extraordinary general meeting on Nov 5.
The proposed consideration of HK$234 million is above the net asset-based valuation and falls within the free cash flow to firm (FCFF) valuation range, said SCS Global in assessing the disposal consideration.
Independent business valuer Asia Equity Research Sdn Bhd valued the 45% stake in Real Jade at HK$150.49 million under a net asset basis.
The disposal price was also in a range of HK224.68 million to HK248.45 million under the FCFF approach.
SCS Global said the disposal price was closer to the upper end of the latter range under the FCFF approach, allowing Mudajaya to realise a higher value for its investment, taking into account the future earnings potential of Real Jade’s upgraded cement manufacturing plant, which was completed in September.
The proposed disposal, announced in May this year, involves Mudajaya’s indirect unit Xelmont Ltd selling the stake to MHL. Upon completion, Mudajaya will retain an indirect 55% stake in Real Jade, which is principally involved in cement manufacturing, sales and trading in China.
MHL holds a direct 11.76% stake in Mudajaya, making the disposal a related-party transaction.
The consideration will be set off against debt to MHL amounting to HK$244.97 million as at April 30, 2026.
SCS Global said the proposed disposal is expected to minimise immediate cash outflow, preserve Mudajaya’s cash reserves for its existing projects and working capital requirements and mitigate potential repayment default risk in respect of the debt owing to MHL, which is due for repayment in the near term.
The disposal is expected to generate a disposal gain of HK$82.11 million for Mudajaya, with the group’s net assets per share expected to increase to RM1.14, from RM1.06.
The group’s gearing ratio is projected to decline to 0.59 times from 0.76 times.
On Wednesday’s market close, Mudajaya’s share price settled unchanged at a record low of 28 sen, valuing the company at RM148.81 million. The stock has fallen nearly 40% year to date.