MISC shares surge after EPF demand

KUALA LUMPUR: The share price of MISC Bhd surged past its offer price of RM5.30 yesterday after a minority shareholder demanded for more money.

The stock hit an intraday high of RM5.39 before closing 3.0 sen higher to RM5.31.

It was the 17th most actively traded stock on Bursa Malaysia, with some 98,465 shares exchanging hands.

Buying momentum for MISC got a heads up after the Employees Provident Fund (EPF), the second-biggest state-run pension fund in Asia Pacific, said Petroliam Nasional Bhd (Petronas) should increase its RM8.8 billion buyout offer for MISC.

According to CIMB research in a January report, MISC has a sum of parts valuation (SOP) of RM6.17 a share.

SOP values a company by determining what its divisions would be worth if it was broken up and spun off or acquired by another company.

"We are looking at a higher price for the shares than what Petronas is offering now," EPF chief executive officer Tan Sri Azlan Zainol said in an interview with Bloomberg on Friday.

Based on the SOP valuation for MISC, most research outlets said the offer price is fair but valuations could change as MISC is almost at the tail end of its balance sheet cleaning exercise and is poised for a cash windfall.

The national shipping company has started to turn around after making a RM1.74 billion impairment write-off after exiting the liner business in late 2011.

It returned to the black in the second quarter ended June 30 2012 with a net profit of RM380.95 million.

It is also in for a US$1.73 billion (RM5.36 billion) windfall from the sale of its 50 per cent stake in its semi-floating production system, Gumust Kakap.

The ace in the pack for MISC, however, is American Eagle Tankers (AET) Inc, a company it bought a decade ago for US$445 million (RM1.4 billion).

AET owns some 80 tankers and has a big global presence. A listing or sale of AET could raise more than US$1 billion (RM3.1 billion) for MISC.

Against this backdrop, the stage could be set for minority shareholders to revolt for a higher price, led by EPF.

EPF is the single largest minority shareholder in MISC, with a 9.66 per cent stake.

The other substantial shareholder in MISC is Skim Amanah Saham, with a 6.35 per cent stake.

Petronas, the major shareholder, owns 62.27 per cent of MISC.
Other minority shareholders such as Penang Development Corp and Pacific Mutual Fund Bhd have said that the Petronas offer is too low. Now, with EPF seemingly backing for a higher payout, the equation for complete ownership in MISC has changed.

EPF asking for the RM5.30 bar to be raised comes at a time when minority shareholders have started to assert themselves to protect their interest.

Just last week, tycoon Tan Sri Quek Leng Chan failed in his attempt to take Hong Leong Capital Bhd private after receiving poor response to his takeover offer of RM1.71 per share.

Tan Sri Syed Mokhtar Albukhary was forced to raise the offer price for Tradewinds Plantation Bhd after minority shareholders helped push the share price to above its offer price.

Last week, he made a new offer for Tradewinds - RM5 per share and RM3.13 per irredeemable convertible unsecured loan stock (ICULS) from RM4.03 per share and RM2.43 per ICULS previously.