Delisting of PLUS from Bursa Malaysia to benefit others?

Delisting  of  PLUS  will  return  RM9.1bn  cash  to  minority  shareholders  after  14 December 2011. How this cash is reinvested will depend on the investment mandate of  the  shareholders.  Potential  beneficiaries  are  counters  like  Maybank,  Maxis, Telekom, Petronas Chemicals, RHB Capital, MISC, Public Bank, Digi, YTL Power, KLK, BAT, Petronas Dagangan, Petronas Gas, LITRAK, Air Asia, Bumi Armada and UEM Land.


Delisting of PLUS to return RM9.1bn cash
- Trading in PLUS has been suspended and shareholders as at 14 December 2011 will be  entitled  to  receive  RM4.45  cash  per  PLUS  share.   This  represents  the privatization offer by EPF, UEM and Khazanah who collectively own 59% of PLUS. 
- The minority shareholders of PLUS will thus receive RM9.1bn cash (41% of 5bn shares at RM4.45 per share) on 28 December 2011, which may be reinvested in Bursa Malaysia.   
Which counters may benefit from the reinvestment of this cash?
- For institutional fund managers, what they do with the cash proceeds will depend on the investment mandate of their funds which originally owned PLUS.
-  If the mandate was for dividend yield, then stocks of decent size (>RM10bn market capitalization) and dividend yield similar or better than PLUS would be the likes of Maybank  (MAY  MK,  Hold,  TP:  RM8.00),  Maxis,  Telekom  Malaysia,  Petronas Chemicals, RHB Capital, MISC, Public Bank, Digi.Com, YTL Power, Kuala Lumpur Kepong (KLK  MK,  Hold,  TP:  RM21.75),  British  American  Tobacco,  Petronas Dagangan and Petronas Gas.
- If the mandate was for concessionaire-type businesses, then similar stocks would be YTL Power and LITRAK.
-  If the purpose for holding PLUS was to benchmark against the FBMKLCI, then Air Asia, Bumi Armada and UEM Land were the three stocks that replaced PLUS, MISC and Gamuda in the FBMKLCI.  However, the combined market capitalization of the new  inclusions  (Air  Asia,  Bumi  Armada,  UEM  Land)  amounts  to  only  RM32bn compared  to  RM54bn  for  the  three  that  were  removed (PLUS,  MISC,  Gamuda).  Hence,  there  will  also  be  some  redistribution  to  other  FBMKLCI  components  to maintain a benchmark against the FBMKLCI.


by ECMLibra

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