KUALA LUMPUR, Aug 29 ― Local analysts have advised Malaysian Airline System Bhd's (MAS) minority shareholders to accept Khazanah Nasional Bhd's proposed selective capital reduction and repayment exercise of 27 sen per share.
In a note today, Affin Investment Bank Research said the privatisation offer price of 27 sen, which implied 1.3 times of its price to book value, should be attractive to shareholders.
“We expect MAS' airline operations to continue making losses due to stiffer competition as well as negative sentiment towards the company following both the MH370 and MH17 tragedies,” it said.
Alliance DBS Research said the offer price provided a timely exit opportunity, given the airline's weak earnings momentum and imminent cash call ahead.
It said MAS needed to rethink its business strategy to turn around its operations.
Meanwhile, Hong Leong Investment Bank Research has maintained a “sell” call on MAS with the similar target price based on Khazanah's offer.
“We believe that MAS' capacity growth plan will be reviewed under the coming restructuring programme,” it said.
The three research houses said MAS' second quarter net loss was within their expectations and expected weaker operating data ahead in second half of this year.
MAS in its filing to Bursa Malaysia yesterday reported its revenue declined five per cent to RM3.59 billion from RM3.78 billion previously as a result of lower yield and seat factor following the MH370 tragedy.
Khazanah, which owns 69.4 per cent of MAS is expected to unveil its plan to privatise the ailing national carrier under a restructuring exercise today.
The Malaysian government's strategic investment arm earlier this month announced it would acquire the 30.4 per cent that it does not own, under a share buy-back at 27 sen per share, that will cost RM1.38 billion to kick-start the restructuring process. ― Bernama
