ANALYSTS LAUD QSR'S MOVE TO INCREASE STAKE IN KFCH
September 26, 2006
ANALYSTS LAUD QSR'S MOVE TO INCREASE STAKE IN KFCH. Check it out:(Bernama The Malaysian National News Agency Via Thomson Dialog NewsEdge) from BERNAMA, The Malaysian National News Agency KUALA LUMPUR, Sept 17 (Bernama) -- Analysts are generally in favour of QSR Brands Bhd's move to increase its stake in cash-rich KFC Holdings Malaysia Bhd (KFCH) from 32.83 percent to 40.43 percent to protect its interest as well as that of its parent company, Kulim (Malaysia) Bhd
According to Yeonzon Yeow, head of research at K&N Kenanga, the move will allow the diversified plantation group to gain more control of KFCH, albeit via QSR, and gain a better grip of the fast food operator's cash flow of around RM150 million per year
"Increasing its stake in KFCH will improve overall dividend flow into Kulim and QSR, which benefits it greatly in servicing the RM400 million loan it secured to purchase QSR," Yeow told Bernama
A Kuala Lumpur-based analyst of a Swiss brokerage house said the action taken by QSR was not surprising as it was Kulim's only avenue to protect its interest and deter future hostile takeover attempts for QSR's crown jewel, KFCH
"It only makes sense for Kulim via QSR to up its stake in KFCH to ensure that the company solidifies its position," the analyst said
According to him, KFCH is an attractive catch
"It is the leading fast-food firm in the country with over 50 per cent market share. It owns 420 restaurants in Malaysia, Singapore and Brunei and has RM148.14 million in its bank account as at June 2006," he said
Its net profit for the first half of the year stood at RM41.65 million versus a net loss of RM76.1 million in the same period a year ago
Revenue grew slightly to RM723.75 million from RM723.18 million previously
On the uptake of the mandatory general offer (MGO), with an offer price of RM4.94 per KFCH share, the analyst said the majority of shareholders would most probably not take up the offer as there was little upside compared to the company's current trading price
However, resistance to the offer could be an indication of support for the institution-led presence that ushered in an era of management stability, as well as their belief in the future positive performance of KFCH, he said
In its statement to Bursa Malaysia on Sept 12, QSR said the RM4.94 price was derived from the five-day weighted average market price of KFCH shares up to and including Sept 11 this year
The price represents a premium of RM0.12 or about 2.49 percent to the weighted average market price of KFCH shares during the period
QSR on Sept 12 announced that it had triggered a MGO for all remaining ordinary shares of KFCH after its stake increased from 32.83 percent to 37.88 percent
It purchased 5.04 percent or 10 million shares of KFCH via direct business transaction through Bursa Malaysia, where the seller is believed to be Unioncity Enterprise Ltd
The company then made a further purchase the following day on Sept 13, totalling 2.56 percent or five million KFCH shares, bringing QSR's total stake in KFCH to 40.44 percent
On the issue of taking KFCH private, Tan Sri Muhammad Ali Hashim, who is chairman of both QSR and KFCH, said recently that the focus now was to secure more KFCH shares from the open market
"Taking KFCH private is not related to the raising of stake in KFCH
This is also not the time to talk about taking KFCH private as that would entail a separate business decision," he said. Tengku Noor Shamsiah Tengku Abdullah Copyright 2006 Bernama
Copyright 2006 Bernama - Malaysian National News Agency Source: Financial Times Information Limited - Asia Intelligence Wire.
Related Tags: increase stake, bernama malaysian, malaysian national, million, percent, stake
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