May 28, 2012

MPHB Technical – Short Term Trading Buy

MPHB made a major weekly Wave 4 low at RM2.14 (Sep 2011) with grossly oversold and bullish signals. Due to its positive weekly chart signals, the indicators are pointing firmly upwards to a move towards the resistance areas indicated and upside target areas of MYR3.51, MYR3.89 and MYR4.40 in the short to longer term. It is in a triple time frame uptrend, with stop-loss at MYR2.71.

MPHB Weekly chart. (click to enlarge):
mphb analysis

Recently, MPHB has proposed to de-merge its gaming and non-gaming businesses into two separate listed entities. The existing MPHB will hold the gaming business, and the new entity (SPVC) will hold the non -gaming businesses (insurance, stock broking, hotel, various parcels  of land  and other investments). Firstly, MPHB will sell all its non-gaming assets to the SPVC for new shares in the new entity or for cash. MPHB will then offer all its SPVC shares to entitled shareholders of MPHB. The net proceeds will be distributed as a capital repayment to MPHB shareholders.

Both entities (MPHB and  SPVC)  will  be listed on the local bourse. MPHB intends to change its name to incorporate the word “Magnum”, and position itself as a gaming dividend stock. From there, the pure gaming company intends to pay out at least 80% of its net profit vs. Berjaya Sports Toto’s >75%. To facilitate the high dividend payout, MPHB intends to refinance its existing debts in the gaming business with longer-dated debt.

MPHB quarterly earnings summary (click to enlarge(:
mphb quarterly earning

Maybank-IB currently has a fundamental BUY  call on MPHB with a target price of MYR3.87,  as we believe that the current exercise  will unlock value for the company post-restructuring.  All six  of the  other brokers who cover MPHB based on Bloomberg data have BUY calls on the name, with an average TP of MYR3.81. MPHBcurrently trades at a PER of 7.96x with an indicative dividend yield 4.7%.

Multi-Purpose Holdings Bhd (MPHB)  is an investment holding company. The company's subsidiaries’ businesses include investment holding and trading, operation of general insurance businesses, provision of leasing, hire purchase, factoring and general loan financial services, operation and management of a licensed 4-digit number forecast game, hotels and securities broking and dealing.

by Mayban IB