Monday, September 29, 2014

MUIB (Undervalued) !!!

Tan Sri Khoo Kay Peng’s MUIB has received a well regarded investor just as the group is said to be exploring the divestment of its crown jewel in London to unlock value.

Datuk Dr Yu is listed as one of its top 30 shareholders with 44.63 million shares or a 1.53% stake as at April 28 2014.

Tan Sri Khoo hoelds a 47.67% stake in the company.

Market observers said Yu could have been attracted to the inherent value in the group.

For instance the main appeal of MUIB leis in its chain of hotels in the UK that have not been revalued for many years. Notably its crown jewel the 390 room hotel known as Corus Hotel Hyde Park sits on 21640 sq ft of freehold land, is carried at a NBV of rm257.5 million. MUIB acquired the property in 2001.

It would appear that Khoo is finally looking to sell Corus Hotel Hyde Park. MUIB is said to have appointed a real estate firm to sell the property for rm1.06 billion.

If the sale materializes, the surplus of close to rm800 million could serve to pare down its debts of rm893.5 million as at June 2014 and finally let its profits shine through.

Such hefty borrowings, compared to the group’s total equity of rm762 million resulted in a finance cost of rm52.6 million in the financial year ended Dec 2013 which wiped out a majority of its rm54.9 million operation profit.

Meanwhile a surplus of close to rm800 million could also double MUI’s shareholders equity to rm1.56 billion or rm0.533 a share.

It may be time for Khoo to unlock the value of its assets in MUIB, clean up its books and leave a good legacy.

MUI is also looking to dispose some of its restaurants in the UK.

MUI owns and operates nine hotels and two restaurants in the UK and two hotels in Malaysia, most of which operate under the Corus brand.

Apart from the hospitality industry, MUI controls 94.52% stake of Metrojaya Bhd, 35.17% stake of London listed Laura Ashley Holdings plc (market cap of 19 million pound) and major stakes in MUI Properties, Pan Malaysia Corp Bhd, Pan Malaysia Holdings Bhd, Pan Malaysia Capital Bhd and so on …

On its London assets, property market observers said it would not be difficult for MUI to fetch 200 million pound for Corus Hotel Hyde Park.

MUI’s gearing has decreased over the years, total borrowings dropped from rm1.33 billion in 2009 to rm894 million as at June 2014 as Khoo commits himself to putting his house in order.

For Yu, it is not just MUI that he has shares in as he is also holding shares in MUI’s listed subsidiaries with a 2.41% stake in MUI Properties, 0.19% stake in Pan Malaysia and 5.46% stake in Pan Malaysia Holdings.

Market observers linked Yu’s asset play style of investment in MUI to his investment in Shangri-La Hotels back in 2011 and HLCap.

Ultimately MUI has rich assets but a long overdue sum of rm393 million which has been owed to the group for over 10 years by some parties remains an issue in corporate governance.

In an update in Aug 2014 pertaining to the sum owed MUI said the liquidation of the debtors estates is still ongoing …


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