In this briefing:
- M1 Ltd (M1 SP): Axiata Throws in the Towel, Delisting Looms
- THK (6481 JP): New Orders Down by Two-Thirds in 4Q, Near the Bottom of the Cycle
1. M1 Ltd (M1 SP): Axiata Throws in the Towel, Delisting Looms
After the market close last Friday, M1 Ltd (M1 SP) announced that the voluntary conditional offer (VGO) became unconditional as Keppel Corp Ltd (KEP SP) and Singapore Press Holdings (SPH SP) (KCL-SPH) has an interest in M1 of 76.4%. The offer became unconditional due to Axiata Group (AXIATA MK), the single largest shareholder with a 28.7% shareholding, accepting the offer.
KCL-SPH again extended the closing date of the offer from 18 February to 4 March 2019. M1’s shares are trading at S$2.04 per share, marginally below the VGO price of S$2.06 per share. We believe that the KCL-SPH should get the valid acceptances to complete the delisting and wholly own M1.
2. THK (6481 JP): New Orders Down by Two-Thirds in 4Q, Near the Bottom of the Cycle
Sales and profits were above management’s guidance in FY Dec-18, with operating profit rising 36.9% on a 10.9% increase in sales. But new orders continuously declined and were down about two-thirds year-on-year in 4Q.
In view of the order flow, management is guiding for a 12% decline in sales and a 44% decline in operating profit in FY Dec-19, a forecast that is roughly in line with our own.
On the positive side, historical data indicates that new orders are at or near the bottom of the cycle. Anticipating a better investment climate after some resolution of the U.S.-China trade problem, we are forecasting an increase in sales and profits going into FY Dec-20.
The shares have rebounded by 41% since the beginning of January. At ¥2,720 (Friday, February 15, close), they are selling at 15.6x our estimate for FY Dec-19 and 13.8x our estimate for FY Dec-20E. These multiples look reasonably attractive in comparison with the company’s recent P/E range.
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