PETALING JAYA: Sime Darby Bhd is estimated to receive up to RM76 million in special dividends following Tesco PLC’s move to sell its businesses in Thailand and Malaysia to CP Group for US$10.6 billion (RM44.66 billion).
“We estimate that Sime could receive RM63 million to RM76 million in special dividends (50-60% payout) via its 30% stake at Tesco Malaysia, which translates into a dividend per share (DPS) of 1 sen,” the research house said in a note yesterday.
Tesco PLC plans to pay US$6.5 billion in special dividends to its shareholders once the deal is completed in the third quarter of the year.
“Based on the US$700 million enterprise value (EV), we estimate that Tesco Malaysia is valued at 7.4 times EV/ ebitda.”
Tesco Malaysia reported RM400 million in ebitda per annum for FY18 and FY19. With net debt of RM2.5 billion, the equity value of Tesco Malaysia equates to RM400 million.
“Assuming that 50-60% of the net cash proceeds are to be paid to Tesco Malaysia shareholders as special dividends, Sime Darby could potentially receive about RM63-76 million or 0.9-1.1 sen DPS as a 30% shareholder of Tesco,” said Maybank IB Research.
The research house noted that Sime Darby’s move to sell its 30% stake in Tesco Malaysia is not surprising in view of its ongoing non-core assets divestment plan.
“Sime Darby has stopped equity accounting Tesco Malaysia some time back and has fully provided its investment on this.”
Maybank IB Research is maintaining a “buy” call on Sime Darby with a target price of RM2.58.
The stock closed 1 sen higher at RM1.91 yesterday on 8.14 million shares done.
Upon completion of the deal, CP Group will gain control of the 1,965 stores Tesco operates in Thailand (including 200 Tesco Lotus hypermarkets and 1,600 Tesco
Lotus Express) and 74 outlets in Malaysia.
source https://www.thesundaily.my/business/sime-darby-could-receive-rm63m-rm76m-from-tesco-exit-research-house-MG2109916
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