Positive views on DRB-Hicom plan to dispose of Corwin

PETALING JAYA: Analysts are positive on DRB-Hicom Bhd’s plan to dispose of its entire stake in Corwin Holding Pte Ltd, owner of The Verge shopping mall in Singapore, as it will allow DRB to unlock the value of its investment in Corwin and take advantage of the strengthening Singapore dollar.
“In our SOTP (sum-of -the-parts) valuation, we have ascribed a valuation of RM780 million for The Verge,” PublicInvest Research analyst Nur Farah Syifaa’ Mohamad Fu’ad said in a note yesterday.
“It was noted that Hicom Megah’s total investment in Corwin from 1997 until 2015 is approximately RM224.94 million,” she added.
On Wednesay, DRB said its indirect subsidiary Hicom Megah Sdn Bhd and Corwin’s minority shareholders, who own the remaining 10% share, has entered into a non-binding term sheet with Lum Chang Holdings Ltd (LCH) for the proposed transaction.
Nur Farah said the remaining proceeds are expected to improve DRB’s cash flow and strengthen its balance sheet in a challenging environment.
HLIB Research analyst Daniel Wong said the research house expects the current valuation of Corwin to be somewhat similar or slightly lower than the previous valuation finalised under the first disposal attempt.
“We are positive on disposal, as part of DRB’s rationalisation plan in disposing non-core assets to improve its balance sheet and realise its investments gain,” Wong said.
HLIB Research maintained its “hold” rating on the group, with an unchanged target price of 85 sen based on 30% discounts to SOP.