Koon Yew Yin
16th Jan 2013
On 24th Dec 2012 the controlling shareholders announced that they wanted to buy up all the outstanding shares of TWS and TWSP that they did not own, at Rm 9.30 and Rm 4.03 per share respectively.
On 12th Oct I wrote an article “The most undervalued stocks I know” which was posted on Malaysia Finance Blogspot and KCLau website when TWS’s price was Rm 6.40 and TWSP was Rm 4.00. TWS and TWSP closed at Rm 9.07 and Rm 4.06 respectively. Those who bought TWS should be laughing but those who bought TWSP are disappointed because the prospect seems so hopeless.
Since the announcement of take over, I have bought up most of the shares traded. In my opinion, I have never felt safer and better in making money before than now in buying TWSP at Rm 4.06 per share because your potential lost is limited to 3 cents per share if they actually have the right to force you to sell at Rm 4.03. But the potential gain can be a few Ringgit per share.
Although according to the takeover & merger code, the controlling shareholders can force you to sell at the offered price if they have acquired more than 90% of the total issued shares. But under the same code, any dissenting shareholder can protest and the civil court will have to hear the complaint and pass a fair judgement.
In March 2012 an analyst from UOB KH wrote an article on TWSP when its share price was Rm 4.80. He had a target price of Rm 7.20. In his opinion the RNAV of TWSP was Rm 19.56 per share and CAGR for FFB production is about 13% for the next 3 years because most of their palms are young. The industry average is between 5-8%.
Although they have sent out the official offer to buy up TWS on 14th Jan, they have not sent out the official offer to buy up TWSP. I think they could not find an independent adviser to support their offer. I also think it is most likely that they will raise the offer price to about half of the RNAV ie about Rm 10.
I believe this is the safest and best opportunity to own TWSP to make money because the downside is so small while the potential gain is so great.
I am obliged to tell you that my holding of TWSP forms a significant part of my share investment portfolio.
Koon Yew Yin
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