Beyond Boundaries UMW Holdings Berhad 19 March GAME CHANGER Consolidation of equity stake in MBM Resources and PERODUA

Transcription

1 Beyond Boundaries UMW Holdings Berhad 19 March 2018 GAME CHANGER Consolidation of equity stake in MBM Resources and PERODUA 1

2 AGENDA 1. TRANSACTION RATIONALE 2. THE VALUE PROPOSITION 3. PROPOSED RIGHTS ISSUE 4. MOVING FORWARD UMW HOLDINGS BERHAD 2

3 Transaction Rationale 3

4 CONTINUED EXPANSION OF OUR BUSINESS Our Strategy Towards Growth AUTOMOTIVE Enhancing and optimizing profitability EQUIPMENT Strengthening of heavy and industrial equipment segment M&E Continued expansion of core business and HVM GAME CHANGER Mergers & Acquisition strategy UMW HOLDINGS BERHAD 4

5 TRANSACTION OVERVIEW The proposals :- MBM Resources Perodua 50.07% % 10.0% (1) 50.07% stake in MBM Resources Berhad ( the Company or MBMR ) for a purchase consideration of RM 501m (2) Mandatory general offer (MO) will be made to the remaining shareholders of the Company of RM 499m (3) 10% stake in Perusahaan Automobil Kedua Sdn Bhd ( PERODUA ) for a purchase consideration of RM 418m from PNB Equity Resources Corporation ( PERC ) 5

6 GROUP STRUCTURE BEFORE AND AFTER THE PROPOSALS Increasing our strategic stake in Perodua As at 6 March 2018 (1) After the Proposals PERC UMWH MBMR UMWH (3) 10.0% 38.0% (2) 20.0% 51.5% 100.0% (4) DMSB* 48.0% MBMR 51.5% 5.0% DMSB* 20.0% Perodua Perodua 5.0% *DMSB Daihatsu (M) Sdn Bhd Notes: (1) Being the latest practicable date prior to the date of the MBMR offer letter (2) Held through UMW Corporation Sdn Bhd, a wholly-owned subsidiary of UMWH (3) UMWH reserves the right to nominate another affiliate(s) to undertake the Proposed MBMR Acquisition and the Proposed Perodua Acquisition (4) 100% ownership of MBMR is dependent on the outcome of the Proposed MO 6

7 RATIONALE AND BENEFITS PROPOSED ACQUISITIONS The Proposed Acquisitions are consistent with our strategy to enhance our core businesses 1 Increase strategic stake in Perodua Effective interest in Perodua will increase from 38.0% to 60.6% after completion of the Proposed MBMR Acquisition and assuming full acceptance of the Proposed MO Further increase to 70.6% after the completion of the Proposed Perodua Acquisition 2 Increase exposure in the commercial vehicle segment Assimilating MBMR s multi-brand dealerships i.e. Daihatsu and Hino vehicles 3 Widen our offerings in the manufacturing segment Integrating MBMR s auto parts manufacturing business wheels manufacturing, safety products and noise, vibration and harshness products 4 Improve prospects in the automotive segment Leveraging on Perodua s strength in the national car segment, coupled with the Company s existing presence in the non-national car segment via the Toyota marque Benefit from economies of scale and create synergies 7

8 The Value Proposition 8

9 THE OFFER PRICE FOR PERODUA AND MBMR Valuation Build-up RM million Offer price for Perodua reflects a c.9.0x earnings multiple over Perodua s 2016 audited net income of RM463.6 million ,001 (1) % stake in Perodua 22.6% stake in Perodua MBMR ex-perodua MBMR Offer Price RM million 57 MBMR ex-perodua Exposed to holding company debt and business risks of MBMR Group 91 Net debt at MBMR company level 148 Adj. equity Value of MBMR ex-perodua Note: (1) Rounded from the offer price of RM2.56 per MBMR Share Financials in this section are based on MBMR s and Perodua s audited 2016 financials, including the net debt at MBMR company level Source: Bloomberg as at 14 March 2018 Equity value of remaining businesses at MBMR (ex-perodua) estimated at RM148 million Includes the loss-making alloy wheels segment 9

10 MBMR OFFER PRICE IS A PREMIUM TO HISTORICAL PRICES Close to Last 2 Years Historical High MBMR Share Price (RM) Historical Prices (1) Premium 5-day VWAP RM % 1-month VWAP RM % 3-month VWAP RM % Submission of offer 7 March 2018 Volume (units mn) Offer Price of Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 Note: (1) VWAP up to and including 6 March 2018, being the last trading day prior to the date of the MBMR Offer Source: Bloomberg as at 14 March

11 FUNDING REQUIREMENTS RM 1,072 million RM 418 million MBM Resources 100% Perodua 10.0% RIGHTS ISSUE* INTERNAL FUNDS + UMW SHARES Amount raised via the Rights Issue (RI) would depend on the cash or shares option selected by MBMR s minority shareholders as payment Pending the RI, UMW undertakes bridging facility to fund the deal Includes about RM 71m transaction and other costs 11

12 Proposed Rights Issue 12

13 DETAILS OF THE PROPOSED RIGHTS ISSUE Illustrative To be determined at a later date closer to the implementation of the Proposed Rights Issue to enable the price to be more reflective of the prevailing market price at that time Gross proceeds Subject to fixing of the entitlement basis and issue price at a later date Full Cash Scenario Full Shares Scenario RM1,072 million RM559 million Issue price To be fixed at a later date but for illustration purposes: Full Cash Scenario Full Shares Scenario RM4.40 per rights share (23.7% discount to TERP) RM4.30 per rights share (26.9% discount to TERP) For this illustration, the TERP is calculated based on the 5-day VWAP of UMWH Shares up to and including 12 March 2018 (1) of RM6.04 Entitlement basis To be fixed at a later date but for illustration purposes: Full Cash Scenario Full Shares Scenario 1 rights share for every 5 UMWH Shares 1 rights share for every 10 UMWH Shares Shareholders irrevocable undertaking Underwriting arrangement The Company intends to seek irrevocable undertaking from Permodalan Nasional Berhad ( PNB ) and the funds managed by PNB to subscribe in full their respective entitlements The Company intends to procure underwriting arrangement(s) for the remaining rights shares for which no undertaking has been obtained Use of proceeds Primarily to repay the Bridging Facility to be obtained by the Company TERP Theoretical ex-rights price Notes: (1) Being the last trading day prior to the announcement of the Proposed Rights Issue on 13 March

14 RATIONALE PROPOSED RIGHTS ISSUE 1 Repayment of the Bridging Facility 2 Improve financial flexibility Optimise the Company s capital structure Further strengthen capital base to reflect the enlarged operations following the Proposed Acquisitions 3 Opportunity to further increase equity participation in the Company Opportunity to further increase equity participation on a pro-rata basis at a discount to the prevailing market price of UMWH Shares No dilution to equity interest, provided that all entitled shareholders fully subscribe their respective entitlements to the rights shares 14

15 PROFORMA BALANCE SHEET AND GEARING The Proposed Rights Issue will strengthen our capital base to reflect our enlarged operations following the Proposals Pro forma I Pro forma II After Pro forma I and the Proposed Perodua Acquisition (2)(3 ) Full Cash Scenario Pro forma Pro forma III(a) IV(a) Full Shares Scenario Pro forma Pro forma III(b) IV(b) Audited as at After the Completed After the Proposed MBMR After Pro forma II and the After Pro forma III(a) and the After Pro forma II and the After Pro forma III(b) and the 31 Dec Transaction ( Acquisition (2 Proposed Proposed Proposed Proposed ) ) MO (4) Rights Issue MO (4) Rights Issue (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) Shareholders Funds 4,718,562 3,458,395 3,682,529 3,982,529 4,206,036 5,245,484 4,705,671 5,242,467 Non-controlling interests 2,145,713 1,144,679 2,134,405 2,134,405 1,411,263 1,411,263 1,411,263 1,411,263 Total equity 6,864,275 4,603,074 5,816,934 6,116,934 5,617,299 6,656,747 6,116,934 6,653,730 No. of UMWH Shares in issue ( 000) 1,168,294 1,168,294 1,168,294 1,217,555 1,217,555 1,461,066 1,299,526 1,429,479 NA per UMWH Share Total borrowings 6,355,106 2,582,588 3,453,247 3,453,247 3,952,882 2,952,210 3,453,247 2,952,210 Gearing (times) (5) Notes (1) Adjusted to illustrate the effects of the distribution of 1,204,777,400 ordinary shares in UMW Oil & Gas Corporation Berhad ( UMW-OG ), being the entire shareholding of UMWH in UMW-OG. (2) Assuming that the carrying values of MBMR and Perodua are equivalent to its fair value for illustrative purposes. (3) Assuming that Perodua continues to be equity accounted from accounting perspective despite the increased stake for illustrative purposes. (4) Assuming full acceptance under the Proposed MO. (5) Calculated as total borrowings divided by equity attributable to owners of the Company. 15

16 Moving Forward 16

17 KEY TAKEAWAYS Upon completion of the transactions, we will continue to evaluate strategic options that will put the Company in a better position to grow its businesses and enhance shareholder value. We believe that the offer price is fair, which is a premium of more than 13% and the offer is higher than historical prices - for the most of the last 12 months. Existing shareholders of UMWH who do not subscribe to the RI - may experience earnings dilution but this would be mitigated by the immediate earnings accretion following the consolidation of the two businesses. The minority shareholders of MBMR - will have the choice of having a cash offer, or an equivalent UMW share offer. Those who wish to remain invested in the automotive sector will have the option to invest in UMWH instead, and will benefit from the liquidity of our shares and potential growth of the UMW Group. 17

18 MOVING FORWARD PROPOSED CONSOLIDATED AUTOMOTIVE GROUP ARE ABLE TO DRIVE GROWTH IN VARIOUS SEGMENT OF THE AUTOMOTIVE BUSINESS 01 HARNESSING ON OUR STRENGTH Leveraging on MBM Resources and UMWH strength and expertise to drive the Group s automotive segment. Market leadership aspirations to drive value in both passenger and commercial vehicles segments. Broadening of our product offering ENHANCING MANUFACTURING CAPABILITIES Strengtening our manufacturing and engineering capabilities in terms of auto-parts manufacturing. UMWH capabilities with KYB- UMW and MBM Resources parnership with Hiratako and Autoliv would enhance our market position in terms of auto-parts. DEVELOPING GROUP SYNERGIES Enhancing distribution and after sales services for the consolidated Group opens cross selling opportunities such as lubricants as well as replacement auto-components market. 18

19 THANK YOU UMW HOLDINGS BERHAD 19