Primary Symbol & Exchange: Measat
3875 - Ordinary Shares - Malaysian Stock Exchange
Price/share @ 29/7/2010 RM:4.07
Mkt Cap RM’m : 1,587.01
Shares (m): 389.93
Par RM: 0.78
SECTOR CLASSIFICATION
MSEB: Technology
Fox Capital: Telecommunication & Internet
Executive Chairman: Dato’ Umar bin Haji Abu
Managing Director: -
KNOWN MAJOR SHAREHOLDER(S) (as at 28/04/2009)
MEASAT Global Network Systems Sdn Bhd + 59.56%
Telekom Malaysia Bhd 15.39%
Kumpulan Wang Persaraan 5.39%
+ Direct & indirect interest – controlled by T Ananda Krishnan
Contact Info
MEASAT Satellite Systems Sdn. Bhd. (247846 - X)MEASAT Teleport and Broadcast CentreJalan Teknokrat 1/ 2 63000 Cyberjaya, Malaysia
Tel. No.
: +60(3) 8213 2188
Fax. No.
: +60(3) 8213 2233
Email.
: cosec@measat.com
BACKGROUND
Measat Global Bhd (Measat) was listed on the Main Market of Bursa Malaysia on 1/7/1978 under the name of Malaysian Tobacco Company Bhd. As its former name implies, Measat was formerly a manufacturer of cigarettes and tobacco-related products. However, it disposed off its cigarette manufacturing business to British American Tobacco on 2/11/1999 for RM770m cash. In order to comply with Practice Note No. 10/2001 and to maintain its listing status, it completed the acquisition of 100% of Measat on 8/5/2002 for RM1.45b via the issuance of 187.43m new Measat shares and cash payment of RM750m. To better reflect its new business, Measat adopted the present name on 23/7/2003.
Since 1996, MEASAT has been providing reliable satellite solutions to customers across the Asia-Pacific region. The MEASAT fleet comprising MEASAT-3, MEASAT-3a, AFRICASAT-1 and AFRICASAT-2 satellites extends MEASAT’s reach to over 145 countries representing 80% of the world’s population across Asia, Africa, Europe and Australia.MEASAT supports the Astro DTH service in Malaysia and Brunei, providing DTH multi-channel television services to over 2.78 million subscribers, as well as DTH service in India. MEASAT is also used by many of the international leading channel operators, to distribute television programming to pay television platforms, and by telecommunications operators to support remote connectivity, GSM back hauling and corporate VSAT networks.
Leveraging infrastructure at the MEASAT Teleport and Broadcast Centre, a world class teleport facility located just outside of Kuala Lumpur, and working with a selected group of world-class media partners including Antrix, Astro, Ascent Media and GlobeCast, MEASAT provides a complete range of broadcast services including Standard Definition and High Definition video playout, up-linking, fibre connectivity, occasional video contribution and co-location services
History
In 1992, in response to the Vision 2020 plan laid out by YA. Bhg Tun Dr Mahathir Mohamed for the development of communications infrastructure for Malaysia for the new millennium, Binariang Sdn. Bhd. brought together a team of experienced and highly motivated experts to develop and launch Malaysia’s first communications satellite system. The project was named the Malaysia East Asia Satellite or MEASAT for short.This effort culminated in the launch in 1996 of the MEASAT-1 and MEASAT-2 communications satellites from Europe’s Spaceport in Kourou, French Guiana. The two high-powered Boeing 376HP communications satellites provided regional C-Band coverage and pioneered the use of Ku-Band in the high rain fall South East Asia region. Operated from a purposed built satellite control facility located 915m above sea level in Gunung Raya, Langkawi, the MEASAT-1 and MEASAT-2 satellites started providing satellite service across South East Asia from 1996.The launch of MEASAT-1 and MEASAT-2 led to a rapid increase in Malaysian infrastructure development, both in telecommunication and broadcasting industries, including the launch of the first world’s digital Direct-To-Home (DTH) Multi-Channel TV Service, Astro.
Originally part of the Maxis Group, the satellite division became independent in 1998. Undertaking a reverse takeover of Malaysian Tobacco Company (“MTC”) in 2001, renaming the holding company MEASAT Global Berhad, and the operating Company MEASAT Satellite Systems Sdn Bhd, the company came of age.
Since the launch of the first two satellites, MEASAT has been supporting the development of Malaysia’s ICT infrastructure, while expanding its regional presence. Today MEASAT operates satellites providing reach to over 145 countries, representing 80% of the world’s population. It supports customer over 145 countries and host one of the region’s strongest DTH neighbourhoods.
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WHY WE FEEL THAT THIS IS AN ARBITRAGE OPPORTUNITY FOR CONSERVATIVE INVESTORS?
1) MEASAT Global Network Systems Sdn Bhd (MEASAT Global) announced on evening of 28/7/2009 a privatization offer for MEASAT at RM4.20 cash per share. The offer is conditional upon acceptance of 90% of the nominal value of shares (excluding those already held by MEASAT Global and relevant approvals and will close not later than 60 days from the date of posting of the offer document. Following the close, the company has 21 days to obtain the relevant approvals, if required.
2) Let’s calculate the return based on latest closing price of RM4.07/share upon acceptance of the above offer & upon the offer being unconditional:-
Assumption: No. of shares acquired from open market @ RM4.07/share = 10,000
Breakdown of cost:
RM40,700 = RM4.07/share x 10,000 shares
RM244.20 = Brokerage @ 0.6%
RM41.00 = Stamp duty
RM12.21 = Clearing fee @ 0.03%
RM40,997.41 (Aggregate investment cost)
Proceeds to be received from the offer acceptance:
RM42,000.00 = RM4.20/share x 10,000 shares
Return on the cost = 2.45%
3) Next question: how much is the estimated time to receive the proceeds of the offer?
To estimate the timeline, we can refer to the take private offer for the related company – Astro as summarized below:-
Announcement of Conditional Take-over offer @ RM4.30/share 17/3/2010
Posting of offer document to shareholders 30/4/2010
Closing date of offer 21/5/2010 (97.10% level acceptance)
Settlement date (within 21 days from the closing date)
Delisting date 10/6/2010
From the above, it is noted that Astro was delisted within less than 3 months from the announcement of the Conditional Take-over offer.
Hence, we envisage that the proceeds may be received in within 2 to 3 months, barring any unforeseen circumstances.
4) How much is the estimated annualized return?
If proceeds are received by 2 months : 14.7% p.a.
If proceeds are received by 3 months : 9.8% p.a.
Hence, the annualized return may be between 9.8% p.a. to 14.7% p.a.
5) This is a very good investment opportunity for conservative investors! Especially for those who put their deposits in FD. The return here should definitely far exceed the return from putting in FD!
6) Of course, there may be risk that the take private offer fall through or the offer could not become unconditional. Nevertheless, given the previous proven record of Maxis & Astro being successfully taken private in a swift manner, the risk is minimal.
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