KUALA LUMPUR (Feb 16): Tenaga Nasional Bhd's take-over offer for port operator Integrax Bhd should be rejected as its offer price of RM2.75 a share is "not fair but reasonable", according to independent adviser M&A Securities.

In a circular to Integrax shareholders today, M&A said Tenaga's (fundamental: 1.3; valuation: 1.8) offer price was at a discount to the revised net asset value of Integrax (fundamental: 1.65; valuation: 0.8) shares of between RM3.60 and RM3.62.

"We conclude that the offer is not fair but reasonable. Our "not fair" view outweighs our "reasonable" view.

"As such, we recommend that holders reject the offer," M&A said.
 
M&A said the offer was seen as reasonable because  Integrax's share trade was already deemed illiquid. As such, trading liquidity of Integrax shares may further deteriorate if the offeror's Integrax's shareholding increases, according to M&A.

M&A notes prospects for Integrax are optimistic. The view took into account the jetty terminal usage agreement M4 and jetty terminal usage agreement M5 contracts which are pending execution.

However, M&A said there was no assurance that Integrax would be able to realise and execute its business plan successfully.

"Integrax continues with its plans to expand Lumut port to a multi-user port and logistic hub and to secure new contracts for the import, blending and export of coal.

"Further Integrax is also subject to various external factors which are not within its control, and which may dampen any of its planned initiatives," M&A noted.

As at 12.30pm, Tenaga shares closed four sen or 0.3% lower at RM13.94. Integrax fell three sen or 1% to RM2.81.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)