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Submitted by:
1. Mohd Hafizi Bin Abdul Fatah
2. Yanoorhady Norza Yahya
3. Adnan Yacob
Lecturer Name: Assoc. Prof. Dr. Mohd Amy Azhar Hj Mohd Harif
Assignment No. 3
BUSINESS VALUATION EXERCISE
Overview of
Presentation
1.
2.
3.
4.
Introduction
Analysis of Pre Merger
Analysis of Post Merger
Conclusion and
Recommendations
5. Q&A Session
RESEARCH QUESTIONS
1. Does post-merger and acquisition improve
business profitability?
2. Does post-merger and acquisition improve
leverage?
3. Does post-merger and acquisition improve
liquidity position?
4. Does post-merger and acquisition improve
capital market?
INTRODUCTION (1/2)
1. Sime Darby Bhd. is an investment holding company, which
engages in the plantation, industrial equipment, motors, property,
and energy and utilities businesses.
2. It operates through the following segments: Plantation, Industrial,
Motors, Property, Energy and Utilities, and Others.
3. In March 2007, the Vice President of Sime Darby Bhd evaluated a
proposal for mega merger of Sime Darby, Golden Hope Bhd and
Guthrie Bhd. All the three listed companies are in the plantation
sector controlled by Permodalan National Berhad (PNB).
4. Special Purpose Vehicle (SPV) for this merger is Synergy Drive
Sdn Bhd.
INTRODUCTION (2/2)
5. This SPV was set up to facilitate the merger of the Golden Hope
Bhd, Guthrie Bhd and Sime Darby Bhd.
6. With the completion of the merger the three companies the group
comprised of the businesses, namely plantations, property, motor,
heavy equipment and energy and utilities.
7. The company is a merger of 3 large plantations entities with the
merger having taken place on November 2007. The entities
are Kumpulan Guthrie, Golden Hope and Sime Darby.
8. For details about Sime Darby. Please visit www.simedarby.com
WHY MERGER?
The merger it will give the group the competitive strengths as follows:
1. To grow further the upstream and downstream sectors
2. To optimise on cost and revenue synergies
3. To value-add further to the palm-oil business
4. To focus on enhancing technology for the industry (research and
development)
Sime Darby
Golden Hope
Guthrie
RM1,203.1 Million
RM269.08
Million
RM605.46 Million
No of Shares
RM2431.40 Million
RM1,432.49 Million
RM1,006.59 Million
EPS (Basic)
0.461
0.422
0.281
12.58
9.86
13.88
RM5.8
(RM6.46)
RM4.16
(RM5.46)
RM3.9
(RM4.27)
TotalMarket Value
(N*MPS) OR (EAT*P/E
RATIO)
RM15,134.99 million
RM2,653.11 million
RM8,403.82 million
Liquidity:
CA/CL
Profitability
:
ROA
ROE
PM: NI/Sales
BEP: EBIT/TA
Debt
Manageme
nt:
Debt Ratio
Pro-Forma Post(2007)
Merger
(2008)
Sime
Darby
Golden
Hope
Guthrie
SDB
SDB
1.99x
1.32x
2.23x
1.97x
3.86x
6.39%
12.73%
5.55%
9.36%
3.92%
5.23%
6.79%
6.13%
4.96%
13.87%
18.02%
6.92%
7.68%
12.96%
9.59%
10.13%
10.43%
17.32%
11:02%
14.59%
44.15%
22.09%
46.30%
39.11%
38.27%
FORECASTED POSITION
RM2,706.8 Mil
RM3,512.1 Mil
No. of Shares
6,086 Mil
5,889.7 Mil
2706.8/6,086=RM0.43
3512.1/5889.7=RM0.60
12.58+9.86+13.88/3 = 12.11x
9.05/59.51=15.17x
RM 5.33
RM 9.05
RM 32,779.35
RM 53,278.56
Profitability Ratio
Pre-Merger
During
Merger
Post-Merger
ROSF Return
11.07%
of Shareholders
Funds
15.77%
17.32%
ROCE Return
on Capital
Employed
12.40%
17.15%
20.09%
Net Profit
Margin
10.65%
9.91%
15.42%
Gross Profit
Margin
11.10%
4.66%
20.83%
Efficiency Ratios
Pre-Merger
During
Merger
Post-Merger
Average
69.92 days
Turnover Period
62.54 days
84.78 days
Revenue To
Capital
Employed
1.16
1.73
1.30
Revenue Per
Employee
MYR258,095
MYR691,167
MYR340,447
Altmans Z-Score
PreMerger
During
Merger
PostMerger
0.06
0.12
0.40
0.45
0.52
0.09
0.11
0.15
0.79
0.77
0.85
0.80
1.06
0.95
Z-Score
2.22
2.52
2.81
Golden Hope
Share Price
Guthrie
Share Price
Conclusion
SDB in right business as at FY2008
Recommendations
Taking the company private
Thank You