Analysts uncertain over Barito-CASH transaction<\/p>\n
SINGAPORE (Reuter): Analysts are uncertain about what lies
\nbehind this week's developments in the reverse takeover of
\nMalaysia's Construction and Supplies House Ltd (CASH) by
\nIndonesian timber tycoon Prajogo Pangestu.<\/p>\n
CASH, listed on the Kuala Lumpur Stock Exchange (KLSE) and
\nSingapore's over-the-counter market, in February announced an
\nalliance with Prajogo's Barito Pacific (Barito) group. The
\nalliance will be signed on Saturday.<\/p>\n
Malaysia's Business Times this week said CASH is also buying a
\nstake, believed to be about 30 percent, in Barito Pacific.<\/p>\n
A 30 percent stake would swell to 2.56 billion ringgit from
\n700 million ringgit the value of assets to be injected into CASH
\nin return for shares, a possible loan and cash.<\/p>\n
While analysts say the deal is positive for CASH in that it
\ntransforms a \"mere $2 (ringgit) company\" into an asset-rich
\nconcern, they are uncertain of the Indonesian group's motives and
\nthe long-term implications for CASH.<\/p>\n
Yap Huey Chiang, timber industry analyst at Baring Securities
\nin Kuala Lumpur, said CASH would be better off buying timber
\nprocessing companies or companies with timber concessions outside
\nIndonesia.<\/p>\n
Yap said buying into Barito Pacific, whose main asset is its
\n2.89 million hectares of timber concessions in Indonesia, makes
\nlittle sense as CASH would not be able to sell the logs outside
\nIndonesia.<\/p>\n
Another sector analyst, from a Singapore brokerage, said
\nBarito was probably attracted by the fact that Malaysian stocks
\ntended to command higher price-earnings ratios than Indonesia's.<\/p>\n
\"By injecting their assets into a Malaysian listed company,
\nthey (the Indonesian group) would get better market value,\" the
\nanalyst said.<\/p>\n
Analysts also wonder why there has been such a high level of
\nsupport from both Malaysian and Indonesian governments for the
\ndeal. One reading is that Malaysia and Indonesia want to
\nstabilize timber prices by controlling the supply.<\/p>\n
Despite their uncertainty, both analysts and dealers said
\nCASH's stock is likely to surge when trading resumes on June 20.<\/p>\n
The stock was suspended in March at S$4.68 in Singapore and
\n$7.95 ringgit on the KLSE. \"Hopefully after the signing, things
\nwill be clearer. But I think only one to two years down the road
\ncan we be sure whether to recommend CASH as a long-term buy for
\ninstitutions,\" said the Singapore brokerage analyst.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/analysts-uncertain-over-barito-cash-transaction-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}