UNTR buy ACST
IPS RESEARCH
UNTR: United Tractor (UNTR IJ; Rp17,200; Buy) has signed a Memorandum of Understanding ("MOU") with two shareholders of PT Acset Indonusa Tbk (ACST IJ, Not Rated, Rp3,330), namely PT Loka Cipta Kreasi dan PT Cross Plus Indonesia, to acquire of at least 250,500,000 (two hundred and fifty million five hundred thousand) shares in ACST ("Transaction") by UNTR or its subsidiary. The purpose of the acquisition is to expand and support UNTR?s main business.The completion of this transaction will be depending on the outcome of negotiations between the parties and the fulfillment of the terms and conditions of the MOU and any other related agreements. In the event if the transaction will cause change of control of ACST, UNTR or its appointed subsidiary will proceed with Mandatory Tender Offer. (Company)
Comment: ACST acquisition is part of UNTR?s diversification strategy amid the continuous weak coal outlook. As ACST is a construction company focuses on high rise project, we believe the acquisition purpose is to support UNTR?s parent company, Astra International (ASII IJ; Rp6,400; Buy) which plans to expand in property business. Assuming the acquisition price of Rp3,330/share, the transaction value is Rp834bn, around 40% of UNTR FY15 capex and implies 11.5x FY15 PE of consensus forecasts. In our view, ACST will not contribute to UNTR?s overall earnings significantly as ACST?s annualized FY14 earnings is only Rp100bn vs. our UNTR?s earnings forecast of Rp5.6tn in FY14.
UNTR: United Tractor (UNTR IJ; Rp17,200; Buy) has signed a Memorandum of Understanding ("MOU") with two shareholders of PT Acset Indonusa Tbk (ACST IJ, Not Rated, Rp3,330), namely PT Loka Cipta Kreasi dan PT Cross Plus Indonesia, to acquire of at least 250,500,000 (two hundred and fifty million five hundred thousand) shares in ACST ("Transaction") by UNTR or its subsidiary. The purpose of the acquisition is to expand and support UNTR?s main business.The completion of this transaction will be depending on the outcome of negotiations between the parties and the fulfillment of the terms and conditions of the MOU and any other related agreements. In the event if the transaction will cause change of control of ACST, UNTR or its appointed subsidiary will proceed with Mandatory Tender Offer. (Company)
Comment: ACST acquisition is part of UNTR?s diversification strategy amid the continuous weak coal outlook. As ACST is a construction company focuses on high rise project, we believe the acquisition purpose is to support UNTR?s parent company, Astra International (ASII IJ; Rp6,400; Buy) which plans to expand in property business. Assuming the acquisition price of Rp3,330/share, the transaction value is Rp834bn, around 40% of UNTR FY15 capex and implies 11.5x FY15 PE of consensus forecasts. In our view, ACST will not contribute to UNTR?s overall earnings significantly as ACST?s annualized FY14 earnings is only Rp100bn vs. our UNTR?s earnings forecast of Rp5.6tn in FY14.