Perhatian:
Ada dua rencana dalam mesej ini:

1) Saham UEM jatuh teruk - Bloomberg
2) EON yang terkapai-kapai jatuh - AWSJ

From The Singapore Straits Times
10th October 2000

UEM share price sinks to 14-month low

CONCERN OVER HALIM'S RENONG OPTION

KUALA LUMPUR -- United Engineers Malaysia (UEM) shares plunged to a 14-month low on concern that its vice-chairman, Mr Halim Saad, will not honour an option due in February next year to buy back more than US$600 million (S$1.05 billion) in Renong stock from UEM.

""It's a billion-dollar question; if he doesn't honour it, there will be a fallout'' in the market, said research manager Loke See Ooi at Worldsec Securities Adviser.

Failure to honour that option is likely to fuel more concerns that politically connected Malaysian companies are not doing enough to protect minority investors.

UEM shares fell for a fourth day, losing 52 sen or 9.5 per cent to RM4.98, its lowest level since Aug 9 last year. It is also its biggest one-day drop since April 17.

It is the second most active stock with 3.8 million shares traded, more than double its six-month daily average of 1.49 million shares.

The stock has tumbled 29 per cent over the past month, making it the third-worst-performing stock on the benchmark Composite Index.

In November 1997, UEM had incurred the wrath of minority investors when it bought 32.6 per cent of Renong for RM2.34 billion (S$1.08 billion) at a 12 per cent premium over Renong's price at that time. UEM shares plunged 38 per cent after the announcement because investors saw it as a ploy to support Renong shares.

To appease investors, UEM was granted an option to call on Mr Halim to buy back those shares at the same price plus costs. --Bloomberg News

AWSJ: Heard In Malaysia:Savaging EON Stk Seen As Overreaction

From Asian Wall Street Journal
10th October 2000

Heard In Malaysia: Savaging EON Stk Seen As Overreaction

By CRIS PRYSTAY Staff Reporter

Investors have hammered Edaran Otomobil Nasional since the company lost its virtual monopoly on the distribution of Malaysia's national car in August.

That has landed EON on the buy list of a growing number of analysts, who say its fall has been too steep, leaving the company - in particular, its still profitable auto business - severely undervalued.

EON's woes began after talks between Malaysian state oil company Petroliam Nasional, or Petronas, to acquire EON from debt-laden Hicom Holdings broke down in August. Petronas, which owns a controlling stake in national car maker Perusahaan Otomobil Nasional, or Proton, contends that Hicom asked too much for EON.

So Proton lopped off a piece of EON's main business and gave it to its own wholly owned car distributor, Usahasama Proton-DRB, or USPD. Proton said it will divide distribution of all new models between EON, which had sold all of Proton's sedans, and USPD, which had sold only Proton's hatchback models. EON and Proton are still negotiating the exact terms of EON's distribution agreement, which lapsed last year.

By the time negotiations with Petronas stalled and finally failed, EON's share price had sunk 48% to a low of 6.10 ringgit ($1.61) on Oct. 2 from 11.80 ringgit three months earlier. The stock closed at 7.20 ringgit Monday in Kuala Lumpur.

"There are a couple of concerns the company needs to address before investors get more confident, but right now, it's too cheap to entirely ignore," says Chehan Perera, an auto analyst at ABM Amro Asia Equities Research.

Mr. Perera worries that EON's banking unit, EON Bank, will have to use a big chunk of its estimated 600 million ringgit in cash reserves to expand in order to compete, reducing the amount available for dividends. EON Bank is the smallest of 10 Malaysian anchor banks being created by a government-mandated consolidation plan for the sector; the bank recently acquired four finance companies as part of the plan.

Other analysts are concerned that the cash will be used to cover goodwill premiums paid to acquire the finance companies.

Another question mark is the impact on EON Bank's profits from losses on its car financing business. EON's car sales staff typically refer customers to the group's finance company, a wholly owned subsidiary of EON Bank. Analysts estimate about 25% of EON Bank's profit, before the recent merger plan, came from car loans disbursed by EON Finance; about 80% of the finance company's loans outstanding are for Proton cars.

But Mr. Perera believes Petronas eventually will bring EON under Proton's umbrella, despite the breakdown in talks in August. EON has about twice as many outlets as USPD, he notes, suggesting that it will be several years before USPD can fill the distribution role EON now plays. "Why not just consolidate the two and realize economies of scale? It makes the most sense," he says.

Even if Petronas abandons its plans to buy EON altogether, EON will only lose about 20% of its distribution business to USPD in the first two years, estimates Vincent Khoo, an auto analyst at SG Research. "The understanding is USPD will get a share of all new models, but that EON still gets to distribute existing models - and they account for the bulk of sales," he says, noting that the seven-year-old Iswara model alone accounts for 40% of Proton car sales.

Some analysts think new competition might arise for EON if Petronas converts some of its gas stations into Proton sales and service centers. "But I don't think it's that easy," says Mr. Khoo. "For the next few years, anyway, Proton needs EON's extensive network," he says. He rates EON stock a hold, but says he may review his recommendation after a company visit this week.

Analysts at online research concern MalaysiaStreet.com also believe in EON's resilience. They note that EON has garnered 30% more orders than USPD for the newest Proton model, the Waja, which was launched last month. That illustrates how important EON is to Proton, they say.

A new MalaysiaStreet.com report calculates that aside from EON's car distribution business, the company's 21% stake in Singapore-listed Cycle & Carriage is valued at 347 million ringgit at Monday's closing share price of S$3.38 (US$1.93). The report values EON's 59% stake in EON Bank at 650 million ringgit. Including the estimated 600 million ringgit in cash EON holds, MalaysiaStreet.com calculates that EON has net tangible assets of about 1.61 billion ringgit, or 7.05 ringgit a share - not including its auto distribution business. Including the auto operations, the research company puts EON stock's value at 7.90 ringgit. Any future contribution from the car business would be a bonus for investors who buy the stock now, says the report.

MalaysiaStreet.com upgraded EON from a sell to a buy on Oct. 3.

Even some analysts who are wary of EON like the stock. Melvyn Boey, an auto analyst at Jarding Fleming, maintains his hold recommendation because of the uncertainties over the distribution agreement with Proton. But he says EON stock now looks attractive. Mr. Boey estimates EON is worth 8.30 ringgit, even after valuing EON's auto and bank businesses at deep discounts.

"We just don't know how much of the (car) franchise they'll be able to retain. Until that's sorted out, I don't think EON will go all the way back up to its original price," he says. "But right now it's way below book value. For value investors, it's worth looking at."

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