SD Guthrie selldown driven by ‘market overreaction’
Maybank Investment Bank says the market largely misunderstood PNB’s US$300 million exchangeable sukuk issuance.
Maybank Investment Bank (Maybank IB) attributes SD Guthrie Bhd's recent share price drop to market overreaction following Permodalan Nasional Bhd's (PNB) recent exchangeable sukuk (ES) issuance. The state fund manager's US$300 million (RM1.22 billion) ES, announced last Wednesday, carries a profit rate of 1.5% and an exchange premium of 10%.
PNB holds a significant stake in both SD Guthrie and Gamuda Bhd, which benefited from the company's previous ES issuance in January. Maybank IB asserts that SD Guthrie's fundamentals remain strong despite the share price weakness, adding that no new share issuance occurs if ES investors exercise their options. For sukuk investors to convert shares, the share price must reach at least RM8.66, which the stock is currently trading below.
Maybank IB estimates SD Guthrie's share price needs to hit RM8.66 for ES investors to convert, and it has upgraded the stock to "buy" from "hold" with an unchanged target price of RM7.10.
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- SD Guthrie selldown driven by ‘market overreaction’ freemalaysiatoday.com
