Disposal of 10% of group’s equity in Bunge Loders Croklaan Group B.V. IOICorp announced it has completed the sale of 1,800 shares, which represent 10% shareholdings in Bunge Loders Croklaan Group B.V. (BLC) to Koninklijke Bunge B.V (KBBV) for a total consideration sale price of USD84m plus EUR19m c. RM376.3m and RM89.9m respectively. With a 10% share sale, IOICorp’s interest in BLC is now reduced to 20%.
Additionally, the estimated loss arising from the Share Sale is approximately RM50m of which mostly is a fair value loss from
the derecognition of the terminated Put and Call options. Previous proceeds were raised for mixed purposes. To recap, on 1st March 2018, the Group completed the disposal of 70% equity interest in BLC with a preliminary disposal consideration of USD595.0m plus EUR303.4m (total of approximately RM3,784.7m). On 23 October 2018, the company received a net adjustment amount of EUR11.5m (approximately RM55.0m) upon finalisation of the intermediate disposal consideration in accordance with the terms of the sale and purchase agreement. The status of utilisation of proceeds raised from the Corporate proposal as of May 2022 is as follows:
MIDF saw previous proceeds were raised for mixed purposes such as future investment (25%), dividend payment (20%), working cap (4.75%), and transaction expenses (0.25%). Since c. 50% out of it was used for repayment of borrowings, if 80% of RM466m latest proceeds are also to be used for debt settlement purposes, the research house could see the group’s gearing improving down to 25.6% onwards versus 29.2% in 9MFY22.
Earnings estimates. MIDF makes no changes to our earnings forecast for now.
Maintain BUY. The research house continues to like IOICorp premised on its integrated business where the manufacturing segment which makes up 35% of group profit will help cushion any pullback of ASP for CPO – hence, reducing earnings volatility. BUY call with TP of RM6.00 by pegging its FY23 EPS of 25.4sen to PER of 23.6x nearly mean of its 2-year
historical average.
