Today I attended the AGM and EGM of Ajinomoto Malaysia Berhad. This could be the last AGM of AJI, if the privatization offer is approved by minority shareholders today.
This is the first EGM I have attended so far concerning on the privatization of a listed company. The Chairman has invited two ladies from Maybank and RHB investment banks to present the valuation report of AJI in order to let shareholders aware on the "intrinsic value" of AJI.
Indeed, I have learnt something new today.
The investment bank analyst mentioned that for those companies that make consistent profit (e.g. AJI), the PE method (Price/Earning Per Share) is the most suitable metric. Therefore, the PE method was used as the primary method to value AJI, followed by the secondary method, which is EV/EBITDA. EV is the Enterprise Value = Market Capital + Total Borrowings - Cash, whereas EBITDA is Earning Before Interest, Tax and Depreciation and Amortization.
The investment bank has worked out the fair PE and fair EV/EBITDA metrics for AJI, by letting the fair metrics of AJI as the average PE and EV/EBITDA values of other listed companies in F&B sector. To be honest, I do not agree on this method, as these companies are operating in a different business segment compared to AJI. For example, if NESTLE is considered as one of the F&B companies in the averaging calculation, the average PE metric would go up definitely, as NESTLE is always traded in sky-high PE value given its market dominance. Personally, I still prefer to make use of the market-given PE values of a specific company for various years, and take the average (or median) of them to get a somewhat "fair" PE value for a company.
In fact, the offer price of RM20/share is absolutely attractive for me, given the fact that the PE and EV/EBITDA at RM20 have already exceeded the market-given "fair" values of AJI, at least based on the current earning level. For me, the offer RM 20/share could have factored in the future growth of AJI in upcoming years.
A few shareholders (including a rep from MSWG) have voiced up to the Chairman that they will reject the offer as the investment bank's comment on the offer price is: Unfair but reasonable. MSWG will only accept if the comment is fair and reasonable. Another veteran Chinese shareholder shared a very interesting analogy. He said that he once has a property called "AJI". If he owns it, he can still rent it out to get the rental fee (i.e. dividend). If he sells it, he gets the capital gain, but he will not get any future dividends. He said that AJI's dividend yield is very high, so it is worth to keep. Honestly, I am puzzled when he said AJI's dividend is high (coz AJI's dividend yield is merely 2% - 3%). So, please do not blindly believe on what other people said.
Anyway, after the voting session, 92% of disinterested shareholders (non-AJICO shareholders) have voted to accept the offer.
Good bye AJI... And thank you...
