CGS International analyst Tay Wee Kuang is recommending that Japfa 's minority shareholders accept the 62 cents per share privatisation offer put forward by the controlling Santosa family.
Under a scheme of arrangement, the nod from shareholders representing at least 75% in value of the scheme shares for the offer will be required.
In his Jan 27 note, Tay is of the view that the privatisation offer is "fair", given the valuation of 1.07x 9M24 P/BV, which is higher than Japfa’s historical average of 0.7x over the past 10 years.
Investors still keen on exposure to Indonesia's poultry sector can still do so via Japfa's Indonesia-listed subsidiary Japfa Comfeed Indonesia, says Tay.
He observes that Japfa's share price has gained 205% in the last 12 months after the company returned to profitability amid a consumption upcycle.
As such, he recommends shareholders to approve the scheme as they would then be able to exit their investments at a "fair valuation".
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Just as an update, Tay has revised his earlier "add" call on the counter to "hold" and his target price to 62 cents - in line with the offer price, from 53 cents earlier.
Japfa shares changed hands at 61 cents as at 10.06 am.
