Bumi Resources (BUMI) – Maintain BUY
Price: Rp2,600 – Target Price: Rp3,250
Bakrie – Vallar Transaction
- Vallar Plc will acquire 25% stakes of BUMI and 75% stakes in PT Berau Energy through combination of cash and share swaps, amounting total US$3.0 bn.
- Post transaction, Vallar Plc will be renamed Bumi Plc and Bakrie will be the single largest shareholder.
- Bakrie Group and Recapital will hold 43% and 25% of Vallar, respectively.
- No major impact in BUMI as there’s no change of control and operations in BUMI.
- We believe it will improve BUMI’s corporate governance and credibility, with shareholder that is listed on the London Stock Exchange
- Moreover, it will wider access to raise fund and enable company to refinance loan at lower interest rate and also access of backdoor listing.
- BUMI is still on track to de-leverage loan. Further loan reduction will be from collection of receivable from asset sale.
- Price target, Rp3,250/share. MAINTAIN BUY