Wednesday, September 15, 2010

Jerneh extends losses

KUALA LUMPUR: Shares of JERNEH ASIA BHD [] fell as much as 20 sen to RM3.08 on Wednesday, Sept 15 after trading resumed following its announcement of the disposal of its entire 80% stake in Jerneh Insurance.

At 4.23pm, it was down 19 sen to RM3.09. There were 4.86 million shares transacted at prices ranging from RM3.08 to RM3.29. The warrants, Jerneh-WA fell 15 sen to RM1.61.

The FBM KLCI fell 3.41 points to 1,471.03. Turnover was 622.08 million shares valued at RM1.16 billion. The broader market was cautious, with declining counters beating advancers 462 to 264.

On Tuesday, Jerneh Asia and Paramount Corp Bhd announced the disposal of their 80% and 20% stakes Jerneh Insurance Bhd respectively for RM654 million to ACE INA International.

The Edge FinancialDaily reported Jerneh Asia is set to become an even more cash-rich company, as it may pocket RM523.2 million cash from the proposed disposal Jerneh Insurance to ACE INA International Holdings.

The share prices of Jerneh and Paramount had risen sharply in recent weeks on market talk of the proposed disposal.

RHB Research had said Paramount's 20% stake in Jerneh Insurance would see Paramount pocket about RM131 million (or RM1.09 per share). The proceeds provide a scope for special dividend.

"To re-iterate, in addition to our FY10 DPS forecast of 29 sen, assuming a 30 sen special dividend, this would translate into a generous yield of 15%," it said.

RHB Research said there was no change in our FY10-12 forecasts. Its RNAV/share estimate of RM8.92 was largely unchanged after it incorporated the new surplus value for Jerneh Insurance.

"Based on an unchanged 35% discount to RNAV, our fair value is kept at RM5.80," it said.

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