Maybank Kim Eng analyst Lai Gene Lih is recommending Hi-P International’s investors to accept the $2 per share privatisation offer tabled on Dec 18 by chairman Yao Hsiao Tung.

The offer price is 10.5% above Hi-P’s last traded price of $1.81 before the offer was announced on Friday morning. The $2 offer price is also 62% above Lai’s target price of $1.23.

“We recommend minority investors to take the offer, as valuation appears attractive at 15.3 times FY21 estimated price-earnings ratio, vis-à-vis 5-year average forward price-earnings ratio of 10 times,” states Lai in his Dec 20 note.

In contrast, Singapore listed peers to Hi-P trade are seen to trade at around 12.7 times estimated FY2021 earnings.

“As we believe current share price fully reflects the fundamental value of Hi-P, we downgrade Hi-P to “sell” from “buy”, adds Lai.


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Yao and his wife Wong Huey Fang already own 83.5% of the shares and in the offer document, reasons cited for the privatisation offer include the want for greater management flexibility and no foreseeable need to tap new funds from the Singapore market. 

Meanwhile, Lai is reiterating his buy calls on other Singapore listed tech stocks such as Frencken Group, UMS Holdings, AEM Holdings and Venture Corp, as he remains positive on their prospects and end markets. 

Lai’s target prices on these stocks are now at $1.39 for Frencken; $1.41 for UMS, $5.05 for AEM and $23.27 for Venture.

Hi-P shares closed last Friday at $2.