PACIFIC & ORIENT BHD (P&O =6009)

Pacific & Orient Berhad is a Malaysia-based investment holding company.

P&O perates in 4 business segments

1.     Insurance

2.     information technology

3.     investment holding

4.     money lending.

Information technology also operates in Thailand and the United States.

The Company's subsidiaries include:

1.     Pacific & Orient Insurance Co. Berhad (POI)

2.     P & O Technologies Sdn. Bhd.

3.     P & O Global Technologies, Inc.

4.     P & O Global Technologies (Thailand) Co. Ltd.

5.     Dynamic Network Distributions Sdn. Bhd.

6.     P & O Capital Sdn. Bhd.

7.     P & O Global Technologies Sdn. Bhd.

P&O is a decently managed standalone insurer where it is not bank-backed

There are risks which large insurers dare to take while the smaller ones do not have the size or even the experience to take up larger risks.

The only attraction with P&O is it being an acquisition target. Market is valuing at least a 2.2x of book value for a Malaysian insurance company.

The holding company for P&O did not actually sell out but rather signed a deal for it to sell 49% of its insurance arm to a group under Sanlam. Who is Sanlam? Not particularly big but still it is a much bigger partner for the standalone P&O.

The price is RM270 million cash valuing it at 2.46x NAV. Not too shabby(破旧) a deal.

Since POI business is all cash deal, it would have put the company into a net cash company from its current debt of RM88 million to about RM182 million net cash.

P&O suddenly looks attractive for the immediate term. Its current traded price (MP) is still below the book value of RM1.60 upon completion of the exercise and the bulk of its holdings in cash.

Besides the book value, is P&O an attractive growth company. Looking forward with the larger insurers being very aggressive and starting to understand the local insurance market better, I do not see P&O will be a strong growth insurer. 

P&O was selling the 49% stake in “Pacific Orient Insurance Co. Bhd (POI)” to Sanlam Emerging Markets Proprietary Ltd for RM270mil cash. The effective date of the transaction is 17 May 2013.

P&O would still hold a 51% stake in POI, while the South African financial group would hold the remainder stake.

P&O are plans using RM37mil to pay special dividends.

P&O said that the special dividend would be paid within three (3) months of the divestment being completed.

Another RM150 million will be used for investments to be identified later, while RM48 million would go towards the repayment of bank borrowings.

Number of POB Shares =244,350,000

RM37,000,000 as special dividends.

RM special dividend per share = RM37,000,000 / 244,350,000 = RM0.1514 /share

But, POB paid RM0.1899 on JUNE 2013.

The period when there was no dividend in 2009 and 2010 was when the insurer was required to shore up its shareholders funds due to requirement by Bank Negara. 

P&O has set up a subsidiary in England – Pacific & Orient Properties Ltd – with its intended principal business listed as investment, development, and dealings in property.