China Minzhong

China Minzhong: Grp has formed an alliance with one of Indonesia’s leading food magnate, Indofood Sukses Makmur. China Minzhong will allot and issue of 98m new shares to PT Indofood Sukses Makmur at $0.915 / share, whose operation ranges from the production of raw materials and their processing through to consumer products in the market. The Subscription Price represents a discount of 9.93% over the last traded Vwap of $1.0159 and represents 14.95% of the share capital of MinZhong. Grp note that with Indofood’s long-standing track record in the food industry and China Minzhong’s experience in agriculture and food processing, there are a lot of potential synergies between its businesses such as strategic cooperation in supply chain and product distribution in the fast moving mkts of China and Indonesia. Grp’s strongholds in different geographical regions and product segments will open the door to new business opportunities and look forward to leveraging on each other’s strengths and experiences to broaden its market exposure in the future. Maybank-KE further note that 15% control might not be the end of the story. Indofood’s acuqitision track records show that it usually prefers controlling the majority of the targeted co, & suspect that 15% stake in Minzhong is probably not the end for Indofood. In house view, highly possible that in future Indofood will acquire more shares in open mkt or from other big shareholders such as GIC through another placement. We even cannot rule out the possibility of a privatisation offer by Indofood some day in the future. Maybank-KE maintains Buy and raises TP to $1.36 from $1.16