The Berita Harian reported today that "the LTAT was still keen on acquiring the Esso stake and it could offer as much as RM5.20 per share". For more, go here. This report was also picked up by the Edge (here).
People shouldn't believe what they read or heard without asking themselves logical questions, like "Why ExxonMobil did not accept a better offer from LTAT?" or "Why LTAT didn't offer a higher price earlier?". Obviously, there was no such offer on the table. The unsuccessfully bidder must have offered a lower price which was rejected.
The next thing this bidder would bring out is national interest. Yes, they will say that the retail chain of petroleum products is a critical plus subsidized business and it should be owned by Malaysians. Then you should ask yourself another question, "Why would ExxonMobil sell these businesses to foreigner when there is an Malaysian party interested to buy over the businesses?". ExxonMobil's crude oil exploration & production business in Malaysia makes huge profit annually and they would not want to jeopardize that business by offending an important GLC entity, like LTAT.
Based on this analysis, I believe that the content of the report is not true. LTAT is trying to protect itself from criticism from certain nationalist or chauvinistic parties for its failure to buy over the ESSO retail chain. If it managed to do so, it could double or triple its presence in the local petroleum retail business overnight. Its related company, BHP bought over BP retail chain a few years back & renamed it BHP.
Meanwhile, I am aware that some people, owning ESSO shares, are hoping that another party would come in and offer a higher price. Sometime, when players are caught with a losing position, they would grasp onto anything that gives them hope of salvation. If you have to pray for a miracle to save your trading position, chances are that miracle will not happen. The best course of action is to face reality and take the best price offered by the market.
Update: Just what we need, another hero to the rescue.
6 comments:
hi alex,
sorry for asking u other stock...
can u comment on MAS?
time for it to rebound around 1.65?
i still holding high cost at 1.93.
Hi Alex,
Can comment about Tenaga and Amedia?
TEH
Hi teh
Tenaga is likely to test its strong horizontal support at RM5.00. That's a good entry level.
Amedia will test the lower boundary of the irregular triangle at RM0.25. The upper boundary is at RM0.30-0.31.
Hi RedsArmy
MAS is struggling to hold onto its horizontal support at RM1.65. If that failed, the next horizontal support is at RM1.50. That coincides with the short-term uptrend line support at RM1.48-1.50.
thank you alex.
i read from maybank research saying that they expect MAS to make losses on 2Q to be released tomorrow.
do u think the same too?
i thought 1Q MAS already making losses and this quarter should be better?
Based on FY2010 result, NTAPS of ESSO is 2.8. I cannot comprehend the logic behind of offering RM5.20.
May be that's why I will never reach their level.....
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