On Wednesday, following the news regarding the sales of 50% of the shares in the Miss Universe Organization to the Mexican billionaire, JKN extended its gain by 15.79% or THB 0.12 to close the morning session at THB 0.88 per share.
Yuanta Securities (Thailand) published the analysis regarding divestment in JKN Legacy, which holds the right holder of Miss Universe Organization (MUO), from JKN Global Group Public Company Limited (SET: JKN) to Mr. Raul Rocha Cantu, a Latin-American oil business owner and a billionaire, to take part in a strategic partnership on behalf of the MUO by holding 50% shares with an investment value of $16 million, or THB 582 million.
Prior to the deal, JKN had been dealing with problems regarding the liquidity of the company, leading it to file a petition to the bankruptcy court to enter into the process of business rehabilitation. The company’s plan was to take the fund from the MUO transaction to increase the liquidity of the company, use the fund as the subsidiary’s working capital, and help rehabilitate the business.
The analyst saw the deal as a positive sentiment for JKN with the details as follows:
- The company takes profit from the deal. Since the company bought the business by investing THB 800 million (referring to the value that JKN bought the business in the past), the sales of 50% shares should accumulated into THB 400 million in costs, and in the case that the sales were valued at THB 582 million, the company should make at least approximately THB 182 million in profit.
- The cash from the deal will help support the company’s tight liquidity and help ease the debt, as the analyst perceived that the company still has a high debt burden.
Yuanta Securities (Thailand) had issued the last copy of JKN’s analysis on 31 August 2023, with the recommendation to avoid investing in the company, and removed JKN from its coverage as JKN had encountered difficulties with the company’s liquidity and the lower-than-expected business performance, with the deficit of approximately THB 131 million, according to the 9M23 financial statements.
The analyst will keep monitoring the situation despite the change in the company’s shareholding, as to whether the MUO business can bounce back to a positive trend or not. The analyst also expected some short-term speculations from the news.
