DEVINE BUYER 'MAY PAY $1.20 A SHARE'

DEVINE’S (ASX: DVN) shares may still have some upside as the company explores its options for a full sale of its business, according to broking house Morgans.

A research report released by the broker last month has indicated that an offer of $1.20 a share still gives a prospective purchaser room to move with Devine’s net asset backing sitting at $1.50 a share.

Devine’s shares have been trading around $1.08, rising from about 90c when major shareholder Leighton Holdings (ASX: LEI) announced on June 25 its intention to sell its 50.6 per cent stake in the Brisbane property developer.

Devine this week raised the stakes when it disclosed it had decided to put the entire company up for grabs following Leighton’s decision to sell its interest as part of a $1 billion asset sell-off.

Media reports have suggested Japan’s Daiwa House and Sekisui House, along with Australian homebuilder AV Jennings (ASX: AVJ), are among the potential bidders for the company.

Morgans has been talking up a full buyout of Devine, which is currently valued around $170 million, since early June.

“Given NTA of $1.50 per share and DVN’s relatively high cost base (although this is inflated by the low margin construction work in the business) there looks to be value for an industry participant,” says Morgans.

“Any corporate offer could potentially be (above) $1.20 per share,” it says.

Morgans says positives are Devine’s improved capital position following asset sales which should see $52 million returned to the balance sheet.

It says the negatives for a purchaser lie in its construction arm and its forward order book for apartment construction.

Devine’s workbook has been boosted in the past week following its appointment by Walker Corporation to build the $150 million Westmark Milton apartment project.

Walker Corporation Queensland general manager Peter Saba says his group will soon begin leasing the spaces to ‘select tenants’ appropriate for Milton’s current mix of upmarket shopping and dining’.