One investment specialist believes that a handful of ASX 200 shares could be attractive merger or acquisition (M&A) targets.
Tribeca Investment Partners lead portfolio manager Jun Bei Liu gave her analysis of these shares in an article that appeared in Livewire yesterday morning.
Liu said the M&A case for these stocks is strengthened due to their depressed valuations amid the current bear market, while their business fundamentals remain strong. Liu believes another catalyst will be a sector rotation into growth stocks over the coming year. From that, the real estate property trust (REIT) and property trust sectors are "the most obvious M&A targets".
Let's investigate which ASX 200 companies could be snapped up in the next 12 months.
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Property shares could be a target
Liu believes that Dexus Property Group (ASX: DXS) and GPT Group (ASX: GPT) could be prime M&A targets. They are potentially undervalued when comparing their share prices to their book values.
Liu said:
The most obvious M&A target is the REIT and the Property Trust sector. The premium property players, such as Dexus or GPT Group, are not going to remain at such low discounts to their net asset values. We also see value in Ramsay – we think it looks incredibly cheap, given its premium asset holding, as well as its expected earnings growth over the next few years.
Both of these property shares are down substantially year to date. Dexus is down 30.7% while GPT Group has lost 25.9%.
ASX 200 tech shares too
Liu is also keen on two ASX tech shares as M&A targets, namely NextDC Ltd (ASX: NXT) and Megaport Ltd (ASX: MP1). Liu leaned more towards NextDC due to its robust fundamentals and "infrastructure-like revenue stream".
Thanks to the sector rotation out of technology stocks that unfolded late last year, the technology sector is one of the worst performers on a year-to-date basis. NextDC is down 29% while Megaport is down over twice as much at a 67% loss.
