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Sino Grandness - ANother GEM
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josephyeo
Elite |
26-Feb-2017 21:14
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The companies mentioned in Hot Research are subjects of research reports issued recently by investment firms. Their opinions in no way represent those of Barrons.com or Dow Jones & Company, Inc. Share prices at the time the report was issued and the date of the report are in parentheses. To be considered for this feature, please send material to [email protected]
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josephyeo
Elite |
26-Feb-2017 21:13
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Singapore Takeover Targets: Who&rsquo s Next?DBS Vickers&rsquo top buyout picks include Courts Asia, PACC Offshore, Sinostar PEC and Mermaid Maritime.Feb. 23, 2017 12:36 a.m. ET
Recent buyout offers put privatisation theme back under the spotlight. Barely two months into the new year, we have already seen buyout offers for three companies, including Healthway Medical and Auric Pacific, offering premiums between 5% to 21% over their last transaction price and 14% to 21% over one-month VWAP. Privatisation premium offered. We estimate that the 20 small-mid companies (of which 14 have been delisted and privatised) that have announced potential privatisations over the last 12 months offered average premiums of 24% and 31% over their last transaction price and one-month VWAP, respectively. At least two-thirds of privatisation candidates were trading below book, while a further two companies were trading at low P/BV of under 1.1x just before their respective offer announcements. A quarter of the privatisation candidates were S-Chips. Of the 20 offers, 75% were made by majority shareholders (nearly half of which were by founding families). At least 15% were led by management or the executive team, while third party offers only represented 10%. Privatisations help unlock value and offer exit for shareholders. For majority-owned companies trading at persistently low valuations and with less incentive to maintain their listing - especially cash-rich companies with low capex needs, privatisations can often serve as a means of unlocking value for shareholders, while freeing up company resources towards longer-term objectives and growth. What have been the premiums offered? Premiums can vary pretty widely across deals, looking at small mid-cap privatisations (deal size under S$2 bn and excludes third-party offers) that have gone through successfully over the last 12 months, we found that:- a) Low P/BV companies were more likely to receive privatisation offers (70% were trading below book value) and saw higher premiums on average, b) Higher premiums (> 38% over 1mth VWAP) were often required to entice shareholders of companies trading at prices that were much lower compared to their historical peak, c) Conversely, premiums for companies trading close to the upper end of their historical range (i.e. Sim Lian) were more modest, at about 15-20%. Unsurprisingly, prior to the offer, these companies were at least 50% majority owned. While offerors in our sample year did not appear to show bias for net cash companies, we opine that in a rising rate environment, companies with net cash could potentially be more attractive targets, particularly for third-party buyers. These companies could be next. Staying on this theme, we screen for small-mid cap (market cap between S$50m to S$2 bn) companies outside our coverage that fit the following critera: 1) Low P/BV (Under 1.1x P/BV), 2) Profitable over the last 12 months, 3) Majority shareholders with > 50% stake in the company, 4) More than 40% of current share price backed by net cash. Trading below net cash per share. Of the 19 names that showed up on our screen, two were trading below their net cash per share levels, namely CDW Holding and Nobel Design. Their net cash per share represented 113% and 107% of their share prices respectively. Other names trading very close to their net cash per share include Sinostar PEC, Asia Enterprises, PEC Ltd and Hanwell &ndash all of which are trading above 90% of their net cash per share levels. Deep discounts to book value. At 0.50x, 0.53x, and 0.58x P/BV, Hanwell Holdings, Chemical Industries and Nobel Design appear to offer deep discounts to their respective asset values. Additionally, Nobel Design and Chemical Industries delivered 13.7% and 8.4% ROE over the last 12 months, respectively, which suggest that they could potentially be deeply undervalued. Undemanding PE valuations. A couple of names that appear inexpensive from a PE perspective include Nobel Design, Chemical Industries, Sinostar PEC, Multi-Chem, and Hai Leck Holdings, which are currently trading at 4.6x, 6.4x, 6.7x, 7.2x and 7.9x historical PE respectively. Majority shareholders have stakes of over 80%. Based on our screen, four companies &ndash Hai Leck Holdings, MultiChem, PNE Industries, and Khong Guan Flour Milling, had substantial majority shareholdings representing 88.5%, 83.6%, 82.0% and 81.8% of their respective free floats. Interestingly, some companies require less cash than on their balance sheet to privatise. With the founding Cheng family and related parties collectively owning about 83.4% of outstanding shares, we believe that Hai Leck Holdings will be a counter to watch as the estimated cash outlay required to acquire remaining shares of under S$25.8m (assuming a 40% offer premium), represents just 1.8x of TTM earnings. This is also less than the current cash (of S$69.9m as at end-4Q16) that the company has on its balance sheet. Assuming a 40% privatisation premium, OKP Holdings, among others, could also require less cash than available on their balance sheet to successfully privatise. With our stock screen in mind, we highlight 5 companies that could potentially see privatisation or take-over offers: Courts Asia (BUY, TP S$0.51) 1) Compelling valuations of 8x FY18F PE and 0.8x P/BV. 2) 74.3% owned by Singapore Retail Group, the outlay required to acquire remaining shares does not seem excessive in our view (c.S$58m, and approximately 2.3x FY18F net profit level based on current share price). PACC Offshore (BUY, TP S$0.41) 1) Share price has recovered off 2016 lows but at current prices, trades at > 50% discount to book value 2) Approximately 81.9% owned by Kuok group 3) POSH is a more stable long-term bet versus peers with no immediate debt concerns, and has also demonstrated ability to secure work for its vessels amid an anaemic market Mermaid Maritime (BUY, TP S$0.24) 1) Mermaid is c.87.3% held by the Thoresen group and its related management. With c. S$270m in cash on hand, the Thoresen group has the necessary ammunition to take Mermaid private. 2) Very low debt levels versus peers, and net gearing of only 0.11x as of 3Q16, which adds to Mermaid&rsquo s attractiveness as a privatisation candidate. CSE Global (HOLD, TP S$0.41) 1) Net cash 20% of market cap, 0.9x P/B and 6.5% dividend yield. Reasonable PE of 11x. 2) Free float of over 50% and with no single shareholder holding more than 15%, CSE is a potential take-over target. Sinostar PEC (NON-RATED) 1) Based in Shandong, China, Sinostar produces petrochemical products in two locations. 2) Company is trading below book at 0.8x, and under 7x PE, while trading nearly at net cash per share. 3) Single largest shareholder, the chairman, owns over 50% of the company. 
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hardwired
Senior |
26-Feb-2017 20:13
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Can you reproduce the article here. I can' t access the article. Thanks.
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josephyeo
Elite |
26-Feb-2017 17:47
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Share with you a link - DJ Singapore Buyout Targets: Who' s Next? -- Barrons.com Source: Dow Jones
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hardwired
Senior |
24-Feb-2017 16:28
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Going up up up |
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paranomic123
Veteran |
21-Feb-2017 11:45
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I bought almost 100 lots ave at 0.099 |
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alexchew
Master |
21-Feb-2017 11:41
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results coming next week. Just realised, they have close to 500m cash, and interest with 4% = 20m already. Easily sustain the dividends with interest income... More room for increased dividends definitely.. |
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josephyeo
Elite |
16-Feb-2017 16:50
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My 1st post on Sinostar .. 10 oct ' 16
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josephyeo
Elite |
11-Oct-2016 11:19
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last done 12.3cts. one of 3 companies trading below its cash level as highlighted by DBS Research on 10 oct ' 16. its cash per share is 15 cts against current price of 12.3 cts at date n time of posting. |
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josephyeo
Elite |
10-Oct-2016 16:52
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Sinostar is a much neglected stock. No retail interest for a long time. Most are not aware of its current low valuation. If it is able to continue w its good result the situation may change. For info ... i have the habit of picking under-valued neglected stocks and wait. When people become aware, the stock would have shot up like crazy. I was in Sunningdale, Valuetronic and many others long before they became popular hot stocks. I was amply rewarded. A stock is cheap because its neglected. by the time people are aware of its good value, the stock would have already run up. By then it may be too late to chase after the stock. Above write up is just to share my investment style.
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jayarumah
Master |
10-Oct-2016 10:11
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this one suggests retailers dont buy
why ? 1. volumes low 2. i can see easily bbs behind it in Full Control ....up down as easy as abc 3. signs showing bbs just want it for themselves only... thus very the...u know |
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jayarumah
Master |
10-Oct-2016 09:35
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2 possible options for Sinostar Pec : 1. Privatization Move by Existing Shareholder , who will find current price valuation a bargain 2. M & A Offer by big companies either in China or foreign-owned ang mo companies. If existing majority shareholder knows how to enhance its Value, No.2 Option is a better option. Any M & A (say by a Giant State Owned Chinese Company) will move this stock above 50 cents (like that China Aviation Oil) |
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jayarumah
Master |
10-Oct-2016 01:32
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you are very very sharp indeed.
Sinopec benefits from low oil prices. 8 years ago, it was trading at close to $1. Could be an M & A target for foreign companies wanting to make use of its distribution network to penetrate the vast China markets. Under Valued Stock. Been watching closely also. |
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josephyeo
Elite |
10-Oct-2016 00:47
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Sharing some notes on Sinostar Pec. Sinostar Pec is an s-chip listed in the Singapore Exchange in 2007 at 38 cts. Share price closed at 12.8cts on friday 7 oct 2016. Below are some datas/figures on the company: Prices for past 52 weeks: High : 13.5 cts Low : 6.0 cts Closing on friday 7 oct 2016 : 12.8cts Dividend : In the last 3 financial year, company had declared dividend. Dividend declared for financial year 2015 was 0.5 cts which gives a yield of 3.9% Company was profitable in the last 6 quarters: Jan-Mar ' 15 - profit 12.5 mil Apr-June' 15 - profit 8.7 mil July-Sept' 15 - profit 16.2 mil Oct-Dec' 15 - profit 3.3 mil Full year 2015 - profit 40735 mil Jan-Mar ' 16 - profit 11.4 mil Apr-June' 16 - 31.0 mil ( Profits in RMB ) Cash/debt n capitalisation. Company has a cash horde of 475 mil (RMB) and no debt. Company is capitalised at S$81.9 mil against cash of RMB 475 mil or S$99.75 mil (Exchange rate of 1RMB to S$0.21) Major shareholder buying back shares lately. 23 Sept ' 16 - 65500 shares at 8.7 cts 3 Oct ' 16 - 89000 shares at 10.4 cts 5 Oct ' 16 - 117000 shares at 11.2 cts 6 Oct ' 16 - 335000 shares at 10.8 cts NTA Nta is at 18 cts against share price of 12.8 cts Reasons why I am vested in this company. Company is trading below its cash value, major shareholder buying back shares, trading below nta, have been profitable in the last 6 quarters, and has a dividend yield of close to 4% Notes: Company is an s-chip. was not profitable in 2014 and earlier. Company has been placed under SGX Watchlist for failing to meet the MTP (Minimum Trading Price) since March 2016. Caveat Above are for sharing. Its not intended to be a buy or sell call. |
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