InvestIdeas

interested chinese party deal

selling biz to own substantial shdr

http://info.sgx.com/webcoranncatth.nsf/ ... penelement

sale = rmb 516.71m = S$ 104.4848m

from 3Q09
num of sh = 1,158,460,754
cash = rmb 23.525m + rmb 132.187m = rmb 155.712m
debt = rmb 78.415m + rmb 26.68m + rmb 6.64m = rmb 111.735m

net cash = rmb 560.687m = S$113.3774m
=> $0.09787 cash per sh

lastdone = $0.065
key qn: can we trust mgt to return $$?
akan datang ... watch this space

not vested ... yet ... and maybe nv until i know their plans for this new cash shell coy IF deal is done

RECEIPT OF FIRST PAYMENT OF SALE CONSIDERATION
http://info.sgx.com/webcoranncatth.nsf/ ... penelement

so far so good
just tat i do not know which china bank is holding their money etc etc
still not vested
lastdone = $0.065
possible entry px thus far = $0.055

YO içhew,

can i ask how do you come across this Co.? through IR??

ichew, the calculation above isn't quite right, as the consolidated cash & debt don't stay with the holding company after all the subsidiaries are sold. In fact, if u look at the divestment proposal, the stated NTA after divestment is only 8.365c (40.65 fen), out of which 8.348c is cash.

There're 2 main risks in this bet:

1. Shareholder approval

Hui Zhong Holdings (2nd largest shareholder) paid close to 8c per share to buy her 26.64% stake (from Rowsley) in 2007. Would she be satisfied with a exit price of 8.3+? Not sure about Hong Leong (3rd largest shareholder).

2. What will mgmt do with the cash?

The proposal mentioned about a capital reduction after divestment, and with today's announcement that the CEO has ceased his service, I'm hoping that this will turn out to be another Asia Dekor (ie. return all cash & delist).


Things will be clearer once the circular is sent out, and the SGM conducted. The spread will narrow though, if u wait till then. Just my views.

I am surprised to see Kwek in the substantial shareholder list. He probably got the shares in 2004 at a max of 10.5 cts looking at past AR and stock prices.

Would she be satisfied with a exit price of 8.3+?

I supposed you used 1:5 for the exchange rate and the Consideration in the calculation. If we use the Net Proceeds, it will closer to 8.1cts. The kicker comes as the Settlement Amount of 3+cts. That brings us to a total of 11+cts. At this price, the chance of success greatly improves.

another Asia Dekor

The risk for Eagle is higher as the underlying business is not making money. Asia Dekor is quite established in their brand of laminated flooring.

And I assume that the amount due to subsidiaries will be paid.
Non current: 46,853
Current: 117,020
This will reduce the net net proceeds to...hmmm 8.3+cts.

This used to be a good brand many years ago. However, if you go down to any renovation centre now, you will realize that there are so many choices and you will not be able to have any pricing power anymore.

Vested in anticipation that
- substantial shareholders are substantial enough to represent minorities for cash to be returned;
- limited roadblocks due to government backing (if shareholders approved);
- current spread will narrow

I'm wondering if it's better for the cash not to be returned.

The B/S shows a line on "reserves" that breaks down further into "accumulated losses" and "surplus capital" (or something like that... dun have the doc with me now) in the NOTES. If I read this correctly, Eagle has a fair amount of "retained losses". The total net income for the last 5 years amt'ed to -307m RMB.

China has a 5 year losses carry forward tax rule, if i'm not wrong. If the resulting cash shell purchases a profitable business, it could tap on the "retained losses" to reduce tax significantly. The value obtained would then be more than the remaining cash.

sorry, been busy so cant reply nor monitor earlier


hi san san
it was a chance random encounter
i came across this while scanning thru sgx announcements which i do when i am free
btw as i am a christian,i also believe my God will show me
BUT this is really a personal belief


hi bluechipstamp
thanks for the accounting points
i am not good in accounting but willing to learn
let me go re-read the B/S once my project ends
but thanks for pointing out my errors
much appreciated
hopefully with more practice, i will make less mistake


hi cif5000
as mentioned, i am still not vested
key reason being i got no time to read and re-read, digest and re-digest this transaction
it is a IPT (interested party txn)
i am always sceptical abt such deals
another reason is i cant call anyone up to ask my questions
last reason is i learned from last yr china cash companies saga - ie i dunno if their cash is real or hidden or wat they intend to do with it etc etc
sorry, tink i am too careful sometimes.
i rather not lose money than earn a little.
i prefer to buy A LOT of those that i am very confident in than spread my bullet around.
but this is again a personal way