Ocean Sky International

The management now want to acquire 30% of Ang Tong Seng Brothers Enterprises Pte. Ltd., a construction coy whose main shareholders are the 2 Ang brothers in Ocean Sky. It is obvious to me that they are using OS to help ATS. The $3m they intend to pay ATS for the acquisition wud likely mean OS will thus not be paying dividends this year. How do minority shareholders obstruct such move of the Ang brothers? Hope forumers will give advice.

Note: their earlier proposed RTO failed

I thought Ocean Sky's proposed divestment of its core contract garment manufacturing operation for a max. USD55.0m and the proposed diversification into new property and related businesses, as well as the proposed payment of a $0.016/share Special dividend upon completion of the divestment, are quite interesting.....
http://info.sgx.com/listprosp.nsf/bc9c2d...40015c01d/$FILE/OceanSky-Cir(Casting).pdf

I am also attracted by the declared payment of a Final dividend of $0.008/share - which is expected to come before the Special dividend - in the recent FY12 (ended 31Dec12) full-year results announcement.....
http://info.sgx.com/webcoranncatth.nsf/V...100458841/$file/OSIL_FY2012.pdf?openelement

In the EGM held today (30Mar13), shareholders present have given a resounding "FOR" vote to the proposed divestment of the core contract garment manufacturing operation for a max. USD55.0m, and the proposed diversification into new construction/engineering and property businesses.....
http://info.sgx.com/webcoranncatth.nsf/V...E0027173B/$file/OSIL_Results_of_EGM.pdf?openelement

At current price in the ballpark of 0.195 sgd, it is attractive. We are exchanging 0.195 with something that will have a NTA in the ballpark of 0.27 sgd in the near future, especially most of them are cash. What is worrying is that their foray into property development and construction busineess.
Based on the 30 years history of ATS, which only manage to secure 28 millions revenue so far, it seems that their skill in this sector is so-so.

QUOTE :
ATS is a profitable company with a proven track record of more than 30 years in the civil engineering and construction sector. ATS’ audited revenue for the last three financial years ended 31 December 2009, 31 December 2010 and 31 December 2011 were approximately S$25.8 million, S$21.0 million and S$27.8 million respectively. The audited profit after tax of ATS for the last three financial years ended 31 December 2009, 31 December 2010 and 31 December 2011 were approximately S$2.7 million, S$3.4 million and S$2.8 million respectively. Given the foregoing, the Board believes that the completion of the proposed Acquisition will contribute positively to the future earnings of the Company and enhance shareholder value in the long term.
UNQUOTE.

After selling the garment manufacturing business and Ocean Sky collecting USD55.0m from it, what are the chances that the controlling shareholders Ang brothers would waste away the company's enhanced capital and cash resources by investing indiscriminately into new projects?

My own view is that they won't and, as the cash reserve in the company after the proposed business disposal and paying out the 2 proposed dividends would still be huge - estimated to be approx. USD80.0m, or approx. $0.236/share - I believe there is a fair chance that Ocean Sky would pay out more dividends in the next 12 to 24 months.

(31-03-2013, 08:54 PM)dydx Wrote: After selling the garment manufacturing business and Ocean Sky collecting USD55.0m from it, what are the chances that the controlling shareholders Ang brothers would waste away the company's enhanced capital and cash resources by investing indiscriminately into new projects?

My own view is that they won't and, as the cash reserve in the company after the proposed business disposal and paying out the 2 proposed dividends would still be huge - estimated to be approx. USD80.0m, or approx. $0.236/share - I believe there is a fair chance that Ocean Sky would pay out more dividends in the next 12 to 24 months.

Good to see your interest in this dead stock. Were you there at the EGM? Edward said he and the board will consider another special dividend when a shareholder made that question. However, whether or not that will materialize remains an unknown, just as much as an unknown on how much cash will be consumed by the new business. We know that in the construction/property business, the appetite for cash is huge. And I have not seen one that has too much cash to deploy...

There was no indication on exactly what the company has planned following the sale of the garment business. All we know is that the listco will absorb the 30 year-old small time family business. The chairman has our money, and he also wants our trust. I haven't learned how to value trust or run Discounted Trust Flow valuation. He said the same trust thingy when the RTO was on the table.

Let's say the sale goes through and the cash is in. The company then follows to deploy the cash into assets to support the new business. What price should the stock trade when we know that SGX has traditionally valued such companies at discount to their book values?

In other words, are we better off buying other discounted construction/property companies? Do we have to discount the cash in advance since only 1.6 cts will be paid out as special dividend and knowing that the remaining are kept for better or "diworsification"? If so, has the current share price already fairly valued the company?

(31-03-2013, 10:52 PM)cif5000 Wrote: Good to see your interest in this dead stock. Were you there at the EGM?

I did not make it to the EGM. Any other points discussed in the meeting? Was the attendance good?

Ocean Sky has gone up by another $0.004 this morning, last done at $0.197. I guess some shareholders who attended the meeting decided to add more shares for the coming 2 dividends.

Things shouldn't be judged on its face value.

ATS is a v small business. After 30 years, its profit has only reached $3m.

For all u know, ATS could be a decoy to satisfy SGX's ongoing business requirement, so as to buy more time to execute a RTO or acquisition.

Also, if the failed RTO had proceeded, the Ang's would be reaping the cash gains from selling the apparel business alone. Now that they've got to share it with minorities, we've to question HOW the Ang's are going to extract the value out.

(01-04-2013, 09:42 AM)dydx Wrote:

(31-03-2013, 10:52 PM)cif5000 Wrote: Good to see your interest in this dead stock. Were you there at the EGM?

I did not make it to the EGM. Any other points discussed in the meeting? Was the attendance good?

Ocean Sky has gone up by another $0.004 this morning, last done at $0.197. I guess some shareholders who attended the meeting decided to add more shares for the coming 2 dividends.

OSI had a big move on high volume today. Up 12.2% and closed at $0.23.

Of interest to me were 2 things and they were floated during the AGM - RTO and opportunities in Myanmar. Edward answered in the most professional manner, and to really see into his mind one has to be a master psychologist. I could catch no ball as his verbal and body language were well encrypted, at least from where I was seated.

http://info.sgx.com/webcorannc.nsf/Annou...endocument

Book Closure Date of Special Dividend of 1.6cts is on 19 June, 2013.

A question for Buddies:
Based on 1Q2013 Financial Statement, most of asset is Cash (about USD79m), except the rest of USD5.3m is Non-Current asset.

Currently, Elite KSB asset is mainly in cash, and it is a Cash Company.
Why this counter is not designated as Cash Company?