King Wan Corporation

(18-02-2014, 06:03 AM)GPD Wrote: Kingwan's current share price should have priced in the high expectation of the $50mil windfall from KTIS listing. If it doesn't get listed, its will likely suffer more than just a dip. Its dividend payout will lend some support to its price but not much. Any premium built into its current price will be removed if KTIS listing went haywire.

The last date for this to take place will be 15 Aug this year. I expect a big slide in confidence if KTI still cannot get listed by late July to early Aug.

KingWan's M&E business is still doing fine but those two Thai businesses contributed half of KingWan's profit before they were disposed of. It actually made KingWan quite risky now. Its PE is about 4 before this event. Since this event, profit has halved so PE doubled. Then price went up in anticipation and so PE raised further. PE is now ~14.

No sure how their property venture is turning out but it doesn't seems to have contributed strongly to its bottomline, if any.

Not a call to buy or sell. DYDD.

(Vested)

http://infopub.sgx.com/FileOpen/KWCAnnou...leID=36915

5. PUT AND CALL OPTIONS
5.1 KTIS, the Company and the Subsidiary have agreed to grant to each other the options described below in paragraphs 5.2 and 5.3, if the Consideration Shares are not issued and allotted to the Company and/or the Subsidiary within twelve (12) months from the Completion Date (or such other period as the parties may mutually agree in writing) (‘Expiry Event’).

5.2 KTIS grants each of the Company and the Subsidiary the option to require KTIS to sell and transfer all (but not some only) of the EPPCO Shares and EPC Shares (collectively the ‘Option Shares’), on the exercise of which KTIS shall become bound to transfer all of the Option Shares at the price equivalent to the Cash Consideration (‘Option Price’) in accordance with the EPPCO Agreement and EPC Agreement.

5.3 Each of the Company and the Subsidiary grants KTIS the option to require the Company and the Subsidiary to purchase the Option Shares at the Option Price, on the exercise of which the Company and the Subsidiary will become bound to acquire all of the EPPCO Shares and EPC Shares respectively in accordance with the EPPCO Agreement and EPC Agreement.

5.4 The Option is exercisable by the service of a written notice (an ‘Option Notice’) by KTIS or (as the case may be) the Company and the Subsidiary within three (3) months after the occurrence of the Expiry Event (the ‘Option Period’).

5.5 If applicable, KTIS shall pay each of the Company and the Subsidiary such amount as may be necessary to put each of the Company and the Subsidiary into the financial position it would have been in if the sale of the EPPCO Shares and EPC Shares did not occur. Such amount shall include, but is not limited to:
(a) any dividends that may have been paid by EPPCO and/or EPC to KTIS from the Completion Date; and
(b) any diminution in the financial position of EPPCO and EPC arising from such restructuring exercise carried on by KTIS after the Completion Date.

Can somebody help me to understand this put and call option?

5.2 and 5.3) Does it mean that if KTIS ipo not happen, Kingwan will get back its 20% share in EPPCO and EPC, but need to pay back the 5% cash that KTIS already paid to Kingwan upon completion of sale?

5.5) If the deal is off, KTIS needs to pay back all the dividends owed to Kingwan within the IPO pending period?

After that, everything back to square, Kingwan continues to hold the thai investment and receive dividend as usual?


(Vested)

(18-02-2014, 06:03 AM)GPD Wrote: Kingwan's current share price should have priced in the high expectation of the $50mil windfall from KTIS listing. If it doesn't get listed, its will likely suffer more than just a dip. Its dividend payout will lend some support to its price but not much. Any premium built into its current price will be removed if KTIS listing went haywire.

The last date for this to take place will be 15 Aug this year. I expect a big slide in confidence if KTI still cannot get listed by late July to early Aug.

KingWan's M&E business is still doing fine but those two Thai businesses contributed half of KingWan's profit before they were disposed of. It actually made KingWan quite risky now. Its PE is about 4 before this event. Since this event, profit has halved so PE doubled. Then price went up in anticipation and so PE raised further. PE is now ~14.

No sure how their property venture is turning out but it doesn't seems to have contributed strongly to its bottomline, if any.

Not a call to buy or sell. DYDD.

(Vested)

I share the same concern as you, hence, I am having a conflict with myself now. Doubt the share would drop back to its pre-news level but still definitely a significant drop. Technically, if one is going for a value approach there is no reason to sell the company but rather add even more when the price declines, since the company is indeed undervalued?

(Vested)

SG Value Investor
http://www.sgvalueinvestor.wordpress.com

Investors got to take note of 2 issues.....

One is the Thai baht. With the current political turmoil and rice issue, most likely thai baht might depreciate further......so when it is translate back into Sing Dollar, the amount might be a big difference. The second concern is their stake in The Skywoods. The project was launched in early Sept 2013.


Update: The Skywoods Jan 2014
Cumulative Units Sold to-date: 62
Median Price ($psf) in the Month: 1308
Units sold in the month: 3
Cumulative Units Launched but Unsold: 358
Total Number of Units: 420

(I used the yahoo currency converter to convert the THB 1.224b into S$ and I got $47.4m instead of $50.2m stated in the 3Q2014 result)
(Exchange rate - 0.0387 19 Feb 2014)

(18-02-2014, 11:57 AM)desmondxyz Wrote:

(18-02-2014, 06:03 AM)GPD Wrote: Kingwan's current share price should have priced in the high expectation of the $50mil windfall from KTIS listing. If it doesn't get listed, its will likely suffer more than just a dip. Its dividend payout will lend some support to its price but not much. Any premium built into its current price will be removed if KTIS listing went haywire.

The last date for this to take place will be 15 Aug this year. I expect a big slide in confidence if KTI still cannot get listed by late July to early Aug.

KingWan's M&E business is still doing fine but those two Thai businesses contributed half of KingWan's profit before they were disposed of. It actually made KingWan quite risky now. Its PE is about 4 before this event. Since this event, profit has halved so PE doubled. Then price went up in anticipation and so PE raised further. PE is now ~14.

No sure how their property venture is turning out but it doesn't seems to have contributed strongly to its bottomline, if any.

Not a call to buy or sell. DYDD.

(Vested)

http://infopub.sgx.com/FileOpen/KWCAnnou...leID=36915

5. PUT AND CALL OPTIONS
5.1 KTIS, the Company and the Subsidiary have agreed to grant to each other the options described below in paragraphs 5.2 and 5.3, if the Consideration Shares are not issued and allotted to the Company and/or the Subsidiary within twelve (12) months from the Completion Date (or such other period as the parties may mutually agree in writing) (‘Expiry Event’).

5.2 KTIS grants each of the Company and the Subsidiary the option to require KTIS to sell and transfer all (but not some only) of the EPPCO Shares and EPC Shares (collectively the ‘Option Shares’), on the exercise of which KTIS shall become bound to transfer all of the Option Shares at the price equivalent to the Cash Consideration (‘Option Price’) in accordance with the EPPCO Agreement and EPC Agreement.

5.3 Each of the Company and the Subsidiary grants KTIS the option to require the Company and the Subsidiary to purchase the Option Shares at the Option Price, on the exercise of which the Company and the Subsidiary will become bound to acquire all of the EPPCO Shares and EPC Shares respectively in accordance with the EPPCO Agreement and EPC Agreement.

5.4 The Option is exercisable by the service of a written notice (an ‘Option Notice’) by KTIS or (as the case may be) the Company and the Subsidiary within three (3) months after the occurrence of the Expiry Event (the ‘Option Period’).

5.5 If applicable, KTIS shall pay each of the Company and the Subsidiary such amount as may be necessary to put each of the Company and the Subsidiary into the financial position it would have been in if the sale of the EPPCO Shares and EPC Shares did not occur. Such amount shall include, but is not limited to:
(a) any dividends that may have been paid by EPPCO and/or EPC to KTIS from the Completion Date; and
(b) any diminution in the financial position of EPPCO and EPC arising from such restructuring exercise carried on by KTIS after the Completion Date.

Can somebody help me to understand this put and call option?

5.2 and 5.3) Does it mean that if KTIS ipo not happen, Kingwan will get back its 20% share in EPPCO and EPC, but need to pay back the 5% cash that KTIS already paid to Kingwan upon completion of sale?

5.5) If the deal is off, KTIS needs to pay back all the dividends owed to Kingwan within the IPO pending period?

After that, everything back to square, Kingwan continues to hold the thai investment and receive dividend as usual?


(Vested)

The way I read, seems like KingWan is guaranteed equivalent to that $50mil (in Thai Bahts so still subject to currency risk?) one way or another. Sounded like a risk free gain agreement.

Still how does one value the future of KingWan after this gain? Suppose it all went as planned, its prices went up by another 25%, its P/E will be ~17-18 based on its core M&E business. Not sure how much the property and vessel venture will contribute to its bottomline.

Long term wise, there is no visibility of strong EPS growth (yet).

Just sharing my views.

KTIS Group seeks funds for expansion

Kaset Thai International Sugar Corporation (KTIS Group), the country's third largest sugar manufacturer, will seek funds to expand capacity of its bio-power plants through the stock market in the second quarter of this year.

Full Article:
http://www.bangkokpost.com/business/news...-expansion.


Recent weakness in the share price could be a good entry opportunity

My wishful thinking if they did get listed during the 2nd Q:

Pay 1ct final dividend for FY14
Pay 0.5cts interim dividend together with a 1.5cts special dividend for Half-year FY15.

http://www.bangkokpost.com/business/news...h-ipo-cash

Quote:Its debut on the Stock Exchange of Thailand has been slated for April 28.

(04-04-2014, 11:02 AM)cif5000 Wrote: http://www.bangkokpost.com/business/news...h-ipo-cash

Quote:Its debut on the Stock Exchange of Thailand has been slated for April 28.

Ah what a waste. Only barely started accumulating 60 lots then this news broke and the price shot up. Was expecting listing to happen sometime in Aug 2014

A quick qn for any pros ard here:
KW recorded almost $1.5m in "interest income" from loans to associates, and $600k plus in "income from financial guarantees" to associates for bank loans, in the 9mths to Dec 2013.
This is very substantial considering the net profit is $4.6mil

Anyone knows what is this "income from financial guarantees" about?
Is KW loaning out money to associates who otherwise may not be able to get bank loans? Otherwise why would the associates get loans from KW? Or is KW loaning out at a lower interest rate than what they would get from banks?

I am concerned as loaning money is not their core businesses and there's little information about who they are loaning to and the terms of the loan.

<vested>

(07-04-2014, 11:12 AM)GFG Wrote:

(04-04-2014, 11:02 AM)cif5000 Wrote: http://www.bangkokpost.com/business/news...h-ipo-cash

Quote:Its debut on the Stock Exchange of Thailand has been slated for April 28.

Ah what a waste. Only barely started accumulating 60 lots then this news broke and the price shot up. Was expecting listing to happen sometime in Aug 2014

A quick qn for any pros ard here:
KW recorded almost $1.5m in "interest income" from loans to associates, and $600k plus in "income from financial guarantees" to associates for bank loans, in the 9mths to Dec 2013.
This is very substantial considering the net profit is $4.6mil

Anyone knows what is this "income from financial guarantees" about?
Is KW loaning out money to associates who otherwise may not be able to get bank loans? Otherwise why would the associates get loans from KW? Or is KW loaning out at a lower interest rate than what they would get from banks?

I am concerned as loaning money is not their core businesses and there's little information about who they are loaning to and the terms of the loan.

<vested>

To be honest, many small companies does that; internally funding their subsi company on interest free. In some other cases, some directors even lend the company $ at exorbitent interest rate. Given their exposure to property market, I believe they may have lend to their associate or subsi to bargin hunt investment properties in Singapore. (dated 17th Jan on SGX). I think thats what most cash rich towkay are doing these days ..

KTIS listing adds new excitment, with prospect of special dividend in their full year reporting in May. However, it seem theres some consolidation above $0.30 level.. Hoping for more upside potential in near term.

(07-04-2014, 02:14 PM)DP28 Wrote:

(07-04-2014, 11:12 AM)GFG Wrote:

(04-04-2014, 11:02 AM)cif5000 Wrote: http://www.bangkokpost.com/business/news...h-ipo-cash

Quote:Its debut on the Stock Exchange of Thailand has been slated for April 28.

Ah what a waste. Only barely started accumulating 60 lots then this news broke and the price shot up. Was expecting listing to happen sometime in Aug 2014

A quick qn for any pros ard here:
KW recorded almost $1.5m in "interest income" from loans to associates, and $600k plus in "income from financial guarantees" to associates for bank loans, in the 9mths to Dec 2013.
This is very substantial considering the net profit is $4.6mil

Anyone knows what is this "income from financial guarantees" about?
Is KW loaning out money to associates who otherwise may not be able to get bank loans? Otherwise why would the associates get loans from KW? Or is KW loaning out at a lower interest rate than what they would get from banks?

I am concerned as loaning money is not their core businesses and there's little information about who they are loaning to and the terms of the loan.

<vested>

To be honest, many small companies does that; internally funding their subsi company on interest free. In some other cases, some directors even lend the company $ at exorbitent interest rate. Given their exposure to property market, I believe they may have lend to their associate or subsi to bargin hunt investment properties in Singapore. (dated 17th Jan on SGX). I think thats what most cash rich towkay are doing these days ..

KTIS listing adds new excitment, with prospect of special dividend in their full year reporting in May. However, it seem theres some consolidation above $0.30 level.. Hoping for more upside potential in near term.

Yes, subsidiary companies.
But these are associate companies where their stake is considerably less. As of FY13Q4, I noted that their investment in associates collectively, net of dividends received, is $12,042,006. But their share of associate's book value is only $6.6mil.
In other words, net of dividends, their investment has actually decreased by almost 50%!

I do note that based on the most recent FY14Q3 results though, the investment in associates has decreased to 4mil only. Probably through the dividends they have received from associates.