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09-09-2012, 12:16 PM
(This post was last modified: 09-09-2012, 12:23 PM by johnnydash.)
(07-09-2012, 11:23 PM)ngcheeki Wrote: There was surge in volume (1,865 lots) and share price (S$0.181) for King Wan in today. The cause is likely due to a report in The Edge Singapore September 10 2012, hinting of a possible special dividend from the sale of their Thai associates. I suspect the share price uptrend will be continue for the next 1 to 2 trading days. The following is what I had extracted from the article:
1. Possible 5X returns inclusive of $16 mil and $50.2 from the sale of stakes in 2 associates (Environment Pulp and Pater Co, Ekarat Pattana Co) with the original investment of $12 million.
2. Kaset Thai Industry Surgar Co (KTIS) is preparing for an IPO in 1Q FY2013.
3. King Wan stakes in KTIS is expected to be just below 3%.
4. King Wan and KTIS found each other because their controlling families share Teohew Clan.
5. After sale of stakes in EPPCO and EPC, NTA of king wan will be 31.13 cents which is twice the market value.
6. King Wan will see a significant decline in its earning as it won't be collecting dividends from their associates.
7. Opptune time to sell EPPCO and EPC as the tax break they enjoy will soon end and raw materials and energy cost will continue to rise.
8.The strength of M&E (wiring and installation of air con) Business is able to fill the 'lost' in dividend with 25,000 HDB falts launch this year and 83,251 uncompleted private units
9. 35% owned 105 units of starlight suites in RV are 51 units sold at an average price of $2,100 to $2,200
10. UOB Kay Hian and CIMB research suggested in July 12 and July 17 that KingWan is likely to give special dividend once sale proceed is received.
>>10
5% of sales proceed is in cash, 95 % is in ipo shares of kaset thai. from the annual report 2012.
if that's the case there will be significant market risk. so on paper the gain looks good but in reality its not locked in. it will only be realised after king wan sells its ipo shares.
if we consider the following. KTIS is estimated to have a market cap of 1.6 billion sgd. assuming the majority shareholders wish to stay majorly vested, they will place out 20% new shares for the ipo. so ipo will be worth about 300 million. Kingwan will get 45 million worth of the ipo which is 15%.
i think there will be sales restriction? not sure about this though. but legal restriction or not, the only way for king wan to get out quick will be in a good market. in a quiet, lacklustre market, kingwan has to sell the ipo slowly or risk putting pressure on the price.
we are not sure of kingwan's plans, whether to divest its stakes completely. but we know that if the ipo tanks, than kingwan will be locked in for a longer time.
so a special dividend from proceeds of this disposal seems far away.
please correct me if i am wrong
i am not sure about the ipo market in thailand, maybe someone can comment on this.
cos unless there is a localised and distinct set of circumstances in thailand that causes its ipos to be red hot, for at least 3 months so king wan can divest, than i assume that its ipo market will depend heavily on general market sentiment around the world. (two eyes on europe, slow down in china, maybe even US fiscal cliff)
so buying kingwan i will say is leveraging on market risk. market risk from its own shares as well as prospective gains.