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08-01-2013, 10:02 PM
(This post was last modified: 08-01-2013, 10:03 PM by Nick.)
This is one of the 2 remaining Ow Chio Kiat companies listed in SGX - the other is St****** while Cougar Logistic recently had a restructuring exercise. I read with a great deal of intrigue at the latest SPA between SSC and Cougar Logistic (CL) whereby the latter will divest its previously core logistic assets to SSC for $15.0 million.
http://info.sgx.com/webcoranncatth.nsf/V...90008AB5B/$file/SALE_AND_PURCHASE_AGREEMENT_ENTERED_INTO_WITH_MYP_LTD..pdf?openelement [M&A Announcement]
This is a significantly accretive acquisition and will boost SSC earnings tremendously. It is currently generated approx US$2 million NPAT on a quarterly basis and this division is very recurring as the vessels are on long term charters. The proposed acquisition targets generated US$3.3 million NPAT in the previous year. SSC and CL have a good history of dividend payout with the former paying 1 SG cents annually and the latter paying out virtually all of its profits. The key question - will this lead to higher dividends in FY 2013 onwards and hence a higher share price ?
(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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Yes, SSC is a little known stock.
As mentioned by Nick, the income of the company is from long term (20yrs) charter.
Profit for the next 10 plus years has been locked in.
Haven't really studied the impact in details though....
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Should be good deal to SSC. But just curious why the new owner of MYP ( Couger ) wants to sell these lucrative businesses away ?
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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(08-01-2013, 11:36 PM)cfa Wrote: Should be good deal to SSC. But just curious why the new owner of MYP ( Couger ) wants to sell these lucrative businesses away ?
They want to focus on properties....as stated in their announcement.
S$15m for S$3.3mNPAT with synergy among the businesses....
sounds right to me.....
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(08-01-2013, 11:43 PM)camelking Wrote: (08-01-2013, 11:36 PM)cfa Wrote: Should be good deal to SSC. But just curious why the new owner of MYP ( Couger ) wants to sell these lucrative businesses away ?
They want to focus on properties....as stated in their announcement.
S$15m for S$3.3mNPAT with synergy among the businesses....
sounds right to me.....
Just find the business too narrowly focused, only cars- carriers, no diversity, and charters for 2 vessals going to expire soon...
Gearing will be significant after this aquisition, since they are very unlikely to be able to use just internal resources for this.
GIven their payout ratio is already quite high, above 50% and much higher in some years, I am concerned even if i feel the buy is quite value for money.
just 2 cents worth and some very prelim reading after what nick post trigger my interest, i might be wrong...
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Market seems to like this transaction. Sp Ship is up 8.5% now.
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http://info.sgx.com/webcorannc.nsf/Annou...endocument
Ow sold his 27.08% stake in former Cougar at $0.28 per share - raked in S$8.6m.
His latest purchase is a masterstroke - basically he got an excellent bargain by buying back logistics business that originally belong to Singapore Ship and perhaps started from the Hai Sun Hup days.
This business is not new to him and should not pose any difficulties in terms of continuity and execution. While Singapore Ship bought 100% of the business at less than 4 times PER, on Ow's proportionate 27.08% stake, Ow would have paid S$4.1m for his proportionate stake - less than half of his sales proceeds.
On Sing Ship going forward, it appears that the rebuilding process is ongoing. Note that Sing Ship is currently a "stripped down" company post Ow's disposal of bulk carriers at the previous peak of the shipping cycle.
The car carrier that is currently owned by Sing Ship was purchased during the last two years and so far the long term lease to Japanese (if I am not wrong) has proven correct due to continued volatility in the global shipping market. The car carrier business is almost equivalent to a long term bond and is a good arbitrage (carry-trade) against the low US$ financing costs.
The "new" business as indicated in the announcement will provide S$ to help pay dividends noting that Sing Ship's financial statement is denominated in US$.
Ow is an extremely shrewed businessman. However, he only execute deals when they meet his terms. For the time being, apart from buying back a familiar business, it appears unlikely that any further new acquisitions will be forthcoming. More importantly, as pointed out by other buddies, will the latest acquisition lead to a change in dividend policy?
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(09-01-2013, 12:55 PM)greengiraffe Wrote: http://info.sgx.com/webcorannc.nsf/Annou...endocument
Ow sold his 27.08% stake in former Cougar at $0.28 per share - raked in S$8.6m.
His latest purchase is a masterstroke - basically he got an excellent bargain by buying back logistics business that originally belong to Singapore Ship and perhaps started from the Hai Sun Hup days.
This business is not new to him and should not pose any difficulties in terms of continuity and execution. While Singapore Ship bought 100% of the business at less than 4 times PER, on Ow's proportionate 27.08% stake, Ow would have paid S$4.1m for his proportionate stake - less than half of his sales proceeds.
On Sing Ship going forward, it appears that the rebuilding process is ongoing. Note that Sing Ship is currently a "stripped down" company post Ow's disposal of bulk carriers at the previous peak of the shipping cycle.
The car carrier that is currently owned by Sing Ship was purchased during the last two years and so far the long term lease to Japanese (if I am not wrong) has proven correct due to continued volatility in the global shipping market. The car carrier business is almost equivalent to a long term bond and is a good arbitrage (carry-trade) against the low US$ financing costs.
The "new" business as indicated in the announcement will provide S$ to help pay dividends noting that Sing Ship's financial statement is denominated in US$.
Ow is an extremely shrewed businessman. However, he only execute deals when they meet his terms. For the time being, apart from buying back a familiar business, it appears unlikely that any further new acquisitions will be forthcoming. More importantly, as pointed out by other buddies, will the latest acquisition lead to a change in dividend policy?
Yes, Ow is extremely good in shipping. He sold almost all his ships at the peak of the cycle few years ago. Now, SSC is back to Hai Sun Hup days.
The two carriers are on 20 years long term charter with Mitsui or something.
I like the way he manages the company.
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Ow is indeed a shrewed businessman. However as running a business is a long term thing, unless a shareholder has stamina to stay with him through the cycles, it will be difficult to see the fruits of labour.
One thing I forgotten to mention, Ow managed to pull off a big rabbit at Cougar before offloading another "stripped down" Cougar to the Indonesian.
A logistics centre at Jurong East was sold off the Manlo Logistics some time back that resulted in huge special dividends being paid off to Cougar shareholders.
Anyway, its back to the future for a lighter version of Hai Sun Hup that is rooting in Singapore Ship now.
As the global shipping industry remains in doldrums in line with global economic woes, we should never rule out that Ow may yet again take a plunge to bargain hunt. At that point in time, Singapore Ship may have to re-capitalise through a rights issue.
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The proposed acquisition will increase by about half its Net Profit based on the circular.
More importantly, the acquisitions will bring in the dough in SGD, which was one of the important reason: to pay the dividend which are in SGD.
The 1c dividend (which gives a yield of around 5% based on today's price) seems to be locked in too.
With Portek already delisted, this could be the closest to the industry that we can get on the local bourse.
Just when one of the news article is about buying stocks because of certain personalty, maybe Mr OCK is developing a cult following among the VB forumers?
Used to be vested in this long time ago but surely will take a closer look with this latest development.
(09-01-2013, 12:55 PM)greengiraffe Wrote: http://info.sgx.com/webcorannc.nsf/Annou...endocument
Ow sold his 27.08% stake in former Cougar at $0.28 per share - raked in S$8.6m.
His latest purchase is a masterstroke - basically he got an excellent bargain by buying back logistics business that originally belong to Singapore Ship and perhaps started from the Hai Sun Hup days.
This business is not new to him and should not pose any difficulties in terms of continuity and execution. While Singapore Ship bought 100% of the business at less than 4 times PER, on Ow's proportionate 27.08% stake, Ow would have paid S$4.1m for his proportionate stake - less than half of his sales proceeds.
On Sing Ship going forward, it appears that the rebuilding process is ongoing. Note that Sing Ship is currently a "stripped down" company post Ow's disposal of bulk carriers at the previous peak of the shipping cycle.
The car carrier that is currently owned by Sing Ship was purchased during the last two years and so far the long term lease to Japanese (if I am not wrong) has proven correct due to continued volatility in the global shipping market. The car carrier business is almost equivalent to a long term bond and is a good arbitrage (carry-trade) against the low US$ financing costs.
The "new" business as indicated in the announcement will provide S$ to help pay dividends noting that Sing Ship's financial statement is denominated in US$.
Ow is an extremely shrewed businessman. However, he only execute deals when they meet his terms. For the time being, apart from buying back a familiar business, it appears unlikely that any further new acquisitions will be forthcoming. More importantly, as pointed out by other buddies, will the latest acquisition lead to a change in dividend policy?
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