OKH Global (formerly: Sinobest)

[CY09]

http://infopub.sgx.com/FileOpen/OKH%20-%...eID=397042

Wow loans at 1.5% per month, thats as good as P2P loan rates. They should have asked me to be part of the loan syndicate

[Triple70]

Why need to do a capital reduction exercise? How does that show the true intention of the controlling shareholders?

[TTTI]

http://infopub.sgx.com/FileOpen/OKH%20-%...eID=397042

Wow loans at 1.5% per month, thats as good as P2P loan rates. They should have asked me to be part of the loan syndicate

Yes, but that's only a short term loan. You'd expect the interest rates to be exorbitant.

Also, the 1.5% is only for the 1st 3 months, after that, it goes up to 2% per month!

yup, wished they'd ask me to be a part too.

[TTTI]

This whole episode served to show what can happen when you get "margin called".

Nevertheless, I have taken the chance to exit at 0.089. It was a fun ride but industrial property landscape is one area I do not want to invest much (esp when OKH was only able to sell less than 30% of their new projects). Just want to thank financial institutions for giving me such a chance of a trading gain.

If OKH boss requires a quick loan, feel free to pm me here. 16% interest loan

after some digging i come to the conclusion that the sales for their two new projects, ace buroh and loyang enterprise is well above 30%. ace buroh is quite well sold. 
i came to this conclusion from a combination of looking at listings on property portals, crossing out double listings, checking with listed agents, and statistics from JTC/ URA.

to put across a simple stats. For industrial projects that are completing in 2016 ( a category loyang enterprise fall into), the number of unsold units is only about 194 for the whole market in east, central and northeast region(yes jtc has this wierd classification), which has 23 projects. so on average each project has 8 unsold units. even if we assume that loyang enterprise is so lousy that it underperforms by a margin of 200%, thats 24 unsold units, out of about 100 units for the whole project. thats still 75 % sold. 

most of the unsold industrial properties in Singapore are in the north! 1400 /2000 unsold units. neither ace buroh or loyang is in the north.

will any other valuebuddies will like to take up the challenge to try and get to their estimates? or share how they will approach this!

Just to point out that these industrial projects revenue recognition is by a completed contracts method.
In other words, even after building and selling the units, the profits do not show up in the income statement yet, they only come up upon TOP

That may provide the catalyst for OKH to suddenly spike up once these uncertainties subside.
Afterall, we all know the main reason for the tanking of the share price is due to margin calls, which technically doesn't affect the fundamentals of the company

Having said that, I have not done much of an analysis of this company. Not sure if there are any hidden value traps
The recent dilution of existing shareholders is one such trap

[CY09]

http://infopub.sgx.com/FileOpen/FY2016_Q...eID=404828

Its latest Q3 results shows Loyang entrprise is about 44% sold. During this quarter, a new category appeared and that was "Completed properties for sale" worth 87,877,000.

Cash flow is tight with about 100 mil in loans maturing on the back of 65 mil. This is probably why Singhaiyi has to come in for share placement/debt lending exercise to ease the cash flow burden

[Louhan]

AGM on 21 Dec 2016. Can find out from management on their cash flows and sales of the industrial properties.

[weijian]

So, Chip Eng Seng's construction arm is returning to the public markets. To recap about 2 years ago, the Tangs delisted the entire CES at ~25-30% below NAV. Now OKH has to pay 118.5mil, a 56% premium to its book value for this "RTO". But to be fair to OKH's minorities, this 100% share deal is done via issuing new OKH shares at NAV rather than market value.

PROPOSED ACQUISITION OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL OF CHIP ENG SENG CONSTRUCTION PTE. LTD. AND ALLOTMENT AND ISSUANCE OF SHARES IN OKH GLOBAL LTD. AS CONSIDERATION FOR THE PROPOSED ACQUISITION

(a) The Company has engaged RSM SG Corporate Advisory Pte. Ltd., as the independent valuer (the "Independent Valuer"), to undertake a valuation of the Target Group. According to the summary valuation report dated 12 November 2024 prepared by the Independent Valuer, the Independent Valuer has assessed that the market value of the Target Group as at the valuation date of 30 June 2024 is in the range of approximately S$115.3 million to S$128.4 million. The valuation was prepared based on, inter alia, the income approach or net asset value approach (as applicable), depending on the business
nature of each entity and availability of information. The market value of 100.00% of the share capital of the Target Group as at the valuation date of 30 June 2024 was derived using the sum-of-parts approach taking into account the shareholding interest of the Target Group in each entity.

(b) As at 30 June 2024, the (i) book value of the Sale Shares is S$75,878,000; and (ii) net tangible asset value of the Sale Shares is S$65,094,000. The shares of the Target are not publicly traded.

https://links.sgx.com/FileOpen/OKH%20Glo...eID=827225

[ghchua]

Hi weijian,

The deal is hugely dilutive to existing OKH Global shareholders, not only in terms of EPS but also NAV.

Long term investors already lost a lot from the previous RTO from Sinobest to OKH Global. Do they have the stomach for another "RTO"?

A better outcome should be liquidation and return cash back to shareholders, if they felt that the current business is too small to do anything more.

[weijian]

hi ghchua,

Since this is an all-share deal with shares issued at NAV, even though CES construction is been acquired at a premium to NAV/NTA, the premium will be accounted for as goodwill on the balance sheet, resulting in no NAV change from an accounting angle. CES construction's PPE (especially machinery) probably have a higher liquidation value in excess of accounting value, which is a general trend we observe across local companies with hard assets.

The pro forma for FY24 EPS showed that OKH Global will turn from profitable (pre deal) to loss making (post deal). But this pro forma was done on assumption that the transaction was completed on 1st July 2023. Since the overall Spore construction landscape has been progressively improving in the last 2 years, there is a good chance that FY24 results for CES construction might show a complete different picture? In addition, we are also not privy to the actual P/L which may have some "non cash" write-offs due to potential restructuring after delisting.

In essence, it is curious that the independent valuer has assigned a 58% premium to NAV based on the pro forma results post transaction. And so I have a tendency to believe their valuation over the "disappointing/alarming" pro forma results.