IPC Corporation

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#31
Even though share price has gone up over 20% this morning after the following announcement, if the deal could be completed as outlined, estimated net proceed from the sale would amount to about  SGD 1.76 per share, which is close to the current share price...................... 

http://infopub.sgx.com/FileOpen/IPC_Anno...eID=376948 
 
PROPOSED DISPOSAL OF SEVEN HOTELS IN JAPAN
“Following Completion, the Board intends to distribute the net proceeds from the Proposed Disposal to Shareholders by way of a capital reduction exercise. The Company will update Shareholders in due course and make further announcements as and when details of the capital reduction are finalised. “
 
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Here is my interpretation. Comments are most welcomed.
 
As at 30-Sep-2015:
 
Total Assets ( SGD million) :
Cash and Cash Equivalent                       =     71.969  (or SGD 0.84 per share)
Investment properties                              = 122.224
Financial assets, available for sale             =   20.295
Other assets                                          =    98.316 
Total Assets                                             = 312.804
 
Total Liabilities (SGD million) :
Borrowings (current + non-current)             = 83.242
Other Liabilities                                         = 13.414
Total Liabilities                                          = 96.656
 
Net Assets = (Total Assets) – (Total Liabilities) = 216.148 million (or SGD 2.48 per share, of which cash per share = SGD 0.84)
 
After the sale of investment properties:

Estimated sale proceed after tax = 119.43 + 31.12 = 150.55 m ( or SGD 1.76 per share)
 
 
Total Assets ( SGD million) :
Cash and Cash Equivalent                  =     222.519  ( or SGD 2.61 per share )
Investment properties                       =         0.00
Financial assets, available for sale       =     20.295
Other assets                                     =     98.316 
Total Assets                                      =     341.13
 
Total Liabilities (SGD million) :
Borrowings (current + non-current)     =      83.242  (or SGD 0.98 per share )
Other Liabilities                                 =      13.414
Total Liabilities                                  =      96.656
 
Net Assets = (Total Assets) – (Total Liabilities) = 244.474 million ( or SGD 2.86 per share, of which cash per share = SGD 2.61 )
 
 
If all borrowings were to be paid off after the sale of investment properties:
 
Total Assets ( SGD million) :
Cash and Cash Equivalent                  =     139.277 ( or SGD 1.63 per share )
Investment properties                       =        0.00
Financial assets, available for sale       =      20.295
Other assets                                     =      98.316 
Total Assets                                      =     257.888
 
Total Liabilities (SGD million) :
Borrowings (current + non-current)           =    0.00
Other Liabilities                                        = 13.414
Total Liabilities                                         = 13.414
 
Net Assets = (Total Assets) – (Total Liabilities) = 244.474 million ( or SGD 2.86 per share, of which cash per share = SGD 1.63 )
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Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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#32
Number of shares = 85,291,885 (after share consolidation)
 
Back in April, OHL made a non-serious offer of SGD 0.170 per share (equivalent to SGD 1.70 per share post-share-consolidation) – and there were hardly any takers.
 
Now the market is only pricing the share a few cents higher at around SGD 1.76
 
The Buyer is willing to pay approximately SGD 172.22 million (JPY14.94 billion) for the 7 hotels owned by IPC, which work out to be SGD 2.02 cents per share. Woundn’t it better for them to make a GO for the Company at this price, and get the remaining assets of IPC for free.

I wonder………………………………
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Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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#33
(09-11-2015, 03:17 PM)Boon Wrote: Number of shares = 85,291,885 (after share consolidation)
 
Back in April, OHL made a non-serious offer of SGD 0.170 per share (equivalent to SGD 1.70 per share post-share-consolidation) – and there were hardly any takers.
 
Now the market is only pricing the share a few cents higher at around SGD 1.76
 
The Buyer is willing to pay approximately SGD 172.22 million (JPY14.94 billion) for the 7 hotels owned by IPC, which work out to be SGD 2.02 cents per share. Woundn’t it better for them to make a GO for the Company at this price, and get the remaining assets of IPC for free.

I wonder………………………………
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Indeed good logic!  However, if they (buyers) do, they will definitely face headwinds from OHL & the Ngiam brothers.  They will ask for much more to acquire the whole co.
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#34
There is no assurance that the deal will go through, although the penalty for both side is quite large JPY0.50 billion.

<vested>
Specuvestor: Asset - Business - Structure.
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#35
(09-11-2015, 12:12 PM)Boon Wrote: Estimated sale proceed after tax = 119.43 + 31.12 = 150.55 m ( or SGD 1.76 per share)

The difference between the above net proceeds and sale consideration looks huge.
172,220 - 150,550 = 21,670

Since the buyer for these 7 hotels is the same as the other 2 earlier hotels, I looked at the previous numbers. The gap wasn't that wide. Hmm...???

Net gain $10.45m
Consideration: $29.91m
Cashflow: $27.7m
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#36
cif5000 Wrote:The difference between the above net proceeds and sale consideration looks huge.

I think this could be due to the deferred tax of $8.324m?

Prev deal:
Cash flow/Consideration = 92.6%

Curr deal:
(150.55m + 8.324m)/172.22m = 92.3%
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#37
(09-11-2015, 03:42 PM)hh488 Wrote:
(09-11-2015, 03:17 PM)Boon Wrote: Number of shares = 85,291,885 (after share consolidation)
 
Back in April, OHL made a non-serious offer of SGD 0.170 per share (equivalent to SGD 1.70 per share post-share-consolidation) – and there were hardly any takers.
 
Now the market is only pricing the share a few cents higher at around SGD 1.76
 
The Buyer is willing to pay approximately SGD 172.22 million (JPY14.94 billion) for the 7 hotels owned by IPC, which work out to be SGD 2.02 cents per share. Woundn’t it better for them to make a GO for the Company at this price, and get the remaining assets of IPC for free.

I wonder………………………………
________________________________________________________________________________________________________________________________________

Indeed good logic!  However, if they (buyers) do, they will definitely face headwinds from OHL & the Ngiam brothers.  They will ask for much more to acquire the whole co.

Combined stakes of OHL & Ngiam family is still less than 50%. 

Of course, timing is also critical. The Buyers should have make a higher competing bid to that of OHL then...................

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Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
Reply
#38
(09-11-2015, 04:07 PM)lanoitar Wrote: I think this could be due to the deferred tax of $8.324m?

Prev deal:
Cash flow/Consideration = 92.6%

Curr deal:
(150.55m + 8.324m)/172.22m = 92.3%

Hi

The previous Sapporo divestment carries a book value of S$12.93 mil and reported net gain of S$10.45 mil.  Total of these two are S$23.4 mil against a sale price of S$29.6 mil.  The difference is attributed to the Japanese capital gains tax and transaction costs. You can also observe that the deferred taxes between end Sep-14 and Dec-14 had increased by about S$4 mil following disposal of the Sapporo properties.

For this round, it is likely the cash receipt will be c. 160-165 mil but of this sum about S$10-15mil will be needed to settle the tax arising from the disposal leading to net gain of S$31 mil on a book value of S$119mil.

Just my two cents on how I looked at the situation.
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#39
7 hotels sold for $172.2. I think this deal has a good chance of going through because the buyer will be getting a good deal. Ichigo was the same real estate management company that bought 2 Sapporo hotel last year from IPC Corp.

I am projecting 40% gain on IPC Corp vss 20% downside if the deal does not go through or risk/reward ratio 1:2

With Oei Hong Leong holds more than 30% IPC Corp shares, there is a high chance that the company will eventually monetize the rest of development properties and a nest hotel in China.
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#40
Ichigo Hotel REIT will list its shares on Tokyo Stock Exchange, scheduled to be on 30 November 2015.
Ichigo sold 9 hotels to Ichigo Hotel REIT for JPY 20.4B, leaves its hotels to 2 units. Now is the right time to replenish stock for future recycling.
Nest Hotel Sapporo Ekimae is sold at JPY 2.16 billion, Nest Hotel Sapporo Odori is sold at JPY 1.45 billion, totalling JPY 3.61 billion.
Specuvestor: Asset - Business - Structure.
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