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Stocks In Focus (Halcyon Agri, NH Ceramics, SingTel) – 04/06/13
Halcyon Agri To Acquire Malaysian Rubber Producer For RM63m
Halcyon Agri’s indirect wholly-owned subsidiary, Halcyon Agri (Malaysia), has moved to purchase a Malaysian rubber producer, Chip Lam Seng, for RM63 million. The proposed acquisition consists of four plots of land occupied by two natural rubber processing factories as well as all associated buildings, plants and machinery located in Ipoh, Malaysia. The factories are strategically located near two major ports in Malaysia, which houses excellent logistics infrastructure. The deal represents an opportunity for the firm to broaden its asset and earnings base as well as provide potential long-term recurring source of revenue and profit and help generate new revenue streams. It will finance the proposed purchase through internal resources, bank borrowings and a fund-raising exercise. On 15 May-13, the firm had raised approximately $20.7 million from a placement exercise with Credence Capital Fund II.
Significance: The acquisition, which will more than double Halcyon’s potential production capacity from 120,000 tonnes a year to more than 300,000 tonnes a year, is in line with its growth strategy of increasing output while adhering to the firm’s risk management principles.
NH Ceramics To Turn Coal Producer Through US$150m Reverse Takeover Deal
NH Ceramics entered into a conditional sales and purchase agreement with five parties to purchase Blackgold Asia Resources and Blackgold Energy for US$150 million. In total, both companies have controlling interests in three Indonesian companies, each possessing coal concessions covering a combined area of approximately 53,000 hectares located in the Riau Province, Island of Sumatra, Indonesia. “The proposed acquisition will enable the company to gain entry into the growing Indonesian coal mining industry and will allow the company to position itself within an active market for coal resources,” the firm said. The purchase will be financed through the allotment and issuance of 3.18 billion new shares at an issue price of $0.059 per share, inclusive of 0.25 billion shares as payment to UOB Kay Hian for arranger fees. On a proforma basis, the enlarged group would have a revenue of $5.16 million and a profit after tax of $3.7 million for FY12.
Significance: Upon completion of the deal, the firm will consolidate every five shares into one with the vendors and UOB-Kay Hian holding about 83.2 percent and 7.2 percent of the enlarged issued and paid-up share capital of the firm respectively.
SingTel Runs For Myanmar’s Telco Licence
Yesterday, the last day for the bidding of the two available telecommunication licences in Myanmar, saw Singapore Telecommunications (SingTel) and its partners, KBZ Group and Myanmar Telephone Company, submitted a bid for it. This makes it one of among 11 applicants whom are competing for the licences. Also in the running is Digicel Group, which is leading a consortium backed by billionaire George Soros, and includes mainboard-listed Yoma Strategic Holdings. Up till 31 May 2013, there had been 12 shortlisted applicants, but joint bidders Vodafone and China Mobile, the two biggest mobile phone companies, withdrew their bid citing a statement saying the returns would not justify the investment required. The licences up for contention will allow telecommunication companies (Telcos) to build, own and operate a nationwide network for an initial term of 15 years, and the results will be announced on 27 June 2013.
Significance: Investors have been eyeing on the newly liberalised Myanmar, after the government said it wants to boost communications coverage to as much as 80 percent of its population of 64 million by 2016. Currently, mobile phone penetration stands at only 9 percent and according to McKinsey, the telecommunication industry may grow at a CAGR of 23 percent from 2010 to 2030.
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