Golden Agri

Asia Food & Properties is selling its wholly owned subsidiary Florentina Int’l to Golden Agri for a cash consideration of Rmb976m. Florentina is a China-based manufacturer of snack noodles and ice sticks and has 8 production plants and 29 production lines in 7 Chinese provinces. AFP will reap a $74.8m gain from the proposed divestment and intends to use the net proceeds to increase its land bank, as general working capital and repay its borrowings.

Meantime, AFP has obtained approval for the demerger of its Chinese property business under BCI via distribution-in-specie to shareholders on the basis of 1 BCI share for every 2 AFP shares held. Books closure is on 21 Jun and BCI is expected to commence trading on SGX on 28 Jun.

The sale of its China food business and demerger of its China property business will transform the group into a property play with interests in Indonesia, S’pore and Malysia and selected mixed developments Chengdu, Shenyang and vacnt land in Zhuhai.

Golden Agri proposed US$142.8m purchase of sister company AFP’s China-based noodles prodn business may be positive as it will give the group greater presence in China, where its distribution business is currently confined to Zhejiang and Guangdong provinces. China market contributed US$118m or almost 19%, to its 1Q10 sales. Florentina Int’l has 8 prodn plants in 7 Chinese provinces with its products sold through 26,500 distributors, 4,600 supermarkets and chain stores, 600 hypermarkets.

Stock has moved up 9% past few days and facing some resistance at $0.55 50-day MA.