Company proposed a series of acquisitions so that it can diversify away from the current loss-making business of mnftg CDs, and other digital storage products, and venture into the workers’ accommodation sector in Spore, with facilities that can house >14k workers...
The acquisitions involve, i) 100% of Westlite, the owner-operator of Westlite Dormatory with capacity for 5300 workers, at an estimated $85m (RNAV for FY10), subject to sh/h approval; ii) Centurion’s 45% stake in the Lian Beng-Centurion Mandai JV for $10m. The JV recently purchased a 18.7sm freehold land site for $67m to be developed into dormitories; iii) 75% of the existing stake in the JYC-NCL JV for $39m...
The JV operates temporary workers’ 3 dormitories with that can house ~9k workers in total.
Total payment for ii) and iii) is via a mix cash and issue of 224.8m new shares (vs 362.4m current share base) at $0.10 each to the vendors.
Deals i) and iii) come with profit warranties of $10.2m and $27m for FY11-12 combined, and may help the co return to profitability...
Still the stock remains a concept play, as the M&A is still in process. Successful execution remains the key risk.
Stock trades at 1.3x P/B.
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