Sky One

Sky One: +9.4% at $0.093 on above avg volume, extending its run into the third day since closing at $0.055 on 9 Nov, when after mkt close, the co reported its 1HFYMar12 results and a proposed acquisition.
As per guidance, results were weak with revenue down 13% yoy to HK$76.4m, and net loss of HK$4.6m vs net profit of HK$3.3m yoy.

Separately, the co proposed to acquire PT Energy Indonesia Resources (EIR) for consideration of $1.8m from Mr Nordiansyah Nasrie and Forrest Point Enterprises. Thereafter, Sky One will inject another $0.7m in cash equity into EIR.
The total cost of acq of $2.5m is to be funded by a placement of up to 60m shares (24.7% of existing sh base) at issue price of $0.05/sh.
UOB Kay Hian is the placement agent, and has agreed to work on a best effort basis.

EIR has a foreign direct invmt status. It is currently dormant, but after the acquisition, is envisaged to commence mining support activities consisting of i) mgt of a stockpile facility, jetty and loading conveyor, ii) transportation of coal ore produced by customers to the stockpile facility and the loading of such coal ore to ships at the jetty, and iii) other logistical support activities.
This compares with Sky One’s current business activities, which is in express land transport and airfreight.

Stock trades at 2.4x P/B, while P/E is not meaningful.
The stock is essentially a concept play at this stage, with key risk being execution risk. Note that current share price is at a 86% premium to the placement price, which suggests higher valuation risk now.