mDR

mDR: proposes to acquire the businesses and assets of Shenzhen Quanli Leather and Quanli (HK) Leather Co. Quanli SZ is a PRC co involved in the mnft of leather accessories for mobile phones and laptios, and Quanli HK is the exclusive distributor of pdts mnft by Quanli SZ. Concurrently, mDR also executed a Sales and Purchase Agreement for the acquisition of Pixio Sdn Bhd. Pixio is a Msia co and is in the business of providing design solutions and digital inkjet printing for Point-Of-Sale and Out-of-home advertisements. The execution of the two definitive agreements paves the way for mDR to expand its business footprint beyond Singapore through the acquisition of complementary businesses. Both acquisitions will immediately give mDR access to new markets and customers and to grow beyond its solely Singapore-centric source of revenue generation. Purchase consideration for Quanli SZ & HK is based on 6x P/E of avg net profit for FY13-15. Based on historical numbers, mDR expects to pay an est Rmb 60m for both companies, based on a mix of cash and mDR shares. Purchase consideration for Pixio will be at RM 16.2m cash, based on 4.5x 9M12 P/E. The acquisitions are expected to be earnings accretive to mDR, based on FY12 numbers, as EPS will rise from 0.075 cts to 0.11 cts. It will also be valn accretive, as mDR currently trades at 21.8x P/E. Chairman Philip Eng notes, mDR is entering a new phase of growth and devt with the acquisitions. Notes the target companies will now have easier access to more working capital to expand their operations which are currently small and profitable. For eg. Quanli can grow its online business in both China and int’l markets, while Pixio can extend its range of services in Msia and explore operations beyond Msia, in particular Spore and Myanmar. mDR shares are +6.3% at $0.017.