Jaya Holdings

Jaya Holdings: ($0.081) How much is the cash shell worth? The share price of Jaya has doubled in the past two days to 8¢ following the disposal of its existing business and subsequent distribution of 62.5¢ special cash dividend and 16¢ capital back to shareholders. This leaves Jaya as a virtual cash shell and likely reverse takeover target. Using another SGX-listed shell entity, Memstar Technology as a benchmark, we attempt to estimate how much Jaya is potentially worth. Memstar currently has a market cap of $50.7m and net assets of Rmb12.9m, which mainly comprises a cash balance of Rmb12.7m ($2.6m). Therefore, on an ex-cash basis, the market is valuing Memstar’s shell status at $48m. This compares to Jaya's current market cap of $62.5m, which includes a $32m residual cash balance set aside for: - future operating costs and an incentive bonus payable ($7m) - warranty provision ($25m) Assuming the market ascribes the same valuation for the shell entity as Memstar and that no warranty claims are made, Jaya should be worth $48m (shell status) + $25m (unclaimed warranties) = $73m. This will translate to a theoretical value of 9.5¢/share for the stock, giving an additional 18% upside from current levels. But in the event that the group is required to fulfill all of the warranty claims, then Jaya’s stock value will drop to 6.2¢.