Sapphire Corp

Sapphire Corp: Sapphire Corp surged 31% over the past three days to a close at $0.106 yesterday, before SGX issued a trading query on the investment holding company. In response, Sapphire highlighted its proposed sale of its loss-making steel manufacturing business for $70m had been approved by shareholders recently. The disposal is expected to result in a $6m gain, which the company intends to invest into an engineering, procurement and construction company, specializing in land transport infrastructure design and engineering works. Sapphire is principally engaged in mining services, through wholly-owned Mancala Holdings based in Australia that provides raised bore, shaft excavation, engineering services and other mining services. Mancala currently operates the largest nickel mine in Son La Province in Vietnam. From the official website, Sapphire's growth strategy includes "expansion into the resource sector and embarking on a Merger & Acquisition spree when the opportunities arise". Sitting on $2.7m cash and debt of $7.5m (excluding proceeds from the divestment) as at 30 Jun, it may not be a surprise to see share dilution at some point, to keep in line with its growth strategy. Notably, Sapphire's CEO, Teh Wing Kwan, is a non-executive and non-independent director of Heng Fai Enterprises (HK-listed), Singapore eDevelopment, and Asian American Medical Group (ASX-listed). At $0.106, Sapphire is loss-making and is valued at post-disposal FY13 P/B of 1.1x.