CH Offshore

CH Offshore: On 11 Dec, Falcon Energy made a voluntary conditional offer for shares of CH Offshore (CHO) at $0.495 each. Since then, CHO's share price has been creeping up to $0.525/share. With this, we are of the view that some shareholders may deem the offer price not attractive enough, suggesting the possibility of a higher counter-offer. According to latest SGX filings, Falcon is currently the largest shareholder of CHO with a 29.1% stake, while Chuan Hup ranks second with 23.8%. Considering that Falcon has independently made the offer, Chuan Hup has a number of options to consider - to accept, reject, or make a counter-offer. There is a fair probability that Chuan Hup may consider the last option. After all, CHO was once a wholly-owned subsidiary of Chuan Hup. The offer price values CHO at 1.08x P/B and 10.6x FY14 P/E. In the event of a counter-offer, valuations may be considered reasonable up to a multiple of 1.25x P/B (7-yr historical average), which translates into a share price of $0.57.