Mr Koon Yew Yin blogged about Xingquan. Cash about RM3/share, EPS was 42sen/share for FY15, with PE multiple less than 2x.
If the share price does not reflect its true value, at current share price of 60sen/share, why not the major shareholder privatise the company?
If the major shareholder offers to privatise the company at RM2/share, not only he does not have to fork out money to take the company private, yet he actually earns RM1/share plus the remaining ownership of the company for free.
Is there such a big toad jumping on the street?
Added on 1 Jan 2016
Would you invest in a company that carries net cash of RM934m as of end September 2015 still needs rights issue to raise RM50.7m to fund RM99.2m capex?
When major shareholder is holding 50% and more, the reverse of the above is true. From the major shareholder's perspective, by holding 50% + 1 share, he/she effectively control 100% of the Company's resources. The remaining 49%, e.g. the minorities will forever be sitting outside the ring. Seeing the cash per share rise and rise and PE going down and down and YET he could not extract any value out from the Company. The only way minorities can extract the value is from the Share Market. :)
ReplyDeleteThe difference if he privatises the company is that he has the flexibility can use the entire cash as and when he likes for any purposes, without being queried by shareholders. And this comes not only with zero cost, he gets RM1/share plus remaining ownership of the company.
DeleteIf you cannot beat them, you join them. And if you cannot join them you leave them. China-based stocks are scary indeed!
ReplyDeleteRM934m. if just RM934 then need to raise cash. lol. china ppl outtricked msian KYY.
ReplyDeleteTypo... My bad. Thanks for highlighting
Delete