Courts Singapore is now the target of a private equity buyout in a deal that values the furniture and appliance retailer at over $100 million. Singapore Retail Group, a company jointly owned by Baring Private Equity and Topaz Investment Worldwide Inc, is making a general offer for the remaining 45.84 per cent stake it does not already own at 64.5 cents a share, half a cent below its last traded price of 65 cents on Wednesday. Topaz is owned by Kuwaiti financial services group The International Investor. The mandatory unconditional cash offer was triggered by Singapore Retail’s acquisition yesterday of a controlling 54.16 per cent stake in the mainboard-listed company. The offeror intends to take the company private if it manages to secure a stake of at least 90 per cent. Singapore Retail bought the controlling stake from Courts Group International Ltd (CGIL), paying $56.20 million, or 64.5 cents a share.
Whats up with this recent IPO? Heard from a friend who got 1 lot of this and he is sitting on a tidy profit from this. Why is it so hot?
Sailing to the top [EXTRACT]
Niche player on the cusp
Chinese shipbuilders are rising and gaining market share, and Yangzijiang
Shipbuilding (Holdings) Ltd. (YZJ) is leading the trend. New orders received in the
first four months of 2007 (4M07) have already hit 58% of the full 2006 figure,
compared with China’s 39% and South Korea’s 23%. We expect YZJ to continue
distancing itself from the crowd and deliver 63% sales CAGR and 53% earnings
CAGR in 2007-09.
Well defined strategy and solid execution
YZJ’s industry-leading gross margin of 21% in 2006 highlights management’s
strategy and execution. In addition to an expanding market share in containership,
the company recently secured 4% of the global share in Panamax bulker. We
believe YZJ is likely to explore more ways to strengthen its leadership position.
A dramatic industry slowdown and capacity glut would take their toll on all
players. We believe currency fluctuation and raw material prices are two
operational risks and gauge that a 1% change in the renminbi/US dollar exchange
rate and steel cost could swing the company’s earnings by 3.4% and 0.6%,
Valuation: initiate coverage with Buy 2; price target of S$2.35
We derive our price target of S$2.35 from a DCF method, assuming a WACC of
8.9% and terminal growth of 3%. Our price target implies an estimated 2008 PE of
30.1x and EV/EBITDA of 23.8x. We foresee 29% upside potential from the
current level and initiate coverage with a Buy 2 rating.
I posted here about my May IC Trade. RUT expires on the 3rd Thursday of every month.
As of today, the IC has expired and i get to pocket my credits. A 9.4% returns in 45 days. The June IC looks more dangerous than the current one. Hopefully, I can pull through this one.