There are already plans for OSK Investment Bank to sell the stake to another poultry related firms as DBE does not add synergistic value to the investment bank.
Potential buyers are said to be include companies such as QSR Brands and QL.
Its rm12 million from the rights issue will be used to repay its debts. This will decrease its gearing to 0.8 times.
DBE has a full poultry integration system, with breeder farms, hatcheries, broilers and processing plants. About 30% of its chickens are supplied to Tesco, 5% to KFC outlets and the rest to restaurants and hotels in Perak. However DBE has been making losses since FY2006.
However market talk that QSR & QL had turned down the offer
OSK Holdings Bhd’s wholly owned subsidiary OSK Investment Bank Bhd (OSKIB) has emerged as the single largest shareholder of poultry outfit DBE Gurney Resources Bhd, with 180.99 million shares or 26.88% of DBE’s enlarged issued share capital.
Its holding surpassed DBE executive chairman Datuk Ding Chong Chow whose interests via vehicle Fortune Junction Sdn Bhd amount to 25.52%.
OSKIB had ended up with the DBE shares as it had undertaken all unsubscribed shares in DBE pursuant to a renounceable rights issue exercise. The rights issue, which involved 400 million new shares of 10 sen each in DBE, with 200 million free detachable warrants, had only received 52% acceptances from DBE shareholders at the close of acceptance on March 17 2011.
As the underwriter for the rights issue, OSKIB had taken up the rest of the unsubscribed rights shares and is now sitting on some RM10.9 million paper profits. It is estimated that OSKIB’s subscription cost for the 180.99 million DBE shares was RM18.1 million, based on the issue price of 10 sen per rights share.
Apart from the said number of shares, OSKIB had also received 90.5 million free DBE warrants from the rights issue.
It is worth wondering what could be in store for Perak-based DBE, which had been loss-making over the past four financial years.
As at FY10 ended Dec 31, DBE had racked up accumulated losses of RM40.91 million. Meanwhile, total borrowings amounted to RM72.6 million as at Dec 31 versus RM116,000 cash.
Nevertheless, the company had managed to narrow its losses, from RM9.79 million in FY08 and RM18.73 million in FY08, to RM2.9 million and RM202,000 in FY09 and FY10 respectively. Operationally, there was also a significant improvement in its operating profit before working capital changes, which rose to RM13.09 million in FY10 from RM9.52 million in FY09.
The completion of the rights issue may put DBE on a stronger financial footing. Of the RM40 million proceeds , the company plans to set aside RM25.9 million as working capital while RM12 million will be earmarked to repay its bank loans.
DBE had also said it planned to boost the utilisation rate of its existing plant to improve on its profitability.
Tuesday, October 11, 2011
Monday, October 10, 2011
FCW/GBH… dated April 2011
Both which have Tan Sri Robert Tan as a common and substantial shareholder, have a total of 30.59 acres of land in Segambut, located strategically next to Mon’t Kiara.
Any potential development of the land is likely to spark interest in the two companies as they do not have strong core businesses to generate attractive profile.
GBH is looking the feasibility of developing the land. The company will make the necessary announcements when such plans materialize. As for FCW, it has been a long term plan of the board to earmark the property for redevelopment, but it has yet to embark on any development plan.
FCW bough its 15.73 acres tract in 2007 from GBH at rm86 million cash and subsequently leased back to the latter for its warehousing needs. The land was valued at rm88.26 million as at Aug 2 2010. This translates to about rm129 psf. Meanwhile, GBH’s parcel of 14.86 acres was valued at rm119 million or rm194 psf. The value of the land booked by the two companies is relatively lower than the transacted prices in that area.
As FCW and GBH’s market cap was rm128.7 million and rm329 million respectively based on 07 April 2011 closing price. If the land were developed over 10 years at a 15% profit margin, the two companies could book a total profit of rm41.25 million annually.
The Segambut land’s potential is not reflected in the market cap of both companies, although both FCW and GBH are trading at a premium to their book values. FCW and GBH net assets per share stood at 64.98 sen and rm1.02 as at 31, Dec 2010 respectively. That is because the market value of their land is not reflected in their books.
FCW’s profit for six months ended Dec 31, 2010 with 60.44% from the lease of its Segambut land and warehouses to GBH. Its telecommunications division and contract manufacturing business brought in only rm1.79 million.
Besides the sustainability of the income stream from GBH is uncertain as the clay pipes and sanitary ware marker is still in the red. Nevertheless, competition in the ceramic building materials industry remains intense with imports from China . So unless GBH returns to the black with a sound core business, its ability to pay FCW rent totaling rm5.3 million a year remains uncertain.
But what is certain is that both companies have plans to develop the 30.59 acres of land. And considering its proximity to Mon;t Kiara and Sentul East along Jln Ipoh, the potential development could lead to a possible re rating of both companies when a development plan is finally unveiled.
Any potential development of the land is likely to spark interest in the two companies as they do not have strong core businesses to generate attractive profile.
GBH is looking the feasibility of developing the land. The company will make the necessary announcements when such plans materialize. As for FCW, it has been a long term plan of the board to earmark the property for redevelopment, but it has yet to embark on any development plan.
FCW bough its 15.73 acres tract in 2007 from GBH at rm86 million cash and subsequently leased back to the latter for its warehousing needs. The land was valued at rm88.26 million as at Aug 2 2010. This translates to about rm129 psf. Meanwhile, GBH’s parcel of 14.86 acres was valued at rm119 million or rm194 psf. The value of the land booked by the two companies is relatively lower than the transacted prices in that area.
As FCW and GBH’s market cap was rm128.7 million and rm329 million respectively based on 07 April 2011 closing price. If the land were developed over 10 years at a 15% profit margin, the two companies could book a total profit of rm41.25 million annually.
The Segambut land’s potential is not reflected in the market cap of both companies, although both FCW and GBH are trading at a premium to their book values. FCW and GBH net assets per share stood at 64.98 sen and rm1.02 as at 31, Dec 2010 respectively. That is because the market value of their land is not reflected in their books.
FCW’s profit for six months ended Dec 31, 2010 with 60.44% from the lease of its Segambut land and warehouses to GBH. Its telecommunications division and contract manufacturing business brought in only rm1.79 million.
Besides the sustainability of the income stream from GBH is uncertain as the clay pipes and sanitary ware marker is still in the red. Nevertheless, competition in the ceramic building materials industry remains intense with imports from China . So unless GBH returns to the black with a sound core business, its ability to pay FCW rent totaling rm5.3 million a year remains uncertain.
But what is certain is that both companies have plans to develop the 30.59 acres of land. And considering its proximity to Mon;t Kiara and Sentul East along Jln Ipoh, the potential development could lead to a possible re rating of both companies when a development plan is finally unveiled.
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