KUALA LUMPUR (July 10): China’s Hengan International Group Co Ltd’s unconditional mandatory takeover offer to acquire the remaining 50.45% stake in Wang-Zheng Bhd has been deemed “not fair and not reasonable” by independent adviser Affin Hwang Investment Bank Bhd.
“The offer price of RM1.14 per offer share is not fair, taking into account that it is lower than our estimated range of value of between RM1.16 and RM1.39 per Wang-Zheng share,” the adviser said in an independent advice circular today.
The offer price also represents a discount of 25.49% to the last traded price as at the latest practicable date (LPD),” Affin Hwang added.
The last traded price of Wang-Zheng shares as at the LPD was RM1.53, which is higher than the offer price, said Affin Hwang.
“Despite there being no other competing take-over offer for the offer shares, we are of the view that the offer is not reasonable, taking into account the following average monthly traded volume over free float of Wang-Zheng shares has generally improved since February 2017 and Wang-Zheng shares are relatively liquid,” Affin Hwang said.
Also taking into account the offeror intends to maintain the listing status of Wang-Zheng on the Main Market of Bursa Securities, Affin Hwang added.
Accordingly, as Wang-Zheng shares are relatively liquid and will remain traded on the Main Market of Bursa Securities, holders will have opportunity to realise their investments in the open market after the closing date (though there is no assurance the shares will continue to trade at current price and volume levels after the closing date), Affin Hwang IB said.
Hence, Affin Hwang IB advised and recommended holders to reject the offer.
At 9.47am, Wang-Zheng’s shares were up four sen or 2.63% to RM1.56, for a market capitalisation of RM241.04 million.
Calvin comments:
It is ironical that Affin Hwang IB was no where to be seen when Calvin Tan Research called for a buy on WangZheng when it was traded at only 75 sen
See
WANG ZHENG – KING OF DOMAIN – THE DEFENSIVE RECESSION PROOF GROWTH STOCK
Posted by
Calvin Tan
Posted on
January 10, 2016
Posted in
Smart Investment
Edit"WANG ZHENG – KING OF DOMAIN – THE DEFENSIVE RECESSION PROOF GROWTH STOCK"
Wang Zheng means “KING OF DOMAIN”
Wang Zheng is a manufacturer of baby nappies & adult diapers. These are unglamorous products nothing to shout about.
However, from past experiences, investing in unglamorous things do yield fantastic results.
Take Muda & Oka for examples. Muda is involved with recycling waste papers (Sampah) while Oka deals with drain pipes (Longkang). Longkang & Sampah? And now Wang Zheng’ baby & adult diapers (Berak?). What unpleasant stuff?
Yet they are making good monies for share holders. We bought Muda at 32 cents. Now Rm2.35 (Up 700%) and Oka at 35 cents (Also up 600% after bonus issue). So don’t look down on small unglamorous companies. So, Sampah, Longkang & Berak, though unpleasant, will make tonnes of monies for you.
These are the Salient Factors for Wang Zheng
(Don’t be confused with other China listed Companies in Malaysia. Wang Zheng is a 100% Malaysian Owned Company with all Existing Factories in Sungai Buloh & Rawang)
GOOD MARGIN OF SAFETY. Selling at 76.5 cents with NTA of Rm1.06
Rock Solid Recession Proof Business. Baby nappies & adult diapers are necessities of life.
Rock Solid Growth – Forward P/E is only 8.5
Rock Solid Prospects. Exporting 90% of its products overseas. And with strong US Dollar its profits will swell
Rock Solid Balance Sheet. It has NET CASH POSITION OF RM100 MILLIONS. Or 55 cents per share.
Rock Solid Shareholders. 88% of the Shares are owned by Top 30 Major Shareholders. So there is a very limited 12% free float. Better buy early while it’s still cheap before Mr. Market discovers it!
Increasing dividends by the years. With 9.39% FCF (Free Cash Flow). There is surplus Cash for dividends.
Wang Zheng – An undiscovered, overlooked, hidden gem of Great Value!
WANG ZHENG – KING OF DOMAIN OR FORTRESS
Fortify Your Investments And Protect Yourselves By Investing in WANG ZHENG Now.
China experienced Twice Limit Down Trading Halts after Crashing 7% this past week & Dow Jones collapsed over 1,000 points in just 7 days! 2016 looks like a very turbulent year ahead.
So Here You Are! A Stock for Safety & Growth in these tough times.
WANG ZHENG – CERTAINTY IN UNCERTAIN TIMES!
Note: Wang Zheng has Rm70 millions short term borrowings. But they are backed by Rm70 Millions “Trust Receipts” & Rm50 Millions in Receivables. Its receivables are from reputable pharmacies, hospitals & established supermarkets. So Wang Zheng has Net Cash & Debt Free Position overall. This is Rock Solid Safety.
CHEERS
Regards,
Calvin
Calvin latest comments on WangZhg
It is ironical that when Wangzhng was 76.5 sen when Calvin called for a buy many doubted & poured cold water on it. Now that MGO is offered at Rm1.14 Market punters have chased it above Offered Price.
Affin Hwang IB even come out to say that it is now undervalue & the Offered Price is unfair?
This same scenario happened when Calvin called for a buy on Perak Corp at 60 sen. Few bothered then. One day when Perak Corp already touched Rm3.60 (Up 600%) & Perak Govt offered to take Perak Corp private at Rm3.90 (Many came out to oppose it - saying tyhe Perak Corp is worth at least Rm4.50 to Rm5.00?) The irony & stupidity of it all?
When cheap?
People gave one thousand and one reason why you should not buy cheap. And when Price is chased to the sky? People gave the same excuse that Price should go even higher.
It is no wonder that 80% of Market Punters eventually lose monies in the Stock Market.
People are fearful because Others are fearful. People also get greedy when Others are greedy. This damnable crowd psychology work against our investment health & do damage to us - again and again.
Now Calvin thinks the entrance of Hong Kong New Shareholders was to capitalize on WangZhng efficiency & lower cost of production for its exports to China.
To chase up the Offer Price far above its intrinsic value is now too speculative.
You must remember that even in Malaysia - GIANT GROUP OF SUPERMARKETS & OTHER HYPERMARKETS are coming out with their own house brand.
There is no real "moat" in adult diaper making. So they can only compete on price. And pricing of WangZheng looked attractive at Rm1.14
If you expect too high a price do you think they will benefit from the takeovers?
Moreover, there are even other lower cost producing countries like Thailand, Indonesia, Vietnam, Myanmar & Cambodia - apart from Malaysia.
So Calvin thinks this is a clear case of being greedy when others are greedy.
We should heed the words of Sifu Warren Buffet when he said, "To be fearful when others are greedy and to be greedy when others are fearfully selling"
How many dare to buy WangZheng at 76,5 sen? How many greedily chased it to Rm1.70?
Further Note:
This week Calvin called for a buy on L&G (Land & General)
In the face of doubters & naysayers who dare to buy?
Regards,
Calvin the conrarian value investor
