Ni Hsin to see RTO by O&G
- NI HSIN RESOURCES BHD NIHSIN (7215)
KUALA LUMPUR: Cookware manufacturer Ni Hsin Resources Bhd may see a reverse takeover (RTO) by an oil and gas (O&G) outfit, say sources. Its share price has shot up 173% in the past two months. It also saw recent heavy trades.
It is learnt that the target price is 70 sen per share, about 170% more than its net asset per share of 26 sen as at June 30.
An industry source termed the deal as “attractive” and “well-structured” for a company the size of Ni Hsin.
He hinted that the O&G outfit is one that rakes in annual net profits of more than RM10 million, but declined to elaborate more.
Sources said the new owner plans to announce the deal to Bursa Malaysia in two to three weeks.
Ni Hsin posted a net profit of RM1.99 million on revenue of RM55.15 million for the financial year ended Dec 31, 2013 (FY13), and had a market capitalisation of RM109.7 million as of yesterday when its shares closed at 46.5 sen, with 45.8 million shares changing hands.
Its shares, which has been thinly traded historically, were previously hovering around 17 to 18 sen between January and June, before rising to 36 sen on Aug 22.
Then on Wednesday, the stock suddenly shot up 16% to close at 47 sen, its all-time high, with some 66.6 million shares traded.
In view of the sudden rise in price and the number of shares traded, Bursa Malaysia slapped Ni Hsin with an unusual market activity query yesterday.
The exchange requested the company to respond if there is any corporate development relating to the group’s business and affairs that has not been previously announced that may account for the slew of trading interest it had attracted, including any that were being negotiated or discussed.
Ni Hsin also saw 10.22% or 23.6 million of its shares traded off-market yesterday morning at 30 sen a piece.
The transactions were traded in seven blocks, and were 36% below its previous closing of 47 sen.
Ni Hsin’s FY13 annual report shows that the Hsiao family collectively holds (directly and indirectly) a 36.67% stake in the company as at March 31 this year. Its chairman Hsiao Chih Jen holds (direct and indirectly) 12.14%, while managing director Hsiao Chih Chien holds a 11.73%.
Meanwhile, an investment banker said Ni Hsin is “not too fantastic” financially and that its share price is overvalued (with price-to-earnings of about 93 times based on Bloomberg data).
Hence, he said it will most likely see an asset injection through issuance of new shares, considering its minimal cash balance, which, as at June 30, stood at RM1.03 million.
For the six months ended June 30, Ni Hsin reported a net loss of RM251,000 on revenue of RM19.9 million.
The group was in the red for FY10 and FY11, but returned to the black in FY12 and FY13 with better profits.
The Edge Financial Daily, September 19, 2014.
