Major corporate actions are an inevitable part of business. Publicly-traded companies are responsible in being accountable to their shareholders. That’s why companies are expected by the exchange to make timely announcements on major corporate actions that may affect their operations.
In this week edition of 4 Stocks This Week, we look at a few companies that have been in the news lately due to announcements or significant changes that could impact their company.
# 1 Genting Hong Kong (SGX: S21) – Delisting
Earlier this week, Genting Hong Kong announced that it would be delisting from the Singapore Exchange (SGX) on 17 April 2018. The company will continue to be traded on the Hong Kong Stock Exchange (HKEX). What this means is that moving forward, existing Singapore investors who want to continue trading the stock will need to do it through the HKEX.
Formerly known as Star Cruises, which older investors will be more familiar with, Genting Hong Kong also owns some other brands such as the iconic Zouk. The company is majority-owned by the Genting Group based in Malaysia, the same company that owns Genting Singapore.
# 2 mm2 Asia Ltd. (SGX: 1B0) – Major Acquisition
After failing in its attempt to purchase Golden Village earlier this year, mm2 announced that it has entered into an option agreement to acquire rival Cathay Cineplexes for S$230 million. mm2 is an investment holding company that produces and distributes films, television and online content across multiple countries in Asia.
One area of interest to note is that Cathay Cineplexes profits for 2016 was S$16.66 million. So based on the current profit and the acquisition price, mm2 will be paying a price-to-earning (PE) of about 13.8.
# 3 Raffles Education (SGX: NR7) – Management
A previously scheduled extraordinary general meeting (EGM) on 29 November 2017 called by billionaire shareholder Oei Hong Leong to remove current CEO and Raffles Education founder Chew Hua Seng, was withdrawn on 16 November 2017.
No reason was given for either wanting to remove the CEO or why the notice was withdrawn.
Raffles Education operates a total of 25 colleges and universities across 13 countries. Despite starting in Singapore and being known as a Singapore company, the company predominantly generates its revenue outside of Singapore, with China being its biggest market.
# 4 Noble Group (SGX: CGP) – Loss Of Support From DBS
Noble woes continue. On the same day its co-CEO quit, it was also revealed that one of its main banking partners, DBS, have also pulled key lending support for Noble Group. It’s unsure if DBS still has any lending exposure to Noble Group.
This bodes terribly for Noble Group, which has already been battered badly after reporting a loss of US$3.05 billion for the first nine months of 2017. As of 30 September 2017, the company also have cash and cash equivalent of only US$338 million.
Since the start of November, Noble’s stock has fallen from $0.29 to $0.205. This company has a price-to-book (PB) value of 0.195, a valuation that is so low that there is no point in trying to make any sense of it. Its current market capitalisation of $275 million is lower than the cash it holds, which essentially means that the company is valued at less than the money it actually has.
Three months ago, we wrote about Noble where we asked ourselves how much lower it would go (its price then was $0.44), three months later, we have our answer, with the company losing more than 50% of it market value.
The next question remains. How long more can Noble go on before something finally gives?
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.