In the past 12 months, we had seen a sharp rise in the price of TChong (from a low of RM1.00 to a recent high of RM3.50). At the same time, its sister company, APM has also enjoyed a strong rally (from a low of RM1.30 to a recent high of RM3.30). Today, APM rose to a high of RM3.83 (from yesterday's close of RM3.30), surpassing its all-time high of RM3.78 recorded in 2002. TChong has also rallied today to hit a high of RM3.22 from overnight close of RM3.10. Why the sharp rally in APM?

APM & TChong are both controlled by Dato' Tan Heng Chew, mainly through Tan Chong Consolidated Sdn Bhd ('TCC'). As at 31/3/2009, Dato' Tan & TCC together owned 52.8% & 50.85% of APM & TChong, respectively. TCC is a private company owned by the two brothers who founded the Tan Chong empire years ago. The two families were at logger heads up until recently when a solution was reached on how to divide up their interests in TCC.

A corporate exercise involving APM & TChong either in the form of the takeover of APM by TChong or the merger of the two companies or the sale of the business of both companies to a Newco could be in the final leg. Looking at the fact sheet below, I think it may involve a share exchange between APM & TChong at a ratio of 5 APM shares for either 6 or 7 TChong shares, if the exercise is a takeover of APM by TChong or a merger between APM & TChong. If it's a sale of the their business to a Newco, the valuation of the business/shares of APM & TChong may reflect the same ratio of either 5:6 or 5:7 in favor of APM.


Table: APM & TChong's Fact Sheet


Chart 1: TChong's weekly chart as at Feb 24, 2010 (Source: Tradesignum)


Chart 2: APM's weekly chart as at Feb 24, 2010 (Source: Tradesignum)