Icon8888 Gossips About Stocks

(Icon) Global Oriental Bhd (3) - Acquired 65% Equity Interest in Houseware Business

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Publish date: Wed, 02 Apr 2014, 11:24 AM
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I follow the smell of money.
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Yesterday, GOB announced that it has completed the acquisition of 65% equity interest in Perwira Nadi Trading Sdn Bhd ("PNT").  The remaining 35% will continue to be held by one of the original shareholders.

 

1.  Details of the Acquisition

The principal business of PNT is trading and distribution of housewares and related products such as glass and ceramic dinner ware, cookware, tableware and etc in Malaysia.

For the financial year ended 31 March 2013, PNT reported RM9.63 mil profit after tax.   It has net assets of RM20 mil.

GOB acquired 65% equity interest from original shareholders for RM50 mil cash.  This values the company at RM77 mil, representing PER of 8 times.

As part and parcel of the acquisition, the vendors provide a profit guarantee of RM10 mil for FYE 31 March 2014 and 2015 respectively.

According to the announcement, the rationale for the acquisition is to allow the group to diversify its earning base by venturing into consumer retail sector.

 

2.  Some of My Thoughts

This latest development came as a pleasant surprise (I didnt actually pick up this piece of information when I was writing the first article for GOB).

The transaction is earnings accretive.  GOB share price went up this morning in response to the announcement.  Apparently the market likes the transaction.

I tried to google for PNT information.  Unfortunately their info is in a facebook format.  Since I don't have access to facebook (a deliberate decision so as not to get addicted), I am not able to fish out more info.  Anybody can volunteer to do that and post the info here ? I will add it to this article if it is available.

I conitnue to like GOB due to the defensive nature of the stock as mentioned in Part 2 of my various articles.  Please also give some thoughts on whether you should add it to your portfolio.

 

Have a nice day.

GOB (1147)
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Discussions
1 person likes this. Showing 14 of 14 comments

Top_investor

icon, look like u don't like comments other than GOB is very good,i thought u r pro, smile :)

2014-04-02 12:01

vinc3362

Was thinking of adding substantially to my portfolio even though they are doing a rights issue. But with this acquisition I am having second thoughts. Firstly, they are venturing out of their area of expertise and Secondly, the percentage of discount to their intrinsic value will be reduced.

2014-04-02 12:03

Top_investor

well said vinc, but i think this article will be deleted and create a new one without -ve comments soon, hahaha

2014-04-02 12:08

Icon8888

ha ha Top_Investor not really. I dont mind other people having different opinions. I dont really believe our views will have significant impacts on the stock price.

Sometime i delete the article and repost it again.

This is because when I posted it at 10 am, very soon the article will be swamped by other articles, and nobody will notice it.

That is why I delete it and repost it at 11.30am and it will surface again at the top of the list.

This is a little trick I play to attract more eyeballs (as a writer, I would like more people to read my article, simply for the reason that I have put in effort to write it).

However, when I repost it, all the earlier comments will be gone. I apologize.

2014-04-02 12:10

Icon8888

I can actually wait for 1130 am and post the article. Then it wont become so convoluated. However, some time when share price looked like it is about to run, a writer would not want to wait too long, as he wants to claim credit. I know it is a bit silly, but that is the real reason behind it. Once again, I apologize if it causes any inconvenience

just to re-iterate, Top_Investor, I welcome your different opinion

2014-04-02 12:13

Icon8888

i think next time i wont do this trick any more. I will just wait until 1130 am. Didnt realise it will create this kind of misunderstadning

2014-04-02 12:15

vinc3362

Thanks Icon for your info update. I have actually bought some GOB last week after seeing your comments and intend to increase the qty gradually until I saw your latest update. GOB may still fly, but the punch carries a much lighter weight now.

2014-04-02 12:22

Top_investor

oh ok, icon, thanks for your good effort, :)

2014-04-02 12:22

Icon8888

vince I am flattered by the fact that you actually acted on my previous article and bought GOB. That gave me a lot of satisfaction (I have to confess writers are a very funny breed)

I am open minded towards different opnions.

As at this stage, I interprete GOB's latest transaction positively (mostly because I trust the market is wise. The fact that share price is up means the deal must be not that bad).

Of course you are entitled to interprete differently. No matter what happen, I wish your investment is fruitful, and my earlier recommendation of GOB does not fail you.

We all huat together

2014-04-02 12:30

tonylim

Icon you are flattening unwavering old bird

2014-04-02 13:17

Icon8888

Huh ?

2014-04-02 13:20

vinc3362

GOB's P/E ratio of 6.1 buying PNT at P/E ratio of 8 .
Pay RM50 million in cash and then issue a rights issue for shareholders to contribute cash.
This sure speaks a lot about the top management at GOB.
Are they really interested in maximising shareholders value?

2014-04-02 13:30

vinc3362

Thanks again Icon for your timely update.
We may interpret the news differently, but our final objective is similar.
Maximise our wealth.

Let's huat together.

2014-04-02 13:33

chin888

huat ah

2014-04-02 13:41

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