Lets work out the math....At RM1 billion offer for F&B, it is worth at least RM5 per Can-One share.
Since it has acquired Kian Joo at RM3.10, and with the cash from F&B sale to pay fully loan for Kian Joo acquisition, Kian Joo share will be free from loan. At 3.10 valuation of Kian Joo per Can-One share is more than RM7 per share.
The annual AGM has been postponed to end of June from mid Apr in previous years. No EGM is required for the disposal as they just need to add this as an additional agenda for the coming AGM. A well planned move?? ;-)
Canning industry is certainly good in long term. No matter how, people still need can food. Moreover, the can making machines (made in Europe) are able to used more than 50 years. The machines will be fully deprecated after 10 years operations. It is a capital intensive industry. Cons..the company may suffer high start up costs when the new factories starting operations and normally is unable to fill the factory capacity immediately.
You need a strong heart to follow this counter....stingy on dividend but otherwise a lot of excitement. But if you analyse deeper, they are very very shrewd in their dealings....
1. If you analyse from the annual report, there is a bargain purchase gain of 308 million, meaning value per Kian Joo share in canone book is RM3.10 + RM0.70 = RM3.80 per share. They are only paying RM3.10 per share for it
2. If you follow canone history, the acquisition price of F&B is RM12 million for the first 80% and 39.753 million shares in exchange for the remaining 20%, reported to be worth RM113 million. The total gain from disposal at RM1 billion will be a whopping RM875 million!
3. As at 31 December 2019, the total assets in food product division is RM555 million and total liability is RM312 million. Assuming this all belong to F&B, the net assets they are now selling is worth RM243 million.........gain from disposal will be a whopping RM757 million if dispose at RM1 billion!.
4. It took Canone only 13 years to build up F&B from a seemingly low volume low profit in 2006? to a RM1 billion company
5. From Kian Joo & F&B transactions alone, Canone profit will be at least RM308 million + RM757 million.....in excess of RM1 billion
6. In Q1, you can work out the net assets per share to be worth RM7.45 (including Kian Joo bargain purchase). If you include gain from F&B disposal, the net assets per share will jump to RM11.40 per share
Shrewd piece of business? sure..... Dividend? Lets pray for it
At 3.83 this counter is unbeliveably cheap. The market cap is less than RM750 million, still lower then the value of F&B which it hold 100%. If i am south capital, i might as well launch an offer on canone and get the rest of the business free and still does not cost me that much!
agree logic is the subsidiary is v valuable, whilst mother company has liabilities. But with impending sale, they will b able to pay off their short term liabilities. Collect on weakness will break RM4
The edge reports really does not do justice to how good the deal is, in my opinion.
1. In short, the disposal value will be between RM800m and RM1 b of which RM750m will be paid upon completion. The balance will be paid later. If not paid, it can be converted to shares of Wholesome Dairy which is the new owner of F&B. Meaning if this is not paid, Can-One gets to own shares in F&B again.
2. The balance sum not paid now will attract interest at 8% per annum which, in today's world, very high. I dont think Can-One own borrowing cost is that high...
3. After disposal of F&B, gearing ratio will be between 0.55-0.79 depending on the disposal amount and how it is settled. This will put the old debate on how high the gearing of the group to bed.
4. After the completion, together with consolidated adjustment on Kian Joo, the profit for the year could soar to between RM1b to RM1.2b.
5. Net assets per share will increase from RM4.32 as at end of 2018 to between RM9.22 to RM10.44
No mention on whether there will be a special dividend or not though......
RM40m & RM26m has been reserved for dividend and capital repayment from this disposal proposal (about 30-40 sen per share). Hopefully these will be distributed to the shareholders for the coming group re-organisation proposal.
Same TP before & after the F&B Nutrition disposal? It shows MIDF is only good at assess current P&L instead of the co business. Instead Mr Yeoh has all in in can-packaging business by switching from dairy.
@gozilla88 Maybe you can share how you have been conned by this counter.
This is one of the counter with the lowest profile, never thumb their chest telling people how good they are. Listed in 2005 at RM1 and has pulled off a small fish eat big fish stunt, built F&B business from virtually nothing to RM1 billion dollar company and in the meantime, never ask shareholders for a single sen and still pay annual dividend of between 3-5 sen.
To me it is a fantastic counter amid low dividend payment and low profile.
@Larrytrader for those who accepted the MGO at RM3.10, they have received their payment. For those remaining 2% who did not accept the MGO, I think the money will be eventually paid out once the whole compulsory acquisition is completed. You can refer to their announcement.
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moneycashrich
2,101 posts
Posted by moneycashrich > 2019-06-04 13:14 | Report Abuse
so going up. Expected price ?