Pimpinan Ehsan – Cash arbitrage gains on the cards?

Pimpinan Ehsan Bhd (PEB) (Bursa Stock code: 5622)(formerly known as TriPLC Bhd) was in the news for its corporate deal involving the following in sequence:

(i)                  Transfer of TriPLC under Pimpinan Ehsan Bhd - Completed

(ii)                Sale of 100% stake in TriPLC construction business unit to Puncak Niaga - Completed

(iii)               Declaration of special dividend of RM1.95 per share from sale proceeds of TriPLC - Completed

The stock recently went ex-special dividend on 14 June 2018, and currently trading at ex-dividend price of RM0.64 per share. It is currently trading at a whopping 45% discount to net cash per share of RM0.93 per share, which may potentially be distributed back to shareholders should a core business is not found by PEB within a year.

Final thoughts:

Pros: Potential unlocking of share value via dividend distribution catalyst, acquisition of earning accretive business

Cons: Extension of timeline for new acquisition of business thus delay in full realization of share value/narrowing of discount to NTA/net cash per share, Management hoarding cash (low probability), acquisition of value destroying business.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

Disclosure: None.

Reach Energy: Potential Risk Arbitrage? (2)

Recall in an earlier posting that highlighted the risk arbitrage deal offered by Reach Energy listed company shares. Fast forward to 15 November 2016, it had successfully obtained sufficient shareholder approvals to acquire an oil and gas outfit.

The option to vote officially expires on 28^th October 2016 where if you are a shareholder up till the end of business day, you have the right to attend the EGM and cast your vote on the acquisition. Shareholders who voted against the acquisition would have gotten back approximately RM0.76 per share as per the following Bursa stock exchange announcement made by the company via a share purchase mechanism:

http://www.bursamalaysia.com/market/listed-companies/company-announcements/5271517

Shareholders focusing solely on extracting the risk arbitrage spread offered by Reach would have earned a decent premium. However, the share repurchase price paid by the company is subject to the qualifying acquisition going through. Christmas indeed came early should you have bought into Reach below RM0.70 per share price levels.

This post will end the story for Reach risk arbitrage chapter.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

Disclosure: None.

Golden Land Bhd: Special dividend and capital repayment as catalyst for share price uptrend movement? (2)

Recall in an earlier blog posting that yours truly had speculated on the potential share price uptrend movement due to 2 separate cash distribution and the perceived margin of safety for the intrinsic cash value post distribution.

The trade did not work out as expected as share price took a dive following the special dividend ex-date on 28 March 2016. Announcement of capital repayment did not have the desired effect as well.

Reasons that could explain the downtrend may be expected heavy capital outlay for investment in plantation land that could lock up cash reserves. Other than that it was a value trap so far that trapped my investment funds which did not see any growth for more than 6 months.

This will be the last of Golden Land posting until there are any new corporate developments.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

 


Disclosure as at time of publication: Long Golden Land Berhad.

Golden Land Bhd: Special dividend and capital repayment as catalyst for share price uptrend movement?

Golden Land Bhd (Stock Code:7382) listed on Bursa Malaysia announced on 8 June 2015 that it has signed a conditional sale and purchase agreement to sell 4 of its subsidiaries and a piece of plantation land to a ubsidiary of Felda Global Ventures (Stock Code:5222). Fast forward to March 2016, the sale and purchase is almost nearing its completion stage with the latest announcement in its quarterly report ending 31 Dec 2015 indicating completion of disposal in early March 2016 and receipt of the balance of cash receipt amounting to a total of RM655million.

Yours truly had been collecting Golden Land shares in several trades after the announcement of the deal, with the view that the announcement of the cash distribution will provide a short term catalyst for narrowing of discount of its share price to its intrinsic pure cash value, hence providing a short term risk arbitrage gains.

Based on the latest quarterly financials as at 31 December 2015, intrinsic cash value (A) is determined to be as follows (RM1.87 per share):

 

Note: (B) represents expected cash outlay for purchase of palm oil plantation in Indonesia as announced in its quarterly report.

Based on the current share price of RM1.61 as at 4 March 2016, there is still a 15% discount to its intrinsic cash value, excluding all other fixed assets. The actual NTA is deemed to be higher but had been excluded in the computation.

For those holding on to the Golden Land shares, it may be ripe for harvesting and to take the opportunity to dispose your shares for any gains obtained, since bulk of its income generating palm oil assets will have been fully disposed.

For those that are willing to ride on Golden Land’s shift of focus into growing its Indonesian palm oil plantation operations and smallish property development ventures, the net cash value post distribution may serve as a cash buffer for future operations and should you choose to hold on to the shares.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

 
Disclosure as at time of publication: Long Golden Land Berhad.