Severely Undervalued Stocks

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03 Jun 2020 09:48 #25357 by walterlim
1. Saphhire
- divested subsidiary for RMB 280m. Current cash holdings at RMB 172m. Total cash it will be holding is around SGD 88million. Current market cap is 43m. Stock price should be at least twice of now.

2. Procurri
- the deal to divest its subsidiary was called off. Proposed sales was $115m. Market cap of Procurri at the moment is only 80m. (Just the subsidiary alone is valued at $115m and is debt free business.

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03 Jun 2020 12:52 #25358 by Kapitan
Replied by Kapitan on topic Severely Undervalued Stocks
Sapphire does look interesting and a value stock at this point. One thing is, I wish the company had explicitly said they would give a special dividend. Otherwise, the cash will be mainly deployed into new businesses. The company announcement listed many things it would apply the cash to. Altho last par did mention dividends, I think it's not definite and may not happen:

(a) investments into infrastructure and water and environmental conservation (WEM)
projects and transit-oriented development (TOD) projects, as and when opportunities
arise;

(b) purchase of construction equipment by SYE for its leasing business;
(c) expansion of the building estate management (“BEM”) business of CJPS, including
investments into other companies undertaking the BEM business or by increasing the
headcount of CJPS;
(d) contributions to Ranken Railway’s capital (whether by way of equity or debt) as
required by Ranken Railway;
(e) contingency for reimbursement of any losses during the Audit Period as described in paragraph 3.3 “Salient terms of the Proposed Transaction – Reimbursement of losses
during the Audit Period” above and reimbursement of outstanding accounts
receivables of Ranken Railway as described in paragraph 3.3 “Salient terms of the
Proposed Transaction – Guarantee of accounts receivables” above; and
(f) general corporate purposes including general working capital, financing of new
business ventures through acquisitions and/or strategic investments as and when
opportunities arise, and share buy-back exercises and dividend distributions to
Shareholders.

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14 Jun 2020 10:34 #25378 by walterlim
On 12 Jun, there was a married deal of about 21 million shares traded at 33 cents. This is more than 10% of the price when i spoted the under valuation about a week ago. 21 million shares represents about 7% of the total outstanding shares. Should expect more stock movement after this.

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16 Jun 2020 09:19 #25381 by walterlim
Loke Wai San has acquired 7% and increased his stake to 19%. Feels like he is planning for a takeover offer soon.

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16 Jun 2020 09:51 #25382 by walterlim
Public float is 45%. Procurri issued profit warning in June. Typically they announce half yearly results in August. If there is indeed a takeover offer in the pipeline, this should be anounced shortly after the disappointing half yearly result. It has been a typical trend for takeover offers to be made after disappointing financial results to justify the takeover. Some of these include Breadtalk, PCI, and in less recent times, OSIM

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16 Jun 2020 10:08 #25383 by walterlim
The third party hardware maintenance valued at USD$115m is one of the 4 business in Procurri's lifecycle segment. The life cycle segment consist of

1. IT Distribution
2. Third Party Maintenance
3. IT Asset Disposition
4. Migration Services.

Lifecycle Services accounted for 50.8% of Gross Profit in the Annual Report.

IPO price of Procurri was $0.56. The share price has been trading below IPO since it listed and only touched breakeven level in Feb this year. This makes it highly attractive for the investors to make a takeover offer.

Considering the third party maintenance is valued at $115m, this translates to roughly $158mllion SGD. Based on this valuation alone, the stock price should be trad.ing at $0.585. Market valuation now is only 95million

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