Chua Cheng Song, CEO, Adampak

Adampak: Yesterday, on the first day of trading of its shares following the company’s announcement of a takeover offer, shareholders locked in capital gains by selling 6,639,000 shares at 41.5 cents

Only 30,000 shares were transacted at 42 cents as a buy-up by an investor.

Presumably, most, if not all, of the buying at 41.5 cents was by the takeover party, Navis Capital Partners. Throughout the day, the bid-sell prices stayed at 41.5 and 42 cents, respectively.

Lim & Tan Securities yesterday recommended that shareholders take profit “anywhere close to the takeover offer of 42 cents or better”, and switch into cheaper comparables such as Armstrong Industrial, Broadway Industrial or Cheung Woh Technologies.

Its reasons are as follows:

1. The key founding management team (5 members in total) who collectively own 52.28% of the company has decided to call it a day and will be cashing out. The exception is CEO Chua Cheng Song, who has been given the option of swapping his existing 3.03% stake in Adampak for a 2.4% stake in the private company (assuming a successful privatization).

2. The offeror does not intend to revise the offer price except in a competitive situation, which seems unlikely given that Adampak’s major shareholders must have shopped around before deciding on the above deal; and

3. At 10x forward PE and 2x price to book, investors are better off looking elsewhere in the sector. Comparable stock Armstrong is trading at 9x forward PE and 1.5x price to book, Broadway (7x and 0.9x) and Cheung Woh (6x and 0.7x).

Edward Fu, independent director, JEL

JEL Corp: Typically, a director’s purchase of just S$7,500 worth of shares is not going to arouse any market interest. However, Edward Fu’s case is different.

An independent director of JEL for the past four years, Mr Fu bought his first shares of JEL yesterday – 300,000 of them at 2.5 cents apiece.

The striking facts surrounding his purchase:

a. It happened after JEL stock has become an incredible 4-bagger in just six weeks (shooting up from 0.6 cent to 2.5 cents). Have the prospects of JEL suddenly become so much brighter that it's worth paying 4X the price it was worth in mid-February?

The market would be watching keenly if his purchase continues -- or his stake stays a token sum.

b. There is massive dilution coming from the proposed sale of 2 billion new shares to billionaire Sam Goi. The shares will constitute approximately 50.3% of the enlarged issued and paid-up share capital of the company.

The market (and Edward Fu?) is overlooking the dilution, focusing instead on the positive angle of Sam Goi putting down about S$14 million cash to help JEL turn around.

Since the news of Sam Goi's backing broke, the stock price has soared 160% in the past two days (from 1 cent to 2.6 cents).

If approved by shareholders at an EGM, Sam Goi will become JEL's No.1 shareholder, lifting his current stake of 14.99% to 57.75% of the enlarged issued and paid-up share capital of JEL.

For more of the action, read:

STAMFORD TYRES, DUTY FREE, JEL CORP: Latest happenings.....

JEL, PLASTOFORM: Big investors getting big in small caps

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#1 Sammy 2012-04-04 07:32
The name & face of Sam Goi seem to be worth a lot, having done magic to JEL stock price. In financial figures, 2 billion shares x 1.6 cents = S$32 million. U can say Sam Goi has 'charged' a fee of $32 million appearance fee in 2 days!!

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