WE HOLDINGS: M&A to boost core business
Terence_TeaExecutive Chairman Terence Tea. Company photo
WE HOLDINGS is acquiring 4 companies that provide testing and recycling solutions for electronics components.

This latest action by the loss-making distributor and manufacturer of HDD and semi-conductor components follows a spate of announcements last year about its foray into new businesses.

These include cement manufacturing and petroleum exploration in Myanmar, as well as the acquisition of the component distribution businesses of SGX-listed Europtronic and Everbest Industrial.

Formerly known as WesTech, WE Holdings has incurred losses since FY2010.

During 1HFY2014 (April to September 2013), it widened its loss attributable to shareholders to US$4.4 million (1HFY2013: loss of US$1.3 million).

Nonetheless, it managed to increase its cash reserves to US$20.7 million as at 30 September 2013 (compared to US$6.4 million as at 31 March 2013), following two share placements in April and a rights-cum-warrants issue in May.

In January this year, it said that it would raise net proceeds of up to S$39.41 million from yet another rights-cum-warrants issue to fund its forays into new businesses.

The latest acquisition vertically integrates its components business with value-added system testing services, bringing it a step nearer its vision of being a one-stop solutions provider.

The acquisition also expands the Group’s customer base and generates economies of scale.

On 29 January, WE Holdings signed a sale and purchase agreement to acquire 100% in the following four companies: SingYaSin Technologies Pte Ltd (“SingYaSin”), SCT Technologies Pte Ltd (“SCT”), LSP Technology Pte Ltd (“LSP”), and LSP Advanced Sdn Bhd (“LSP Malaysia”).

SingYaSin’s businesses include the following:
> Wholesaling of scrap and junk
> Provision of testing solutions for bare printed circuit boards
> Supply and manufacture of printed circuit boards
> Trading of copper balls and scrap metal
> Equipment rental

SingYaSin is 92.2%-owned by WE Holdings Executive Chairman Terence Tea. Well-known investor Bobby Lim also has a 2.7% stake in it.

SCT provides test solutions for bare PCB, as well as supplies industrial-related electronics products.  It is 90%-owned by SinYaSin and 10%-owned by Mr Tea.

LSP wholesales professional, scientific equipment with after sales services. It also provides laboratory test services for environmental and reliability tests.

LSP Malaysia sells and services reliability testing equipment and operates test laboratories for electronic components and parts.

The acquisition consideration will be satisfied by a combination of cash and share issue from WE Holdings, with the final amount to be determined based on the audited NTA of the target companies.

WE Holdings has estimated the 4 target companies to be worth S$7.6 million.

Otto_chart2.14Otto Marine (7.9 c) has a market cap of S$321 million and trades at an expected PE of 7.6X FY2013 earnings, according to Bloomberg data. Chart: FT.com

OTTO MARINE: Management changes
250_Michael-SeeGroup Executive Director Michael See. Company photo
Executive Director Michael See has on 3 February 2014 been promoted to Group Executive Director.

Mr See has been Otto Marine’s Group CFO since 2007.

In his expanded role, Mr See will primarily support Otto Marine’s Group CEO Garrick Stanley, in the functions of business development and corporate services.

Mr See will continue to oversee the financial aspects, human resource management, office administration and information technology after relinquishing his position as Group CFO in conjunction with his promotion.

Mr Denville Wee, who was V. Ships Asia’s CFO during 2006 to 2012, will assume Mr See’s CFO responsibilities.

Mr Wee was previously I.M. Skaugen Marine Services’ CFO in 2012 and 2013.


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