Excerpts from analyst's report

Phillip Securities analyst: Richard Leow, CFTe, FRM

What is the news?
LeeChengChye800Super 10.14Lee Cheng Chye, CEO of 800 Super.800 Super Holdings Ltd (800 Super) made an announcement on SGXNet on 16 February after market hours that its largest shareholder, Yong Seong Investment Pte Ltd (YSI) has increased its stake in the Company.

» Largest shareholder, YSI, now controls 66.8%. YSI previously held a 66% stake in 800 Super. YSI had purchased 782,000 shares for S$340,170 (average price 43.5 cents/share) and 13,900 shares for S$5,977 (average price 43 cents/share) on 15 February; and 665,100 shares for SS$292,644 (average price of 44 cents/share) on 16 February 2016.

» YSI is held by Company insiders. Lee Koh Yong (Executive Chairman), Mr Lee Hock Seong (Brother of the CEO and Executive Chairman) and Mr Lee Cheng Chye (CEO) hold a 28%, 28% and 24% stake in YSI, respectively. Through their own direct interest and indirect interest via YSI, they now hold a 21.5%, 21.5% and 18.4% stake in 800 Super, respectively.

What do we think of this?
» Expect to see a price floor at S$0.43. With this increase in stake, we believe that this sends a positive signal to the market that insiders are willing to buy at this price level. As such, we expect to see a price floor at S$0.43.

Company Price (S$) Mkt Cap (S$m) Trailing P/E Trailing P/B Trailing EV/EBITDA ROA (%) ROE (%)
800 Super 0.435 86.7 4.8 1.5 5.2 15.1 34.8
Colex 0.300 46.4 7.9 1.6 4.0 15.1 21.9

Source: Bloomberg (Updated: 18 April 2016)

Investment Actions
Based on last closing price of S$0.435 and the price floor that we are expecting at S$0.43, we believe there is limited downside risk. We continue to like 800 Super for its defensive business model amidst the current market volatility. We maintain our target price of S$0.58 based on 7.5x FY16e P/E multiple. Reiterate BUY.

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