Delong Holdings is proving to be an S-chip with major positive surprises.

DingLiguo DelongDing Liguo, 48, executive chairman of Delong Holdings, and his wife own 75.56% of Delong. Photo: CompanyIts controlling shareholder, Ding Liguo, who is the Executive Chairman and CEO, today made a conditional offer to privatise the company for $7.00 a share in cash.

The stock in recent weeks traded at above $6. That made it a 20-bagger compared to the 30 cents it was trading at in January 2017!

Mr Ding is the sole owner of the offeror, Best Grace Holdings, a special purpose vehicle incorporated in Singapore on 26 July 2018.

The Offer is conditional upon the offeror having received, by the close of the offer, valid acceptances in respect of 90% of the total number of offer shares.



Mr Ding sits atop Delong, which is an S-chip specialising in the manufacture of hot-rolled mid-width steel coils.

His takeover offer comes hot on the heels of his share purchase, rare in its magnitude by a Singapore listco insider, of shares amounting to US$110.9 million.

Stock price 

$6.95

52-week range

$1.59 - $7.00

PE (ttm)

1.9

Market cap

$765 m

Shares outstanding

110.2 m

Dividend 
yield
(ttm)

--

1-year return

374%

Source: Bloomberg

On 1 June 2018, Mr Ding's investment vehicle, Best Decade, entered into a sale and purchase agreement with two institutional shareholders -- Evraz Group S.A. and Vollin Holdings. (See: )


The deal was to acquire 16,569,599 and 2,522,100 shares of Delong from Evraz and Vollin, respectively.


Evraz' s block was transacted at S$7.42 while Vollin Holdings' was at $4.826.

Evraz's transacted price is higher than Mr Ding's $7.00 takeover offer -- but lower than the $7.00 takeover offer combined with a dividend of 55 cents a share that was paid out yesterday (26 Sept). 

The $7.00 offer looks like a lowball one as the trailing PE is 1.86.

However, Mr Ding does not intend to revise the offer price or any other terms of the offer.

(As we subsequently learnt, t
he dividend should not be considered together with the takeover price. 

The rule apparently is, if it is a mandatory takeover, the highest price previously paid that is relevant applies to the past 6 months.

For a voluntary takeover, the highest price paid is relevant for 3 months. Mr Ding's purchase of the Evraz stake was signed on 1 Jun 2018, and so was outside the 3-month period).

11 Oct update: 


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