Midas Holdings: Lim & Tan Securities Company has entered into a sale and purchase agreement with Jilin Kaitong Engineering to acquire 45% stake in Jilin Midas Light Alloy (JMLA) for an aggregate sum of RMB306 mln (approximately S$62 mln). Upon completion, Midas will hold a 100% equity interest in JMLA, which shall become a wholly-owned subsidiary of the group. The assets valuation report issued by Jilin Shengyuan Assets Appraisal valued JMLA, including all its assets such as the land, work-in-progress of the project under construction, equipment and cash, after deducting its liabilities at about RMB662.8 mln, of which the Sale Equity is 45%, thus resulting in a valuation of RMB298.3 mln. The assets valuation report was commissioned by JMLA and was based on both the market comparison approach and the cost approach. We note that Midas has agreed to pay a small premium over valuation of approximately RMB7.7 mln (or S$1.56 mln) though this is probably quite fair in view of the future market potential of JMLA’s products and its strategic fi t with the growth and direction of the group. With cash holdings of over RMB1.1 bln, we believe Midas should have no problem funding this acquisition though net gearing is expected to increase to 0.7x. The stock is currently trading at about 22x FY14 and 15x FY15 P/E, based on consensus estimates.
Posted on: Mon, 14 Jul 2014 01:31:24 +0000
Trending Topics
Recently Viewed Topics
© 2015