Monday, April 15, 2013

Privatisation Plays From Hot Buns to Beams of Steel (MKE)

Privatisation Plays
From Hot Buns to Beams of Steel

 If only bread can talk, oh the tales they could tell! The appearance of Thai F&B player Minor International (MINT) as a 10% shareholder in one of Singapore’s leading F&B names, BreadTalk, is currently tantalising the taste buds of local investors and could prove tasty for those with the appetite to take a bet on other potential privatisation plays. We think the flour will not stop rising yet. In a world of record low interest rates against a backdrop of macro uncertainties, acquirers are obviously taking charge of their own fate by buying out the good assets.

More than one way for small caps to get into big leagues. Stocks that may see transactions involving change in ownership or listing status would be far more likely to happen in the small-to-mid cap arena than among big caps, given the smaller absolute investment sums involved. Other than valuations, we believe potential acquirers will look at qualitative factors such as whether the business is easily replicable.

54 such transactions since 2011; consumer stocks popular! Sector-wise, we observed a disproportionally large number of consumer stocks that were privatised or taken over. It is also in the consumer sector where transactions commanded the highest valuations. Overall, premiums were mostly above 20%, and while conventional wisdom would say it takes more than one to tango, the presence or absence of a majority shareholding did not seem to matter much.

Nine stocks dressed to the nineths. We put on our tall thinking hats and came up with nine small caps straddling across various sectors, with favourable chances for positive corporate actions. Being prudent investors however, our choices also reflected attractive underlying valuations as well as positive growth potential, which will be supportive of further share price appreciation even in a non-event, meaning we would be comfortable holding on to these stocks in the long term even if a corporate action does not pan out.

Source/Extract/Excerpts/来源/转贴/摘录: Maybank Kim Eng Research
Publish date: 11/04/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
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高估期间, 卖对, 不卖也对, 买是错的。
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Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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