Oakwell Engineering

Anyone holds Oakwell? Been steadying and going up from 0.044. I have been a seasoned oakwell trader, everytime I buy when it is down and sell when it is up. I currently have 200 lots at 0.062, last done was 0.066 (day high was 0.073), i sold 99 lots at 0.072 on Wed. Anyway anyone read the papers the past few days also report on Oakwell?

You can all go check the SGX Website too. They just announce they sold their distribution business for US70 million which I think its great because that side of their biz isn't really money making.

Friends, insiders and brokers have been telling got potential M&A, anyone also heard of this stock, pls share your thoughts. Dunno Monday market open should sell not.

I just read the SGX announcement. It's SGD70 million, not US$70 million. The company will be paid in cash. Some of the money will be held back for a while.

It's give out a special dividend, it seems. The cash "...to fund future acquisitions and its working capital, consider reducing its bank borrowing and provide a dividend distribution."

Selling the distribution business will mean that Oakwell will be left with loss-making businesses. In the SGX announcement, the net profits attributable to the Assets to be disposed was S$11.0 million, compared with the Group's net loss of S$29.3 million as at 31 December 2012. Roughly, it means in the absence of the Assets, the company would have lost S$40 million last year.

Yes it is SGD 70 million, my bad. Do note though it has potential to be 74.5 million.

On the issue of the sale of the asset, read the annoucement:
RATIONALE FOR THE PROPOSED DISPOSAL
The Directors are of the view that the Proposed Disposal is in the best interests of the Company and its Shareholders as the Directors have considered the likelihood that the Distribution Business may require significant capital injection to grow, the Proposed Disposal will enable the Company to realise its investment in the Distribution Business and to unlock the value thereof for its shareholders.

You need to read the other declaration in context:

Consideration received based on aggregate total of the Base Consideration and Adjustment Amount of S$74,500,000, compared with the market capitalisation based on the total number of issued shares excluding treasury shares as of the market day preceding the date of the LOI on 22 May 2013 (Based on weighted average price of S$0.0692)
161.1% of the current market cap.

Do note that despite the weight average being used as of 22nd May which is 0.069, it is still 161%. I think the sale in general is a good deal for shareholders in the short to medium term. Oakwell for me as never been a buy and hold company, it is for me to buy hold for a max 3 months and sell to earn a tidy 30-100% return. I might clear-out on Monday to be honest.

If you look at it, after the deal their NAV as in terms of Assets will only be 11% if we exclude the Cash they are getting. From what I know, they have a major shipping business in Thailand (for those who know, it has High Barriers of Entry), and the recent for their loss is cause it used to have lots of pesky high paid angmos to run the show who are useless but are only a burden. Now they have all been removed but the damage is done, to be honest the deal can only be good: (1) Issue dividend (0.5 to 1 cent sounds plausible), (2) Reinvest into their revamped ship business.

Finally, I heard there is a power struggle in the boardroom (hearsay), so might be a bidding war soon. DO take note of large volumes past 3 trading days (Tues to Thursday)

Dont think so M&A ? They mention they are finding partners for their shipbuilding business in annual report !!

Many company are trying to enter thailand market.. Oakwell do have their advantage provided those inefficient management there are cleared..and they can partner with big shipbuilder !!

Oakwell highest 0.078 with high volume. now 0.073 lowest sian. bouncing back to 0.075