The newly-opened Ah Yat Tian Xia restaurant in Orchard Central, Singapore. Photo by El Lee

Bookbuilders for Oceanus' Taiwan Depositary Receipts (TDRs) are pricing the abalone farmer at 8% to 35% above its last close price of 35 cents per share (18 Dec) on the Singapore bourse.

Five brokers in Taiwan have indicated that each TDR, which represents one Oceanus share, will be issued at NT$8.70 (37.5 cts) to NT$10.90 (47 cts).

The actual price will be determined on 24 Dec, and trading in the TDRs will start on 31 Dec.

Oceanus' dominance of China’s abalone industry is wowing investors, according to the book builders. 

That, plus the surge in China XLX’s stock price following its recent dual listing in HK, are foremost on investors' minds.

China XLX had closed at HK$5.20 (94 cents) on the Hong Kong bourse on 8 Dec, the first day it was introduced there. 

Singapore punters had a field day on the Singapore bourse, when the urea maker's shares from 51 cents, shot up 51% overnight to close at 77 cents on 8 Dec.

Even though China XLX shares have since come off to 65 cents, it is still a significant 12% higher than its 12-month high of 58 cents before the dual listing.

Index name PE
Taiwan Capitalization Weighted Stock Index 196
FTSE ST All Shares index 31
Hang Seng Composite Index 24
 Source: Bloomberg, Dec 18

Shares on the Taiwan bourse trade at many multiples compared to shares traded on the SGX, but the impact of Oceanus’ TDR on its share price on the Singapore bourse remains to be seen.

Several factors will be at play. Shares trading on SGX and TDRs are non-fungible, unlike for China XLX shares, which take about 2 weeks to transfer between the 2 exchanges.

Secondly, 323.418 million China XLX shares transferred from SGX to HKSE resulted in neither earnings nor asset dilution.

In the case of Oceanus, of 200 million Oceanus shares which underlie the TDRs, 100 million were new share issues: 90 million were converted from warrants and another 10 million were vendor shares.

Closing price
18 Dec
35 cents
Market cap S$649.3 m
52-week high/low 40 / 9.5 cents
(Bloomberg est.)
10.1 X
Price/Cashflow 4.6 X
Price/Book 3.4 X

The world’s largest inland abalone farmer expects to raise S$37.5 million to S$47 million shares from the new shares for expanding its Ah Yat Tian Xia abalone fast food chain (84%) and for investment in its processing plant (16%).

t expects to expand its fast food chain to 70 outlets by the end of 2010, or 3.5 times of the 20 outlets it has as at end 2009, and to 150 outlets in 3 years.


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