CHINA YONGSHENG is a supplier of ready-mixed concrete in Suzhou which reverse took over (RTO) Global Ariel in 2007 on the Singapore Exchange.
Its profitability jumped strongly this year: For 9MFY14, the company reported net profit of RMB32.3 million versus a loss of RMB2.5 million in the corresponding period in 2013.
This, despite 9M2014 revenue dipping 2% to RMB490.7 million.
China Yongsheng is not cash-rich, though. It had borrowings of RMB307.2 million as at end-3Q2014. Cash on hand and at bank = RMB72 million only.
Like many S-chips, it is trading at a sharp discount to its NAV.
As at end-3Q2014, its NAV was RMB23.59 cents a share (or 5 SGD cents) compared to its recently traded stock price of 2.2 SGD cents, which translates into a market cap of S$37 million.
In the past 5 years, its stock traded between 0.6 cent and 3 cents.
What could its privatisation offer price be (assuming the offer materialises)?
At NAV? Not necessarily. There have been S-chips which were privatised at a discount to their NAVs.
Will an offer even materialise? The chances are there, considering that the Chairman, CEO and two executive directors jointly own a vehicle (Ever Universe Investments) that already holds a 68.06% stake in China Yongsheng.
See our 2008 story: GLOBAL ARIEL: A play on China's property boom