The board of Directors (“Board”) of China Yongsheng Limited (the “Company”) refers to the announcements released by the Company on 23 October 2014 and 30 November 2014 in relation to the Board’s receipt of a formal proposal (the “Proposal”) from an entity related to certain executive directors of the Company that may result in the delisting of the Company. The Board wishes to inform shareholders of the Company that discussions are still ongoing and there is no certainty whether a transaction will take place pursuant to the Proposal. 

-- Company announcement on 24 Dec 2014.  

350_1sunjianmingSun Jianming, executive chairman of China Yongsheng. NextInsight file photo.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.

3Q2014 saw a particularly big improvement in performance: Gross profit increased 69% to Rmb28.4 million as a result of an increase in the average unit selling price of concrete and a decrease in the average unit cost of production.

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

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