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YangZiJiang - Acquisition of minority stake in PPL Shipyard - BUY ($1.43) TP $1.80 by DMG
Proposed acquisition of PPL is a prelude to bigger things. YZJ and two partners have proposed to acquire PPL Holdings from Baker Technology for US$155m (S$216m). Under the structure of the deal and post-acquisition, YZJ will own an effective stake of 7.5% in PPL Shipyard, which is one of the world’s leading rig builder.
In our view, the deal is positive:
(1) Acquisition is fairly valued at 3x P/B vs. P/B valuation for listed rig builders of more than 4x.
(2) The deal is modestly EPS dilutive due to share placement to a Middle Eastern investor, but compensated by potential earnings growth when its offshore division is fully developed.
(3) The acquisition allows YZJ to tap into PPL’s expertise and helps develop YZJ’s offshore capabilities.
We believe this may lead to a yard setup in China to focus on the offshore market.
We maintain our earnings forecast but raise our TP to S$1.80 based on higher P/E multiple of 15x on FY10 EPS. Acquisition fully funded by share placement to Middle East investor.
Key details of the acquisition:
(1) YZJ, a Middle East investor and Mr. Yu Kebing (a non-executive director of YZJ) have offered to acquire PPL Holdings from Baker Technology for US$155m. Baker Technology has up to 4 May 10 to accept the offer. The crown jewel in PPL Holdings is the 15% stake in PPL Shipyard. The remaining 85% in PPL Shipyard is owned by Sembcorp Marine.
(2) Postacquisition, YZJ, the Middle East investor and Mr. Yu will hold 50.1%, 49% and 4,9% stake in PPL Holdings respectively.
(3) YZJ’s share of the acquisition at US$77.6m will be fully funded by a 83.5m share placement to an unnamed
Middle East investor at S$1.295/share. The new placement shares will dilute YZJ’s existing share base marginally by 2.3% and is subjected to acceptance of the offer by Baker Technology. (4) PPL Shipyard has a net book value of US$343m for FY09. The acquisition price values the shipyard at 3x P/B.
Valuation: target price raise from S$1.48 to S$1.80. Despite strong share price run-up of 23% since our initiation, we think there is more upside to the stock. We raise our TP from S$1.48 to S$1.80 based on higher P/E multiple of 15x on FY10 EPS compared to 12x previously. The higher P/E reflects the potential earnings from YZJ’s new pillar of growth in the offshore market. Our revised TP implies 4.1x FY10 P/B.
Key catalysts for share re-rating are:
(1) recovery of new orders;
(2) new income from business units under development.
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China’s Yangzijiang Shipbuilding (YAZG.SI) and a Middle Eastern investor will buy an an indirect stake in Singapore-based oil-rig maker PPL Shipyard in a $155 million deal. Yangzijiang has offered to buy Baker Technology’s (BASE.SI) fully-owned vehicle PPL Holdings, which owns a 15% stake in the Singapore oil-rig maker, it said in a statement today. Under the deal, Chinese shipbuilder will get a 50.1% stake in the vehicle, the Middle Eastern investor 45% and 4.9% will go to Yangzijiang’s non-executive director Yu Kebing. Yangzijiang will partly fund the deal by placing 83.55 million of its shares to the unnamed Middle Eastern investor at $1.295 a share, raising about $77.65 million for the purchase. PPL shipyard, which makes offshore oil rigs, is 85% owned by Sembcorp Marine (SCMN.SI). To create link towards this article on your website, copy and paste the text below in your page. Preview : China’s Yangzijiang to buy stake in Singapore rig-maker Saturday, 17 April 2010 © 2010 - The Edge Singapore |
| Last Updated on Saturday, 17 April 2010 21:12 |
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China’s Yangzijiang Shipbuilding (YAZG.SI) and a Middle Eastern investor will buy an an indirect stake in Singapore-based oil-rig maker PPL Shipyard in a $155 million deal. Yangzijiang has offered to buy Baker Technology’s (BASE.SI) fully-owned vehicle PPL Holdings, which owns a 15% stake in the Singapore oil-rig maker, it said in a statement today. Under the deal, Chinese shipbuilder will get a 50.1% stake in the vehicle, the Middle Eastern investor 45% and 4.9% will go to Yangzijiang’s non-executive director Yu Kebing. Yangzijiang will partly fund the deal by placing 83.55 million of its shares to the unnamed Middle Eastern investor at $1.295 a share, raising about $77.65 million for the purchase. PPL shipyard, which makes offshore oil rigs, is 85% owned by Sembcorp Marine (SCMN.SI). To create link towards this article on your website, copy and paste the text below in your page. Preview : China’s Yangzijiang to buy stake in Singapore rig-maker Saturday, 17 April 2010 © 2010 - The Edge Singapore |
| Last Updated on Saturday, 17 April 2010 21:12 |
The Daily Edge
China’s Yangzijiang to buy stake in Singapore rig-maker
China’s Yangzijiang Shipbuilding (YAZG.SI) and a Middle Eastern investor will buy an an indirect stake in Singapore-based oil-rig maker PPL Shipyard in a $155 million deal. Yangzijiang has offered to buy Baker Technology’s (BASE.SI) fully-owned vehicle PPL Holdings, which owns a 15% stake in the Singapore oil-rig maker, it said in a statement today.
China’s Yangzijiang to buy stake in Singapore rig-maker
Saturday, 17 April 2010
Saturday, 17 April 2010
© 2010 - The Edge Singapore
Stopped to kill 3 birds with a stone?
HALT is KILLER ????
Hulumas ( Date: 16-Apr-2010 08:48) Posted:
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Baker Tech shareholders will be the real winners. They are selling their 15% stake for US$155 million. This is slightly smaller than their market capitalization LOL
PROPOSED ACQUISITION OF 50.1% INTEREST IN PPL HOLDINGS PTE LTD ("PPLH")
The Board of Directors of the Company is pleased to announce that the Company has:
(a) entered into a placement agreement ("Placement Agreement") dated 15 April 2010 with a Middle East investor ("Investor") in relation to the placement of 83,555,000 new ordinary shares in the capital of the Company (each, a "New Share") at the issue price of S$1.295 per New Share ("Issue Price") to the Investor ("Placement"), which proceeds are to be applied by the Company for the Acquisition (as defined below);
(b) entered into a joint investment agreement ("Joint Investment Agreement") dated 15 April 2010 with the Investor and Mediterranean Success Group Inc. ("MSG") (which is wholly owned by the Company's Non-Executive Director, Mr Yu Kebing) in relation to the acquisition of shares in PPLH by each of the Company, the Investor and MSG in the proportions of 50.1%, 45% and 4.9% respectively, and subsequent to completion of the Acquisition, to regulate the parties' rights and obligations as shareholders of PPLH ("Joint Investment"); and
(c) issued a binding letter of offer ("Letter of Offer") dated 16 April 2010 to Baker Technology Limited ("Vendor") pursuant to which the Company has made an offer to the Vendor to acquire the entire issued and paid-up share capital of PPLH on the terms and conditions contained therein ("Acquisition").
Contra long won't be effected but contra short will be most effected!
ruanlai ( Date: 16-Apr-2010 08:45) Posted:
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They are planning to anounce two good news in this time halt.
Pai Sey if one release now and 2 days later another halt.
Contra ppls will die if every 2days halt once.
So give them two more days to kill all the contra ppls.
I came across this article, the halt is may be related to this good news, but still dun understand why they need to halt for 1 day:
http://www.asiasis.com/viewprint.php?bbs_id=news&doc_num=7283&prn=1
Yangzijiang secures six bulkers
On April 12th 2010, China’s Jiangsu Yangzijiang Shipbuilding reached an agreement with compatriot Fujian Provincial Communication Transportation Group to build six 45,000-dwt bulk carriers.
The ships are all designed by Chinese institutes for ocean going.
As is introduced, the newbuilding cost of six ships totals CNY 1.1bn ($161m)
The ships will be delivered in late 2011, early 2012 and early 2013 respectively.
The laden draft of those ships is only 10.5m. So, it’s suitable for Chinese domestic operation, especially the supply for the national power plants located along inland lines.
Yangzijiang targets 50 ship deliveries this year, regardless of market recession.
As is reported earlier, the Singapore-listed builder are considering listing in Hongkong or Twaiwan as well.
Published : April 15, 2010
First halt to tell ppls no news yet.........cos the BBs did not buy enough......
Just two day halt again.........cos the BBs buy enough liao......
If two day later another third halt ......... HAUT LAR............
BUT, when resume trade huh.........
no decision doesnt mean NO to dual listing...these operators are smart as they are buying time to push up the share px now...just let the rumour goes on so that the play is still there!
freeman_5js ( Date: 12-Apr-2010 16:54) Posted:
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better sell fast if ur thinking of earning on tt dual listing
SINGAPORE, April 12 (Reuters) - Singapore-listed Yangzijiang <YAZG.SI> said on Monday it has made no decision on any dual listing plan, following media reports about the possibility of listing its shares in Hong Kong or Taiwan.
YZJ moving together with Cosco, up more than 7% today with huge vol.
YZJ possible dual listing..then wht abt Cosco ?
Maybe something to do with the possible appreciation in RMB.
sarsar ( Date: 12-Apr-2010 14:26) Posted:
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HALT EFFECT HALTED
very sure aarrr ???
i going to sold my property liau
Will Recharge and Chiong tomorrow...
Fund Manager brought enough for today and go for coffee/dinner
spider4079 ( Date: 12-Apr-2010 15:32) Posted:
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low batt liau.
CHEONG LIAO
TODAY TARGET AT $1.40
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_4E8BE1A5E01E9C4A482577030007988C/$file/CLARIFICATION.pdf?openelement
Andrew ( Date: 12-Apr-2010 14:21) Posted:
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0338 GMT [Dow Jones] Singapore-listed shipbuilders rally as investors revisit laggards in marine sector. Cosco (F83.SG) +6.6% at S$1.61, JES International (EG0.SG) +11.1% at S$0.20, both on substantial volumes. "Investors are looking for laggard plays in the sector," says analyst at local brokerage. Notes Cosco has been consolidating at S$1.10-S$1.30 for about a year, while other marine stocks have been moving up; "naturally, attention will gyrate to those that haven't moved as much." Adds sentiment backed by Cosco's recent win of US$500 million contract to build rig for Sevan Drilling. Newsflow for JES has been thin since release of 4Q09 results in February, when shipbuilder turned in wider loss of CNY60.4 million vs CNY44.0 million loss year earlier, but improving sentiment on marine sector appears to be rubbing off on stock now. Orderbook quotes tip resistance for Cosco at S$1.65, for JES at S$0.21. Yangzijiang (BS6.SG) halted pending announcement; traders say China-based shipbuilder may announce plans for dual listing in HK or Taiwan, idea mooted by management in past results briefings. (frankie.ho@dowjones.com) Contact us in Singapore. 65 64154 140; MarketTalk@dowjones.com -0- Copyright (c) 2010 Dow Jones & Company, Inc. |
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