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iOCBS targets $1.41 this morning!!!!!!!!!!!!!CHEONG AH!!!!!!!!!!!
Still fishing for BUY ideas?
view PAH as being in a good position to enjoy more strong double-digit
growth, as it continues to operate in a key market that is still seeing
strong fish demand. With the enlarged scale of its operations over the past
2-3 years from recent acquisitions, the next phase is likely to see the
group build on this base to improve its operational efficiency. We are
projecting continuous strong growth for PAH, with FY08F earnings of
HK$586m. Management has declared final dividend of 1.08 cents (before
rights), giving full year yield of 2.1%. We are maintaining our
and our fair value of S$1.41.
latest development....
PACIFIC ANDES ACHIEVES 49.7% FY2007 NET PROFIT INCREASE
|
HK$ Million |
FY2007 |
FY2006 |
Chg (%) |
||
|
Revenue |
5,292.6 |
3,554.7 |
48.9 |
||
|
Gross Profit |
965.0 |
575.2 |
67.8 |
||
|
Profit After Tax for the Year |
962.8 |
559.2 |
72.2 |
||
|
Net Profit Attributable to Shareholders |
385.4 |
257.4 |
49.7 |
||
|
Net Profit Attributable to Shareholders , Excluding Exceptional Gain |
243.2 |
176.1 |
38.1 |
||
|
Earnings per Share (HK cents) |
58.20 |
39.24 |
|||
|
Earnings per Share, Excluding Exceptional Gain (HK cents) |
36.73 |
26.59 |
|||
Earnings per Share calculated based on issued share base of 662,215,616 shares.
Significantly increased earnings contribution from China Fishery, and sustained growth in frozen fish supply chain management business
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Proposes final dividend of 0.54 SG cents per ordinary share ex-rights or 1.08 SG cents per share pre-rights, on top of 1.30 SG cents interim dividend paid out; total payout at consistent level with previous years
To raise effective stake in China Fishery from 28.8% to 63.9%
Management is confident of better FY2008 performance
SINGAPORE ? 30 May 2007 ?
In FY2007, the Group achieved a 48.9% year-on-year increase in revenue to HK$5,292.6 million, from HK$3,554.7 million a year ago. Profit after tax for the year surged 72.2% to HK$962.8 million on improving economies of scale, as well as an exceptional gain booked by PAH on the dilution of its interest in China Fishery Group Limited ("China Fishery") through a new share placement.
Singapore Exchange ("SGX-ST") Mainboard-listed Pacific Andes (Holdings) Limited ("PAH" or the "Group"), a leading global frozen fish supplier with an integrated supply chain encompassing industrial fishing, global sourcing and transportation, announced today a strong set of results for the financial year ended 31 March 2007 ("FY2007").PACIFIC ANDES ACHIEVES 49.7% FY2007 NET PROFIT INCREASE Page 1 of 4
Down the line, the Group posted a 49.7% increase in net profit attributable to shareholders to HK$385.4 million. Comparing year on year when excluding exceptional gains recorded in both FY2006 and FY2007, net profit attributable increased 38.1% to HK$243.2 million.
Building on the momentum gained in recent years since PAH first invested in China Fishery, the Group enjoyed continued financial growth. Amidst increasing global consumption of fish, significantly increased contribution from the fishing division, supplemented by sustained growth in its frozen fish supply chain management ("SCM") division, provided the key growth drivers for the Group in FY2007.
In particular, the Group?s fishing division benefited from a series of strategic expansion plans that were executed over FY2007. In January 2007, the fishing division entered into its 3rd and 4th Vessel Operating Agreements ("VOAs"), which increased its trawling fleet size to 23. It also established fishmeal operations in Peru through a series of acquisitions, where it now has 4 fishmeal processing plants and 26 purse seine fishing vessels, and ranks as one of Peru?s leading operators.
Along with these expansions, the Group enlarged its balance sheet considerably. Total assets grew from HK$3,771.9 million as at 31 March 2006 to HK$7,180.5 million as at 31 March 2007, of which HK$185.7 million were in cash and equivalents. Total borrowings increased from HK$1,813.6 million to HK$3,578.2 million, attributed mainly to the issuance of US$225 million in senior notes due 2013 by a China Fishery subsidiary to fund the Peruvian acquisitions.
By businesses, the frozen fish SCM division accounted for 66.1% of FY2007 revenue, while the fishing division accounted for 33.8%, as compared to 17.4% in the previous year. By markets, the People?s Republic of China ("PRC") remained as the Group?s most significant market, accounting for 76.1% of FY2007 revenue. Japan and Korea, the Group?s second largest market and most important consumer of high-value premium fish products, accounted for 14.5%. With the establishment of fishmeal operations in Peru, the Group also diversified its sales to other markets of the world, including Europe, the Americas and various Asian countries. These markets accounted for the balance 9.4% of FY2007 revenue.
"Our upstream fishing operations have now evolved a step further to include Peruvian fishmeal processing. Such an enriched operating profile allows us to capture the various market opportunities emerging from global fish consumption and supply trends more effectively. In the
PACIFIC ANDES ACHIEVES 49.7% FY2007 NET PROFIT INCREASE Page 2 of 4
year ahead, the Group will continue to seek enhancements in its earning capabilities, with particular focus in the upstream fishing division, which remains as PAH?s fastest growing business segment," commented Mr Ng Joo Siang, Chairman of PAH.
Currently, the Group is in negotiations to restructure the terms of the 4th VOA from a daily charter hire basis to a long-term prepaid charter hire basis. If concluded, this would enhance profit margins under the 4th VOA significantly. The Group will also continue to increase the capacity of its purse seine fishing fleet in Peru, so as to drive cost and yield improvements in its fishmeal operations.
In March 2007, PAH also announced a proposed increase of its effective stake in China Fishery from 28.8% to 63.9%. While PAH already has a controlling stake in China Fishery, this is aimed at enhancing the proportion of China Fishery?s earnings attributable to PAH through enlarging its stake at an attractive purchase consideration.
To finance this stake increase, PAH has in April 2007 completed the issue of US$93 million in 4% convertible bonds due 2012. It also intends to raise approximately US$226 million in a 1-for-1 rights issue, which is subject to shareholders? approval in June 2007. These financing methods were selected so as to defer and minimise equity dilution to PAH?s existing shareholders, as well as enlarge the Group?s capital base significantly in preparation for future growth. Following the proposed rights issue, PAH?s share base will be doubled to 1,324,431,232 shares.
"Be it acquisitive or financing in nature, we see every corporate exercise as an opportunity to generate more good quality long-term value for our shareholders. In view of the buoyant environment, and given our sound fundamentals, the management maintains a very positive outlook on our Group?s performance in FY2008 and beyond," concluded Mr Ng.
In view of the strong corporate performance, and taking into consideration the Group?s forward capital requirements as it continues to pursue acquisitive growth, the board of directors is proposing a final dividend of 0.54 SG cents per ordinary share held based on the ex-rights enlarged share capital of 1,324,431,232 shares. In the event that the proposed rights issue is not carried out, the final dividend per share will be revised to 1.08 SG cents, based on the existing issued share capital of 662,215,616 shares. This is on top of an interim dividend of 1.30 SG cents per share already paid out. Total dividend payout for FY2007 remains at consistent levels with previous years.
unstoppable !!! Hit $1.20 today. bull dozing into $1.40
very likely as per analyst forecast.
FLY.... VERY POWERFUL
DBSVic targets $1.20!!! for this gem
Pacific Andes : BUY S$0.94; Price Target : 12-Month S$ 1.20
Pacific Andes (PAH) announced that it is raising its effective interest in China Fishery (CFG) to 63.9% (from 28.8%) through
the proposed acquisition of a 35.1% stake held by Jade China Investment Limited*. Total consideration of the proposed
acquisition is US$356m, which translates to S$3.96 per CFG share. This is a 10% discount to CFG's closing price of S$4.40 on
20 March, representing an entry PE of 8.6x 07F earnings.
* A private company owned by Sung Yu Ching, Managing Director of CFG.
The Group will fund this acquisition through a combination of convertible bonds (CBs) issue, rights issue, and internal
resources and/or external financing. The issuance of CBs at 4% semi-annual coupon will raise US$93m, and is convertible at
an exercise price of S$1.0813. The conversion shares represent c. 19.8% of the Group's shares when fully converted. It was
indicated that the CBs have been fully placed out to institutional investors. The rights issue will result in 662.2m new shares
at an issue price of S$0.52, on the basis of one new share for each existing share, raising S$344m (US$226m). In total, the
Group will raise about US$319m, and the remainder will be from internal resources and/or external financing. The
proposed acquisition will enhance PAH's net profit, but EPS will be lowered by 8%, due to the enlarged volume of shares
outstanding. We see this move as positive, as CFG is currently the Group?s main growth driver. And in view of the
acquisition?s positive effects on earnings, we advise shareholders to take up the rights issue. Pending relevant shareholders?
approval for the rights issue, we maintain our BUY recommendation with our target price of S$1.20, based on 10x 08F
earnings.
this is good or bad news.
Seems I was right on Option 3, rather than 2 !
See news article below:-
Pacific Andes breaks one-month CB drought
By Anette Jönsson, | 22 March 2007
Read this article online at:
http://www.financeasia.com/article.aspx?CIID=76288
The Singapore-listed company raises $93 million to boost its stake in a fishing subsidiary. Pent-up demand helps push pricing to the aggressive end.
Singapore-listed Pacific Andes (Holdings) on Tuesday (March 20) sold $93 million worth of convertible bonds to raise cash that will be used to increase its indirect stake in a subsidiary.
The company is responsible for supply chain management and the provision of logistic and shipping services within the Pacific Andes group, whose main business is the distribution of frozen fish and seafood. The subsidiary China Fishery Group, in which it is increasing its stake, is the fishing division within the group.
The CB, which accounts for just under 20% of the company?s issued share capital, was done together with a rights issue to existing shareholders which will raise another $225.6 million that will also go towards the same acquisition. Both deals were arranged by HSBC.
This is the first publicly marketed CB of size in Asia since mid-February when Merrill Lynch did a $175 million deal for Indian drug maker Orchid Chemicals & Pharmaceuticals. Those bonds were sold off in the immediate aftermarket after both equity and bond investors reacted negatively to a hefty increase in the deal size.
Orchid?s offer came on the tail end of a busy two-week period that saw five other convertibles come to market, including the record-breaking $1 billion offering from Reliance Communications and a $425 million deal from US-listed Suntech Power. Since then, however, the markets have become a lot more volatile which, according to CB bankers, have made it more difficult to pin down the credits. Potential issuers have in many cases also had to cope with sizeable drops in their share prices, which have made them hold off on equity-related fund raising exercises for the time being.
The good demand for the Pacific Andes trade, which sources say was partially due to the recent lack of primary issues, may convince them to revive their CB plans, however.
According to one source, the offer was more than four times covered and attracted some 40 investors even though the order book was open for only two hours. All the usual hedge funds and CB investors were said to have come into the trade, which was open to Asian and European investors as well as offshore US accounts.
The demand was reflected in the pricing which saw both the yield and the conversion premium fixed at the end of the range most favourable to the issuer - the premium at the wide end of the 20% to 25% range and the yield at the tight end of a 6.75% to 7.25% range.
Based on Tuesday?s closing price of S$0.865, the initial conversion price was set at S$1.0813. However, this will be adjusted down to S$0.8656 to reflect the dilution caused by the one-for-one rights issue which was offered to investors at a 39.9% discount to the latest close.
The five-year bonds have a 4% coupon and were sold at par. There is no put, but the issuer has the ability to call the bonds already after two years if they continue to perform strongly. To ensure the bond investors don?t get cheated on their share of any such upside, this can only be done if the share price gains exceed the initial conversion price by more than 40%. This hurdle will fall to 30% after three years and 20% after four years.
The offering was priced off a credit spread of 400 basis points where HSBC provided asset swaps for about $20 million of the deal. The stock borrow cost was assumed at 5% since there is no lending available and a dividend protection will kick in if the company?s payout ratio goes above 33% of the net consolidated profit, which at current prices is equal to a dividend yield of 3.6%.
This gave a bond floor of 90% and an implied volatility of about 30%, which compares with a quite high historic volatility of about 40%. The volatility is evident by the fact that the stock rallied 27% in the first two months this year to a high of S$0.99, but has since dropped about 13% to Tuesday?s close of S$0.865. It is up 18% in the past 12 months.
The shares were suspended Wednesday pending further details on the China Fishery acquisition and the funding of it.
According to a source, Pacific Andes will increase its indirect stake in China Fishery by acquiring more shares in Super Investment Ltd, which holds 78% of the unit in question. Pacific Andes already owns (indirectly) 34.9% in Super Investments and it will now buy a further 45%.
Separately ? although this deal is also arranged by HSBC ? Hong Kong-listed Pacific Andes International, which owns 65% of Singapore-listed Pacific Andes Ltd., will also do a rights issue to raise enough cash to take up its entitlement in the Singapore subsidiary?s rights issue.