Last week, CSE Global (CSE) accepted an offer from Hitachi Ltd for all its 59,789,000 shares (30.94% stake) in Malaysia-listed financial solutions provider eBworx Berhad (eBworx). This follows a voluntary general offer from Hitachi’s bankers, in Mar 12, to acquire all the outstanding ordinary shares for a cash offer of M$0.90. If Hitachi’s acquisition of eBworx goes according to plan, CSE would receive about S$21.5m in cash in exchange for its stake in eBworx. The proposed transaction is not expected to have any material impact on CSE’s consolidated net tangible assets per share or earnings per share for FY12. As we believe that there are little synergies between the two companies, the sale should help CSE unlock shareholder value and redeploy capital to its core businesses. Pending further clarity on the situation, we maintain our HOLD rating with S$0.80 fair value estimate.
Sale of 31% stake in eBworx.
Last week, CSE Global (CSE) announced that it has accepted an offer from Hitachi Ltd for all its 59,789,000 shares (30.94% stake) in Malaysia-listed financial solutions provider eBworx Berhad (eBworx). This follows a voluntary general offer from Hitachi’s bankers, in Mar 12, to acquire all the outstanding ordinary shares for a cash offer of M$0.90 (15.7x historical PER). If Hitachi’s acquisition of eBworx goes according to plan, CSE would receive about S$21.5m in cash in exchange for its stake in eBworx. The proposed transaction is not expected to have any material impact on CSE’s consolidated net tangible assets per share or earnings per share for FY12.
What is eBworx?
eBworx is a consulting and technology solutions firm specializing in the Asian financial services industry. Its products include credit management (Loans Origination, and Collection & Recovery), delivery channel (Cash Management, Internet Banking, Branch Delivery) and Trade Finance solutions. The group was originally part of CSE’s e-solutions business, but was later spun off as eBworx and listed on MESDAQ in 2003. For FY11, it reported a net profit of M$11.8m and shareholder’s equity of M$70.9m.
What’s the implication for CSE?
Today, the operations of CSE and eBworx are very different. CSE provides system integration work for the energy, infrastructure and healthcare sectors. Its jobs are mainly engineering-focused and working capital intensive, but the underlying technology is stable. By contrast, eBworx provides mainly consulting and software solutions to the financial services industry. Although its work is less capital intensive, eBworx requires ongoing R&D due frequent changes in the financial services industry (i.e. Basel III). As we believe that there are little synergies between the two companies, the sale should help CSE unlock shareholder value and redeploy cash to its core businesses. Pending further clarity on the situation, we maintain our HOLD rating with S$0.80 fair value estimate.
Last week, CSE Global (CSE) announced that it has accepted an offer from Hitachi Ltd for all its 59,789,000 shares (30.94% stake) in Malaysia-listed financial solutions provider eBworx Berhad (eBworx). This follows a voluntary general offer from Hitachi’s bankers, in Mar 12, to acquire all the outstanding ordinary shares for a cash offer of M$0.90 (15.7x historical PER). If Hitachi’s acquisition of eBworx goes according to plan, CSE would receive about S$21.5m in cash in exchange for its stake in eBworx. The proposed transaction is not expected to have any material impact on CSE’s consolidated net tangible assets per share or earnings per share for FY12.
What is eBworx?
eBworx is a consulting and technology solutions firm specializing in the Asian financial services industry. Its products include credit management (Loans Origination, and Collection & Recovery), delivery channel (Cash Management, Internet Banking, Branch Delivery) and Trade Finance solutions. The group was originally part of CSE’s e-solutions business, but was later spun off as eBworx and listed on MESDAQ in 2003. For FY11, it reported a net profit of M$11.8m and shareholder’s equity of M$70.9m.
What’s the implication for CSE?
Today, the operations of CSE and eBworx are very different. CSE provides system integration work for the energy, infrastructure and healthcare sectors. Its jobs are mainly engineering-focused and working capital intensive, but the underlying technology is stable. By contrast, eBworx provides mainly consulting and software solutions to the financial services industry. Although its work is less capital intensive, eBworx requires ongoing R&D due frequent changes in the financial services industry (i.e. Basel III). As we believe that there are little synergies between the two companies, the sale should help CSE unlock shareholder value and redeploy cash to its core businesses. Pending further clarity on the situation, we maintain our HOLD rating with S$0.80 fair value estimate.
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