Intraco Limited

Kim Eng on 10 Sept 2012

All offers lapsed. The saga for Intraco’s controlling stake appears to have ended with no resolution in sight. Hanwell Holdings announced the offer lapse, citing differences and the introduction of conditions that were deemed unfavourable for Hanwell shareholders. Mr. Oei Hong Leong officially holds no interest in Intraco after disposing a 22.3% stake at SGD0.56/share to Mr. Chew Leong Chee. Mr. Chee on his own purchased nearly 2% stake via open-market purchase, boosting his personal stake up to 24.1%. Hanwell Holdings remains the controlling shareholder of Intraco with a 29.9% stake.

1H12 results turn profit. In 1H12, there was a consolidation in the individual segments. Loss-making semi-conductor business has now been fully disposed. Though both trading and project sales declined by 3.8% and 42.5% YoY, respectively, in 1H12, it appears to have bottomed out, with net level turning profit. Gross margin has normalized in the range of 3.7-3.9%.

Who will add value? Mr. Oei has a higher profile when investing in listed companies such as Natsteel, Tung Lok, Super Group, and GuocoLeisure. On the other hand, TH Investments, a private arm of Ng family, are clearer on their motive. It has a history of investing in infrastructural-related companies such as CSC Holdings, a foundation and geotechnical engineering company, and TTJ Holdings, a structural steel fabricator.

Net cash position provides fundamental support. The Group holds a net cash position of 36cents/share, or 55% of its market cap. Its NAV is maintained at 0.70/share as at June’12.

Trading below book value. Stock still trades below book with P/B at 0.9x. Earnings appear to have bottomed out after disposal of a loss-making segment.