KSH recently conducted a placement for 30.9m new shares and 4.1m existing treasury shares at 40.8 S-cents per share. This was at a 5.2% discount to the weighted average traded price of 43.0 S-cents on 11 Mar 2013 and raised S$13.9m of capital for the group. Shortly after the placement, KSH deployed S$1.9m to increase its stake in its Beijing condominium project (Liang Jing Ming Ju, Phase 4) from 26.24% to 45.00%. Pending further visibility on capital deployment, we are overall neutral on this placement but note it would increase the size of the public float and possibly improve the counter’s trading liquidity, which has been low historically. Maintain BUY on KSH. Our fair value estimate dips mildly to S$0.61 from S$0.62, due to a mild dilution effect, but our forecast for buoyant earnings growth over FY13-14 remains unchanged.
35m share placement at 5.2% discount
KSH recently conducted a placement for 30.9m new shares and 4.1m existing treasury shares at 40.8 S-cents per share. This is at a 5.2% discount to the weighted average traded price of 43.0 S-cents on 11 Mar 2013 and would raise, on a net basis, S$13.9m of capital. Management plans to use 70% of the proceeds to support the growth of the company in Singapore, the PRC and Southeast Asia, and the remaining 30% for working capital needs.
Increased stake in Beijing condominium project to 45%
Shortly after the exercise, KSH deployed S$1.9m to increase its stake in its Beijing condominium project (Liang Jing Ming Ju, Phase 4) from 26.2% to 45.0%. We understand that this project, with estimated sellable area of ~31.4k sqm residential space and 8.1k sqm retail, is likely to commence construction and sales this year. We currently value this project conservatively at book and assume no accretion in our valuation model, pending more clarity on sales later this year.
Overall neutral on placement exercise
Pending further visibility on capital deployment, we are overall neutral on this placement exercise but note that it was conducted at a premium to book (39.9 S-cents per share as at 31 Dec 2012). This exercise would also increase the size of the public float and possibly improve the counter’s trading liquidity, which has been low historically. Finally, we note that no vendor shares were placed (aside from treasury shares bought back earlier at significantly lower prices), which likely points to management’s continued confidence in the group’s prospects.
Maintain BUY
Maintain BUY on KSH. However, pending further visibility on capital deployment, our fair value estimate dips to S$0.61 from S$0.62 due to a mild dilution effect. Our SOTP methodology values the construction segment at 4x FY13E earnings and applies a 40% discount to RNAV for the property segment. Our forecast for buoyant earnings growth ahead for KSH over FY13-14 remains unchanged.
KSH recently conducted a placement for 30.9m new shares and 4.1m existing treasury shares at 40.8 S-cents per share. This is at a 5.2% discount to the weighted average traded price of 43.0 S-cents on 11 Mar 2013 and would raise, on a net basis, S$13.9m of capital. Management plans to use 70% of the proceeds to support the growth of the company in Singapore, the PRC and Southeast Asia, and the remaining 30% for working capital needs.
Increased stake in Beijing condominium project to 45%
Shortly after the exercise, KSH deployed S$1.9m to increase its stake in its Beijing condominium project (Liang Jing Ming Ju, Phase 4) from 26.2% to 45.0%. We understand that this project, with estimated sellable area of ~31.4k sqm residential space and 8.1k sqm retail, is likely to commence construction and sales this year. We currently value this project conservatively at book and assume no accretion in our valuation model, pending more clarity on sales later this year.
Overall neutral on placement exercise
Pending further visibility on capital deployment, we are overall neutral on this placement exercise but note that it was conducted at a premium to book (39.9 S-cents per share as at 31 Dec 2012). This exercise would also increase the size of the public float and possibly improve the counter’s trading liquidity, which has been low historically. Finally, we note that no vendor shares were placed (aside from treasury shares bought back earlier at significantly lower prices), which likely points to management’s continued confidence in the group’s prospects.
Maintain BUY
Maintain BUY on KSH. However, pending further visibility on capital deployment, our fair value estimate dips to S$0.61 from S$0.62 due to a mild dilution effect. Our SOTP methodology values the construction segment at 4x FY13E earnings and applies a 40% discount to RNAV for the property segment. Our forecast for buoyant earnings growth ahead for KSH over FY13-14 remains unchanged.
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