faye Tan, very good illustration. It show Tekala is a good buy. Furthermore, Tekala is also cash rich and useful for its expansion. Bought earlier and sold for a handsome profit before closing. Will surely consider to buy back on Monday.......kakaka
TEKALA is going through Reverse Takeover (RTO) into WMG Holdings Sdn Bhd (WMG). Eventually, WMG will be the listed entity after taking over from TEKALA. Key statistics that you need to know are: i) the exchange rate between TEKALA-WMG shares and ii) issue price of WMG shares. 2. 1 TEKALA shares = 1.33 WMG shares of RM0.50 each. Refer to Page 2 of the Bursa announcement which states that : “proposed share exchange of the existing entire issued and paid-up share capital of Tekala comprising 139,975,300 ordinary shares of RM1.00 each in Tekala (“Tekala Shares”) (excluding 13,008,000 Tekala Shares held as treasury shares) on the basis of 133 new ordinary shares of RM0.10 each in WMG (“WMG Shares”) at an issue price of RM0.50 per WMG Share for every 100 existing Tekala Shares held at an entitlement date to be determined later (“Proposed Share Exchange”)”; 3. Arbitrage opportunity. Theoretically, this is how an investor can play TEKALA-WMG RTO: i. BUY 1000 share of TEKALA at RM0.40 ii. Cash outflow = 1000*RM0.40 = RM400 iii. Keep TEKALA and stay through the whole corporate exercise iv. Your 1000 TEKALA shares will turned into 1330 WMG shares v. On the day of IPO of WMG, sell your 1330 WMG shares for RM0.50 vi. Cash inflow = 1330*RM0.50 = RM665 vii. Arbitrage gain = RM665 – RM400 = RM265 or 66% 4. TEKALA shares should rise to RM0.665 for arbitrage opportunity to disappear. Let’s redo the calculation if TEKALA shares is at RM0.665: i. BUY 1000 share of TEKALA at RM0.665 ii. Cash outflow = 1000*RM0.665 = RM665 iii. Keep TEKALA and stay through the whole corporate exercise iv. Your 1000 TEKALA shares will turned into 1330 WMG shares v. On the day of IPO of WMG, sell your 1330 WMG shares for RM0.50 vi. Cash inflow = 1330*RM0.50 = RM665 vii. Arbitrage gain = RM665 – RM665 = RM0 5. Key assumptions: i. The IPO may not materialize for whatever reasons ii. You may not be able to sell at RM0.50 on the day of WMG listing iii. This calculation ignores commission, brokerage fee and GST incurred in the real world iv. Opportunity cost of your money should it be invested somewhere else. 6. BUY or SELL at your own risk. This is an academic observation only. Hence, any decision to buy or sell shares is at your own risk.
Since the discontinuance of its vessel chartering business following the disposal of its sole vessel in 2013, the Tekala Group has been focusing on the timber processing business, in particular, the manufacturing and export of eco-floor base plywood to Japan. However, business conditions continue to be challenging due mainly to the escalating cost of production as a result of higher raw material costs, as well as high labour costs arising from the implementation of the minimum wages policy. Such additional costs could not be transferred to the customers as the selling prices of plywood have traditionally been determined by the Japanese market.
The Proposals present an opportunity for the existing shareholders of Tekala to participate in a proposed new core business that is viable and profitable. The Target Companies have more than 30 years of proven track record in the property development sector, mainly in Kota Kinabalu and Sandakan, Sabah. The combined revenue and profit after tax of the Target Companies for the latest FYE 31 December 2014 amounted to RM141.0 million and RM22.1 million respectively. Unaudited combined revenue and profit after tax of the Target Companies for the 9 months ended 30 September 2015 amounted to RM118.7 million and RM25.1 million respectively
Prospects of the Target Companies As a home grown Sabah-based company, the Target Companies will continue to increase and strengthen their presence in their home state. As at the LPD, the Target Companies have a total land bank of 597.99 acres, comprising 146.74 acres in Kota Kinabalu and 451.25 acres in Sandakan. The land bank of the Target Companies consists primarily of land in strategic locations such as major residential hubs, commercial and industrial area and sea-fronting sites. Through their secured land bank, the Target Companies are well-positioned to grow their project portfolio and overall presence in Sabah. The WMG Group (comprising WMG and its proposed subsidiaries, i.e. the Target Companies) intends to continue its focus on development projects in Kota Kinabalu and Sandakan, as these are among the 2 most populated districts in Sabah and are the locations of all its past projects. These projects will ensure the WMG Group’s continued growth and sustainability as the projected returns from these developments will enhance the WMG Group’s overall financial performance. The Target Companies also plan to develop partnerships via joint ventures and strategic collaborations with other property developers to undertake future property development projects in the Klang Valley, Penang and Johor as part of their expansion plans. Such collaborations are intended as an avenue to leverage on the different niche capabilities of these prospective partners in these markets, as well as to manage the risk exposure and capital commitment of the Target Companies. These potential partnerships are expected to enhance the WMG Group’s experience as a property developer and provide it with greater exposure to the industry trends and development in the country.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
LOOK009
1,079 posts
Posted by LOOK009 > 2015-12-04 16:37 | Report Abuse
go go go.