This posting is to follow up on the latest development of Bright World. BW just announced its financial results for FY2008 last friday. As i have expected all along, they are able to meet the profit requirement of RMB18 million for Q4 2008. Pls refer to the links below for my earlier posting:
http://level13-analysis.blogspot.com/2008/10/sweeteners-for-bright-world-takeover.html
http://level13-analysis.blogspot.com/2008/09/my-view-on-bright-world-takeover-part-2.html
Having a profit after tax of at least 91% of what was achieved in FY2007, BW has successfully overcome a large hurdle in ensuring that the takeover by CHAC turns out to be a reality. Of course at this moment, nothing is firmed up yet. There are still pre-conditions to be fulfilled. The obstacle that everyone will focus on now will be the shareholders' meeting organised by CHAC. In that meeting, which will take place before 10th March, CHAC shareholders will vote on the takeover offer. The green light from the authorities on both sides should also be made known in March. Once all these have been passed and approved, the share price of BW should move up towards the $0.70 region.
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this is an extracted from OCBC research report :
Discontinue coverage on BWPM. We believe that capital equipment
manufacturers including BWPM are likely to encounter further slowdown on the back of a sputtering global economy. Our last rating on the stock was a BUY, with a view to accept the offer. However, there are now some
uncertainties on the offeror's part in terms of fulfilling the pre-conditions for the deal to go through. We are STOPPING COVERAGE on BWPM due to reallocation of resources, anticipated weak global demand and lack of regular daily trading liquidity in the stock.
Good luck ...!!!
Hi,
It is possible that the Chairman of Brightworld might lower his asking prices of 70 cents (<90%) and 75c (>90%), thus placating the CHAC shareholders (>66.6%) to accept the offer during the next AGM/EOGM to be held not later than 21 days after the BW full-year result announcement.
Cheers!
Hi,
a doubt still on my mind: I am referring that the MAS query on 2nd
Dec last year. Three months have had passed, and there is no resolution. Any one care to comment?
Cheers!
Hi,
Have accessed the latest CHAC filing with the SEC of America.
By 10th March, CHAC has to file a plan on what it needs to do with the UD$160m raised during its IPO in late 2007, and of which has been collecting fixed depoisit interest, since then.
Share price and transacted volume of CHAC on the NYSE have been going up recently, touching US$9.26lately, and very close to its IPO price of US$10; a good sign as weak shareholders are selling and stronger shareholders are accumulating, and who believe in the long-term growth prospect of Brightworld.
A point of resolution would come as early as mid-March ....so do keep your finger crossed for the time being
To the 1st anonymous,
I have learnt not to read too much into analyst's opinion. They are also the one who said that BW cant meet the profit target of RMB18 mil. Not surprising they stopped coverage since BW is a thinly traded stock.
To the 4th anonymous,
Our thinking are along the same line. Everything should be clear before 10th March.
Cheers!
Hi,all readers including Agent "Level 13".
another +ve perspective to the takeover:
In July 2008, when the offer was made, the US/SG dollar exchange rate as about 1.36; but now the USD has strengthed to 1.53 => the takeover, which is in in SGD, will be about 12.5% cheaper now.
BW share price is about 22 cents; and its P/E ratio about 4 to 5. Even if the takeover is aborted, BW share price may plausibly go down to 15 cents; all is not lost and its future share price will depend on overall performance over the next few years.
< my assessment is that PRC is making use of this once-in-a-century financial crisis phenomenon to leverage on its critical mass and huge financial reserves with the central govt as well as its provincial govts using financial resources totalling a few US$trillion # possibly 5 trillions!!!, to leapfrog the rest of the other nations in the next 10 to 20 years. And heavy industries especially the heavy stamping machine industries that BW is in is key to PRC development. Also BW business, at its current development, primarily services the PRC mkts, and is pretty isolated from the rest of the world; herein, lies the future export potential that CHAC is keen to bring about, upon the acquisition.>
In essence, the risk/reward perspective works strongly in taking a measured bet, and I share the same sentiments at LEVEL13. THE BEST IS YET TO BE!
Cheers! The4thAnonymous
despite all said & so far nothing done yet .... on share price....crash to 0.15 today.....
Can somebody tell me why ???
do not lose hope, yet!
too much uncertainties in the financial jungle => very small volumes of transaction in BW over the past few months; for example, if you sell 50 lots today, you can bring down the price to 15 cents; conversely, you can buy say 80 lots in the late afternoon, the price of BW can go back to 20 cents.
if you look at the breakdown of shareholding in BW, the major shareholders account for a major >90% of the total shares, and they are holding on and not selling, waiting for the final resolution, due this month. on the other hand, the smaller investors get greater fright; they could be buying recently, but with the declining price, gets edgy, sells and cuts loss instead.
I will be more concerned when the institutional investors and/or large retail investors (very few though) starting selling in big volumes, over the next few weeks.
so do hang on, have greater conviction in your measured judgement, and await new corporate developments over the next few weeks. u may be pleasantly surprised; such is the irony of life and $$; some time when you are cocky sure, it does not happen; and the converse is true.
In the worst case, even if the CHAC shareholders vote against the acquisition, the p/e ratio of BW is already very low, and the downside in the BW price can be a further few cents, at most!
Hi All Readers,
I have compiled some statistics on the BW share transaction, since the time when the proposed takeover news was announced:
Total transaction done from 21 Jul 08 to 5 Mar 09 was 33,631 lots. Price of BW was at 37c (1st Offer on 21 Jul) and 27.5c (2nd Offer on 24 Oct). From Oct 08 onwards, roughly only 2,091 lots was done below 25c.
In short, the churning rate since Oct 08 is only 0.5%, over the total BW shares of 400 million. That means, the majority of the shareholders are still holding on..
12,653
From 21 Jul08 to 31 Jul08 range 42c to 66.5c
10,454
In Aug 08 range 41.5c to 48c
2,157
In Sep 08 range 30.5c to 43c
2,245
In Oct 08 range 24c to 34.5c (439 done below 25c B4 24 Oct)
2,015
In Nov 08 range 23.5c to 31.5c (25 done at 25c, 228 done below 25c)
815
In Dec 08 range 22.5c to 28.5c (117 done at 25c, 655 below 25c)
2,206
In Jan 09 range 25c to 37.5c (81 done at 25c)
924
In Feb 09 range 20c to 26c (902 done below 25c)
162
In 1-4 Mar 09 range 15c to 19.5c
144 lots done today; range 15c to 16c
Total lots done to date: 33,755
Hi All,
One of the pre-conditions for the takeover is a MAJORITY OF THE CHAC SHAREHOLDERS HAS TO VOTE IN FAVOUR.
Technically, what does that mean in the context of the US stock exchange rulings?
Does it mean a simple majority (>50%) of all CHAC shareholders, irrespective of the number of shares held by each of the shareholders, who attend the AGM/EOGM and cast their vote, and those who cannot attend the meeting,and butcast their vote in proxy?
How do we take care of those shareholders who do not bother to attend the AGM/EOGM, and/or do not bother to cast their votes? Are these counted as YES votes or NO votes?
Any one who has the experience in the US market care to enlighten on the matter?
Some of the readers have done good research on the trading volume of BW. Basically the main reason why the share price is going down is because of the forced selling and margin calls.
In order for the takeover offer to go through, not more than 33.33% of the CHAC shareholders must vote against the Offer Transactions and exercise their redemption rights in relation to their shares. I hope the explaination helps.
if end of march dont have any offer from CHAC, then the deal is most probably off. at first CHAC say the deal will took place in 4th quarter 2008. then postpone to 1st quarter 2009. end of march would be the end of 1st quarter 2009.
Appear tah some readers are negative and are of the opinion that the deal is likely to be off. Any further comments from Level 13?
Notice that CHAC shares are active in the US the last 10 days - this is a good sign. Can be interpreted that stronger parties are buying in and have confidence in Bright World deal. THE BEST IS YET TO BE!
Hi All,
even without the bonus of capital gain via the consummation of the CHAC takeover, Brightworld is trading at a P/E ratio of 2, and with a NTA of about 40 cents, which is about 2.5 times that of the prevailing share price.
if you believe that high-capacity PE machines are the mainstay of the PRC industries, and that they are not too many competitors around
in PRC, then Brightworld is a medium-term bet.
btw, it would be interesting to do further research on Brightworld's competitors and a peer comparison analysis?
meanwhile, I am slowly and steadily accumulating the shares ...
how come still no news on the CHAC shareholders meeting ??? is the voting postponed ???
Hi All,
do not despair; as the Chinese saying goes: "Good show is in the backstage"; for those interested, can log on this website
http://www.secinfo.com/$/SEC/Documents.asp?CIK=1408348&Party=BFO&Type=8-K&Label=Current+Reports+--+Form+8-K
to follow the latest development from CHAC
Also from our SGX website, you can see Brightworld has just formed a new subsidiary to develop and market CNC-controlled stamping and cutting machines to address the needs of a more sophisticated market, and that is a +ve sign; cheers!
Agree - to operate in the global market; the company need to go to a higher level of hi tech.
It will be bright after all.
You are right. The acquisition of Brightworld by CHAC is only the first step. For those who know, Brightworld products are sold solely in the PRC market, which by itself is a very huge one.
After the acquisition, the two Americans from CHAC will come in as Dy Chairman and CFO respectively... to lend the expertise and to further synergize the company to develop products for the world markets.
Approval by the PRC regulatory authority would not be a problem. Also for those who have studied the details, the PRC owner/chairman of the company will swap his shares for an equivalent holding of the CHAC securities; after the acquisition, this Chinaman will still have a majority ownership of the new entity..You may like to also know that in the past, one Western company had been trying to acquire a company similar to Brightworld ie developing and marketing stamping machines, but the PRC authority blocked the sale on the basis of key core manufacturing capability falling into foreign hand.
for much for now; more details later for those who care to ask!!
here is the end of the mth.... wat is the plan for CHAC....??? no shareholders meeting yet ???? if the deal so good to CHAS..why would they hold the meeting ASAP ?
look like those who invested in tis share...got to stuck with it .... for how long ?
Look at the anounce at SGX time -17:36 - amendment to the financial results. ..... -11.3% .... out of the 10% range..... what will happen?? ALl die??
how come all these chinese companies got this type of accoutning problem....... ???? I m sure CHAC shareholders must hv heard the winds ...so they r delaying the voting ..... dun know how deep is the hole...sigh ....
Lets put thing into prospective, the additional 4m rmb write-off as "Doubtful Debts", which reduced the PAT from 131.9m to 127.9m was done after the audit was completed only on 27 Mar. (please note previous numbers released did state "unaudited"). The earlier "Trade Receivable" was 323m rmb of which 6.64m was taught to be collectable at that time and now only 2.64m was collected after the additional 3 months effort, the auditor/mgt decided to write-off the additional 4m or 1.2% (reason being customers try to defer the payment due to the downturn) as an audit adjustment on ground of prudence. In my view, this is a "transparent" approach for BW to reflect its latest position.
One of the "Pre-con" of PAT-FY08 is now off by 1.3% (previous was better by 1.4%), anyone care to intrepet the meaning of "satisfied" in the sentence - "The possible Offer which will only be made if and when the Pre-Conditions are SATISFIED, not later than the 9-month date or 12-month date".
So, is it "satisfied" if the 1.3% off was due to the above reason, you decide!!!!
One more point to add. The external auditor Horwath First Trust LLP is ranked 8 in USA. It is registered in Spore and I think they are ranked slight below the top 4 in Spore. Should be very reputable. Info extracted from a close friend. Anyone elase can confirm this?
deal is off. CHAC not really interested after the meltdown of the US economy.They keep delaying the takeover meeting. Now with the condition not fulfilled, then CHAC can openly cancel the deal.
the last posting refers; pls do not prejudge; Brightworld requested a trading halt today,pending an announcement... cheers!
most chinese companies went into troubles, will first request trading halt. this is not new or rahter not anything to cheer ... yet. Besides, the most important CHAC voting is not carried out ... wat could one expect the announcement be anything positive...?? And why would they announced it long ago in March...and keep till their auditor digged into their account ...
sori...i jus don see why so positive abt this suspension... let se wat it come out later...
CHAC has withdraw the takeover. But heard rumours that CHAC may tender another unconditional takeover at the price of 35-40cents. Another one can comment?
hahaha...... still got pple b-live tis type of crap rumours......
the best thing to judge truth or false --- check the price and volume of this stock ... see whether it is this "hot" like it claimed.....
objectively, CHAC can make another unconditional takeover of BW, this time at a much lower price, and that can be done immediately, as the takeover code allows that.
CHAC directors are astute; why pays 70 to 75 cents when one of the pre-conditions in term of PAT has not been met. better exercise the right to abort the deal...and re-negotiate with BW Chairman who owns more than 70++% BW shares, to fix and accept an agreed price for his portion of his share, as a prelude to the unconditional takeover for the rest of the minority shareholders, albeit with the condition that there is a final 90% or more acceptance rate, so that CHAC can eventually privatise BW; of course, CHAC will still swap CHAC's shares with Chairman BW's shares, but this time, Chairman BW will get lesser of the CHAC shares...
so over the next few months, do some monitoring of the BW's share prices and transaction volume ..
as for me, I am still accumulating BW shares at a reasonable price...he who laughs last laughs best... thinking of buying a brand new next-gen E-class at the end of the year; ha! ha! joking lah.. cheers!
If the big boys are not selling this "China" counter, they may know "something" that we don't. So my friend don't give up your E-class yet.
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