Hot Stock Ogawa jumps 22% on takeover offer

Hot Stock Ogawa jumps 22% on takeover offer
Business & Markets 2013
Written by Chong Jin Hun of theedgemalaysia.com
Tuesday, 10 September 2013 10:17

KUALA LUMPUR (Sept 10): OGAWA WORLD BHD [] jumped as much as 19 sen or 22% to RM1.05 on news that the massage-chair manufacturer has received a takeover offer from a China-based firm, remisiers say.

At 10.05am, Ogawa reduced gains to trade at RM1.01 with some 3.7 million shares done. "The shares have risen due to the offer," a remisier told theedgemalaysia.com over telephone.

Yesterday, Ogawa said it had received an offer from China-based Xiamen Comfort Science & TECHNOLOGY [] Group Co Ltd to buy all remaining shares in Ogawa for RM1.05 cash.

Xiamen Comfort Science & Technology does not own any Ogawa shares. The firm has however obtained the commitment of Ogawa major shareholder Great Genesis Sdn Bhd and several individual stakeholders who hold a collective 53.9% in Ogawa to accept the offer.

Trading of Ogawa shares which was suspended yesterday in conjunction with the proposed takeover and privatisation announcement, resumes today.

The offer price of RM1.05 a share compares to Ogawa's latest reported book value of 72 sen a share. The stock’s latest closing price prior to the trading suspension was 86 sen.

The proposed privatisation of Ogawa comes a time when the firm's financials have improved. It posted a net profit of RM14.37 million in financial year ended June 30, 2013 (FY13) versus a net loss of RM1.35 million a year earlier. Revenue rose to RM223.55 million from RM176.07 million.

Analysts expect Ogawa's good performance in FY13 to continue in FY14. In a note, RHB Research Institute Sdn Bhd analyst Shin Kao Jack said the research firm expects Ogawa to "grow organically on the back of improving consumer sentiment on lifestyle products".

Shin said debt-free Ogawa's growth may also come from new products.