Stake sale boosts Sin Heng Chan’s NAV

KUALA LUMPUR: Sin Heng Chan (Malaya) Bhd (SHC) has entered into a conditional share sale agreement to divest an 80% equity stake in its unit Sin Heng Chan Industries Sdn Bhd for RM24.5 million cash.

The sale of its 80% stake in Sin Heng Chan Industries is expected to boost SHC’s net assets per share by 11 sen or 18.6% to 70 sen from 59 sen as at Dec 31, 2010.

The proposed disposal will enable the animal feeds manufacturer to make a RM11.42 million net gain. At yesterday’s closing of 42 sen and net assets per share of 70 sen, SHC’s shares were trading at 0.6 times of price-to-book value.

Gearing is also expected to fall from 0.64 times to 0.53 times following the exercise, which is expected to be completed by the fourth quarter of this year, according to SHC’s announcement to Bursa Malaysia yesterday.

“The rationale for the proposed disposal is to enable SHC to realise and unlock value in its investment in Sin Heng Chan Industries as well as to enable SHC to focus on its other existing business operation such as oil palm cultivation and to raise additional working capital for this operation,” it said.

SHC’s plantation business is currently its anchor source of revenue and profit, making up almost all its profit for 1Q ended March 31.

SHC posted a net profit of RM1.06 million for 1Q versus net loss of RM271,000 a year earlier mainly due to higher profit margin for the plantation division. Revenue rose 12.4% to RM15.7 million during the quarter from RM13.98 million a year earlier mainly due to the higher turnover of the plantation division.