SIIC Environment
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SIIC to buy China-based water treatment business for $348.3 million
Published on Mar 25, 2015 8:35 AM
SINGAPORE - Mainboard-listed SIIC Environment Holdings plans to buy a China-based water treatment business in a deal valued at about 1.55 billion yuan (S$348.3 million) in cash and shares, the water specialist announced late Tuesday.
SIIC said it plans to buy all of Global Envirotech Investment, which in turn holds an indirect 92.15 per cent stake in Fudan Water Engineering and Technology Co, from Global Environment Investment. SIIC will pay 151.7 million yuan in cash and issue 1.56 billion new shares, or 16.3 per cent of the existing shares, at 13.2 cents apiece. The total consideration includes 479.18 million yuan that will be used to pay off an outstanding debt.
The issue price for the consideration shares represents a 12.2 per cent discount to the volume-weighted average price of SIIC shares on Tuesday. SIIC stock closed at 15 cents on Tuesday before the announcement.
BUSINESS TIMES
Published on Mar 25, 2015 8:35 AM
SINGAPORE - Mainboard-listed SIIC Environment Holdings plans to buy a China-based water treatment business in a deal valued at about 1.55 billion yuan (S$348.3 million) in cash and shares, the water specialist announced late Tuesday.
SIIC said it plans to buy all of Global Envirotech Investment, which in turn holds an indirect 92.15 per cent stake in Fudan Water Engineering and Technology Co, from Global Environment Investment. SIIC will pay 151.7 million yuan in cash and issue 1.56 billion new shares, or 16.3 per cent of the existing shares, at 13.2 cents apiece. The total consideration includes 479.18 million yuan that will be used to pay off an outstanding debt.
The issue price for the consideration shares represents a 12.2 per cent discount to the volume-weighted average price of SIIC shares on Tuesday. SIIC stock closed at 15 cents on Tuesday before the announcement.
BUSINESS TIMES
It is undergoing a 5 to 1 share consolidation, so it will not be a penny stock for long.
Stock price chiong until kenna trading caution from SGX.
chainer9999
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yes boss following now!
sg_investor
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What happened?
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In Jan 2017, DBS
https://researchwise.dbsvresearch.com/ResearchManager/DownloadResearch.aspx?E=cegick-b
Room for more deals
Positive despite share dilution. Despite the possible dilution from the share placement, we maintain our BUY rating on SIIC Environment (SIIC).
The company is making good progress of gradually expanding its water treatment portfolio with good growth potential from upgrades and tariff hikes.
It is also grabbing opportunities in the sludge treatment market. After the share placement, its financial position will be strengthened, allowing it to conclude more M&A transactions.
Share placement to the parent at a premium.
SIIC announced that it intends to place 350m new shares to Shanghai Industrial Holdings (363 HK), its parent company.
The placement price is set at S$0.63 per share, representing a 11.5% premium to the previous day’s closing price. This reflects the strong confidence of the parent in SIIC.
The new shares will account for c.13% of the enlarged share capital. After the transaction, Shanghai Industrial Holdings will increase its stake from 36.6% to 45.9%.
Improved balance sheet.
The net proceeds from the placement is estimated at S$220m which will be used to repay existing borrowings and utilized for business expansion. We estimate the net debt-to-equity ratio would improve from 80% to 60%
after the transaction.
With an improved balance sheet, SIIC is in a stronger position to take on more M&As or new projects. Repayment of loans will also lower interest expenses.
Valuation:
To reflect the share placement, our TP is adjusted to S$0.68, based on 25x FY17F PE (excluding construction revenue).
Key Risks to Our View:
Operational. Slower-than-expected deal flows, project upgrades and tariff hikes will have downside risk on our earnings estimates.
https://researchwise.dbsvresearch.com/ResearchManager/DownloadResearch.aspx?E=cegick-b
Room for more deals
Positive despite share dilution. Despite the possible dilution from the share placement, we maintain our BUY rating on SIIC Environment (SIIC).
The company is making good progress of gradually expanding its water treatment portfolio with good growth potential from upgrades and tariff hikes.
It is also grabbing opportunities in the sludge treatment market. After the share placement, its financial position will be strengthened, allowing it to conclude more M&A transactions.
Share placement to the parent at a premium.
SIIC announced that it intends to place 350m new shares to Shanghai Industrial Holdings (363 HK), its parent company.
The placement price is set at S$0.63 per share, representing a 11.5% premium to the previous day’s closing price. This reflects the strong confidence of the parent in SIIC.
The new shares will account for c.13% of the enlarged share capital. After the transaction, Shanghai Industrial Holdings will increase its stake from 36.6% to 45.9%.
Improved balance sheet.
The net proceeds from the placement is estimated at S$220m which will be used to repay existing borrowings and utilized for business expansion. We estimate the net debt-to-equity ratio would improve from 80% to 60%
after the transaction.
With an improved balance sheet, SIIC is in a stronger position to take on more M&As or new projects. Repayment of loans will also lower interest expenses.
Valuation:
To reflect the share placement, our TP is adjusted to S$0.68, based on 25x FY17F PE (excluding construction revenue).
Key Risks to Our View:
Operational. Slower-than-expected deal flows, project upgrades and tariff hikes will have downside risk on our earnings estimates.
Last edited:
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in Feb 2017, DBS
https://www.dbs.com.sg/private-bank...rticle/equity/data/en/DBSV/012014/SIIC_SP.xml
Disappointing results.
We downgrade our rating on SIIC Environment (SIIC) from BUY to HOLD due to several disappointments:
(i) FY16 results were below expectations,
(ii) growth in operating capacity in FY17 will be slower than expected, and
(iii) dual-listing in Hong Kong has been delayed again, to 3QFY17. But we have doubts on whether the listing will go ahead, which would dampen sentiment towards the stock.
FY16 results below expectation.
SIIC recorded 26.2% growth in FY16 net profit to Rmb454.9m, in line with our estimate. However, stripping out the revaluation gain of Rmb155m, the results were below our expectations because of higher administration cost (due to acquisitions) and finance expenses. Turnover increased 46.8% to Rmb2.6bn, 10% above our estimate.
With the fast progress, construction revenue almost doubled. Thanks to contribution from newly acquired projects, higher sewage treatment volume led to 23.9% growth in O&M income. Net debt-equity ratio reached >100% but should fall to c.80% after the share placement to the parent. A final dividend of 0.01 Scent was declared (FY15: nil).
Slow organic growth in FY17.
While construction revenue in FY17 will be similar to that in FY16 (i.e. not much growth), there will be no addition to operating capacity in FY17 as construction work will not be completed until the end of FY17 or early FY18.
Thus, growth in treatment volume will be led only by the full recognition of its new acquisitions in FY16. In addition, as Longjiang Environment’s average tariff is lower, the average sewage treatment tariff of SIIC will be dragged down from Rmb0.95 to Rmb0.85/ton.
Although the company targets to add 1-1.5m tons of new capacity to its portfolio in FY17, we expect M&As to slow down before the finalisation of the dual-listing plan.
Valuation
To reflect the higher operating cost, we have cut our FY17 and FY18 earnings forecast by 23-35%.
Our TP is also lowered to S$0.55, based on 25x FY17F PE (excluding construction revenue).
Downgrade to HOLD.
https://www.dbs.com.sg/private-bank...rticle/equity/data/en/DBSV/012014/SIIC_SP.xml
Disappointing results.
We downgrade our rating on SIIC Environment (SIIC) from BUY to HOLD due to several disappointments:
(i) FY16 results were below expectations,
(ii) growth in operating capacity in FY17 will be slower than expected, and
(iii) dual-listing in Hong Kong has been delayed again, to 3QFY17. But we have doubts on whether the listing will go ahead, which would dampen sentiment towards the stock.
FY16 results below expectation.
SIIC recorded 26.2% growth in FY16 net profit to Rmb454.9m, in line with our estimate. However, stripping out the revaluation gain of Rmb155m, the results were below our expectations because of higher administration cost (due to acquisitions) and finance expenses. Turnover increased 46.8% to Rmb2.6bn, 10% above our estimate.
With the fast progress, construction revenue almost doubled. Thanks to contribution from newly acquired projects, higher sewage treatment volume led to 23.9% growth in O&M income. Net debt-equity ratio reached >100% but should fall to c.80% after the share placement to the parent. A final dividend of 0.01 Scent was declared (FY15: nil).
Slow organic growth in FY17.
While construction revenue in FY17 will be similar to that in FY16 (i.e. not much growth), there will be no addition to operating capacity in FY17 as construction work will not be completed until the end of FY17 or early FY18.
Thus, growth in treatment volume will be led only by the full recognition of its new acquisitions in FY16. In addition, as Longjiang Environment’s average tariff is lower, the average sewage treatment tariff of SIIC will be dragged down from Rmb0.95 to Rmb0.85/ton.
Although the company targets to add 1-1.5m tons of new capacity to its portfolio in FY17, we expect M&As to slow down before the finalisation of the dual-listing plan.
Valuation
To reflect the higher operating cost, we have cut our FY17 and FY18 earnings forecast by 23-35%.
Our TP is also lowered to S$0.55, based on 25x FY17F PE (excluding construction revenue).
Downgrade to HOLD.
only_lonely
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this one lowest is and highest is?
exterminazn
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Wahkao and wol shifu any comments?
Find bottom first den slowly add
Water plays like Citic Environment. Moya already back up.
Recent placement to parent @ 0.630 350mil shares
Buying below their placement price with a margin of safety should be safe..
Results are encouraging too
Water plays like Citic Environment. Moya already back up.
Recent placement to parent @ 0.630 350mil shares
Buying below their placement price with a margin of safety should be safe..
Results are encouraging too
exterminazn
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Thanks master. Are you vested, to give me a stronger vote of confidence?
Kinetic88
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