Selangor Properties Berhad

Event Driven Trade - Merger & Acquisition Arbitrage

Throughout the years journaling my investment journey in Stockbit, I often get the most comments / DMs / PMs / engagements from friends in the platform whom had learned a thing or two, or celebrating together successful closure of an event driven trade. These deals were often lower risk in nature, whilst having a pretty decent absolute return and even more so on per annum basis, perhaps due to the inefficiency of the market.

Some past low risk event-driven trade ideas and threads of the past:

1) $SPB / 1783 (SELANGOR PROPERTIES BERHAD) SELANGOR PROPERTIES BERHAD, Nov 2018. 17% absolute return within months. Link: https://cutt.ly/AGZ1feq

2) $TAGB / 5158 (TA GLOBAL BERHAD) TA GLOBAL BERHAD, June 2020. 22% absolute return within months. Link: https://cutt.ly/1GZ1fbR

3) $BIMB / 5258 (BIMB HOLDINGS BERHAD) WA, Dec 2020. 24% absolute return within months. Link: https://bit.ly/3saXHOo

4) $IJMPLNT / 2216 (IJM PLANTATIONS BERHAD) and $MMCCORP / 2194 (MMC CORPORATION BERHAD), June 2021. 5% and up to 25% absolute return within months. Link: https://bit.ly/3sbYH51

5) RAZER INC (1337 HK), Feb 2022, 15% absolute return within months. Link: https://bit.ly/3sbLGIM

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Anyhow... Warren Buffett addressed this in a very layman manner in his recent Berkshire AGM, when he touched on his Activision Blizzard shares ownership - of which BRK now owns 9.5%. I often wonder whether my posts on this topic is / was understood by many, so here's uncle Warren's explanation on "work outs aka arbitrage"

https://bit.ly/3w3teTM

- BRK fund managers bought 15m shares of activision in 2021

- In mid Jan, Microsoft to acquire Activision at USD 95 per share

- Buffett then said that Activision "become a different kind of security... an arbitrage."

- Buffett the continues that an arbitrage is a "stock whose value depends not on what the market price does but whether a given announced corp event occurs."

- Buffett then purchase Activision HIMSELF for this arbitrage event. He mentioned that in an arbitrage, you should "spend alot of time on analysis of announced deal going through"... and that "has to bet big as profit is limited" whils also warning that "the deal may blows up and who knows what happen".

Do take a listen! In current volatile market, low risk event driven trades are worth pursuing!

M&A Event Driven Trade - 1337 HK, RAZER INC

This could be of interest to stockbitors who liked past deals like $IJMPLNT / 2216 (IJM PLANTATIONS BERHAD) $MMCCORP / 2194 (MMC CORPORATION BERHAD) $SPB / 1783 (SELANGOR PROPERTIES BERHAD)

I'm sure everyone in Stockbit knows Razer.

On December 1, 2021 - Razer announced a pre-conditional Scheme from its founders and CVC to buy the company at HK$2.82/share.

Yesterday, the pre-conditions had been fulfilled. The next key conditions for the delisting will be the headcount test and approval by at least 75% independent H-shareholders (<10% of all independent H-shareholders rejection).

This could be held in early May and possible completion of entire deal in June / July.

Consensus FV of Razer (which I'm agreeable to) is around HKD 2.30- HKD 2.60, means that the offer is good price. Additionally, recent market condition means closest peer Logitech had some multiple de-rating, making the offer price even more attractive.

Price before rumours of the deal happening or the break away price was around HKD1.80 which I think is pretty "value".

All in all, the spread is at around 12% absolute with completion ranging 4-5 months. Annualised return could be up to 37%. Risk reward feels reasonable.

This is a low risk event driven trade idea for those who wants to counter recent choppy market.

@zhexiangxd @mengteck @zhengyou0705 @Jay888 @facademy @Goldenhorse77

$MMCCORP / 2194 (MMC CORPORATION BERHAD) - Sold off all my MMC today to raise cash level. Selling it at 1% away from the offer price or 6% annualised to completed date. This was probably the best event drive arb trade I've done. (better than Selangor Properties $SPB / 1783 (SELANGOR PROPERTIES BERHAD))

As a final word, such opportunities exist in Bursa - lets look for the next one!

@tgku22 @hokuan @andy721 @wsk20 @cheyhaw @D240z @leonjakelim @SiMunLui @Goldenhorse77 @FryTillCrispy

$WELLCAL / 7231 (WELLCALL HOLDINGS BERHAD) $SPB / 1783 (SELANGOR PROPERTIES BERHAD)

TA Global - low risk event driven trade

This is in relation to $TAGB / 5158 (TA GLOBAL BERHAD) and $TA / 4898 (TA ENTERPRISE BERHAD) Enterprise proposed acquisition. There're a couple of ways one can play this event, but would just like to focus on the simplest one of all, a chance of an M&A Arbitrage, via going long TA Global and accepting TA Enterprise cash offer at RM 0.28.

1) The Story thus far...
a) On 12th Feb 2020, TA Enterprise Berhad, announced that it's going to take all remaining TA Global shares it doesn't own.
b) On 10th April 2020, TA Enterprise Berhad announced that SC approved the application
c) On 6th May 2020, TA Enterprise Berhad "shamelessly" (notion used by many minorities) asked for withdrawal of the application due to COVID19
d) On 2nd June 2020, after much backlash from minority group, SC had decline the application of withdrawal

2) The Proposal...
On 12th Feb 2020, TA Securities Holdings Bhd on behalf of TA Enterprise Berhad, announced the following:
(i) proposed acquisition of additional interest in TA Global Berhad via a proposed conditional voluntary take-over offer by TAE to acquire up to 2,119,389,362 ordinary shares in TAG (“Offer Shares”), representing up to 39.83% equity interest in TAG, for a consideration of RM0.28 per Offer Share which shall be satisfied by way of the following:
(a) a cash consideration of RM0.28 for every 1 Offer Share surrendered ("Cash Option"); or
(b) a share exchange based on an exchange ratio of 0.4211 new ordinary share in TAE (“TAE Shares”) to be issued at an issue price of RM0.665 each for every 1 Offer Share surrendered; and
(ii) proposed issuance of up to 550,539,554 new TAE Shares at an issue price of RM0.665 each to be subscribed by Datuk Tiah Thee Kian to fund the Cash Option pursuant to the Proposed VGO.

3) Background...
TA Enterprise owns 60.17% of TA Global, The Tiah family owns another 15.13% from their personal holding. The Tiah family owns 41.92% of TA Enterprise.

4) The Play
There're several ways to play this event, but would just like to focus on the simplest one of all, to go long TA Global, hoping for acceptance from TAE shareholders in upcoming EGM and accepting TA Enterprise cash offer at RM 0.28

5) The Risk & Return
At 23c, a potential return of 21.74% if the entire exercise is completed. Assuming it's to be completed before end of year, that's a total annualised return of 38.90%.

The biggest risk at the moment is if TA Enterprise shareholders will approve the acquisition in upcoming EGM or not.

6) Rationale of the trade
- Technically, since its existance (almost a decade), TAGB never close below RM 0.19 (March 2020) when COVID19 strike.
- It also have a PB ratio of 0.39x (10 year average of 0.60x).
- TA Global RNAV will be higher imo - they own more than 20 properties in their portfolio. Means their asset after revaluation should be higher
- TAG also consistently in the past 5 years, generate net income of above RM100m every year
- As a TA Enterprise shareholder, buying TAG at 28c (when IPO was at 50c, should be a "good enough" deal.
- Risk is if Tiah's family - try and sabotage the EGM and make the proposal not to go through, however looking at the current improving COVID19 situation, and the criticism they have received of late, would think this is unlikely. TA Enterprise is also having a great year.


7) Favorable play?
- AT 23c, upside of 5c, and downside of 2-4c with alot of fundamental cushion at the bottom
- I would think that there's a 75% chance of the deal going through, 25% of it not to go through.
- Taking in my probability and % return, my expected return is +12%, even if probability is at 5050, it's still a +2.2% expected return
- Summary: I'm queing to buy TA Global at 23c for this calculated low risk event driven trade.

Anyone else looking at this? Please let me know what you guys think! I might be missing some important features. I had a good experience on my last event driven trade in KLSE ( when I long $SPB / 1783 (SELANGOR PROPERTIES BERHAD)), hopefully this will be another good one.

How to avoid Value Traps by Equity Tracker

1.Conglomerate business - sop vluation.
Exp: $DRBHCOM / 1619 (DRB-HICOM BERHAD)
-always much higher than share price.
-no conglomerate trade at sop value.
-only when breakout or restructuring to unlock its true value by SOP.

2. Property companies
-How much discount compare to net asset value.
-Compare share price with Revalued net asset value - bcoz value the land bank of what company have and compare with current share price - will project value of the land bank of current price of future price.
-All properties trade at discount at RNAV. The only difference is how big the diff is。
-big company like Mah Sing is about 30% discount.
-Only $SPSETIA / 8664 (S P SETIA BERHAD) trade premium at NAV - is becoz they build really good quality executive.

3. Legacy company - a company that exited for quite a long time but still run by family themselves.
Exp: 1.Selangor Properties $SPB / 1783 (SELANGOR PROPERTIES BERHAD) . - 1 landbank in Damansara is much more than whole market cap.
- they no intention to unlock the company value. Not aggressive to develop the land bank they have. - privatised at quite undervalued price.$GPP / 03029 (GPP RESOURCES BERHAD)
2.Oriental Holdings $ORIENT / 4006 (ORIENTAL HOLDINGS BERHAD) - same like Selangor.

4.company that hold a lot of cash but dun utilise it for exp expand their business or rewarding shareholders - no plan for the cash.

5.Plantation Company - the earning for plantation is slow and thus they make the landbank into propeties segment to earn more fast money. But this is just one off earning and there is no continuous earning for that landbank.

6. NTA can value a company?- Only liquidating basis only gt use and depend on the asset u means. If a lot of NTA ismachinery u need to give a lot of discount. This is because machinery wont worth a lot during liquidation. Benjamin's analysis only atribute 20% of the value to he machinery during liquidation.
For banks u can use P/B bcoz their NTA is cash and this is close to that.

SELANGOR PROPERTIES BERHAD ("SPB" OR THE "COMPANY")

SELECTIVE CAPITAL REDUCTION AND REPAYMENT EXERCISE OF SPB PURSUANT TO SECTION 116 OF THE COMPANIES ACT, 2016 ("SCR")

SELANGOR PROPERTIES BERHAD ("SPB" OR THE "COMPANY")

SELECTIVE CAPITAL REDUCTION AND REPAYMENT EXERCISE OF SPB PURSUANT TO SECTION 116 OF THE COMPANIES ACT, 2016 ("SCR")

SELANGOR PROPERTIES BERHAD ("SPB" OR THE "COMPANY")

SELECTIVE CAPITAL REDUCTION AND REPAYMENT EXERCISE OF SPB PURSUANT TO SECTION 116 OF THE COMPANIES ACT, 2016 ("SCR")

SELANGOR PROPERTIES BERHAD ("SPB" OR THE "COMPANY")

SELECTIVE CAPITAL REDUCTION AND REPAYMENT EXERCISE OF SPB PURSUANT TO SECTION 116 OF THE COMPANIES ACT, 2016 ("SCR")

SELANGOR PROPERTIES BERHAD ("SPB" OR THE "COMPANY")

PROPOSED SELECTIVE CAPITAL REDUCTION AND REPAYMENT EXERCISE OF SPB PURSUANT TO SECTION 116 OF THE COMPANIES ACT, 2016 ("PROPOSED SCR")