Hume Industries to sell out Hume Fibreboard to Evergreen Fibreboard

On 23 June 2008, Hume Industries (3328, 谦工业) announced that they had entered into a Business Transfer Agreement with Evergreen Fibreboard (Nilai) Sdn Bhd and Evergreen Fibreboard Berhad (5101, 长青纤维板) to dispose of the Assets, Liabilities, activity, business and undertaking pertaining to the manufacturing and sale of medium density fibreboard and related products and activities carried on by their wholly owned subsidiary Hume Fibreboard Berhad for a total consideration of RM213.23 million, to be satisfied by way of cash of RM170 million and the balance of RM43.23 million by the issue of 33 million new ordinary shares of RM0.25 each in Evergreen Fibreboard at an issue price of RM1.31 per share.

Evergreen closed at RM1.30 yesterday (24 June), dropped by 3 sen, while Hume Industries closed at RM3.88, rose by 8 sen.

I see this as a good deal for Hume Industries (which I am one of its minority shareholders) because after the deal:

• Hume Industries will hold a 6.43% interest in the enlarged and paid up capital of Evergreen. This will probably make Hume Industries to be the 5th largest shareholder in Evergreen then.
• This deal will result in a gain of RM114 million to Hume Industries, and will rise its EPS by 64 sen.
• The NTA of Hume Industires will be risen by 64 sen.
• The cash balance of Hume Industries will further strengten from the current RM131 million to RM301 million.

Evergreen has 480 million issued shares, and its 1st quarter profit after tax for 2008 stood at RM30.305 million. Assuming that its full year profit after tax to be RM120 million (without taken into the consideration of this acquisition of Hume Fibreboard) , with the price of RM1.31 per share, Hume Industries is obtaining the 6.43% shares in Evergreen at the PE of 5.24 only, which is a very good deal. Below is the calculation for the mentioned PE:

PE = Price/EPS = 1.31 / (120 / 480) = 1.31 / 0.25 = 5.24

Evergreen has pretty good fundamentals, showing satisfactory growth over the past 5 years. Its profit after tax has grown 5 times (500%) from RM21.725 million in 2003 to RM118.656 million in 2007. This deal would further increase Evergreen's production capacity and would make them the largest fibreboard producer in Malaysia and the top 12 producers in the world.

Disclaimer: This article is intended for sharing of point of view only. It is not an advice or recommendation to buy or sell any of the mentioned stock counters. You should do your own homework before trading in Bursa Malaysia.

20 litre free water for Selangor consumers finally materialized

Something new in my water bill this month. There stated starting from 1 June 2008 onwards, the first 20 litre of water usage for Selangor domestic consumers will be paid by the state owned company Kumpulan Darul Ehsan Bhd (KDEB). An amount of RM8.81 is deducted from the bill as result.

This 20 litre free water per household for Selangor domestic consumers was proposed by the new Selangor government formed by Pakatan Rakyat after the recent election, and lead by Tan Sri Khalid Ibrahim. There were several hiccups and negotiations with the Selangor state water concessionaire Syarikat Bekalan Air Selangor (Syabas) over the past few months before it comes to materialization now.

Although this proposal is criticized by some people that providing free water might make the consumers more wasteful and less concerned about conserving water, the determination of the new state government to overcome all the resistance and make it into reality shows their endeavour and sincerity in keeping their promise to the people, and this is definitely a good news, especially to the poor families during the current high inflation time.

Thumb up to the Selangor state government!

Babyjaya mid-year sale, up to 50% off

Good news to parents in Klang Valley!

Babyjaya Enterprise, a one-stop 3-storey baby shop located in Damansara Utama (near the Uptown Office Towers) is having a mid-year sale now from 21 June to 8 August 2008.

We can expect up to 50% discount on the following babycare and childcare items:

• play & learn
• healthcare & hygiene
  
• safety & control
• clothes & shoes
• food & beverage
• feeding
• nursing
• bags & warmers
• nursery
• travel gears
• skincare
• gifts & vouchers
• children furniture

Offered brands include 4M, Avent, Baby Art, Baby Bjorn, Babylove, Babyvision, Bebe Confort, Bumble Bee, Bumbo, Chicco, Creative International, Crocs, Dr Browns, Evenflo, Fabulous Mom, Farlin, Fisher Price, Fridge-to-go, Gerber, Graco, Halford, Innoform, Kiddopotamus, K's Kids, Lascal, Lamaze, Leap Frog, Lindam, Littlepods, Lollipop, Lucas Papaw, Lucky Baby, Maclaren, Mam, Maxi-cosi, Medela, Miamoda, Munchkin, My Lovely Closet, My Dear, Neo Geo, Nestle, Nuby, Nuk, Peg Perego, Pigeon, Pitter Patters, Puku Petit, Quinny, Recaro, Seba Med, Seni Daya, Simple Dimple, Spectra, Step 2, Tenderly, The First Years, Tiny Love, Tolo, Unite Safety, Vtech, Zibos, Zooper, etc.

For example, the The Easy Fit Alarm safety gate usually cost RM329.90 is now selling at RM197.94 only.