Daily Review, 30 November 2012 Page 1 of 4
SGX-ST Member, SGX-DT (CNCM)
Daily Review
30 November 2012
LIM & TAN SECURITIES PTE LTD
20 CECIL STREET
#09-00 EQUITY PLAZA
SINGAPORE 049705
TEL: 65330595 FAX: 65332368
www.limtan.com.sg
RCB Reg No. 197301030W
SYNEAR FOOD
S$0.185-SYFD.SI
Synear food’s 3Q ‘12 profit was flat from last year at
Rmb7.5mln despite lower sales of 3.4% to
Rmb407mln due to cost cutting efforts, but 1H’s
profit decline of 28% means that 9 months to Sept
’12 profit is down 24% to Rmb47mln.
The continued weak performance is due to the bad
publicity at the end of 2011 where the company’s
products tested positive for minute traces of the
staph bacteria.
Looking ahead, management warned that the
company will face cost pressures from rising raw
material prices and labor costs and the economic
slowdown in China means that their operating
environment will continue to remain very challenging
in the next 12 months.
The above should not be surprising given that the
management team who currently owns 58.17% of the
company is trying to take it private, offering minority
shareholders 18.6 cents a share.
While the exercise may not succeed given that
institutional shareholders such as Fortune Domain
and Greenwood Asset Management who together
own close to 14% of the company can block the deal
from going through we are also not sure if management
will “help” minority shareholders realize the “true
worth” of the company if their offer fails.
This was shown in Full Apex’s example where Pope
Asset Management had blocked management from
taking the S-Chip private 2 years ago only to see the
company selling away their “crown jewel” at a distressed
price one year later on the excuse that the industry is
going into a downturn.
While Full Apex’s share price did momentarily go above
management’s offer price of 18 cents a share in 2010,
hitting 25 cents after the offer failed at the end of 2010,
it is currently at 9.2 cents, similar to its 2009 lows.