Fair value S$0.74
Allegations dropped
Viz Branz (VB) announced on Friday that former CEO and current top
shareholder Chng Khoon Peng has unreservedly dropped all his earlier
allegations of impropriety over a series of payments involving the
company that prompted him to lodge a complaint with the
Commercial Affairs Department (CAD) in Mar 2012. Mr Chng will now
withdraw his complaints with the CAD and will no longer pursue them
further. He acknowledges that he has "no further basis nor concerns
for his allegations" after being provided with explanations and
supporting documents by VB.
Another distraction wrapped up
The withdrawal of the complaint concludes another chapter (the last,
it is hoped) of the feud between Mr Chng and his son, VB’s current
CEO. Previously, the two had a long-running dispute over a 15%
stake in the company, which was ultimately resolved in favour of the
elder Mr Chng.
All eyes on GO
We deem this latest development as a positive event that coincides
with the possibility of a general offer by Lam Soon Cannery Pte Ltd,
which now has an estimated 20.06% stake in VB (after increasing its
stake from 19.8% with open market purchases when the price
dipped). All signs now point to an impending offer for VB from Lam
Soon – there are no more public family disputes outstanding; its
current CEO’s stake has been reduced, suggesting his intent to exit
the business; and VB did not declare a dividend for FY12.
Just a waiting game
The recent share-price appreciation of consumer-related companies
such as Super Group and Food Empire [both not rated] has caused
some fluctuations and sell-offs in VB as investors become impatient
and disappointed with the lack of progress. We urge investors not to
be disheartened and reiterate our belief that a general offer is
approaching. Furthermore, the fundamentals for VB remain
unchanged in the medium-term and its FY13 growth projections are
strong. Maintain BUY with a fair value of S$0.74.
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