Company Result Feb 2013

Business tycoon Oei Hong Leong has surfaced as a substantial shareholder of Intraco

Background: Intraco was founded in 1968 to open up export markets for Singapore manufacturers and to promote external trade for the fledgling local economy, a mission that was vital in the early stages of Singapore’s industrialisation. In 2003, food and provisions supplier PSC Corp, now called Hanwell Holdings, gained a controlling 29.9% stake. A PSC-led turnaround followed and Intraco built up a nice little cash pile. Its net cash currently accounts for 54% of its market value. However, it appeared that PSC has reached the limit of what it could do, and its 29.9% stake was sold to TH Investments, the investment company of the family that controls crane operator Tat Hong.

Why are we highlighting this stock?
Business tycoon Oei Hong Leong has surfaced as a substantial shareholder of Intraco with a 21.1% stake just five days after TH bought into it at SGD0.62/share. Living up to his reputation however, Mr Oei’s average cost was only SGD0.50/share, way below TH’s cost. Not surprisingly, talk of a possible tussle between TH and Mr Oei has started, as have enquiries into the true value of Intraco. What did these two investors see in Intraco, which may still prove to be a value trap or an undervalued gem?

Our view