KUALA LUMPUR (Aug 28): Innofarm Sdn Bhd, which is the controlling shareholder of Lay Hong Bhd (fundamental:0.75; valuation: 1.4), has acquired a 7.34% equity stake in the loss-making pottery and porcelain products manufacturer, Spring Gallery Bhd.
Innofarm, which holds a 36.75% equity stake, is the investment vehicle of the Yap family that founded poultry firm, Lay Hong. This is the second public-listed company that Innofarm has bought into of late, after Takaso Resources Bhd.
The filing with Bursa Malaysia today revealed that Innofarm had acquired 7.67 million shares in Spring Gallery, representing a 7.34% stake in the company on Aug 24.
According to Bloomberg data, 7.67 million Spring Gallery (fundamental:2.4; valuation:0.3) shares were crossed off market on the same date (Aug 24) at 66 sen per share, for a total transaction value of RM5.06 million.
The transaction price of 66 sen per share represented a 1.5% premium over Spring Gallery’s closing share price of 65 sen on that day. Today, Spring Gallery's shares closed at 64 sen, up 3.23% from yesterday (Aug 27), for a market capitalisation of RM66.9 million.
Spring Gallery’s largest shareholder is Greenfield Hills Sdn Bhd, with a 30.91% stake; followed by Spring Gallery's executive director Kuan Poh Huat, with a 9.09% stake. Greenfield Hills is believed to be a friendly party to Kuan.
For its fourth quarter ended June 30, 2015(4QFY15), Spring Gallery reported a net loss of RM5.08 million, on the back of RM3.07 million in revenue.
Of late, Innofarm, which is a vehicle of Lay Hong's managing director Yap Hoong Chai, has been sweeping up shares in another Bursa Malaysia-listed entity, Takaso Resources Bhd.
On Aug 14, Innofarm had acquired 13.997 million Takaso shares, representing a 6.8% stake in the company; and on Aug 24, it had increased its shareholdings in Takaso to 7.65%.
Yap had emerged as a substantial shareholder in Takaso in December last year, through a private placement of 10 million shares, but had ceased to be a substantial shareholder in Takaso in the following month, with the disposal of his shareholdings in the company.
Condom and baby product maker Takaso (fundamental: 1.65; valuation:0) has recently announced its diversification to include construction and property development activities.
(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)