Stocks With Likelihood Of Corporate Exercise: Hwang Capital

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Hwang Capital Bhd
Hwang Capital Berhad (Hwang) is best known as the former holding company of Hwang DBS Investment Bank, which has since been disposed, turning the company into a cash-rich entity looking for a new core business. Hwang is backed by two major strong shareholders, DBS Bank Limited, Singapore’s largest bank, and the family of the founding shareholder, the late Dato’ Seri Hwang Sing Lue.

In April 2014, Hwang disposed of its key subsidiary, Hwang DBS Investment Banking Berhad to Affin Holdings Bhd for a consideration of about RM1.3 billion. The company also disposed its commercial bank in Cambodia in March with the intention of exiting the banking industry. The remaining businesses left are in money lending and property management.

Of the RM 1.3 billion sale proceeds, the company distributed RM 637.9 million or RM2.50 per share, back to shareholders as special dividends. Some RM 250 million of the remainder has been set aside for potential acquisitions for the company. At this point, the company has not identified any potential acquisitions yet.

Hwang is trading at a price-to-book of 0.7 times and based on its current leftover operations. Cash on hand was RM 372.8 million as at 31 July 2014, equivalent to RM 1.46 per share — or 73.1% of its market capitalisation of RM 510.3 million.

With such a large cash pile, it will be interesting to see what industry Hwang ventures into next.

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This article first appeared in The Edge Financial Daily, on November 14, 2014.