Wednesday, August 20, 2014

Jobstreet's revised sale price to RM1.89b

Just yesterday, Jobstreet announced a revision in its sale price to Seek which below is self explanatory.


The special dividend hence is being revised to RM2.62.

One should note the following:

- post dividend distribution, the Net Asset value of Jobstreet will still be around RM0.40 per share;
- the sale has yet to be approved by Singapore's anti-competition body. Expected decision to be before 31 October 2014.
Whether I am confident of the approval? I would say yes, although this is taking longer than expected. Nevertheless the longer approval is a blessing in disguise as this allows change in purchase price by Seek.com.

Remember my article on undervaluation of Jobstreet by Seek.com. This seems to be a reprieve.

14 comments:

Investor said...

Do you mean after distribution the stock price will drop to RM 0.40 per share?

Phuah SK said...

Q2 report is out! Investor, the net asset after distribution should be RM0.40 per share. However, the price might be traded at a lower price.

ok said...

Hi Felice, let me know if my reasoning is correct

Deals go through
- Gain = (Dividend-Buy Price) x Shares + Shell company (104 Corp, Building, misc online business = 15-30 cents)

Deals fall through
- Gain/Loss = Short term share price movement

And one more thing, you did mention if deal goes through, Shell co cannot compete in online recruitment for 2 years, do you think they will be force to sell their stake in 104 Corp?

ok said...

My line of thinking is that if the above reasoning is close to correct, i would wait for the Singapore decision before buying the shares, UNLESS the price falls below $2.50.

Because if I am to buy at $2.55-2.60 and the deal falls through, yes long term the business is still solid and sound, however I would find this investment return less attractive because $2.60 is rather fully valued not undervalued.

I am assigning the remaining business at 15 cents just as margin of safety, if post acquisition the price is 15 cents or higher then thats perfect. The attractive part i find would be their stake in 104 Corp, the building doesnt worth a lot. But 104 Corp is a 'Mini jobstreet' in taiwan that can keep growing and growing. Correct me if I am wrong thanks

felicity said...

It will drop to around RM0.40 possibly. Maybe lower.

I think Jobstreet is allowed to Keep 104 Corp as it is an investor and not the controlling shareholder. Moreover it is in Taiwan, not South East Asia.

Investor said...

Hi all

I still don't get what you guys mean RM 0.40.

Lets say the deal approved and the trading before EX-date is RM 2.62.

Do you mean the price will drop sharply to RM 0.40 after EX-date?

Thank you for the guidance.

felicity said...

Hi Investor Yes. It will drop sharply after ex-date because you will be getting dividend in cash of RM2.62 per share.

Investor said...

Hi Felicity

That means I have temporary 2 months paper lost of RM 2.22?

Definitely not wise for contra?

Phuah SK said...
This comment has been removed by the author.
Gallen said...

Still have 1.75 sen interim dividend to boot :)

Akagi Shigeru said...

Felicity :
As per yesterday announcement, do you think the deal is considered the done deal ? Do you think the SG authority would not allow the deal ? I have been floowing up this for sometimes and I do hold position on Jobstreet. It looks and sound like the proposal would be concluded soon. I am thinking to add more for I don't think the management want to keep the copany in PN17 for long. I appreciate your comment. Thanks.

felicity said...

Don't take my word for it, personally I think it will be through for the very fact that Seek has done beyond to assure the Singapore anti-competition agency.
Also, if you really look at it Singapore is just a market where Seek and Jobstreet are in. The very fact that why they have to get approval is probably because of the structure of the organization with Singapore being the holding. The business that Seek is buying, Singapore is not the largest - Malaysia is.

Phuah SK said...

Felicity, in view of today's share buy back, what do you think the management is trying to do? I know that means slightly more payout to the shareholders, but I'm not sure if this is a good move as surely they will need the money to acquire or venture into new business once the deal goes through?

felicity said...

It is the right thing to do and I am sure they know what's best. It also gives a good hint that the sale will be approved. From what I gather, they are not sure whether they will maintain the company for the longer term. If there are no better investments, it probably will be dissolved.