SINGAPORE (June 3): Tiong Seng’s subsidiary Suzhou Huisheng Construction Development Co is selling its entire 55% stake in Jiangsu Huiyang Construction Development Co to its 45% shareholder for a consideration of RMB 67 million ($13.4 million).
After a strategic review of the group’s core business, Tiong Seng’s board is of the view that the disposal of Huiyang will allow the group to dispose a non-core business which generate minimal annual return, unlock value attached to the underlying assets and strengthen the group’s financial position for new investment opportunities as and when they arise.
Huiyang is engaged in the sale, leasing and management of various commercial units within a retail investment property, Wenchang Broadway, located Yangzhou City. Huiyang owns a wholly-owned subsidiary, Yangzhou Huixin Commercial Asset and Property Management Services Co, which provides property management service to Huiyang. Huiyang and Huixin shall collectively be known as the “disposal group”.
Tiong Seng said the consideration was arrived at on a willing-buyer and willing-seller basis, based on the property valuation of RMB 135.8 million ($27.1 million) on Wenchang Broadway performed by at commissioned by the purchaser as well as the estimated costs to repair, upkeep and upgrade the investment property and post-acquisition staff consolidation within the Disposal Group.
The payment will be by way of cash in two tranches, RMB 30 million on the 7th working day upon the signing of the sale and purchase agreement and balance RMB 37 million upon completion of the disposal.
Based on the 1Q19 consolidated accounts of the group, the disposal group’s revenue amounted to $0.5 million with a loss before tax of less than $0.1 million.
As at March 31, the net tangible asset (NTA) value of the disposal group amounted to $10.6 million, with 55% share being $5.8 million, resulting in a net profit after tax of RMB 24.8 million (or $5 million).
Shares in Tiong Seng last traded at 23 cents on May 31.
