Tuesday, 24 December 2024

Oceanus Group Makes An Immediate S$10.5 Mil Profit From Disposal of Non-Core Aquaculture Farms in China.

Oceans Group has finally released some positive news that it is selling 4 plots of land used for acquculture farming in Fujian Province of China for S$19.2Mil. The cost of the 4 plots of land in the books of Oceanus is at S$8.7Mil. This is a 120% return from this deal and an immediate gain on diposal of S$10.5Mil. Given that the Sale and Purchase Agreement ("SPA") is signed on 20 December 2024, the gain on disposal booking in will only be in early 2025 upon completion of all the warranties in the SPA. 

1. Annoucement on 23 December 2024
The interesting thing here is that no market valuation benchmarking exercise was carried out and the deal is crafted as being on a "willing-buyer and willing-seller" basis. Personally, I am not a fan of willing-buyer and willing-seller as there is a degree of lack of transparency with regard to whether a deal is fairly done if benchmarked to the market.  

2. Immediate Positive Financial Impact Upon Completion of the SPA:
The NTA of Oceanus Group will go up by approximately 22.7% upon the completion of the deal. The S$10.5Mil will be re-deployed into working capital.  

Parting Thoughts
Interestingly, if one had purchased Oceanus recently at S$0.005 per share last week, the current market price of S$0.007 per share would mean a +40% capital gain from holding Oceanus in just one week.

Overall, I thought that Peter Koh, the Group Chief Executive Officer of Oceanus Group, executed a good deal of realising hidden intrinsic value from its non-core assets. Current market value of Oceanus Group is trading at S$0.007 per share as at 24 December 2024 relative to the revalued NTA per share of S$0.0027. This deal maybe essential as Oceanus Group has been making losses at the net profit level and will help to recapitalise the company without further issuance of shares via equity fund raising.  

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