Wednesday, December 1, 2010

Updates On GMG Global and C&O Pharma

GMG Global recently announced that it would acquire slightly more that a majority stake in Thai rubber producer Teck Bee Hang for a nominal fee of USD 909. However, GMG Global will make out significant loans to Teck Bee Hang amounting to at least SGD62 million for the purpose of working capital as well as to finance outstanding debt. GMG Global says the move fits its expansion strategy and intends to turnaround the Thai rubber producer by 2011.

Meanwhile, C&O Pharma Tech announced that Japanese conglomerate Sumitomo Corp will acquire a 29% from Executive Chairman Gao Bin for $96 million. This is about 50 cents per share and will make the Japanese conglomerate the second largest shareholder after the company's Executive Chairman himself. The announcement was made after the company was halted from trading for two days since Tuesday.

SGX Stockpicker Says...
GMG Global's acquisition of the loss making company makes good sense even if Teck Bee Hang is loss making. GMG Global needs access to the Thai market, which is the largest in the world. Although GMG Global has been trying to build its estate in Africa, the long gestation period does not fit with its controlling shareholders' objective of feeding the booming Chinese automobile company. GMG Global does have the financial muscle to revive the once largest rubber exporter in the world.

As for C&O, the move should be seen as a confidence signal because a foreign firm is willing to invest in a supposedly S-Chip. $0.50 is the entry price of the Sumitomo and it looks like the floor price in the months to come. That said, there are definitely challenges C&O will face, particularly the regulations pertaining the PRC healthcare sector. The second half of the year will be important periods for long term investors to take note, as sales is usually the strongest then.


  1. Hi,

    Do you think C&O will eventually be bought over and delist? In terms of valuation and prospects, would you recommend GMG or C&O?


  2. i do not think c and o will be delisted. i still need some time to think whether the acquisition is an investment or a strategic partnership. if it is just an investment, Sumitomo will not sell so easily or hope to delist.

    IMO C&O is better in terms of valuation plus it will give dividends compared to GMG Global. I believe GMG Global has good prospects but i think you will have to wait a year out for the returns because GMG Global unlikely to give dividends plus it has to turnaround TBH