Poor results from OM Holdings for FY 2011 (see attached) - with revenues of A$389.7 million but a shrinkage in gross margins from 38% to just 15% (because of falling manganese prices).
Net loss of A$11.5 million incurred, and no dividend declared for FY 2011.
But I'd expect that Boustead already knew this when they invested in OM Holdings.....
There is a very good 2-page article on Boustead in The Edge Singapore this week. It talks about their purchase of OM Holdings (8.6%) and also their business expansion plans.
Grab a copy if you can!
(24-02-2012, 01:47 PM)Musicwhiz Wrote: [ -> ]There is a very good 2-page article on Boustead in The Edge Singapore this week. It talks about their purchase of OM Holdings (8.6%) and also their business expansion plans.
Grab a copy if you can!
A deep value play company.
Today, OM Holdings released an announcement confirming Boustead's subscription of 8.6% of the Company's share, at A$17.5 million; and Boustead as a substantial shareholder. They also attached the share subscription agreement, for those who like to read legal stuff.
For info, OM Holdings is surging >10% from A$0.35 to current A$0.395 as I type this.
OMH announced to ASX today:
i) 25m new shares @ A$0.3907, a 10% premium to the 10 day weighted trading price, raising A$9.77m;
ii) 25m unsecured 5% convertible notes with a conversion price of A$0.80 maturing 2016
to Hanwah, a Tokyo and Osaka listed international specialist metal supplier with mkt cap of approximately A$1bn.
OMH further announced today that it has entered into a strategic marketing relationship covering 80,000 tonnes of ferro silicon and 80,000 tonnes of manganese alloy with Hanwah from its proposed Sarawak smelter.
Note that OMH's upcoming smelting plant in Sarawak, M'sia has an annual proposed tonnage of 600,000 tonnes comprising 310,000 ferro silicon and 290,000 manganese alloy.
Based on OMH updates on 17 Jan 12, the 310,000 tonnes ferro silicon part of the smelter has already signed a binding term sheet with the second largest steel producer in Japan, JFE Shoji, for a potential direct equity investment of between 30 - 40% combined with a product offtake agreement of up to 100,000 tonnes of ferro silicon (around 1/3 of the ferro silicon capacity) valued at an equity participation of between US$30 - 40m.
With the above strategic agreements with JFE Shoji and Hanwah, OMH has signed agreement to "underwrite" about 58% of the ferro silicon and 27.5% of the manganese annual output. OMH is well on track to meet its previously indicated target of securing orders for 60% of the proposed smelter's annual output.
In addition, the latest capital raising of A$29.77 m will reduce the estimated funding gap of OMH from A$52m down to a more managable A$22.23m.
The above announcement is a win-win deal for OMH whose share price has been hit by worries on its ability to raise funds for the mammoth project in view of the weak global manganese prices. In addition, Boustead's recently concluded investment in OMH appears to be growing into a D24 tiger hill durain.
I read this announcement this morning with interest, thanks for summarising the points greengiraffe. It does sound positive in terms of the required funding, but one concern of mine is - will Boustead's 8.6% stake be diluted as a result of this placement?
Also noted that OMH's share price closed at A$0.405 today, after this news was released.
Hi Musicwhiz,
You have been a faithful follower of Boustead. Without a doubt, Boustead's stake in OMH will be diluted. However, to begin with, 8.6% is too little for equity accounting as well. Hence, Boustead's stake in OMH will be reliant on dividends from OMH. However, given the low prevailing manganese prices and the huge capex earmarked for the Sarawak Smelter, OMH is highly unlikely to pay dividends at least till cashflow from the smelter begins.
Judging from the interviews on OMH and Boustead featured in Edge Singapore, one can only deduce that Boustead could be eyeing more than just OMH's direct stake. There has been speculation by BT on Boustead's direct involvement. In addition, Mr Wong has been quoted by the Edge that Boustead could be vying for some project management deals.
Overall, the permutations remain highly fluid until some formal announcements are expected in the future. As you have rightly pointed out in your previous postings, Boustead is a well run company with proven risks management ability. It took them such a long time to hunt down OMH since their cash hoard has swelled over the years. I am pretty sure that there will be more chances of rabbits coming out of Boustead's hat soon. We just have to be patient.
Point to note, OMH share price rebounded very smartly off a recent low of A$0.33 in two days to end at A$0.405. It coincided with formal announcement that Boustead has concluded its purchase of placement shares. Boustead has certainly lifted investors' sentiment in OMH.
http://www.bhpbilliton.com/home/investor...ation.aspx
High costs shuttered BHP's 305,000 tonnes manganese alloy plant. Reinforced why OMH's 20 year sustainable low energy costs power purchase agreement in Sarawak is so critical for success of the proposed smelter.
23 February 2012
BHP Billiton today announced its intention to temporarily suspend production at TEMCO1, its manganese alloy production facility located in George Town, Tasmania, by early to mid March 2012.
BHP Billiton Manganese President, Tom Schutte, said: “TEMCO is a processing business that competes globally with similar facilities in other parts of the world. Recently, there has been further erosion of its international competitiveness due to the strong Australian dollar and steady increases in input costs, including in reductants and electricity. At the same time, manganese alloy markets in Europe and North America have been weak and global prices remain low.
“While measures have been taken to make the operation as cost effective as possible, these have not been sufficient to counter shifts in the market, increased costs of production, or operating losses,” he said.
BHP Billiton Manganese Australia President, Bryan Quinn, said the Company will review the long term future of the operation over a three month period, which will include extensive stakeholder consultation and review of all options.
“Importantly, during this time there will be no change in the employment status of TEMCO based permanent employees. However, contracting partners will be reduced to those critical to essential activities. If any decision is made to reduce the number of permanent employees following the review, we will explore all options in order to preserve jobs, including redeployment opportunities within BHP Billiton,” he said.
1 TEMCO is part of the manganese joint venture between BHP Billiton (60%) and Anglo American (40%) and produces approximately 65kt of SiMn and 240kt of High Carbon Ferro Manganese. BHP Billiton is the Manager and Operator.
FF Wong is known to be an astute investor with the Midas touch.
I have also invested in his listcos. But I am wary of his latest forays into OM Holdings.
In the EDGE article, he was said to have been searching far and wide for the next good investment (pot of gold) only to find it across his garden fence----in his neighbour.
I wonder if FF Wong would be investing in OM Holdings if Mr Low NT has a manganese smelter next to his house.
There are obvious reasons why the Aussies and the S Africans where the managnese is mined will want to transport that toxic stuff thousands of miles away and carry out the smelting process eslewhere.
The answer is in the 5-letter word LYNAS----- the saga playing out in Kuantan. That U can google and find out.
But these environmental issues about maganese smelting has been playing out elsewhere in
China and
S Africa.
So one wonders why a shrewd bizman like FF Wong would want to venture into this.
Sure the costs are much higher in Australia becos the Aussie govt has slapped mining tax and environmental barriers that make mining and smelting there expensive. And to beat it all, U have the Sarawak state authorities granting tax incentives becos they have a white elephant in Bakun.
But a white elephant is not a "Black Swan" as the LYNAS saga has shown---- how it plays out I am not sure----- but safe to say, the Sarawak authorities cannot expect to make one huge environmental mistake in deforestation and destruction of natural reserves by following up with another---i.e building the manganese smelter--- and not expect any repercussions (environmental and political) long term.
This could potentially be a persistent black crow---- squawking in Boustead's backyard.
I know many of U love this stock and what I am writing sounds like heresy.
But, I wish FF Wong can somehow make a graceful exit b4 the environmental timebomb that the smelting process unleashes builds up and eventually explodes.