Recently Scientex announced acquisition of 2 subsidiaries of GW Plastics for total consideration of RM 283 million. Upon the completion of the acquisition, GW Plastics will pay out distribution from the proceed of sales of RM 1.19 per share and delist from the stock market.
Well, we can see the current price of GW Plastics is ranging around RM1.08-1.10, it provides some opportunities to lock off some profit. Let say if you buy GW Plastics at RM1.09, you will get back RM1.19 per share, which is RM0.10 or 9% (exclude brokerage fee & other charges) return, at the end of the acquisition. I believe the acquisition will be completed in 3 - 5 months, it means that you may get the 9% profit in 5 months time.
Anyway, this is not a riskless investment. The disposal is conditional upon the approval from relevant authorities and shareholders of GW Plastics. The disposal may be burst if those authorities & shareholders do not approve on the about mentioned disposal, however, I think the chance of not getting approval is relatively low since the price of RM1.20 or historical PE of 12.7 times seems quite reasonable & the share price of GW Plastics was trading below RM0.75 most of the time.
Note: The above content is just a blogging activity that purely share my investment thoughts & ideas and should not be used as recommendation to buy or sell any securities. I may already have position in the above securities. Any action that you take from the opinions or information of this blog is solely on your own responsibility. Please consult your investment advisor before you make any investment decision.
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