Why did Xiamen Comfort launch takeover of Malaysia’s Ogawa World?

  • Business
  • Friday, 13 Sep 2013

KUALA LUMPUR: Low-profile Ogawa World Bhd has been thrust into the limelight after Shenzen-listed Xiamen Comfort Science & Technology Group Co Ltd launched a takeover of Ogawa World Bhd at RM1.05 cash a share or a total of RM126.2mil.

The takeover, which was launched on Monday, saw several shareholders who owned a combined 53.9% of Ogawa World or 64.62 million shares, giving their irrevocable undertakings to Xiamen to accept the offer.

This could be viewed as an opportunity for the major shareholders to exit the business as the offer at RM1.05 a was a premium of 19 sen or 22.9% above Sept 6’s closing price of 86 sen.

At 5pm on Friday, Ogawa World -- one of Malaysia’s largest player in healthcare equipment -- closed at RM1.01 with 537,900 shares done.

Ogawa has been in the market since 2001 and has spread out across Malaysia, Australia,  Hong Kong, India, Indonesia, the Philippines and Singapore.

Ogawa World’s earnings have been on the upward trend over the past three quarters.

In its fourth quarter ended June 30, 2013, it posted net profit of RM9.56mil on the back of RM78mil revenue. Earnings per share were 7.97 sen.

Ogawa posted net profit of RM2.9mil in the third quarter on the back of RM54.83mil in revenue while in the second quarter, earnings were RM528,000 on a revenue of RM45mil each.

Its short-term deposits, cash and bank balances for the fourth quarter stood at RM59.98mil, an increase from RM45.73mil during the same quarter last year.

Its liabilities in its fourth, third and second quarter stood at RM48.3mil; RM38.4mil and RM42.5mil.

Xiamen Comfort could probably be attracted to Ogawa due to its improved earnings and healthy bank balances, and proved to be a better option from Ogawa’s bigger counterpart which is the Singapore-based Osim International Ltd.

Osim has a market capitalisation of S$1.4bil (RM3.63bil). At the last traded price of S$1.935, it was trading at a price to earnings of 15.02 times. 

Ogawa’s market capitalisation was RM121mil. At the last traded price of RM1.01, it was trading at a PE of 8.49 times.

Apart from Ogawa’s takeover, Xiamen had in April bought over the trademark of FujiMedic, which was also involved in medical equipment for a total of RM220,000.

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