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Why selling
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rsua88
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13-Jul-2006 00:04
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Hi Nostradamus, Thank you for enlightening me on some fundamental issues at hand which I am not aware of. Your updates on events leading to this date have been thorough and your ability to conceptualise the probable outcome is just excellent. Thanks again. |
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Nostradamus
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12-Jul-2006 17:03
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Hi rsua88, Since the release of the preliminary takeover prospectus at the end of Jun '06, MFS has been declining consistently to $1.01 yesterday, below Multifineline's (MFLX) cash offer price of $1.15 (assuming they obtain < 90% acceptances) and $1.20 (assuming they obtain > 90% acceptances). This reflects the fact that while WBL who owns 61% of MFLX's shares has given an irrevocable undertaking to vote in favour of the deal, a special general meeting is still required to be held to obtain majority votes (> 50%) from non-WBL shareholders (ie the other 39%). But since then, MFLX had disappointed the market by reporting 2Q net profit which was below expectations and provided a downbeat outlook. MFLX shares closed down 58% since the takeover announcement. MFS also issued a profit warning that sales for 3Q06 is expected to be down about 28% qoq, mainly due to reduced demand from its end customers and a slower than expected mkt response to new products launched by certain customers. At the time of the takeover announcement, consensus expectations for MFS for full year ending Sep 06 was for profit to hit $55m. But after the warning, it looks like MFS would only be able to achieve $38-39m. When MFLX announced the takeover at the end of Mar 06, MFLX was commanding a PER of 33x vs MFS's 21x. Historically, MFS had traded to an average PE of 12-13x vs MFLX's average of 20x. As a result of the above, there's a good chance that MFLX's minority shareholders may not vote in favour of the deal or seek to revise the offer terms lower. And if that happens, downside risks exist for MFS (its current PER is 17x and MFLX of 13x). |
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rsua88
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11-Jul-2006 16:44
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Thanks Singaporegal. Nice of you to shed some light. |
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singaporegal
Supreme |
11-Jul-2006 16:25
Yells: "Female TA nut" |
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It is my belief that this stock has just started on a downtrend that may last some time. The TA indicators look real bad. |
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rsua88
Member |
11-Jul-2006 14:31
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Counter dropped to 0.99 this morning. Potential buy-out for Cash 1.12 to 1.2 per share. Any reason/s. Perhaps some one out there care to share some light on this. Its pretty dark out here. Thanks. |
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