Should You Really Be Excited About Asia-Pacific Strategic Investments Ltd?

Looking at the daily top volume traded companies on the Singapore Exchange for the past week, I realized that a company called Asia Pacific Strategic Investments Ltd (SGX: 5RA) has been appearing at the top of the list a number of times. After some digging through the SGX website, I realized that Asia Pacific Strategic is a S$60 million company in the midst of a reverse takeover. So now the question is, is the excitement over the company justified?

Current Business

According to the company’s latest annual report, Asia-Pacific Strategic Investments is a provider of integrated bereavement services in Malaysia. It operates a 100-acre memorial park in Klang Valley, Malaysia. However, the company has not been profitable for the last few years. That could be a reason why the management has been eagerly looking for an alternative for the company.

Enter the RTO

This is where the new company comes in. In September 2013, the company announced that it will be planning a reverse takeover with Coeur Gold Armenia Limited, a mining company focusing on gold, copper and iron ore. The company has interests in two mines in Armenia through mining exploration licence for the next few decades.

However, Coeur Gold Armenia Limited itself is also a loss-making company with negative shareholders’ equity. On top of that, Coeur Gold Armenia has had no revenue at all for the past 2 years. Yet the deal is to be valued at S$500 million, subjected to a valuation report of the asset of Coeur Gold Armenia.

Foolish Takeaway

It does not seem like Coeur Gold Armenia has a track record in showing that its reserves and resources are economical to extract. With the existing available information, it seems that there is little fundamental justification for investors to get excited about the deal. Investors would do better to watch the company’s operational performance over the next few years.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim does not own any companies mentioned.