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Singapore’s Big Winner of the Week: Tye Soon Ltd

Shares of Tye Soon Ltd (SGX: T08) gained slightly more than 7% this week to close at S$0.148 on Friday. With the Straits Times Index (SGX: ^STI) putting on just 1.5% to 3,412 points, Tye Soon is a big winner in Singapore this week.

The firm, according to its website, is “the most prominent independent automotive parts distributor in Southeast Asia” and boasts one of the largest portfolios of top-tier global automotive parts brands.

On Tuesday this week, Tye Soon announced that it had entered into an option agreement with a wholly-owned subsidiary of Valuemax Group Ltd (SGX: T6I) to sell 11 units of properties located at Block 261 Waterloo Street, Singapore for S$11 million.

The properties, which are leasehold, have an 83-year lease granted by the Housing and Development Board (HDB) that had started in 1994. They have a total floor area of around 708 square metres and in January this year, the properties were valued at S$10.6 million collectively.

Tye Soon commented on the reasons behind the sale:

  1. It’s an attractive price to sell the properties at;
  2. It allows the intrinsic value of its business to be unlocked; and
  3. Its automotive parts retail operation can be moved closer to an area where automotive repair workshops are located, which is outside the Central Business District area.

The company will receive net proceeds of S$10.9 million and the money will be used in a number of ways: “[For] general working capital and the reduction of bank borrowings, as well as possible distribution by way of dividend to the Company’s shareholders.”

A possible dividend payment would likely be music to the ears of Tye Soon’s shareholders.

But, nothing’s set in stone yet. Before the properties can be sold to ValueMax, all relevant approvals have to be obtained. This includes approvals from HDB and Tye Soon’s shareholders; the latter may be waived if a waiver’s granted by stock exchange operator Singapore Exchange Limited.

Tye Soon is currently trading at 21 times its historical earnings.

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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 Sudhan P doesn’t own shares in any companies mentioned.