Singapore “Flyer” of the Week: ASTI Holdings Limited

Shares of ASTI Holdings Limited (SGX: 575) surged 16.4% for the week to close at S$0.085 on Friday. In comparison, the Straits Times Index (SGX: ^STI) inched up by a mere 0.4% during the same time frame. This makes ASTI a massive gainer in the Singapore stock market this week.

As a quick background, ASTI is involved in the research, design, development and manufacturing of semiconductor equipment. It has four research and development centres, 14 factories and 29 sales offices globally. ASTI also has controlling equity stakes in Advanced Systems Automation Limited (SGX: 5TY) and Dragon Group International Limited (SGX: MT1).

Earlier in the week, ASTI made public that it has agreed to sell five of its wholly-owned subsidiaries to Shanghai Pudong Science and Technology Investment Co Ltd (PDSTI) for S$90 million in cash and an additional S$38 million in dividends.

The five wholly-owned subsidiaries involved in the deal are: Semiconductor Technologies & Instruments Pte Ltd (STI SG); Semiconductor Technologies & Instruments Sdn Bhd (STI Msia); Semiconductor Technologies & Instruments Phils Inc (STI Phils); Semiconductor Technologies & Instruments (Taiwan) Inc (STI TW); and STI Tech Korea Co Ltd (STI Korea). They will be collectively known as the STI Group.

ASTI said that the transaction would unlock the value that it had built up in STI over the years.

The proposed disposal will bring net proceeds of around S$72.8 million for ASTI, which will be used for general working capital requirements, and to fund future business expansions, investments and acquisitions. Shareholders’ approval for the deal will be sought at an extraordinary general meeting to be convened.

ASTI’s executive chairman and chief executive, Michael Loh Soon Gnee, commented:

“While ASTI is financially and technologically adequate in its current position, the transaction will substantially increase our cash balance and shareholder value. The new robust balance sheet will give all our growing business units the necessary working capital, as well as the resources for us to explore more opportunities through M&A and achieve accelerated growth through the strategic inflection point. The stronger cash position and better business prospects will also allow us to explore avenues to bring value to our shareholders through dividends and / or share buybacks.”

For the full year ended 31 December 2017, ASTI’s revenue fell 13% year-on-year to S$123.9 million. It saw a net loss of S$4.4 million as compared to a net profit of S$1 million seen in 2016. ASTI ended 2017 with cash and cash equivalents of S$29.6 million and total debt of S$29.1 million.

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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.