Hong Leong unit takes Thakral stake

Feb 08, 2005
The Business Times

KWEK Leng Beng's New York-listed China Yuchai International Limited has agreed to take a 15 per cent stake in Singapore-listed electronics group Thakral Corporation. The agreement came yesterday as Thakral reported a net profit of $13.8 million on group turnover of $400.4 million for the nine months ended Dec 31, 2004.

Its earnings per share for the nine months was 0.92 cent while its net asset value was 11.08 cents. Group turnover improved by 3 per cent despite a reduction of revenue of $15.4 million contributed previously by its subsidiaries Beijing Wenlu and China Express Associates. Both subsidiaries were divested in the last financial year.

Thakral, which suspended trading of its stock yesterday, said it agreed to place out 264 million new shares at 11.7 cents apiece to China Yuchai, raising $30.8 million for new business expansion. China Yuchai is a subsidiary of SGX-listed Hong Leong Asia, a manufacturing group controlled by Mr Kwek.

The stake represents 17.64 per cent of the issued capital and 14.99 per cent of the enlarged capital of Thakral. Thakral trades and sells high-end consumer electronics and distributes home entertainment software and is also into contract manufacturing.

CYI is listed on the New York Stock Exchange, with its main subsidiary being a China-based diesel engine manufacturing company.

The new shares were sold for cash at a discount of almost 10 per cent to the weighted average price of trades done on the day before the agreement. After becoming a substantial shareholder, CYI will nominate three members to the Thakral board.

Inderbethal Singh Thakral, managing director of Thakral Corp said: 'This strategic investment from CYI will allow us to tap into the immense growth opportunities in the high growth economies of China and India as well as other countries in Asia.'

'The global reputation and strengths of the Hong Leong Group will help enhance our competitive edge - both financially and operationally.' Thakral shares last closed at 13 cents, having climbed from 10 cents towards the end of last year.