CFM Holdings sells Ang Mo Kio property at 73% over book value for S$13.35 million

A subsidiary of metal stamping firm CFM Holdings on Thursday (Jun 16) said it is selling a property in Ang Mo Kio for S$13.35 million, a price that is nearly 73 per cent over the property’s book value as at end-December.

The property at 4 Ang Mo Kio Avenue 12 is currently owned by Cheong Fatt Holdings as part of its warehousing and logistics operations, according to exchange filings.

It is presently used as the group’s office and for warehousing and logistics, with some units and floors being subletted, the Catalist-listed company said.

The property will be sold to Hi-Beau Group, which is owned by directors Zhang Ming and Du Wei. CFM noted that the buyer is in the business of wholesale trade of a variety of goods without a dominant product.

The purchase price of S$13.35 million was arrived at after negotiations, CFM said, adding that the property was valued at S$13.2 million based on market value.

However, the book value and net tangible asset (NTA) value of the property as at Dec 31, 2021 was S$7.73 million, the company said, bringing the potential proceeds from the sale to over S$5.6 million.

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Cheong Fatt Holdings expects to receive net proceeds of about S$9.19 million, after repaying loans related to the property estimated to be S$4.16 million.

The net proceeds will be used for general working capital of the group, CFM said.

The sale price of the property represents more than 61 per cent of CFM’s total market capitalisation, which is valued at S$21.76 million.

It is thus likely to have “material positive and favourable impact” on the company’s earnings per share and NTA for the financial year ending Jun 30, 2023.

CFM said its subsidiary’s business of warehousing and logistics operation is incurring losses due to high interest and other operational costs and “is not contributing effectively to its group’s operations”, adding that it believes the sale will be in the interest of the subsidiary.

The warehousing and logistics business will then be transferred to another subsidiary to minimise operational expenses, it added.

The buyer will pay in cash in 3 tranches, said CFM, with the first payment at S$133,500. The second payment, at S$534,000, must be made by 4 pm on Jun 29 before the expiry of the purchase option.

The sale of the property is subject to approval from the authorities.

CFM is advising shareholders and potential investors to exercise caution when trading in its shares as there is no certainty or assurance that the proposed sale will be completed.

CFM shares fell 2.7 per cent or S$0.003 to S$0.108 on Thursday, before the announcement.