Hi-P rides hype of possible share deal

Singapore

HI-P International shares climbed a further 3.77 per cent on Tuesday as more punters jumped on the prospect of a share deal, although the company said it has not been approached by any party.

Rumours of a possible transaction bumped the contract manufacturer's shares up 30.9 per cent in heavy trading on Monday, prompting an unusual share trading query from the Singapore Exchange.

Hi-P replied on Tuesday: "The company understands that a controlling shareholder of the company is considering a possible transaction involving the shares of the company which may or may not lead to a transaction."

Executive chairman and chief executive Yao Hsiao Tung is Hi-P's single controlling shareholder with a 84.22 per cent stake as at June 20.

With nothing confirmed or denied, punters pushed Hi-P shares as high as S$1.17 on Tuesday though they ultimately closed at S$1.10 on volume of 19.6 million.

One stock watcher said: "Hi-P privatisation talk has been circulated on and off due to the founder's old age." Mr Yao is over the age of 70.

Fanning speculation on Monday was an anonymous note circulated by remisiers, which flagged Hi-P as a "potential privatisation play".

Hi-P has bought back slightly over 1 per cent of its shares since it renewed its share purchase mandate on Apr 20. It also has a relatively small free float.

The note read: "Assuming the group purchases the maximum 10 per cent (of total issued shares allowed under the share purchase mandate), Yao's ownership could potentially increase to more than 92 per cent - making it easy for a privatisation bid. In fact, the company has to increase its free float or delist when the free float falls below 10 per cent."

Hi-P's high cash balance of S$234.5 million was also highlighted, relative to its market cap of S$880.7 million.

Hi-P, which makes plastic and metal parts for Apple, has been identified as an acquisition target before. DBS analysts observed last year: "With its entrenched relationship with key customers, which include some of the world's biggest names in mobile phones, tablets, household and personal care appliances, Hi-P could be an attractive target for global companies looking to build a base in Asia."

In the past, speculators eyeing an M&A play have also focused on Mr Yao's "lack of a concrete succession plan", though this may have changed. On Nov 1, Mark Su Lii-Yun, who is based in China, was named deputy chief executive to assist Mr Yao in the overall management of the group.

Mr Yao, who is in China, declined to comment for this story.