World Precision Machinery to acquire assets in China for 155m yuan
Michelle Zhu
WORLD Precision Machinery is proposing to fully acquire a company in China, along with its assets, for 155 million yuan (S$30.2 million).
Named Wanning Yinhu Hot Spring Holiday Hotel, the dormant target company does not carry out any business operations but holds a state-owned land in the Xinlong Hot Spring Tourism Zone of Wanning, Hainan, China spanning 54,430 square metres (sq m).
Existing infrastructure, including above-ground buildings and fixtures on the land, form part of the company’s assets.
It also owns the right to use this land until Apr 1, 2050, as well as a lease over state-owned land of 41.72 mu or some 27,813 sq m, for the period until Mar 31, 2050.
In a bourse filing on Monday (Jan 9), World Precision said its board will determine how to monetise these assets, with the possibility of further investing in the existing infrastructure to operate as a resort hotel, or for other commercial uses.
The consideration is to be fully funded by internally generated cash, to be paid out to the sellers in four installments.
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The deal is expected to be accretive to World Precision’s net tangible assets (NTA) and earnings per share (EPS).
Had the acquisition been completed as of Jan 1, 2021, the group’s NTA per share for FY2021 would have been 2.92 yuan as opposed to 2.88 yuan. EPS would have been 0.32 yuan instead of 0.28 yuan.
World Precision said its proposed acquisition, which is for investment purposes, will not change the company’s risk profile considering there are no plans for diversification of the group’s businesses.
This also comes in line with the group’s long-term business and investment strategy to utilise excess cash, it added.
Shares of World Precision ended Friday unchanged at S$0.38.
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