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Hot stock: Yeo Hiap Seng up more than 12% after report claims no plans to delist
SHARES of Yeo Hiap Seng jumped more than 12 per cent on Wednesday from the previous day's close, prompting a query from Singapore's bourse operator.
This comes two days after a research report stated that there are no plans to delist the company, which has yet to realise its full potential.
The homegrown food and beverage (F&B) maker's counter was at S$1.470 apiece as at 4.51pm on Wednesday. This is a 12.2 per cent increase from Tuesday's closing price of S$1.310. It had hit an intra-day high of S$1.505.
In a May 30 report, CIMB Research stated that "from our interview with management, we understand that they have no plans to take Yeo Hiap Seng private at this juncture".
The report comes after recent news that some listed homegrown companies may be potentially going private. Lifestyle products group OSIM International, listed since 2000, has effectively gone private after founder Ron Sim made an offer for the firm in March. A consortium has been trying to take private traditional Chinese medicine firm Eu Yan Sang.
The Far East Group and its related entities own 78.97 per cent of Yeo Hiap Seng.
CIMB Research's report also noted that the potential of Yeo Hiap Seng has yet to be unlocked fully. It wrote that the company has sold its last property unit in 2013, and it is now returning to its roots in F&B. The report also noted that Yeo Hiap Seng has extensive brand recognition and distribution network in South-east Asia. At the same time, it has, boosted by its strong cash flows, made new investments to upgrade its production facilities.
In particular, Yeo Hiap Seng is relatively undervalued when compared to its F&B counterparts listed on the Singapore Exchange. Yeo Hiap Seng, at a market capitalisation of about S$797.7 million, is the smallest of all F&B companies covered by CIMB Research. At 1.5 per cent, its dividend yield is also lower than its peer average of 2.6 per cent, said the research house.
"With the backing of the Far East Group, Yeo Hiap Seng is in an ideal position to untap its brand potential," wrote the report.