Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

A little over a year ago, in June 2018, a company called Best Decade - owned by <a href="https://www.smartkarma.com/entities/delong-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16982:1" rel="noopener">Delong Holdings (DLNG SP)</a>'s CEO Ding Liguo and his spouse - acquired a 15.04% stake in Delong from <a href="https://www.smartkarma.com/entities/21926" target="_blank" data-smartkarma-citation="entities:21926:1" rel="noopener">Evraz PLC (EVR LN)</a> at $7.42/share. That lifted the CEO's stake to 75.56%.  Russian vertically integrated steel production and mining business Evraz had tried to launch a takeover in 2008 but could not obtain PRC approvals and the <a href="http://www.evraz.com/media/news/1865/?sphrase_id=1208453" target="_blank" rel="noopener">SPA lapsed</a> in August 2009.
Just over three months later at the end of September 2018, another vehicle of the CEO called Best Grace made a <a href="http://infopub.sgx.com/FileOpen/Best%20Grace%20Holdings%20Pte%20Ltd.Offer%20Announcement.ashx?App=Announcement&amp;FileID=526443" target="_blank" rel="noopener">voluntary conditional cash offer</a> for the rest of the company at S$7.00/share. 
As <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> wrote last year in <a href="https://www.smartkarma.com/insights/delong-s-low-ball-offer" target="_blank" data-smartkarma-citation="insights:24535" rel="noopener">Delong's Low-Ball Offer</a> when that deal was announced in late September 2018, under the <a href="http://www.mas.gov.sg/~/media/resource/sic/press_releases/Consultation_of_the_Code_Response_Paper_23_Mar_2012_Annex_2.pdf" target="_blank" rel="noopener">Singapore Code on Take-Overs and Mergers</a>, Best Grace would not be obligated to offer minority shareholders a similar price as three months had elapsed since that acquisition.
3-month v 6-month Takeover Ruling
Under a voluntary offer the Consideration (Rule 15.2 of the <a href="http://www.mas.gov.sg/~/media/resource/sic/press_releases/Consultation_of_the_Code_Response_Paper_23_Mar_2012_Annex_2.pdf" target="_blank" rel="noopener">Code</a>) must be:
<blockquote>
in cash or securities or a combination thereof at not less than the highest price paid by the offeror or any person acting in concert with it ....  during the offer period and within 3 months prior to its commencement."
</blockquote>
<ul>
<li>If it had been a Mandatory General Offer, the time frame would be extended out to 6 months prior to the commencement (Rule 14.3).</li>
<li>As the SPA with Evraz struck in early June had lapsed, the Offeror was (according to them) no longer bound under the Code to table a similar offer to minorities. </li>
</ul>
<h2>On the Offeror &amp; Best Decade</h2>
The Offeror, Best Grace, was an SPV incorporated in Singapore on 26 July 2018 and ias wholly-owned by Ding Liguo. 
Best Decade is a wholly-owned subsidiary of Golden Top Group. In turn, Golden Top is a wholly-owned subsidiary of Honest Joy. Ding Liguo and his wife Zhao Jing own all of the issued shares of Honest Joy in the proportion of 7:3. 
On the 1st June 2018, Best Decade <a href="http://infopub.sgx.com/FileOpen/_FORM3_BD.ashx?App=Announcement&amp;FileID=508547" target="_blank" rel="noopener">acquired 17.33%</a> of Delong from Evraz (16.569mn shares, 15.04% at S$7.42/share) and Violin Holdings (2.522mn shares, 2.29%, at S$4.87/share), increasing its stake to 75.56%.
That Offer ended up being withdrawn about two weeks later because it fell afoul of Rule 17.1 of the <a href="http://www.mas.gov.sg/~/media/resource/sic/press_releases/Consultation_of_the_Code_Response_Paper_23_Mar_2012_Annex_2.pdf" target="_blank" rel="noopener">Code</a>, since, as David wrote, "that is the highest price at which a person acting in concert with the Offeror has bought for cash, during the six months prior to the date of the Offer Announcement, of Shares carrying 10% or more of the voting rights" though he noted that the wording in 17.1 is a little vague.  In any event, the Bidder was required to bump to $7.42 and as they didn't have sufficient funds under the revised Offer, the Offer was withdrawn. 
<h2>The New News</h2>
Yesterday, Best Grace announced a renewed <a href="https://links.sgx.com/FileOpen/Offer%20Announcement.ashx?App=Announcement&amp;FileID=572107" target="_blank" rel="noopener">Voluntary General Offer</a> for the rest of the shares of Delong under substantially similar terms to the deal proposed last September. Rule 33.1(a) of the Code provides that, except with the consent of the Securities Industry Council of Singapore (the “SIC”), the Offeror or concert parties cannot announce a new Offer for the Target company within 12 months of the date (11 Oct 2018) of the withdrawal of the 'original offer'. However, Best Grace in this case sought and received an exemption from the prohibition under Rule 33.1(a) of the Code from the SIC.
<div class="content-highlight">
So now we have a new deal.  Last year's S$7.00 offer came at a 1.7% premium to undisturbed.
This year's is at a 16.5% premium, which is still not great. And it is at 0.6x tangible book value. It is 1.7x EV/EBITDA. But it is the steel business in China and one could imagine not everything trades at book in that case, and one wonders about the cycle, but 1.7x EV/EBITDA is low by anyone's standards.
However, unlike last year's effort, this year's effort has substantial Irrevocable Undertakings, which will get the acquirer to 88.56%. That means just 1.44% - or 12.6% of the remaining 11.44% of shares out - need to accept the Offer for this to go to a delisting.
It would make sense given the premium and the illiquidity otherwise to expect this will get done, even though it is something of a lowball bid.
</div>
<hr>
For more detail on Singaporean M&amp;A rules, regulations, documentation, etc, please see the <a href="https://www.smartkarma.com/insights/quiddity-singapore-m-a-guide-2019" target="_blank" rel="noopener">Quiddity Singapore M&amp;A Guide 2019</a>. Look for other countries in the series <a href="https://www.smartkarma.com/search?q=Quiddity%20M%26A" target="_blank" rel="noopener">here</a>.

A little over a year ago, in June 2018, a company called Best Decade - owned by Delong Holdings (DLNG SP)'s CEO Ding Liguo and his spouse - acquired a 15.04% stake in Delong from Evraz PLC (EVR LN) at $7.42/share. That lifted the CEO's stake to 75.56%.  Russian vertically integrated steel production and mining business Evraz had tried to launch a takeover in 2008 but could not obtain PRC approvals and the SPA lapsed in August 2009.
Just over three months later at the end of September 2018, another vehicle of the CEO called Best Grace made a voluntary conditional cash offer for the rest of the company at S$7.00/share. 
As David Blennerhassett wrote last year in Delong's Low-Ball Offer when that deal was announced in late September 2018, under the Singapore Code on Take-Overs and Mergers, Best Grace would not be obligated to offer minority shareholders a similar price as three months had elapsed since that acquisition.
3-month v 6-month Takeover Ruling
Under a voluntary offer the Consideration (Rule 15.2 of the Code) must be:

in cash or securities or a combination thereof at not less than the highest price paid by the offeror or any person acting in concert with it ....  during the offer period and within 3 months prior to its commencement."


If it had been a Mandatory General Offer, the time frame would be extended out to 6 months prior to the commencement (Rule 14.3).
As the SPA with Evraz struck in early June had lapsed, the Offeror was (according to them) no longer bound under the Code to table a similar offer to minorities. 

On the Offeror &amp; Best Decade
The Offeror, Best Grace, was an SPV incorporated in Singapore on 26 July 2018 and ias wholly-owned by Ding Liguo. 
Best Decade is a wholly-owned subsidiary of Golden Top Group. In turn, Golden Top is a wholly-owned subsidiary of Honest Joy. Ding Liguo and his wife Zhao Jing own all of the issued shares of Honest Joy in the proportion of 7:3. 
On the 1st June 2018, Best Decade acquired 17.33% of Delong from Evraz (16.569mn shares, 15.04% at S$7.42/share) and Violin Holdings (2.522mn shares, 2.29%, at S$4.87/share), increasing its stake to 75.56%.
That Offer ended up being withdrawn about two weeks later because it fell afoul of Rule 17.1 of the Code, since, as David wrote, "that is the highest price at which a person acting in concert with the Offeror has bought for cash, during the six months prior to the date of the Offer Announcement, of Shares carrying 10% or more of the voting rights" though he noted that the wording in 17.1 is a little vague.  In any event, the Bidder was required to bump to $7.42 and as they didn't have sufficient funds under the revised Offer, the Offer was withdrawn. 
The New News
Yesterday, Best Grace announced a renewed Voluntary General Offer for the rest of the shares of Delong under substantially similar terms to the deal proposed last September. Rule 33.1(a) of the Code provides that, except with the consent of the Securities Industry Council of Singapore (the “SIC”), the Offeror or concert parties cannot announce a new Offer for the Target company within 12 months of the date (11 Oct 2018) of the withdrawal of the 'original offer'. However, Best Grace in this case sought and received an exemption from the prohibition under Rule 33.1(a) of the Code from the SIC.

So now we have a new deal.  Last year's S$7.00 offer came at a 1.7% premium to undisturbed.
This year's is at a 16.5% premium, which is still not great. And it is at 0.6x tangible book value. It is 1.7x EV/EBITDA. But it is the steel business in China and one could imagine not everything trades at book in that case, and one wonders about the cycle, but 1.7x EV/EBITDA is low by anyone's standards.
However, unlike last year's effort, this year's effort has substantial Irrevocable Undertakings, which will get the acquirer to 88.56%. That means just 1.44% - or 12.6% of the remaining 11.44% of shares out - need to accept the Offer for this to go to a delisting.
It would make sense given the premium and the illiquidity otherwise to expect this will get done, even though it is something of a lowball bid.


For more detail on Singaporean M&amp;A rules, regulations, documentation, etc, please see the Quiddity Singapore M&amp;A Guide 2019. Look for other countries in the series here.

Delong - Another Offer by the CEO. Still The Wrong Price But Whaddya Gonna Do?

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<ul>
<li>
The 51-member FTSE ST Small Cap Index tracks the performance of small-cap companies that pass size, free float and liquidity screens and trade on SGX Mainboard. As the Index has a significant Real Estate weighting – with 19 REIT constituents – it maintains a relatively high average dividend indicated yield of about 4.5%, above the STI’s 3.9% yield. 
	 </li>
	<li>
Of the Index’s 32 non-REIT constituents, 12 have indicated yields of above 4%. Among these 12, the five best-yielding stocks are: Duty Free (9.3%), Delong (9.2%), SIIC Environment (6.3%), UMS (6.2%), and QAF (6.0%). They average an indicated yield of 7.4%. 
	 </li>
	<li>Among the 12 best-yielding stocks, the five best performers in the YTD were: QAF (+43.6%), UMS (+28.1%), Chip Eng Seng (+20.5%), Bumitama Agri (+15.3%) and Lian Beng Group (+15.1%). They have averaged a YTD total return of 24.5%.</li>
</ul>
 

The FTSE ST Small Cap Index is a free float-adjusted, market capitalisation-weighted index representing the performance of small-capitalised companies, which pass size, free float and liquidity screens and trade on SGX Mainboard. The Index comprises 51 constituents with a combined market capitalisation of about S$40 billion, ranging from S$63 million to over S$2 billion. More broadly, beyond the Index are approximately 200 stocks listed on SGX that fall within this market capitalisation range.

The 10 largest capitalised constituents of the FTSE ST Small Cap Index account for more than a third of the Index’s weighting, and comprise six Real Estate Investment Trusts (REITs), two consumer stocks, one healthcare play, and one financial services provider. Given the significant Real Estate weighting in the Index – there are a total of 19 REIT constituents – it maintains a relatively high average dividend indicated yield of about 4.5%, above the benchmark Straits Times Index’s (STI) 3.9% yield.

Excluding REITs and business trusts, the Index has 32 non-REIT constituents, with dividend indicated yields ranging from below 1% to above 9%. Of these 32, 12 stocks have indicated yields of above 4%. Among the 12, the five best-yielding Index constituents are: Duty Free International (9.3%), Delong Holdings (9.2%), SIIC Environment (6.3%), UMS Holdings (6.2%), and QAF Ltd (6.0%). These five have averaged an indicated yield of 7.4%.

The table below details the 12 non-REIT constituents of the FTSE ST Small Cap Index with yields above 4.0%, sorted by dividend indicated yield.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y (%)
			</td>
			<td>
			Total Return 3Y (%)
			</td>
			<td>
			Div Ind Yld (%)
			</td>
			<td>
			P/E (x)
			</td>
		</tr>
<tr>
<td>
			DUTY FREE INTL
			</td>
			<td>
			5SO
			</td>
			<td>
			234
			</td>
			<td>
			3.9
			</td>
			<td>
			-1.6
			</td>
			<td>
			-34.9
			</td>
			<td>
			9.3
			</td>
			<td>
			15.6
			</td>
		</tr>
<tr>
<td>
			DELONG HOLDINGS
			</td>
			<td>
			BQO
			</td>
			<td>
			673
			</td>
			<td>
			-3.2
			</td>
			<td>
			58.3
			</td>
			<td>
			2074.1
			</td>
			<td>
			9.2
			</td>
			<td>
			2.0
			</td>
		</tr>
<tr>
<td>
			SIIC ENVIRONMENT
			</td>
			<td>
			BHK
			</td>
			<td>
			808
			</td>
			<td>
			12.7
			</td>
			<td>
			-26.6
			</td>
			<td>
			-53.5
			</td>
			<td>
			6.3
			</td>
			<td>
			7.4
			</td>
		</tr>
<tr>
<td>
			UMS HOLDINGS
			</td>
			<td>
			558
			</td>
			<td>
			392
			</td>
			<td>
			28.1
			</td>
			<td>
			-28.0
			</td>
			<td>
			84.0
			</td>
			<td>
			6.2
			</td>
			<td>
			9.1
			</td>
		</tr>
<tr>
<td>
			QAF LTD
			</td>
			<td>
			Q01
			</td>
			<td>
			483
			</td>
			<td>
			43.6
			</td>
			<td>
			-14.9
			</td>
			<td>
			-11.5
			</td>
			<td>
			6.0
			</td>
			<td>
			59.1
			</td>
		</tr>
<tr>
<td>
			BUMITAMA AGRI
			</td>
			<td>
			P8Z
			</td>
			<td>
			1,242
			</td>
			<td>
			15.3
			</td>
			<td>
			3.4
			</td>
			<td>
			1.0
			</td>
			<td>
			5.6
			</td>
			<td>
			11.9
			</td>
		</tr>
<tr>
<td>
			HONG LEONG FINANCE
			</td>
			<td>
			S41
			</td>
			<td>
			1,242
			</td>
			<td>
			9.4
			</td>
			<td>
			4.2
			</td>
			<td>
			32.1
			</td>
			<td>
			5.4
			</td>
			<td>
			10.5
			</td>
		</tr>
<tr>
<td>
			CHIP ENG SENG
			</td>
			<td>
			C29
			</td>
			<td>
			498
			</td>
			<td>
			20.5
			</td>
			<td>
			-17.1
			</td>
			<td>
			31.0
			</td>
			<td>
			5.1
			</td>
			<td>
			8.0
			</td>
		</tr>
<tr>
<td>
			METRO HOLDINGS
			</td>
			<td>
			M01
			</td>
			<td>
			856
			</td>
			<td>
			2.0
			</td>
			<td>
			-8.0
			</td>
			<td>
			19.5
			</td>
			<td>
			4.9
			</td>
			<td>
			20.1
			</td>
		</tr>
<tr>
<td>
			CHINA SUNSINE CHEMICAL
			</td>
			<td>
			CH8
			</td>
			<td>
			570
			</td>
			<td>
			-7.9
			</td>
			<td>
			-21.4
			</td>
			<td>
			232.1
			</td>
			<td>
			4.7
			</td>
			<td>
			4.4
			</td>
		</tr>
<tr>
<td>
			CENTURION CORP
			</td>
			<td>
			OU8
			</td>
			<td>
			366
			</td>
			<td>
			4.8
			</td>
			<td>
			-2.3
			</td>
			<td>
			34.9
			</td>
			<td>
			4.6
			</td>
			<td>
			4.6
			</td>
		</tr>
<tr>
<td>
			LIAN BENG GROUP
			</td>
			<td>
			L03
			</td>
			<td>
			262
			</td>
			<td>
			15.1
			</td>
			<td>
			-8.7
			</td>
			<td>
			27.0
			</td>
			<td>
			4.3
			</td>
			<td>
			4.6
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			12.0
			</td>
			<td>
			-5.2
			</td>
			<td>
			203.0
			</td>
			<td>
			5.9
			</td>
			<td>
			13.1
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 30 April 2019)

Among these 12 best-yielding stocks, the five best performers in the 2019 year-to-date were: QAF (+43.6%), UMS (+28.1%), Chip Eng Seng (+20.5%), Bumitama Agri (+15.3%) and Lian Beng Group (+15.1%). The five have averaged a YTD total return of 24.5%.

The table below details the 12 non-REIT constituents of the FTSE ST Small Cap Index with yields above 4.0%, sorted by YTD total return.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y (%)
			</td>
			<td>
			Total Return 3Y (%)
			</td>
			<td>
			Div Ind Yld (%)
			</td>
			<td>
			P/E (x)
			</td>
		</tr>
<tr>
<td>
			QAF LTD
			</td>
			<td>
			Q01
			</td>
			<td>
			483
			</td>
			<td>
			43.6
			</td>
			<td>
			-14.9
			</td>
			<td>
			-11.5
			</td>
			<td>
			6.0
			</td>
			<td>
			59.1
			</td>
		</tr>
<tr>
<td>
			UMS HOLDINGS
			</td>
			<td>
			558
			</td>
			<td>
			392
			</td>
			<td>
			28.1
			</td>
			<td>
			-28.0
			</td>
			<td>
			84.0
			</td>
			<td>
			6.2
			</td>
			<td>
			9.1
			</td>
		</tr>
<tr>
<td>
			CHIP ENG SENG
			</td>
			<td>
			C29
			</td>
			<td>
			498
			</td>
			<td>
			20.5
			</td>
			<td>
			-17.1
			</td>
			<td>
			31.0
			</td>
			<td>
			5.1
			</td>
			<td>
			8.0
			</td>
		</tr>
<tr>
<td>
			BUMITAMA AGRI
			</td>
			<td>
			P8Z
			</td>
			<td>
			1,242
			</td>
			<td>
			15.3
			</td>
			<td>
			3.4
			</td>
			<td>
			1.0
			</td>
			<td>
			5.6
			</td>
			<td>
			11.9
			</td>
		</tr>
<tr>
<td>
			LIAN BENG GROUP
			</td>
			<td>
			L03
			</td>
			<td>
			262
			</td>
			<td>
			15.1
			</td>
			<td>
			-8.7
			</td>
			<td>
			27.0
			</td>
			<td>
			4.3
			</td>
			<td>
			4.6
			</td>
		</tr>
<tr>
<td>
			SIIC ENVIRONMENT
			</td>
			<td>
			BHK
			</td>
			<td>
			808
			</td>
			<td>
			12.7
			</td>
			<td>
			-26.6
			</td>
			<td>
			-53.5
			</td>
			<td>
			6.3
			</td>
			<td>
			7.4
			</td>
		</tr>
<tr>
<td>
			HONG LEONG FINANCE
			</td>
			<td>
			S41
			</td>
			<td>
			1,242
			</td>
			<td>
			9.4
			</td>
			<td>
			4.2
			</td>
			<td>
			32.1
			</td>
			<td>
			5.4
			</td>
			<td>
			10.5
			</td>
		</tr>
<tr>
<td>
			CENTURION CORP
			</td>
			<td>
			OU8
			</td>
			<td>
			366
			</td>
			<td>
			4.8
			</td>
			<td>
			-2.3
			</td>
			<td>
			34.9
			</td>
			<td>
			4.6
			</td>
			<td>
			4.6
			</td>
		</tr>
<tr>
<td>
			DUTY FREE INTL
			</td>
			<td>
			5SO
			</td>
			<td>
			234
			</td>
			<td>
			3.9
			</td>
			<td>
			-1.6
			</td>
			<td>
			-34.9
			</td>
			<td>
			9.3
			</td>
			<td>
			15.6
			</td>
		</tr>
<tr>
<td>
			METRO HOLDINGS
			</td>
			<td>
			M01
			</td>
			<td>
			856
			</td>
			<td>
			2.0
			</td>
			<td>
			-8.0
			</td>
			<td>
			19.5
			</td>
			<td>
			4.9
			</td>
			<td>
			20.1
			</td>
		</tr>
<tr>
<td>
			DELONG HOLDINGS
			</td>
			<td>
			BQO
			</td>
			<td>
			673
			</td>
			<td>
			-3.2
			</td>
			<td>
			58.3
			</td>
			<td>
			2074.1
			</td>
			<td>
			9.2
			</td>
			<td>
			2.0
			</td>
		</tr>
<tr>
<td>
			CHINA SUNSINE CHEMICAL
			</td>
			<td>
			CH8
			</td>
			<td>
			570
			</td>
			<td>
			-7.9
			</td>
			<td>
			-21.4
			</td>
			<td>
			232.1
			</td>
			<td>
			4.7
			</td>
			<td>
			4.4
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			12.0
			</td>
			<td>
			-5.2
			</td>
			<td>
			203.0
			</td>
			<td>
			5.9
			</td>
			<td>
			13.1
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 30 April 2019)
</body></html>





The 51-member FTSE ST Small Cap Index tracks the performance of small-cap companies that pass size, free float and liquidity screens and trade on SGX Mainboard. As the Index has a significant Real Estate weighting – with 19 REIT constituents – it maintains a relatively high average dividend indicated yield of about 4.5%, above the STI’s 3.9% yield. 
	 
	
Of the Index’s 32 non-REIT constituents, 12 have indicated yields of above 4%. Among these 12, the five best-yielding stocks are: Duty Free (9.3%), Delong (9.2%), SIIC Environment (6.3%), UMS (6.2%), and QAF (6.0%). They average an indicated yield of 7.4%. 
	 
	Among the 12 best-yielding stocks, the five best performers in the YTD were: QAF (+43.6%), UMS (+28.1%), Chip Eng Seng (+20.5%), Bumitama Agri (+15.3%) and Lian Beng Group (+15.1%). They have averaged a YTD total return of 24.5%.

 

The FTSE ST Small Cap Index is a free float-adjusted, market capitalisation-weighted index representing the performance of small-capitalised companies, which pass size, free float and liquidity screens and trade on SGX Mainboard. The Index comprises 51 constituents with a combined market capitalisation of about S$40 billion, ranging from S$63 million to over S$2 billion. More broadly, beyond the Index are approximately 200 stocks listed on SGX that fall within this market capitalisation range.

The 10 largest capitalised constituents of the FTSE ST Small Cap Index account for more than a third of the Index’s weighting, and comprise six Real Estate Investment Trusts (REITs), two consumer stocks, one healthcare play, and one financial services provider. Given the significant Real Estate weighting in the Index – there are a total of 19 REIT constituents – it maintains a relatively high average dividend indicated yield of about 4.5%, above the benchmark Straits Times Index’s (STI) 3.9% yield.

Excluding REITs and business trusts, the Index has 32 non-REIT constituents, with dividend indicated yields ranging from below 1% to above 9%. Of these 32, 12 stocks have indicated yields of above 4%. Among the 12, the five best-yielding Index constituents are: Duty Free International (9.3%), Delong Holdings (9.2%), SIIC Environment (6.3%), UMS Holdings (6.2%), and QAF Ltd (6.0%). These five have averaged an indicated yield of 7.4%.

The table below details the 12 non-REIT constituents of the FTSE ST Small Cap Index with yields above 4.0%, sorted by dividend indicated yield.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
			
			Total Return 3Y (%)
			
			
			Div Ind Yld (%)
			
			
			P/E (x)
			
		


			DUTY FREE INTL
			
			
			5SO
			
			
			234
			
			
			3.9
			
			
			-1.6
			
			
			-34.9
			
			
			9.3
			
			
			15.6
			
		


			DELONG HOLDINGS
			
			
			BQO
			
			
			673
			
			
			-3.2
			
			
			58.3
			
			
			2074.1
			
			
			9.2
			
			
			2.0
			
		


			SIIC ENVIRONMENT
			
			
			BHK
			
			
			808
			
			
			12.7
			
			
			-26.6
			
			
			-53.5
			
			
			6.3
			
			
			7.4
			
		


			UMS HOLDINGS
			
			
			558
			
			
			392
			
			
			28.1
			
			
			-28.0
			
			
			84.0
			
			
			6.2
			
			
			9.1
			
		


			QAF LTD
			
			
			Q01
			
			
			483
			
			
			43.6
			
			
			-14.9
			
			
			-11.5
			
			
			6.0
			
			
			59.1
			
		


			BUMITAMA AGRI
			
			
			P8Z
			
			
			1,242
			
			
			15.3
			
			
			3.4
			
			
			1.0
			
			
			5.6
			
			
			11.9
			
		


			HONG LEONG FINANCE
			
			
			S41
			
			
			1,242
			
			
			9.4
			
			
			4.2
			
			
			32.1
			
			
			5.4
			
			
			10.5
			
		


			CHIP ENG SENG
			
			
			C29
			
			
			498
			
			
			20.5
			
			
			-17.1
			
			
			31.0
			
			
			5.1
			
			
			8.0
			
		


			METRO HOLDINGS
			
			
			M01
			
			
			856
			
			
			2.0
			
			
			-8.0
			
			
			19.5
			
			
			4.9
			
			
			20.1
			
		


			CHINA SUNSINE CHEMICAL
			
			
			CH8
			
			
			570
			
			
			-7.9
			
			
			-21.4
			
			
			232.1
			
			
			4.7
			
			
			4.4
			
		


			CENTURION CORP
			
			
			OU8
			
			
			366
			
			
			4.8
			
			
			-2.3
			
			
			34.9
			
			
			4.6
			
			
			4.6
			
		


			LIAN BENG GROUP
			
			
			L03
			
			
			262
			
			
			15.1
			
			
			-8.7
			
			
			27.0
			
			
			4.3
			
			
			4.6
			
		


			Average
			
			
			 
			
			
			 
			
			
			12.0
			
			
			-5.2
			
			
			203.0
			
			
			5.9
			
			
			13.1
			
		

Source: Bloomberg &amp; StockFacts (data as of 30 April 2019)

Among these 12 best-yielding stocks, the five best performers in the 2019 year-to-date were: QAF (+43.6%), UMS (+28.1%), Chip Eng Seng (+20.5%), Bumitama Agri (+15.3%) and Lian Beng Group (+15.1%). The five have averaged a YTD total return of 24.5%.

The table below details the 12 non-REIT constituents of the FTSE ST Small Cap Index with yields above 4.0%, sorted by YTD total return.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
			
			Total Return 3Y (%)
			
			
			Div Ind Yld (%)
			
			
			P/E (x)
			
		


			QAF LTD
			
			
			Q01
			
			
			483
			
			
			43.6
			
			
			-14.9
			
			
			-11.5
			
			
			6.0
			
			
			59.1
			
		


			UMS HOLDINGS
			
			
			558
			
			
			392
			
			
			28.1
			
			
			-28.0
			
			
			84.0
			
			
			6.2
			
			
			9.1
			
		


			CHIP ENG SENG
			
			
			C29
			
			
			498
			
			
			20.5
			
			
			-17.1
			
			
			31.0
			
			
			5.1
			
			
			8.0
			
		


			BUMITAMA AGRI
			
			
			P8Z
			
			
			1,242
			
			
			15.3
			
			
			3.4
			
			
			1.0
			
			
			5.6
			
			
			11.9
			
		


			LIAN BENG GROUP
			
			
			L03
			
			
			262
			
			
			15.1
			
			
			-8.7
			
			
			27.0
			
			
			4.3
			
			
			4.6
			
		


			SIIC ENVIRONMENT
			
			
			BHK
			
			
			808
			
			
			12.7
			
			
			-26.6
			
			
			-53.5
			
			
			6.3
			
			
			7.4
			
		


			HONG LEONG FINANCE
			
			
			S41
			
			
			1,242
			
			
			9.4
			
			
			4.2
			
			
			32.1
			
			
			5.4
			
			
			10.5
			
		


			CENTURION CORP
			
			
			OU8
			
			
			366
			
			
			4.8
			
			
			-2.3
			
			
			34.9
			
			
			4.6
			
			
			4.6
			
		


			DUTY FREE INTL
			
			
			5SO
			
			
			234
			
			
			3.9
			
			
			-1.6
			
			
			-34.9
			
			
			9.3
			
			
			15.6
			
		


			METRO HOLDINGS
			
			
			M01
			
			
			856
			
			
			2.0
			
			
			-8.0
			
			
			19.5
			
			
			4.9
			
			
			20.1
			
		


			DELONG HOLDINGS
			
			
			BQO
			
			
			673
			
			
			-3.2
			
			
			58.3
			
			
			2074.1
			
			
			9.2
			
			
			2.0
			
		


			CHINA SUNSINE CHEMICAL
			
			
			CH8
			
			
			570
			
			
			-7.9
			
			
			-21.4
			
			
			232.1
			
			
			4.7
			
			
			4.4
			
		


			Average
			
			
			 
			
			
			 
			
			
			12.0
			
			
			-5.2
			
			
			203.0
			
			
			5.9
			
			
			13.1
			
		

Source: Bloomberg &amp; StockFacts (data as of 30 April 2019)



Small Cap Index’s Five Best-Yielding Stocks Average 7.4% Yield      

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<ul>
<li>
In-line with the STI’s 5% gain over the first three weeks of 2019, the FTSE ST Small Cap Index has recovered one-third of its 15% decline in 2018. The Index is highly diversified, from perspectives of both sector representation and international revenues. 
	 </li>
	<li>
Regional Small Cap Indices were amongst the stock market’s least performing segments in 2018 on the rising US Dollar, trade tensions &amp; decelerating growth outlooks. This was exemplified by the FTSE Asia Pacific Small Cap Index declining 16% &amp; FTSE China A Small Cap Index declining 38%. 
	 </li>
	<li>
Two-thirds of the FTSE ST Small Cap Index constituents will be reporting their FY18 results this earnings season. Of the five constituents with the highest ROE, four generated gains in 2018, averaging a 62% total return in 2018, followed by a marginal 1% gain in the 2019 YTD. 
	 </li>
</ul>
Small Cap stocks are typically those stocks with a smaller market capitalisation than the larger capitalised stocks that make up a country’s stock market benchmark. In Singapore the average market capitalisation of the FTSE ST Small Cap Index constituents is approximately S$650 million, which compares to an average market capitalisation of S$18 billion for the 30 constituents of the Straits Times Index (“STI”).

Recent Swings of Regional Small Cap Indices 

Last year, regional Small Cap Indices declined more than the Benchmarks. For instance, the FTSE Asia Pacific Small Cap Index declined 16.0% last year compared to the FTSE Asia Pacific Index which declined 12.3%. 

<ul>
<li>In China, the FTSE China A Small Cap Index declined 38.3%, which was significantly more than the decline posted by the 50 constituent FTSE China A50 Index. The 2018 declines in the China stock market saw increased risk management activity and the SGX FTSE China A50 Index volume surged 30% on the previous year. 
	 </li>
	<li>The performance divide between the FTSE China A Small Cap Index and the FTSE China A50 Index is even greater over the three years of 2016 through to 2018 with the FTSE China A Small Cap Index declining 58.7% compared to the FTSE China A50 decline of 4.1%. 
	 </li>
	<li>In the first few weeks of 2019, the FTSE China A Small Cap Index has rebounded 6.6%, with the broader FTSE Asia Pacific Small Cap Index gaining 2.8%. As illustrated below, similar moves  have been observed in the Singapore market.</li>
</ul>
<figure>
 <img src="https://api2.sgx.com/sites/default/files/2019-01/21.PNG" alt="Index Total Returns in 2019 YTD">
 </figure>
 <div class="content-caption">Index Total Returns in 2019 YTD</div>
Regional Drivers &amp; More SME Reforms Earmarked for China

In 2018, regional stock markets were impacted by decelerating GDP growth outlooks across the region, in addition to the pace of US interest rates hikes and corresponding 4.4% gain in the US Dollar Index. Furthermore, trade tensions generated uncertainty throughout the last eight months of the year, as reflected in both regional surveys and corporate outlooks.

The combination of above saw China register GDP growth of 6.6% in 2018, down from a revised 6.8% in 2017. From a policy perspective, increased assistance to non-state owned businesses and small and medium-sized enterprises (“SMEs”) will continue to be a key priority for China policymakers in 2019.

In the week leading up to 2019, the China State Council, chaired by Premier Li Keqiang, unveiled a range of policies to support SME growth which included deeper tax cuts, improved financial services, property protection, market access and innovation support. As illustrated above, for the first three weeks of 2019 there has been greater correlation of the FTSE China A Small Cap Index and the FTSE China A50 Index than the longer timeframes of 2015 through to 2018.

 

Singapore’s FTSE ST Small Cap Index Makes a 5% Start to 2019

With a 4.9% gain, the FTSE ST Small Cap Index has recovered one-third of its 14.9% decline in 2018. The Index is highly diversified, from perspectives of both sector representation and international revenues. 

As recently reported by the Business Times (click <a href="https://www.businesstimes.com.sg/sme/bt-outlook-2019/smes-ho-hum-about-2019-outlook-more-look-to-asean-for-opportunities">here</a>), following the wait-and-see approach that was observed for much of 2018, industry watchers noted more SMEs were planning to move ahead with their overseas expansion plans in 2019, with a renewed focus on Southeast Asia.

The five strongest stocks of the FTSE ST Small Cap Index in the 2019 year through to 21 January were KrisEnergy, Geo Energy Resources, China Everbright Water, Lippo Malls Indonesia Retail Trust and QAF.

 

FTSE ST Small Cap Index Constituents with the Strongest ROE 

The majority of the 61 constituents of the FTSE ST Small Cap Index that are currently listed for trading will be reporting FY18 results this earnings season.

The five stocks of the Index maintaining the highest Return on Equity (“ROE”) for the last 12 months are Best World International, China Sunsine Chemical Holdings, Delong Holdings, Sheng Siong Group and Health Management International.

These five stocks average a 34% ROE (compared to a non-weight Index average of 9.5%). Four of these five stocks were among the six strongest stocks of the Index in 2018, with the average performance of the five stocks at 61.5% as tabled below. On the back of the comparatively strong gains in 2018, the five stocks have not kept pace with the FTSE ST Small Cap Index in the 2019 year to date, with an average gain of 1.4%.  

<table class="table table-striped"><tbody>
<tr>
<td>
			Five Constituents of FTSE ST Small Cap Index with Highest ROE
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap S$M
			</td>
			<td>
			Total Return in 2018 %
			</td>
			<td>
			Total Return in 2019 YTD %
			</td>
			<td>
			12M ROE %
			</td>
		</tr>
<tr>
<td>
			Best World International
			</td>
			<td>
			CGN
			</td>
			<td>
			1,494
			</td>
			<td>
			105.7
			</td>
			<td>
			3.4
			</td>
			<td>
			51.7
			</td>
		</tr>
<tr>
<td>
			China Sunsine Chemical Holdings
			</td>
			<td>
			CH8
			</td>
			<td>
			639
			</td>
			<td>
			42.3
			</td>
			<td>
			3.2
			</td>
			<td>
			34.8
			</td>
		</tr>
<tr>
<td>
			Delong Holdings
			</td>
			<td>
			BQO
			</td>
			<td>
			667
			</td>
			<td>
			158.4
			</td>
			<td>
			-4.1
			</td>
			<td>
			32.4
			</td>
		</tr>
<tr>
<td>
			Sheng Siong Group
			</td>
			<td>
			OV8
			</td>
			<td>
			1,669
			</td>
			<td>
			18.4
			</td>
			<td>
			4.7
			</td>
			<td>
			26.3
			</td>
		</tr>
<tr>
<td>
			Health Management International
			</td>
			<td>
			588
			</td>
			<td>
			452
			</td>
			<td>
			-17.2
			</td>
			<td>
			0.0
			</td>
			<td>
			24.6
			</td>
		</tr>
<tr>
<td>
			Average:
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			61.5
			</td>
			<td>
			1.4
			</td>
			<td>
			34.0
			</td>
		</tr>
</tbody></table>
Source: SGX StockFacts, Bloomberg and Thomson Reuters (Data as of 21 January 2019). Note the full market capitalisation of the majority of the FTSE ST Small Cap Index constituents spans approximately S$100 million to S$1 billion.

 

ROE, also known as return on net worth, measures a corporation's profitability by revealing how much earnings a business generates with the money shareholders have invested. ROE is expressed as a percentage and calculated by dividing net income against shareholder's equity, which refers to the company’s net assets, or assets minus liabilities. Typical ROEs can vary across sectors, with the general rule that a higher ROE implies the company operations are more efficient in making use of its funds. Note however, that the ratio can also gain if the value of shareholder equity falls ROE gains.
</body></html>





In-line with the STI’s 5% gain over the first three weeks of 2019, the FTSE ST Small Cap Index has recovered one-third of its 15% decline in 2018. The Index is highly diversified, from perspectives of both sector representation and international revenues.  
	 
	
Regional Small Cap Indices were amongst the stock market’s least performing segments in 2018 on the rising US Dollar, trade tensions &amp; decelerating growth outlooks. This was exemplified by the FTSE Asia Pacific Small Cap Index declining 16% &amp; FTSE China A Small Cap Index declining 38%. 
	 
	
Two-thirds of the FTSE ST Small Cap Index constituents will be reporting their FY18 results this earnings season. Of the five constituents with the highest ROE, four generated gains in 2018, averaging a 62% total return in 2018, followed by a marginal 1% gain in the 2019 YTD. 
	 

Small Cap stocks are typically those stocks with a smaller market capitalisation than the larger capitalised stocks that make up a country’s stock market benchmark. In Singapore the average market capitalisation of the FTSE ST Small Cap Index constituents is approximately S$650 million, which compares to an average market capitalisation of S$18 billion for the 30 constituents of the Straits Times Index (“STI”).

Recent Swings of Regional Small Cap Indices 

Last year, regional Small Cap Indices declined more than the Benchmarks. For instance, the FTSE Asia Pacific Small Cap Index declined 16.0% last year compared to the FTSE Asia Pacific Index which declined 12.3%. 


In China, the FTSE China A Small Cap Index declined 38.3%, which was significantly more than the decline posted by the 50 constituent FTSE China A50 Index. The 2018 declines in the China stock market saw increased risk management activity and the SGX FTSE China A50 Index volume surged 30% on the previous year. 
	 
	The performance divide between the FTSE China A Small Cap Index and the FTSE China A50 Index is even greater over the three years of 2016 through to 2018 with the FTSE China A Small Cap Index declining 58.7% compared to the FTSE China A50 decline of 4.1%. 
	 
	In the first few weeks of 2019, the FTSE China A Small Cap Index has rebounded 6.6%, with the broader FTSE Asia Pacific Small Cap Index gaining 2.8%. As illustrated below, similar moves  have been observed in the Singapore market.


      
    
    Index Total Returns in 2019 YTD
Regional Drivers &amp; More SME Reforms Earmarked for China

In 2018, regional stock markets were impacted by decelerating GDP growth outlooks across the region, in addition to the pace of US interest rates hikes and corresponding 4.4% gain in the US Dollar Index. Furthermore, trade tensions generated uncertainty throughout the last eight months of the year, as reflected in both regional surveys and corporate outlooks.

The combination of above saw China register GDP growth of 6.6% in 2018, down from a revised 6.8% in 2017. From a policy perspective, increased assistance to non-state owned businesses and small and medium-sized enterprises (“SMEs”) will continue to be a key priority for China policymakers in 2019.

In the week leading up to 2019, the China State Council, chaired by Premier Li Keqiang, unveiled a range of policies to support SME growth which included deeper tax cuts, improved financial services, property protection, market access and innovation support. As illustrated above, for the first three weeks of 2019 there has been greater correlation of the FTSE China A Small Cap Index and the FTSE China A50 Index than the longer timeframes of 2015 through to 2018.

 

Singapore’s FTSE ST Small Cap Index Makes a 5% Start to 2019

With a 4.9% gain, the FTSE ST Small Cap Index has recovered one-third of its 14.9% decline in 2018. The Index is highly diversified, from perspectives of both sector representation and international revenues. 

As recently reported by the Business Times (click here), following the wait-and-see approach that was observed for much of 2018, industry watchers noted more SMEs were planning to move ahead with their overseas expansion plans in 2019, with a renewed focus on Southeast Asia.

The five strongest stocks of the FTSE ST Small Cap Index in the 2019 year through to 21 January were KrisEnergy, Geo Energy Resources, China Everbright Water, Lippo Malls Indonesia Retail Trust and QAF.

 

FTSE ST Small Cap Index Constituents with the Strongest ROE 

The majority of the 61 constituents of the FTSE ST Small Cap Index that are currently listed for trading will be reporting FY18 results this earnings season.

The five stocks of the Index maintaining the highest Return on Equity (“ROE”) for the last 12 months are Best World International, China Sunsine Chemical Holdings, Delong Holdings, Sheng Siong Group and Health Management International.

These five stocks average a 34% ROE (compared to a non-weight Index average of 9.5%). Four of these five stocks were among the six strongest stocks of the Index in 2018, with the average performance of the five stocks at 61.5% as tabled below. On the back of the comparatively strong gains in 2018, the five stocks have not kept pace with the FTSE ST Small Cap Index in the 2019 year to date, with an average gain of 1.4%.  




			Five Constituents of FTSE ST Small Cap Index with Highest ROE
			
			
			SGX Code
			
			
			Market Cap S$M
			
			
			Total Return in 2018 %
			
			
			Total Return in 2019 YTD %
			
			
			12M ROE %
			
		


			Best World International
			
			
			CGN
			
			
			1,494
			
			
			105.7
			
			
			3.4
			
			
			51.7
			
		


			China Sunsine Chemical Holdings
			
			
			CH8
			
			
			639
			
			
			42.3
			
			
			3.2
			
			
			34.8
			
		


			Delong Holdings
			
			
			BQO
			
			
			667
			
			
			158.4
			
			
			-4.1
			
			
			32.4
			
		


			Sheng Siong Group
			
			
			OV8
			
			
			1,669
			
			
			18.4
			
			
			4.7
			
			
			26.3
			
		


			Health Management International
			
			
			588
			
			
			452
			
			
			-17.2
			
			
			0.0
			
			
			24.6
			
		


			Average:
			
			
			 
			
			
			 
			
			
			61.5
			
			
			1.4
			
			
			34.0
			
		

Source: SGX StockFacts, Bloomberg and Thomson Reuters (Data as of 21 January 2019). Note the full market capitalisation of the majority of the FTSE ST Small Cap Index constituents spans approximately S$100 million to S$1 billion.

 

ROE, also known as return on net worth, measures a corporation's profitability by revealing how much earnings a business generates with the money shareholders have invested. ROE is expressed as a percentage and calculated by dividing net income against shareholder's equity, which refers to the company’s net assets, or assets minus liabilities. Typical ROEs can vary across sectors, with the general rule that a higher ROE implies the company operations are more efficient in making use of its funds. Note however, that the ratio can also gain if the value of shareholder equity falls ROE gains.



Regional Small Cap Stocks Start 2019 on Firmer Tone 

David Blennerhassett

Best Grace Holdings (the Offeror), a wholly-owned vehicle of Ding Liguo, the Executive Chairman and CEO of Delong, has made a <a href="http://infopub.sgx.com/FileOpen/Best%20Grace%20Holdings%20Pte%20Ltd.Offer%20Announcement.ashx?App=Announcement&amp;FileID=526443" target="_blank">voluntary conditional cash offer</a> for <a href="https://www.smartkarma.com/entities/16982" target="_blank" data-smartkarma-citation="entities:16982:1">Delong Holdings (DLNG SP)</a> at $7.00/share.
The Offer Price represents a 1.9% premium to the undisturbed price and a 17.9% and 37.2% premium over the three &amp; six-month VWAP price.
Best Decade, a vehicle jointly controlled by Ding and his spouse, which holds a 75.56% position in Delong, has given an irrevocable undertaking to accept the Offer. The Offer is conditional on 90% acceptance.
In June of this year, Best Decade increased its stake to 75.56% after acquiring a 15.04% stake from <a href="https://www.smartkarma.com/entities/21926" target="_blank" data-smartkarma-citation="entities:21926:1">Evraz PLC (EVR LN)</a> at $7.42/share. Under the <a href="http://www.mas.gov.sg/~/media/resource/sic/press_releases/Consultation_of_the_Code_Response_Paper_23_Mar_2012_Annex_2.pdf" target="_blank">Singapore Code on Take-Overs and Mergers</a>, Best Grace is not obligated to offer minorities shareholder a similar price as three months have elapsed since that acquisition. 
This Offer is triggered ostensibly via a cosmetic change in the structure of the major shareholder, at a price 6% below that paid to a substantial shareholder back in June. The Code permits this. However, as the Offer is just outside the three-month period stipulated under the Code, Ding had the opportunity to exercise his fiduciary responsibility and provide minorities with a similar exit price to that afforded Evraz. And despite having increased three-fold+ in the past year, Delong remains "cheap" relative to peers.

Best Grace Holdings (the Offeror), a wholly-owned vehicle of Ding Liguo, the Executive Chairman and CEO of Delong, has made a voluntary conditional cash offer for Delong Holdings (DLNG SP) at $7.00/share.
The Offer Price represents a 1.9% premium to the undisturbed price and a 17.9% and 37.2% premium over the three &amp; six-month VWAP price.
Best Decade, a vehicle jointly controlled by Ding and his spouse, which holds a 75.56% position in Delong, has given an irrevocable undertaking to accept the Offer. The Offer is conditional on 90% acceptance.
In June of this year, Best Decade increased its stake to 75.56% after acquiring a 15.04% stake from Evraz PLC (EVR LN) at $7.42/share. Under the Singapore Code on Take-Overs and Mergers, Best Grace is not obligated to offer minorities shareholder a similar price as three months have elapsed since that acquisition. 
This Offer is triggered ostensibly via a cosmetic change in the structure of the major shareholder, at a price 6% below that paid to a substantial shareholder back in June. The Code permits this. However, as the Offer is just outside the three-month period stipulated under the Code, Ding had the opportunity to exercise his fiduciary responsibility and provide minorities with a similar exit price to that afforded Evraz. And despite having increased three-fold+ in the past year, Delong remains "cheap" relative to peers. 

Thematic (Sector/Industry)

<ul>
<li>In the 2018 YTD, the FTSE ST China Index has declined 6.6% inclusive of dividends, compared to the China’s CSI 300 Index decline of 17.1%. This brings the three year SGD total return (through to 25 Sep) of the FTSE ST China Index to 12.0% and -0.9% for the CSI 300.</li>
<li>Effective 24 September, Delong Holdings and EC World REIT have joined the FTSE ST China Index. The Index consists of FTSE ST All-Share Index constituents with at least 50% of their revenues in China, or 50% of operating assets in Mainland China.</li>
<li>In the Sep quarter-to-date, the FTSE ST China Index has generated a third of the declines of the CSI 300 Index; and has been led by Yangzijiang Shipbuilding Holdings &amp; Geo Energy Resources which have averaged 21.7% total returns since the end of June.</li>
</ul>


In the 2018 YTD, the FTSE ST China Index has declined 6.6% inclusive of dividends, compared to the China’s CSI 300 Index decline of 17.1%. This brings the three year SGD total return (through to 25 Sep) of the FTSE ST China Index to 12.0% and -0.9% for the CSI 300.
Effective 24 September, Delong Holdings and EC World REIT have joined the FTSE ST China Index. The Index consists of FTSE ST All-Share Index constituents with at least 50% of their revenues in China, or 50% of operating assets in Mainland China.
In the Sep quarter-to-date, the FTSE ST China Index has generated a third of the declines of the CSI 300 Index; and has been led by Yangzijiang Shipbuilding Holdings &amp; Geo Energy Resources which have averaged 21.7% total returns since the end of June.


Delong Hldgs & EC World REIT Join FTSE ST China Index

Singapore

Delong Holdings Limited manufactures and trades in steel. The Company specializes in the manufacture of hot-rolled mid-width steel coils. Through its subsidiary, the Group also invests in resource and other steel-related businesses.

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