Why SG exit offer on Expolanka Holdings is the best option

Tuesday, 5 March 2024 00:55 - - {{hitsCtrl.values.hits}}

As trading is suspended on EXPO.N, and lawful to comment on each one’s personal stance on their delisting from CSE at a price of Rs. 185, I would be sharing my opinion on the delisting offer.

This is the first time I’m coming out publicly on my stance on what some of us “majority secondary shareholders” have decided to do with the delisting offer. (What each person or fund does is their own decision and risk).

We will be giving out our EXPO blocks at Rs. 185.

Given the current market confidence and macro-economic situation, we feel this is the best option as EXPO has not even crossed Rs. 185 in the past 1 year. So in the best interest, we will sell to SG Holdings and re-invest some of those funds back in other equity stocks. Some of us have an average cost of Rs. 6 per share as of 2 March 2024, some at Rs. 227 and some at Rs. 310.

We have witnessed many delisting offers and “if” the share commences trading, it has always plunged in my 17 years of experience.

SG Holdings will be bringing in nearly $ 200 million for the balance acquisition of shares which is unconditional to Sri Lanka unlike IMF offering $ 200 million and asking the citizens to take on more taxes and pain.

Best is to initially judge who is making the offer? Is it a legitimate organisation? Has any reputed Japanese corporation proven to be unethical in their business practices? Will they haphazardly make an offer without any consideration towards shareholders? No! Even though the BOD meeting took place on 1 March 2024, the CEO of EXPO had to fly into Japan to meet SG one week before to make sure we, the secondary shareholders, got a fair offer. He has tirelessly worked for this offer.

If the USD buying rate closes below Rs. 300 on 31 March 2024, all export companies including EXPO will have to report larger losses on C. Income/profit.

At that time, we will not even be able to justify the share at Rs. 185? Who will pay us Rs. 185 for a dollar balance sheet like EXPO if the LKR strengthens? The PE ratio will be in an unjustifiable stage.

After 31 March 2024, can any broker justify to their clients to buy or hold EXPO after the above scenario takes place? Will anyone want to buy a share trading over PE 50-70x or negative?

So let’s think at this stage,

1. What’s best for us

2. Haven’t we made profits on EXPO during COVID and now demanding a bit too much from the de-list offer?

3. Isn’t this money better off in another asset class where we could start covering losses?

4. At least if half of the proceeds come back into CSE after delisting, wouldn’t it help the deserving counters trade at its deserving price?

5. At this crucial economic downturn, who is going to give our country c. $ 200 million?

When margin providers force us to sell our other shares and broker firms that have no option but to sell to recover their dues, without batting an eyelid, we give in.

So when SGH makes a delisting offer, are we taking kindness for granted?

They could’ve easily started buying from the board from Rs. 120 to Rs. 140, but they are an ethical and transparent company with good moral values.

SG is not a company that will come out with many offers. It’s a one-time offer as per their SOP which they follow to the dot.

Aslam Deen

WealthArray Investors