Straits Trading: Round 2. Fight!

CIMB-GK has been appointed as the independent financial adviser to the directors of
The Straits Trading Company Limited (STCL).

Here are some of the interesting highlights from their letter to the Independent
Directors of STCL.

STCL has four distinct core buseinsses comprising:
(a) Tin mining and smelting;
(b) Hotel operations;
(c) Property operations; and
(d) Securities trading and investment holding.

Using the SOP valuation analysis, CIMB-GK values STCL between $6.09 to $7.27 per
share.

The summary of the valuation as follows:

Tin mining and smelting $118m - $212.2m
Hotel operations $66m - $274.8m
Property operations $1064.1m
Investment in UE $66.3m - $115.5m
Investment in WBL $81.5m - $116.4m
Remaining investment portfolio $316.6m
Other net tangible assets $270.7 m

Total - $1983.2m - $2370.3m

At $7.27 per share, it is perhaps a highly optimisstic target. Interestingly, the Lee
family has raised the stakes in the fight for STCL. At $6.55, it would be interesting
to see how The Cairns would react. MYOB knows little about The Cairns or the
directors, mainly Ms Chew Gek Khim. However, it is worth noting that Tecity recently
gave an irrevocable undertaking to sell its stake in Robinson to Al-Futtaim. The
significance of this move could be related to OCBC and GE 'selling out' Robinson to
the Lippo Group.

In any case, MYOB thinks that there is a chance for a final bid by The Cairns.

Looking at a recent similar event, shares in OUE were privatised at $10.20 each by
the Lippo group (them again!) and Ananda Krishnan in May 06. Disregarding the
dividents, OUE's last traded price is $15.40. So even in the event that both the
offerers fail, STCL should have generated enough interest. Lastly, Ms Teh of BT have
done a comparison of privatisation offers and concluded that cash deals triumph share
deals.

What MYOB likes:
- Cash offer
- Quality of STCL
- Strong investors
- Attachment to STCL

Make it your business? Just hang in there.. the show just started!