Just hot off the press – Adampak has been offered to be bought over by Navis Capital at $0.42/share (Offer Price). Current market price is at $0.345. This is a premium of 21.7%. For more information, check out the SGX announcement.
Adampak has been halted from trading since 30th March 2012, pending this announcement. Trading is still halted at the time of writing. At the price of $0.42/share, the P/E ratio works out to be 17.4. This will be the highest ratio ever since FY 2005. The ratio is high due to the decrease in earnings for FY2011, mainly due to the Thailand flooding.
For most shareholders, I guess it will be a bittersweet moment as they will be unwilling to let a gem go but at the same time, cash in due to the uncertainties surrounding the HDD market.
SudhanP.com 
Adampak has consistently provide a stable & slow growing cashflow therefore from my point of view, I think its better to value the business using free cash flow. Using cash flow to value and based on the proposed price of 0.42. We will get a PE of around 10x. But I share your concern regarding the uncertainties in the HDD markets.
Hi Thomas,
Thanks for visiting my blog and for your comments!
Your view is correct. In my own analysis, I use P/FCF valuation. I used P/E in this case as that’s the ratio most of the investors will be looking at. I wanted a common valuation tool so I used the P/E ratio.
yes… lost a passive income generator….
Hi Ray,
Yeah. The frustrating part is that $0.42 is just around fair value of the business. Now, owners have to look elsewhere to deploy the cash.