A ray of hope in Nico Steel

I hate to admit that Nico steel was a bad call. Even though I emphasized on only putting small amounts of extra gambling funds in it, still the drop in share price had made many lost money. I now realised the toxicity of convertible bonds can do to share price for a company especially when the company was desperate for cash flow. This will be a lesson to me so I decide to mark it down in my blog as well.

Ok, let me now take us to a brighter side of things. Nico recently had announced potential MOU with a China Fund House - Jiangsu Kaixinfenxiang Green Finance co. Ltd. To me, news like this is often a pretext for company to find investors for its equity. I would totally disregard such news. However, something interesting was happening at the same time, I wondered if really there could be a ray of hope for this stock Nico Steel.

Nico steel's outstanding shares had diluted from 600Mil to over 2 Bil in the past few months. Company still has market value of about 4Mil. Looking into the company financials, it was really not as bad as what it seemed. Company is still cheap for 4Mil market cap. This is because it would cost as much as 4Mil for a private company to get listed on SGX mainboard. So, it would make sense for any private company to just spend a little extra to acquire a public listed firm and do a RTO.

The recent share buying activities by two China individuals and CEO himself suggested to me that there could be a three way fights over control of Nico Steel. if this is real, it would not take long to see market interest coming in to the stock and price appreciation to follow. I hope for the best to those who still own the stock and hope something beautiful can come out of it.

CEO Danny Tan purchased 450Mil shares last two days. This still put him the largest shareholders with over 20% stake. To gain control, Lei Xu need to get over 30% stakes or another 700Mil more shares by estimates.