Wong Fong Industries Sells Tuas Property for S\$9.5 Million: Major Cash Boost and Potential Share Price Catalyst

Key Highlights of the Deal

• Property Disposal: Wong Fong Industries Limited (SGX: 1A1) is selling its wholly-owned subsidiary’s property at 16 Tuas Avenue 6, Singapore, for S\$9.5 million to R&S Engineering Works Pte. Ltd.
• Substantial Gain on Disposal: The book value of the property is S\$3.5 million, so the company expects a gain of approximately S\$6.0 million from the sale.
• Market Valuation: The property was independently valued at S\$10.0 million in February 2025, making the sale price slightly below valuation but still delivering a significant profit given the book value.
• Proceeds Utilisation: Net proceeds of about S\$9.4 million (after expenses) will be used for general working capital, including repayment of existing loans and liabilities—expected to strengthen the Group’s liquidity.
• Shareholder Approval Not Required: The transaction constitutes a disclosable transaction under SGX Catalist rules, but does not require shareholder approval.
• Potential Share Price Impact: The disposal will significantly improve FY2024 earnings per share from S\$0.0154 to S\$0.0406 and provide a substantial liquidity boost.

Detailed Breakdown of the Transaction

On 14 August 2025, Wong Fong Engineering Works (1988) Pte Ltd (WFE), a wholly-owned subsidiary of Wong Fong Industries, granted an option to R&S Engineering Works Pte. Ltd. to purchase its factory property at 16 Tuas Avenue 6 for S\$9.5 million. WFE received an option fee of S\$95,000, and the option remains valid until the earlier of either 16 weeks from the grant date or five business days after JTC Corporation’s in-principle approval. If the option is not exercised by then, the fee is forfeited.

The property is a 60-year leasehold (from 1 May 1992) and spans approximately 5,454 square feet. The sale is subject to approval from JTC Corporation and relevant authorities for the buyer’s proposed use (service and repair of commercial vehicles), including compliance with any environmental or decontamination requirements.

The buyer, R&S Engineering Works, is engaged in mechanical engineering, machinery installation, and vehicle repair. Notably, one of the buyer’s shareholders holds a 2.5% stake in Wong Fong Investments Pte Ltd, a controlling shareholder of Wong Fong Industries. However, no directors or other major shareholders are deemed interested in the deal.

Financial Impact Analysis

• Net Tangible Assets (NTA): The transaction will reduce NTA per share from S\$0.2410 to S\$0.2258 (based on FY2024 figures).
• Earnings Per Share (EPS): Assuming the disposal was completed on 1 January 2024, EPS for FY2024 would jump from S\$0.0154 to S\$0.0406—more than doubling reported earnings.
• Market Capitalisation: The sale represents about 21.6% of the company’s market cap (S\$43.9 million, based on recent trading prices), making it a material event for the company.
• Liquidity and Debt: Management intends to use the proceeds to bolster working capital and pay down debt, strengthening Wong Fong’s balance sheet and liquidity position.

Why This Matters for Shareholders and Investors

This transaction is highly price sensitive and could move Wong Fong’s share price. The significant gain on disposal, large cash inflow, and expected boost in earnings per share are all positive developments. The company’s increased liquidity may allow for greater flexibility, possible debt reduction, and potentially even future dividends or reinvestments into core business operations.

Investors should also note that while the property is being sold below its latest appraised market value (S\$10.0 million vs. S\$9.5 million sale price), the difference is relatively minor compared to the book value, ensuring a strong accounting gain. The transaction is not subject to shareholder approval and is expected to close following regulatory clearances, particularly from JTC and environmental authorities.

Caution: The deal’s completion is subject to regulatory and environmental approvals, and if these are delayed or not obtained, the transaction may not be completed as planned.

What Investors Should Watch Next

1. Updates from Wong Fong on regulatory approvals, completion timeline, and actual use of proceeds.
2. Potential changes in the company’s debt levels or announcements regarding dividends or new investments following the cash inflow.
3. Any market movement in Wong Fong’s share price in reaction to this news, given the material improvement in EPS and liquidity.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult financial professionals before making investment decisions.

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