Market reactions to the company announcements

[capcheong]

Background

I bought Hwa Hong at price 0.59 cts per share in mid Nov without doing any homework, purely was attracted to the attractive dividend, 12 cts per share.

The next day, when I checked, the price had dropped 23%, closed at 0.455 cts. I was a little bit panic, but in the end, I chose to hold it. It's been quite stable at price 0.40-0.45 cts for the past few weeks.

Last Friday, Hwa Hong halted its trading. I panicked again.

There is an announcement - MISCELLANEOUS :: ANNOUNCEMENT OF MEMORANDUM OF UNDERSTANDING IN RELATION TO THE POTENTIAL DIVESTMENT OF TENET INSURANCE COMPANY LTD

Frankly speaking, as a newbie, after reading the announcement, I can't really evaluate this piece of news. I have a lot of questions as I am unfamiliar with the financial jargons and at the same time I am more interested in the stock market reactions to this kind of news.

1) How will market react to this kind of news?
2) Why is there no actual buyer mentioned?
3) How long will it take for the whole negotiation and selling process?
4) What is due diligence?
5) What if the negotiation failed?

I think I still panic over the 23% price dropped on the first day of XD.

I sincerely appreciate it if anyone can share with me his/her experiences.
Thanks in advance.

[capcheong]

Dennis's summarised the announcement in layman term:
Hwa Hong is in negotiation to sell investment Tenet Insurance for S$95 million, carried in its book at only S$52 million.

Why is there no actual buyer mentioned? Could it be a bubble?

Usually how long will it take for the whole negotiation and selling process?

What if the negotiation failed?

I believe the company will notify us if there is any updates on this, am I right?

[Dennis Ng]

Background

I bought Hwa Hong at price 0.59 cts per share in mid Nov without doing any homework, purely was attracted to the attractive dividend, 12 cts per share.

The next day, when I checked, the price had dropped 23%, closed at 0.455 cts. I was a little bit panic, but in the end, I chose to hold it. It's been quite stable at price 0.40-0.45 cts for the past few weeks.

Last Friday, Hwa Hong halted its trading. I panicked again.

There is an announcement - MISCELLANEOUS :: ANNOUNCEMENT OF MEMORANDUM OF UNDERSTANDING IN RELATION TO THE POTENTIAL DIVESTMENT OF TENET INSURANCE COMPANY LTD

Frankly speaking, as a newbie, after reading the announcement, I can't really evaluate this piece of news. I have a lot of questions as I am unfamiliar with the financial jargons and at the same time I am more interested in the stock market reactions to this kind of news.

1) How will market react to this kind of news?
2) Why is there no actual buyer mentioned?
3) How long will it take for the whole negotiation and selling process?
4) What is due diligence?
5) What if the negotiation failed?

I think I still panic over the 23% price dropped on the first day of XD.

I sincerely appreciate it if anyone can share with me his/her experiences.
Thanks in advance.

Basically, Hwa Hong is in negotiation to sell investment Tenet Insurance for S$95 million, carried in its book at only S$52 million. If successfully sold, Hwa Hong will make gains of S$43 million.

[Dennis Ng]

Dennis's summarised the announcement in layman term:
Hwa Hong is in negotiation to sell investment Tenet Insurance for S$95 million, carried in its book at only S$52 million.

Why is there no actual buyer mentioned? Could it be a bubble?

Usually how long will it take for the whole negotiation and selling process?

What if the negotiation failed?

I believe the company will notify us if there is any updates on this, am I right?

Well, I think the buyer is now doing some due diligence on Tenet Insurance, which is typical. And buyer would only confirm buying if the due diligence is satisfactory.

Thus, it is not unusual that the buyer like to keep its identity confidential at this moment as the deal might not go through.

Whatever you feel, your thoughts, write them down as these are all very good reference in the future, when the results are out and you look back at this incident.

[capcheong]

The price closed at 0.515. Quite positive.

[Dennis Ng]

The price closed at 0.515. Quite positive.

Expected actually. Remember I mentioned that the price would jump up from previous close of S$0.44? S$0.515 is a jump of 17%, plus 12 cents dividends, you're now "above water" since you bought at S$0.59 when the stock was CD.

However, do take note not to buy any stock without doing homework in future, it is not a good reason to buy becos the stock gives special dividend of 12 cents.

[capcheong]

Yes, I will always remember this - my first real life experience in stock market. =)

[Dennis Ng]

Yes, I will always remember this - my first real life experience in stock market. =)

yes, pen down notes on your experience, what you learned from this experience, your feelings at different points in time; all these will provide good reference in future when you look back.