The share price of Osotspa Public Company Limited (SET: OSP) dropped 8.5% in early trading session on Monday to THB20.50 per share after the announcement to divest in Myanmar Golden Eagle Co., Ltd. (MGE) and Myanmar Golden Glass Co., Ltd. (MGG) that would lead to a one-time loss of around 600 million baht.
OSP reported Friday that at the special Board of Directors meeting on August 30, 2024, a resolution was passed to divest investment in Myanmar Golden Eagle Co., Ltd. (“MGE”) and Myanmar Golden Glass Co., Ltd. (“MGG”) (collectively referred to as the “MGE Group”), which are joint venture companies in which the company’s subsidiary has an ownership interest of 35.00% and 51.84% respectively.
The MGE Group provides OEM glass bottle manufacturing and distribution services in Myanmar. The company’s subsidiary successfully signed the Condition Precedents Share Purchase Agreement on August 30, 2024.
Meanwhile, the remaining investment value is approximately 136 million Baht, and the company’s wholly-owned subsidiary has guaranteed loans for the MGE Group amounting to approximately 35.8 million US dollars and 15,558 million Myanmar Kyat.
OSP noted that the divestment in the MGE Group, a joint venture company, aligns with the business restructuring strategy focused on building strength and expanding growth in core businesses and divest non-core businesses including those with minority interests or no control.
This divestment will not affect the company’s beverage operations in Myanmar, the operations of core businesses, operational assets, or the liquidity of the Osotspa Group. The company remains committed to continuously enhancing revenue generation and increasing profit margins from core businesses to create long-term value for shareholders in line with the long-term strategic plan and Osotspa’s 5-year growth ambition.
Kasikorn Securities (KS) expected the company to book this one-off item in the 3Q24 financial results around 600 million baht. KS maintained a ‘Buy’ recommendation on OSP at the target price of THB30.90 per share, but advised investors to take the profit now as the third quarter is typically a low season in sales along with this one-off item.
At the analyst meeting, the management noted that the one-time loss will conclude in 2024 with no further realization in 2025. Thus, KS saw no downside risks to OSP in 2025-26.
