Bullish share price of HTL International not due to manipulation

SINGAPORE - HTL International has nothing to hide amid the repeated queries on share price movement by the Singapore Exchange in recent months, an insider at the furniture and sofa firm told The Straits Times on Friday.

Instead, the company share prices are on a bullish run due likely to the frequent announcements surrounding an ongoing deal that may see HTL being bought out by a Chinese firm, said company senior manager Phua Bo Wen, who is the son of chief executive and managing director Phua Yong Tat.

The Phua household founded HTL International in the 1970s and remain the controlling shareholders of the company.

In October last year, it was revealed that Guangdong Yihua Timber Industry in China had started talks to acquire HTL International. The offer price was finalised at S$1 a share, but both parties are still in the process of fulfilling the deal's pre-conditions, such as getting regulatory approvals in China.

"Both Guangdong Yihua and HTL have made announcements every time there is progress in the process, and that may have stoked the speculative interest in the shares. It would not be difficult for the share price to spike up given how thinly traded it was prior to the deal announcement," Mr Phua said during an interview on Friday (May 6).

Also, the current share price is still below the S$1 offer price, so it shouldn't be surprising that it's still trending up ahead of the deal."

HTL International shares have put on some 250 per cent since late October to 85 cents at last close, despite 10 per cent slide to the Straits Times Index in the period. In response, the SGX has issued three queries over the past five months.

"There is absolutely no element of internal manipulation involved. Both Guangdong Yihua and us have not traded HTL shares since the deal was announced. The SGX is also satisfied with the info we provided," Mr Phua stressed.

Meanwhile, the acquisition by Guangdong Yihua does not mean that the Phuas plan to cash out and abandon the business.

"We found the offer attractive because it was four times more than our share price then. But the Phuas will remain at the company, just as the HTL brand will remain. We are not going anywhere."

Part of that commitment was reflected in the opening of a flagship store at Mohamed Sultan Road in March this year.

This came as HTL International endured a choppy year in 2015 when revenue dropped 9.1 per cent to US$454.9 million (S$617.49 million) and the company was hit by a net loss of US$1.6 million.

The outlook will remain uneven, but it's not all doom and gloom this year.

Mr Phua said: "What is beneficial for us is the drop in the cost of leather in China and the Chinese yuan. This will help our margin because our manufacturing is entirely based in the country… Our expectation is that this year the business conditions will be better than last year."

HTL International will report its first quarter results next Thursday (May 12).

whwong@sph.com.sg