While many industries suffer amid the Covid-19 induced downturn, the global tech industry seems to be enjoying a strong lift, as demand for digital services, as well as computing and networking equipment stays strong. Beyond the pandemic, entire industries are moving at their own pace as they try out ways and means to undergo their own digital transformation journeys.

Singapore may not have a global tech name to call its own, but the strong external demand seems to be sparking off a flurry of investment and deal-making activities by some smart money, all taking place within the broader tech manufacturing sector. After all, without the components and moulds produced by these upstream suppliers, there can be no end products to speak of.

“We are positive on the outlook for the tech sector in 2021,” notes CGS-CIMB analyst William Tng. “The Covid-19 pandemic has accelerated the digitalisation of many work processes, leading to higher demand for IT-related infrastructure,” says Tng in his Jan 4 report, “Tech is hot again”.

The most visible sign of interest in this sector was the IPO of Nanofilm Technologies International, which provides coating services using its proprietary capabilities to top tier electronics names. In fewer than three months after the listing at $2.59, at least three brokerages have issued increasingly bullish calls on this stock — the most recent was Credit Suisse which on Jan 20 calls a target price of $6.00. Nanofilm closed at $5.19 on Jan 21, double its IPO price, valuing the company at $3.43 billion.

Company insiders, presumably, have a good sense of the prospects and are making their moves accordingly. On Dec 18, Hi-P International’s chairman Yao Hsiao Tung and his wife Wong Huey Fang, who already control 83.5% of the company, made a $2 per share offer to buy out the remaining shareholders.


On Jan 18, control of Fu Yu Corp changed hands, when a variable capital company managed by fund manager Pilgrim Partners bought out the bulk of the shares held by three co-founders of the precision engineering firm.

The VCC, 85% held by one Wang Shao Ren, paid $58.3 million, or 26 cents per share, for a 29.8% stake — just a shade below the general offer trigger of 30%. Fu Yu’s CEO, Hew Lien Lee is staying put, even though he sold 0.55% of his direct stake of 1.08% as part of the transaction.

However, Ching Heng Yang, who is Fu Yu Corp’s vice chairman and executive director, together with his two co-founders cum executive directors, Tam Wai and Ho Nee Kit, have resigned with effect on Jan 18.

Last March, at the darkest days of the market crash, Fu Yu traded as low as 19 cents. Since then, it has quickly recovered to close at 28.5 cents on Jan 21, as investors pile back in with the anticipation that the debt-free company, backed by a strong net cash balance of $97.8 million, will continue to pay attractive dividends even as it suffers from a temporary blip in its earnings.

Novo Tellus

Another string of interesting deals in this sector involves Novo Tellus Capital Partners, a local investment firm with a stated focus on the industrial technology sector of southeast Asia. The firm, headed by Loke Wai San, better known as chairman of AEM Holdings, reportedly has funding from a certain sovereign wealth fund.

On Jan 11, AEM, which has been riding on the semiconductor upcycle, announced an offer of $1.15 per share to take over CEI, a listed printed circuit board (PCB) assembly contract manufacturer, valuing the target at $99.7 million.

According to AEM, there are synergistic benefits of owning CEI. For one, CEI’s PCB assembly capabilities will enable AEM to have improved vertical integration with a higher level of control towards quality and agility over the entire supply chain.

By owning CEI, AEM believes it can beef up the resilience of its supply chain and manufacturing operations, given the geo-political tensions, adding that there are also cross-selling opportunities.

Separately, Novo Tellus, is also investing $23.6 million for a 23.45% stake in another Singapore-listed company, Grand Venture Technology (GVT), by taking up 71.5 million new shares at 33 cents each. This deal was announced on Jan 12. According to GVT, which provides manufacturing services to customers in the semiconductor and analytical life sciences sectors, the bulk of the new capital from Novo Tellus will be used for possible M&As, although it did not specify any targets.

Novo Tellus, which is best known for its investment in AEM Holdings around a decade ago, has apparently been sizing up deals constantly. In Feb 2019, Novo Tellus invested around $5.4 million for a 6.84% stake in yet another listed company, ISDN Holdings, which focuses on industrial automation solutions. The investment was made via a subscription of new ISDN shares at 20 cents each. Keith Toh, a partner at Novo Tellus, was given a seat at ISDN’s board.

“ISDN has kept a low profile in the public market while patiently building its core automation business and developing its emerging energy business. We believe investors will increasingly see the results of the company’s patient strategy in the coming years,” said Toh back then. It didn’t take too long for ISDN investors to see some handsome returns. On Jan 21, ISDN closed at 72.5 cents, up 262.5% from the 20 cents Novo Tellus paid.


With the prospects of this whole sector looking up, there will be more investors joining the fray, and not let the company insiders have all the fun to themselves. For one, Novo Tellus’ joint offer for Sunningdale Tech in concert with the company’s chairman, Koh Boon Hwee, has been met with loud protests from other investors.

Activist investor Quarz Capital Management, which is managing funds holding 8.284% of Sunningdale as at Jan 19, said in a Jan 14 open letter that the proposed takeover price of $1.55, announced on Nov 9, was “too low” and “significantly undervalues” the company. This price, after all, is at a significant discount of more than 22% to Sunningdale’s book value of close to $2 per share. Over the last 10 years, Sunningdale traded at an average of just 0.6 times book value, and over the last two years, with a slightly improved level of 0.64 times.

In addition, it was pointed out that Loke sat on Sunningdale’s board as an independent director, and was only re-designated to a non-independent director after the offer was made.

On Jan 19, the offerors made a revised and final offer of $1.65 per scheme share, or 1,650 shares in Sunrise Tech (holding company of the offeror) per scheme share. The $1.65 offer price implies a price-to-book value of 0.83 times. It also represents a 42.6% premium over the volume-weighted average price of Sunningdale shares from Sept 9, 2019, to Sept 9, 2020.

The revised offer provides a premium greater than any closing price of Sunningdale’s shares in the 12-month period prior to and including Sept 9, 2020 — the date the company announced a possible transaction involving its shares.

The offerors note that this “is the only offer available to date for Scheme Shareholders to consider and it provides Scheme Shareholders with the opportunity to achieve a full exit of their investment for cash at a premium to trading value”.

“In the past, the low historical trading volume in the Sunningdale shares may have presented larger Sunningdale shareholders with difficulty in exiting a full position at trading value,” the offerors add.

An earlier version of the story put Nanofilm's target price by Credit Suisse at $6.24. The correct target price is $6.00.