Libra Group has entered into a conditional sale and purchase agreement to acquire 100% stake or 1.5m ordinary shares of Cyber Builders Pte Ltd at a consideration of ~S$1m. The acquisition shall be fully satisfied by the issuance and allotment of 4.5m new ordinary shares at an issue price of S$0.22/consideration share.

Cyber Builders is primarily engaged in building construction activities as a general contractor with BCA main contractor grading of C1, which allows them to tender for public sector projects up to S$4.2 million. Despite Cyber Builders’ net loss position in FY14, the company holds the potential upgrade to BCA main contractor grading of B1 by early 2016, which gives a tender contract limit of S$42m.

Libra also believes the acquisition would be complementary and synergistic to the Group’s existing building construction business. Maintain BUY with a fair value estimate of S$0.37.

Source: OCBC Research - 17 Mar 2015