DBE has confirmed that it is in talks with a shareholder of CIH which includes a private placement exercise. It had plans for a private placement to raise funds for its working capital requirement. However, DBE said the talks with the CIH shareholders was at preliminary stage. As, the pricing for the proposed placement exercise have not been finalized yet.
As of Sept 30, 2011, DBE has a long-term loan of RM26.45mil and short-term loans and bank borrowings of RM24.2mil. It has RM3.26mil cash in its books.
The company looks set to finally turn around for its financial year ended Dec 31, 2012 (FY12), through the sale and leaseback of its factories and by increasing its plant utilitisation from a single shift to three shifts by the start of the second quarter of 2012.
DBE was back in the black as of the third quarter ended Sept 30, 2011. For the nine-month period, the company recorded a 70.79% drop in net profit to RM1.19mil while revenue was down 3.76% to RM100.83mil.
The company had been loss-making in the past four years due to depreciation charges of RM6mil from its assets worth about RM105mil. By embarking on the sale-and-lease exercise, it immediately free up working capital of RM50mil. This enables it to ramp up its production and also increases the bottomline by RM6mil.
In a sale-and-leaseback transaction, after a piece of property (usually a building housing business operations) is sold, the former owner leases it back from the buyer and continues occupying the property.
In 2010 DBE had undergone a series of corporate restructuring exercises, which included a capital reduction, a share premium reduction, and a rights issue.
These proposals have been fully completed on March 31, 2011 and the net impact is a significant reduction in its net gearing level from 4.5 times as at end Dec 2010 to only 0.6 times in end Sept 2011.
The group has also showed signs of a strong turnaround from a still net loss of RM2.3mil in the first quarter to net profits of RM1.3mil and RM2.2mil in the second and third quarters respectively.
Wah Seong Corporation is likely to be busy with Malaysian contracts 2013, underpinned by Petronas' RM300 billion five-year capital expenditure.
The company had been receiving inquiries for pipe-coating jobs in Malaysia , indicating potentially robust job replenishment. It may also be a direct beneficiary of Petronas' plan to replace ageing facilities; 60 per cent of Petronas' major producing oil fields in Malaysia average 26 years old. And there is also vast opportunity in the pipeline rehabilitation programme, given that c.800km pipelines are over 30 years and would need to be replaced soon.
Wah Seong was now primed to gain pipe-coating market share in Malaysia as the RM15 billion North Malay basin project might be rolled out soon given Petronas' timeline of first production by 2013.
Meanwhile, the Gulf of Mexico would be the next growth frontier for the company with the expected commissioning of its two plants in Louisiana , United States , by the second half of 2012. These plants would be operated via a joint-venture which would springboard Wah Seong's entry into the Gulf of Mexico region by leveraging on its partner’s infrastructure.
Australia would remain a key driver for the company as it would offer huge potential due to large number of liquefied natural gas projects.
Meanwhile, Wah Seong is looking for potential mergers and acquisitions to boost the contribution for its non oil and has division which is part of the initial public offering for its de-merger exercise to unlock value for the company.
Industry observers speculate on whether SingTel could at some point marry Axiata Group.
One such catalyst would be if SingTel were to divest its 35% stake in PT Telecom which at S$8.5 billion is already 4.5 times what SingTel initially paid. Putting aside any potential regulatory hurdles for now, a combination of SingTel and Axiata is not impossible sometime in the future.
In general, it could be argued that there are some merits for Axiata and Singtel to work together. However there are many considerations to take into account for this to happen. This includes the different visions and aspirations, strategic fit, operating model, existing partnerships and regulatory considerations, among others.
Several pertinent roadblocks to the hypothetical SingTel-Axiata merger such as would the Malaysian government allow Singapore or any other foreign party, to control Malaysia ’s second largest mobile operator.
More important, Temasek’s 54% stake in SingTel and the latter’s S$49 billion market cap relative to Axiata’s size as well as Khazanah’s 39% shareholding in Axiata mean that it would be Temasek and not Khazanah that would end up as the controlling shareholder of the merged entity.
Temasek’s holding in SingTel is worth four times that of Khazanah in Axiata. The foreign shareholding of Tier 1 telcos in Malaysia is capped at 49%.
Also what Axiata has is a abasket of prized regional telecommunications assets in a sector that Khazanah counts as a strategic and core holding.
Moreover, if the objective of a tie up is cost savings and operational synergies, a non equity collaboration to pool, resources could work just as well.
While Khazanah is willing to pare down some of its shareholdings and divest no core assets, but having a minority stake in a company it deems as a core holding is highly unlikely.
Even if the powers that be in Singapore and Malaysians are able to find a middle ground, there are still potential regulatory issues in India .
In putting across the SingTel Axiata merger, the complexities of executing such a merger that could results in an increased presence in 11 markets but see overlaps in four: Singapore , India , Indonesia and Bangladesh .
Questions arose whether there could be remarriage between TM and Axiata.
Industry observers reckon that in the longer term, TM could face substitution risks in retail business as even faster wireless technologies enable more compelling offerings. An integrated business could reduce this risk while allowing the merged entity to leverage its infra advantage – which is becoming a key differentiator for data.
Therefore, these could be potential merits in a remarriage. The discussions between TM and Axiata to give the latter access to the former’s high speed broadband network. It now seems that both are trying to build or add capabilities that do, in fact, make them an integrated player.
However, a reversal of the demerger, if it takes place may raise concerns about their management’s consistency.
Another observers opine that a re merger could send a message of inconsistency in strategic direction. Both TM and Axiata are doing very well on their own and had spilt not too long ago. If it is a matter of Celcom wanting access to a fixed line, a business arrangement can be made without a marriage.
That said, a re merger is really the decision of the shareholders as in the case of the de merger.
Should Axiata and TM re marry, there could once again be a risk of one business being marginalized over the other. Unless this issue can be convincingly sorted out.
Sources say it is in talks to sell a hotel in KL for about rm50 million. This is part of the parcel of the company’s asset rationalization programe. It owns hotels in Penang , Pudu and Ampang.
The sale of the hotel will not be the first for MPHB. In Dec 2011, it completed for disposal of Menara MPHB to MCA for rm375 million cash.
Following the divestment, estimated that the net gearing of MPHB to be reduce to 51% by the end of FY2011.
Apart from the building, the other assets up for sale within the group are its insurance business – Multi Purpose Insurans Bhd – as well as its stockbroking business.
MPHB has embarked on an asset disposal progrwame to reduce the debt taken to acquire the remaining 49% equity interest in numbers for NFO magnum Corp Bhd in an exercise that was announced in Feb 2011. The debt incurred to purchase the 49% block is said to be approximately rm750 million.
The bulk of the 49% block was held by CVC Capital Partners. Apart from cash, CVC Capital also ended up with a 23% stake in enlarged MPHB, which was issued at rm2.30 a share.
Magnum’s steady cash flow is expected to ultimately help MPHB to repay the borrowings it took on to make Magnum its wholly owned subsidiary again. The NFO has a steady annual cash flow of about rm300 million, which is growing.
The group also has attractive landbank, from which it can unlock value via its JV with Bdr Raya Development Bhd.
Its objective is to keep MPHB as a pure gaming play.
Apart from the land that is tied with BRDB, MPHB has 4600 acres in Johor, which fronts the sea. It has been earmarked to be developed into a deepwater petroleum terminal in a project undertaken by Dialog Bhd.
MPHB also has land in Setepak, Rawang, KL and Penang with a total net book value of rm416 million.
The group is clearly sitting on valuable landbank but its next sales could come from its stockbroking and insurance net assets. These are estimated to be worth rm360 million and rm250 million respectively.
Bakery products manufacturer is adopting a global strategy for its food business as it capitalizes on its strategic collaboration with its major shareholder Koperasi Permodalan Felda Malayasia Bhd.
Its MD Datuk Jackson Tan says the company could grow its portfolio to include other basic food products in various countries.
A transformation will certainly be a boost for its major shareholders – LTH, the single largest shareholder with a 23.34% stake and Koperasi Permodalan Felda with 13.36% stake.
Koperasi Permodalan Felda owns 51% of Felda Holdings Bhd, with the remaining 49% held by Felda Global Ventures Sdn Bhd. Felda Holdings has control over some 800000ha of plantation land – a large chunk of which it manages for settlers – on which crops such as oil palm, cocoa and sugar cane are cultivated. Felda Holdings and LTH had also set up a joint venture which owns plantation tracts in Indonesia .
In the downstream, sector, Felda Holdings which owns 71 palm oil mills, manufactures cocoa based products, including cocoa powder and butter. Meanwhile Felda Global Ventures, which is due for listing on Bursa Malaysia in 2012 has multi-crop plantations across the Americas , Asia, Australia and the Middle East .
Silver Bird’s wholly owned subsidiary had in June 2011 signed a shareholders’ agreement with several parties to establish a food manufacturing entity … KPFQ.
Under the agreement, Koperasi Permodalan Felda will be the single largest shareholder with a 60% stake in KPFQ while Silver Bird and Consortium Fresh Food Bhd will own 30% and 10% respectively.
This means Silver Bird will be able to generate a new income stream in the form of logistics fees when it distributes KPFQ’s food products.
Global expansion is seen as a key objective of the KPFQ JV. Its collaboration with Koperasi Permodalan Felda will enable Silver Bird to grow its product portfolio for the domestic and export markets.
In Malaysia , Silver Bird is expanding its bread production capacity and distribution channels. It is also planning more product launches to grow its share in the domestic premium bread markets to 30% with the next two years.
Apart from High 5 brand of sandwich bread, the company manufactures cakes, cereals, snacks and drinks.
Its financials have improved, with net profit rising 35% to rm4.93 million in FY2011 ended Oct 31.
Malaysia accounts for 97% of Silver Bird’s revenue, with the balance from its Singapore operations.
Silver Bird had cash of rm38.4 million versus debts of rm151.46 million as at Oct 31, 2011, translating into a net debt of rm113.06 million or net gearing of 0.5 times. Net assets per share stood at rm0.52.
It had announced earlier that its factory in Thailand was inundatead with 2.1 ft of water. The flood waters receded in Nov 2011. The Thai plant is a small one with just 20 computerized machining equipment compared with 1200 in its Klang factories.
As there was some available capacity on the Klang factories, Notion was able to take orders from vendors that had large, submerged factories in Thailand . It had gained five new customers, all in the HDD sector.
These customers are NHK Spring, Minebea, Nidec, Toshiba and the Seagate group through Samsung. Some of these vendors may continue to outsource some of their business to Notion, depending on their intentions to reinvest in new machines.
Meanwhile Notion is preparing to re-equip its plant in Thailand as the 30 damaged CNC machines were covered by insurance. It may take one or two more quarters before the company sees overall orders back to normal. The Thai plants of WD, its principal HDD customer resumed production in Dec 2011, but the company and its various vendors are expected to fully restore production in their plant capacities.
While Notion’ direct exposure to the Thai floods was at its relatively small plant there, the Thai plants of both of its major customers – WD and Nikon – were inundated. That caused a major disruption of orders for Notion, which is waiting for business to normailise. Notion machines precision parts for Nikon, which is expected to be back in full production in March 2012.
Business from WD and Nikon will continue to be impacted jn the first half of 2012. Businesses will be stronger in 2013 with resumption for its core customers, boosted with orders from new customers.
None of big institutional funds have stakes in MKH. The reason being is that MKH’s business portfolio includes a non-halal livestock business.
MKH is among the property companies with a fairly balanced business portfolio. It owns a sizeable landbank of 500 acres, mostly in the Kajang Sememyih area, as well as 16000 ha of oil palm estates in East Kalimantan . The plantation will be maturing in the next few years, hence providing a catalyst for the group.
PNB’s Skim Amanah Saham Bumiputera owned an 8.6% stake in MKH in 2004 but exited in 2009. But it has Public Bank Group Officers’ Retirement Benefits Fund, which held a 9.04% stake and Public Smallcap Fund with 0.81% and PCB Asset Management Sdn Bhd with a 0.42% stake as at end 2010.
Chen, together with his brothers and other family mambers own over 45% stake of MKH.
Its net asset per share as at Sept 30, 2011 stood at 2.77.
MKH had disposed of its non halal livestock farming business for rm64 million cash. MKH will utilise about rm30 million to pare down group borrowings, which stood at rm280.83 million as at Sept 30, 2011 while the remaining rm34 million will be used for working capital. The group held about rm65.8 million cash as at Sept 30, 2011.
The proceeds from the disposal will further improve its cash position for acquisition of more development land bank and plantation estates.
MKH had unbilled sales of rm405 million as at Nov 30, 2011.
MKH’s current 600 acre landbank, much of which has been converted for housing purposes, total estimated GDV is about rm4.5 billion over seven years.
However its plantations will be the catalyst for the group.
For the past three years, it has been losing money without any sign of a reversal of fortunes. Now its prospects may depend on what its new controlling shareholders have in store.
Early Dec 2011, the controlling shareholders of the property outfit exited, paving the way for new blood to come in. Despite selling the 25.3% equity interest, Wong and Eric were still directors of the company.
It is currently 24.6% owned by Bersatu Jayamaju Sdn Bhd. Bersatu controlling shareholder is Moo Hean Chong. Moo and Eng Kim Leng were appointed director on the private company. Both were appointed directors of Bina Goodyear.
It is not known whether there will be other changes at Bina Goodyear with Bersatu emerging as the largest shareholder. Eng is well known in the property circles. He was previously the COO of Naza TTDI Sdn Bhd and had served under Datuk Johan, the developer’s former MD. He also had a stint with Farlime Group where he was the GM.
Initially it was reported that with Eng’s presence, speculation that Bina Goodyear could possibly be a vehicle for Naza TTDI. But this was denied by parties close to the Naza Group.
As for Moo, ge was experience in the construction, property development and mining sectors. Moo is also understood to be on the board of Australian lied Coal FE Resources Ltd, a company with coal explorations and production projects in Indonesia .
So what the new controlling shareholders of Bina Goodyear plan to do is anyone’s guess. However, Bina’s ailing fortunes could prove difficult to change without an injection of fresh capital or asset.
It has been three years since Bina Goodyear posted profits due to costs incurred completed contracts.
As end Sept 2010, it had net assets per share of rm1.27. Cash and bank balances amounted to rm4.6 million, while short term liabilities came to rm32 million and long term debt commitments stood at rm478000.
The company’s assets include a plant and machinery workshop in Klang, valued at rm1.15 million in 1996.
Hoyt Yung has about 6.37% equity interest and is the only other substantial shareholder apart from Bersatu.
News said Naxis capital already announced to buy over 54.6% shares from XiDeLang major shareholder, HongPeng International Holdings. I am thinking whether XiDeLang boss is willing to sell over his shares or not? If I am him, I will not sell this business at a offer price just 2 to 3 times of an annual earning income.
XiDeLang latest quarter report showed EPS is 5.45 cents and it has 89 million net cash on hand with 440 million shares, which equal to 20cents cash per share. NTA also has 72 cents.
Now the share price is trading at 40 cents, so how much you will sell this company if you are the boss of XiDeLang?
Please note take writer has certain portion of shares in XiDeLang.
Disclaimer:
Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.
