Monday, August 19, 2013

Can-One/Kian Joo - privaization?


Sources say Can-One is revisiting the privatization of Kian Joo Can Factory Bhd (KJCFB) in which it has a 32% stake.

Only this time, Can-One’s advisers are looking enlisting the help of the EPF to take private. EPF currently (Aug 2013) holds 10.03% stake in Kian Joo.

Both Kian Joo and Can-One denied of any takeover plans.

To recap, Can-One financed the acquisition of Kian Joo entirely through borrowings. At that time, the loan taken was reported to have doubled the company’s borrowings to rm467 million and caused its gearing to hit a whopping 2.2 times.

The amount of dividend received from Kian Joo is just enough to cover the interest charges from the loan.


 It is easy to understand why Can-One is keen to take Kian Joo private as the latter is a dominant force in the aluminium can industry with a domestic market share of 70%.

Furthermore, the industry observers says Kain Joo’s factories in Batu Caves are ripe for redevelopment. But with only 32% equity interest currently (Aug 2013), it will be difficult for Can-One to maximize the value from Kian Joo.

Its subsidiary Box Pax Bhd is also big in corrugated cartons. Box Pax has zero gearing while Kian Joo’s gearing is only 20%.

Can-One is also keen to re examine the privatization of Kian Jooo because the latter’s profits have looked good.

Kian Joo’s borrowings as at March 31 2013 totaled rm180 million indicating that net gearing stood at 0.17 times to equity.

Its six properties in Batu Caves are worth Rm87 million in net carrying value. The properties were last re valued in 2009.

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