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Capital: Lead Story: Substantial paper losses after GE14

TheEdge Mon, Jun 18, 2018 02:00pm - 1 year ago


AFTER Pakatan Harapan won the 14th general election, a number of businessmen with ties to the previous government were impacted directly. Many of these high-flying tycoons suffered substantial paper losses after the market reopened on May 14.

For some, the losses may be just a drop in the ocean compared with their overall wealth, much of which may not be in the stock market. However, others may have suffered more. We look at how several well-connected businessmen have fared.

Tan Sri Tan Kay Hock

Tan Sri Tan Kay Hock, who controls George Kent (M) Bhd with a 42.21% equity interest, has seen paper losses of RM668.1 million.

On the eve of GE14, George Kent closed at RM3.94, giving it a market capitalisation of RM3.17 billion and valuing Tan’s holding at RM1.34 billion. However, the holding shrank 71% from RM936.77 million on May 8 to RM268.67 million on May 30. The fall in the share price more than halved George Kent’s market capitalisation to RM636.53 million.

According to latest Bursa  Malaysia filings, Tan directly holds 26.89 million shares or a 4.773% stake in George Kent and indirectly controls 210.86 million shares or a 37.425% stake via Star Wealth Investment Ltd, Puan Sri Tan Swee Bee, Johan Equities Sdn Bhd and several nominee accounts.

During Datuk Seri Najib Razak’s tenure as prime minister, Tan turned George Kent, a water meter manufacturer, into an infrastructure building firm. The company was once considered a proxy for investors who wanted to gain exposure to the country’s infrastructure-building activities.

On May 14, however, the counter fell 29.9% to RM2.76 as it was reported that the new government would review some mega infrastructure projects.

The share price continued to fall over the next couple of weeks before settling at a 21-month low of RM1.28 on May 30 when the government announced the scrapping of the third mass rapid transit line project, in which George Kent — along with its joint-venture partners — was seen as a leading contender for the job.

A consortium that it was a part of was also bidding for the Kuala Lumpur-Singapore high-speed rail project, which has also been shelved. — By Ahmad Naqib Idris

 

Wong Thean Soon

Wong Thean Soon, whose fleet of sports cars is the envy of many, is probably one of the biggest losers.

He is the single largest shareholder of MyEG Services Bhd and Excel Force MSC Bhd. The decline in the two counters prompted Bursa to suspend their short-selling, along with two others, on May 15.

The value of Wong’s stake in MyEG had shrunk as much as RM2.74 billion as at June 4, as RM6.73 billion had been wiped out from the company’s market capitalisation.

MyEG, which had a monopoly on the provision of e-government services, saw its share price drop as much as 73.44% from RM2.58 on May 8 to an almost four-year low of 68.5 sen on June 4. The stock ended at 85.5 sen last Friday, giving the company a market capitalisation of RM3.04 billion.

Based on the latest Bursa filings, the managing director has 40.746% equity interest in MyEG — via a direct interest of 8.6% and indirect or deemed interest of 32.123%.

Meanwhile, the 64.6% drop in Excel Force’s share price to 35 sen on May 30 from 99 sen on May 8 translates into a RM62.59 million decline in the value of Wong’s 23.59% stake. The stock managed to recoup some of its losses to close at 51 sen last Friday. — By Ahmad Naqib Idris
 

Datuk Dr Siew Ka Wei

Ancom Bhd chairman Datuk Dr Siew Ka Wei, who is regarded as a close associate of Najib, even before the latter became prime minister, seems to have had a lucky escape. He lost only RM2.22 million following the decline in Ancom’s share price. He holds a 20.67% stake.

Siew was group managing director before he became executive chairman, taking over from non-executive chairman Datuk Ahmad Johari Abdul Razak, Najib’s brother. Siew is also chairman of Tourism Malaysia.

Ancom’s decline of about 9.4% — from 53 sen on May 8 to a two-month low of 48 sen on May 30 — was not as bad as other counters’. The decline erased about RM10.76 million in its market capitalisation. Siew had been mopping up shares since early May, increasing his stake to 44.49 million shares, or 20.678%, as at June 4.

Siew has holdings in other listed entities, including Nylex Malaysia Bhd, Ancom Logistics Bhd (both subsidiaries of Ancom) and Kumpulan Jetson Bhd, but these counters were not significantly affected by the outcome of the general election.

Ancom has almost rebounded to pre-election levels, closing at 50.5 sen last Friday. — By Ahmad Naqib Idris
 

Tan Sri Bustari Yusuf

Little-known Sarawak businessman Tan Sri Bustari Yusuf lost at least RM27.4 million in a fortnight after the general election. However, some describe the amount as just a drop in the ocean compared with his vast wealth.

While his wealth is difficult to gauge, one indicator is his flagship company Petra Energy Bhd, in which he holds a 27.54% stake via Shorefield Resources Bhd. Bustari’s brother, Ahmadi Yusuf, is an executive director while his son, Mohamad Subky Bustari, is CEO of a Petra Energy subsidiary.

Bustari is said to be a close adviser to Najib. Another brother, Datuk Fadillah Yusuf, is Petra Jaya MP and was works minister in the previous government.

Another notable shareholder is Najib’s brother, Datuk Mohamed Nizam Abdul Razak, who is also a board member.

On May 8, Petra Energy closed at 62.5 sen, giving the oil and gas outfit a market capitalisation of RM200.59 million.

The historic change in government saw the counter tumble as the market reopened on May 14. Over the following two weeks, the stock shed about half its market value.

By May 31, the counter had fallen 49.6% to hit a five-year low of 31.5 sen, giving it a market capitalisation of RM101.1 million.

It is worth noting that Lebuhraya Borneo Utara Sdn Bhd — the project delivery partner of the Pan-Borneo Highway project in Sarawak — is seen as linked to Bustari, although the man himself does not surface in the project.

Following the election, media-shy Bustari disappeared from public view, although Fadillah says his brother is still in the country. — By Khairie Hisyam
 

Datuk Rozabil Abdul Rahman

Datuk Rozabil Abdul Rahman, group managing director of Destini Bhd, lost just under half of his shareholding value when the company’s shares were traded on May 14, the first trading day after the general election. The Perlis Umno treasurer is the single largest shareholder with about a 25% stake.

Destini plunged 40.7% to close at 25.5 sen on May 14, with about RM202.17 million in market capitalisation wiped out.

Rozabil’s personal holding would have been reduced by about RM50.54 million.

Destini eventually fell to a multi-year low of 20.5 sen on May 24, giving it a market value of RM236.82 million. On June 8, the stock closed at 27.5 sen.

The company had been riding high financially in recent years. In 2017, its revenue grew 93% year on year to RM685.6 million mainly on strong demand for its maintenance, repair and operation services.

Prior to 2017, it had already seen revenue grow over six times between 2012 and 2016 to hit RM354.4 million while net profit more than quadrupled.

However, Destini’s share price did not keep up, see-sawing before trending downwards from the last multi-year high of 87 sen in October 2016, as some fund managers found that the company had yet to deliver expected stronger earnings growth. Its last major rally was from end-2017 to early this year, when the stock rose from 43 sen on Nov 24 to hit 64 sen on Jan 26.

Before the election, Destini had been positioning itself as a well-connected contender for big defence projects. In January last year, its joint venture with Lembaga Tabung Haji won a RM739 million job to supply three offshore patrol vessels to the Malaysian Maritime Enforcement Agency.

The contract win marked its arrival at a scene dominated by the likes of Boustead Heavy Industries Corp Bhd, which is controlled by Lembaga Tabung Angkatan Tentera. — By Khairie Hisyam

 

Tan Sri Mohamad Salim Fateh Din

The heavy selldown in Malaysian Resources Corp Bhd (MRCB) after the general election cost Tan Sri Mohamad Salim Fateh Din over RM300 million in just over two weeks.

The group managing director holds a 16.61% stake, after a merger in 2013 that saw MRCB acquire his vehicle, Nusa Gapurna. He is the second largest shareholder after the Employees Provident Fund, which has a 35.37% stake.

Mohamad Salim’s stake in the construction and property development firm was worth RM729.18 million before the polls. MRCB had closed at RM1 per share, giving it a market capitalisation of RM4.39 billion.

But the resulting sell-off saw the counter fall 21.5% on May 14. It eventually hit a multi-year low of 57 sen on May 30, translating into a market capitalisation of RM2.5 billion. The stock shed RM1.89 billion in market value in just over a fortnight.

Mohamad Salim’s shareholding had dropped to RM415.3 million in value by May 30. He is seen to be close to the top Barisan Nasional leadership.

By June 7, MRCB regained some lost ground to close at 68 sen per share.

Mohamad Salim is the first entrepreneur to manage MRCB in recent memory as the group managing director’s post had been held by professionals. His son, Mohd Imran, is executive director of the group.

MRCB’s revenue tripled over a five-year period to hit RM2.82 billion in 2017. While it also rebounded from a full-year loss in 2013, its bottom line had been trending downwards over the past three years. — By Khairie Hisyam
 

Tan Sri Kenneth Eswaran

Well-connected businessman Tan Sri Kenneth Eswaran is a major shareholder in his flagship company, Pinehill Pacific Bhd. Prior to the polls, the executive chairman’s 32.33% stake was worth RM8.7 million as Pinehill Pacific had closed at 18 sen, giving the company a market capitalisation of RM26.97 million.

After trading resumed on May 14, reactions to Eswaran’s perceived political connections to Barisan Nasional were somewhat delayed and muted.

The counter initially rose slightly to 20 sen on May 16 but trended downwards to a multi-year low of 15.5 sen on June 4, translating into a market capitalisation RM23.22 million. This meant that Eswaran’s holding had shrunk to RM7.5 million in value.

However, the counter had been trending downwards for some time. Its last peak was 30 sen in February last year.

Eswaran is behind Asian Broadcasting Network (ABN), which was launched in June 2013. Although the digital cable television operator set out to break Astro’s dominance in the pay TV segment, it struggled. In May last year, a supplier, Sony (M) Sdn Bhd, successfully obtained a court order to liquidate ABN.

Reports say ABN’s overall debt at the time was about RM400 million, RM200 million of which was owed to Bank Pembangunan Bhd. The rest was reportedly owed to 100 creditors. It is unclear whether Bank Pembangunan has recovered its funds. — By Khairie Hisyam
 

Tan Sri Desmond Lim Siew Choon

Property and retail mall tycoon Tan Sri Desmond Lim Siew Choon emerged as a substantial shareholder of WCT Holdings Bhd in November 2016. He is also a major shareholder of Malton Bhd and Pavilion Real Estate Investment Trust (REIT).

To recap, Lim acquired the 19.66% stake in WCT from co-founders Peter Taing Kim Hwa and Wong Sewe Wing. It is estimated that Lim had paid RM614.3 million for the stake, based on the transacted price of RM2.50 per share.

Unfortunately, WCT’s share price has never breached the RM2.50 level since Lim surfaced as its substantial shareholder. After the stock hit a peak of RM2.22 in May last year, it went downhill from there, closing at 85 sen last Thursday.

That means Lim is suffering a paper loss of 66% with his 17.84% stake worth only about RM196 million. A month ago, his stake value was about RM321 million.

The recent surprise announcement of the cancellation the third mass rapid transit line is expected to impact the rail job outlook for WCT, whose market capitalisation has shrunk from RM1.8 billion to RM1.1 billion. As a result, Lim’s stake value in WCT has declined 39% or RM124 million within a month of the election.

It is worth noting that the REIT listing of WCT, which was expected to take place by end-2017, will not be happening this year either. It is not the first time the REIT’s listing has been deferred. Planned as early as 2014, it was postponed to 2016 and then, 2017. Now, it may take place next year.

Similarly, as Malton’s share price has declined 29% after GE14, the value of Lim’s 37.4% stake in the company has also shrunk by RM44.5 million. — By Liew Jia Teng
 

Tan Sri Lim Kang Hoo

Construction and property tycoon Tan Sri Lim Kang Hoo is the controlling shareholder in Iskandar Waterfront City Bhd (IWC), Ekovest Bhd and Knusford Bhd.

Ekovest’s share price has fallen 19% a month after the election. Its market capitalisation shrank from RM1.73 billion on May 8 to RM1.4 billion last Thursday.

Lim, who has a 32.37% stake in Ekovest, saw his investment value in the company drop by RM106 million within a month. His stake value is now worth about RM453 million, compared with RM560 million a month ago.

In May last year, it all came crashing down for Lim when the government suddenly terminated the sale of the Bandar Malaysia land.

Five months later, Lim aborted the merger plan between IWC and its sister company, Iskandar Waterfront Holdings Sdn Bhd (IWH).

In March, shareholders rejected Ekovest’s proposal to acquire a 62% stake in IWC through the exchange for either RM1.50 cash per share or a one-for-one swap of Ekovest shares for IWC shares.

That means Lim has seen within a year his three ventures fail to come to fruition.

But just when he thought that this year could not get any worse, an announcement came last Tuesday that Ekovest’s joint venture (JV) with Samling Resources Sdn Bhd to develop the Pan Borneo Highway in Sarawak, which has a total contract value of RM2.1 billion, is void.

Ekovest said it received a letter last Monday from Samling Resources informing that Lebuhraya Borneo Utara Sdn Bhd, the project delivery partner, had not consented to the project being subcontracted to Samling-Ekovest JV Sdn Bhd.

“We are reserving our rights in relation to the above matter and are seeking advice and will take all necessary actions as may be required,” Ekovest said in a filing with Bursa Malaysia. — By Liew Jia Teng
 








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