What is single largest shareholder planning for Khee San?

TheStar Sat, Aug 15, 2020 08:40am - 8 months ago


Bursa Malaysia filings show that businessman Datuk Ng Meng Kee (pic), who is the founder of security seals manufacturer Mega Fortris Malaysia Sdn Bhd, has been steadily building up his stake in the company, buying shares from the open market since the middle of December last year

AFTER failed attempts by several “white knights” to turn loss-making candy and wafer manufacturer Khee San Bhd around, could the company finally be seeing a change of sorts in its fortunes with the emergence of a new name?

Bursa Malaysia filings show that businessman Datuk Ng Meng Kee, who is the founder of security seals manufacturer Mega Fortris Malaysia Sdn Bhd, has been steadily building up his stake in the company, buying shares from the open market since the middle of December last year.

That is about the same time as when troubled London Biscuits Bhd (LBB) exited Khee San as its shareholder and placed out new shares amounting to 45% of Khee San to instant noodle and snack manufacturer Mamee-Double Decker (M).

Both LBB and Mamee have since sold out of Khee San.

Meanwhile, the most recent stock exchange filing shows that Ng, has since accumulated over 17 million shares or a 14.9% stake in Khee San, making him now the single largest shareholder in the Serdang-based company, followed by one Koh Chee Meng who has a 7.5% stake.

Based on the stock’s last traded price of 34 sen per share, Ng’s stake is now worth around RM5.78mil.

When contacted by StarBizWeek, Ng doesn’t elaborate on what he plans to do with the stake but says: “I will be having a discussion with parties who will jointly assist Khee San to get it out of trouble.”

Based on stock exchange filings, no other new name apart from Ng’s, has surfaced as substantial shareholder in Khee San since both LBB and Mamee sold out.

Notably, Koh had surfaced in the company much earlier.

It remains to be seen if other new names will emerge in the company following Ng’s entrance.

Ng notes that one of Kee San’s most compelling traits, despite it being financially-troubled, is that it is the first candy company in Malaysia, with its business being in existence for decades.

“It is a good company with extremely good products, ” he says, but adds that it fell victim to what he calls “financial misappropriation”.

“We are able to resolve Khee San’s problems. It will be a shareholders’ rescue exercise, ” according to Ng.

Khee San, which makes sweets and wafers under brand names such as “Fruitplus”, “Mintplus” and “Tip-Top”, is no stranger to financial woes.

Just recently, it was classified under the PN17 category, a classification set aside for financially-distressed companies in Malaysia.

Sluggish domestic outlook

In its most recent annual report, the company blames the sluggish outlook of the domestic economy amid a global economic slowdown and says that it expects “the domestic consumer sentiment to remain weaker than previously as consumers adopt more prudent spending habits which inevitably shall translate to weaker retail consumption across the board”.

Based on latest available figures, the domestic market makes up about 68% of the group’s total sales while the remaining of its products are exported.

To be sure, Khee San has been trying to pare down massive borrowings that it took on to grow its confectionery and snacks business for the longest time.

More specifically, since LBB became its single largest shareholder and gained board control of Khee San way back in 2007, the company has been borrowing huge amounts of money to build up its production capacity and revenue.

Recall in 2007, LBB itself came under criticism from the investing community when it bought into Khee San at RM1.50 per share, a rich premium to its then share price of about RM1.

LBB’s financial woes have intensified since then and finally in July 2019, it became a PN17 company, following its payment default amounting to RM9.83mil to the Bank of Nova Scotia Bhd.

According to its annual report, Khee San and its 2 subsidiaries, Khee San Food Industries Sdn Bhd and Khee San Marketing Sdn Bhd are the largest manufacturers of candy and wafer products in Malaysia.

As of March 31,2020, the company had cash and bank balances amounting to RM108,000 and short-term borrowings of close to RM74mil.

Khee San’s shares last traded at 34 sen apiece, valuing the entire company at RM39mil.

In the past 52 weeks, the stock has traded between 16.5 sen and 56 sen.






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