KUALA LUMPUR (June 1): The news that Lembaga Tabung Angkatan Tentera (LTAT) is considering taking Boustead Holdings Bhd private at 80 sen per share last week did not lift the diversified conglomerate’s share price. 

In contrast, Boustead’s share price has been on a decline since the stock resumed trading on Friday afternoon. Boustead dropped three sen to 66.5 sen with 15.8 million shares traded. The closing price is about 17% below the indicative price that LTAT has announced. However, the army fund reiterated although it is considering a privatisation exercise, no final decision has been made. 

The downtrend is seen by some quarters as a sign that the market is not positive that the privatisation exercise, which will cost LTAT about RM665 million, would materialise. 

Among other substantial shareholders in Boustead are the Retirement Fund Inc (KWAP) holding a 10.08% stake, while Employees Provident Fund (EPF) holds a 5.10% stake.

A fund manager, who declined to be named, pointed out that Boustead’s share price has gone up substantially before LTAT’s announcement. He commented that it is understandable that investors are taking advantage of the news to take profit.

“Furthermore, there is no confirmation that LTAT will go ahead with the privatisation, it is just an announcement of intention. For some investors, [it is] not worthwhile to take the risk for the additional 10 sen gain if [they were to] hold on, against a current realised gain of 20 sen if [they] sell now," the fund manager said. 

Indeed, Boustead shares had rebounded to a two-month high of 70 sen last Thursday, up by 50% from the recent low of 35 sen. However, Boustead’s share price is still down by 29% year to date.

The indicative price of 80 sen is substantially lower compared with Boustead’s net asset per share of RM1.85. 

It is worth noting that Boustead also has equity stakes in four listed subsidiaries. It is the third-largest shareholder of Affin Bank Bhd, which is currently trading at a price-to-book value of barely 0.3 times, holding a 20.73% stake. Meanwhile, it controls a 57.42% stake in Boustead Plantations Bhd.

It is also the controlling shareholder of Boustead Heavy Industries Corp Bhd, holding a 65% stake, and owns 56.09% of Pharmaniaga Bhd.