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Country Heights taps technology to move ahead but details remain scarce

TheEdge Tue, Oct 13, 2020 05:00pm - 1 month ago


SOME of us will remember the Mines Wonderland Theme Park, which was a popular entertainment destination in the 1990s. The theme park was part of Mines Resort City, developed by Country Heights Holdings Bhd (CHHB).

That period was the heyday for CHHB, which was listed in 1994. Its share price surged past RM8 but the group — overwhelmed by debt — was brought to its knees during the 1997/98 Asian financial crisis.

CHHB was founded by tycoon Tan Sri Lee Kim Yew, who announced last week that he would be stepping down as executive chairman on Jan 1, as he wants to focus on the blockchain and cryptocurrency space.

Although the 66-year-old claims that CHHB will be the first public-listed company to accept cryptocurrency in lieu of cash for the purchase of its goods and services, its shareholders are surely eager to know more about its strategy for the future.

Nevertheless, the management has remained tight-lipped about CHHB’s plans, saying only that its business operations would be technology-driven with the planned issuance of a cryptocurrency dubbed the “horse currency”.

“The company has a lot of shareholders’ funds and its gearing is very low. We will find a lot of opportunities by using blockchain, with a new way of funding in the future,” Lee tells The Edge.

CHHB has been relatively inactive in the property segment, compared with its peers. Lee says, however, that the company has adopted a different approach.

“You go and see other big developers, now [they] end up with debt. But we have very low debt. Why should we compete and build? It ends up with debt,” he says.


Lee is passing the baton to the new management, which includes his son-in-law Datuk Jared Lim, who has been appointed as managing director. Besides that, Gerard Lim (not related to Jared) was named the company’s independent director, Kevin Chen its financial director and Ryan Xu its chief technology director.

Both Chen and Xu have a blockchain background. The former co-founded Collinstar Capital in Melbourne, Australia, in 2015, while the latter co-founded Blockchain Global Group in 2014, also in Melbourne.

Lee’s second daughter Dianna Lee and son Lee Thai Young Matahari remain on the board as deputy chairman and executive director, respectively. Jared is married to Lee’s eldest daughter, Datin Dian Lee.

It is interesting to see whether the new management will be able to give CHHB a new lease of life.

A year ago, Datuk Low Kok Thai resigned as CEO, just six months after being appointed to the post, citing his unsuccessful efforts at restructuring the company’s debts after exhausting all avenues with local financial institutions.

Jared notes that CHHB will integrate the entire Mines township with its platforms through technology adoption. “For everything that Tan Sri has built all these years, we will just use technology as the main priority to add value to the assets.”

He adds that there are many new initiatives in the pipeline for the wellness business. “We are going to further invest and expand it. We will announce it in due course,” he says in the interview with The Edge.

Currently, wellness is CHHB’s only profitable segment, recording RM2 million in profit for the first half of 2020.

However, the pandemic has wrought a devastating impact on the hospitality sector. CHHB’s hotels and resorts were forced to close when Covid-19 broke out and have yet to reopen.

To revive the country’s tourism industry, Lee urges the government to re-examine the “Malaysia My Second Home” programme, which has been suspended temporarily, by conducting a comprehensive review and re-evaluation.

“After Covid-19, all the hotel operators must start changing. We have to try to attract people from overseas for long-term stay here. We target high-net-worth individuals for long-term stays. We can use technology to make people feel safe and secure,” he elaborates.

As regards its financial performance, CHHB started to incur losses in 2015, dragged down by its property development division.

It remained in the red in the following years, except for 2018, when it recorded a net profit of RM86.65 million on the back of a fair-value adjustment of RM115.3 million on its investment properties.

In 2019, it slipped back into negative territory, registering a net loss of RM34.6 million.

For the first half ended June 30, 2020, CHHB’s net loss widened to RM12.72 million from RM6.25 million in the same period last year, as all its business segments, including its wellness hub, resorts & hospitality, and the Mines car city centre were disrupted by the restrictions under the Movement Control Order.

CHHB has not been paying dividends since the Asian financial crisis in 1997.

Its shareholders’ funds stood at RM821.92 million as at end-December 2019 and it had net assets per share of RM3.

Over the past five years, its share price has been trading between 80 sen and RM1.54. The stock closed one sen or 0.9% higher at RM1.14 last Thursday, giving it a market capitalisation of RM314.31 million.

CHHB had RM193.34 million in loans and borrowings as at end-June 2020, and cash and cash equivalents of RM7.44 million.

Jared says the company is comfortable with its borrowing level and could sell land if there is a need to raise funds.

CHHB’s 2019 annual report shows it had 2,357.92 acres of land in Selangor, Negeri Sembilan, Kedah, Pahang, Malacca as well as in South Africa and the UK, with a combined net book value of RM1.12 billion.

Lee is the company’s largest shareholder with direct and indirect stakes of 27.97% and 36.51%, respectively.

He was its group managing director from 1986 to 2007, before being redesignated as non-executive deputy chairman. In 2009, he handed over the reins of the company to daughter Dianna, who was made group CEO in 2011. She was designated as deputy chairman in 2016 and remains in that position.

Lee made news in 2014 when he returned to CHHB as adviser with a monthly salary of RM225,000. He was redesignated as chairman in June 2016 and subsequently, as executive chairman on Oct 1 the same year.

Lee’s previous private investments hit snags

Country Heights Holdings Bhd’s (CHHB) Tan Sri Lee Kim Yew made headlines last week after announcing plans to issue cryptocurrencies through his own private entities, owing to constraints under the Securities Commission Malaysia’s guidelines on digital assets.

In fact, this is not the first time he is embarking on investments using his own vehicles.

In 2007, Lee launched the Golden Palm Growers Scheme, involving a 10,000-acre plantation land in Gua Musang, Kelantan, to ride the then crude palm oil (CPO) price boom.

Investors were guaranteed an 8% yield for the first three years, and returns based on average CPO prices and fresh fruit bunch tonnage for the next 20 years.

The scheme was terminated five years later in 2012, as the terrain was not suitable for plantations, coupled with bad weather conditions and elephants wreaking havoc on planting activity.

In May 2019, Lee emerged as a substantial shareholder of Metronic Global Bhd, a company that provides systems integration in intelligent building management and security management.

Disputes between Lee and Metronic emerged after he requested that the company appoint an independent auditor last October to conduct a special audit on its corporate exercises in 2019, comprising an employees’ share option scheme (ESOS), a joint venture and a proposed private placement.

Early this year, Lee filed a claim against Metronic, seeking a declaration that the company’s affairs were being conducted in a manner that was oppressive to him.

He also sought an order for the directors of the company to pay him RM10.45 million, on top of damages to be assessed against the company and its directors, together with interests, costs and further relief deemed fit by the court.

Metronic has filed an application to strike out Lee’s claim and the hearing has been scheduled for Oct 5.

On Sept 24, Lee ceased to be Metronic’s substantial shareholder after disposing of another huge block of 123.51 million shares, or a 9.91% stake, paring his shareholding to merely 2% from a high of 29.01%.

“I don’t lose money [for the investment in Metronic]. We thought it was a very healthy company, a very good target for me to go in and do [a] corporate exercise. But we didn’t get cooperation from them, so no point [in retaining my shareholding],” he says.

Sanichi Technology Bhd and MNC Wireless Bhd, on the other hand, raised their stakes in Metronic to 10.21% and 5%, each.






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