Tuesday, March 26, 2013

Scomi ... Mar13

Tan Sri Abu Sahid Mohamed said he could increase his stake in Scomi Group Bhd as he believes that the company is undervalued.

Abu Sahid, who owns 6.8 per cent stake in Scomi, however, looks to be staying for the long run. The tycoon last bought Scomi shares on March 19 2013 when he acquired some 1.19 million shares.

Shah Hakim is also a key shareholder of Scomi Group.

To recap, Abu Sahid had disputed IJM Corp Bhd's emergence as a shareholder in Scomi, citing that it will dilute the stake of current shareholders.

IJM's entry into Scomi is said to have the backing of Shah Hakim. Under the deal, Scomi would issue RM110 million worth of convertible debt to IJM, which, upon conversion, would see the construction company owning 24.3 per cent of Scomi.

The convertible debt proposal went ahead after gaining shareholders' approval.

He is quitting as Avalon Minerals Ltd chairman. Abu Sahid had bought into Avalon, a company listed on the Australian Stock Exchange, in 2008 and controls about 11 per cent of its shares. However, he has no plans to hive off his stake in the Australian company as he is betting that the mineral exploration company will deliver in the long run.

Monday, March 18, 2013

KSENG ... Mar13

There is speculation of a corporate exercise cum special dividend at keck Seng Bhd.

It is a Singaporean run and low profile property and oil palm estate owner

Market observers opine that its asset are worth rm8.60 per share.

Its assets include 1850 acres of land surrounding JB that were valued 30 years ago. It is primed for a major re rating … and a share bumper dividend by virtue of its section 108 (Tax Credit) balance that expires in Dec 2013.

It was also speculated that its assets can spun off into a REIT.

Its businesses range from oil palm estates and property development to share investment and running hotels and resorts, is only one part of the wider Keck Seng group, the other vehicles of which include HK listed Keck Seng Investments Ltd and Keck Seng Pte Ltd.

The group’s assets include residential properties in Singapore, KL, Johor and Macau. It also owns Riverview Hotel and the Keck Seng Tower office block in Singgapore, the Sheraton Saigon Hotel & Towers and Caravelle Hotel in Vietnam, Holiday Inn Riverside Wuhan, Sheraton Ottawa Hotel and W San Francisco.

Of these assets, the Doubletree Alan Waikiki Hotel in Hawaii. Doubletree Toronto Airpot Hotel and Tanjung Puteri Golf Resort in Johor are housed under Keck Seng Malaysia.

At this juncture, what is certain is that a lot more can be done to unlock the value of Keck Seng Malaysia whose cash pile doubled in FY2010 after it acquired a takeover offer for its Parkway Holdings Ltd shares. Keck Seng made a bonus issue in 2010 bit has paid out less than rm30 million in dividends a year.

Cash and short term investments stood at rm761 million or rm2.11 per share as at Dec 31 2012. Including investment securities, Keck Seng’s liquidity assets made up of rm3.47 per share.

This means investors pay only rm593 million (rm1.63 per sharea) for the rest of Keck Seng’s assets, which include plantation, the hotel in Hawaii and Toronto and a mall in Johor. Most of these assets are virtually free given that the Menera Keck Seng office block in Jalan Bukit Bintang is carried in its books at a 1996 valuation of only rm56 million or rm212 psf floor area.

Market observers value Keck Seng’s plantations at rm383 million or rm1.06 per share. The company has 3411ha of mature estates in Johor with palm trees averahing 16 years plus 246ha of immature estates.

Its biggest earnings generators were property development, share investments. Plantations and hotels.

Keck Seng is only about 30% owned by the Singapore based Ho family led by its executive chairman Ho Kian Guan and his brother and MD Datuk Ho Kian Hock. 66% of the Keck Seng is in the hands of 30 shareholders.

Saturday, March 16, 2013

RHB Cap ... Mar13

In an effort to create better value and improve tax efficiency, there is a proposal to restructure RHB Cap Bhd in an exercise that will lead to its privatization. The extensive proposal suggests that RHB Bank be re-listed later and the banking group be enlarged with the subsequent injection of MBSB at a later stage.

The rationale for the proposals is to prepare the group to meet changes in the upcoming new FSA as well as to create a more efficient platform for dividend payments and further strengthen the capital base.

The timing of the restructuring and whether the major shareholders of the group – which include the EPF – are agreeable to the proposal remain unknown.

The EPF holds 41% equity interests in the group, had yet to respond to such speculation. The two other major shareholders of RHB Cap are Middle East based Aabar Investments, with a 22% stake, and OSK holdings with 9.8% stake.

At rm8.30, the stock is still trading at a cheap valuation of 1.2 times.

With the OSK acquisition completed, RHB Cap has another target on the table – Indonesia’s Bank Mestika – and thus, it is not surprising that its major shareholders are exploring avenues to ensure its capital base remains strong.

Banking observers are expecting the group to make a rights issue soon. The company maintained it was likely to contemplate a rights issue but hinted that the size of the issue would likely be only slightly larger than the cost of rm651 million to acquire Bank Mestika. This is less than its initial assumption of rm1 billion.

Speculation over a merger and acquisition exercise between RHB Cap and MBSB has always been there because the EPF is the largest shareholder in both financial groups.

The EPF currently (March 2013) has two good financial assets in its table – MBSB and RHB Cap.