Tecnic/SKPRes ... Dec10

Datuk Gan Kim Huat, the executive chairman of Tecnic Group Bhd, increased his

indirect stake in the company to 38.71% after buying 4.035 million shares, or 9.98% equity interest, for RM8.99 million.

The four million shares were purchased from Unfold Riches Sdn Bhd, via his private vehicle Graceful Assessment Sdn Bhd. Following the purchase, Gan now holds a 19.88% indirect stake in Tecnic via Graceful Assessment Sdn Bhd, and another 18.82% indirect stake via Zenith Highlight Sdn Bhd. Combined with his 31.55% direct stake, Gan now has a total of 70.25% equity interest in Tecnic.

According to a source close to the matter, there is no intention to take the company private. It is believed that Gan has chose to increase his stake because he felt the company was undervalued and saw upside in the stock price.

What’s interesting is that following the purchase, Gan’s direct and indirect stake in Tecnic crosses the 33% threshold, which triggers a mandatory general offer. So far there has been no announcement whether a mandatory general offer will be coming or if Gan will not be required to do one.

Gan is also the substantial shareholder in SKP Resources Bhd, where he holds a 70.99% stake, consisting of 8.99% direct equity interest and a 62% indirect stake held via four private vehicles including Graceful Assessment and Zenith Highlight. The other two private vehicles are Renown Million Sdn Bhd and Beyond Imagination Sdn Bhd.

In the past few months, there has been speculation that Gan would take Tecnic and SKP Resources private as he had slowly been building up his stake in both companies in the past few months.

Tecnic is involved in plastic moulding design and fabrication, plastic injection and blow moulding and provision of assembly services for the manufacturing of plastic products. SKP manufactures plastic parts and components for the electronic and electrical sector.

For the nine months ended Sept 30, Tecnic’s net profit rose 23.8% to RM12.18 million or 30.15 sen per share, on the back of RM125.83 million in revenue. Net assets per share as at Sept 30 was RM1.89 compared with RM1.75 as at Dec 31, 2009. It is also sitting on a net cash position of RM10.87 million with no bank borrowings.

In comparison, SKP has also seen its net profit rise 56.3% to RM10.62 million, or 1.77 sen per share, on the back of RM109.2 million in revenue for the six months ended Sept 31. SKP is also sitting on a RM45.64 million cash pile with no bank borrowings.