KUALA LUMPUR: TA Enterprise Bhd, one of the largest independent stock brokerages in the country, is open to partnership that will help boost its stockbroking business.
Amid the wave of consolidation in the cut-throat brokerage industry, TA Enterprise managing director and CEO Datin Alicia Tiah said although the group was not in discussion with any entity for a possible joint-venture, it would welcome an alliance that could add value.
“I’m not saying ‘no’,” Tiah said when asked about a potential merger and acquisitions exercise for the group’s stockbroking business.
“If we can get a good partner, with whom we have the right ‘chemistry’ and it can add to our bottom line, I will always welcome (the idea),” she said after the company AGM here.
Tiah reiterated that TA Enterprise would not sell its stockbroking business as the division remains a profitable unit for the group.
“Despite the so-called challenges ahead, our stockbroking business remains quite resilient, and it doesn’t really give me a headache.
“It has proven to be a botttom line (booster) and we feel it will continue to be a cash cow for the group,” she said.
TA Enterprise’s stockbroking division contributed 13% to the group’s earnings in the financial year ended Dec 31, 2016, compared with 19% in the preceding year.
In general, the stockbroking industry is an increasingly challenging business, with intense competition leading to a lowering of fees and thinning margins. Technology is also having an impact as the Internet allows the public to trade in a protected environment and lower commission rates.
The challenges have in part led to a consolidation in the industry such as Kenanga Investment Bank Bhd’s joint venture (JV) with Rakuten Securities Inc from Japan.
The JV between Kenanga and Rakuten has led to the launch of Malaysia’s first fully-online system with straight-through processing to Bursa Malaysia last week.
In 2014, Affin Holdings Bhd acquired Hwang-DBS Investment Bhd for RM1.36bil, while Apex Equity Holdings Bhd continued to look for a buyer of its 57% equity interest in Apex Investment Services Bhd.
CIMB Holdings Bhd announced a tie-up with China Galaxy International Financial Holdings Ltd to boost its regional stockbroking business last year.
In March, CIMB was reported to be looking to buy Jupiter Securities, one of the smaller local brokerages, for more than RM50mil as part of a larger corporate exercise to facilitate a joint venture with China Galaxy Securities.
TA Enterprise posted a net profit of RM176.3mil last year compared with RM18.8mil for the 11 months ended Dec 31, 2015. The group’s earnings per share rose to 6.59 sen from 0.13 sen.
Last year, the group’s revenue stood at RM790.3mil compared with RM755.9mil for the 11 months ended Dec 31, 2015.
TA Enterprise said the main contributors to the group were its overseas hotel operations and the broking and financial services, which amounted to 75.2% of its revenue. Property investment, development, investment holdings as well as credit and lending contributed to the remainder.
It noted that apart from the recurring income from the hotel division, the profitability of the group was bolstered by the good performance of the investment in securities in 2016. The group proposed a final single-tier dividend of 1.7%, or 1.7 sen per share for 2016.
TA Enterprise’s shares closed unchanged at 71 sen yesterday. Year-to-date, the counter has gained 57.8%.
Meanwhile, TA Enterprise’s 60.17%-owned unit – TA Global Bhd – was expected to launch RM1.2bil worth of gross development value (GDV) projects this year.
The company would unveil the sales gallery of its Damansara Avenue mixed-development project in the middle of this year, and the first offering would be Ativo Suites, a two-tower project comprising 668 units of serviced residences with a GDV of RM550mil.
The construction of Ativo Suites was expected to start in mid-2017 and targeted for completion by mid-2021.
TA Global was also expected to launch its RM2.15bil project – TA 3 and 4 – comprising two luxury residential towers with a five-star hotel in Jalan P Ramlee here by the end of this year.
Other projects in the pipeline included a RM2.3bil residential development on a 3.12-acre land in Jalan Bukit Bintang here, a RM450mil landed master plan development on 95-acre in Kluang, Johor, targeted for launch in 2018, the RM2.5bil Damansara Avenue Atovo Annexe, targeted for launch in the fourth quarter of 2018, and a RM480mil residential high-rise development on 4.55-acre in North Kiara, Kuala Lumpur.