The short position


  • Business
  • Saturday, 14 Mar 2015

Tabung Haji’s gameplan 

IT has been reported that Lembaga Urusan Tabung Haji has emerged as a 30% shareholder in delisted construction and property development outfit Putrajaya Perdana Bhd, something that the pilgrim fund does not deny.

The rationale for the investment is exposure to the construction sector.

It is not known what price Tabung Haji had paid for the stake in Putrajaya Perdana. Perhaps, this is something that the fund should disclose.

What is puzzling is that the investment in Putrajaya Perdana does not seem to sit well with the previously achieved restructuring at Tabung Haji.

Recall that back in 2002, and under the stewardship of the-then group managing director and chief executive officer, Tan Sri Mohd Bakke Salleh, the group underwent a massive restructuring exercise to reduce its focus areas and remove redundancies, among others.

Mohd Bakke’s plan for Tabung Haji then was to create four key areas of focus: plantations (TH Plantations Bhd), property development (TH Properties Sdn Bhd), construction (TH Technologies Sdn Bhd) and activities surrounding organising haj and umrah packages (TH Travel & Services Sdn Bhd).

The question, thus, is: How does Putrajaya Perdana fit into this equation?

It was previously reported that Putrajaya Perdana planned to relist on the local stock exchange in 2014. Putrajaya Perdana’s other shareholder is Cendana Destini Sdn Bhd, whose main shareholder is Datuk Rosman Abdullah, who was formerly with MALAYSIA AIRPORTS HOLDINGS BHD.

Putrajaya Perdana was taken private in 2010 when Saudi International Ltd acquired and initiated the privatisation of the former’s parent, UBG Bhd. UBG was the banking arm of CAHYA MATA SARAWAK BHD, which is the family vehicle of Tun Abdul Taib Mahmud, the-then chief minister of Sarawak.

Prior to UBG’s privatisation, it had acquired construction outfit Putrajaya Perdana and water infrastructure company, Loh & Loh Corp Bhd, as part of an initiative to turn itself into a construction company.

Hap Seng’s moves

Hap Seng Consolidated Bhd’s move to sell its credit division in Singapore and buy a building under construction in Kota Kinabalu has raised some questions. Is this the most strategic and value-generating move?

To be fair, the sale of its credit division does bring in cash of some RM640mil. Hap Seng will realise a gain on disposal of RM513.19mil. The company has said that the move is an opportunity to “divest its credit finance business in Singapore at an attractive gain”.

Proceeds from the disposal will be used to finance the proposed acquisition of the purpose-built tower, which will be known as Menara Hap Seng KK. The remainder will be used for the group’s general working capital requirements.

But what is the future earnings of this credit division? It could be a lucrative cash cow that Hap Seng is hiving off to related parties.

Hap Seng says the acquisition gives it the opportunity to strengthen its position in the Sabah property market and also grow its brand in Kota Kinabalu.

“The property is expected to fulfil the demand for modern and quality office space, as it is strategically located within Kota Kinabalu city centre. The property will be the first green building in Kota Kinabalu and will be one of the few prominent signature office developments in the city upon completion,” it says.

But is it wise to put money into the property sector now?

Kota Kinabalu is also seeing a fair bit of commercial buildings coming onstream. Is there enough demand for all the new supply coming onstream, and will the capital apprecition and yields of the investment in property there be better than Hap Seng’s future prospects of its credit division in Singapore?

Tech boom

For all the attention on oil and gas stocks when the price of crude oil surged before its collapse last year, there is another sector that has seen even better returns.

Tech stocks on Bursa Malaysia might not be a haven for many investors -- as the bourse is more noted for the traditional brick-and-mortar, blue-chip stocks -- but just looking at the performance of some of these stocks and the increased investor attention they are garnering will give you a sense of just how quietly and spectacularly the boom in the sector has been.

There is nothing as spectacular as the rise in the share price of business management solutions provider IFCA MSC Bhd. The 52-week low for the stock was a mere eight sen. Today, its share price is RM1.34, a staggering 1,587% rise.

Its mouth-watering returns are not based on mere speculation of great promises like what the tech sector had seen during the dot-com boom. It made RM21.1mil or 4.36 sen a share last year, and based on reports, this is set to improve.

Then, there is MyEG Services Bhd, whose stock is up 91.75% over the past 52 weeks.

Another counter that many would say is the one that got away is INARI AMERTRON BHD, which is up 63.08% over the same period.

Assembly, packaging and testing semiconductor manufacturer Globetronics Technology Bhd’s share price, meanwhile, is up 58.83% in this 52-week period, and there will be many others that have seen a similar explosion in their share prices.

What about the darlings of the dot-com boom 15 years ago, you might ask. Well, UNISEM (M) BHD is up 106.44%, while Malaysian Pacific Industries Bhd is 56.08% higher.

The rise in tech stocks is due in part to the evolving technology of the recent years. Electronics and smartphones are commonplace and the demand for chips and hard drives has exploded, as sales of devices soared.

Just how much more room they have to rise still is anyone’s guess. Just like the share prices of the tech giants on Nasdaq are realising their potential from yesteryear, tech stocks in Malaysia are doing the same.

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Business , short position , putrajaya , perdana

   

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