MOST analysts welcome tomorrow's meeting between executives of government-linked companies (GLCs) and Prime Minister Datuk Seri Abdullah Ahmad Badawi on expectations that it would result in more measures being taken to further streamline GLCs' operations, thus signalling the next stage of the restructuring exercise.
“Based on their share prices, TNB and TM have done very well,” said SJ Securities head of research Wee Kim Hong, noting that a great deal of effort had been put into re-looking GLCs' businesses and streamlining operations.
It would be timely for a second round of revamp to create more value in the companies but the GLCs would have to bite the bullet, he said. “It will be a positive catalyst for the market as many of these GLCs are not actively traded although they have a lot of potential and the revamp is a selling point,” Wee added.
Avenue Securities head of research Noor Azwa Mohd Noor agreed, adding that government-owned funds had managed their acquisitions very well but some investors had been too impatient on the results.
He noted that TNB and TM's operations were on track but their bottomlines were affected by external factors. “We can see improvement in their operating cost from the cost-cutting measures that they have taken,” he added.
Capital Dynamics Asset Management Sdn Bhd managing director Tan Teng Boo said the recent changes in Proton Holdings Bhd were more drastic than in other GLCs.
“If they get a CEO that is more capable, instead of producing 200,000 cars, Proton could be making two million units. That will definitely benefit the economy,” he said.
The pace of GLC restructuring should also gain higher momentum, he said, adding that these large corporations constituted a large portion of market capitalisation on Bursa Malaysia as well as contributed significantly to the economy.
Azwa noted that there was a change of management in most of the companies and it's time to set targets for the new guards.
The meeting would also be a good place to discuss how other funds, besides Khazanah Nasional Bhd, could do more in their investee companies, he said, adding that firms under Khazanah had progressed very well.
Andy Ong, head of research at Hong Leong Securities, said the meeting was likely to be part and parcel of the restructuring exercise. “It’s likely to be one of the periodic meetings that they had been having except that this time, the Prime Minister is present,” he said.
As far as measures are concerned, there should not be any surprises. Friday's meeting would be like others but was also an indication of the government's commitment to continue to reform the GLCs, he added.
Meanwhile, an analyst at Mayban Securities said market reaction to the next round of revamp might not be as “dramatic” as before, as investors were now more focused on execution and results.
Did you find this article insightful?