THE one-man institutional investor Koon Yew Yin is now the single largest shareholder in JAKS Resources Bhd, the company that has diverse interest ranging from construction to property development and power plants.
Based on the latest announcement, the 84-year-old Koon has built his interest in the company to 18.17%, making him the single largest shareholder. On top of that, his wife Tan Kit Pheng has 7.71% in Jaks Resources.
The shareholding of the two is much bigger than what is held by the principal officers of the company.
The chief executive officer of Jaks Resources, Ang Lam Poah, has 8.93% while executive director Datuk Razali Merican Naina Merican has 5.7% in the company that has a power plant in Vietnam.
The question is why would Koon, who has built a name for himself as a value investor, build up his position to such a high level in Jaks Resources?
Is he planning to take over the company? What value does he see in the company that others have not?
Jaks Resources, which started as a company that does plumbing work, eventually went into property development and the power-generation sector. It has developed properties in the Klang Valley, specifically at Ara Damansara and Petaling Jaya that is ripe to provide it with recurring income.
As for the US$1.9bil power plant, it is located in Vietnam and Jaks Resources’ effective interest is about 40%. The partner is China Power Engineering Consulting Group.
Jaks Resources is also undertaking a private placement exercise of 10% of its shares to raise almost RM60mil. The placement is being done at RM1.36 per share, which is a recent high for Jaks Resources.
When the placement is completed, Koon’s stake will be diluted. However, the company would have additional cash in its books, thanks to the timing of the placement.
It will be interesting to see if Koon continues to build up his position in Jaks Resources.
MALAYSIA’S Multimedia Super Corridor (MSC) has not been short of initiatives ever since its birth back in 1996 heralded the push towards the so-called knowledge economy. At times, many have wondered whether the various information and communications technology projects that have been launched to much fanfare were going anywhere.
When Malaysia Digital Economy Corp (MDEC) released the data on the performance of MSC-status firms on Thursday, companies of the creative content and technology cluster (CCT) comprising those involved in digital animation and intellectual property works saw the highest growth in export sales.
According to MDEC, sales from the cluster totalled RM1.17bil out of the RM19.1bil that all MSC-status companies exported last year. That’s over 6% of the exports of all MSC companies. As a comparison, MSC-status companies saw export sales of RM16.16bil in 2015, with the CCT companies contributing just RM850mil. Of course, that’s just a drop in the ocean of the country’s total exports but it’s a start.
There are now local digital animation companies which are doing well and have a global presence such as Inspedia and Silver Ant. Malaysia’s first 3D animation production, War of the Worlds Goliath, even won the Best 3D Animated Feature award at the Los Angeles 3D Film Festival in 2012, beating Hollywood movies. Malaysians were also behind the visual effects of the movie Life Of Pi, which won an Oscar for visual effects in 2014.
This is exactly what the Malaysian economy needs in order to be competitive and generate the well-paying jobs. Local private institutes of tertiary education spotted the need for such talent at the turn of the millenium and offered qualifications in this area.
Since jobs in the creative industries will always be far fewer than in the manufacturing or services sectors, moving up the value chain is important for the overall economy. Technology has often been made the bogeyman, as many see it as businesses lowering costs by cutting headcount through automation.
It does not have to be this way. Instead, the adoption of technology should encourage more innovation and expansion into economic activities that can generate higher paying jobs even in manufacturing and services. Sadly, there is still a mismatch in talent and English language skills are still lacking. What is worrying is that Malaysian school children still have low scores in mathematics and science, subjects that are vital for the skills that we want to nurture.
Perhaps, the successes enjoyed and the accolades won by Malaysians will spur business leaders, educators and the Government to work together in upgrading skills of workers as well as reforming education without getting politics involved.
IPO for value creation
A NUMBER of companies have announced plans or are rumoured to be listing a unit of their companies and often this creates excitement.
After all, by listing a unit, the theory goes, shareholders of the parent would gain. The parent could get new monies from that listing and minorities (of the parent) could even be dished out with some stock of the newly listed entity. But is this really the case?
The idea has to be deeply analysed before jumping to the conclusion that it is going to create value.
In other words, the question to be asked is what exact value is being created by the spinoff? Bear in mind that all units of the parent already belong to the parent’s shareholders. And all units should already be factored into the valuation of the listed entity.
So, why would anything change just by merely taking one unit out and listing it?
In some instances, there could be a justification. Conglomerates with multiple assets and segments of business tend to suffer what is deemed as a “conglomerate discount”.
Sime Darby Bhd is a good example. Late last year, Sime stated that the conglomerate would be carved up into three parts – Sime Darby Plantations Sdn Bhd, Sime Darby Property Bhd and Sime Darby Bhd, which would retain the group’s industrial, motor and logistics businesses. These are very large businesses in their own right.
The question is, will value be created by smaller companies spinning off even smaller units? Recent examples of companies looking to list their units include AppAsia Bhd, which is looking to list its online shopping business on the Australian Securities Exchange, and Priceworth International Bhd looking to spin off its Singapore unit GSR Pte Ltd.
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