Property developer Meda Inc Bhd may see some changes to its current shareholding structure, including the possible emergence of a new substantial shareholder, sources say.
It is learnt that there are discussions between a prospective party and the Teoh family, whose members collectively hold an equity stake of 31.27% in the firm, which is currently loss-making.
StarBiz Premium first reported on this possibility on Wednesday.
At this point, it cannot be determined how large a stake in Meda, the potential buyer, who is believed to also be in the property development business, is looking to purchase.
However, the crux of the discussions is likely to be centred on the price the stake will eventually be sold at.
Currently, the single largest shareholder in Meda is the Teoh family with Teoh Seng Aun having a 14.62% stake while his brothers, Datuk Kenneth Teoh Seng Kian, holds an 11.2% stake and Datuk Patrick Teoh Seng Foo, a 5.45% interest.
Patrick is the company’s executive deputy chairman while Kenneth is the managing director.
Meanwhile, the second single largest shareholder in Meda is Datuk Tiong Kwing Hee who holds a 17.72% stake in the firm.
Interestingly, all the Teoh brothers are major shareholders of another Bursa Malaysia-listed property development firm, EcoFirst Consolidated Bhd while Tiong is group CEO and executive director at EcoFirst.
Tiong is also executive director at car paint manufacturer and construction company Mercury Industries Bhd .
To be sure, there have been talks from as far back as two years ago about both property companies, Meda and EcoFirst merging but so far nothing has transpired to this end.
In the past one month, the Meda stock has gone up close to 5%, suggesting some interest has been stirred in this otherwise quiet counter.
At its current price of 45.5 sen per share , Meda is trading at 52% above its net tangible assets of 30 sen per share.
Earnings-wise, for its third quarter ended Sept 30, Meda reported a net loss of RM6.17mil or a loss of 1.29 sen per share on sales of RM11.4mil.
The loss, according to the company, was mainly due to operating losses and losses on disposal of some land.
In February last year, Meda said it was aborting the purchase of 4.18 acres in the Chan Sow Lin industrial estate area of Kuala Lumpur where it had planned to undertake a mixed development project with an estimated gross development value of RM882mil.
It said then that after due consideration and taking into account the current outlook of the property industry, it and the land’s vendors had mutually decided to cancel the deal.
Meda had initially proposed to develop serviced apartments and commercial properties on the land that would generate around RM176.4mil in gross development profit.
The development was supposed to begin in the fourth quarter of 2015 and be completed within four years.
“The group will explore more opportunities in expanding its property development segment, which will generate long-term and sustainable earnings to the group.
“Meanwhile, the group is actively looking for potential land bank and joint venture opportunities in the Klang Valley which would generate higher profit margin for the group,” the company told shareholders in its latest filings accompanying the announcement of its quarterly results.
Meda was listed on the Main Board of Bursa Malaysia in 2002 and its group’s core activities are property development and investment.
Among the firm’s completed property projects include The Summit Subang USJ, The Summit Bukit Mertajam, Aman Larkin, 10 Semantan and The Arc @ Cyberjaya, according to its annual report.
It is also involved in the construction of affordable residential properties under the Government’s PR1MA project.
To this end, it is constructing such homes in Malacca under what is called PRIMA Residensi Tg Kling 1, with plans to build a Phase 2 of this project.
Additionally, Meda is also involved in hotel operations and palm oil cultivation.
Based on its latest balance sheet, the company has properties with a total net book value of some RM210mil as at Dec 31, 2016.
It also revealed that Meda has just over RM2mil in cash and bank balances while its total borrowings stand at close to RM49mil.