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Stocks on a high


AS expected, the stock market had a relatively wild ride on Monday, its first day of business following the momentous 14th General Election (GE14).

It stabilised quickly after that, finishing the week marginally higher.

However, the same can’t be said for a handful of stocks which performed like they were on steroids.

While the benchmark index gained an overall of just 0.4% from May 8, the day before GE14 until Thursday this week, these stocks shot up like there was no tomorrow, putting on double-digit gains and charting new highs.

Eduspec Holdings Bhd took the top spot, gaining a whopping 91% from May 8 to May 17, making it the stock which gained the most, percentage-wise, on Bursa Malaysia. (refer to table for list of other top-performing stocks as well as worst-performing).

Earlier in the week, Eduspec, an IT learning services provider had shot up more than 100%.

It was not the only one.

Eden Inc Bhd , Thriven Global Bhd , Advance Synergy Bhd , Opcom Holdings Bhd , Dolmite Corp Bhd and Ewein Bhd all registered double-digit gains.

Were such increases in a matter of a week, justified?

Notably, most were smallish companies, which safe to say, had run way ahead of their fundamentals.

Among these, ACE Market firm Eduspec, which provides systematic IT learning and robotics programs to school children. This firm is currently loss-making.

For its first quarter to Dec 31, 2017, Eduspec made a net loss of RM5mil on a revenue of RM6mil.

But the company is said to be linked to Datuk Yeow Kheng Chew, better known as KC Yeow, who is a close associate of Prime Minister Tun Dr Mahathir Mohamad’s son, Tan Sri Mokhzani Mahathir.

Both KC and Mokhzani were once principal owners of oil and gas firm Kencana Capital Sdn Bhd before Yeow sold out to acquire Kencana’s stake in Yinson Holdings Bhd , a company that operates floating production, storage and offloading (FPSO) vessels.

On Eduspec’s latest top 30 shareholder list found in its annual report, a company known to be controlled by Yeow called Autonaire Sdn Bhd is listed as the single largest shareholder in Eduspec with a 9.056% stake.

Kencana Capital is listed as the eight largest shareholder with a 3.655% stake.

Fund management firm Areca Capital Sdn Bhd is also one of the substantial shareholders with a 7.545% interest.

Eduspec which derives most of its revenue from Malaysia, followed by Indonesia, Singapore and Hong Kong says in its annual report that the education sector remains competitive but it will continue to “sustain and improve the performance of the group by focusing on its strengths and improving on the quality of its offerings to schools”.

Eden Inc, which is involved in the food, beverage and tourism business as well as energy and manufacturing, is a company linked to Datuk Fakhri Yassin Mahiaddin, who is the son of Tan Sri Muhyiddin Yassin, the former deputy prime minister and current president of Parti Pribumi Bersatu Malaysia, one of the parties that form the ruling government.

Fakhri is the son-in-law of Tan Sri Abd Rahim Mohamad and Puan Sri Fadzilah Md Ariff, who are the executive chairman and executive director of the firm, respectively.

Abd Rahim’s family controls close to 25% of Eden via a 10.92% stake in Zil Enterprise Sdn Bhd and a 14.07% interest in Serata Padu Sdn Bhd, according to its latest annual report.

Notably, Fakhri who used to sit on the Eden board of directors resigned in December last year.

Earnings-wise, Eden is also loss-making, chalking up a net loss of RM16.5mil in its financial year ended Dec 31, 2017 (FY17).

Nevertheless, compared to the same period a year earlier, its losses were narrowed.

Revenue for FY17, meanwhile, stood at RM52mil.

Eden expects its energy sector business to help make this year a better year for the company as the two power plants it operates in Sandakan and Kelantan are expected to be fully re-commissioned after operating at limited capacities due to technical issues.

Thriven Global is also a company linked to Fakhri.

The company is involved in property development with projects across Peninsular Malaysia.

Its flagship project is Lumi Tropicana, which comprises commercial and service apartments in Petaling Jaya.

For the financial year ended Dec 31, 2017 (FY17), Thriven did see a turnaround, making a small net profit of RM201,000 versus a net loss of RM10.14mil in the previous year.

Thriven was previously known as Mulpha Land Bhd and changed its name following the entry of new major shareholders about three years ago.

These individuals include Ghazie Yeoh Abdullah, who is Mulpha Land’s group managing director, Datuk Low Keng Siong and Fakhri.

Since the entry of these individuals, Thriven has undergone a transformation of sorts and now has a cleaner balance sheet as compared to being debt-laden before which can to a certain extent, explain investor interest in it.

Advance Synergy is another politically-connected firm which has been seeing a lot of interest in the GE14 season.

To be sure, the firm which has diverse operations which include property development, hotels and resorts, had already started to make its way unto investor radar last year when it returned to the black with a net profit of RM4.07mil as opposed to a net loss of RM11.59mil previously.

The company is majority-controlled by 70-year-old Datuk Ahmad Sebi Bakar, a corporate high-flyer in the late 1980s who has often been linked to Tun Daim Zainuddin, a member of the Council of Eminent Persons and also Datuk Seri Anwar Ibrahim, Parti Keadilan Rakyat’s de facto leader.

Opcom Holdings was one the stocks which started to move up even before the GE14 fever gained traction. In the week leading to the GE, its shares had already rallied by 50% to 60.5 sen.

At one point during the period of May 8 to May 17, Opcom rose up to RM1.17.

It has since given up some of the gains to finish at 89.5 sen on Thursday, up 48%.

This company, involved in the manufacture of fibre optic cables and cable-related products is well-known for its connection to Mahathir’s son, Mukhriz Mahathir who is one of the main shareholders of Opcom.

His brother, Mokhzani is the chairman and executive director at the firm.

For its latest quarter ended Dec 31, 2017, Opcom reported a net profit of RM586,000 on a revenue of RM27.5mil.

Meanwhile, also dominating the gainers list this week but in terms of absolute price appreciation were the large-cap companies like British American Tobacco (BAT), Nestle (M) Bhd and Dutch Lady Milk Industries Bhd .

Notably, all are consumer companies.

In a report to clients this week, AllianceDBS Research says consumer sentiment is expected to strengthen.

“With the upcoming economic stimulus to be implemented by the newly elected Pakatan Harapan government, coupled with the feel good sentiment arising from the new administration, we believe that the Consumer Sentiment Index will continue to strengthen going forward which is generally positive for the consumer sector,” it says.

The research house also upgraded BAT to a “buy” this week , saying that the cigarette maker serves as the house’s top pick “for exposure to the consumer recovery theme”.

 

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