Short Position

Furniweb in focus  

WHAT is happening to Furniweb Holdings Ltd, a 63%-owned subsidiary of PRG Holdings Bhd that is listed on the Stock Exchange of Hong Kong?

Earlier this week, property and construction firm PRG issued two filings to Bursa Malaysia with regard to Furniweb - the first announcement was related to Furniweb having issued a profit warning over a steep decline in its net profit for the nine months ended Sept 30, 2018.

In the second announcement, PRG said that Hong Kong regulators had cautioned Furniweb over the high concentration of shares in a small number of shareholders, as well as the recent surge in its share price.

Despite the profit warning, the stock is trading almost at its all-time high - HK$1.85 as of yesterday. This is a 440% surge from the closing price of 33.5 HK cents on Aug 28.

The huge surge could be partially due to Furniweb’s announcement on Oct 3 that PRG had disposed of 60.48 million shares, or 12% of the issued shares, for HK$30.24mil to independent third parties.

The disposal price was 50 cents per share, compared with the closing price of 80 cents on Oct 3.

On its profit warning announcement, Furniweb informed shareholders and potential investors that “there was a substantial decline in the group’s net profit of about 86.5% in the period as compared with that of the corresponding period in 2017”.

To be fair to yarn-maker Furniweb, it has been profitable over the last five years, although both profits and margins haven’t been exciting. Its past profits ranged between RM4mil and RM6mil with low single-digit margins.

Perhaps, poorer market conditions and a depreciating currency could really take a significant chunk off its earnings.

On its public shareholding, Hong Kong’s Securities and Futures Commission completed an enquiry saying that as at Oct 8, a total of 19 shareholders held 143.27 million shares or 28.43%.

Together with 317.52 million shares (63% of the issued shares) held by a substantial shareholder, this represented 91.43% of the issued shares as at Oct 8. As such, only 43.20 million shares or 8.57% was in the hands of other shareholders.

This would mean that the public float of Furniweb is extremely small. Until this issue is resolved, expect more wild swings in its share price.


Cut the red tape, Malaysia 

THE fact that Malaysia has moved up nine places to secure a global ranking of 15 in the World Bank’s business index after several business reforms in the past year must be commended.

However, one niggling issue remains in that the country performed relatively poorly in the area of the registration of new businesses.

In the latest rankings, results revealed that Malaysia continued to underperform in the area of starting a business, coming in with a global ranking of 122.

Despite reform measures carried out over the years, it takes 9.5 procedures and 13.5 days to register a new business in Malaysia, compared with two procedures and 1.5 days in closest neighbour, Singapore.

By all measures, this is not a good thing as the speed of starting a business is an important indicator of a country’s overall level of efficiency and ease of doing business.

Why is there still so much red tape in an era where most things are supposedly technologically driven and therefore should be able to be addressed and completed quickly.

The old-school mentality of “this is the standard operating procedure or SOP” should be done away as much as it can possibly be.

Away from the registration of new businesses, red tape still exists in many facets of Malaysian society.

It is understood that in areas like healthcare, patients who are dependent on the government for assistance need to go through “many levels of SOP” before they can be accorded what they need.

Is this fair to them?

Some SOPs are really not that necessary. Let’s hope the new government will push for more efficiency in the days to come.

The MyEg counter still in normal operation at Immigration headquarters in Putrajaya.  MOHD SAHAR MISNI/The Star

More clarity needed 

A REPORT on MyEG Services Bhd issued by a research house early this week has raised something interesting.

The report stated that MyEG’s major shareholder, Asia Internet Holdings Sdn Bhd (AIH), had pledged 50 million MyEG shares to a bank to raise funds to subscribe to an initial coin offering (ICO) issued by a developer.

AIH is owned by MyEG’s managing director, T.S. Wong, and group chairman Datuk Norraesah Mohamed.

The analyst report was seeking to explain the filing by AIH on Oct 26 that it had disposed the said 50 million shares “in pursuant to a financing arrangement”, which typically takes the form of margin financing.

So, the report was seeking to explain that this margin financing was for AIH to raise funds to subscribe to an ICO by a property developer to finish the construction of a shopping mall in the Klang Valley.

The coins can be used to rent space in the developer’s shopping mall when completed, according to the report.

It does seem that the report, which has maintained its “add” call on MyEG, is seeking to assuage concerns of shareholders who thought AIH was selling MyEG shares into the open market.

However, it does raise other questions.

ICOs are a novel fund-raising mechanism using the underlying blockchain technology. However, they remain a grey area of the law. The Securities Commission in Malaysia and the Securities and Exchange Commission (SEC) in the US have gone after ICOs which they feel have transgressed securities laws.

True, the investment was made by a private entity, namely AIH, and not by the listed MyEG.

Still, it would do good for AIH to explain more about its investment in the ICO. For example, it should clear the air if the ICO was done by a developer that had any links to MyEG, for example, if it was a developer that MyEG is a customer of. If so, then there’s the possibility of a related-party transaction disclosure that needs to happen. Also, it is still unclear if the developer mentioned in the report had gotten the green light from the authorities to conduct an ICO.

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