PETALING JAYA: Suiwah Corp Bhd, whose share price dropped to a five-year low a month ago, surged 22.94% yesterday following the decision of its major shareholder to privatise the retail firm.
The Penang-based Suiwah’s shares hit limit-up in morning trade, rising 65 sen or about 30% to an intra-day high of RM2.83.
By 5pm, the stock had pared some of its gains and closed at RM2.68, 50 sen or 22.94%% higher than the previous trading day’s closing price.
A total of 95,200 shares changed hands. The Main Market-listed Suiwah also emerged as Bursa Malaysia’s biggest gainer yesterday, amid the negative market breadth.
The sharp appreciation in share price lifted Suiwah’s market capitalisation to RM153.4mil. It is currently trading at a price-to-earnings ratio of 13.97 times.
Suiwah manages a portfolio of departmental stores, supermarkets, malls, convenient stores and event halls on Penang island under the trade name of Sunshine. The company is also involved in property development and the semiconductor industry.
On Jan 25, Suiwah told the stock exchange that its single largest shareholder, Suiwah Holdings Sdn Bhd (SHSB), and the persons acting in concert have proposed to delist the company by way of selective capital reduction and repayment (SCR). SHSB is the private investment vehicle of Suiwah’s founder and managing director Datuk Hwang Thean Long. The offerors – the Hwang family – collectively own a 30.9% equity interest in Suiwah.
Thean Long is the ultimate offeror.
Under the SCR plan, a RM110mil capital repayment by Suiwah to other shareholders in the company has been proposed, which works out to RM2.80 a share.
The offer price represents a premium of 28.44% against its five-day, volume-weighted average price of RM2.18.
The payment to the entitled shareholders will be made on an entitlement date to be determined later. The privatisation offer will remain open for the board’s acceptance until Feb 11, 2019.
Commenting on the rationale behind the privatisation offer, Suiwah said its shares have been thinly traded. It also said that its listing status brings minimal benefit to the group and its shareholders.
“The privatisation of Suiwah by way of the proposed SCR would also provide greater flexibility to Suiwah in managing and developing its existing businesses without the regulatory restrictions and cost associated with being listed on Bursa Securities,” it stated in a Bursa Malaysia filing.