AFTER a week of intense speculation surrounding the sudden surge in the share price of MUDAJAYA GROUP BHD, there is finally some clarity.
The construction and engineering firm yesterday evening announced the emergence of a new substantial shareholder.
A Taiwanese investor by the name of Kuo Jen-Hao now holds a 27.52% stake, which he acquired from the group’s existing shareholders.
The block crossed at 38.66 sen, which possibly explains why some investors had been chasing up the shares over the past few days.
The stock had skyrocketed by 97% in just a matter of days, from 18.5 sen early last week, and hitting a high of 38.5 sen before settling at 36.5 sen on Thursday - amidst speculation that the group would be announcing a major corporate exercise.
Mudajaya shares, however, cooled off slightly yesterday – the same day the shareholding changes were announced – shedding 1.4% to close at 35 sen.
Back to the transaction, it is interesting to note that the changes in shareholding involved the sale of shares by members of Mudajaya’s past management.
One of the companies that disposed of its stake was Dataran Sentral (M) Sdn Bhd – a company owned by the group’s former managing directors, Ng Ying Loong and Anto Joseph.
Another name involved in the disposal of the block of shares was Wee Teck Nam, who currently sits on the board as a non-executive director.
On the other side of the deal, it was revealed that a small portion of the block newly-acquired by Kuo, is held by two key members of Mudajaya’s current management team – group managing director and CEO James Wong and executive director Eric Lee Eng Leong.
Disclosures by the group noted that Wong, together with Lee, own 10% of the block that was transacted, giving the two a combined stake of 2.7% in Mudajaya.
Wong had joined the board in 2014 and was later named group MD and CEO of the group on April 1,2015.
MULPHA INTERNATIONAL BHD, which had previously controlled Mudajaya, had sold 6.5 million shares in the group to former directors Ng and Joseph’s Dataran Sentral in December 2016, and two years later, declared a dividend-in-specie to its shareholders using its remaining shares in Mudajaya.
After the distribution, Mulpha was left with 0.08% equity interest in Mudajaya, and ceased to be a substantial shareholder.
Now, with the latest transaction, it appears that Mudajaya’s former management team is also out of the picture.
During its heyday, Mudajaya was among of the darlings of construction counters, but the company slipped into losses on the back of lower construction activities and its venture in the power plant business in India.
Having been loss-making since 2014, and bogged down by issues including a stealing scandal involving its staff, Mudajaya had, to some extent, faded from the limelight in recent times.
The group, however, sprang back into the limelight in the past week due to the surge in its share price.
In June this year, Mudajaya told StarBiz that the group expects to start seeing a turnaround in its fortunes by as early as the third quarter of the current financial year ending Dec 31, as it seeks to fix its Indian venture.
However, it said the turnaround would not be reflected in its full-year numbers due to the “overwhelming impact” the Indian venture had on its earnings in the first two quarters.
The group’s third quarter results are expected to be released this month.
Mudajaya had taken a big hit in the fourth quarter of 2018 on a rising share of losses from its power plant project in India.
Its chairman Datuk Yusli Mohamed Yusoff (pic) had then said the group was close to resolving the situation.
“We’re at a stage where we expect to see a turnaround in revenue. We’re still in negotiations with lenders in India on the project but we’re close to finalisation in terms of discussions with them, ” he had said at the time.
Interestingly, a broker points out that at its current price, Mudajaya seems undervalued as it has a much higher break-up value.
The group has fast-growing power assets, including a 50MW power plant awarded by the government in 2016.
In India, indications are that the 1400MW power plant is already operational, at least partly, and that Mudajaya is in the midst of negotiating some offers for these assets at the moment.
Also, according to its latest annual report, the group has a total RM1.6bil worth of assets, including some land and buildings.
So what comes next for Mudajaya?
With a new substantial shareholder, and the exit of the former management team, it appears that changes are on the horizon.
The theories range from a possible privatisation, to fund-raising exercises in the near future.
The management says the company’s fortunes are changing and that a turnaround is imminent.
At the same time, the scandal relating to its former employee, Michael Chua, who allegedly stole RM72mil from the company is also being taken care of, with both criminal and civil proceedings initiated. For now, all these point to potentially better times ahead.
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