THE heated-up stock market is leading to a rush for unlisted assets to enter the capital market and for individuals to take over listed companies.
Just this week, three such deals surfaced.
First, MSCM Holdings Bhd announced the emergence of a new major shareholder in the form of Penang-based Hong Seng Group. This followed the divestment by MMAG Holdings Bhd, which has sold its entire 29.89% stake in MSCM to the Hong Seng Group for RM18.09mil cash.
The Hong Seng group is the vehicle of Datuk Teoh Hai Hin and his brothers Hai Seng, Hai Bim and Hai Peng. The group has half a century of experience in lorry-related businesses and is seeking to expand its vehicle leasing operations. Hong says that the entry into MSCM is to transform the latter into a formidable logistics play in South-East Asia, particularly in the area of lorry supply.
Filings show that Hin and his daughter Teoh Soon Han, 35, had joined MSCM’s board already.
MSCM, which was formerly known as PanPages Bhd, also proposed a name change to Hong Seng Consolidated Bhd. MSCM has also announced plans to invest RM2mil for a 20% stake in eMedAsia. The deal will see it becoming eMedAsia’s exclusive fourth party logistic service provider to give warehousing services to all eMedAsia’s member clinics and hospitals. Note that MSCM’s share price has skyrocketed from about 30 sen two weeks ago to hit a high of RM1.34, before closing yesterday at RM1.15. This translated into a market cap of RM366mil.
Then later in the week, Oversea Enterprise Bhd was the subject of a takeover from Datuk Chai Woon Chet, the managing director and a substantial shareholder of Anzo Holdings Bhd after he acquired 63.37% of the Chinese restaurant operator at 30 sen per share.
Interestingly, a day before the takeover was announced, an English daily reported that Oversea could see the entry of tycoon Tan Sri Desmond Lim, who is said to be on the lookout for attractive assets, such as the food & beverage business
Interestingly, a dealer familiar with the current situation said that there was more than one party bidding to buy the blocks of shares of both those listed companies.
“Clearly, there seems to be a rush to acquire listed companies now considering the stock market’s performance. However, the fact that there are sellers tells you that rushing in now has its risks, ” he says.
Back to Oversea, the acquisition of Anzo’s Chai triggered a mandatory takeover offer for the rest of the shares in the former not held by him. However, Chai, who is also a director of M3 Technologies (Asia) Bhd, intends to keep Oversea listed on the stock exchange.
It is unclear what plans Chai has for Oversea, which has been loss-making for the past six financial years.
One possibility is tapping into the frozen Chinese food segment for the export market, one source says.
Whatever the case, the corporate exercise saw punters chasing the stock up by 95.24% or 30 sen to 61.5 sen yesterday – surpassing the takeover offer of 30sen.
Meanwhile, on the back of a strong demand for medical gloves because of Covid-19, an unlisted glove maker Harps Holdings Sdn Bhd is said to be weighing an initial public offering (IPO). Bloomberg reported this week that the local glove maker is seeking to raise about US$500mil or RM2.1bil from the potential IPO that could take place in the first half of next year.
According to sources, Maybank Investment Bank is working on the deal but the interesting thing is what valuation will the company be looking to come onto the local bourse given that listed glove manufacturers are trading at high price-earnings ratio following a meteoric rise in their share prices in recent months. The other question is whether the current euphoria over glove makers can sustain in the event a vaccine is found by year-end or next year.
Harps’ key subsidiary is lightweight nitrile examination glove maker Central Medicare Sdn Bhd, which it bought in 2015. Central Medicare operates 24 double-former production lines that contribute to a total monthly output of 590 million units of gloves.
According to record by the Companies Commission of Malaysia, Harps has a share capital of RM100mil. It made a revenue of RM512.21mil and a profit after tax of RM57.93mil for the financial year ending Dec 31,2019. That makes it a relatively small player vis-à-vis the listed glove stocks on the local bourse.
More recently, there was speculation that WRP Asia Pacific Sdn Bhd, one of the largest unlisted glove manufacturers based in Sepang, was planning to reverse itself into a locally listed firm. But so far nothing has materialised on this front for the company that saw the entry of Singapore-headquartered private equity fund TAEL Partners as an investor early this year.
Meanwhile, Australian listed VIP Gloves Ltd, which has operations in Malaysia has also seen increased investor interest there, not unlike its peers on Bursa Malaysia. In November last year, it was reported that the company was exploring the possibility of a dual listing in Malaysia or Hong Kong following the emergence of a new shareholder, Hong Kong’s Silver Max Asia Pacific Labuan Ltd.
VIP Gloves is primarily involved in the manufacturing of nitrile gloves, supplying the product for a number of big rubber players in Malaysia on an original equipment manufacturer or OEM basis with a production plant in Beranang, Selangor.
Last month, Australian media reported that VIP Gloves plans to boost production capacity by up to 60% with the installation of four additional new production lines over the next 18 months to meet the strong demand for nitrile gloves on the back of the prolonged global Covid-19 pandemic.
As part of its plans, the company raised A$2.3mil to part-finance the installation of the initial two new nitrile glove production lines at its Selangor factory premises. These two new lines will increase annual glove production by around 40% to 620 million pieces when operating at full capacity.
With Malaysia being the red-hot market for glove makers, there is a stronger case for VIP Gloves to consider a listing on Bursa Malaysia, say some.
If last month’s listing of Sri Trang Gloves Pcl in Thailand is anything to go by, investor appetite for IPOs of glove manufacturers are strong. The company, which is Thailand’s largest glove maker and command an 8% share of the global market, made a successful debut gaining as much as 77% on its first day versus its IPO price of 34 baht. Its share sale saw high demand from institutional and retail investors. The stock closed yesterday at 88.5 baht - up 46% in just over a month.
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