Short Position - Ho Wah's latest bet


  • Short Position
  • Saturday, 08 Aug 2020

Ho Wah’s latest bet

GLOBALLY there is a big race by governments and big pharma to develop vaccines against Covid-19 and big money is involved.

The path to finding a vaccine that passes all testing and regulatory hurdles is not child’s play. The world’s biggest scientific brains and largest pharma players are hard at work on this. Surprisingly, one Malaysia-listed company said it is joining the fray.

Ho Wah Genting Bhdusiness/marketwatch/stocks/?qcounter=GENTING' target='_blank'>Genting Bhd (HWGB), a company not known for any scientific discoveries or pharmaceutical skills set, says it is partnering with a little-known US company to work towards creating a vaccine.

Naturally, in the current euphoric stock market, HWGB’s share price spiked up following the news. The company said it is investing US$1mil (RM4.19mil) into E-MO Biology Inc (EBI) which will undertake phase four clinical trials of the poliomyelitis virus vaccine for Covid-19.

HWGB says this will entitle it to 40% of profits from the commercialised vaccine and that it will have exclusive rights for the production and sale of the vaccine in South-East Asia. HWGB says that EBI has submitted an application to the US Food and Drug Administration (FDA) to conduct phase four clinical trials for the vaccine.

However, EBI was only incorporated on May 24,2020, with its sole director and shareholder being one Qiyi Xie. But Xie and other inventors have the credentials of having filed patent applications relating to infectious disease control including vaccines, immunological treatment and diagnostic product development against Severe Acute Respiratory Syndrome and other relevant diseases.

But it is up against the biggest and the brightest in the race to find a vaccine. Will it succeed? HWGB is a company that has dabbled in numerous businesses but has been loss making for most part of the last 10 years.

It is clearly in search for that golden opportunity to reap much needed profits.

Finally, the power plant takes off

AFTER four years, Tadmax Resources Bhd’s power plant in Pulau Indah has finally crossed a major hurdle.

The power plant, which is held under its 40% associate, Pulau Indah Power Plant Sdn Bhd (PIPP), signed a power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB) which makes the project bankable. With a PPA in hand, the next step is for PIPP to see into the financial close of the 1,200 megawatt gas-fired combined cycle plant that is estimated to cost RM3bil.

The award of the power plant project to politically-linked Tadmax early August 2016 came with some controversy. In announcing the award by the Energy Commission then, Tadmax had said that “in line with the decision by the government, Tenaga Nasional would be invited to participate in the project”.

In immediate response, TNB initially denied having any knowledge of the award of the power plant to Tadmax. A week later on Aug 10, TNB said the Energy Commission had informed it of the award.

TNB did not take any equity stake in the project. Instead, Tadmax managed to rope in Worldwide Holdings Bhd and Korea Electric Power Corp as shareholders with stakes of 35% and 25% respectively. Worldwide Holdings is an entity owned by the Selangor state government.

The award to Tadmax came when the Barisan Nasional government resumed its practice of directly awarding power plant licences without calling for an open tender. The beleaguered 1Malaysia Development Bhd (1MDB) was a major beneficiary as it was directly awarded power plant projects.

The Pulau Indah power plant is to cater for the demands of electricity in the central regions of Peninsular Malaysia. It is being constructed with the latest large-scale turbines with the view of extracting better efficiencies.

Previously there were aspersions that the project was not financially viable as it was too far from the load centre and would involve the construction of an undersea cable. The management, however, refuted such allegations and said that the distance is only 37 km and the entire stretch is through an overhead cable.

At one stage when Pakatan Harapan was in control of the federal government, there were doubts if the project would take off. With the latest development, the project is firmly on track.

Gold rush

THERE has been a gold rush in Bursa Malaysia following the historic high price gold had fetched after hitting US$2,000 an ounce in the global market.

Counters related to gold saw a huge upward surge with Tomei Consolidated Bhd and Poh Kong Holdings Bhd tripling and doubling of their share price in a very short period as investors felt that higher gold prices will see the value of their gold inventories rise.

Whether that value of inventory will translate to cash profit is another issue as higher gold prices may affect sales given the high price of the precious metal.

But the scouring of beneficiary stocks led to investors sniffing out Borneo Oil Bhd and Niche Capital Emas Holdings Bhd, and that led to frenzied trading in their share prices.

Borneo Oil had doubled in value in just days and Niche Capital’s shares had quadrupled in just a few days.

Borneo Oil just a couple of days ago issued a report saying there is about 22,000 ounces in one of the zones assessed by geologists and will explore the other areas. The gold ore density found was just above that of a low grade mine according to the World Gold Council’s g/t standard and the company will seek an external party to mine the gold.

Niche Capital on the other hand had ventured into the construction and property development business and said in its results that for the quarter ended March 31, its pre-existing jewellery business contributed RM1.49mil in revenue. Its new business pillar of construction and property contributed RM3.08mil revenue.

Shareholders of those companies surely will be reaping the windfall of investor interest directed towards those two heavily traded counters but those chasing share prices need to understand what they are buying before engaging in wanton speculation.

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