The latter holds the licensing and distribution rights for several brands of clothes and fashion apparels such as leather goods. It has over 700 consignment counters at leading departmental stores throughout Malaysia retailing products for men, women and children.
Lotus KFM is principally in the business of milling, distribution and sale of wheat flour and starch products. Its products are one of the key ingredients for the food manufacturing industry.
The businesses of both Lotus KFM and MESB are anchored on consumer spending. Apart from that, they are like chalk and cheese. There are completely no synergies between the operations of both companies.
Hence, what do Wong Sak Kuan and Yau Min Teck, who are shareholders in Lotus KFM, see in MESB for them to emerge as the controlling shareholder in the latter?
Wong, who owns more than 29% of Lotus KFM and Yau who has 8.4% have emerged as substantial shareholders of MESB by increasing their stake on Oct 12 from 16.35% to 44.14%.
They bought the additional stake from the major shareholders of MESB at 30 sen each.
The writing was already on the wall for the entry of a new substantial shareholder in MESB as far as October last year.
The company, which was controlled by Teoh Hwa Peng through privately held Angsana Inai Sdn Bhd, had proposed a 30% private placement at 42.5 sen per share.
The proposal to issue new shares of 36.85 million went through board and shareholders in less than two months and the first tranche, amounting to 9.5 million shares were issued.
The response was tepid so the placement of more shares was put off.
But not all shareholders appeared to be happy with the developments in the company. Some shareholders holding more than 10% of the company, including a director, had requisitioned for a shareholders meeting to be called twice.
But MESB told Bursa Malaysia that there were no specific reasons given by the requisitioning shareholders for the meeting to be called. Now with Wong and Yau making a general offer for MESB, the dissenting shareholders will probably cash out. But what is the end game for the company?
Sign of the times
The challenging business environment, brought on by the onset of the Covid-19 pandemic, has taken the wind out of duty-free retailer Atlan Holdings Bhd. Results revealed this week showed that the company has reported a RM6mil loss for the second quarter ended Aug 31,2020. For the six months period, that loss has galloped to RM20mil.
This is not a big surprise. As explained by the company itself, due to compliance with movement control orders by the government, many of its retail outlets have been shut.
The loss of business meant there are insufficient funds to offset fixed costs like rental and payroll expenses, the company said. It added that the outlook looks bleak and that the group’s retail outlets at the Malaysia-Thai border and airport outlets remain closed.
The company says it has already implemented cost cutting measures including downsizing of manpower and closure of non-profitable retail outlets. On a positive note, Atlan says that it is actively pursuing revising its business plans to mitigate further negative impact arising from the Covid-19 pandemic but did not elaborate on those. Perhaps a leaf ought to be drawn from Singapore.
There, the Changi Airport Group (CAG) while being hit by the pandemic – its airport stores suffered an almost 60% drop in sales in February and March – has seen its online sales surge. The airport’s online duty free shop iShopChangi recorded a 58% surge in sales in the first 10 months, onboarding more than 10,000 new brands including brands such as Aveda, Banyan Tree Essentials and Too Faced. This is a good example of how morphing one’s business plan quickly and timely, in this case going digital, is very crucial especially in these trying times.
Other recent examples of businesses being badly hit by the pandemic include two big names in the leisure and entertainment sector – MBO Cinemas and Kidzania Singapore – which are facing liquidation woes. An earlier implemented digital strategy may have helped them through this difficult times.
Controlling the risk
The roads in the Klang Valley are relatively empty following the implementation of the CMCO to control the spread of Covid-19 in the third wave of the pandemic the country is experiencing.
Why this has happened is quite apparent – blame it on the state election in Sabah – but the stark reality is that the economic impact from this third wave serves notice of what can happen if politics were to rear its head once again.
Businesses are already hurt from the fallout of Covid-19, and the subsequent measures to keep the disease at bay mean that things are not returning to normal as fast as anyone had hoped for. The promise of a vaccine may bring glimmer of hope that things will return to normal but are still many variables and unknowns in the direction of a medical solution to the damage the coronavirus has caused to lives and livelihoods.
The evaporation of footfalls in malls and the constraints imposed on the general population to control the spread of the disease is a reminder of what can happen if Covid-19 is left unchecked. Right now, there is a yearning for people to get their lives and jobs back. Schools need to be safe from the threat of disease so that our young can get an uninterrupted education. For the school and university leavers, the question is what can the hope for in terms of gaining gainful employment instead of worrying about how their futures will look different from that of their parents.
For parents, it is the constant worry of whether their jobs and salaries are safe in order to provide for their families and for the retirees, grandparents and the sickly, it is a constant fear over their fate, which is linked to statistical averages that put them in a higher danger category.
Whichever way those scenarios are shuffled, the crux is that what Malaysians don’t need now is more political instability and scenarios that can hurt their livelihood prospects. The third wave is only just beiginning to show us that.
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