PETALING JAYA: Seal Incorporated Bhd
, which has been attempting to turn around its fortunes, sees the entry of businessman Aaron Chen Khai Voon as strategic and advisorial.
Last week, Seal said it plans to place out 20% new shares in the company to Chen at a price of 26 sen a piece for a total RM16.2mil.
This would give Chen a 16.67% in Seal. The Koay family, led by Nixon Koay Shean Loong and his mother Datin Seri Tan Guik Lan, will see their holdings diluted to 18.6% following the entry of Chen.
Seal’s executive director, 29-year-old Nixon Koay said Chen will become a part-time adviser for the group as the latter’s corporate network and experience should prove valuable to Seal.
“Chen will not be involved with day-to-day operations but his appearance as a strategic investor should uplift the company’s image,” Nixon Koay told StarBiz.
Having taken over the reins in December 2020 following the demise of his father Datuk Koay Teng Choon, Nixon Koay says his recent meeting with Chen came at a timely juncture as Seal is looking to diversify.
Seal, a low-profile and long-time Main Market-listed company formerly known as South East Asia Lumber Corporation Bhd, started out in timber and then ventured into construction and property.
Its past property projects include Elit Heights, Elit Avenue and Sapphire in Penang.
Seal recently said it viewed the renewable energy (RE) sector favourably and has been eyeing solar power-related engineering, procurement, construction and commissioning (EPCC) jobs.
“Property development has long gestation periods. We need other viable businesses and RE will not only bode well for us in that sense but also boost our environmental, social and governance (ESG) targets.
“We made it clear in our announcement that the funds raised from the new placement exercise will go towards developing this new segment,” Koay said.
Chen’s proposed entry had stirred excitement in Seal’s shares, which rose by some 40% on the day after the announcement of his entry. It closed last Friday at 41 sen, giving the company a market capitalisation of RM130.1mil.
Low-profile Chen is the co-founder and major shareholder of Genetec Technology Bhd and holds an 18.26% stake in the company, which has a market capitalisation of around RM2bil.
Chen also has stakes in PappaRich Group Sdn Bhd, Beacon Hospital and MSR Green Energy Sdn Bhd. The latter undertakes EPCC project management and consultancy for solar photovoltaic projects.
Seal’s Nixon Koay added that while there is nothing concrete yet on the specific business Seal intends to acquire, there are some options on the table as the company is still identifying the best option.
This is not the first placement that Seal has carried out in recent years. In February this year, the group conducted a similar exercise and another two back in 2021, all generally for working capital purposes.
“There were not many developments in the group for the past two years because the management took the opportunity during the Covid-19 pandemic to restructure and revise the plans in its offerings. This year is a really important year for Seal,” he said.
On property development, Nixon Koay said Seal is planning two property launches this year.
“We are expecting to generate quite a bit of revenue as we also see a pick-up in demand in the market.
“A few more land parcels were added in the last few years, especially in Penang. We are looking to re-establish our presence in Penang as a property developer,” he said.
Seal’s earnings have been patchy, reporting a profit after tax of RM16.2mil in its financial year ended June 30, 2020 (FY20) but slipping into the red with a loss of RM10.4mil in FY21.
In FY22, Seal had a turnaround in profitability and recorded a profit after tax of RM4.6mil, underpinned by factors like higher gross profit margin and tax income.
The company is in a net debt position of RM37.1mil.
