Thursday 20 October 2016

KHEESAN and REACH to have general meetings in early morning hours and late afternoon hours

Headquartered at Seri Kembangan, Kheesan had been conducting its AGMs in Klang Valley. 


FY
Venue
Time
2000
Bukit Jalil Gold & Country Resort
1500
2001
Bukit Jalil Gold & Country Resort
1500
2002
Bukit Jalil Gold & Country Resort
1500
2003
Bukit Jalil Gold & Country Resort
1500
2004
Bukit Jalil Gold & Country Resort
1500
2005
Mines Resort City, Seri Kembangan
1500
2006
Mines Resort City, Seri Kembangan
1500
2007
Mines Resort City, Seri Kembangan
1500
2008
Mines Resort City, Seri Kembangan
1500
2009
Mines Resort City, Seri Kembangan
1100
2010
Mines Resort City, Seri Kembangan
1111
2011
Mines Resort City, Seri Kembangan
1111
2012
Mines Resort City, Seri Kembangan
1111
2013
Mines Resort City, Seri Kembangan
1111
2014
Mines Resort City, Seri Kembangan
1111
2015
Mines Resort City, Seri Kembangan
1111
2016
Taman Perindustrian Desa Cemerlang, Ulu Tiram, Johor
0800
However, for FY16, the group will convene its 22nd AGM at Ulu Tiram, Johor. Looking at the list of properties of the group shown in FY15 annual report, it did not show Kheesan owning any property in Ulu Tiram. The AGM will be held at London Biscuit's office in Ulu Tiram. London Biscuit is the largest shareholder of Kheesan.

Besides the unexpected change in meeting venue, the meeting is scheduled to start at 8a.m..

What could be the real reason of having the AGM so far away from its business address, and at such early hour if it is not trying to discourage minority shareholders from attending the AGM? Shareholders should seek clarifications from the management.

Separately, Reach Energy will be having its EGM on 4 Nov 2016 at 3.30pm. I think the reason of having the general meeting in late afternoon hours is to provide fair trading of its shares as the asset acquisition voting results are material to the movement of the share price, its warrants price in particular. It may take 1 to 2 hours for presentation on the proposed acquisition and Q&A session before the voting starts. By the time the results are released, stock market would probably have closed for the day. This prevents potential unfair advantage to those who know the results before announcement by the Chairman in the EGM or to those members attending the meeting versus those shareholders who do not.

Monday 10 October 2016

Bina Puri – Keep asking for money but where has the value gone?


Bina Puri had its IPO in November 1994. Based on IPO price of RM2.80/share, it carried a market value of RM112m. It has been about 22 years since its listing. However, its current market cap is below the value of the group during IPO time (based on IPO offer price).


Let’s not forget after IPO, Bina Puri has raised a total of RM150.4m from rights issue (RM40m), private placement (RM93.3m) and ESOS (RM17.1m). This has not taken into consideration that the group had capitalised RM20m of debt in 2009.



And last Friday, Bina Puri proposed a private placement of not more than 10% of enlarged share capital of the group. Again?


The company has been profitable since 2000. But why is it still stucked as a micro cap company? Furthermore, the total proceeds raised over the years after IPO alone (RM150.4m, excluding RM20m debt capitalisation) were already greater than its current market cap, even after deducting total dividend paid out since 2003!(historical records of dividend payout before 1999 were not available at Bursa website)

Despite it has been profitable since 2000, it had to carry out capital reduction (from par value per share of RM1 to RM0.50) in 2014 in order to new shares as the share price then was way below RM1. As highlighted above, the IPO offer price was RM2.80/share. What has gone wrong?

Is this company too undervalued that investors failed to appreciate the assets owned by the group and its earnings potential or is it something not right within the company that caused value destruction to the minority shareholders? Something for existing shareholders of Bina Puri and potential investors to look further into.

UPDATE: The group's cash and cash equivalents as of end June 2016 was RM-11.4m (negative cash!)

You may be interested to find out previous writing about Bina Puri: Is Bina Puri Cheap?

Sunday 2 October 2016

Is Bina Puri cheap?

Bina Puri was founded in 1975. It celebrated its 40th anniversary in 2015. Among its track records:

- Completed many types of civil and building projects in various parts of Malaysia, including East Malaysia 
- It has completed several projects in overseas (Thailand, Brunei, Russia, India, Nepal, Pakistan, UAE, China, and etc.)
- Completed Ampang LRT line extension
- Completed KLIA2 satelite building
- A group with turnover exceeding a billion RM (since 2010)
- Uninterrupted yearly profit since 2000

In terms of assets, the group has:

- Recurring income from power generation business in Indonesia (more than 30MW)
- 50% stake in LATAR Highway
- Net asset value per share of 93.47sen as of end June 2016
- Recurring income from Main Place shopping mall (33% effective stake)

For its construction division, it has a strong outstanding order book of RM2.0b. It is actively tendering for civil works such as LRT 3, MRT 2, and various highway projects.

However, some readers may not be aware that the group's market capitalisation is only RM101m (share price 41.5sen) last Friday.

Construction companies such as Gamuda, IJM were founded around 1970's or 1980's. Their market capitalisations have now exceeded RM10b. Late comer Gadang which Tan Sri Kok Onn took over the control in 90's, is having a market cap of RM742m. It has similar business segments as Bina Puri (construction, property and utilities). Construction specialists focusing in foundation works, Econpile, Ptaras have market caps of  RM904m, and RM582m.

Before reading further, what do you think?
a) The stock is grossly undervalued
b) There could be reasons for the uninspiring share price performance.

In 2013, Ng Keong Wee took up private placements by the group at RM1/share and emerged as a substantial shareholder with about 9% to 10% holding in the group. About 3 years down the road, his stake has been diluted to 5.8%. A bigger concern is the paper loss as the share price has declined to about 40sen/share now.

Some bloggers have recommended this stock but why is the share price fails to excite in a sustainable manner? 

Even though the numbers look good, unless there is a positive change in certain "qualitative" aspect of the group, I am skeptical that the share price will go far in a sustainable manner.

Separately, SJC is an advertising company. It is in net cash position with the value close to its market cap. This is before including some good properties owned by the group. The group has been profitable in recent years. It also pays dividend. Last week, it has just secured a 10-years concession from MRT which may double the group's revenue. Despite all these, there was no appreciation in terms of share price. This stock is under researched but I am sure there are investors who know the group and its financial standing. Other than share trading liquidity, what is lacking is the stock?

I see similar issue in Menang and AYS. Again, unless there is a positive change in certain "qualitative" aspect of the group, I tend to think the share prices of these listed companies won't go far.