English

12.10.2018

MESSAGE FROM THE CEO

Increasing Free Float Through Government Divestments

The government has indicated that it will consider downsizing its stakes in GLCs which are held by Government-Related Institutions such as Khazanah Nasional Bhd, Employees Provident Fund, Lembaga Tabung Angkatan Tentera, Kumpulan  Wang  Persaraan  (Diperbadankan) and Permodalan Nasional Bhd, (currently held via GLICs and Khazanah). The collateral benefit is increased free float…more shares floating in the market which allows investors to buy these GLC shares without causing share price spikes. The foreign institutional investors love increased free float too…very much. Foreign institutional investors buy in bulk and if there is not enough free float such bulk buying often sends share prices spiraling because of limited supply. Moreover, it may be harder for them to buy in large quantities and the spread in share prices may be pretty wide too.

It is no secret that the Government-Related Institutions can influence the market and the stock market indices due to their sheer size of shareholdings. Some say that the higher PE (price earnings ratio) enjoyed by companies listed on the Malaysian stock exchange, compared to its regional peers, is due to the heavy involvement of the Government-Related Institutions.

We cannot blame the Government-Related Institutions for buying-up these good GLCs and hanging on to them for the long term as that is what long-term investment is all about.

05.10.2018

MSWG’S QUICK TAKE ON-ONGOING CORPORATE DEVELOPMENTS

VERSATILE CREATIVE BERHAD (“VCB”)

VCB held its 15^th Annual General Meeting (“AGM”) on 30 September 2018.

The voting results for the resolutions of the AGM are shown below:

1. Resolution 5 was withdrawn. Dato’ Wong Kong Choong @ Leong Kong Choong had, on 29 September 2018, indicated his wish for not seeking re-election as a Director of the Company pursuant to Article 73 of the Company.
2. Resolutions 6 and 7 were also withdrawn. En Fathi Ridzuan bin Ahmad Fauzi and To’ Puan Rozana Binti Tan Sri Redzuan have resigned as Directors of the Company with effect from 24 September 2018 and 27 September 2018 respectively.

The Quarterlies – Do We Still Need Them

In Malaysia, PLCs are required to announce their quarterly financial statements within two months of the quarter end.

There is growing debate on the merits and demerits of such quarterly announcements.

Some countries are doing away with the quarterly announcements, and replacing it with six-month announcements, for several reasons.

Regulators in Malaysia are probably revisiting the merits and demerits of these quarterly announcements.

At MSWG, we prefer the quarterly announcements as it gives the shareholders an early ‘heads-up’ on the financial situation of the PLC. The quarterly transparency will facilitate informed decision-making. Also, price discovery is facilitated by more frequent disclosure of information.

21.09.2018

MSWG’S QUICK TAKE ON-ONGOING CORPORATE DEVELOPMENTS

KIM TECK CHEONG CONSOLIDATED BERHAD (“KTC”)

KTC announced the resignation of its Independent Director, Mr Wee Hock Kee who is Chairman of the Audit and Risk Management Committee as well as a member of the Nomination Committee on 12 September 2018.

In his resignation letter to the Chairman of the Board, the Independent Director had stated the following:

“I feel I have no choice but to step down, due to the recent development in the boardroom wherein my role as the Chairman of the Audit and Risk Management Committee has been undermined. 

The Board had rejected the advice of the Audit and Risk Management Committee on a significant accounting matter (a significant audit finding on impairment reported by our external auditors in their Audit Review Memorandum) that my Committee considers it cannot compromise over; and all means to resolve the disagreement had been exhausted. It is irresolvable concern about disclosure and financial reporting of the fourth quarter 2018 unaudited results. This breakdown of trust and confidence on us (collectively as members of the Audit and Risk Management Committee) has diminished our effective contribution as an oversight board for financial reporting.

Hence, I as the Chairman of the Audit and Risk Management Committee take full responsibility for this impasse and the best way is to resign as a board member and pave the way for the appointment of a new Chairman of this board financial oversight committee.  I believe I have served the board to my best ability and exercise my fiduciary duties in good faith taking into account the interest of ALL shareholders.”

[Source:  KTC’s announcement on Bursa Malaysia’s website on 12 September 2018]

14 September 2018

MESSAGE FROM THE CEO

PLCs sitting on large cash balances

Every now-and-then, we come across PLCs sitting on large cash balances.

Inevitable, minority shareholders, and even institutional shareholders, sometimes raise the following question to the Board at AGMs: “Why don’t you distribute some of the cash rather than just sitting on it?”

For these shareholders, their rationale is simple: if you do not have any plans to use the money (like capex) over the next few years, why do you not return the money to shareholders as dividends.

Shareholders often phrase their statement to the Board as the PLCs ‘not sweating their assets (cash) enough’. The cash is merely sitting in the PLC and the PLC is only getting FD rates. This is not the reason why the shareholders parted with their cash to invest in the PLC, especially during the IPO.

To be fair, some of these PLCs do declare dividends while some do not. While some dividends are generous, the other dividends are not so…barely above the Fixed Deposit (FD) rates.

The answer from the Boards are often that the cash is being held as a ‘war chest’…we do not know what bargains (acquisitions/takeovers) will come our way in the future and when it does come, we must have sufficient cash. The PLCs argue that with cash settlement terms, they can obtain better prices and at the same time not affect their gearing ratios adversely.

12 September 2018

MSWG’S QUICK TAKE ON-ONGOING CORPORATE DEVELOPMENTS

TA ENTERPRISE BERHAD

INDEPENDENT ADVICE CIRCULAR TO THE HOLDERS OF THE OFFER SHARES (HOLDERS IN RELATION TO THE CONDITIONAL MANDATORY TAKE-OVER OFFER BY DATUK TIAH THEE KIAN (“OFFEROR”) THROUGH TA SECURITIES HOLDINGS BERHAD TO ACQUIRE ALL THE REMAINING ORDINARY SHARES IN TA ENTERPRISE BERHAD (“TAE”) (“TAE SHARES”) NOT ALREADY HELD BY THE OFFEROR AND THE PERSONS ACTING IN CONCERT WITH HIM (“PACS”) (“OFFER SHARES”) AT A CASH OFFER PRICE OF RM0.66 PER OFFER SHARE.

Recommendation by BDO Capital Consultants Sdn Bhd (“BDO CC”):

BDO CC is of the view that the Offer is NOT FAIR and NOT REASONABLE. BDO CC advises and recommends that Holders to REJECT the Offer.

Recommendation by the Directors:

The Non-Interested Directors excluding Jory Leong Kam Weng, being:

• Zainab Binti Ahmad
• Dato’ Sri Mohamed Bin Abid
• Peter U Chin Wei
• Christopher Koh Swee Kiat
• Datin Rahmah Binti Mahmood