PETALING JAYA: The share price of Oriental Holdings Bhd shot up by 31 sen or 6.9%, making it the top gainer on Bursa Malaysia yesterday, and extended Monday’s rebound to RM4.79 from near year-to-date low of RM4.31 last Friday.
The stock has rallied by more than 8% since the beginning of this week.
Investors may have realised the underlying value of the stock, as the company is sitting on a huge pile of cash with most of its assets being undervalued, and some not revalued since the 1970s, according to Bharat Joshi, assistant investment manager at Aberdeen Asset Management Asia Ltd.
Aberdeen holds 44.63 million or 7.19% of the group’s shares as at Dec 6, up from 31.08 million shares or 5.01% it held in September last year.
“I think investors have started to appreciate that the stock has been undervalued. In uncertain times like this, cash is king. Investors might be banking on Oriental pulling off some interesting manoeuvres in the near future,” Joshi told The Edge Financial Daily on Monday.
As at end-September this year, Oriental’s net asset per share stood at RM6.98.
Investors might have taken the cue from Aberdeen which has been slowly increasing its stake in Oriental via the open market since emerging as a substantial shareholder in September last year.
While Aberdeen is raising its stake, another substantial shareholder — the Employees Provident Fund (EPF) — is paring down its holdings in Oriental.
The EPF currently holds 44.05 million or 7.1% of Oriental’s issued and paid-up share capital. This is down from the 58.68 million shares or 9.46% it held in July last year.
Joshi added that Oriental’s cash pile at end-September which stood at RM2.8 billion could be an essential buffer during uncertain times.
As at end-September, Oriental had short-term debt commitments of RM896.48 million while its long-term borrowings amounted to RM34.93 million.
Joshi commended the company’s expansion of its oil palm business especially in Indonesia, where it has 60,000ha, as this segment has become the group’s anchor earnings contributor, overtaking the automotive distribution and auto parts manufacturing operations.
This article appeared in The Edge Financial Daily, December 7, 2011.
The stock has rallied by more than 8% since the beginning of this week.
Investors may have realised the underlying value of the stock, as the company is sitting on a huge pile of cash with most of its assets being undervalued, and some not revalued since the 1970s, according to Bharat Joshi, assistant investment manager at Aberdeen Asset Management Asia Ltd.
Aberdeen holds 44.63 million or 7.19% of the group’s shares as at Dec 6, up from 31.08 million shares or 5.01% it held in September last year.
“I think investors have started to appreciate that the stock has been undervalued. In uncertain times like this, cash is king. Investors might be banking on Oriental pulling off some interesting manoeuvres in the near future,” Joshi told The Edge Financial Daily on Monday.
As at end-September this year, Oriental’s net asset per share stood at RM6.98.
Investors might have taken the cue from Aberdeen which has been slowly increasing its stake in Oriental via the open market since emerging as a substantial shareholder in September last year.
While Aberdeen is raising its stake, another substantial shareholder — the Employees Provident Fund (EPF) — is paring down its holdings in Oriental.
The EPF currently holds 44.05 million or 7.1% of Oriental’s issued and paid-up share capital. This is down from the 58.68 million shares or 9.46% it held in July last year.
Joshi added that Oriental’s cash pile at end-September which stood at RM2.8 billion could be an essential buffer during uncertain times.
As at end-September, Oriental had short-term debt commitments of RM896.48 million while its long-term borrowings amounted to RM34.93 million.
Joshi commended the company’s expansion of its oil palm business especially in Indonesia, where it has 60,000ha, as this segment has become the group’s anchor earnings contributor, overtaking the automotive distribution and auto parts manufacturing operations.
This article appeared in The Edge Financial Daily, December 7, 2011.
