KUALA LUMPUR: Something appears to be brewing between two unrelated and generally thinly traded stocks — Sanbumi Holdings Bhd and Permaju Industries Bhd.
The former’s major shareholder has been building up a sizeable stake in the latter, leading to speculation that this may lead to an alliance between the two companies.
Both Sanbumi and Permaju share a common business interest in timber and both companies are loss-making.
The typically illiquid stock of Permaju saw relatively large movements of its shares traded off market last week.
On Nov 29, Sanbumi managing director Datuk Chua Tiong Moon bought an additional 3.63 million shares in Permaju at 29 sen a piece for RM1.05 million in a married deal.
This brought his total shareholdings to 12.99 million shares or a 6.91% stake in Permaju, making him the third largest shareholder behind brothers Tan Sri Chai Kin Kong and Datuk Chai Kin Loong, who have 10.95% and 7.35% direct stakes in the company respectively.
On the next day (Nov 30), 4.5 million Permaju shares were exchanged in an off-market cross trade at the same price of 29 sen. These shares were sold by Kin Kong, Kin Loong and other family members.
In contrast, Permaju’s 30-day volume traded average is just 7,077 shares.
Permaju’s biggest shareholder Kin Kong had reduced his stake from 13.7% on April 22 to 10.94%, and on Sept 28 selling most of the 7.64 million shares in the open market.
Kin Kong also disposed of 2.9 million Sanbumi shares, reducing his stake to 4.99% with a total of 8.694 million shares.
It appears that Chua has been building up his stake in Permaju, possibly buying up the Chai brothers’ shares.
It is unclear what Chua’s motive is, although there could be a synergy between the two companies’ timber businesses.
Permaju and Sanbumi have a market capitalisation of RM58.78 million and RM47.31 million respectively.
Permaju has two core businesses in timber and automotive. While Permaju’s timber segment accounted for a majority of the group’s assets, its automotive division contributed almost 10 times the revenue compared with timber.
Permaju’s timber business which has 59.41% of the group’s assets at RM140.84 million only contributed RM14.09 million in revenue or 8.94% of their full-year revenue ended Dec 31, 2010. The timber segment incurred a loss of RM5.35 million overall.
Its automotive segment which contributed 90.98% of its 2010 revenue, accounted for 46.44% of the group’s total assets in the same period.
Permaju executive chairman Datuk Rahadian Mahmud Mohammad Khalil wrote in the 2010 annual report, “The group’s timber log trading activity is to be further rationalised and to cease if the trading environment remains unhealthy.”
Permaju has RM16.96 million worth of timber concession rights in Pahang and Kelantan and Sanbumi’s principal activities through its subsidiaries are saw milling, manufacture of downstream timber products, timber log and timber product trading.
For the group’s 3Q results ended Sept 30, Permaju incurred losses of RM5.02 million, with its timber business offering weak revenue return to assets.
The timber business which has RM123.24 million in assets or 53.54% of the group’s total assets only contributed RM4.75 million in revenue or 3.72% of the group’s total for the quarter and incurred an overall loss of RM276,000.
In the same quarter, Permaju’s automotive segment with RM114.06 million in assets (49.54% of total assets) contributed RM122.66 million to the group’s top line or 96.19% of total revenue with a loss of RM2.26 million.
Sanbumi chalked up net losses of RM5.24 million for the nine months to Sept 30.
Both stocks are trading at a similar 0.36 times price-to-book ratio. Their net assets per share stood at 84 sen and 70 sen respectively as at Sept 30.
Permaju’s share price closed at 30 sen unchanged while Sanbumi gained 0.5 sen to 25 sen last Friday.
This article appeared in The Edge Financial Daily, December 5, 2011.
The former’s major shareholder has been building up a sizeable stake in the latter, leading to speculation that this may lead to an alliance between the two companies.
Both Sanbumi and Permaju share a common business interest in timber and both companies are loss-making.
The typically illiquid stock of Permaju saw relatively large movements of its shares traded off market last week.
On Nov 29, Sanbumi managing director Datuk Chua Tiong Moon bought an additional 3.63 million shares in Permaju at 29 sen a piece for RM1.05 million in a married deal.
This brought his total shareholdings to 12.99 million shares or a 6.91% stake in Permaju, making him the third largest shareholder behind brothers Tan Sri Chai Kin Kong and Datuk Chai Kin Loong, who have 10.95% and 7.35% direct stakes in the company respectively.
On the next day (Nov 30), 4.5 million Permaju shares were exchanged in an off-market cross trade at the same price of 29 sen. These shares were sold by Kin Kong, Kin Loong and other family members.
In contrast, Permaju’s 30-day volume traded average is just 7,077 shares.
Permaju’s biggest shareholder Kin Kong had reduced his stake from 13.7% on April 22 to 10.94%, and on Sept 28 selling most of the 7.64 million shares in the open market.
Kin Kong also disposed of 2.9 million Sanbumi shares, reducing his stake to 4.99% with a total of 8.694 million shares.
It appears that Chua has been building up his stake in Permaju, possibly buying up the Chai brothers’ shares.
It is unclear what Chua’s motive is, although there could be a synergy between the two companies’ timber businesses.
Permaju and Sanbumi have a market capitalisation of RM58.78 million and RM47.31 million respectively.
Permaju has two core businesses in timber and automotive. While Permaju’s timber segment accounted for a majority of the group’s assets, its automotive division contributed almost 10 times the revenue compared with timber.
Permaju’s timber business which has 59.41% of the group’s assets at RM140.84 million only contributed RM14.09 million in revenue or 8.94% of their full-year revenue ended Dec 31, 2010. The timber segment incurred a loss of RM5.35 million overall.
Its automotive segment which contributed 90.98% of its 2010 revenue, accounted for 46.44% of the group’s total assets in the same period.
Permaju executive chairman Datuk Rahadian Mahmud Mohammad Khalil wrote in the 2010 annual report, “The group’s timber log trading activity is to be further rationalised and to cease if the trading environment remains unhealthy.”
Permaju has RM16.96 million worth of timber concession rights in Pahang and Kelantan and Sanbumi’s principal activities through its subsidiaries are saw milling, manufacture of downstream timber products, timber log and timber product trading.
For the group’s 3Q results ended Sept 30, Permaju incurred losses of RM5.02 million, with its timber business offering weak revenue return to assets.
The timber business which has RM123.24 million in assets or 53.54% of the group’s total assets only contributed RM4.75 million in revenue or 3.72% of the group’s total for the quarter and incurred an overall loss of RM276,000.
In the same quarter, Permaju’s automotive segment with RM114.06 million in assets (49.54% of total assets) contributed RM122.66 million to the group’s top line or 96.19% of total revenue with a loss of RM2.26 million.
Sanbumi chalked up net losses of RM5.24 million for the nine months to Sept 30.
Both stocks are trading at a similar 0.36 times price-to-book ratio. Their net assets per share stood at 84 sen and 70 sen respectively as at Sept 30.
Permaju’s share price closed at 30 sen unchanged while Sanbumi gained 0.5 sen to 25 sen last Friday.
This article appeared in The Edge Financial Daily, December 5, 2011.
