Accept Kuok Brothers takeover offer, Jerneh Asia shareholders told

KUALA LUMPUR (Dec 1): JERNEH ASIA BHD []'s shareholders have been advised to accept the takeover offer by the group's major shareholder, Kuok Brothers Sdn Bhd, for a quicker way out of the cash-rich company that has been without a core business for a year.

OSK Investment Bank (OSK IB) Bhd, which is the independent adviser to the Kuok Brothers' offer, said on Thursday the takeover offer was preferable compared with the "uncertainty and lengthy" procedure of receiving proceeds via the route of asset disposals, capital repayment and winding up.

In arriving at its recommendation, OSK IB said it considered that Jerneh Asia was classified under PN16 and PN17 status given that it was without a core business, having disposed off its insurance business.

Last December, Jerneh Asia sold its 80% equity interest in Jerneh Insurance Bhd to ACE INA International Holdings Ltd last December for RM523.2 million cash and had distributed the proceeds in the form of dividends and capital repayments.

To recap, Kuok Brothers had on Oct 31 launched a conditional takeover offer of RM1.45 cash per share for all remaining Jerneh Asia shares it does not own and for all new Jerneh Asia shares which may be issued arising from the exercise of the outstanding warrants.

Kuok Brothers, which holds a direct 37.71% stake in Jerneh Asia, was also looking to acquire the remaining 2.96 million warrants for 45 sen apiece. Kuok Brothers and persons acting in concert (PACs) hold a combined 41.81% equity interest in Jerneh Asia, comprising 102.02 million shares.

Based on a simple calculation, Kuok Brothers — the vehicle of tycoon Robert Kuok Hock Nien — will have to fork out about RM207.19 million for the deal.

Jerneh Asia shares yesterday closed unchanged at RM1.43.



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Jerneh Asia posts losses in Q3

Jerneh Asia Bhd posted a pre-tax loss of RM31,000 for the third quarter ended Sept 30, 2011 compared to pre-tax profit of RM5.65 million in the same quarter last year.

Revenue increased to RM42.87 million from RM25.93 million previously, the company said in a filing to Bursa Malaysia today.

Jerneh Asia said the pre-tax loss was mainly due to the poor performance in the equities market in the current quarter and the provision for losses in an associated company as a result of floods in Thailand. -- Bernama



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Jerneh Asia posts RM1.36m losses in 3Q

KUALA LUMPUR (Nov 21): JERNEH ASIA BHD [] posted net losses of RM1.36 million in the third quarter ended Sept 30, 2011 compared with net profit of RM21.33 million a year ago, mainly due to the poor equities market and provision for losses in an associate due to the severe floods in Thailand.

It said on Monday its revenue rose 65% to RM42.87 million from RM25.93 million. Its loss per share was 0.56 sen compared with earnings per share of 11.81 sen.

“The increase in revenue was mainly contributed by the sale of held-for-trading investments and interest income from the placement of proceeds from the disposal of Jerneh Insurance Bhd to an approved financial institution,” it said.

For the nine-month period, its earnings fell 77.1% to RM10 million from RM43.79 million in the previous corresponding period. Its revenue fell 156% to RM109.51 million from RM42.71 million.

Jerneh Asia said the group’s revenue for continuing operations for the period ended Sept 30 increased by RM66.79 million to RM109.51 million from RM42.72 million in the corresponding period in 2010.

The group recorded a profit before tax from continuing operations of RM13.92 million compared with RM13.34 million profit a year ago due to improved returns from the sale of held-for-trading investments.

When compared with the preceding quarter ended June 30, it recorded a loss before tax of RM310,000 compared to profit before tax of RM8.50 million in the preceding quarter. It said this was mainly due to the poor performance in the equities market in the current quarter and provision for losses in an associated company as a result of floods in Thailand.

To recap, on Oct 31, Jerneh Asia announced it had received a notice of voluntary conditional take-over offer from Kuok Brothers Sdn Bhd to acquire Jerneh Asia.



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Kuok Brothers to buy out Jerneh Asia

KUALA LUMPUR: Jerneh Asia Bhd’s major shareholder, Kuok Brothers Sdn Bhd, has launched a conditional takeover offer of the former in a move that could provide a quicker way to wind up matters at the cash-rich company that has been without a core business since last year.

In a filing with Bursa Malaysia yesterday, AmInvestment Bank Bhd said Kuok Brothers is offering RM1.45 cash per share for all remaining Jerneh Asia shares it does not own and for all new Jerneh Asia shares which may be issued arising from the exercise of the outstanding warrants.

Kuok Brothers, which holds a direct 37.71% stake in Jerneh Asia, is also looking to acquire the remaining 2.96 million warrants for 45 sen apiece.

According to the announcement, Kuok Brothers and persons acting in concert (PACs) hold a combined 41.81% equity interest in Jerneh Asia, comprising 102.02 million shares.

Kuok Brothers and PACs, however, do not hold any warrants.

The PACs are Ophir Holdings Bhd, PPB Group Bhd, Dalex Investments Ltd, Jerneh Asia chairman Datuk Lim Chee Wah, former Jerneh Asia executive director Tan Yew Jin, TYJ Sdn Bhd and Datuk Musa @ Ayob Saad.

Based on a back-of-the-envelope calculation, Kuok Brothers — the family vehicle of tycoon Tan Sri Robert Kuok — will have to fork out about RM207.19 million for the deal.

To boost its offer, Kuok Brothers affirmed that its offer would not fail due to insufficient financial capacity, adding that each shareholder who wishes to accept the offer will be fully paid in cash.

Kuok Brothers’ directors include Kuok Khoon Chen, Kuok Khoon Ho, Kuok Khoon Ean and Kuok Oon Kwong.

The substantial shareholders of Kuok Brothers include PPB Corporate Services Sdn Bhd (10.72%), Kuok Hock Swee and Sons Sdn Bhd (8.84%), Kuok Foundation Bhd (8.4%), Nicka Enterprise Sdn Bhd (8.4%) and Kota Johore Realty Sdn Bhd (6.26%).

Kuok Brothers also noted Jerneh Asia shareholders may face delays in receiving the proceeds from Jerneh Asia’s proposed disposal of its major assets, capital distribution exercise and subsequent winding-up exercise.

“Hence, the offeror intends to undertake the offer to provide Jerneh Asia shareholders and warrant-holders an opportunity to realise their investment earlier compared to the capital repayment and winding-up,” AmInvestment Bank said.

Kuok Brothers also said it does not intend to maintain Jerneh Asia’s listing status.

To recap, Jerneh Asia has been without a core business after selling its 80% equity interest in Jerneh Insurance Bhd to ACE INA International Holdings Ltd last December for RM523.2 million cash.

Jerneh Asia was earlier in talks to acquire Sabah-based property developer Sagajuta (Sabah) Sdn Bhd, whose flagship project is the massive 1Borneo mixed development in Kota Kinabalu.

However, the deal recently fell through after Jerneh Asia and Sagajuta’s 60% shareholder, Generasi Cipta Sdn Bhd, failed to reach a consensus on the terms of the proposed acquisition.

Shortly after the discussions ceased, Sagajuta’s managing director Datuk Raymond Chan Boon Siew surfaced in timber manufacturing firm Harvest Court Industries Bhd after acquiring a substantial 13.85% stake.

Meanwhile, an analyst opined that Kuok Brothers’ offer price for the remaining shares in Jerneh Asia is a fair offer which offers shareholders the convenience of skipping Jerneh Asia’s proposed route of asset disposal and capital repayment, which would involve a lengthy company dissolution process.

Jerneh Asia’s shareholders’ funds stood at RM760.47 million as at June 30, 2011. Subsequent to that date, the company saw the conversion of 42.04 million warrants in July and the payment of RM443.65 million in dividends in August.

According to the analyst’s calculations, Jerneh Asia’s pro forma shareholders funds as at June 30, after incorporating the warrant conversion and deducting the dividend payment, would work out to be about RM384.07 million or RM1.55 per share.

However, the analyst noted that Jerneh Asia’s assets includes a sum of about RM63.86 million invested in associate companies, which works out to be about 25.9 sen per share.

“The investment in associates is less liquid and could take a while to sell. So, Jerneh Asia’s net asset value less its investments in associate works out to be RM1.29 which is below the offer price of RM1.45 per share,” said the analyst.

“There are also some residual assets which may be difficult or sell, as well as liquidation expenses in a winding-up process ... so the amount offered by Kuok Brothers is very fair,” he added.

“The Kuok family has been very transparent in its aim from the start to return Jerneh Asia’s cash back to shareholders as quickly as possible. This is the fastest option after the Sagajuta deal fell through,” he said, adding that the offer was slightly above the estimated capital repayment of between RM1.36 and RM1.41 per share as stated in Jerneh Asia’s circular to shareholders dated June 13.

AmInvestment Bank also noted that Kuok Brothers’ offer of RM1.45 per share was a 7.41% premium over Jerneh Asia’s five-day and one-month volume weighted average price (VWAP) of RM1.35 sen.

The offer price is also a 6.62% premium over Jerneh Asia’s closing price of RM1.36 yesterday, prior to the announcement of the Kuok Brothers’ offer.

As for the warrants, AmInvestment Bank noted that the 45 sen offer for the warrants was calculated based on the difference between the Kuok Brother’s RM1.45 per share offer and the warrants’ RM1 exercise price.

This puts the offer price for the warrants at a 9.76% premium over its five-day VWAP, 12.5% premium over the one-month VWAP and a 9.76% premium over the warrant’s last closing price of 41 sen yesterday.


This article appeared in The Edge Financial Daily, November 1, 2011.

Markets off to cautious start in November

KUALA LUMPUR (Nov 1): Markets kicked off the first trading day of November on a cautious note, with most key regional bourses in the red, as investors worried about a slowdown in global economy and slow progress in the European debt crisis.

At 12.30pm, the FBM KLCI fell 8.01 points or 0.54% to 1,438.88. Turnover was 584.83 million shares valued at RM501.86 million. There were 193 gainers, 394 losers and 241 stocks unchanged.

Japan’s Nikkei 225 fell 1.19% to 8,881.02, Hong Kong’s Hang Seng Index 1.41% to 19,584.69 and Singapore’s Straits Times index 0.66% to 2,836.93.

US light crude oil fell 79 cents to US$92.40, crude palm oil futures for third month delivery shed RM8 to RM2,945 per tonne. The ringgit weakened to 3.1013 to the US dollar.

OSK Research, in its market outlook, said for November, given the previous month’s sharp rally, it expects some pullback in global markets with Malaysia being no exception.

“Barring the announcement of a General Election, we remain Defensive on the Malaysian market and would advocate a Buy if the KLCI retraces towards 1,300 while we could call a Sell on the market if it rises towards the 1,533. Neutral for now with defensive Top 5 Buys all maintained,” it said.

Genting was the top loser, down 24 sen to RM10.52, dragging the KLCI down 2.05 points while CIMB fell nine sen to RM7.48, pushing the index down another 1.55 points.

LPI fell 22 sen to RM13, Panasonic Malaysia 22 sen also to RM19,48, Bursa 12 sen to RM6.67, AirAsia 11 sen to RM3.79 and Petronas Chemicals 10 sen to RM6.35.

Maxbiz was the most active, up four sen to 13 se, with 29 million shares done, prompting query from Bursa Malaysia Securities.

MBSB added four sen to RM1.81, MBSB-WA three sen to 93.5 sen and MBSB-CA two sen to 17 sen after the strong set of third quarter results.

DiGi was the top gainer, adding 40 sen to RM32.10 as investors sought dividend stocks, F&N added 10 sen to RM17.10 while Jerneh Asia rose six sen to RM1.42 after it received a takeover offer from its major shareholder Kuok Brothers Sdn Bhd.

Jerneh Asia climbs on Kuok Brothers’ takeover plan

KUALA LUMPUR (Nov 1): Shares of JERNEH ASIA BHD [] advanced on Tuesday after it received a takeover offer from its major shareholder Kuok Brothers Sdn Bhd.

At 11.53am, Jerneh Asia was up six sen to RM1.42.

The FBM KLCI fell 7.5 points to 1,484.39. Turnover was 517.93 million shares valued at RM432.07 million. Declining stocks beat advancers 380 to 181 while 226 stocks were unchanged.

Kuok Brothers offered to buy the remaining 58.19% stake, which it does not own, for RM1.45 a share. At RM1.45, this is nine sen above Monday’s close of RM1.36 while the warrants ended at 40 sen.

Kuok Brothers and the parties acting in concert directly hold 102.02 million shares or 41.81% of Jerneh Asia.

Kuok makes offer for Jerneh Asia

Jerneh Asia says it received a letter from AmInvestment Bank on behalf of Kuok Brothers, offering to buy the shares not controlled by them in the insurance company.

Kuala Lumpur: Sugar King Robert Kuok Hock Nien has made a bid to gain absolute control of cash-rich Jerneh Asia Bhd.

Malaysia's richest man is using Kuok Brothers Sdn Bhd, a company he founded with two of his brothers in 1949, as the vehicle for the exercise valued at just above RM205 million.

In a late statement to Bursa Malaysia, Jerneh Asia said that it received a letter from AmInvestment Bank Bhd on behalf of Kuok Brothers, offering to buy the shares not controlled by them in the insurance company.

The Kuok Brothers and parties aligned to them, namely PPB Group Bhd, Ophir Holdings Bhd, Dalex Investment Ltd, TYJ Sdn Bhd, Datuk Musa Ayob, Tan Yew Jin and Datuk Lim Chee Wah control 41.81 per cent of Jerneh Asia.

The offer comes just weeks after Sagajuta Sdn Bhd, a Sabah-based developer, pulled out from a reverse takeover exercise involving Jerneh Asia.

The Kuok Brothers are offering RM1.45 apiece for the shares it does not own, and 45 sen a piece for the Jerneh Asia warrants.

The offer is a very small premium to Jerneh Asia's last traded price. Jerneh Asia's mother share closed at RM1.36, while the warrants closed at 40 sen apiece.

In July, Jerneh Asia shareholders had received a RM1.81 net dividend. The dividend was part of the proceeds the company received after selling Jerneh Insurance Bhd for about RM600 million to the ACE INA International Holdings Ltd.

If the Kuok Brothers' takeover offer is successful, it does not plan to maintain the listing status of Jerneh Asia, the offer letter said.

As such, the company in tends to provide an early "window of opportunity" for the remaining shareholders to exit now, as previously the stakeholders were waiting on the Sagajuta deal, and a second dividend payment.

As early as May, the Jerneh Asia board had stated their intention of winding up the company, in the event its corporate exercise did not go through.

The market had been expecting the Kuok family to make a move as over the past four years, the family has been active in shifting their assets, starting with the sale of PPB Group's edible oil and grain assets to Wilmar International Ltd.

This was followed by the RM1.3 billion sale of the sugar refinery business to the Federal Land Development Authority.

The Kuok Brothers' offer comes at a time when many of the country's best companies are also takeover targets.

Among the companies which received takeover offers in the past three months are SP Setia Bhd, Hirotako Holdings Bhd, DXN Holdings Bhd, Sindora Bhd and Aikbee Resources Bhd.

HDBSVR: KLCI to face selling pressure

KUALA LUMPUR (Nov 1): Hwang DBS Vickers Research (HDBSVR) said it expects the Malaysian stock market to face some selling pressure on Tuesday following the overnight fall on Wall Street.

It said the initial euphoria from the European debt bailout plan seems to be over. Major U.S. equity indices tumbled between 1.9% and 2.5%, triggered in part by Greece’s decision for a referendum on the new agreement on financing for the country.

“Back home, we expect our benchmark FBM KLCI not to be spared from the bearish external sentiment. The benchmark index should come under selling pressures today, possibly retreating towards our immediate support level of 1,475,” it said.

HDBSVR said on the corporate front, stocks that may be in the limelight include Jerneh Asia, following the announcement that its major shareholder, Kuok Brothers will buy out the company as a quickest way to return cash to shareholders;

Also in focus would be Hock Seng Lee, after it secured a RM90.28 million water treatment plant contract from the Sarawak state government.

Meanwhile, TRC Synergy, which was awarded a RM51.3 million contract from Jabatan Kerja Raya to upgrade infrastructures and facilities at the Lumut jetty in Perak.

Stocks to watch: MBSB, Ireka, Maybank, Chin Teck, Jerneh Asia

KUALA LUMPUR (Oct 31): The string of positive corporate news is expected to underpin market sentiment on Tuesday, Nov 1 after the FBM KLCI ended October on a strong note.

However, the overnight fall on Wall Street could rein in some of the buying appetite and investors use this opportunity to take profit. Wall Street closed its best month in 20 years on a down note on Monday as the failure of trading firm MF Global Holdings Ltd and new worries about Europe's debt crisis hammered financial shares.

The Dow Jones industrial average dropped 276.10 points, or 2.26 percent, to 11,955.01. The Standard & Poor's 500 Index fell 31.79 points, or 2.47 percent, to 1,253.30. The Nasdaq Composite Index lost 52.74 points, or 1.93 percent, to 2,684.41.

Among the stocks to watch are MALAYSIA BUILDING SOCIETY BHD [] (MBSB), IREKA CORPORATION BHD [], CHIN TECK PLANTATION []S BHD [], MALAYAN BANKING BHD [], JERNEH ASIA BHD [] and AutoV Corporation Bhd

MBSB posted a 134% increase in its earnings to RM95.08 million for the third quarter ended Sept 30, 2011 from RM40.51 million a year ago.

Its revenue increased by 72% to RM372.67 million from RM215.77 million while earnings per share were 10.88 sen compared with 5.79 sen.

Ireka’s unit has secured a RM85.14 million contract for the proposed City International Hospital project in Ho Chi Minh City, Vietnam from Hoa Lam-Shangri-La 1 Ltd Liability Company.

Chin Teck Plantations Bhd’s earnings surged 90.8% to RM21.84 million in the fourth quarter ended Aug 31, 2011 from RM11.45 million a year ago, boosted by the increase in average selling prices of fresh fruit bunches (FFB), crude palm (CPO) and palm kernel despite lower production.

Its revenue rose 31.4% to RM38.37 million from RM29.20 million a year ago while earnings per share were 23.91 sen compared with 12.53 sen.

For the financial year ended Aug 31, its earnings rose 62.1% to RM76.01 million from RM46.88 million. Revenue rose at a slower pace of 28.6% to RM143.34 million from RM111.44 million.

Malayan Banking Bhd’s PT Bank Internasional Indonesia Tbk (BII) reported consolidated net profit of Rp555 billion (RM193.04 million) for the January-September period, up 34% from Rp415 billion a year ago.

BII said “the increase was achieved on the back of solid growth across the Bank’s core businesses as well as from its overall operational improvements”.

It recorded a 22% consolidated loan growth from Rp50.8 trillion in September 2010 to Rp61.9 trillion in September 2011, underpinned by small and medium enterprises (SME) and commercial loans.

Jerneh Asia Bhd has received a notice of voluntary conditional take-over offer from Kuok Brothers Sdn Bhd to acquire the remaining 58.19% stake which it does not own for cash consideration of RM1.45 per share and 45 sen per warrant.

Kuok Brothers and the parties acting in concert directly hold 102.02 million shares or 41.81% of Jerneh Asia.

At RM1.45, this is nine sen above Monday’s close of RM1.36 while the warrants ended at 40 sen.

Automotive components manufacturer AutoV Corporation expects its turnover to increase by 60% next year with the acquisition of Proreka (M) Sdn Bhd.

Bernama reported executive chairman Bernard Kong as saying the company was also in the midst of merging with two other listed companies to form a bigger group. “Financially we will be much stronger to support our businesses. We also can support our clients better," he said.

Kong said the merger with AIC CORPORATION BHD [] and Jotech Holdings, expected to be completed "sometime in March next year", would transform the company into an integrated manufacturing group dealing in automotive as well as electronics products.