Malaysian tycoon Tan Sri Robert Tan seems to be on a roll to unlock the values of some listed companies; A close associate of Tun Daim Zainuddin, Tan’s company Spanco obtained a privatised contract in 1993 to service govt-owned vehicles.

Updated: Saturday February 8, 2014 MYT 11:11:18 AM

Robert Tan’s PDZ in the limelight

BY WONG WEI-SHEN

LOW-PROFILE tycoon Tan Sri Robert Tan Hua Choon seems to be on a roll to unlock the values of some his listed companies. His modus operandi: the entry of new shareholders that bring with them new businesses.

The 72-year-old, dubbed the elusive “Casio King”, only last month saw his Malaysia Aica Bhd (Maica) make headlines after it received a takeover offer from property developer Sunsuria Development Sdn Bhd. The move sent Maica shares sky rocketing by some 60%.

Now the buzz is around Tan’s ailing shipping firm PDZ Holdings Bhd. Market talk has it that Tan is steering PDZ into becoming an oil and gas services concern.

“PDZ is mulling the acquisition of an oil and gas services firm, which could see the emergence of a new major shareholder,” says a dealer.

Since January, PDZ shares have been traded heavily, averaging 18 million shares within that period and hitting a high of 54.5 million shares on Jan 20 alone.

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Tan’s direct stake in PDZ stands at 19.13% bu t he may control more of the company through friendly parties.

It closed at 12 sen on Friday, a 50% jump from its 8 sen close on Jan 2.

This is the highest its shares have hit since May 2009.

PDZ is clearly in need of some kind of business revival. The loss-making container shipping firm is still reeling from the industry’s downturn since the 2008 economic crisis.

The shipping industry took a downturn following the 2008 economic crisis, on over capacity, high fuel costs and low freight charges.

Many shipping companies were caught, as they were unable to repay bank loans for the procurement of new vessels, and are still on the road to recovery.

According to its website, it operates six vessels covering Malaysia, Singapore, Brunei and Myanmar.

For its financial year ended June 30, 2013, it posted a net loss of RM12.45mil from a net profit of RM10.56mil the previous financial year.

PDZ attributed the loss to an impairment loss of RM8.24mil due to a vessel that it sold for scrap, and weakening freight rates due to oversupply of shipping tonnage.

The glut in the shipping industry is expected to continue on the back of the continued supply-demand imbalance caused by excess supply of tonnage.

Freight rates are expected to remain depressed this year.

“The existing container shipping industry is not doing so great. It will be hard for PDZ to make any headway in recovery,” an analyst says.

However, PDZ has a relatively clean balance sheet, being in a net cash position of close to RM16mil, which possibly makes it an attractive vehicle for new shareholders to emerge via the injection of an asset.

PDZ plans to reduce operating costs and improve operational efficiency in a bid to consolidate to a more competitive cost structure.

Another notable development at PDZ is the fact that Tan resigned from his role as chairman and director last June.

However, Tan has not sold any of his shares in PDZ, leading industry observers to speculate that he is likely to ride along with the new shareholders who come in as a result of the new asset injection.

Tan’s direct stake in PDZ stands at 19.13% although it is believed he might control more of the company through friendly parties.

His son-in-law Wong Hok Yim, who was appointed as PDZ’s non-independent non-executive director in June last year, has a deemed interest of 0.85% in the company.

Any corporate exercise involving the injection of an asset into PDZ for new shares will dilute Tan’s stake in the company.

But the reclusive businessman has slowly been letting go of control of a number of his listed companies.

Maica has seen the entry of low-profile property developer Datuk Ter Leong Yap, who now controls 50% in Maica.

Tan’s stake in Maica, post the entry of Ter, is around 14%.

Ter’s vehicle TER Equity Sdn Bhd, after receiving new Maica shares from the sale of land into Maica, has since launched a mandatory general offer for the rest of the shares in Maica.

Maica is hence being turned from a maker of wooden and fire-rated doors into a property developer.

Ter has plans to inject more land into Maica for development. Maica’s share’s have appreciated by almost 60% since the entry of Ter, raising Tan’s holding values in this company.

Tan also has his hands in ceramic and sanitary ware company Goh Ban Huat Bhd (GBH), which he won control of in August 2009 after raising his offer to RM1.50 per share from the original offer of RM1.25 per share.

GBH has indicated its plans to venture into property development within the next three to five years. It has 5.92ha of prime land in Jalan Segambut, Kuala Lumpur, where its manufacturing plant is built.

A close associate of Tun Daim Zainuddin, Tan’s company Spanco Sdn Bhd obtained a privatised contract in 1993 to service government-owned vehicles.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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