Friday, November 4, 2011

Fresh impetus for some

PETALING JAYA: The emergence of new, politically connected shareholders and directors appears to be giving fresh impetus to selected small counters on Bursa Malaysia amid the current weak market sentiment.

The companies that have seen politically linked figures come on board in recent months include Harvest Court Industries Bhd, Envair Holding Bhd and Sanichi Technology Bhd.

The three counters, two of which are listed on the ACE Market, saw significant price movements on high trading volume in recent weeks. What is interesting is that all three companies made losses in their last financial years.

Mohd Nazifuddin Najib, the son of Prime Minister Datuk Seri Najib Razak, was appointed a non-executive director of Harvest, which was lifted from its PN17 status in December 2009, at the end of October.

Nazifuddin is also chairman of Sagajuta (Sabah) Sdn Bhd, best known as the developer of the 1Borneo mall in Kota Kinabalu, Sabah. Sagajuta has several ongoing projects including 1Sulaman and 1Likas in Kota Kinabalu, and 1Gateway in Klang. Its controlling shareholder and managing director is Datuk Raymond Chan Boon Siew.

Both Chan and Nazifuddin joined Harvest’s board on Oct 28 after Chan emerged as a substantial shareholder of Harvest 10 days earlier, when he acquired 23.808 million shares, or a 13.85% stake, at 20 sen per share.

The value of Chan’s stake has since tripled, with the stock closing at 64 sen yesterday as investors anticipate he may inject Sagajuta’s assets into Harvest was awarded a contract by Sagajuta for the supply of door leaves for some RM7.03 million.

Chan’s entry into Harvest follows the abortion of earlier plans to inject Sagajuta into Jerneh Asia Bhd.

About a week prior to Chan and Nazifuddin’s appointments, the company received an unusual market activity (UMA) query from Bursa Malaysia on Oct 17.

In response, Harvest said it is unaware of other developments, apart from the discussions between managing director and shareholder Ng Swee Kiat and Affin Bank Bhd for the proposed purchase the entire shares and warrants held by Affin in Harvest.

The query, however, did not stop Harvest shares from rising further, especially after the two appointments.

The counter reached a new high yesterday of 64 sen, a 760% premium to its recent low of 7.5 sen on Sept 26, 2011. The counter gained 334% year-to-date (YTD) compared with 509% in the last three months on an average daily trading volume of 8.34 million.

It is worth noting that for the whole of last year, Harvest posted a net loss of RM2.82 million from a net profit of RM12.16 million a year ago.

While the company posted a net profit of RM168,000 in 2QFY11 ended June 30, it is still in the red for the nine-month period with a net loss of RM678,000.

Envair, meanwhile, appointed Mohd Anuar Mohd Hanadzlah, the brother of Second Finance Minister Datuk Seri Ahmad Husni Mohd Hanadzlah executive director.

The loss-making Envair, which manufactures, sells and services clean air and containment facilities, made headlines recently when it unveiled plans to sell two million barrels of light crude oil per month to a Chinese company for a five-year period, in a deal worth some US$182 million (RM573 million) per month.

Envair was asked by Bursa Malaysia to clarify the deal. This was one of a number of queries from the exchange on Envair’s announcements since Oct 13 that it wanted to venture into the oil and gas business.

The company has also announced that ZAI Corporate Finance Ltd, a London-based investment banking firm, was interested in subscribing to up to 30% of its share base under a private placement exercise. There have been no updates on this development.

Envair posted a net loss of RM290,000 in 2QFY11 ended June 30 and a net loss of RM816,000 for the nine-month period. For the whole of FY10 ended Dec 31, it made a net loss of RM5.38 million.

Envair shares gained some 204% over the three months on an average trading volume of 1.26 million. YTD the counter put on some 407% to settle at 35 sen yesterday.

ACE Market-listed Sanichi Technology Bhd saw the emergence of Datuk Mohd Wira Dani Abdul Daim, son of former finance minister Tun Daim Zainuddin, as a new substantial shareholder three months ago.

Wira Dani recently bought 10 million shares or 6.12% of the loss-making precision moulds and tools maker for RM6 million or six sen per share. The transacted price was about 20% below the market price 7.5 sen at the time.

Sanichi’s share price shot up by as much as 10% after Wira Dani bought into the company in early August.

But over the recent three months, Sanichi lost over 47% to close at 5 sen yesterday. It reached its 52-week high on Aug 4, 2011 at 11.5 sen and its low of 3.5 sen on Dec 22, 2010.

Sanichi is still in the red with a net loss of RM14.93 million in FY11 ended June 30 on the back of RM9.44 million revenue.

Also notable are two counters that have seen significant movement in their share prices of late: GPRO Technologies Bhd and DVM Technology Bhd.

Interestingly, the reason behind the price movement of both companies appears to be centred around one individual: Christian Kwok-Leun Yau Heilesen.

The movement in its share price prompted Bursa Malaysia to query GPRO Technologies earlier this week.

In response, GPRO said it was not aware of any activity that may have contributed to the unusual price movement and yet, the counter settled at 23.5 sen yesterday, translating into about 200% gain YTD.

To recap, GPRO, whose market capitalisation is barely RM24 million, saw the emergence of Heilesen as a new major shareholder, when he bought 38.23 million shares or a 15.29% stake in the ACE Market-listed IT firm recently.

Heilesen acquired the shares on the open market for RM3.25 million or 8.5 sen each in early September. At current prices, the value of his stake has appreciated nearly three times.

This is the second ACE Market- listed loss-making company that Heilesen has bought into in less than two months. The first was DVM, which he later sold down in less than three weeks in August.

Heilesen made news last month when he bought into DVM and requested an EGM to remove four directors from the company’s board. However, he sold down his stake barely two weeks after the share purchase.

To recap, Heilesen, a Danish national, and Raymond Yip Wai Man from Hong Kong emerged as substantial shareholders in DVM via the acquisition of its shares on the open market. Both had a combined interest of close to 20% in the company before selling down their stakes.

While the duo were picking up shares on the open market, the company’s single largest shareholder, Datuk Goh Kian Seng, was paring down his stake to 5.05%.

DVM closed at 7.5 sen yesterday, an increase of more than 40% YTD, but down 73.2% from its recent high just three months ago.

It reached a high on Aug 2, 2011 of 28 sen, which was a 409% premium to its record low of 5.5 sen last November.