Reports » Malaysia

Malaysia stock market and companies daily report (October 19, 2012)

Contributed by Shares Investment

SAAG Slips Into PN17
After seeing its share price plunge earlier this week, SAAG Consolidated has now slipped into Practice Note 17 (PN17) status, due to its inability to regularise its financial position. SAAG has outstanding debts amounting to about RM700 million, owed to banks such as Arab Malaysian Bank (AMMB), Export-Import Bank of Malaysia and the State Bank of India among others. However, SAAG’s group chief executive officer and shareholder Anand Subramanian is not any less deterred and is striving to work out a solution with its creditors. On Monday 19 October, pending the finalisation of an acceptable debt restructuring plan, it had deferred the repayment of principal and interest of its debt to the banks and other creditors resulting in a 70 percent drop in its shares. Although the company had a debt restructuring scheme, efforts to raise RM100 million through a restricted offer of shares was not fruitful due mainly to the depressed share price, the large debt and continued losses, according to the group CEO.
Significance: SAAG fell into its current financial state due to a default by one of its multinational clients during the financial crisis. Currently, the CEO opines that debts can only be restructured if the banks take a haircut as well as having a white knight to save it.

RHB Cap Dismisses Merger Talks
RHB Capital had dismissed any on-going merger talks between its subsidiary, RHB Bank and Malaysia’s largest lender, Maybank Bank. RHB has not been approached by Maybank for a possible merger that could potentially create the region’s biggest bank, said the group managing director Kellee Kam. He however did not discount future mergers and acquisitions if the right opportunity arises. RHB by itself is on an acquisition move. The group is nearing completion of its RM208.5 million merger with OSK Investment Bank and is now pursuing Indonesia’s Bank Mestika Dharma. Through the merger of RHB Investment and OSK Investment along with the acquisition of Bank Mestika Dharma, the group will obtain regional access to seven out of 10 ASEAN markets. The group managing director revealed that RHB Capital’s goal is to generate 40 percent of its earnings from offshore operations by 2020. This compared to the present of five percent.
Significance: RHB would be looking to expand via the acquisition of OSK Investment Bank and regionally. However, any synergies of a merger with Maybank would be difficult to produce as it would lead to more operational duplication.

Mah Sing Proposes RM1.1b Property Project In Iskandar
Mah Sing through its wholly owned subsidiary, Tropika Istimewa Development has signed a lease purchase agreement with Medini Land for the proposed acquisition of two parcels of contiguous prime land in Medini, Iskandar with 99 years lease for RM74.7 million. The land is located within Medini North, in Flagship Zone B of Iskandar Malaysia and has a gross floor area of 2.1 million square feet. The lease price is at approximately RM34.9 per square feet. The land is proposed for an iconic integrated development to be named as Meridin@Medini with an estimated gross development value (GDV) of RM1.1 billion. The project comprises of Meridin Suites residences, Meridin Linx small office versatile office (SoVo), Meridin Walk lifestyle retail as well as Meridin Exchange corporate towers. The project is expected to commence in the second half of 2013 and to be constructed over a span of five years.
Significance: Together with i-Parc@Iskandar project and the remaining phases of its existing townships, Mah Sing will have a combined remaining GDV of RM2.3 billion in Iskandar. The Meridin@Medini will further strengthen the group’s foothold in Johor Bahru.