Thursday, September 06, 2012

Featured Article: Man Who THREW Away 90 Million

On Star Biz:

  • Thursday September 6, 2012
    The man who threw away RM90mil

    Raison D'etre - Risen Jayaseelan

    CHIN Boon Long, Ingenuity Solutions Bhd's (Ingens) controlling shareholder, will surely go down in the annals of Malaysian corporate history. His declaration yesterday that he is not going to accept a buyout offer for his shares at 55 sen each should give him the moniker of the RM90mil man. Or more aptly, the could-have-been RM90mil man.

    That's because Chin is saying no to that almost unbelievable offer that values the whole of Ingens at a whopping RM300mil. (Chin owns about 30% of Ingens, so the 55 sen offer would have pocketed him RM90mil.)

    Valuing Ingens at RM300mil is mind boggling because just a few months ago, this was a stock with a market value of a mere RM50mil. This is a stock that traded below 10 sen for a whole year from last July.

    The stock's spectacular rise since early August is still an inexplicable development.

    So why is Chin turning down the opportunity to be a millionaire, 90 times over? He says that he prefers to go ahead with his grand plan of integrating Ingens with another ACE Market company that he controls, 1 Utopia Bhd.

    The plans involve the usual tech-talk stuff, like B2C and B2B, electronic payment gateways, loyalty programmes and the retailing of IT and computer products.

    In other words, what Chin is saying is that, his savvy business plan should eventually lift the value of both these companies to be worth so much more, that his equity in these companies will be worth more than the RM90mil he is being offered.

    It must be some plan though because typically, those type of businesses tend to earn low margins and have low entry barriers.

    Consider the numbers in this saga though the RM90mil Chin is turning down is:

    worth more than the entire market capitalisation of 1 Utopia of RM60mil

    worth many times more than the value of Chan's 12.85% equity in 1 Utopia of a mere RM7.6mil

    worth more than Chan's 30% equity in Ingens that works out to RM37mil

    values Ingens at six times more than what the company was trading at just a few months ago

    may be enough for Chin to actually buy 100% of another company in the same business.

    Considering all this, one wonders if there's more in this saga that meets the eye.

    The other concern of this Ingens saga is whether it is setting a bad precedent. What if there are copycats of this whole episode other listed companies may see the emergence of some hitherto little-know party making a buyout offer, but one that is directly only to the stakes owned by certain major shareholders. In the ensuing excitement that follows, especially on the hope that the offer is accepted which would then trigger a mandatory buyout of the rest of the shareholders, punters may jump in. And then get burnt like they did with Ingens.

    Business news editor Risen Jayaseelan reckons that if the buyout offer by Ninetology Marketing Sdn Bhd had actually led to the general offer for the rest of the shares of Ingens, it would have been one of the most generous offers ever of a Bursa-listed company, going by historic share price performance


bonny b said...

9There are enough securities laws to prevent these kinds of shenanigans. The question is whether our SC or Bursa is doing anything about it. Their subsequent actions or inaction will complete the story, which by the way, is also the story about integrity of Malaysia in general.

limko said...

I said 'Bullshit!'

Moolah said...

Simple thinking.

What has this 55 sen offer accomplished so far?

Answer: Much interest on Ingenuity stock.

How is the stock doing?

Answer: Despite the denial, the stock closed the day trading at 25 sen.

Is 25 sen a fair value value or is the price still grossly overvalued given Ingenuity current financials and performances?

Answer: ______ ?

What is Chin Boon Long's cost for his Ingenuity stake?

Answer: _______ ?

How Limko?