Wednesday, September 30, 2009

Singer Malaysia And Seven Eleven Proposed Listing

Many years ago, 18 Jan 2006, to be exact, I wrote the following... I Do.. The Losers!

  • So what's left for Intan Utlities?

    After scrapping their proposal to buy Berjaya Sports Toto shares, the company announced
    it plans to consolidate its business by selling all its non-core businesses and concentrate on its chain of 7-Eleven business.

    Sounds fair.

    But what about the market players who 'invested' in Intan based on their early announcement to buy shares in Berjaya Sports Toto? Without this share purchase, it would appear that the current share price is not justifiable given the historical poor earnings from Intan....

    They announced a deal, suddenly value was created.
    They rescinded the deal, suddenly value is destroyed.

    Such is the power of corporate exercises.

    Oh yes, in the share market, there's always winners and losers, and the losers in this "I Do.. I Don't" flip-flop controversy is Intan.

    But is the loser only Intan?

Many months later.. Intan was taken private.

  • Vista to take Intan private for RM85.6m

    Intan Utilities Bhd’s single largest shareholder Vista Meranti Sdn Bhd, with a 57.7% stake, is taking the company private with an RM85.61 million voluntary general offer for the remaining shares at RM2.10 each.

    The cash offer price is a premium of about 10.53% to the five-day weighted average market price up to Monday (Sept 11) of RM1.90 per share. Yesterday, it closed four sen higher at RM1.88, with only 100 shares done.

    In a statement yesterday, Intan said Vista had submitted the de-listing proposal to its board to request the company to undertake a voluntary withdrawal of its listing from Bursa Securities.......

So Intan was taken private via a VGO worth about 85.6 million.

In another story, October 2006.

  • Cosway minority shareholders prefer sale
    By Chong Jin Hun

    MINORITY shareholders of Cosway Corp Bhd want the direct-selling firm to be put up for sale rather than let its parent Berjaya Corp Bhd (BCorp) take it private.

    "It is a bad idea to take Cosway private as it is a good and profit-making company with a bright future. Investors like to invest in companies with good dividends and bonus issues," proxy holder William Woon told reporters after Cosway's annual general meeting in Kuala Lumpur yesterday.

    He said it would be better to put the company up for sale as competitive bidding can produce higher sale prices.

    Woon was commenting on BCorp's recent announcement that it is considering a proposal to buy the remaining shares it does not own in Cosway. BCorp currently owns 74.4 per cent in Cosway.

    Another shareholder, who spoke on condition of anonymity, said it is unfair for Cosway to be taken private as the group has done well financially, thanks to its strong shareholders' funds.

    "The company had earlier sold shares to minority shareholders, and now, when it is making money, it (BCorp) wants to take it back from the minority shareholders," he lamented.

    It was reported that BCorp's possible voluntary general offer may cost the group between RM105.8 million and RM123.5 million for the remaining 25.6 per cent it does not own in Cosway.

    The amount works out to between RM1.20 and RM1.40 per Cosway share, whose price had advanced 73.4 per cent this year.

    Shares of Cosway closed higher by one sen at RM1.07 yesterday, while BCorp shares were unchanged at 15 sen.

    In the year ended April 30 2006, Cosway's net profit grew 62 per cent to RM98.2 million on a smaller revenue increase of 5 per cent to RM1.12 billion.

    Net profit for the first quarter to July 31 2006 decreased 15 per cent to RM10.3 million, while revenue was down 35 per cent to RM180.4 million.

    The dip in earnings for the first three months was due to the deconsolidation of former subsidiary Dunham-Bush (M) Bhd, according to Cosway's filings to Bursa Malaysia.

Good point mentioned: "The company had earlier sold shares to minority shareholders, and now, when it is making money, it (BCorp) wants to take it back from the minority shareholders,"

So Intan Utilities was taken private.

So was Cosway.

Yesterday, Businesss Times had this article.

  • Berjaya to list Singer, 7-11 via new unit

    Published: 2009/09/29

    BERJAYA Corporation Bhd has announced the proposed listing of Berjaya Retail Bhd, the listing vehicle for subsidiary Singer (Malaysia) Sdn Bhd and 7-Eleven Malaysia Sdn Bhd, on the main market of Bursa Malaysia.

    In a statement to Bursa Malaysia today, the group said B-Retail will be principally involved in the marketing and direct selling of consumer durables with instalment option schemes via Singer Group, and the operation of a chain of convenience stores via 7-Eleven Group.

    The proposed listing will be undertaken via the implementation of the following proposals:

    i) proposed disposal of Singer to B-Retail for RM360 million;
    ii) proposed acquisition of 7-Eleven by B-Retail for RM600 million;

    iii) proposed dividend-in-specie by BCorporation;
    iv) proposed offer for sale of B-Retail securities; and
    v) proposed listing of and quotation for ordinary shares of RM0.50 each in B-Retail and irredeemable convertible preference shares in B-Retail on the Main Market of Bursa Securities.

    The Singer and 7-Eleven acquisitions will be satisfied through a combination of assumption of debt and issuance of new shares.

    "The Proposed Listing will enable BCorp to achieve its objective of unlocking shareholder value and distributing to its shareholders via the Proposed Dividend-In-Specie thus enabling its shareholders to have a direct participation in the equity and envisaged growth of B-Retail Group," the company said.

    It added that following the Proposed Dividend-In-Specie, BCorp shareholders will directly hold securities in a prominent organization with strong brand values and good growth prospects without the need for any cash outlay.

    "The Proposed Listing will also enable B-Retail Group to gain access to the capital markets should it wish to raise funds for its future expansion and continued growth," it added.

    Barring any unforeseen circumstances, the Proposed Listing is expected to be completed in the quarter ending 31 March 2010.


One minute, companies are listed. Next they are taken private. Now they wants relisting again.

Is our local stock market such a easy cheap, easy market where companies can list and delist and relist as per they like?

One minute in and one minute out!

How does one expect our market to attract quality funds to invest in our market when this keeps happening?

Now I also want to spare a moment for Intan Utlities and Cosway shareholders.

I am sure that they would be not happy to read such a development.

For Intan Utlities ex-minority shareholders, how much was they offered for their shares? How much does B-Retail wants to buy Seven Eleven for now? 600 million!

For Cosway ex-minority shareholders. Many had objected but yet the company was taken private. Now a subsidiary of its company, Singer Malayisa, is sold for how much now? 300 million!


Can't help it but does it not look like the minority shareholders got the extra short end of the stick?

And what does this say about long term investing?

Yeah, some say it wouldn't work because long term investors always tend to get the short end of the stick.

However, some say, this is not true. Long term investors just needs to be really prudent. One cannot simply buy any company and declare it as long term investing! Or as some would say, never be a shareholder of a business venture if you cannot trust your partners!


Moolah said...

Listing of 7-Eleven in the works
Written by Joyce Goh
Monday, 01 June 2009 00:00

The Berjaya Group, helmed by Tan Sri Vincent Tan, is believed to be in talks with investment banks with a view to list its 24-hour convenience store chain, 7-Eleven, on Bursa Malaysia, say sources.

“The size of the listing could be big. They are looking at listing towards the end of the year. The stock market has rallied recently but things are still uncertain. With the revised GDP numbers, it’s anybody’s guess how things will be like moving forward,” says a source.

It is believed that CIMB Investment Bank is the frontrunner to undertake the listing.

The rights to establish and operate 7-Eleven in the country are currently held by 7-Eleven Sdn Bhd, which used to be known as Convenience Shopping Sdn Bhd.

According to data on the Companies Commission of Malaysia (CCM), 7-Eleven made RM9.7 million in net profit on the back of RM926.2 million in revenue for its FY2007 ended Dec 31. A year before that, the company was in the red with a RM12.4 million net loss while its revenue was RM796.6 million.

7-Eleven’s non-current assets stood at RM144.9 million as at Dec 31, 2007, while its current assets are RM192.5 million while share capital is RM5 million. Non-current liabilities for FY2007 stood at RM20.7 million while current liabilities are RM285.8 million.
With profit margins at merely 1% in FY2007 after being in the red a year before, the 24-hour convenience store business is a tough one. What would then be attractive about the listing of the company when it happens?

First, despite competition ranging from small private retailers to hypermarkets and petrol kiosks that operate their own convenience stores, industry observers believe 7-Eleven’s network is extensive enough to translate into interesting numbers.
“7-Eleven’s business model has its advantages. It operates round-the-clock while most of its competitors do not. In addition, with over 1,000 stores nationwide, it has a larger reach than the petrol kiosk chains,” says an industry observer.

“Also, 7-Eleven stores are not restricted geographically in terms of the location of new stores while petrol kiosks can only be opened in certain approved locations. The wide network reach will likely bode well for the group’s bottom line in the longer term as the wider network would strengthen the group’s bargaining power with suppliers and earn more listing fees from the principals,” adds the industry observer.

Since Tan took over the 7-Eleven franchise from Antah Holdings Bhd in 2000, it has grown from around 250 stores to about 1,000 today.

In addition, according to the source familiar with the listing plan, 7-Eleven is believed to have grown by over 100 shops in 2008 and has set a target to open about 150 stores this year.

“It has improved its operations. The company used to have 20 of its outlets robbed every day. Today, things are better. The management has put safes in the stores where money can be deposited but cannot be taken out until a certain time,” says the source.

In an interview with The Edge in late 2007, Ng Su Onn, executive director of Convenience Shopping (now known as 7-Eleven Sdn Bhd), said the company was focused on turning around its loss position and had put in place financial controls to contain cost and also increased its advertising and promotional activities.

He added that the company was also looking to increase the list of services available to attract new customers. The services included phone reloads and higher margin items like hot and fast food. Ng also revealed that the company was exploring the possibility of introducing a line of proprietary products.

...... to be cont...

Moolah said...

..... 7-Eleven returned to the black in 2007. How the company developed and fared in 2008 remains unseen as it is privately held and the results have not yet been submitted to the CCM as of last week. Nevertheless, industry observers believe the business remained profitable in 2008.

7-Eleven’s company data on CCM lists Premier Merchandise Sdn Bhd as its shareholder. In turn, Berjaya group’s Intan Utilities Bhd — a company that was taken private by the group in early 2007 — owns Premier Merchandise.

In October 2004, Intan completed a restructuring exercise that saw the company divest itself of its entire interest in its water treatment operations and in return, acquire the 7-Eleven chain. As a result of the new business injected into the group, Intan saw its revenue soar 728% to RM828.97 million for its 17-month financial period ended December 2005 (it had changed its accounting year-end), compared with RM100.16 million the previous fiscal year. Net profit did not jump as high, but it still saw 54% growth to RM18.17 million in the same period.

On top of the new business for Intan, the company got many of its investors excited when it proposed to acquire 320 million shares or a 25.7% stake in Berjaya Sports Toto Bhd from Berjaya Land Bhd in June 2005. The proposed acquisition, however, was called off in January 2006 and Intan was taken private two years ago by Vista Meranti Sdn Bhd.

According to a circular to shareholders in 2007, Vista Meranti is indirectly wholly owned by Tan.

Although Intan, together with its 7-Eleven business, was taken off the local bourse, it looks like investors who are keen to invest in the 24-hour convenience store business may get a chance to do so again should the Berjaya Group successfully list its 7-Eleven franchise.

This article appeared in the Corporate page of The Edge Malaysia, Issue 757, June 1-7, 2009

solomon said...

I wonder how many times a person will buy things from 7 evelen compared to carrefour, Giant or Tesco? This could not be the best analogy but it tells you whether this company prospect is bright. It only serves the niche market.

Anyhow, the major shareholder have a track record to take back the company at lower tide. Could this mean that investors are buying at higher tide. This is to be known in coming days. Are you trying to imply here, Moola?