On the Edge Financial Daily: Chen’s stocks stir interest
- Chen’s stocks stir interest
Written by Joyce Goh
Wednesday, 20 October 2010 15:25
KUALA LUMPUR: Stocks related to low-profile Malaysian tycoon Tan Sri Dr Chen Lip Keong have been thrust into the limelight recently. Like bees to honey, investors have flocked to shares of Chen’s flagship Malaysian entity Karambunai Corp Bhd after the government announced plans last month on the Economic Transformation Programme for a proposed 500-acre “eco-nature” resort in Kota Kinabalu, Sabah.
Although the government has yet to disclose the name and area where the integrated resort would be in Kota Kinabalu, many believe that Karambunai Corp is likely to be a beneficiary from the proposed project. The government announced in its Budget 2011 last Friday that it would allocate RM100 million to part finance developer and resort operator Karambunai Corp’s integrated eco-tourism resort in Kota Kinabalu. The RM3 billion project is slated to start next year and is expected to take about five years to complete.
Karambunai Corp is one of the largest resort operators in Kota Kinabalu with its Nexus Karambunai Hotel resort in Sabah. The Main Board-listed company has 600ha of land in the Karambunai peninsula. About 130ha have been used to build the five-star Nexus Resort Karambunai, Nexus Golf Resort Karambunai and 200-odd units of luxury beachfront villas.
Given this, it is no wonder investors have started making a beeline for the stock. There was also a rumour circling that Karambunai had plans to build a casino but the company flatly denied it.
Although not in the same league as Genting’s Tan Sri Lim Kok Thay or Las Vegas Sands’ Sheldon Adelson, Chen is still a fairly significant gaming player in Southeast Asia. Via Hong Kong-listed NagaCorp Ltd, he owns the NagaWorld casino resort in Phnom Penh, Cambodia.
Karambunai’s shares ended at 25 sen yesterday — its highest since 2002.
BACK IN THE LIMELIGHT... Investors have run up the share prices of Karambunai Corp Bhd and Petaling Tin Bhd, companies linked to low-profile tycoon Tan Sri Dr Chen Lip Keong, following news that the government is supporting Karambunai Corp’s RM3 billion integrated eco-tourism project in Kota Kinabalu, Sabah. The picture above shows the Nexus Karambunai Hotel resort.
Its 52-week closing low was at five sen on July 19, 2010. From 5.5 sen on Sept 21, 2010, the stock soared about 50% a day for three consecutive days, tripling to 18 sen by Sept 24. The company, which is loss-making, had net assets per share of 37 sen as at June 30, 2010.
While Karambunai’s shares continue to run, a once-forgotten stock — Petaling Tin Bhd — seems to have stirred up interest as well. Petaling Tin and Karambunai Corp have Chen as a common substantial shareholder. The reclusive tycoon also sits on the board of both companies.
Petaling Tin had closed at its two-year high of 28.5 sen at the start of the week on Monday. That translates into a 33% increase in the share price from its close of 21.5 sen last Friday.
Trading of the usually sleepy stock has also picked up since the start of the week.
On Monday, trading volume of the stock stood at 5.08 million which is a 3,578% jump from its one-year daily average volume of 13,811 shares.
Trading interest continued until yesterday with 4.6 million shares done.
Petaling Tin’s shares ended at 28 sen yesterday. Its one-year average price stood at 15.8 sen while its 52-week closing low was at 12.5 sen just four months ago on June 7, 2010.
What could be brewing there?
A closer look at the company shows that Petaling Tin is also one of the largest landowners in the Karambunai peninsula, after Karambunai Corp’s 600ha.
The Karambunai peninsula land is officially located in Mukim Menggatal, district of Tuaran in Sabah.
According to Petaling Tin’s 2009 annual report, the company owns two parcels of leasehold land totalling 575.5ha there, which expires on 2093. One parcel of 550.4ha has a book value of RM207.6 million and another of 25.1ha has a book value of RM38.6 million. The cost of the larger plot of land is RM152,690 per acre or RM3.50 per square feet (psf). The smaller plot is RM621,933 per acre, or RM14.28 psf.
Despite the potential sitting on Petaling Tin’s landbank in Karambunai, can the company translate this into returns?
Petaling Tin’s financial track record has not been impressive.
The company managed to return to the black in 2000 after four consecutive years of losses. It posted a net profit of RM4.3 million for the financial year ended Oct 31, 2000 compared to net losses of RM3.8 million in 1999 and RM15.9 million in 1998. The company then underwent a “rescue” programme and managed to stay in the black for three years up to financial year 2002.
Then, it slipped into a loss-making position again in 2003. Since then, Petaling Tin has been in the red up to its most current audited financial year ended 2009.
For its nine months ended July 31, 2010, the company is still in the red — with an RM11.2 million net loss.
Its disappointing financial performance could be a reason why the stock has been trading below its net tangible assets. From 2001 to 2009, the company’s net tangible assets per share stood between RM1.12 and RM1.05. As at Oct 31, 2009, Petaling Tin’s net tangible assets per share stood at RM1.07 while at the end of the company’s third quarter ended July 31, 2010, its net assets per share was at RM1.04.
The company is mainly in the property development business and has several projects — Desa Bukit Indah and Magilds Industrial Park — in Sungai Buloh.
While investors continue to flock to Chen’s Karambunai and Petaling Tin of late, another company linked to him — FACB Industries Bhd — has not seen much interest. Unlike the other two companies, FACB does not have any land in the Karambunai peninsula. The company manufactures and sells stainless steel pipes, as well as mattresses under the “Dreamland” brand.
FACB’s stock ended yesterday at 61 sen, up one sen from the day before. Its 52-week closing high stood at 67.5 sen on April 1, 2010 while its 52-week closing low was 44 sen which it hit in December last year. Its net assets per share stood at RM2.16 on June 30, 2010.
It is unclear if the stocks related to Chen will extend their rally, and if investors’ excitement over the potential of the Karambunai peninsula will continue. While the Chen-related stocks started their rally from relatively low price-to-book multiples, it should be noted that most of them, except for FACB, are loss making. For the gains to be sustained, something exciting has to happen at Karambunai.
This article appeared in The Edge Financial Daily, October 20, 2010.
Hmmm...
- Karambunai Corp is one of the largest resort operators in Kota Kinabalu
- Its 52-week closing low was at five sen on July 19, 2010.
Strange... so long article from the Edge but the Edge did not even write how Karambunai is doing....
This stock used to be called FACB Resources, then it changed its name to Karambunai in 2004.
Let's see..
2000 Quarterly rpt on consolidated results for the financial period ended 31/3/2000 - Made 5.622 million
2001 Quarterly rpt on consolidated results for the financial period ended 31/3/2001 - Loss 20.466 million
2002 Quarterly rpt on consolidated results for the financial period ended 31/3/2002 - Loss 78.688 million
2003 Quarterly rpt on consolidated results for the financial period ended 31/3/2002 - Loss 83.656 million
2004 Quarterly rpt on consolidated results for the financial period ended 31/3/2004 - Loss 57.035 million
2005 .... new name .... Karambunai. :P
2005 Quarterly rpt on consolidated results for the financial period ended 31/3/2005 - Loss 63.747 million
2006 Quarterly rpt on consolidated results for the financial period ended 31/3/2006 - Loss 12.846 million
2007 Quarterly rpt on consolidated results for the financial period ended 31/3/2007 - Made 54.649 million !!! Made money :P ( Made money because of the impairment of goodwill from the redemptions of bond. If no impariment of goodwill... err ... :P )
2008 Quarterly rpt on consolidated results for the financial period ended 31/3/2008 - Loss 32.083 million
2009 Quarterly rpt on consolidated results for the financial period ended 31/3/2009 - Loss 35.397 million
2010 Quarterly rpt on consolidated results for the financial period ended 31/3/2010 - Loss 33.199 million
Q1 earnings in Aug Quarterly rpt on consolidated results for the financial period ended 30/6/2010 - Loss 14.386 million
Errr..... how?
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