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  1. Changing Fortune to its Core Businesses

 

  1. Pharmaceutical division under Pharmaniaga – to supply 12 mil doses of Sinovac Covid-19 vaccines to Malaysia aside from suppling critical personal protective equipment (PPE) to healthcare facilities across the nation. Even after the pandemic phase in  the future, Pharmaniaga could be given an exclusivity to distribute Sinovac vaccines in Malaysia;
  2. Plantation division under Boustead Plantations – the improving results due elevated prices of CPO and higher production of its fresh fruit bunches. The 25 Year Replanting Programme is envisaged to continue to rebalance and optimise the age profile of its oil palms;
  3. Heavy industries division under Boustead Heavy Industries – Resumption of Littoral Combat Ship (LCS) project by Ministry of Defence that was halted since 2019. It also successfully secured new contracts for maintenance, repair and overhaul works for four (4) commercial vessels in 2021; and
  4. Trading, finance & Investment – to anticipate economy recovery in 2H 2021 through proactive measures to fight the pandemic, especially on herd immunity initiatives. It will bode well for its banking, travel and leisure, property, construction, petrol stations businesses.

 

  1. Rationalisation of Non-strategic Assets

 

In the past, all the analysts had ceased coverage of BHB, complex structure with its Group structure, continuous losses and debt issues. However, bear in mind, BHB has many quality assets from prime land (along Jalan Cochrane and Mutiara Damansara, hotels, shopping malls, petrol stations to cruise terminal that can be easily monetised. Some of the rationalisation of non-strategic assets is as follows:-    

 

No.

Transaction

Completion Date

Disposal Consideration

(RM’ Mil)

1.

Disposal of Boustead Cruise Terminal to Westport and Northport  

Q3 2021

230.0

2.

Disposal of Royale Chulan Bukit Bintang Hotel to Every Room A Home

Q1 2021

197.0

3.

Disposal of freehold land at Jalan Cochrane measuring 2.77 acres to Binastra Energy

Q2 2021

130.0

4.

Disposal of freehold land at Jalan Cochrane measuring 6.59 acres to Sunway Rahman Putra

Q4 2021

233.39

Total

790.39

 

In FY20, the Group has also disposed its 45% associate, Kao (Malaysia) with gain of disposal of RM44.5 mil. The Group can tap into possible re-listing and listing exercises for its wholly owned subsidiary, UAC Berhad and its education business under University of Nottingham. UAC Berhad is a leading manufacturer of cellulose fibre cement boards in Malaysia . The Company has many prime plantation and freehold land that are high. Among others is its development land of approximately 10 acres at Mutiara Damansara that was acquired in 1999 for RM106.3 mil. Back in 2020, another listed Company, TSR Capital Bhd sold its freehold land measures at 1.25 acres within the same vicinity for RM48.1 mil. Based on ballpark figures, the 10 acres could be easily be worth RM384 mil, given it a gain of RM277.7 mil.

 

In additional, the Group is a well-known conglomerate with 80 listed and non-listed companies in various sectors under its belt. These are prominent companies with the likes of Pharmaniaga (55.93%), UAC Berhad (100%), Boustead Plantations  (57.40%),  Affin Bank (20.73%), PT Millenium Pharmacon (41%), Boustead Heavy Industries  (65.0%),  Rakan Riang i.e. operator of Kidzania (20%), Cadbury Confectionary (25%), MHS Aviation (51%), University Nottingham (66%) and Irat Properties (50%).

 

  1. Conclusion

 

FY21 could be the turnaround year for BHB after suffered three (3) continuous FYEs losses and two (2) FYEs without dividends to its shareholders, especially to LTAT. With Dato’ Sri Mohammed Shazalli Ramly taking the helm as the MD of the Group and spearheads the “Reinventing Boustead Strategy”, this could be a turning point and year of acceleration for BHB to create value within its existing businesses, rationalising its non-strategic assets, adapting into new business models, adaption of new technologies in its businesses and to maximise the returns for its main shareholder LTAT. Bear in mind, he was the CEO of Celcom Axiata from 2005 to 2016, during which Celcom achieved a record-breaking 31 quarters of uninterrupted consecutive growth with double-digit growth in revenue EBITDA and net profit.  

 

Disclosure: I wrote this article myself, and it expresses my own opinions and not a buy or sells call. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

https://klse.i3investor.com/blogs/TimelessInvestment/2021-06-05-story-h1566073244-Boustead_Holdings_Bhd_BHB_A_Turnaround_Story.jsp

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