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 EMETALL 7217 EONMETALL GROUP BERHADl’s Goh raises stake in  MAYBULK 5077 MALAYSIAN BULK CARRIERS BERHAD, now its largest shareholder

LESS than a year after emerging as a substantial shareholder of cash-rich Malaysian Bulk Carriers Bhd (Maybulk), businessman Datuk Goh Cheng Huat has strengthened his position in the shipping group by buying another 10% stake from Tunas Capital Sdn Bhd (TCSB), making him the single largest shareholder with 26% equity interest.

All eyes are now on Goh’s plans for Maybulk. The shareholding changes come just two months after the group aborted a plan to venture into the grocery business.

In a filing with Bursa Malaysia last Friday, Maybulk announced that Goh had acquired 100 million shares or a 10% stake from TCSB. Upon completion of the deal, TCSB is left with 6% equity interest in the company, whose shareholders include Minister of Finance Inc (15.34%), Kuok Brothers Sdn Bhd (14%) and Pacific Carriers Ltd (2.46%), an entity controlled by tycoon Robert Kuok.

A person familiar with the matter says Goh is likely to take over the remaining 6% held by TCSB, which will increase his stake in Maybulk to 32%. Goh and TCSB emerged in Maybulk in April last year with a plan to diversify into the grocery business. TCSB is a private vehicle owned by brothers Datuk Chin Yoke Kan and Datuk Chin Yoke Choon.

With the disposal of the 10% stake, Yoke Kan and Yoke Choon resigned from Maybulk’s board on Jan 13. Chief financial officer Ooi Teik Huat was subsequently appointed executive director.

Goh and TCSB had bought the 32% stake, or 320 million shares, for RM174.4 million, or 54.5 sen per share, from Pacific Carriers. Kuok subsequently ceased to be a substantial shareholder of Maybulk and the trio of Goh, Yoke Kan and Yoke Choon were appointed directors of the company.

Maybulk currently derives its core income stream from the provision of freight services for charter. Its share price closed at 38 sen last Friday, giving the group a market capitalisation of RM370.2 million.

According to sources, Maybulk is looking for new business opportunities related to its shipping business following the termination of its plan to venture into the grocery business. “Maybulk is not going into the grocery business as part of its diversification strategy, and that is why TCSB sold its stake,” says one of the sources.

Another source points out that the grocery business is very competitive, especially given the growing number of convenience stores, which was one of the key considerations that factored into Maybulk’s decision to not move forward with the business plan.

Recall that in August last year, Maybulk partnered with Tunas Manja Sdn Bhd (TMSB) — controlled by Yoke Kan and Yoke Choon — to undertake a grocery retail business and other related businesses. It was deemed a related party transaction after the brothers emerged as directors and shareholders of Maybulk.

Under the partnership, Maybulk was planning to roll out 30 outlets under the TMG brand, which would have seen the group invest RM54.38 million for the supermarket and convenience store set-up costs, inventory purchases and working capital.

As at Aug 9, TMSB controlled a chain of 85 supermarkets and grocery stores operating under the TMG brand across Malaysia, with the majority of the stores located on the east coast of the peninsula. A company search shows that TMSB made a net profit of only RM2.23 million for the year ended March 31, 2021, but it was a substantial jump of 255.52% from RM626,054 a year earlier.

However, less than four months after announcing the diversification plan, Maybulk called it off as the conditions precedent to the relevant agreement had not been fulfilled by the cut-off date of Nov 14.

It was said that Goh, 61, was the main driver behind the grocery deal. He is the founder, deputy chairman and executive director of Leader Steel Holdings Bhd. He is also the founder and executive director of Eonmetall Group Bhd.

Maybulk is a cash-rich company with RM359.36 million as at Sept 30, 2022, and no borrowings. In December last year, it announced an additional interim special dividend per share of 3.5 sen for its financial year ending Dec 31, 2022, on top of the special dividend of 6.5 sen that it announced in November. This brought the dividend payout to 10 sen per share, or RM100 million.

Fluctuations in ship charter rates were among the main reasons for Maybulk’s diversification efforts. The group has been disposing of its ships to capitalise on the high value of second-hand vessels. It now owns and operates four vessels.

Maybulk posted a net profit of RM195.24 million in FY2021 versus a net loss of RM20.78 million in FY2020. For the first nine months of FY2022, its net profit halved to RM81.78 million from RM160.63 million a year earlier, as revenue fell to RM116.85 million from RM158.91 million previously. Its hire days were fewer as a result of its smaller fleet, despite a 10% rise in charter rates.

In its 3QFY2022 financial results announcement, Maybulk said the drybulk market had softened since the beginning of the third quarter, although there was some recovery as Ukrainian exports picked up momentum and sentiment turned better with the anticipation of a stronger US Gulf market.

“However, the improvements in rates halted toward the end of 3Q, with an ill-timed drought in the US Gulf during the current grain season, and with easing congestion in China which [was] almost back to pre-Covid levels,” it added.

http://www.theedgemarkets.com/node/652031
 

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