Sapura Energy: excessive remuneration for Directors?

From the annual report of Sapura Energy:

Those numbers seem very high, especially given the rather poor recent results of the company:

While the company lost a combined amount of RM 585,000,000 over the last two years, the directors earned a combined fee of more than RM 187,000,000 over the same period.

The share price over the last five years:

After reaching almost RM 5, the share price has declined by about 64%, nothing to shout about for the minority shareholders. And dividends have not been much better:

In other words: 37,000 shareholders received less in dividends than the Directors in remuneration. It seems the company is more interested in rewarding the Board of Directors than the shareholders.

If we look in more detail we notice the following:

Most of the remuneration for the directors is earned by a single person (I assume Sharil, the president and group CEO, although unfortunately the director is not named), and mostly based on performance.

But with the company losing more than half a billion over the last two years, the share price down a lot and the dividend cut, one wonders what the KPIs for that performance are.

The fees for the non-executive directors are also on the high side:

The major shareholders of the company:

We notice three government linked funds in the list of substantial shareholders. Will they make noise about the above remuneration? At the last AGM that did not happen, all resolutions were approved by a large majority of the shareholders.

Let's wait and see if the next AGM to be held in July will be any different.

Wing Tai GO: Pangolin not happy (2)

Article on the website of The Star:

Takeover offer for Wing Tai Malaysia seen undervalued

One snippet:


He further notes that only less than 15% shares in Wing Tai are held collectively by institutional investors, who are more likely to have the holding power.

“Even if they stand together, it will be difficult to pose any challenge to the offer,” he explains.


CIMB Research made the following comment:


We see this transaction as positive for Wing Tai, as it is earnings accretive by reducing minority leakage from WTM.


Loyal minority investors who held on to their Wing Tai shares throughout the years, through thick and thin, are now described as causing "minority leakage" to the majority shareholder.

Well, I guess that is one way to put it, definitely not mine though. Has the term ever been used when a company went for a listing, as in: "we want to IPO our subsidiary because we want to increase minority leakage"?

China Automobile Parts: "bad reputation"? (3)

Things continue to worsen in regards to China Automobile Parts, PKF issued the following rather strong worded statement.

PKF retracted their 2015 audited accounts since the financial statements for FYE2015 do not give a true and accurate picture of the financial position of the company.

Unfortunately, appendix 1 and 2 (mentioned in the text) are not enclosed. That is a pity, they might provide details when things started to turn sour, and how bad things might be.

Audited accounts being retracted from a listed company might be a first in Malaysia, but definitely not for unlisted companies, 1MDB being a rather "famous" example of that.

SC sues Stone Master executive (3)

More and more developments in Stone Master, things are getting really murky.

The Edge Malaysia wrote an article "Stone Master Expose?"

From The Star's website  "Another one bites the dust", one snippet:


"Apparently, in consideration of the exclusive right to distribute the products of the Chinese companies, certain local representatives were paid a sum amounting to RM11.59mil in the form of a non-refundable deposit, of which RM11.54mil was subsequently paid by these local representatives to Chan, who is still a member of the board."


Luckily the last part is not correct, I wrote about this subject before, since then Chan has since retired, according to this announcement. Half a year too late, but at least it was done.

The article in The Star further writes about interesting developments in Samchem Holdings, one snippet:


Industrial chemicals distributor Samchem Holdings Bhd earlier in the week received a special notice from seven of its shareholders, who collectively hold 19.8 % in the company, asking for the removal of Ng Soh Kian as an executive director of the company.

Soh Kian was appointed as an executive director in February 2009, just four months before the company was listed. Interestingly, Samchem’s CEO Datuk Ng Lian Poh, the brother of the company’s founder and executive chairman, Thin Poh, resigned earlier this month. He resigned due to personal reasons.

Thin Poh, who has stepped in as acting CEO, holds a 44.14% stake in the company. Soh Kian has been steadily whittling down his stake in the company and now has only 0.26%.

No reasons were given for wanting to remove Soh Kian from the board by the seven .....

SC sues 7 for insider trading

From the website of the Securities Commission:


Securities Commission Malaysia (SC) has filed a civil suit at the Kuala Lumpur High Court against seven individuals for insider trading involving the shares of Worldwide Holdings Bhd (Worldwide), a company previously listed on Bursa Malaysia.

Datin Paduka Low Siew Moi, Tan Cheng Teik, Liaw Huat Hin, Hoi Main Seng, Chua Keng Hong, Datuk Ter Leong Yap, and Ter Leong Hing were alleged to have been involved in the insider trading of Worldwide shares between 2006 and 2007.

In the suit filed on 18 May 2017, SC claimed that Low had communicated material non-public information, namely the proposed privatisation of Worldwide, which was undertaken by Perbadanan Kemajuan Negeri Selangor (PKNS), to Tan, Liaw, Hoi, Chua, and Ter Leong Yap, in breach of section 89E(3)(a) of the Securities Industry Act 1983. Low was the deputy general manager in PKNS and a director of Worldwide at the material time.

SC also alleged that Ter Leong Yap and Tan had further communicated the said information to Ter Leong Hing, and also Hoi and Liaw respectively. SC claimed that Tan, Chua, Hoi, Liaw and Ter Leong Hing breached section 89E(2)(a) of the SIA when they purchased Worldwide shares while in possession of the material non-public information.

SC is seeking a disgorgement of three times the profits earned by the defendants as a result of the insider trading and a civil penalty of RM1 million from each of the defendants.


Good that the SC chases insider trading activities, which have been rampant in Malaysia. Many significant corporate announcements have been preceded by a surge in volume and price, indicating that some participants were (most likely) privy to confidential information.

In a previous posting on this subject I wrote:

" .... the cases seem all rather old, the alleged events often took place 6-8 years ago. Does it really need to take such a long time before somebody can be charged?"

May be I was too mild, because the above case was 10-11 years old.

There is another interesting issue though, according to an article of The Malay Mail:


The Malaysian Anti-Corruption Commission (MACC) announced today it was cooperating with the National Chamber of Commerce and Industry of Malaysia (NCCIM) to fight graft, the same day the Securities Commission (SC) named NCCIM’s president as one of seven it was suing for insider trading.

The MACC said it has established a “network of cooperation” with NCCIM to fight corruption and also abuse of power, following a meeting between top officials from both the agency and the chambers.

“Businessmen play an important role in spurring our economic growth. The cooperation can help increase business activities and strengthen economic stability,” MACC said in a statement.

The chambers’ representatives were led by its president, Datuk Ter Leong Yap, who is also founder and executive chairman of Sunsuria Berhad, a property developer that is reportedly planning to launch projects with a total gross development value of RM1.55 billion this year.

However, SC announced today that it has filed a civil suit at the Kuala Lumpur High Court on May 18 against Ter and six others for insider trading involving the shares of Worldwide Holdings Bhd ― a company engaged in property environmental services, investment holding and medical device manufacturing businesses ― between 2006 and 2007.

Wing Tai GO: Pangolin not happy

Article in The Edge: "Wing Tai general offer seems unattractive".

Some snippets:


Controlling shareholders of Wing Tai Malaysia Bhd (WTM) want to take the property developer and apparel retailer private at RM1.80 per share.

The offer price is a 52% premium over its last traded price of RM1.18 on Monday before the stock was suspended from trading yesterday. However, it is 34% below its net tangible assets of RM2.73 per share as at March 31.

“WTM is massively undervalued at the takeover price of RM1.80,” said Pangolin Investment Management director James Hay. The asset management firm currently holds a 2% stake in WTM at an investment cost above RM2.

“Don’t forget there was a rights issue [in 2015 at RM1.15 per share],” said Hay, who pegs the fair value of WTM at RM3.63 per share.

His fair value is derived from sum-of-parts valuation, pricing the company’s retail unit (excluding its joint venture [JV] that operates Uniqlo stores) at RM132.8 million, or 28 sen per share, plus the 45% stake in the Uniqlo chain at RM211 million or 44 sen per share.

Also, Hay reckons that WTM’s high-end residential project Le Nouvel here could generate profit of RM100 million, or 21 sen per share.

Besides unsold properties and land bank, WTM manages a portfolio of 12 international fashion brands such as Topshop, Topman, Dorothy Perkins, Miss Selfridge, Warehouse, Burton and Furla. The company also owns a 45% stake in the JV with Japan’s Fast Retailing Co Ltd that operates 36 Uniqlo outlets in Malaysia.


Given the high premium offered, I think there is a serious chance that most minority shareholders will accept the offer and thus that the company will be delisted. That would mean the exit of another good company from Bursa.

Regarding the independent advise (still to be drafted), may I suggest another case of the intriguing "not fair but reasonable"?

Maxbiz CEO: “RM 50 million is nothing to shout about” (2)

I wrote before about this subject. Two of the many red flags I mentioned:


[2] Maxbiz and five directors received public reprimands and fines:

• MAXBIZ had breached paragraph 9.16(1)(a) of the LR for failing to ensure that the 4th quarterly report for the financial year ended 31 December 2008 ("4th QR 2008") which was announced on 2 March 2009 took into account the adjustments as stated in the Company’s announcement dated 4 May 2009.
• MAXBIZ had reported an unaudited loss after taxation and minority interest of RM6.227 million for the financial year ended 31 December 2008. However, the Company had on 30 April 2009 reported an audited loss after taxation and minority interest of RM76.926 million.
• Bursa Securities also found that the directors of MAXBIZ to be in breach of paragraph 16.11(b) of the LR for permitting knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the above breach.

[4] Directors own not even a single share:

The Securities Commission has now charged one of the above directors, this time for (allegedly) insider trading.


Securities Commission Malaysia (SC) today charged Dato’ Vincent Leong Jee Wai (Dato’ Vincent Leong) for insider trading of shares of Maxbiz Corporation Berhad (Maxbiz).

Dato’ Vincent Leong, 58, was charged at the Kuala Lumpur Sessions Court this morning with two counts of communicating material non-public information between November 2010 and January 2011 to one Leong Wye Keong when he should have known that Leong Wye Keong would tend to dispose shares of Maxbiz Corporation Berhad (Maxbiz). Dato’ Vincent Leong was at the material time the Managing Director of Maxbiz.

The material non-public information for the first charge relates to the decrease in Maxbiz’s shareholders’ equity which was close to Maxbiz being classified as financially distressed. The second charge concerns the classification of Maxbiz as a Practice Note 17 (PN17) company.

Dato’ Vincent Leong claimed trial to both charges. Kuala Lumpur Sessions Court Judge, Puan Azian binti Othman fixed bail at RM250,000 with one surety.  Dato’ Vincent Leong was also ordered to surrender his passport to the court.

Insider trading is punishable under section 188(4) of the CMSA, with an imprisonment term not exceeding 10 years and a fine of not less than RM1 million.


A certain "Leong Wye Keong" is mentioned in this court case (most likely as an aggrieved investor in a fund managed by SJ Asset Management). I am not sure if it is the same person, but it could very well be so, the name is not very common. The court case is against SJ Asset Management (and other parties).

I wrote before:


A strange coincedence is the fact that SJ Asset Management was the 2nd largest shareholder of Maxbiz, an asset management company being examined closely by the Securities Commission (SC) due to irregularities in its accounts.


It is a small world, isn't it?

The Securities Commission is quite active in enforcement regarding insider trading these days. Unfortunately, the cases seem all rather old, the alleged events often took place 6-8 years ago. Does it really need to take such a long time before somebody can be charged?

Noble group, its bonds and more

I wrote a few times about Noble Group, but nothing recently. I was interested in the case because of the strange valuation of its holding in Yancoal. That valuation seemed way of the mark (needless to say, DCF was used, the weapon of choice for these kind of occasions). The logical follow-up question would be, if the same would apply to some of its other assets?

Its share price has since come down quite a bit, and more worrisome (recently) the price of its bonds.

"The Macro Tourist" wrote an interesting article about Noble "Was Noble the silver seller?".

It describes a possible involvement of Noble with silver. It is a speculative assumption, but it does show a few nice charts.

China Automobile Parts: "bad reputation"? (2)

In addition to my previous blog post about this subject, things have possibly made a clear turn for the worse, according to its latest announcement.


The Company’s auditor, PKF has requested to carry out certain procedures that include the verification of the Company’s value added tax devices with the relevant tax authorities’ system directly and complete the verification of the consignment notes/appropriate delivery documentation against the sales invoices. The Company wishes to inform that the tax system in Fujian Province, China underwent three major upgrades and reforms within a year and this may have resulted in certain tax information being inaccurate. In order to meet PKF’s request, the person in charge of the Company is in the midst of liaising with the tax department, so that the auditor can clarify directly with the tax department where necessary.


This seems like a good action by PKF, comparing the official tax numbers with the alleged comparable numbers as provided by CAP. Many short sellers use indeed tax numbers of the company, its subsidiaries or trading partners.


On the auditor’s request to seek confirmation with the banks on the Company’s recorded bank balances, the Company will co-ordinate and make the necessary arrangement with the bank for PKF to seek confirmation verification where applicable.


And this also deserves attention, in several cases of Chinese companies listed on Bursa I have strong doubt about the bank balances. I even recommended Bursa to let all these China based companies to do a voluntarily, independent confirmation of the bank balances by an expert party. If the cash is not there, immediate action can be taken, and there would be no need to throw more good money after bad money (for instance through a rights issue). However, if the cash is really there, then that might add to the credibility of the company.

This confirmation has to be done in a proper way though, there have been cases where a company falsified the statements and the online banking system, and even the regional branch manager of the bank was in the fraud.


The auditor highlighted that it has come to their attention that there appears to be certain ongoing litigation involving the Company and certain of its directors whereby certain records appear to indicate amongst others that the Company had undertaken significant borrowings and had defaulted in repayment, resulting in a claim and litigation during financial year ended 31 December 2016 (“FYE 2016”) against the Company and certain of its directors by the lending bank. The Company wishes to inform that it has appointed a lawyer, Fujian Shi Long Law Firm, to verify and confirm the litigation cases involving the Company and certain of its directors. The Company will make announcement on the development of the above matter in due course if necessary.


If the underlined is indeed true (and the auditor must have had pretty reliable information regarding this, otherwise the above would not have been published), then that would be an extremely serious matter.

Shareholders should brace themselves for the worst.

Maxwell: More Mayhem (2)

Maxwell finally published its annual report, bit too late, but better late than never.

The start is promising:

"Moving Forward", interesting motto, but how to move forward when the revenue of the last three quarters has been exactly zero? In other words, the company has ceased all its business.

Regarding its financial position, the company remarks:

"The Group owned a cash and cash equivalents of RM360.673 million (2015: RM366.713 million) with zero debt as at the end of the financial year 2016. The Group has been in net cash position for the past 6 financial years since it was listed on the Main Market of Bursa Malaysia Securities Berhad back in 2011."

That sounds good, RM 361 Million cash, but the accounts are again heavily qualified by the auditors, and again in relation to its alleged cash (among many other items):

As disclosed in Note 10(b) to the financial statements, during the financial year, Jinjiang Zhenxing Shoes & Plastics Co. Ltd., a subsidiary company of the Company, placed RM337.21 million (RMB510.00 million) with an asset management company, Jinjiang Jin Chuang Private Capital Management Co. Ltd., (“Jin Chuang”) (晋江晋创民间资本管理有限公司). The management of Jinjiang Zhenxing Shoes & Plastics Co. Ltd., are unable to provide the relevant information and supporting documents to the Company in respect of the placement of the cash with the asset management company.

On 26 April 2016, the Company announced that Jinjiang Zhenxing Shoes & Plastics Co. Ltd., had on 6 April 2016 notified Jin Chuang to transfer all the funds. On 19 July 2016, the Company announced that the funds placed with Jin Chuang would be transferred into Jinjiang Zhenxing Shoes & Plastics Co. Ltd.’s bank account or a bank account nominated by Jinjiang Zhenxing Shoes & Plastics Co. Ltd., upon maturity.

We were unable to obtain sufficient appropriate audit evidence on the cash and cash equivalents as at the end of the financial year. Therefore, we could not determine the effect of adjustment, if any, on the financial statements of the Group.

It really seems that the company is dragging its feet in proving that the funds (RM 337 Million) really exist. One possibility (which is rather likely, in my humble opinion) is that the cash is simply not there, it probably never was. It would not exactly be the first time that this would happen to a company from China.

The company further stated:

On 14 April 2017, the Company announced that the Company, Jinjiang Zhenxing Shoes & Plastics Co. Ltd. and Maxwell (Xiamen) Co. Ltd. appointed a legal firm in PRC, namely Shanghai Zinger Law Office (上海致格律师事务所) to conduct a special due diligence on Advertising and Promotion Expenses (Note 30.1(1)) and funds placed with Jinjiang Jin Chuang Private Capital Management Co. Ltd. (晋江晋创民间资本管理有限公司) (Note 30.1(2)) and to issue a special legal opinion thereon. As at the date of this report, the lawyer has yet to issue any legal advice on this matter.

I wrote about this marketing issue 18 months ago, why wait so long to appoint a legal firm to conduct due diligence? What have the independent directors and/or the regulators done all this time? Has there been any activity and/or pressure from their side, or do they let the company continue in this rather shameful way?