Goh Ban Huat: connecting the dots

Excellent detective work by Errol Oh in The Star: "From Casio King to King of Coincidences".

This in regard to the acquisition by Goh Ban Huat of 20% in Time Galerie (M) Sdn Bhd for RM 14 Million, as announced here and here.

The detailed work showing possible relationships is much too cumbersome for ordinary retail investors.

Unfortunately, because there are systems out there that would make things much more easy, for instance "Handshakes" and "Webb-site". Pity that Bursa is not making similar systems for retail investors.

Related Party Transactions (RPTs) have a horrific reputation in Malaysia, as detailed in many cases in this blog (and much more cases in "Where is Ze Moola") where minority investors often received the short end of the stick.

But there is one category even worse, RPTs that are dressed up as non-RPTs. With many big players registering their holdings under nominee accounts, in a country where conflict of interest is normal, surely this is happening many times per year.

Unfortunately, enforcement on this aspect is really weak, we hardly hear about relevant cases against major shareholders who do business deals with related parties and fail to report this.

This is very relevant, since RPTs have to follow much more stringent rules and guidelines than non-RPTs. Larger RPTs even require an independent adviser and have to be approved in EGMs where the related parties have to abstain.

That all doesn't mean that Goh Ban Huat's acquisition is a RPT. But it does mean that the regulators actively should look into this deal (and in many similar deals).

It also doesn't mean that it is bad for its shareholders, Time Galerie looks like a very decent, profitable company.

There is one part in the reply to Bursa's query though that I don't like, the comparison to similar transactions. It shows that the PE of Time Galerie (11.8) compares reasonable with five other deals done with listed companies.

However, unlisted companies are sold for much lower PE's, a PE of 5 is often considered reasonable, and a PE of 2 is not unheard of. Shares in unlisted companies are very illiquid, and the standard of the audits is much lower than those of listed companies, hence those companies are trading at a large discount to their listed rivals.

In an unrelated matter, an interesting story about how Robert Tan gained control over Goh Ban Huat can be found here, paragraph 4.3. And for readers who like to know more about Syed Mokhtar (about whom I have written many times in this blog), paragraph 4.2 seems to be interesting.

"Handshakes" system joins the dots in the capital market

".... the executive chairman and CEO of [Singapore listed] Ocean Sky Edward Ang Boon Cheow and independent director Albert Ng Ya Ken, who sits on the audit and remuneration committees, are brothers-in-law"

One of the amazing findings of "Handshakes" (giving a new meaning to the word "independent"), a system developed by two ex-Singapore Exchange regulators that promises to bring a whole new level of transparency to the capital market in Singapore. The website can be found here, it's credo:

"From forgotten IPO prospectuses to daily announcements, Handshakes draws relationship maps that connect People, Listed Companies and Major Financial Transactions, all in one browser window."

Another example of a finding:

"Type in China Sky and Fiberchem, and one is able to find out that besides sharing the same principal banker, Quanzhou City Commercial Bank, they also shared the same audit partner from Deloitte & Touche, and that a Chinese entity - Deluxe Dragon International - which used to own Fibrechem pre-IPO and was its top 20 shareholder, ended up as a subsidiary of China Sky in 2008."

Mr Neo and Mr Poon (right) see Handshakes driving the Singapore capital market into a more advanced state than the rest of the world.

The above information comes from a frontpage article in the The Business Times (Singapore), which continues:


"Handshakes" has electronically uploaded information disclosed in some 16,000 documents going as far back to 1997. It is able to show all the past and current associations any entity or person has with others.

The idea came about while both were toiling at their jobs in SGX, trying to enforce compliance by listed companies with the listing rules. For example, they had to ensure the suitability of directors and ascertain that placements and purchases of assets to and from related parties were disclosed.

The company now has 10 people in Singapore and another 10 people in a neighbouring country [I hope Malaysia] doing the data entry. Some 700 new documents are added every day, said Mr. Neo. It adopts a maker-checker system to ensure data accuracy.


The service costs money, a simple report S$ 500 while a more extensive search may cost S$ 1,000 to S$ 2,000. Understandable, the website is run by a for-profit company. David Webb delivers a similar service free of charge, as a way to give back to society.

Hopefully regulators, researchers and journalists (both in Singapore and Malaysia) will be subscribers to this service, and many nuggets of information will be found and revealed to the public.