Kian Joo: the deal is getting cheaper and cheaper ....

Kian Joo announced a good set of results for its second quarter:

Both revenue and profit are nicely up.

To recall, there is a RPT in which Kian Joo would sell all of its business to Aspire Insight (owned by the the former MD of Kian Joo and EPF), which translates to RM 3.30 per share.

That deal has taken quite some time due to legal reasons, but Bursa has allowed an extension until September 30, 2015.

However, in the mean time no dividend has been paid since 2013, which means that the net assets have grown nicely. The deal looked already cheaper, now even more so.

In the Malaysian context it is very hard to fight these kind of deals. But Datuk Anthony See has a decent stake of about 8.6%, he doesn't like the offer and may be is able to rally the minority shareholders to hold out for a better bid.

The next six weeks will be interesting, both for the minority investors in Kian Joo, and for shareholder activism in Malaysia in general.

Delloyd's hidden gems to be revalued? (3)

I wrote before about Delloyd, here and here.

I hoped that the assets of Delloyd, especially the Sungai Rambai Estate and the estates in Indonesia would be revalued. That has indeed happened.

I also wrote:

"The independent adviser for this corporate exercise is Affin Investment Bank.  I would love to see them write something along the lines: "we estimate that the RNAV per share is around RM 15, therefore we find the proposed price not fair and not reasonable". Will they write that? Although independent advice has been improved significantly, I don't think that will happen."

Indeed, that has not happened.

Affin came up with a SOPV (Sum Of Parts Valuation) of RM 7.60. Since the offer price of RM 5.15 is a 32% discount to that valuation, the offer is deemed to be "not fair".

However, Affine still thinks the offer is "reasonable", hence their verdict: "not fair but reasonable, accept the offer". The rather ambiguous judgement that is quite common these days for independent advisers reporting on deals related to Bursa listed companies.

The most important part of the report is probably this:

Are both assets indeed worth only about RM 320M? I have read much higher valuations than that.

The problem that I have in general with many of the privatisation exercises on Bursa is:

• Why are so many offers "not fair", is it not the duty of the Board of Directors to try to get an offer that is "fair" to all shareholders?
• Why is there almost never a competing offer? In this case, Delloyd could have tried to sell its estates individually, to check if there is an interest in them, and if so, at what price. If the price is indeed good, then it could propose to sell the asset and distribute the proceeds to all shareholders. Has the Board of Directors actively tried to find buyers for its assets?

Delloyd's hidden gems to be revalued? (2)

I wrote before about Delloyd Ventures announcing a proposed selective capital reduction and repayment exercise in which minority shareholders will receive RM 4.80 per share.

A back of the envelope calculation (taking into account revalued prices for their plantation land) appears to indicate that the price severely undervalues the true value per share.

Delloyd announced yesterday that the price per share has been increased to RM 5.20 per share.

I guess that makes it slightly more palatable.

The independent adviser for this corporate exercise is Affin Investment Bank.

I would love to see them write something along the lines: "we estimate that the RNAV per share is around RM 15, therefore we find the proposed price not fair and not reasonable".

Will they write that? Although independent advice has been improved significantly, I don't think that will happen.

But I do hope that all the relatively larger assets of Delloyd will be revalued in a proper way. The minority investors are entitled to know that piece of information.

That revaluation might happen, if not, that would be most disappointing.

Delloyd's hidden gems to be revalued?

On May 16, 2014 Delloyd Ventures announced a proposed selective capital reduction and repayment exercise in which minority shareholders will receive RM 4.80 per share.

The share price, which had "miraculously" increased in price and volume since the beginning of April (six weeks before the announcement), jumped further to around RM 4.50, its current price:

Regarding the reasons behind the proposed privatisation, the company mentioned the following (emphasis mine):

If one reads the red underlined parts, then a pretty bleak picture emerges. But, as a knight in shining armour, the controlling shareholders appear, and propose a premium opportunity for the minority shareholders to realize their investments.

I have to admit to the readers that at this moment tears started to form in my eyes. I have written many stories about controlling shareholders "forcing" minority shareholders out at much too low prices under the threat of delisting and mandatory acquisition. Was I too harsh?

At that moment a short beep announced the arrival of an email from a friendly party in my inbox, it read:


"Delloyd announced the privatization via selective capital reduction at RM4.80 per share. The NTA is RM4.37. Delloyd's jewel is a large oil palm estate Sungai Rambai Estate which is about 20km from KL. It has an area of 1,448ha. The proposed WCE will run right through the middle of this estate. The market value of this estate is about RM1.55bil at RM10psf. This represents RM15.5/share. Delloyd's market cap at the last done price of RM4.35 is RM435mil. Delloyd owns an established auto parts manufacturing business and matured oil palm plantations in Indonesia (on a lovely island with resort development potential). These are valued at RM250-350mil."


Immediately my tears had dried, this is rather different from the official announcement. Value is in the eye of the beholder, but even if the valuation of RM 1.55 Billion is somewhat too rich, then the offer price of RM 4.80 seems to undervalue the company quite a bit.

MSWG wrote the following in their weekly newsletter:


DELLOYD VENTURES BERHAD (“DELLOYD”)
Delloyd had on 16 May 2014 received a privatisation offer from its major owner. The privatization plan at MYR4.80 is via a selective capital reduction and repayment exercise. Major shareholder Chung & Tee Ventures Sdn Bhd, and parties acting in concert with them, own a total of 61.41 million shares or 63.58% stake in Delloyd.

Chung & Tee have pointed out that Delloyd’s automotive segment is becoming increasingly competitive as the group’s revenue, operating profit and operating profit margins have been declining in recent years.

Meanwhile, its plantations segment continued to face challenges given prevailing fluctuations in foreign rates of the rupiah and increasing cost of production. It also reasoned that the group’s shares had been relatively illiquid.

MSWG’S COMMENTS:
Prior to the offer the stock closed at its 52-week high at RM4.35 on the day it was suspended (15 May 2014). The stock is currently trading at a high P/E ratio of 19.2x, while its P/BV is trading at 1.0x. The gearing level is low with Debt/Equity ratio at 11.2%. Nevertheless we are of the view that revalued assets of Delloyd could fetch higher value than its current book value due to its plantation segment which consists of bio-assets with an average 3-year oil palm trees and going to contribute significantly to the group.


I really hope that the company will do a proper revaluation of all its assets based on the current prospects and present this to the shareholders. If not, I hope the authorities will take action.

Triumphal and Perak Corp: unfair privatisations?

Article in The Star: "Will minority shareholders triumph in seeking higher value?".


"It has been reported that a group of individual shareholders who own a combined 4.4% stake in Perak Corp have deemed the RM3.90 per share offer by Perak Corp as “ too low”. This is taking into account the fact that the company’s underlying assets, which have not been revalued in a long time, have appreciated. Perak Corp is the owner of Lumut Port via listed Integrax Bhd – an asset that has huge income-generating potential. Its two major property assets, meanwhile, are the 256.8ha in Bandar Meru Raya and 186ha in Behrang.

The minorities estimate that Perak Corp’s revalued net asset value (NAV) is more than RM12. The company’s NAV per share as at Sept 30, 2013 was RM5.03, while it is sitting on RM180mil in cash.

In Triumphal’s case, the offer of RM1 is at a 65% discount to the company’s NAV per share of RM2.84 as at Sept 30 last year. It has been pointed out by analysts that the company has strong asset backing and was in a net cash position of RM17.81mil as at Sept 30 last year."


Delisting exercises are often unfair in Malaysia, done at a steep discount to its NAV (while sometimes the NAV is even conservatively valued). There is a rather awkward "reward" for controlling shareholders, if they don't extract clear value from a listed company then the share price will go down and the controlling parties are able to privatize the company for a low price. Minority investors are often unable to fight these exercises, being a dispersed group.

However, in this case:


"Two major local institutions now have the opportunity to challenge recent privatisation deals involving Bursa Malaysia-listed firms which are seemingly unfair to minority shareholders. The institutions are Permodalan Nasional Bhd (PNB), which owns 12.18% in Triumphal Associates Bhd, and Sime Darby Property Bhd, which controls a 6.13% block in Perak Corp Bhd."


With the current attention for more shareholder activism by institutional investors, these cases come quite timely. Will PNB and Sime Darby put up a fight?

MSWG holds an investor education forum on January 23, 2014 at 10.30AM about these two cases, but also about Kian Joo Can Factory and BERNAS. Interested parties might want to contact MSWG about this event.

The return of IOI Properties

The following article is from The Star: "The return of IOI Properties".

Some excerpts:

• “People associate Lee Shin Cheng as a planter. They have forgotten that he is an equally good property developer as seen from IOI Properties' track record before its delisting.
• “IOI is the sort of company that big money and institutions will be attracted to,” says one fund manager who used to invest in IOI Properties.
• Prior to IOI Properties' delisting in 2009, it was the biggest property company in terms of profitability.
• Even now under parent IOI Corp, IOI Properties is the second largest company in terms of operating profitability after SP Setia Bhd. As of its financial year ended June 30, 2012, IOI Properties recorded an operating profit of RM506.3mil.
• “The listing of IOI Properties will certainly be interesting. It is one of the biggest property companies in Malaysia and now has a track record in China. As we all know, the China market is never easy to penetrate,” said Etiqa Insurance & Takaful Bhd's Head of Research Chris Eng.

This all sounds very good indeed, surely Malaysia would be proud to have this company listed on Bursa?

But this very same company was actually listed on the very same Bursa, only four years ago. And it was taken private at an extremely low valuation, in the midst of the global crisis.

"Where is Ze Moola" has written many times about this issue.

This is what Gerald Ambrose, fund manager of highly regarded Aberdeen Asset Management remarks:

• ...IOI Properties was an excellent property developer while IOI Corp Bhd was an outstanding upstream and downstream oil palm player.
• “For sure, the company has got the track record and excellent management skills. At Aberdeen, we are long term holders with an investment horizon of 8 to 10 years. We used to be a shareholder of IOI Properties before its privatisation in 2009.
• “We were very disappointed when we had to sell the stock because we considered the privatisation price of 0.66 times to its net tangible asset as greatly undervalued. We hope that this will not happen again,”

Here is the (rather shocking) share graph from Ze Moola's website:

Bursa Malaysia's stand in this matter:

At the AGM, a shareholder also asked what Bursa's role was following an  increasing trend of listed companies being taken private, wiping billions off the exchange. And after several years, these companies got relisted.

"When [privatisation and relisting of the same companies] happens, I think someone is making money but not us shareholders," remarked the shareholder.

To that question, Tajuddin responded: "Bursa has engaged with its stakeholders on this. The conclusion was that these corporate exercises were business decisions .

That sounds like a very unsatisfactory answer. Who were those "stakeholders", where they major shareholders, brokers, lawyers, financial advisers and the like, the usual mix of insiders who only profit from these exercises? Or did they also include retail investors and fund managers like Aberdeen, who are on the receiving end of the stick?

Bursa Malaysia should urgently look into the unfair advantage that majority shareholders have, using the "listing-delisting-relisting game" to book large profits at the expense of the minority investors. It is long overdue. To simply conclude that these are "business decisions" will not do.

Bursa needs to come with an answer on Ambrose's statement "We hope this will not happen again" with which we very much agree, not only regarding IOI Properties, but any listed company on Bursa.

"Not fair but reasonable", OTC, delisting, Bursa

Where is Ze Moola blogged many times about the "not fair but reasonable" issue, for instance here, here, here and here.

Malaysia-Finance wrote this article about it.

I am happy to say that the mainstream media also paid attention to it, The Sun here (an interview with MSWG's CEO Rita Benoy Bushon) and Business Times here.

These are all excellent articles. Just to add, some observations:

• The "not fair but reasonable" description is a clear improvement over the past ten years, when almost all deals were deemed to be "fair and reasonable", pity it had to take so long time before this change came through;
• Still, "not fair and (thus) not reasonable, reject the offer" would make much more sense; the "not fair but reasonable" judgement is (unfortunately) always followed by the advice to accept the offer;
• If a privatisation offer is deemed to be not fair, then the directors should explain why they could not come with an offer that is deemed to be fair, what they have done to unlock the value of the assets, if they actively have tried to get an outside offer, etc.;
• Companies are IPO-ed at a clear premium to their net assets, but many are privatised at a clear discount to their net assets, that doesn't seem right;
• Quite a few companies that were privatised were later relisted again, all at a much higher price, in other words minority investors lost out, in some cases big time;
• Most of these recent independent reports are regarding privatisations, I hope the advisers have the courage to judge Related Party Transactions also to be "not fair", because many are (unfortunately) not fair;

Regarding the delisting issue, Rita Bushon mentioned:

"Perhaps another suggestion is to have an over-the-counter platform for those minorities who wish to still remain in the delisted entity until and unless a compulsory acquisition is triggered," said Bushon.

"This would motivate majority shareholders to offer a better price at the outset and the minority would be more fairly dealt with. (But) this suggestion needs to be studied more in detail with the implications."


A letter to the editor of today's (Singapore) Business Times from Dennis Distant mentions the same:

"SGX needs to look at circuit breakers, OTC

When SGX extends its activities to new fields, it rightly deserves credit and receives it.

However, in its strategy to adopt the features of leading world bourses like NYSE and Nasdaq, it seems to have ignored features like "circuit breakers" and, more importantly, facilities to assist shareholders of companies which get delisted, leaving them with useless paper certificates although in theory they can still sell the shares if they can find a buyer somewhere.

NYSE offers the OTC (over the counter) facility and, though of less help but still an option, the "Pink sheet" for shares in companies not listed on major exchanges.

With the increased instances of delisting since SGX began inviting China-based companies to list here as what became known as the now infamous 'S-chips', it behoves SGX to help out the many victims created when these counters and others were eventually moved off the SGX boards.

Can SGX comment on the absence of circuit breakers, OTC and PINK Sheets from the list of services? Getting delisted is the end of the road but being moved to OTC can lead to a new lease of life as is currently the case in the US with American Airlines and Eastman Kodak."


Regarding the delisting and relisting issue: questions were asked on Bursa's AGM (from The Edge Malaysia):

At the AGM, a shareholder also asked what Bursa's role was following an  increasing trend of listed companies being taken private, wiping billions off the exchange. And after several years, these companies got relisted.

"When [privatisation and relisting of the same companies] happens, I think someone is making money but not us shareholders," remarked the shareholder.

To that question, Tajuddin responded:

"Bursa has engaged with its stakeholders on this. The conclusion was that these corporate exercises were business decisions .


I find that a very unsatisfactory answer, I think Bursa Malaysia should analyse this important matter and come with a much more equitable solution. That is, if it is really serious about trying to get retail investors back to Bursa.


Claire Barnes wrote:

"Efficient capital allocation is so important that stock exchanges should be run in the public interest. In practice, ownership by member brokers often worked quite well. Running stock exchanges for profit sets up huge conflicts of interest. I have noted some of these in the past. Others are clearly explained in this article on Bursa CEO pay and lack of retail investors. Stock exchanges are too important to be listed companies!"


The good news about this all: the attention to these (and other) issues shows increasing maturity in the Malaysian market.

MBF, HLCap, MRCB

I often receive requests to look into certain corporate matters. I don't have as much time as I would I had, but will make a quick round-up of three deals that are hugging the limelight:


[1] Regarding the privatisation of MBF, MSWG is organising a forum on Thursday 28th February at 11AM, at MSWG's Training Centre in KL:

"Some shareholders have raised questions whether the earlier announcement by the Board on dividend arising from the sale of MBF Cards & Services would be paid to them. The privatisation is Tan Sri Mogan Lourdenadin's third attempt to take control of MBF Holdings. In 2010 Mogan had tried to take MBF private through a proposed selective capital reduction and repayment exercise by offering 65 cents per share, but was unsuccessful after minorities rejected the offer due to the low price."


[2] There are several articles about Hong Leong Capital (HLCap), suggesting something is brewing in this privatisation exercise:

From The Star, February 19, 2013:

"Shares in Hong Leong Capital Bhd (HLCap) continued to overshoot the privatisation offer price of RM1.71 made by parent company Hong Leong Financial Group Bhd (HLFG), finishing five sen up to RM1.87 in a weak broader market.

Dealers contacted randomly by StarBiz said they were still puzzled by the broad ongoing buying despite scant indication of any price increase in the buyout offer.

Some dealers continued to speculate that parties friendly to the offeror could be continuing their buying of HLCap shares from the market presumably to ensure HLFG secures a high percentage of shares from acceptances of the general offer, which would then help make the case for the delisting of HLCap, the group's stockbroking, investment banking and asset management arm."

Another article from The Star, February 22, 2013:

"Meanwhile, a new substantial shareholder has surfaced in HLCap Datuk Dr Yu Kuan Chon, the chairman and executive director of publicly-listed and family-run YNH Property Bhd.

Yu, a low-profile former medical officer for the Government, rapidly increased his stake in HLCap to 17.24 million shares or 6.98% as at Wednesday from 14.67 million shares or 5.94% on Monday.

It is not known if Yu is a friendly party to Tan Sri Quek Leng Chan, the patriarch of the Hong Leong group, who is taking HLCap private via his flagship Hong Leong Financial Group Bhd (HLFG) for RM1.71 per share.
......

Dealers have speculated that parties friendly to the offeror could have bought HLCap shares from the open market to ensure HLFG secures a high percentage of shares from acceptances of the general offer, which would help make the case for the delisting of HLCap."


Investors should be very cautious making investment decisions based on the above, since it is mere speculation, as pointed out by The Star. But the matter at hand might have serious consequences for minorities. Parties acting in concert (PAC) should be identified, since the price to be paid by the offering party should be the highest paid by them or any PAC.

Bursa Malaysia should monitor this situation very closely and make sure that minorities are not disadvantaged, either by not receiving timely and accurate information, or in money terms, not receiving the offer price they are entitled to.


[3] MRCB announced a deal with Gapurna, this matter is rather difficult, I refer to articles on the website of KiniBiz:

MRCB-Gapurna deal raises eyebrows
EPF says good to have entrepreneur head MRCB
MRCB-Gapurna: Salim defends deal, explains role
Could the EPF have done more?

And lastly, as a stark reminder that one should not mix politics with business:

MRCB’s chequered past colours its future

"With its political clout, MRCB grew to own such choice assets such as 20.2 per cent in Commerce Asset Holdings Bhd which owned Bank of Commerce Bhd (now CIMB)—via NSTP, a chunk of power generation companies like Malakoff Bhd, Sepang Power and Port Dickson Power among a whole host of other large assets."

How many billions of ringgits would the stake of CIMB alone be worth now, if only they still owned it?

"For its financial year ended August 1999, the company suffered losses of about RM1.45 billion from RM235.39 million in revenue. As at August 1999, MRCB was saddled with short term borrowings of RM923 million while the company long term debt commitments were RM473 million. On the other side of the balance sheet MRCB had cash and bank balances amounting to RM38 million."

In the Asian crisis many dreams came crashing down to Earth.

"Eventually MRCB was acquired by EPF in an apparent rescue of the group."

And that is how the EPF became the controlling shareholder.

Weekly roundup: MISC, growers scheme, RBTR

Wishing all readers happy holidays.

Petronas & MISC
More and more pressure is mounted on Petronas to increase their offer price and on EPF to reject the current offer on the table.

P Gunasegaram wrote about the issue in Malaysiakini, the article can be found here for free. The article is very good, I strongly recommend it to the readers, nothing more to add.

MSWG has also entered the battle, in "The Observer" dated February 7, 2013 they write (emphasis mine):

"As the offeror already held 62.67% of total MISC shares, it requires another 27.33% to reach not less than 90% to have MISC delisted. However to compulsorily acquire MISC the threshold level must reach 96.3%. And to ensure the privatisation is successful and accepted by the minorities a better price should be offered.

In addition, the points to note for readers are as follows:

1. Shipping is mired with many challenges and low freight rates. More importantly we need to understand the long term contracts at good rates versus that of spot transactions which are subjected to competitive rates.
2. MISC disposed the loss-making liner business, thus the situation should look more promising for the company.
3. Last but not least MISC had issued rights issue at RM7.00 in 2010 for every 5 shares held. Based on this the average cost per share was about RM8.25 and with the offer price of RM5.30 per share, investors who had subscribed would suffer a significant loss.

We will look at it again the fairness of the offer upon the issuance of the offer document."

As usual, I have nothing against a General Offer, in the contrary, but I hate those accompanied by a "delisting and compulsory acquisition threat", against which minority shareholders have hardly any chance. In this particular case, should minority shareholders who decided not to sell when the MISC shares were going for around RM 8 (between 2005 and 2011) be pressured to sell at a much lower price?

EPF claimed it is actively fighting for its rights, this case might be good to prove it means business.


Country Heights Grower Scheme
"All's well that ends well."

Many questions are still not answered, like:

• Were the investors properly informed about the marketing expenses?
• Were the investors timely informed about the situation of the low yields at the plantation?
• Was the independent report of sufficient quality, highlighting all important issues?
• Why the hurry, with all being scrambled just before CNY?

But the result (with the improved offer and the faster handling of all money within six months) looks pretty good for the investors. At the end of the day, it is the result that counts. A good day for shareholder activism in Malaysia.

Still a good moment for the authorities to relook at the whole saga, if things can be improved regarding these alternative investment schemes.

For a long list of related articles, please visit MSWG's website on this subject.


RBTR

The Securities Commission has filed a suit against RBTR and seven other defendants:

RBTR ASSET MANAGEMENT BERHAD
AL ALIM BIN MOHD IBRAHIM
VALENTINE KHOO
LOCKE GUARANTY TRUST (NZ) LIMITED
LOCKE CAPITAL INVESTMENTS (BVI) LTD (British Virgin Islands)
ISAAC PAUL RATNAM
NICHOLAS CHAN WENG SUNG
JOSEPH LEE CHE HOCK

The details can be found on the website of the SC. I have written about this case before.

“We are concerned that no further action was taken because the case involves Bank Rakyat chairman Tan Sri Dr Syed Jalaludin Syed Salim and Bank Rakyat managing director Datuk Kamaruzaman Che Mat,” he added. Bank Rakyat had once held a 20 per cent stake in RBTR and lent its “Rakyat” name and logo to RBTR, then called Rakyat BTR Capital Partners Sdn Bhd, when RBTR had solicited funds from the public from mid-2007 till mid-2008. Syed Jalaludin and Kamaruzaman were directors of RBTR before Bank Rakyat sold its stake in 2008.


Searching for "Rakyat" in the statement of claim gives the following three hits:

26. In early 2007, Isaac was introduced to Al Alim by one Tan Sri Dato’ Dr. Syed Jalaludin Syed Salim, the then Chairman of Bank Rakyat Berhad and Director of RBTR, to explore new business opportunities.

43. At all material times during the marketing and/or promotion of the EDI Scheme to Malaysian investors , RBTR described it self as “Rakyat BTR”, an “associate of Bank Rakyat Group’. SC contends that RBTR therefore deliberately gave the impression to the Malaysian investing public that its products were in fact associated with and/or were endorsed by Bank Rakyat, which representation was in fact untrue. SC further contends that this representation was critical towards inducing the Malaysian investing public to invest in the EDI Scheme.

107. Particulars of Breach: (d) (i)
using the “Bank Rakyat” logo and describing itself as an “Associate of Bank Rakyat” in the EDI Scheme Promotional Material without the knowledge or acquiescence of Bank Rakyat knowing that this was likely to be material in inducing investors to participate in the EDI Scheme;


We need to wait for details from the civil suit to find out more details regarding this case and Bank Rakyat and its directors, enough questions remain. For instance:

• Bank Rakyat must have noticed that RBTR was promoting the EDI Scheme with the Bank Rakyat logo on it, did it take immediate and decisive action?
• Did Bank Rakyat have a 20% stake in RBTR, if so when did it dispose of it?
• Who were the directors of RBTR from mid-2007 until now, are they all included in the civil suit, if not why?

MISC taken private: "fair and reasonable?"

MISC announced that it has received an offer from its major shareholder, Petronas, to take MISC private, for a price of RM 5.30 per share.

The Star wrote the following, with some comments from me in red:


In the takeover notice issued to MISC, Petronas said it did not plan to maintain MISC's listing status.

Petronas said the offer was conditional on having received valid acceptances, which would result in Petronas holding 90% or more of the total MISC shares.

In other words, a privatization deal with delisting and mandatory acquisitition "threat", a rather frequent combination against which minority shareholders in Malaysia hardly stand a chance.

MISC's other substantial shareholders are the Employees Provident Fund at 9.66% and Skim Amanah Saham Bumiputra at 6.35%.

These shareholders can together block the deal, but will they? Will they fight in the trenches with the other shareholders, seek publicity, trying to get a higher price? I doubt it, although I hope I will be proven wrong.

However, the proposed buyout has surprised many analysts, as it came at a time when the shipping giant was turning around after several quarters of losses. It was also coming close on the recent C$5.2bil (RM16.16bil) takeover of Canadian-listed Progress Energy Resources Corp by Petronas.

Zulkifli Hamzah, head of research at MIDF Amanah Investment Bank, said: “We are caught by surprise by the privatisation of MISC, especially as it had gone through a kitchen-sinking exercise in late 2011 or early 2012 and would have, therefore, been in a much better financial shape.”

He added that while the petroleum tanker division was still suffering from high supply in the sector, recovery should be due in the near future.

“Nevertheless, the decision to delist MISC reflects the stance of the controlling shareholder that the market is not doing justice to the valuation of the company. 

But is that fair? The company is turning around, the market has not yet realized that, the share price is therefore historically very low, and exactly on that moment Petronas wants to buy out the minority shareholders with the infamous "delisting threat"?

Another analyst said: “I think Petronas just feels that MISC's valuation is at a rock bottom, and it can add a lot more value by restructuring the business away from the public eye.”

I definetely hope not that MISC will be delisted, value being unlocked, and then a few years down the road is relisted again for a much higher price, so that Bursa can boast again about being such a popular IPO destination. I have seen this "game" being played too often already.

He, however, thought that the offer price could be higher.

“Our sum-of-parts calculation for MISC is RM6.20, so RM5.30 is not fair'.”

MISC's bottomline has been volatile in the recent past due to the challenging shipping business. But it was turning the corner following the sale of its liner business in December 2011.

Below the historic 5-year share price of MISC. Long term shareholders who bought the stock more than  a year ago will be sitting on huge losses.

Some time ago a book was published "The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World"  by Antoine van Agtmael. The whole book was about emerging markets, but although Malaysia was the darling of the emerging markets in the nineties, not even one paragraph was written about the country, it had lost its status as preferred destination in the next century. 

The only exception was in the back of the book, where the author gave a list of 25 promising companies in emerging countries, and one single Malaysian stock was mentioned: MISC. The stock picks (incl. MISC) are all listed in this blog posting. 

With hindsight (but then again, with hindsight we are all experts), it was not a good stock pick, people who bought the stock would be sitting on pretty substantial losses. And with the current developments, it looks like they won't have a chance to recoup their losses.