There are many market rumours about Boustead Holdings Berhad 'potential' cooperate exercise. Below are the compilation of the news and we will do a quick analysis on those news and market 'speculations'
1. Boustead Holdings is looking to sell its shares in unlisted "The University of Nottingham in Malaysia Sdn Bhd".
The University of Nottingham in Malaysia Sdn Bhd's sale (66% ownership) is probably one of the few options that Boustead Holdings is looking at with the target to reduce their debt, increase cash flow and most importantly simplify the company to generate profit.
https://www.theedgemarkets.com/article/university-nottingham-malaysia-owners-weigh-exit-%E2%80%94-sources
2. Boustead Holdings has named Shazalli Ramly as the new Group MD.
https://www.theedgemarkets.com/article/boustead-names-shazalli-ramly-group-md-confirms-edge-report
The incoming MD is said to be tasked to continue with the journey to rationalized the company's effort to streamline their holdings and assist it to return to profit.
3. Boustead voice support for BHIC reporting irregularities involving the RM9bil combat ship project
https://www.theedgemarkets.com/article/boustead-voices-support-bhic-reporting-irregularities-involving-rm9-bil-combat-ship-project
While the news is definitely not welcomed and RM9bil contract (with potential mismanagement etc) is a lot of money (few times above Boustead Holdings Berhad's market cap), it is likely to be limited to BHIC as the subsidiary is the ones given the contract. The key risk remains the reputation damage as it's associated with Boustead's name.
4. Boustead Holdings expected to embark on major debt restructuring
https://www.theedgemarkets.com/article/newsbreak-boustead-holdings-expected-embark-major-debt-restructuring
From the below article, you can see that The Curve and its surrounding land (which Boustead Holdings owns) has only a book value of RM579mil.
Quote from the article:
"Non-core assets that are likely to go
All eyes are on which non-core, low-yielding assets Boustead Holdings may sell. The group is asset-rich, with landbank, investment properties and hotels, among others. Observers say it is unlikely that it will sell its shareholding in Affin Bank.
“Affin Bank is not only profitable, but of value to the group, so I doubt it. I expect they would sell some of its property assets such as land and/or property management and some of the Royale Chulan hotels. They also have a stake in the MyTown mall, which is low-yielding,” says one who tracks developments at the group. Boustead Holdings has a 50% interest in MyTown Shopping Centre in Kuala Lumpur.
While there is concern that Boustead Holdings’ assets may not be able to fetch a good price amid the current economic downturn, it is understood that the group does not plan to sell them in haste.
In its 2019 annual report, topping the list of the group’s most valuable properties is five hectares of commercial freehold land on which The Curve mall sits and the building, which have a total book value of RM579 million.
Boustead Holdings, which has been reporting losses since the financial year ended Dec 31 2018 (FY2018), saw its net loss widen to RM1.28 billion in FY2019 from RM554.3 million the previous year, after taking an impairment charge of RM1.33 billion for assets from the heavy industries and plantation segments. Revenue for FY2019 rose a marginal 1.4% to RM10.33 billion.
It had a debt-laden balance sheet, with total borrowings amounting to RM7.91 billion as at end-2019 compared with its shareholders’ equity of RM3.74 billion. Cash and cash equivalents stood at RM893.8 million"
5. Potential Privitisation
a. Comments in i3Investor's forum/comment section
There were plenty of comments in i3 portal claiming privatization of Boustead will happen before Feb 2021 at a price of RM 1.10. This is below the NTA but way above the current depressed prices. Whether or not the offer will come, when is it and will it get the the buy in of smaller shareholders (majority shareholder is LTAT), only time will tell.
b. Previous news on potential privitisation (in June 2020)
There are several announcements made on LTAT's intention to privatise Boustead Holdings and restructure it. This excercise will help in effort to pare down debts, rationalize non-core, non-performing assets (i.e. hotels, lands, shopping malls) and at the end make Boustead Holdings a leaner company with better profit prospects.
https://www.theedgemarkets.com/article/hurdles-mount-ltats-potential-privatisation-boustead
https://www.theedgemarkets.com/article/rm660m-deal-privatise-boustead-holdings
*The above comments are just research done by one of our contributors. All investors are advised to study and make their own recommendations before making any purchase of the stock.
