Datuk Tee Eng Ho

KUALA LUMPUR (May 21): Following a move by Kerjaya Prospek Group Bhd’s major shareholders to acquire another 24.05% of GSB Group Bhd last Friday, it appears that the construction group’s executive chairman Datuk Tee Eng Ho (pictured) may be close to injecting his private property development outfit into GSB.

Last Friday, Javawana Sdn Bhd, the private vehicle of Eng Ho, his wife Datin Toh Siew Chuon, and brother Tee Eng Seng, acquired 127 million shares representing a 24.05% interest in GSB at 13 sen each or a total of RM16.51 million cash.

Prior to the share acquisition, Javawana held 88 million GSB shares obtained via a placement exercise at 10 sen each in December 2015, representing about 16.66% equity interest in GSB.

With the latest acquisition, Javawana’s interest in GSB increased to 40.71% from 16.66%.

As Javawana’s interest has exceeded 33% of the voting shares in GSB, it is required to undertake a conditional mandatory takeover offer to acquire the remaining 313.1 million GSB shares at 13 sen each.

Javawana has been the largest shareholder of GSB since the private placement.

In a filing with the exchange last Friday, it was stated that Javawana intends to maintain GSB’s listing status, which may signal Kerjaya Prospek’s plan to inject Eng Ho’s private property business Kerjaya Prospek Property Sdn Bhd into GSB.

Toh, Eng Ho and Eng Seng own 70.26% of Kerjaya Prospek via Ego Vision Sdn Bhd and Amazing Parade Sdn Bhd.

“Why did they buy GSB? It’s simple. Kerjaya Prospek Property is the private arm, which is not listed and also cash-rich. Its current projects have a gross development value of about RM2 billion and it has a huge land bank.

“They are not listed but GSB is a listed property development entity. If Kerjaya Prospek Property plans to float their shares, they need to go for an initial public offering, which takes some time and requires a lot of money.

“So now, it (Kerjaya Prospek) got GSB, so most probably Kerjaya Prospek Property projects will go into GSB in the near term. They don’t need to separately list Kerjaya Prospek Property when they already have GSB,” a source who is familiar with the company told The Edge Financial Daily.

Meanwhile, when asked whether there is a plan to inject Kerjaya Prospek Property projects into GSB, Toh answered with a smile and said this is certainly one of the many options available for the group.

“We might consider it if there is an opportunity in the future. We are unsure of any future plans at this point as it is still at an early stage. We will see first and do our best for the shareholders,” Toh explained.

Further, on GSB’s management, there is a need to do some restructuring, which will be decided at a later date.

“In terms of management, they need to do a little bit of reshuffling because Toh is the executive director of Kerjaya Prospek and now she takes care of GSB.

“It takes some time for Kerjaya Prospek because this exercise will take three months and they need to go through a lot of review and restructuring,” the source added.

Established in 1992, GSB is principally involved in property development and manufacturing of optical discs.

GSB is a family-run property development and construction business led by patriarch Datuk Gan Seng Biang, who owns 4.69%. His daughter Gan Pik Mui has a 10.37% stake and his son Gan Boon Kat owns about 1.73%.

GSB has total land bank held for development measuring about 91 acres (37ha) across Klang, Shah Alam and Bentong, with a total book value of RM65.8 million.

For the financial year ended Dec 31, 2017 (FY17), Kerjaya Prospek, formerly Fututec Bhd, recorded a net profit of RM124.47 million, 24.9% higher than RM99.62 million in the previous year, while revenue increased 19.7% to RM956.02 million in FY17, from RM798.69 million in FY16.

Kerjaya Prospek said the construction division recorded a net profit of RM117.2 million on revenue of RM874.6 million in FY17, as construction schedules for ongoing projects intensified. The property development and manufacturing divisions contributed the balance of the top line and segmental net profit.

The group’s balance sheet remained robust with a net cash position of RM185.4 million and a current ratio of 2.1 times, according to Kerjaya Prospek’s filing with Bursa Malaysia on Feb 26.

The group’s current outstanding order book stands at RM3 billion, as total contract wins in FY17 totalled RM1.4 billion.

According to its website, Kerjaya Prospek set up a property development division in August 2010.

GSB shares closed two sen or 17.39% higher at 13.5 sen last Friday, giving it a market capitalisation of RM71.29 million, while Kerjaya Prospek shares fell two sen or 1.2% to RM1.65, valuing it at RM2.05 billion.

This article first appeared in The Edge Financial Daily, on May 21, 2018.

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