Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 3): Boustead Holdings Bhd’s share price lost support this morning, plunging as much as 19.7% or 14 sen to a low of 57 sen, on news that its controlling shareholder Lembaga Tabung Angkatan Tentera (LTAT) had decided to abort the privatisation plan. 

The selling reversed its recent rally that lifted the conglomerate’s share price to a six-month high of 76 sen last week. 

The decision came eight months after LTAT first revealed its intention to take the debt-laden conglomerate private in May last year at the peak of the first wave of the Covid-19 pandemic. The arm forces fund then placed an indicative takeover price of 80 sen per share but it cautioned that the announcement of its intention did not mean the privatisation would materialise. 

The selling this morning was not surprising as some analysts viewed that expectations of the privatisation exercise had been the main support of Boustead’s share price since the news broke.

As at 11.40am, Boustead shares were trading at 60 sen, down 11 sen or 15.5%, valuing the conglomerate at RM1.21 billion. Trading volume swelled to 26.8 million shares, sharply higher compared with its 200-day average trading volume of 9.46 million units. It was the 19th mostly traded counter on Bursa Malaysia this morning. 

At market close, Boustead shares were trading at 61 sen, down 14.09% or 10 sen, translating into a market value of RM1.24 billion. Trading volume swelled to 37.85 million shares, sharply higher compared with its 200-day average trading volume of 9.46 million units.

To recap, the armed forces fund announced that it was no longer pursuing the privatisation of Boustead after taking into account the challenging economic environment stemming from Covid-19 and the reimposition of the movement control order (MCO). Instead, the group will focus on its "Reinventing Boustead" strategy to rejuvenate the group.

The announcement came almost one week after LTAT told Boustead that “there has been no material development in respect of the proposal” (the privatisation exercise as of last Wednesday [Jan 27]). 

Yesterday was the final deadline set by the Securities Commission Malaysia (SC) for LTAT to decide whether it was going ahead with the privatisation exercise.

Boustead is the main dividend income contributor to LTAT. The conglomerate was financially stressed in recent years and that affected its affordability to declare generous dividends. 

Boustead has several listed entities under its belt. It holds a 20.73% stake in Affin Bank Bhd, a 57.42% stake in Boustead Plantations Bhd, a 65% stake in Boustead Heavy Industries Corp Bhd and 56.09% of Pharmaniaga Bhd.

Earnings-wise, for the nine months ended Sept 30, 2020 (9MFY20), Boustead reported a wider net loss of RM153.1 million, compared with RM14.2 million a year prior. Revenue for the nine months was 6.16% higher at RM7.79 billion, compared with RM7.33 billion previously.

As of Sept 30, 2020, its borrowings stood at RM7.7 billion.

Edited ByKathy Fong
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