KUALA LUMPUR (Aug 6): Tan Sri Desmond Lim is said to be on a shopping spree for attractive assets, such as the food & beverage business.
Oversea Enterprise Bhd (OEB), which owns and operates the Chinese restaurant chain under the name Oversea, is on the tycoon’s radar, according to sources.
It is understood that Lim is mulling to acquire an equity stake in OEB.
OEB announced yesterday that the company’s shares will be suspended from trading on Aug 6 (Thursday).
Last week, OEB received an unusual market activity (UMA) query from Bursa Malaysia after its share price shot up 50% in four trading days from 22 sen closing on July 24 to hit 33 sen on July 28. The company told the stock exchange that it was not aware of any reasons that could explain the sharp rises in its share price and volume.
However,the board revealed in the announcement that two of its directors and a major shareholder had been approached by a potential investor.
"The parties are in discussions on the proposed disposal of their respective shares in OEB to the potential investor," it said.
When contacted about his interest in OEB, an officer at Lim’s personal office informed The Edge that the tycoon declined to comment.
OEB's director was also tight-lipped.
Details of the proposal of the deal are scarce. It is not known if Lim is looking to buy a controlling stake in the listed entity or the company’s core business, namely the restaurant chain.
According to recent Bursa filings, Yu Tack Tein emerged as a substantial shareholder with 8.4% stake last week after the transfer of shares from the executors and trustees of a deceased family member.
Tack Tein, who is the company’s board member, is the son of the group’s founder and chairman/ group managing director Yu Soo Chye @ Yee Soo Chye. Soo Chye controls a 34% stake in Oversea.
OEB has five restaurant outlets listed on its website currently.
OEB’s earnings haven't been stellar. It has been lossmaking for the past three financial years ended March 31.
For the financial year ended March 31, 2020 (FY20), the group’s restaurant segment recorded revenue of RM39.37 million, down 8.9% versus RM43.2 million a year earlier. The decrease was due to the closure of Subang Parade and Tsim Tung outlet. The fall in earnings from the closure was cushioned by the opening of a new outlet at Skyplaza, Genting.
In FY2020, the restaurant segment saw its loss before tax expanded to RM6.26 million compared to RM5.38 million a year earlier.
The larger losses suffered was due to the additional impairment made towards property, plant and equipment for the FY2020.
Aside from the restaurant business, OEB is also in the manufacturing business where it manufactures mooncakes among other things. The manufacturing segment is profitable, registering RM1.11 million profit before tax for FY2020 versus RM1.32 million PBT a year earlier.