KUALA LUMPUR (April 9): Fintec Global Bhd’s revenue soared 10 times to RM41.21 million in the third financial quarter ended Dec 31, 2020 (3QFY21). However, the company, which has also jumped onto the rubber glove bandwagon, plunged into the red with a net loss of RM61.6 million.
This is in sharp contrast to the company’s net profit of RM720.5 million in the preceding quarter 2QFY21 — an enviable amount that exceeded a majority of companies’ profit on Bursa Malaysia
Fintec is the company which owns equity stake in several listed companies, including Focus Dynamics Group Bhd (25.59%), Saudee Group Bhd (17.53%), Seacera Group Bhd (19.17%), Komarkcorp Bhd (15.29%), AT Systematization Bhd (9.97%) and VSolar Group Bhd (8.23%).
The net loss was due to fair value losses in its investment securities.
According to its financial statements, the group recorded an RM84.82 million in fair value losses in 3QFY21. Fintec attributed the decline in performance to mark-to-market loss in its long-term marketable securities.
The group said its revenue was generated from the sale of marketable securities.
All four of its business segments — portfolio investment, green technology products, O&G services and trading — posted losses in 3QFY21. The portfolio investment segment posted the largest pre-tax loss among the other businesses at RM59.48 million.
It attributed the pre-tax loss of the portfolio investment segment to “the sluggish market of the group’s strategic investments in Malaysia”, without elaboration.
The other segments posted a combined pre-tax loss of about RM1.04 million, which was lower year-on-year, due to lower operational expenses.
For the cumulative nine-month period ended Dec 31, 2020, its net profit surged 369% to RM809.89 million from RM172.65 million in the previous year, while revenue expanded 512% to RM86.83 million from RM14.19 million.
Fintec, whose share price closed at 5.5 sen today, noted that its investment in marketable securities increased 2.9 times to RM1.2 billion as at Dec 31, 2020 as compared with RM312.1 million a year ago, also mainly due to fair value gain on the quoted securities.
As at Dec 31, 2020, its net asset value grew to RM1.34 billion from RM380 million, a 252% year-on-year increase, which it attributed to the “stellar appreciation” of the share prices of Focus Dynamics (290% gain), KomarkCorp (276% gain) and AT Systematization (363% gain).
“Whilst Fintec’s asset value has risen considerably, the company’s stock has not kept pace. As a result, Fintec’s equity value trades at 83% discount to its net asset value,” it said in its bourse filing.
The gain in ATS’ share price is mostly due to its venture into the rubber glove business, which has been a favourite play among retail traders against the backdrop of unprecedented high demand for rubber gloves due to the Covid-19 pandemic last year. However, the glove mania appears to have losing steam since the roll out of Covid-19 vaccine
On the other hand, the driving force behind the multifold appreciation in Focus Dynamics and KomarkCorp’s share prices are less obvious.
Focus Dynamics has been posting net profit growth in recent quarters after reporting a full-year net loss in the financial year ended Dec 31, 2019.
For the fourth quarter ended Dec 31, 2020, it posted net profit of RM9.12 million contributed by better performance of its F&B segment, despite the pandemic, as well as a fair value gain on quoted investment.
On the other hand, packaging and labeling machine manufacturer KomarkCorp is a loss-making company, which has been posting a string of quarterly losses since its first financial quarter ended July 31, 2017.
KomarkCorp’s share price has been drifting lower since last month after its steep climb from 41.5 sen on Feb 19 to 71 sen on March 2. The stock closed at 24 sen today, down 66.2% from the recent peak.
Going forward, Fintec said it plans to “further take on the role of an active investor to unlock value in its investments” for frozen foods manufacturer Saudee Group and PN17-status property developer Seacera.
The group believes that it can realise value from Saudee’s assets through the restructuring of its operations, as well as unlock value in Seacera after the company comes up with a regularisation plan to turn around its business.
Prior to any announcement of corporate exercise, the share price of Saudee, however, has had a roller coaster ride recently. From 37 sen, the stock shot up to RM1.05 on March 19. It lost ground soon after, the share price dropped to a low of 24 sen. The counter closed at 28.5 sen today.
According to filings to the exchange, there were some 21.79 million new shares listed between mid-March and early this month. Its issued share capital stood at 182.8 million.