BUSINESSMAN Datuk Che Azizuddin Che Ismail could surface as a new substantial shareholder in transport outfit KBES Bhd, sources say.
It is learnt that Azizuddin could have acquired a stake in privately held Sani Zaleha Sdn Bhd, which holds up to 35.4 million shares or a 28.1% stake in KBES.
A filing with Bursa Malaysia indicates that one of the shareholders of Sani Zaleha, Hai Shah Hairi Hassan, an executive director of KBES (valuation 0.9, fundamental 0.95), has ceased to be a substantial shareholder while another filing states that Lau Chan Seng, the 68-year-old managing director of KBES and shareholder of Sani Zaleha, has an intention to deal within a closed period.
“He (Azizuddin) was in talks to buy a block [of shares] in the company the last I heard ... that was a few weeks ago. I think he will surface soon,” says a source familiar with Azizuddin’s corporate movements.
Azizuddin could not be contacted for comment.
A check on the Companies Commission of Malaysia’s (SSM) website reveals that Sani Zaleha is 10% controlled by Hai Shah Hairi and 40% by Lau. Judging by the many Laus on the shareholders’ list, it is likely that the remaining 50% stake is held by Lau’s family.
Other than Sani Zaleha, there are no other substantial shareholders in KBES.
Financially, KBES’ bus business has not really been performing. For its financial year ended December 2014, KBES suffered a net loss of RM834,000 on revenue of RM41.9 million.
Over the last five financial years, the company has only been in the black in one year — in 2013.
As at end-2014, KBES had cash and bank balances of RM462,000 and fixed deposits of RM128,000 with banks. On the other side of the balance sheet, the company had long-term debt commitments of RM1.5 million and short-term borrowings of RM504,000.
KBES’ administrative expenses in 2014 was RM5.4 million.
As at Dec 31, 2014, KBES’ net asset per share stood at 45 sen.
On its prospects for the current year, KBES says, “Competition from other modes of transport, especially trains and low-cost carriers, continues to have a significant impact on the group.
“The group continuously reviews its marketing strategy to increase its revenue and improves its cost management, operation efficiency and customer service to achieve better results.”
KBES, in notes accompanying its financial results, also talks about replacing its older buses as a means to reduce its operating costs.
Azizuddin was a substantial shareholder and CEO at haulage and transport company Konsortium Logistik Bhd, but sold his stake to Ekuiti Nasional Bhd (Ekuinas) in October 2010.
Then, in November 2013, Ekuinas sold Konsortium Logistik to Tan Sri Syed Mokhtar Albukhary’s DRB-Hicom Bhd (fundamental: 1.25; valuation: 2.6). Azizuddin is understood to have had a fallout with Ekuinas.
After exiting Konsortium Logistik, Azizuddin took over another transport company, Arca Transline Sdn Bhd (formerly known as Warisan Movers Sdn Bhd).
At one time, Arca Transline’s assets included a ship — MV Arca Emerald — used for transporting cars from Peninsular Malaysia to Sabah and Sarawak. However, it is unclear if the company is still operating the vessel, or if it has been leased out.
Arca Transline also had lorries dedicated to transporting vehicles, as well as a fleet of hauliers and other smaller lorries.
Some of Arca Transline’s clients included national carmaker Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd.
Checks on SSM’s website indicate that Azizuddin has a 60% stake in Arca Transline and his wife Datin Ramlah Abd Aziz, the remaining 40%.
As at Dec 31, 2012, Arca Transline had current assets amounting to RM11.4 million and non-current assets valued at RM10.8 million. Its current liabilities stood at RM13.5 million and long-term debt commitments, RM3.9 million.
For the year in review, the company posted an after-tax profit of RM868,689 on revenue of RM32.4 million.
Another of Azizuddin’s companies, Arca Corp Sdn Bhd — in which he has 20% equity interest and his wife, the remaining 80% — has its mainstay in the manufacture of electric vehicles and batteries.
A search on SSM’s website reveals that as at Dec 31, 2013, Arca Corp had current assets of RM14 million and non-current assets of RM387,981. At the same time, its current liabilities amounted to RM9.4 million and non-current liabilities, RM158,715.
For the financial year ended December 2013, the company registered an after-tax profit of RM3.1 million on revenue of RM6.7 million.
Another of Azizuddin’s businesses, Aiman Motor, deals in Suzuki, Subaru and Mazda vehicles.
Trading on KBES’ shares gained momentum in late January and early February this year. Since end-2014, the stock has gained about 50%, closing at 39 sen last Friday, giving the company a market capitalisation of RM49.14 million.
This article first appeared in The Edge Malaysia Weekly, on May 25 - 31, 2015.