Conglomerates such as Berjaya Corp Bhd (BCorp) have not been getting much attention from the investing fraternity over the years.
News of the recent change of guard at BCorp — the appointment of former Permodalan Nasional Bhd CEO Abdul Jalil Abdul Rasheed as its new CEO — came as a surprise to many.
That said, drawing expertise from outside shows BCorp’s determination in tackling its long-drawn legacy issues, particularly when it comes to the complicated corporate structure — one of the key factors its shares have dropped off investors’ radar.
It has been difficult for investors to gauge the intrinsic value of BCorp, which has interests in various listed and non-listed companies.
For corporates, having a diversified business model has always been an advantage, but this may not be the case for BCorp, which is involved in food, retail, real estate, leisure, hospitality, automotive and gaming, among others.
In the past 10 years, it has made five years of losses. For the financial year ended June 30, 2020, its net loss stood at RM117.27 million.
Despite having a market capitalisation of slightly over RM1 billion, BCorp is deemed a penny stock, with its shares trading below 22 sen for most of the past year. Its share base has ballooned to about 5.26 billion shares owing to multiple fundraising exercises over the years.
In a statement issued last week, Jalil noted that he and BCorp founder Tan Sri Vincent Tan agree that the group is undervalued, given the many good assets that can be optimised. In fact, it is trading at a steep discount of 83.5% based on its net tangible assets of RM1.21 per share as at end-December 2020.
Hence, Jalil’s role is to review BCorp’s corporate structure, human resources, cost and efficiencies, and streamline its businesses.
The group may embark on more corporate exercises going forward, such as disposing of non-performing assets, realignment within the group and paring down borrowings of RM5.01 billion.
With his vast experience in the fund management industry, Jalil could help the group make the right decision for asset accretion.