KUALA LUMPUR (July 6): Gunung Capital Bhd has emerged as Yi-lai Bhd’s substantial shareholder after acquiring another four million shares or a 2.79% stake in the latter last Friday.
According to filings to Bursa Malaysia, Gunung Capital bought the shares at RM1.09 apiece through its wholly-owned subsidiary Gunung Resources Sdn Bhd.
It was a direct business transaction with Yi-lai executive director Aaron Tan Jian Hong, through his private vehicle Boundless Vigour Sdn Bhd.
With this, Gunung Capital owns 8.7 million shares or a 5.99% stake in Yi-lai.
A source familiar with the matter told theedgemarkets.com that Gunung Capital sees undervaluation in Yi-lai, which is currently sitting on a cash pile of RM50.72 million, and is taking the opportunity to acquire or inject new business into the latter.
Specifically, Gunung Capital is looking at expanding the businesses of Yi-lai to include building materials to ride on the revival of affordable housing projects.
In addition, the source said the firm is also looking at injecting some of the renewable energy with concession structure business into Yi-lai, to boost its recurring income portion.
“Based on the estimation, it will take around two years to complete the construction of the renewable energy business, and it can generate approximately RM40 million per annum to the company,” the source said.
Shares of Yi-lai closed unchanged at RM1.02 today, valuing the group at RM148 million. Gunung Capital closed half sen or 0.9% higher at 55.5 sen, giving the group a market capitalisation of RM134 million.