KUALA LUMPUR: After his resignation from the board of SapuraKencana Petroleum Bhd last Wednesday, there is now speculation that Tan Sri Mokhzani Mahathir could be looking at raising his interest in Yinson Holdings Bhd next.

When contacted however, Mokhzani responded: “We have no plans at the moment.”

Mokhzani, via Kencana Capital Sdn Bhd, owns an 18.56% stake in Yinson (fundamental: 1.50; valuation: 1.5) as at June 27, 2014. He emerged as a shareholder in Yinson in June 2013, when Kencana Capital purchased a 14.64% stake for RM106.6 million via a private placement. 

Kencana Capital is Yinson’s second largest shareholder, after the offshore services provider’s chairman Lim Han Weng’s personal direct stake of 22.04%. Lim’s spouse, Bah Kim Lian, owns 8.82%.

“Mokhzani sees value in Yinson. He may want another 4% to 5%, worth possibly RM100 million, to push it closer to 25%,” said a source, adding that Mokhzani is likely to purchase the stake through a direct business transaction and not from the open market. 

Mokhzani, son of former prime minister Tun Dr Mahathir Mohamad, resigned from his post as vice-chairman of SapuraKencana (fundamental: 1.3; valuation: 1.8) on March 4, citing personal reasons. His associate Yeow Kheng Chew also resigned on the same day as a non-executive director due to personal reasons. 

The next day, SapuraKencana shed 19 sen or 7.2%, making it one of the top losers on Bursa Malaysia. 

As at Dec 9, Mokhzani had a 0.16% direct stake in SapuraKencana and was deemed interested in another 10.38% through Kencana Capital and Khasera Baru Sdn Bhd, another of his private vehicles. 

Yeow had a 0.39% direct stake or 23.18 million shares in SapuraKencana. 

When asked if he would dispose of his 10.54% interest in SapuraKencana, Mokhzani’s reply was the same, saying there were no plans to do so at the moment. 

Mokhzani and Yeow had on Dec 5, 2013, relinquished their executive directorships in SapuraKencana and were redesignated as non-executive directors. Prior to that, Mokhzani was the executive vice-chairman of the company. 

When Mokhzani emerged as a shareholder in Yinson, there were concerns this could create conflicts of interest as he was also holding an executive position in SapuraKencana. 

Note that Yinson also leases out floating production, storage and offloading assets, an area in which SapuraKencana is also involved.

In July 2013, SapuraKencana issued a statement that was deliberating whether Mokhzani’s acquisition of the stake in Yinson would create a conflict of interest. The board then decided there was no conflict of interest.   

SapuraKencana closed four sen lower at RM2.41 last Friday, for a market capitalisation of RM14.68 billion. Yinson closed one sen higher at RM2.73 last Friday, with a market capitalisation of RM2.8 billion. 

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard. 

This article first appeared in The Edge Financial Daily, on March 9, 2015.