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This article first appeared in The Edge Malaysia Weekly on January 13, 2020 - January 19, 2020

LOSS-making passenger vehicles charterer Gunung Capital Bhd, whose share price soared 73% in the past month, is expected to see the emergence of new substantial shareholders, according to sources.

The Edge learnt that the previous owners of textile manufacturer Kumpulan Powernet Bhd — led by Datuk Chew Kam Wah — are set to surface as the new major shareholders of Gunung Capital.

Meanwhile, the existing shareholders of Gunung Capital — led by its current group managing director and CEO Datuk Syed Abu Hussin Hafiz Syed Abdul Fasal — could be gradually exiting the company.

“Ideally, the ex-owners of Kumpulan Powernet will be looking to take up a controlling stake in Gunung Capital. But all these will not happen overnight as it might potentially trigger an MGO (mandatory general offer) or even RTO (reverse takeover),” says a source familiar with the matter.

“Datuk Syed (Abu Hussin) had been looking for potential buyers to take up his stake since last year, but there was no material development until recently,” the source says.

As at April 1 last year, Syed Abu Hussin was the single largest shareholder of Gunung Capital with equity interest of 27.98%, of which 23.81% was a direct stake.

Erayear Equity Sdn Bhd, controlled by Azhan Zakaria, is the second largest shareholder of Gunung Capital with an 11.78% stake, followed by Ooi Hock Lai with a 10.27% stake. Both Azhan and Ooi do not sit on the board of Gunung Capital.

Another source reveals that the buyers and sellers have agreed to conduct the transaction at 50 sen to 55 sen apiece.

“The first [likely] step for the buyer is to acquire Erayear Equity’s entire stake in Gunung Capital, or maybe even the whole entity (Erayear Equity), followed by other blocks of shares owned by Datuk Syed (Abu Hussin). The whole process might take at least two to three months,” he says.

So, who are the prospective buyers of the shares in Gunung Capital?

Some of the names that have come up are Kam Wah, Chew Chee Bor — better known as CB Chew — as well as Datuk Lee Chong Hoon, the elder brother of former national shuttler Datuk Lee Chong Wei.

Notably, all three of them were, one way or another, involved in Kumpulan Powernet, before Datuk Dr Mohd Abdul Karim Abdullah — founder and group CEO of Serba Dinamik Holdings Bhd — emerged as its new major shareholder last June.

 

Ex-Kumpulan Powernet

Before Karim surfaced at Kumpulan Powernet, Kam Wah and Chong Hoon were the two largest shareholders of the company, while Chee Bor was, and still is, the director of its two subsidiaries.

Recall that SSF Home Builder Sdn Bhd — an Ipoh-based property firm ultimately controlled by 42-year-old Kam Wah — had on June 20 last year sold its entire 10.99% stake in Kumpulan Powernet to Karim.

On the same day, Lee Chong Hoon Capital Sdn Bhd, a private vehicle named after Chong Hoon, also sold its entire 8.96% stake in Kumpulan Powernet to Karim.

Chee Bor is linked to Kumpulan Powernet as he is the director of its 51%-owned CBG Builders Sdn Bhd and CBG Capital Sdn Bhd — both inactive property developers.

Interestingly, a quick check with the Companies Commission of Malaysia (SSM) shows that Chong Wei Binajaya Sdn Bhd owns the remaining 49% stake in CBG Builders and CBG Capital.

It is not known whether Kam Wah and Chee Bor are related. The duo and Chong Hoon, however, seem to be closely linked to each other.

Now, assuming that Kam Wah and Chong Hoon made a killing together at Kumpulan Powernet, it will not be a surprise if they were to surface at Gunung Capital together.

Looking at the recent share price performance of Gunung Capital, it is safe to assume that something is brewing at the company.

Its shares have risen 73%, from 30 sen on Dec 6 last year to settle at 52 sen last Tuesday, giving it a market capitalisation of RM122.8 million. The counter is currently trading at a price-to-book value of 1.2 times, against its net assets per share of 40.8 sen as at Sept 30 last year.

Gunung Capital is principally engaged in the chartering of its fleet of land-based transportation assets and speciality vehicles.

Through its wholly-owned subsidiaries, GPB Corp Sdn Bhd and Gunung Resources Sdn Bhd, as well as its indirect wholly-owned subsidiary, Bas Rakyat Sdn Bhd, Gunung Capital is focused on chartering its transportation assets to the government, companies with substantial fleet requirements, shuttle bus services within university campuses and ad-hoc charters.

Currently, Gunung Capital, via GPB Corp, is operating the fleet requirements of the Malaysian Ministry of Defence to transport school-going children of the armed forces personnel nationwide.

The group has allocated 233 units of 44-seater buses and 85 units of 25-seater buses to fulfil its obligations under a service contract, whose value over three years is up to RM43.904 million.

While Gunung Capital has been loss-making since 2015, corporate observers point out that the Main Market-listed firm could be seen as a “nice shell company”, given its net cash position of RM20.8 million as at Sept 30 last year.

For the nine months ended Sept 30 last year, Gunung Capital registered a net loss of RM4 million on revenue of RM13.81 million.

It is worth noting that the National Service Programme (NSP) service contract had underpinned the group’s contract revenues for seven consecutive years before the programme was cancelled by the government in August 2018.

“We expect the group’s revenue to then experience minimal growth. Reducing our fleet size is an option currently undertaken to generate cash flow and reduce costs associated with the underutilisation of our transportation assets,” it had said in a statement then.

 

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