Shareholding changes at Benalec leave many guessing

This article first appeared in The Edge Malaysia Weekly, on November 15, 2021 - November 21, 2021.
Shareholding changes at Benalec leave many guessing
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RECENT shareholding changes at marine construction specialist Benalec Holdings Bhd signal the emergence of new substantial shareholders, but their identity has not been disclosed two weeks after the first transaction.

On Oct 28 and 29, the trading volume of Benalec shares surged to 117.7 million and 105.9 million respectively, compared to its average daily volume of 3.8 million.

Subsequent filings with Bursa Malaysia show that Benalec’s major shareholders, the Leaw brothers, had disposed of their interest in the company in off-market transactions in recent weeks.

Notably, the sale was carried out through Oceancove Sdn Bhd, the private vehicle of Datuk Leaw Seng Hai — group managing director and CEO of Benalec — and Datuk Leaw Ah Chye.

Oceancove is Benalec’s immediate holding company, according to its 2020 annual report.

On Oct 28, filings show that Oceancove sold 148.5 million shares, equivalent to a 17.2% stake, at 15 sen each, or RM22.27 million in total. That day, Benalec closed at 15 sen.

Following the share disposal, Oceancove’s stake in Benalec was reduced to 21.9% from 38.8% previously.

Interestingly, the disposal by Benalec’s major shareholders did not stop there. On Nov 3 and 5, Oceancove continued to pare down its stake by another 45 million shares and 54.42 million shares respectively.

Similarly, both transactions were dealt off-market at 15 sen each. After the recent disposals, Oceancove’s stake in Benalec has been reduced to 10.23%.

Meanwhile, Seng Hai also holds 444,100 direct shares in Benalec that have seen no change so far.

Despite the disposals over the past two weeks, the new shareholders remained a mystery as at press time last Thursday (Nov 11).

Under Section 137 of the Companies Act 2016, individuals and corporations that have an interest in at least 5% of the voting shares of a Malaysian incorporated public company (whether listed or unlisted) must disclose that interest to the relevant public company and to the Companies Commission of Malaysia. For listed companies, this must be done within three days of becoming a substantial shareholder.

According to Benalec’s 2020 annual report, the second-largest shareholder of the company after Oceancove appears to be Ong Yoong Nyock, the major shareholder and managing director of Tiong Nam Logistics Holdings Bhd, with a combined indirect stake of 5.07% as at April 2, 2021.

Ong’s interests in Benalec is held via nominee accounts, Tiong Nam Logistics and TNTT Realty Sdn Bhd, which is linked to him.

Meanwhile, Daing A Malek Daing A Rahaman directly owns 2.36% in Benalec. Daing is known to be associated with the Johor royalty, with his name repeatedly appearing as a shareholder in companies in which the Johor royal family has interest.

He first surfaced in Benalec’s 30 largest shareholders list in its 2018 annual report.

Will the weeks ahead reveal the identities of Benalec’s new shareholders? Minority shareholders will certainly be keen to know.

Infighting among Benalec’s major shareholders — the Leaw brothers — made news some years ago. The dispute was resolved via a framework — approved by shareholders in 2014 — to settle all legal suits, grievances, disputes and claims between the company and three members of the Leaw family: Datuk Leaw Tua Choon, Ah Chye and Tua Choon’s son, Leaw Yongene. Brothers Tua Choon and Ah Chye had resigned as directors ahead of a proposal to remove them from the board.

Benalec, whose expertise is in land reclamation, has three flagship projects, including the prime sea-fronting reclaimed land bank in Cheng Ho City, Melaka. So far, it has managed to monetise more than 957.1 acres in the state, amounting to more than RM1.3 billion in land sales achieved.

In addition, there is Tanjung Piai Maritime Industrial Park (TPMIP) and Pengerang Maritime Industrial Park (PMIP), which are poised to be the key drivers of Benalec’s growth for the next 10 to 15 years.

Both tracts of industrial land are sea-fronting, with TPMIP near the Port of Tanjung Pelepas and PMIP, spanning 1,672.8 acres, located near the RAPID project by Petroliam Nasional Bhd (Petronas) and Saudi Aramco in the Pengerang Integrated Petroleum Complex.

“Located strategically on the southeast tip of Johor, it will be the only remaining sea-fronting industrial land available for third-party investment in the vicinity upon completion of reclamation,” says the 2020 annual report.

“Both TPMIP and PMIP will be developed into oil and gas industrial parks in line with the Malaysian government’s and the state of Johor’s common objective of transforming Johor into a sustainable, world-class downstream oil and gas hub.”

Nevertheless, Benalec has been suffering losses for several years now.

For the financial period ended 2019 — which stretched from July 1, 2018, to Dec 31, 2019 — the group booked a net loss of RM47.49 million against revenue of RM135.92 million.

For FY2020, the group recorded a net loss of RM67.77 million against revenue of RM161.06 million.

It has continued to remain in the red for the cumulative six months ended June 30, 2021, but the losses have narrowed. For 1HFY2021, revenue stood at RM55.15 million compared to RM70.4 million a year ago, while net loss narrowed to RM12.21 million from RM44.19 million.

Its net asset per share of 56 sen as at June 30, 2021, is significantly higher than its share price of 14.5 sen last Thursday, giving Benalec a market capitalisation of RM129.42 million.

 

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