Stocks with likelihood of corporate exercise: Goh Ban Huat

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Goh Ban Huat Bhd
Goh Bah Huat (GBH) has been in the news lately — but for the wrong reasons. Its share price has collapsed nearly 40% over the last two weeks, since it announced the abortion of plans to turn the sanitary ware company into an oil and gas player.

At end Sept, it announced that talks to acquire oil and gas (O&G) services provider Dynac Sdn Bhd for RM632 million fell through, aborting what was an earlier intended reverse take-over exercise.

Amid the plunging share price, is hope truly lost for GBH?

As it stands, GBH’s existing business is not exciting. Revenue has been steady at RM40 million to RM47 million over the last four years, though profits have been erratic, registering losses in 2010 and 2012 and profits in 2011 and 2013.

However, GBH’s main attraction was its 13.93 acre land bank in Mont’Kiara, which when sold will turn the company cash rich. The land has since been proposed to be sold to Keladi Maju Bhd for RM192.4 million. Keladi Maju and GBH are related through common controlling shareholder, Tan Sri Robert Tan.  

Incidentally, although the deal to acquire the oil and gas business was aborted, the other proposal for GBH to sell the land to Keladi Maju appears on track, with shareholder approvals secured from both companies.

Once the sale goes through, GBH’s cash on hand will increase to an estimated RM 237.2 million, or RM1.28 per share — a significant 84.5% of the company’s current market capitalisation of RM280.7 million.

It is unclear what other ventures GBH will look to, but with such a large cash pile — and the stock now falling closer to its net cash value, there will unlikely be a shortage of suitors.

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This article first appeared in The Edge Financial Daily, on October 17, 2014.