UTUSAN Melayu (M) Bhd is in the cross hairs of punters and market watchers. As it bleeds, many are waiting to see what its shareholders will do to turn around the company.

The recent contract awards for the design, build, operate and transfer of advertising media equipment with the concession rights to sell and display advertising on trains and at transit facilities for the Sungai Buloh-Kajang mass rapid transit line do not quite come as a revival for Utusan.

Mass Rapid Transit Corp Sdn Bhd awarded the contract to Puncak Berlian Sdn Bhd, in which Utusan has a 20% stake.

In 2008, there was talk of merging Utusan and The New Straits Times Press (M) Bhd, but this was brushed aside. Utusan’s flagship is its daily newspaper Utusan Malaysia. Its ­other publications include the weekend issue of Utusan Malaysia, known as Mingguan Malaysia, and daily tabloid Kosmo.

To recap, over the past five financial years, Utusan has been bleeding losses, and over the past 20 quarters, it has only shown profits on three occasions — in 4Q2015, 2Q2013 and 3Q2012. But then again in 4Q2015, the net profit of RM25.17 million was a result of a “gain on disposal of investments amounting to RM50.6 million”, according to its notes accompanying its financials.

Similarly in 2Q2013, the quarterly net profit of RM1.92 million was largely buoyed by “a gain of RM1.3 million from disposal of quoted securities”, while in 3Q2012, the ­company registered a paltry RM878,000 in net profit.

For its financial year ended December 2016, Utusan suffered a net loss of RM69.38 million from RM230.37 million in sales, translating into a loss of 69.65 sen per share.

As at end-December last year, Utusan had cash and bank balances of only RM32.85 million, and on the other side of the ­balance sheet, it had long and short-term debt of RM126.49 million and RM47.43 million respectively. ­Utusan’s finance costs for the year ended December 2016 was RM8.96 million.

The company used up cash of RM24.18 million in its operating ­activities.

On its prospects, Utusan says, “The Malaysian economy is expected to continue on a moderate growth path in 2017. Given the continuing challenges faced by print-based media company, the directors remain cautious with regard to the group’s performance this year.

“We are actively seeking new businesses to support our core business. Whilst our core business remains in print media, we are promoting our Utusan Online portal and digital newspapers.”

There are other red flags at Utusan.

The company’s trade and other receivables amounted to RM65.20 million as at end-2016, while short and long-term trade payables were RM107.75 million and RM20 million respectively.

With such debt commitments, high trade payables, low receivables and limited cash to boot, Utusan seems to be in dire straits.

So, what is Utusan’s largest shareholder, Umno, which has a 49.77% stake in the company, going to do?

Umno could muscle or nudge ­government-linked companies to advertise in the company’s publications, but even this will not work, with Utusan continuously bleeding losses.

Back in March 2014, MISC Bhd, a subsidiary of Petroliam Nasional Bhd, attempted to sell its MISC Integrated Logistics Sdn Bhd to Utusan’s Golden Age Logistics Sdn Bhd.

But the deal fell through in January last year because Golden Age Logistics was unable to fulfil its obligations as stipulated in the sales and purchase agreement.

A market watcher says, “Honestly, I don’t know what they (Utusan) can do. While there is a likelihood of getting government agencies to advertise or support Utusan, there is also a perception problem … so, who will advertise, meaning how will they make money?”

Umno is the lead member of the ruling Barisan Nasional coalition. Thus, Utusan, which is controlled by Umno, has often been seen as being pro-government, which in turn has led to the perception problem.

From January to June 2016, Utusan Malaysia and its weekend edition Mingguan Malaysia’s paid circulation numbers were 457,933 copies, or 34.42% of the 1.33 million Malay newspaper sales. From 2006 to 2007, Utusan had a daily circulation of 656,826 copies, or 55.23% of average daily circulation of 1.19 million copies.

Apart from Umno, Utusan’s second largest shareholder and the only other substantial shareholder is Nilam Setar (M) Sdn Bhd, which has a 14.76% in the company.

Nilam Setar is controlled by billionaire businessman Tan Sri Syed Mokhtar Albukhary. While his name does not surface as a shareholder, the business address of 110 Jalan ­Maarof, Bangsar Baru is often used by the businessman for his companies.

Some of the companies using the same address include Seaport Terminal (Johore) Sdn Bhd, which controls the businessman’s flagship MMC Corp Bhd.

One of the two directors of Nilam Setar is Datuk Seri Ismail Yusof, who is also a non-independent non-executive director of Utusan. Other than the two shares, he controls the remaining 999,998 shares of Nilam Setar.

Ismail is also an executive vice-chairman of the Albukhary Foundation, and serves as a trustee of the foundation, Syed Mokhtar’s charity arm.

The other Nilam Setar director is Azman Hanafi Abdullah, who was previously a substantial shareholder of United Malayan Land Bhd, a Syed Mokhtar company that was ­privatised a few years ago. Thus, the links to Syed Mokhtar are clear.

Under his vast stable, Syed Mokhtar controls the daily financial newspaper The Malaysian Reserve and owns MPH Group Malaysia Sdn Bhd, which is one of the largest bookstore chains in the country. Syed Mokhtar is also known to be an Umno member and staunch supporter of the government, and Prime Minister Datuk Seri ­Najib Razak.

Utusan’s shares closed at 40.5 sen last Thursday, giving the company a market capitalisation of RM44.8 million.

While its share price may be languishing, a check on its annual report indicates that the company has more than RM200 million in assets, including an eight-storey building (its headquarters) in Jalan Chan Sow Lin, Kuala Lumpur, which has a net book value of RM85.03 million.

It also owns two printing plants — in Bandar Baru Bangi, Selangor, with a net book value of RM64.02 million and in Sebrang Jaya Industrial Estate, Prai, Penang, with a net book value of RM15.30 million. There are also several other parcels of land, shophouses, factory buildings and an apartment in Indonesia in the company’s stable.

So, how long will Umno and Syed Mokhtar leave Utusan in the doldrums?

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