Yip Yee Foo attempts comeback via Halex

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IN THE middle of this month, little-known RM2 company Solaris Cemerlang Sdn Bhd surfaced as a substantial shareholder with a 12.1% stake in Halex Holdings Bhd, an agricultural chemical manufacturer.

The private company is understood to be linked to Datuk Yip Yee Foo, a prominent business figure from the 1990s who is now trying to make a comeback to the corporate scene.

“It’s known in the market circles that he is making a comeback,” a source says.

To recap, Solaris Cemerlang on Oct 10 acquired the block of 12.8 million shares (12.1%) in Halex for RM12.5 million or 98 sen apiece — a premium of 13.95% over the day’s closing price of 86 sen — from Yeoh Cheng Poh, who ceased to be a substantial shareholder in Halex.

Checks with the Companies Commission of Malaysia (CCM) reveal that the company’s two directors are 28-year-old Michelle Yip How Yee and 24-year-old Nicole Yip Jing Yee. Based on their address in Taman Duta, they could be Yip’s daughters as all three have the same house address.

Details from CCM’s records, however, leave many questions unanswered. The registered address of the company, Solaris Cemerlang in Plaza First Nationwide, is that of the company secretary’s, and no business address is given.

Sources say Roy Ho Yew Kee, a director who was appointed to the board of Halex in April this year, is linked to Yip.

Sources also say the first part of Yip’s comeback plan, which involves Halex buying Ken­sington Development Sdn Bhd, has already taken off. Halex acquired 25% equity interest in Kensington Development late last month for RM22 million, and is now looking to buy an additional 50% stake for RM32 million cash.

Kensington Development has several property projects in Sabah and is in the midst of developing 8 Avenue — a 13-storey development with 55 commercial lots as well as 41 single-storey commercial units and 259 small offices/versatile offices in Jalan Tuaran Bypass, Kota Kinabalu, with a gross development value (GDV) of RM148 million.

Its total GDV stands at RM596 million, which is largely from the development of its 30 acres in Sabah.

A check on CCM indicates that Kensington Development was previously wholly owned by Bestempire Limited Offshore Incorporations Ltd. It is understood that Yip could be linked to the offshore company, Bestempire Limited Offshore Incorporations.

Kensington Development’s last submitted financial statement is for the year ended Dec 31, 2011, when it suffered an after-tax loss of RM1 million from RM1.5 million in revenue.

Yip, who is 54, was linked to several companies in the 1990s, notably Cold Storage (M) Bhd and Instangreen Corp Bhd (now known as LBS Bina Group Bhd), just to name a few. He was known as a market maker.

Yip was last in the news about three years ago in 2011, when he and another director of Cold Storage, Datuk Chun Wai Meng, were acquitted and discharged of charges of criminal breach of trust involving RM185 million in 1998.

It is not clear if there are any regulations preventing him from surfacing in listed companies.

It is also not clear if Yip has already amassed a controlling block in Halex via friendly parties and offshore companies, and was just waiting to surface.

A shareholder of Halex, Low Ngak Tiow, sold 13.7 million shares or a 13.7% stake in Halex to private company Olive Park Development Sdn Bhd at end-April this year for RM1.07 a share.

Olive Park’s shareholders, according to the CCM, are Yap Liee Mee and Loh Kuan Chween. Considering that Yap Liee Mee is a company secretary of Olive Park, it could be that the names of the new shareholders have yet to be filed.

Another substantial shareholder of Halex, Ong E Jo @ Wong Ah Chuan, sold 7.4 million shares or 7.4% equity interest at RM1 apiece in early May. The purchaser was Bahamas-based Grande Chateau Holdings Ltd.

It is not clear who controls Grande Chateau Holdings.

Collectively, all three blocks sold — 12.1%, 13.7% and 7.4% — amount to 33.2% equity interest, just shy of triggering a mandatory general offer.

For the nine months ended June, Halex posted a net profit of almost RM1.8 million on the back of RM71.3 million in revenue, translating into an earnings per share of about 1.8 sen.

In contrast to a year ago, the company’s net profit fell 25%, despite revenue being largely flat.

As at end-June this year, Halex had cash and bank balances of RM14.2 million, and deposits with licensed banks of almost RM2 million, while its borrowings were negligible. For the cumulative nine months, its finance costs were only some RM273,000.

Halex also had retained profits of close to RM40 million at end-June.

However, the company’s net cash from operating activities for the nine-month period was down to RM596,000 from almost RM8.5 million in the previous corresponding period.

Halex’s stock hit an all-time high of 97 sen in April this year. It closed at 78 sen last Friday.

This article first appeared in The Edge Malaysia Weekly, on October 27 - November 2, 2014.