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Stocks In Focus MY (MPHB Capital, Prinsiptek Corp, Systech) – 22/12/14
Malaysia Daily Bulletin | 22 December 2014

MPHB To Sit On RM700m Cash Pile After Sale Of Insurance Stake

  • MPHB Capital will be sitting on cash of more than RM700 million, translating into RM1 per share when the sale of a 49 percent stake in its insurance arm to Italy-based Generali Asia NV for RM355.8 million, is completed.
  • With an option to sell a further 21 percent interest only after next June due to listing regulations, the sale would position the group in a prime position to diversify away from the competitive insurance business that is increasingly seeing more participation from foreign companies.
  • Although MPHB says it does not have any firm plans on the utilisation of proceeds from disposal, analysts are upbeat with the extra cash surplus to scout for more property development projects in the coming months.

Significance: Analysts from UOB Kay Hian and Maybank IB Research agree the disposal could impact MPHB’s bottom line initially but believe contribution from property development as well as faster growth in its insurance arm post-strategic tie-up will help recoup the initial loss. Another key catalyst identified will be the redevelopment of Flamingo Hotel in Ampang.

Prinsiptek On Lookout For M&A

  • Construction firm Prinsiptek Corporation, which recently diversified its business into property development, is considering potential mergers and acquisitions (M&A) in construction-related businesses.
  • The group is interested in diversifying into manufacturing of building materials and has been in talks with several parties involved in the manufacturing of construction based materials on potential acquisitions, but has yet to identify a suitable deal.
  • Currently, the firm’s three core businesses are construction, property development and trading of building materials. Additionally, Prinsiptek has an orderbook of RM550 million that will last about two to three years.

Significance: The company shared that it has unbilled sales of RM650 million, which will be recognised in the next three to five years and is also looking to expand its landbank, with plans to enter the Johor market and taking up ore projects in Bangkok, Thailand.

Systech Riding On IT Wave

  • Web-based IT solutions maker Systech, which has been garnering attention for a couple of months now, is merely one of the companies which is “riding the IT wave” and has no plans to be sold off.
  • Founder and chief executive officer Raymond Tan said that the firm is not in talks with anyone to sell at the moment, but does not dismiss the possibility completely in the future if a “right” offer is made.
  • Speculations aside, Tan said that there are actual growth plans in place for the group, including new products and new markets, which could also explain investor interest in the firm.

Significance: The company shared that it will soon embark on a new income stream, namely, cyber security, after the acquisition of a 51 percent stake in Sysarmy, a software research firm. According to Tan, the strategy for its cyber security segment is to tap into its existing customers. The group also has plans to expand into Europe.

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