A precursor of ‘Seri Flipping-jaya’

Iskandar Malaysia: East to West, encompassing the JB CBD has been targeted for a massive corporate exercise going towards flipping of land parcels

The recent mystery of suspension of Tebrau Teguh Bhd (TTB), was quickly answered with revealed with the announcement of Iskandar Waterfront Holdings (IWH) taking over majority control of TTB, via Kumpulan Prasarana Johor (KPRJ). The value, however, is not too sassy.

Market chases up Tebrau Teguh way above 76 sen takeover price

Written by Joseph Chin of theedgemalaysia.com

Fri Feb 10 2012 3:31:27 PTG
KUALA LUMPUR (Feb 10): Tebrau Teguh Bhd share price rose to a high of 94 sen on Friday, chased up by market players hoping the takeover
price of 76 sen could be increased.

Analysts had said the 76 sen offer price had undervalued Tebrau Teguh due to its large landbank in Iskandar Malaysia, the country’s latest property hotspot.

At 3.14pm, it was up 12.5 sen to 93 sen. There were 86.73 million shares transacted at prices ranging from 80 sen to 94 sen.

The FBM KLCI fell 2.7 points to 1,562.62. There were 2.38 billion shares transacted at RM1.73 billion. There were 533 gainers, 339 losers and 316 stocks unchanged.

Tebrau is being taken over by Iskandar Waterfront Holdings Sdn Bhd (IWH), which is buying a 33.15% stake in the company from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) for RM168.7 million.

KPRJ, the Johor state investment arm, will remain a major shareholder of Tebrau as IWH is owned by KPRJ and Credence Resources Sdn Bhd, a company controlled by tycoon Datuk Lim Kang Hoo of Ekovest Bhd.

With the collaboration between Lim and the state investment entity, analysts think Tebrau could potentially be a stock to watch for exposure to Johor.


It is actually an expected corporate manuvre to those who have been watching this very closely. The deal was for 222,poo,000 units shares or 33.15% holdings of TTB. The announcement also include the State Economic Development Unit (UPEN) letter dated 30 Dec 2011 for development of 413 acres of Johor state land PTD 4589 and 4590 in Mukim Pantai, Penggerang which is part of the designated Petronas Refinery and Petrochemical Integrated Development (RAPID) district.

The announcement of a takeover price of 76 sen left many observers wondering, where is the actual beef in this deal for Johor State Government. TTB shares did reach 94.5 sen per share within 12 months prior to the 3 February announcement. The last transacted price for TTB before suspension is 75 sen. Obviously, TTB has more potential solely based on the market track record. Since the market has shown that the bullish potential of TTB due to probably the projects Johor State Govt is ready to inject into the plc via KPRJ, one wonders who is the end benefactor of such deal.

Interesting to note how and when the RM 168.7 million that is supposed to be paid to KPRJ for TTB’s shares has not been made certain, at least to the general public.

IWH is 70% owned by Ekovest Bhd Supremo Dato’ Lim Kang Hoo and his family, who also undertook Danga Bay project away from KPRJ as part of the ‘KPRJ resuscitation program’. The acquisition price that Lim willing to pay is actually peanuts compared to the value he would eventually realize now that he is better position to state his call in TTB and also the clout over any strategic decisions made by Johor State Government, especially land development projects.

The whole package of goodies is listed in this Starbiz report:

Split views between holding out for higher price and selling Tebrau Teguh shares to IWH

Corporate Portrait – By Thomas Huong

TEBRAU Teguh Bhd’s minority shareholders are likely to hold out for a higher offer price for the Johor Baru-based property developer and construction group, said some research analysts.

However, other analysts said the offer price of 76 sen per Tebrau Teguh share actually provided a premium as it was close to the company’s reported book value.

Tebrau Teguh’s major shareholder Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) is selling a 33.15% stake in Tebrau Teguh to Iskandar Waterfront Holdings Sdn Bhd (IWH) for 76 sen per share.

The proposed acquisition would trigger a mandatory takeover offer for Tebrau Teguh by IWH and parties acting in concert (PAC) with it.

The mandatory offer for Tebrau Teguh would be conditional upon IWH receiving valid acceptances which would result in IWH and the PAC holding more than 50% of Tebrau Teguh’s voting shares.

Mercury Securities research head Edmund Tham told StarBiz that Tebrau Teguh shareholders could consider holding out for a higher offer price as there would be better earnings for the company if it starts development on 167.13ha in Pengerang, Kota Tinggi, Johor.

“The offer of 76 sen per share is near the book value of Tebrau Teguh. As at Sept 30, 2011, Tebrau Teguh’s net assets per share was 75 sen. But there could be tremendous future earnings upside from the development in Pengerang,” said Tham.

Tham was surprised by Tebrau Teguh’s share price performance, which closed at 81.5 sen on Friday.

“This could a sign that investors think a higher price may have be offered by IWH,” he said.

ECM Libra Capital head of research Leong Hon Sze concurred, and said Tebrau Teguh’s share price performance showed that investors think that the company’s stock was worth more than the offer price of 76 sen per share.

However, a property analyst said minority shareholders who took the short-term view might want to accept the offer of 76 sen per share.

“IWH is actually offering a premium as property companies with relatively small market capitalisation are trading at only 0.5 to 0.7 times book value. This is because unlike aggressive property developers such as SP Setia Bhd and Mah Sing Group Bhd, these small companies are not fast enough in realising the value of their land bank.”

However, the analyst pointed out that some investors are taking the long-term view concerning property development in Iskandar Malaysia.

“A lot is happening in Johor nowadays, and it looks like every major property developer is homing in on Iskandar Malaysia.”

Tebrau Teguh’s 167.13ha in Pengerang is within the Johor oil and gas industry hub, and it is to be developed into a mixed development which would complement the proposed Petroliam Nasional Bhd’s RM 60 billion integrated refinery and petrochemical complex, known as Rapid.

Pengerang is said to have the potential to rival Singapore’s Jurong Island as a major energy and petrochemical hub in the future.

Companies such as marine engineering specialist Benalec Holdings Bhd and Dialog Group Bhd, an integrated specialist service provider for the oil and gas industry, are also involved in the development of the oil and gas industry hub in Johor.

In June 2011, Dialog entered into a joint venture agreement with Vopak Terminal Pengerang BV, a unit of the Royal Vopak group, for the development of an independent deepwater petroleum terminal in Pengerang, Johor worth RM 5 billion.

Last August, Dialog’s executive chairman Ngau Boon Keat pointed out that Jurong has limited land and was finding it hard to grow further.

Meanwhile, Benalec has land reclamation jobs, over 712ha and 1,410ha in Pengerang and Tanjung Piai respectively from the Johor government, to develop petroleum and petrochemical hubs and maritime industrial parks.

Sources told Starbiz last Thursday that there were plans for Tebrau Teguh to remain listed and be the first pure Iskandar Malaysia stock play, following a successful acquisition by IWH.

Iskandar Malaysia in Johor is an economic growth corridor that encompasses 221,634ha, which is an area of about three times the size of Singapore and twice the size of Hong Kong.

“Furthermore, it’s the only Iskandar play that will be both waterfront and has east and west of Johor Baru city land.”

“KPRJ is not selling out of Tebrau Teguh as the former also owns shares in IWH,” said sources.

KPRJ, an investment arm of Johor state government, has a 30% stake in IWH with the balance owned by Credence Resources Sdn Bhd.

“In the near future, Credence will reduce its holdings to 60% and KPRJ will increase its stake to 40%. So, KPRJ’s indirect stake in Tebrau Teguh will further increase,” sources said.

Meanwhile, another property analyst said several IWH directors were known to be influential in Johor.

“Also, with KPRJ in the picture, there would be no issues concerning development approvals.”

The current IWH directors are Datuk Lim Kang Hoo, Lim Hoe, Lim Keng Cheng, Lim Chen Herng, Datuk Shahir Nasir, Datuk Ayub Mion and Johar Salim Yahaya.

Kang Hoo is also the co-founder and chairman of construction and civil engineering company Ekovest Bhd, as well as Knusford Bhd’s executive director and PLS Plantations Bhd’s non-executive director.

Ayub and Johar are also Tebrau Teguh’s chairman and executive vice-chairman respectively.

According to the Johor government’s website, Johar is KPRJ’s chief executive.

Both Ayub and Shahir are former Johor state secretaries.

Last July, Johar told StarBiz that the company would benefit immensely from Iskandar Malaysia as its land bank was strategically located in the main growth nodes of the growth corridor.

Johar had said the company has 413.53ha of undeveloped land and 12km water frontage within the Tebrau-Plentong river basin development with a net book value of RM 591.93 million,

According to Johar, Tebrau Teguh would shift its focus to high-end residential and commercial developments from low to medium cost residential projects previously.

For the third quarter ended Sept 30, 2011, Tebrau Teguh posted a 29.3% year-on-year jump in net profit to RM 3.2 million, mainly due to higher profit generated from property development activity.

Revenue for the quarter under review was slightly lower at RM 30.5 million, compared with RM 30.6 million a year earlier.

For the nine months ended Sept 30, 2011, the company recorded a net profit of RM 3.7 million, compared with RM 3.8 million a year earlier.

Revenue for the nine months under review increased 33.4% to RM 93.9 million, compared with RM 70.4 million a year earlier.

Revenue for the quarter under review was slightly lower at RM 30.5 million, compared with RM 30.6 million a year earlier.

For the nine months ended Sept 30, 2011, the company recorded a net profit of RM 3.7 million, compared with RM 3.8 million a year earlier.

Revenue for the nine months under review increased 33.4% to RM 93.9 million, compared with RM 70.4 million a year earlier.

What was peculiar, why was the decision to hive off TTB to IWH done in a hasty manner. The fact that the agreed price of 76 sen per share, which is only 1 sen above the last transacted price before its a suspended, clearly demonstrated that it was not planned much earlier. IWH, which substantially in control of TTB should have paid premium for the 222,000,000 shares block. The adviser or investment bank which played a significant role for the deal is also blurry. It is also not clear where is the UPEN in this and how this corporate play would affect the whole planning laid by the economic planner for the state.

It was believed that the decision is made purely on an offer made by IWH in a letter issued on the same day. Had the premium been calculated at just 10%, it would have translated to 17.6 million for KPRJ. Had it been 30%, it means that KPRJ would have realised a profit in the neighborhood of RM 54 million for the sale of the 33.15% holdings of TTB. Factored with the 413 acres for RAPID in two parcels in Penggaram which was approved for ‘injection’ into TTB, analysts believed that TTB share price could have exceeded RM 1.00.

The reality of the whole scheme of things, Johor State Government tend not to have substantial gains from this deemed shoddy ‘share swap’. Theory has it that the value of KPRJ holdings would increase via IWH, as the projects start to roll out.

Interesting to note that KPRJ is a 23% shareholder of Pembinaan Limbongan Setia (PLS) Bhd, which under the control of Lim the Land-owner. More interesting to note that since acquiring this holding, KPRJ had never earned any cash benefits as no dividends were paid. What is more interesting, PLS holds 70% of Aramijaya Sdn. Bhd., which holds a 60 year concession for 35,000 hectares of forest outside Kota Tinggi. That is roughly half the size of Singapore.

Then again, the whole notion of KPRJ-TTB new structure very much put Johor State Government under the back and call Lim. Recently, it was argued that Lim is the only willing party ready to part with hard cash for all of its Johor acquisitions. That got us wondering more if this ‘consolidation’ was the game to realise the full value of premium land parcels within South Johor (particularly Iskandar), why wasn’t JCorp given the first right of refusal? After all, JCorp already entrenched in the property and plantations businesses, with listed companies in the stabble.

In a ball park, we are looking of a ‘gaming ground’ of 2,500 sq km here. That is in general three times the size of Singapore. Within the next 20-30 years, that is a very lucrative proposition for any parties to devour into.

Another interesting point needed to be raised is that its strongly believed that Director of Johor Islamic Department Tuan Haji Elias Hassan will replace recently retired Director of UPEN Dato’ Hamsan Saringat. Would UPEN after this reshuffle still able to defend the interest of the Johor state and Johor State Government in all corporate and proposals involving land matters is not clear.

If TTB would eventually exercise a lot of its activities from ‘flipping’ of strategic land parcels, then Johor State Government could have done it direct without having a ‘middle person’. It would be a sad solution for once the state with the most progressive system had to resort for this, at the behest of the more powerful economy in the neighborhood.

Then again, in the original plan for South Johor Economic Region as chartered by PM ‘Flip-Flop’ Tun Abdullah Ahmad Badawi’s ‘Level Four Boys’ sometime five and a half years ago, this whole area is design to play the supporting role for the high value Singaporean economy. Coincidentally, one of the architects of Iskandar Development Region (as it was known when it was first launched in November 2006) Dato’ Ahmad Zaki Zahid who was then the Principal Co-ordinator for the Prime Minister’s Private Office, is now back in the Johor scene as the Executive Director of Kulim Bhd. He is also expected to play a more strategic role in JCorp as he goes along.

All these is on top what is brewing in Khazanah controlled Medini:

Transaksi hartanah Medini mencurigakan, Khazanah perlu perjelaskan

Surat Pembaca yang dipaparkan di dalam Forum Utusan Malaysia pada 30 Januari lalu perlu diberi perhatian serius oleh kerajaan dan rakyat Malaysia. Jika benar seperti yang didakwa penulis bahawa perjanjian-perjanjian hartanah Medini dengan konsortium Arab berat sebelah, seolah-olah Khazanah Nasional begitu terdesak untuk membawa masuk pelabur asing ke Medini. Ini perlu diperjelaskan kepada rakyat.

Umum mengetahui kerajaan Malaysia telah memberi banyak insentif pelaburan di Medini, sama ada insentif fiskal dan bukan fiskal, sebagai galakan untuk pelabur asing melabur di sana. Jadi mengapa perlu Khazanah menandatangani perjanjian sebegini dengan konsortium Arab?

Sebagai rakyat biasa, persoalannya berkisar kepada dua perkara.

Pertama, jika benar, apakah Khazanah tidak mempunyai kecekapan untuk berunding dengan pelabur hartanah dari luar negara sehingga menyebabkan perjanjian-perjanjian berat sebelah ini ditandatangani. Kedua, yang lebih merisaukan, apakah Khazanah dengan sengaja menandatangani perjanjian-perjanjian sebegini untuk membolehkan pihak-pihak tertentu mengaut keuntungan, lebih-lebih lagi apabila surat pembaca itu menyebut perkataan ‘warga asing’ dan ‘syarikat pesisir’ berpengkalan di British Virgin Island.

Kedua-dua persoalan ini mengundang pelbagai kerisauan. Kerajaan telah memberi amanah kepada Khazanah sebagai institusi pelaburan negara untuk membangunkan Iskandar Malaysia.

Sekiranya konsortium-konsortium Arab ini gagal membawa pelabur Asia Barat lain ke Medini, dan gagal mematuhi jadual pembayaran kepada Medini Iskandar Malaysia Sdn. Bhd. (MIMSB), mengapa perlu membenarkan mereka menjual balik tanah pada harga yang lebih tinggi daripada harga asal atau memulangkan sebahagian dari tanah Medini kepada MIMSB? Bukankah patut perjanjian-perjanjian ini terbatal dengan sendirinya?

Khazanah mempunyai ramai profesional muda yang memegang ijazah dari universiti-universiti terkemuka di dunia. Sukar untuk difahami bagaimana perjanjian-perjanjian berat sebelah ini boleh ditandatangani.

Yang lebih menghairankan, ahli Lembaga Pengarah Khazanah sehingga kini masih membisu tentang perkara ini. Apakah tindakan ini untuk membolehkan perkara ini dilupakan selepas beberapa minggu?

Persoalan lain, di manakah fungsi kawalan dan imbangan (check and balance) di kalangan ahli Lembaga Pengarah Iskandar Investment Berhad (IIB)? Walaupun Khazanah memegang 60 peratus saham di dalam IIB, ini tidak bermaksud ahli-ahli Lembaga Pengarah lain dari Kumpulan Wang Simpanan Pekerja (KWSP) dan Kumpulan Prasarana Rakyat Johor (KPRJ) tidak boleh menyuarakan kebimbangan mereka tentang perjanjian-perjanjian hartanah Medini.

Ahli-ahli lembaga pengarah dari KWSP dan KPRJ patut dipertanggungjawabkan untuk menjelaskan kedudukan mereka mengenai perkara ini. Adakah mereka menyokong atau membangkang perjanjian-perjanjian berat sebelah ini?

Difahamkan dana modal yang disuntik ke dalam IIB berjumlah RM3.2 bilion dalam bentuk wang tunai dan tanah, ini bermaksud pegangan 20% oleh KWSP adalah RM640 juta. Tentunya pencarum-pencarum KWSP ingin mengetahui apakah pelaburan mereka di dalam IIB akan memberi pulangan keuntungan kepada pencarum.

KPRJ juga perlu dipertanggungjawabkan mengenai perkara ini. Kerajaan Johor telah bermurah hati mengecualikan kuota pemilikan bumiputera di Medini. Tidak elok sekiranya kemurahan hati kerajaan negeri dipersenda dengan perjanjian-perjanjian pelik sebegini, yang hanya memberi keuntungan atas angin (seperti yang ditulis oleh Rakyat Johor Prihatin) kepada konsortium Mubadala.

Suruhanjaya Pencegahan Rasuah Malaysia (SPRM) mesti menyiasat dengan teliti ke semua perjanjian-perjanjian melibatkan hartanah Medini. Perkara ini tidak boleh didiamkan.

Masa depan Iskandar Malaysia akan terjejas sekiranya pelabur-pelabur lain melihat Khazanah dibiarkan begitu saja dalam skema hartanah Medini yang mencurigakan.

Khazanah pula mesti membuat kenyataan jelas mengenai apa yang telah didakwa oleh Rakyat Johor Prihatin kerana ia membangkitkan persoalan-persoalan serius mengenai tindak-tanduk Khazanah di Medini. Integriti Khazanah mesti dipertahankan.

Rakyat Malaysia mahu mendapat kepastian yang Khazanah tidak dicemari oleh individu-individu yang mahu mengaut keuntungan dana rakyat Malaysia melalui perjanjian-perjanjian berat sebelah yang ditandatangani oleh mereka.

Since Khazanah via Iskandar Investment is also going the same pathway with similar justifications, then where Johor would be in the medium term is no game for rocket scientist to figure out.

Sultan Ibrahim wishes that Johor benefits at least 30% realisation from all of Johor State Government controlled properties or land being acquired or developed via privatization. Probably more could be realised had Johor GLCs play the leading role instead of allowing individuals like Lim. After all, Johor or for that better Federal Government GLCs have vast experience in development, even via through privatisation.

Observers are not comfortable where all these are heading. The most worrying bit is the speculations that rife from who is actually calling the shot, the end benefactor and of course, end game for Johor. Suspiciously, in this TTB hive off deal, the finger is pointing towards Dato’ Johar Salim as the CEO for KPRJ and Vice Chairman of TTB as playing the pivotal role for the decision which shocked many observers.

Like it or not, the ‘flipping’ in near-tsunami scale has already started.

Obviously, the ‘Ghost of Johor’ did not waste time to devour TTB the soonest opportunity it can. Then again, the mystery question which is still looming in the minds of many; Is this another haunting job by the ‘Ghost of Johor’?

*Updated 0200hrs 12 Feb 2012

Published in: on February 11, 2012 at 20:00  Comments (12)