HLN Technologies

HLN Technologies

Postby sidney » Fri Sep 18, 2009 6:26 am

MAINBOARD-LISTED metallic and rubber components maker HLN Technologies is planning to make a switch to the financial services business and has hired 28-year-old Mr Jeff Cheong as its new chief executive to help spearhead its foray. However, the move has raised some scepticism among analysts and market players.

In a recent interview, Mr Cheong - a former dealer - expressed confidence that his six-year stint in the stock-broking industry has put him in good stead to steer HLN in the new direction. From a manufacturing-based outfit, the firm now plans to focus on fund management, stock-broking and corporate finance consulting.

Mr Cheong, who was appointed CEO in early August, said the company has already rented an office space in Hong Kong for its proposed new business, but operations have not yet started. This is because the company's proposed change in business is still pending approval from the Singapore Exchange.

Mr Cheong told Today that he expects about 60 per cent of the company's revenue from this new business to originate from Hong Kong and China, another 20 per cent from Singapore, and the rest from South-east Asia.

"It's (about) connections ... if you want to break into the Hong Kong market, you must have certain connections, certain knowledge, which is all coming from my previous background," said Mr Cheong.

Although HLN still has manufacturing operations, Mr Cheong said the firm is not ruling out "the possibility of selling out if we meet a good buyer with a good price".

Market players Today spoke to expressed scepticism at the company's proposed change of business direction. "The first hurdle is getting the right person and people for the areas they are focusing on ... If you diversify into a totally non-related industry, then you do expect that there'll be a transition period and also a learning curve," said OCBC Investment Research analyst Carey Wong.

Describing the company's actions as "drastic", another observer, who declined to be named, said the management probably felt that the "current business is no longer viable".

"This is more a shift of business with capital injection from another party - not exactly a reverse takeover (RTO), but very similar," he said.

When asked how he landed the job, Mr Cheong said he got to know the board members of HLN about four years ago, including its former chief executive officer Mr Leslie Wa, through a share placement exercise and they became friends. Mr Wa is now the company's chief operating officer.

Mr Cheong also disclosed his role in a deal where three HLN directors sold their controlling 29.19-per-cent stake in July for $8.3 million to China Infrastructures Global Investment Capital, a vehicle controlled by a Chinese businesswoman.

The investor is a former client of Mr Cheong who had tasked him to restructure the company, but he declined to reveal her identity.

HLN has been in the red for the past year, posting a net loss of $2.65 million for the six months ended June, compared to a $528,000-loss a year earlier. HLN shares closed unchanged at 41.5 cents on Friday.

SOurce: TodayOnline


TOL:

1. Why is broking background is a good fit in new biz foray? Isn't a fund manager background better?
2. Is there evidences of management credentials? Buy low and sell high is different from planning strategy and executing it.
3. Is there independence on checks and balances on the part of directors and independent directors?
4. Who are the starting 11 in the new forays? Are directors warming the benches?
5. Is it in the best interest of shareholders by spearhead into new foray? Will delisting be a better deal?
6. Why not open an accounts as investment holding complany to shield tax?
7. If capital markets are better alternatives to raise cash, will the coy tap into rights or working with investment bankers on bonds soon?
8. On connections & knowledge of CEO, does it imply there is only 1 key man to drive the company in new foray?
9. Will the short term uncertainty in coy reward shareholders in long run?
Tempered.
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