Goh Ban Huat

Goh Ban Huat

Postby winston » Sun Oct 01, 2017 7:11 am

not vested

What lies ahead for Goh Ban Huat?

by P. Aruna

Questions abound as new major shareholder takes an interest

IT is puzzling that a little known property company called Paragon Adventure Sdn Bhd is forking out RM145.7mil for a 51% stake in ceramic products company Goh Ban Huat Bhd

In fact, Paragon Adventure may soon have to spend even more than that if some minority shareholders accept the general offer that was triggered by its purchase of the 95.18 million shares at RM1.40 each from business tycoon Tan Sri Robert Tan Hua Choon (pic).

So what is it about GBH that attracted the interest of a property player?

For its first quarter ended June 30, 2017, its profit stood at a mere RM445,000.

The company is known mostly for its bathroom products, clay pipes and trading ceramic goods, and has a 20.25% stake in watch retailer Time Galerie (M) Sdn Bhd, which it acquired in 2015.

According to its most recent annual report, the company exited its clay pipes manufacturing business in the first quarter of FY2017, leading to revenue for the year tumbling 29.6%.

The company cited the expiry and termination of the tenancies of the premises on which the plants were located as one of the reasons for exiting the business.

It also said that it decided not to invest in a new plant due to the high capital expenditure involved, and as profit margins were expected to remain under pressure due to rising utilities costs.

This leaves the company with its trading and investment segments, as well as its share of profit in Time Galerie.

In the most recent quarter, the trading segment was hit with a 50% decline in revenue, on the back of lower sales from sanitaryware due to the softening property market.

Income for the investment segment, meanwhile, is derived mainly from rental of an investment property.

The company was also gloomy on its prospects for the year, with the outlook for the sanitaryware business expected to be challenging due to the weak ringgit eating into its costs and the slow property market.

At its current share price of RM1.46, GBH is trading at an unusually high price earnings multiple of more than 100 times.

Based on this, it is likely that Paragon Adventure isn’t after the existing business of GBH.

Looking into the balance sheet of GBH, another picture emerges.

The company is in a net cash position of RM152.7mil. It has no debt.

So how did this cash hoard come about, considering the company does not make that much money?

It is from the 2015 sale of its prized 13.9 acres of nine adjoining parcels of land in Segambut, Kuala Lumpur to property developer Keladi Maju Bhd for RM192mil.

GBH had initially intended to use the proceeds from the land sale to venture into the oil and gas industry by buying oil and gas services company Dynac Sdn Bhd.

Dynac provides cooling systems and various services such as cable support and engineering for the O&G and other industries. Its main products include heat ventilation and air-conditioning systems, known in industry jargon as HVAC systems.

That planned acquisition, however, did not materialise after an EGM in which GBH shareholders approved the sale of the valuable real estate, but cancelled at the last-minute the plan to turn GBH into an oil and gas company.

Interestingly, Keladi Maju, the buyer of the land, is also controlled by the businessman who just sold the 51% stake in GBH, Robert Tan.

It is clear that the major owner and non-executive chairman of GBH has been looking to dispose of this company for same time.

Robert Tan, once dubbed the “Casio King” for being the only distributor of the brand’s watches and calculators, was first appointed to the board of GBH on July 8, 2008 as a non-independent non-executive director.

He then famously launched an unfriendly takeover of the ceramic maker from the company’s founding Goh family in 2009, winning control of the company in August 2009 after raising the offer to RM1.50 per share from the original offer of RM1.25 per share.

He was then re-designated as managing director, and later as chairman in April 2010.

Besides the 51% stake in GBH which he plans to sell to Paragon Adventure, Robert Tan still owns another 12.8% in the company.

Back to the buyers of the stake, Paragon Adventure is an investment holding company owned by Datuk Seri Edwin Tan (65%) and Datuk Seri Godwin Tan (35%), both of whom are active in property development in Johor.

The company is linked to property player Joland Group, which is known to use the brand name “Paragon” in its projects.

According to recent reports, Edwin Tan is also MD of Joland Group, in which his father, Datuk Tan Eng Boon is founder and chairman and his brother Godwin Tan is a director.

In Johor, Joland group developed the Grand Paragon Hotel and Kukup Golf Resort, and according to its website, currently has five ongoing projects in Johor, namely the Paragon Residences @ Straits View, Paragon Suites @ CIQ, Skudai Bizhub, the Paragon Square, a shopping neighbourhood mall at Jalan Tampoi, Johor and Pekan Nenas Industrial Park-Phase II.

It also owns the Paragon Private and International schools in the state.

It will be interesting to see what lies ahead for GBH, in the hands of a property player as its significant shareholder.

When contacted about its plans for the company, Paragon Adventure declined to reply, saying they were “unable to comment as the transaction is ongoing”.

While GBH, being in a net cash position of RM152.7mil and no debt, is clearly an attractive target, it is to be noted that Paragon Adventure is merely buying a 51% stake in the company.

However, it has gained control of a public-listed firm via the deal. Paragon Adventure has that it intends to maintain the listing status of GBH.

As one banker points out, “Paragon Adventure will now be in control of the company.

“It will be interesting to watch their next move and in what direction they will take GBH,” he says.

Since the announcement of Paragon’s proposed purchase of Robert Tan’s 51% stake in GBH, the latter’s share price has hovered above the RM1.40 price tag, hitting a high of RM1.50 a piece on Thursday and closing at RM1.46 yesterday.

Shareholders are likely to consider these facts when deciding if they wish to accept Paragon’s offer – GBH has a net asset value per share of RM1.29, a cash per share of 82 sen and trades at an extremely high PE ratio of more than 100 times.

It also doesn’t have any significant landbank left. Then again, they have the option of selling their shares in the market which seems to be holding up well after the announcement.

Source: The Star

http://www.thestar.com.my/business/busi ... qZXtEPq.99
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Re: Goh Ban Huat

Postby winston » Tue Oct 17, 2017 7:57 pm

Goh Ban Huat may diversify business following takeover

KUALA LUMPUR: Property developer Paragon Adventure Sdn Bhd says it intends to leverage on its experience in construction and property development to diversify the business of Goh Ban Huat Bhd (GBH), following the completion of the takeover offer.

According to its offer document to shareholders, Paragon may also consider injecting construction and property development assets into GBH in the near future.

However, Paragon will continue with GBH's existing businesses following the completion of the offer.

It added that it does not plan on introducing any major changes to the structure of GBH Group, dispose of or redeploy its assets, or undertake any staff redundancy scheme.

On Sept 27, Paragon had bought a 51% stake in the ceramics products company from Tan Sri Robert Tan Hua Choon at RM1.40 a share as well as 51% of the outstanding warrants at 40 sen apiece, triggering a mandatory takeover offer.

Datuk Sri Edwin Tan and Datuk Sri Godwin Tan, who have a combined 100% stake in Paragon, are the ultimate offerers in the exercise.

Source: The Star

http://www.thestar.com.my/business/busi ... 2byfHoF.99
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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