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Saturday, 27 July 2013
by yvonne tan
Nagendran is known to be a savvy investor.
THE potential emergence of a couple of high-profile shareholders in smallish, loss-making Flonic Hi-Tech Bhd is bound to pique investor interest in the weeks to come.
So far, the manufacturer of critical and precision cleaning systems for various industries has announced that Tan Siew Ching who is the granddaughter of the late Tan Sri Tan Yuet Foh - founder of Tan Chong Motors Holdings Bhd - has increased her stake in the company to a substantial 6.72%.
Tan bought 10 million shares at 10 sen each on July 15 and another 7 million shares at 10.5 sen each a day later, pushing her small stake in the firm to that percentage.
Following this, market talk has it now that a well known oil and gas industry player could potentially surface as a major shareholder in the company too.
Why all these changes is not very clear at the moment but they do suggest that something is cooking in this firm, which is currently loss-making.
While speculation is still swirling as to who that oil and gas personality is, sources say it is former Perisai Petroleum Bhd major shareholder Nagendran Nadarajah.
According to one source, he had been accumulating shares in the firm over the past few days and could potentially hold a substantial stake in it.
In 2010, Nagendran disposed of his 19% stake in Perisai to HCM Logistic Ltd, a subsidiary of Singapore-listed Ezra Holdings Ltd.
Nagendran is known to be a savvy investor and an oil and gas heavyweight. He also reportedly holds a stake in South-East Asia’s first special purpose acquisition company - Hibiscus Petroleum Bhd.
Whether or not he eventually emerges in Flonic, it is no surprise that questions are already being raised as to whether or not Flonic could potentially tap and diversify into the oil and gas industry.
Still, it is early days.
Currently, the largest shareholders in Flonic are one Ong Say Kiat with a 8.60% stake, followed by private firm Novatige Sdn Bhd, which holds a 7.72% stake.
Tan is the third largest shareholder, according to Bloomberg data.
Novitage, based on latest filings have also seen some change in ownership.
Notably, Tan’s husband, Chua Wye Man, is the executive chairman of Flonic and has a 1.86% stake in the company.
Chua, much like Tan, is also linked to the family of a high-profile automotive firm - namely the Cycle & Carriage Bintang group which is a dealer for the Mercedes Benz brand in Malaysia.
He was appointed a director of Flonic in June last year and re-designated to executive director and executive chairman later in the year.
At the moment, Flonic is loss-making, reporting a net loss of RM611,000 for its first quarter ended April 30, against a net loss of RM970,000 for the same period.
Revenue stood at RM3.4mil for the period against RM658,000 for the quarter a year ago.
As at April 30, the group did not have any capital commitments.
Based on its latest closing price of 12sen, Flonic’s market capitalisation stands at RM42mil.
The company on its website says it is able to cater “virtually to any type of cleaning requirement for any industry” including the high-end semiconductor, electronics, hard disk, aerospace, medical, automotives and food industries, across the globe.
Some of its clients include multinational firms located in countries including the Philippines, China, the US, Britain and South East Asian countries.
Currently, it is understood that Flonic has no link whatsoever to the oil and gas industry.
The company’s pretty much stayed out of the limelight for the last couple of years save for a couple of announcements to the stock exchange.
In January, Flonic proposed to buy a 30% stake in Jiwa Holdings Sdn Bhd, a group mainly involved in interior design and furnishing projects for RM3.75mil cash.
This week, Jiwa M&E Services Sdn Bhd (JMES) a subsidiary company of Jiwa Holdings had on Tuesday executed a maintenance service agreement with 7-Eleven (7E) Malaysia Sdn Bhd to provide comprehensive preventive maintenance services relating to the 7E convenience stores including maintaining, repairing and up-keeping all fittings, fixtures and specified equipment in the stores.
The monthly services fee chargeable to 7E is RM800 per store.
JMES will calculate the service fee based on the number of operating stores which has been certified to be integrated maintenance compatible, the company told Bursa Malaysia without specifying the exact number of stores involved.
The services period, it said, shall be for a term of 3 years commencing from June 1, with an extension of another 3 years in the event 7E exercises its option to renew the agreement.
In its latest annual report, Flonic says the group places great importance in strengthening its internal structure as part of its strategy to deal with the current challenging business environment.
It says in order to compete in the current competitive business environment, it has diversified its principal activities to include project management, interior fit-out, manufacturing and trading in wood furniture, as evident in its purchase of a 30% stake in the Jiwa group.
Flonic has an option to acquire an additional 21% equity interest in Jiwa Holdings for RM2.62mil.
Jiwa Holdings recently received letters of award totalling RM6.64mil for supply and interior decoration works to build one block of 8-storey service apartments containing 222 units at Lumut, Perak.
It has also received a letter of award totalling RM4.1mil for renovation and fit-out works located at the KLIA2.
Flonic was listed in 2005.
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