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Monday, January 21, 2013

Ng set to make further moves on Inch Kenneth (BT)

SYF Resources Bhd chairman Ng Ah Chai plans to boost his interest in Inch Kenneth Kajang Rubber Public Ltd Co by as early as this week.

Last week, Business Times reported that the tycoon was going to raise his personal stake in Inch Kenneth to about 10 per cent.

Subsequently, on January 17, Inch Kenneth told the stock exchange that Ng had bought more of the company's shares from January 11 to January 17 this year.

Against this backdrop, Inch Kenneth had started buying back its own shares in recent days. From December 27 last year until today, the company has bought back some 6.39 million of its shares to bring its treasury shareholding to 6.75 million shares.

As a result of the purchase, Ng now controls 42.16 million Inch Kenneth shares, giving him ownership of 10.18 per cent of the company.

Ng, a long-time shareholder of SYF, one of the largest rubberwood furniture manufacturers in the country, had emerged in Inch Kenneth some five months ago.

Ng and parties alligned to him are expected to boost their stake in Inch Kenneth to about 15 per cent by the end of this week, said a person familiar with Ng's plans for the company.

"Ng might tie up with another public-listed company to gain a firmer foothold in Inch Kenneth," said the source.

The source said by the end of next week, they will request for a board seat.

"Their desire for now is not to take control of Inch Kenneth, but to force the current Inch Kenneth board to either return the cash from the company's war chest or to provide a detailed plan on the company's future development plans."

A check on its annual report for the year ended 31 December 2011 showed that Inch Kenneth had RM221.69 million as short-term deposits with banks.

Inch Kenneth became cash rich after it sold two plots of land in Bangi, Selangor, to UEM Land Holdings Bhd for RM268.5 million.

"Minority shareholders should be given a special dividend from the proceeds of the sale, or an executable plan should be given on how Inch Kenneth is going to develop its massive landbank," added the source.

He did not discount the possibility of the Ng faction making an outright offer to take over the company.

Currently, the dominant shareholders of Inch Kenneth are those who control Concrete Engineering Products Bhd (CEPCO). CEPCO controls about 13.5 per cent of Inch Kenneth.

CEPCO disclosed last year that it was buying Inch Kenneth shares because Inch Kenneth was trading at below its net asset per share of RM1.71.

"The current market price represents a good opportunity to average down the cost of the investment, backed by the net asset of Inch Kenneth at RM1.71," CEPCO said in its annual report last year.

However, according to RHB Research, Inch Kenneth should be valued at between RM1.77 and RM1.88, based on the sum parts valuation method.

The method values a company by determining what its divisions would be worth if they were broken up and spun off or acquired by another company.


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