The bil­lion ring­git ques­tion

That and a Trop­i­cana stake pur­chase have put Top Glove’s supremo in the spot­light

The Star Malaysia - StarBiz - - Companies & Strategies - By S. PUSPADEVI puspa@thes­

LOW pro­file rub­ber glove ty­coon Tan Sri Lim Wee Chai ( pic) rarely hogs the lime­light, pre­fer­ring to ad­dress the me­dia at pre-de­ter­mined press con­fer­ences.

But this week, the 59-year-old founder and ex­ec­u­tive chair­man of Top Glove Corp Bhd, worth a whop­ping RM2.93bil go­ing by his 36.44% stake in the com­pany, has been thrust into the lime­light.

The story be­gan a week ago when Lee told a press con­fer­ence at Top Glove’s fourth quar­ter re­sults briefing that the com­pany will be ac­quir­ing a rub­ber glove man­u­fac­turer that will cost it more than RM1­bil.

Lim had ex­plained say that this would be a rather at­trac­tive ac­qui­si­tion for Top Glove. He in­di­cated that he was 99% con­vinced that he had gott­ten it all wrapped up and will make it pub­lic within the month.

He even nar­rowed the target firm to a Malaysian-based sur­gi­cal and ex­am­i­na­tion glove pro­ducer.

Those words cre­ated a buzz in the mar­ket and sent the stock prices of po­ten­tial tar­gets shoot­ing up.

Spec­u­la­tion then nar­rowed down Top Glove’s target to two lo­cally listed rub­ber glove mak­ers – Ad­venta Bhd and Su­per­max Corp Bhd.

Shares of the re­spec­tive com­pa­nies, in­clud­ing Top Glove, bal­looned on Mon­day. Su­per­max was up 20%, Ad­venta spiked 27% while Top Glove hit a 21-month high of RM6.68.

So, as much as the news caused a frenzy in the mar­ket, this was blown away when Lim shot the spec­u­la­tion down, stat­ing that Top Glove was nei­ther in talks with Ad­venta nor Su­per­max.

Ad­venta and Su­per­max also cleared the air in their re­spec­tive fil­ings with the stock ex­change that the news was not true and was mis­lead­ing.

The fact is Ad­venta had dis­posed of its sur­gi­cal glove man­u­fac­tur­ing busi­ness to As­pion Sdn Bhd five years ago.

Fol­low­ing the clar­i­fi­ca­tions, the share prices of these three rub­ber glove firms cor­rected, with Top Glove los­ing 29 sen or 4.23% to close at RM6.39 on Tues­day. Ad­venta went down eight sen or 9.58% to 75.5 sen, while Su­per­max shed 15 sen or 7.26% to RM1.89.

Lim does not want to com­ment fur­ther on Top Glove’s on­go­ing ac­qui­si­tion un­til it is for­mally an­nounced.

What is note­wor­thy is that shares of Com­fort Glove Bhd, which has a mar­ket value of RM581mil, had also gained trac­tion.

Since Oct 6’s close of 91.5 sen, Com­fort’s

Lim’s Trop­i­cana deal

Then a few days ago, Top Glove’s Lim ap­peared in the news again.

This time, it was his rather sur­pris­ing move to per­son­ally fork out about RM139.6mil for a 10.24% stake in prop­erty de­vel­oper Trop­i­cana Corp Bhd. This is based on Trop­i­cana’s last clos­ing price of 93 sen on Oct 24.

With im­me­di­ate ef­fect, he was ap­pointed to Trop­i­cana’s board as non-in­de­pen­dent and non-ex­ec­u­tive deputy chair­man.

While the trans­ac­tion price was not re­vealed in Trop­i­cana’s fil­ings, Lim bought the stake from Trop­i­cana founder Tan Sri Danny Tan Chee Sing.

Fol­low­ing the dis­posal, Tan’s stake of just over 70% in Trop­i­cana has now dropped to around 60%, with Lim be­com­ing the sec­ond largest share­holder.

Fol­low­ing Lim’s en­try, Trop­i­cana shares rose by 9.7%, to close at 93 sen on Tues­day.

The stock was last high­est on May 25, 2013 at RM1.69. Its low­est was Sept 28 at 90.5 sen.

Lim was sub­se­quently ap­pointed as Trop­i­cana’s deputy chair­man. This has given the im­pres­sion that his en­try into the lo­cal builder is with the sup­port of Tan, the owner.

When con­tacted, Lim says he has al­ways been fas­ci­nated with the prop­erty sec­tor.

“It is a dy­namic and ex­cit­ing in­dus­try. The prospects can be promis­ing,” he says.

Al­though the sec­tor seems soft now, the af­fa­ble Lim be­lieves it is timely to pur­sue his in­ter­ests in this area.

“I am op­ti­mistic that Trop­i­cana is the right com­pany to be with, given their good track record,” he says.

And so what role will Lim play in the com­pany?

To this, the glove man says he be­lieves he is able to add value to Trop­i­cana’s busi­ness with his vast ex­pe­ri­ence in var­i­ous in­dus­tries.

“I can bring in fresh per­spec­tives to en­rich the com­pany’s de­ci­sion-mak­ing,” he says.

And since this was a non-ex­ec­u­tive role, Lim went on to ex­plain that it will not dis- tract him from his glove busi­ness, which has been his pas­sion since he took over his fa­ther’s rub­ber plan­ta­tion and trad­ing busi­ness.

Lim also de­nied the prospect of Top Glove in­ject­ing some of its land into Trop­i­cana for devel­op­ment.

“Our land is ear­marked for fac­tory ex­pan­sion,” he en­thuses.

Ac­cord­ing to a July re­port, Trop­i­cana has a to­tal land­bank of about 1,300 acres with an un­de­vel­oped gross devel­op­ment value in ex­cess of RM50­bil.

Lim’s en­try into the board of Trop­i­cana is part of ma­jor changes tak­ing place.

Ear­lier this month, Trop­i­cana CEO Datuk Yau Kok Seng made a supris­ing de­ci­sion to leave the com­pany.

The 58-year-old Yau, who was made CEO in 2013, said he was leav­ing due to health rea­sons and will re­tire on Nov 30. Yau was pre­vi­ously the man­ag­ing di­rec­tor of Sun­way Hold­ings Bhd.

Mean­while, Tan the owner of Trop­i­cana has two of his sons Dion and Datuk Dick­son on the com­pany’s board. On Oct 2, the same day Trop­i­cana an­nounced Yau’s im­mi­nent de­par­ture from the com­pany, it ap­pointed Dion to the po­si­tion of MD, while Dick­son re­mains deputy CEO.

Mean­while, an in­dus­try source says the two cap­tains – Lim and Tan, have known each other for a long time now.

Lim’s en­try in real es­tate goes back to 2013 when he and Top Glove ac­quired the east wing of The Icon prop­erty near Jalan Tun Razak, Kuala Lumpur for RM226mil cash via his in­vest­ment com­pany, Value Add Sdn Bhd. Lim is said to con­trol about 68% of Value Add, while Top Glove owns about 27%.

He has also in­vested in two other tow­ers, namely PJD Tower in Jalan Tun Razak and The Mines 2 (of­fice tower and re­tail mall) in Seri Kem­ban­gan.

Based on Fri­day’s share price close of RM1.02, Trop­i­cana is trad­ing at a his­tor­i­cal price earn­ings of about 10 times. At the cur­rent share price, the stock of­fers a gross div­i­dend yield of 1.94%.

Earn­ings wise, for the sec­ond quar­ter ended June 30, 2017, Trop­i­cana’s net profit was up 59% to RM52.85mil from RM33.32mil, a year ago, on higher rev­enue of RM444.4mil from RM358mil.

The im­proved earn­ings, ac­cord­ing to its fil­ings, was driven by prop­erty devel­op­ment.

For the cu­mu­la­tive six months, the com­pany posted a net profit of RM85.37mil from RM48.49mil a year ago, against a rev­enue of RM826.26mil from RM645mil, mainly due to higher work in progress across pro­jects in the Klang Val­ley and the north­ern re­gion.

shares have risen about 20.22% at RM1.10 on Oct 23. How­ever, it dropped to RM1.03 the fol­low­ing day after the clar­i­fi­ca­tions.

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