Can new entrant help CME?

AMID an uncertain future, a new major shareholder has emerged in CME Group Bhd.

This will probably give a much-needed new lease of life for the loss-making fire-fighting equipment maker.

The new single-largest shareholder in CME is an investment holding company called Best Birdsnest Sdn Bhd, led by individuals by the name of Lee Siah Sian@Lee Hay Hian and Liew Kuo Yaw.

The company now owns a 16.61% stake in CME after buying the block of shares from CME executive director Tunku Nizamuddin Tunku Shahabuddin.

Tunku Nizamuddin, who had held the stake through Ikram Mulia Holdings Sdn Bhd, has since ceased to be a substantial shareholder in CME.

Business has been challenging for CME in the last 10 years.

Earnings have been volatile, and the company has been raking in losses since 2014.

While the group claims to have ongoing contracts exceeding RM48.8mil for supplying fire-fighting vehicles and maintenance services that could boost its bottom line, stiff competition, rising production cost and other economic uncertainties such as a weak consumer sentiment will continue to cloud its outlook.

Already, its net loss has widened to RM3mil in the six months ended June 30, 2017, from RM1.77mil in the corresponding period last year. This is despite the group raking in a significantly higher revenue of RM24.3mil, compared with RM10mil previously.

CME attributed its higher revenue to the completion and recognisation of fire-fighting vehicles as contributions from its trading segment. But earnings were dragged down by losses incurred in the retail segment and further provisions made for the forbearance deed by a foreign subsidiary company.

So, the weight of responsibility is on the new shareholder of CME to restore confidence in the company. And unless a new strategy is found, CME will probably continue to be on a volatile path.