What’s Karim’s plans for SCIB?

THE takeover offer in Sarawak Consolidated Industries Bhd (SCIB) ended with major shareholder Datuk Mohd Karim Abdullah and parties acting in concert holding more than half of the company.

The offer at RM1.10 was lower than the fair value of between RM1.14 and RM1.23, but higher than the volume weighted average price of the shares of the Sarawak-based company if compared over the last six months.

In fact, in the last three years, the price of SCIB has never exceeded the offer price. Six months ago, SCIB was only trading at about 50 sen.

The stock only became active after the emergence of Mohd Karim, who is also the major shareholder of Serba Dinamik Holdings Bhd, as a major shareholder in May.

After the entry of Karim, the price of the company, which specialises mainly in the manufacturing and supply of pre-cast concrete products, saw some activity.

SCIB is in the highly competitive construction and property development business. The advantage of the company is that it is a dominant player in the pre-cast concrete products segment in Sabah and Sarawak. It also counts on the state development corporation as a shareholder.

Most government projects use materials and services from SCIB. Among the jobs that SCIB is eyeing in the next few years are the Rm6bil coastal roads in Sarawak and the Sarawak Water Supply Grid programme that is estimated to cost Rm2.8bil.

However, Mohd Karim is not likely to be looking at SCIB for merely its existing business, which is construction and property development.

The business is highly competitive, as evidenced by SCIB chalking up losses in the financial years of 2017 and 2018.

He is probably looking at SCIB playing a bigger role in his larger group of companies. His flagship company is Serba Dinamik that is one of the bigger oil and gas players with projects in Malaysia and the region. Mohd Karim is also a substantial shareholder of Kumpulan Powernet Bhd.

This year, Mohd Karim has created a buzz with his corporate moves, but how much value will he create in SCIB and Kumpulan Powernet?