This article first appeared in The Edge Malaysia Weekly on May 24, 2021 - May 30, 2021

THE recent boardroom tussle at NWP Holdings Bhd may have inadvertently unearthed simmering tensions between the bosses of GS Realty Sdn Bhd, one of Malaysia’s leading real estate agencies.

GS Realty was founded by Datuk Seri Kee Soon Ling — who is also the CEO and executive director of NWP — in 2010. Kee, together with Yew Onn Chong and Datuk Seri Mak Hon Leong, are GS Realty’s shareholders.

Yew, along with five others — Cheng Heang Swee, Datuk Chu Boon Tiong, Matthew Chan Cheng Han, Hong Chia Seong and Huang Kun-Fang — were removed from the NWP board at an extraordinary general meeting (EGM) on May 19, called by Mak and Tan Vei Teck, who together hold more than a 10% stake in the company.

Cheng had already been suspended by NWP on May 12 as it had reason to believe that he did not practise objectivity and independence while exercising his duties as a director.

Mak, together with Tan and Ooi Kek Keong, were appointed as new directors of NWP. Mak had been a company director since June 2016 before stepping down in September 2020.

Worth noting is that the removal of six directors and the appointment of three new directors were announced by the EGM requisitionists. No official EGM outcome was filed with Bursa Malaysia.

Instead, a filing to Bursa last Wednesday stated that Chu had, at the EGM, declared that it be adjourned for two weeks after a shareholder questioned the integrity of a proxy form.

It added, however, that the requisitionists had “continued on their own accord even when the chairman was still at the broadcast venue”.

“Police were at the broadcast venue and dispersed the board members present at the meeting, namely Chu, Yew, Kee, Chan and Hong,” the filing said.

It ended by saying that the company was seeking legal advice on the matter and would make the necessary announcement in due course.

However, the company clarified later in a press statement that the presence of the police was due to the directors flouting standard operating procedures.

It is worth nothing that no reasons were given by the requisitionists for the removal of the directors. In a statement issued after the EGM, Tan said the priority was to set a five-year roadmap to turn around NWP. However, he did not elaborate on the plan.

The newly appointed directors were not available for further comments when approached by The Edge.

Nonetheless, Kee is of the view that the feud could be due to the shareholders’ dissatisfaction over the business development of the Sabah-based timber products manufacturer, which has been in the red for the past 15 years.

“It (the tussle) has nothing to do with GS Realty. We don’t know the reason … There has been a lack of communication between the directors. They (Yew and Mak) are still friends though they are on different sides now. Maybe he (Mak) thinks that there was no significant business development under the previous management,” Kee tells The Edge.

Despite the boardroom change, Kee says he will be able to work with anyone as long as it has a positive impact on NWP.

Having emerged as a substantial shareholder in May 2016, Kee is now the largest shareholder of NWP with an 8.85% stake.

NWP manufactures wood moulding, priming timber and laminated timber, and is involved in the trading of sawn timber, plywood and veneer, provision of kiln drying service, sawmilling service and trading of agricultural products. Export sales accounted for about 88% of its total sales in the financial year ended Aug 31, 2019 (FY2019).

The wood product business contributed about 70% of the group’s revenue. For the 18-month period ended Feb 28, 2021, NWP incurred a net loss of RM9.99 million. Its financial year end has been changed to Feb 28 from Aug 31. It had gross borrowings of RM12 million, putting the company in a net debt position of RM10.5 million as at end-February 2021.

NWP has three pieces of land measuring 9.24 acres in Sabah with a total book value of RM14.14 million, according to its annual report.

It had earlier raised RM5 million from its private placement exercise to fund business expansion and for working capital.

Kee says NWP has not been able to transform over the years due to its sole reliance on the timber business, which he deems a sunset industry. As such, he notes that the property segment will be the company’s main focus going forward.

Notably, last month, NWP was appointed as the sales and marketing consultant for the One Stonor project in Kuala Lumpur, developed by the Mayland Group, that has a gross development value of RM550 million.

Meanwhile, the injection of Kee’s shares in GS Realty into NWP is on the drawing board. Early this month, NWP announced that it was considering buying a stake in GS Realty from Kee.

However, the current boardroom tussle may cast doubt on the deal, especially when it involves a related-party transaction.

The memorandum of understanding signed between NWP and Kee is valid for three months from May 6.

Kee says that the transaction may involve about 7.4% of his 24.55% shareholding in GS Realty. Yew and Mak own the remaining 51% and 24.45% in the firm.

“We want to bring profit-making GS Realty into NWP as part of the transformation plan.”

A CTOS search shows that GS Realty reported a net profit of RM3.07 million for the year ended March 31, 2020 (FY2020). There were no filings made for FY2019. Net profit for FY2018 and FY2017 came in at RM680,939 and RM9.09 million respectively.

GS Realty has offices and representatives throughout Malaysia, and partners in Asean countries.

NWP is also involved in the trading of motorbikes and provision of after-sales services. Its first showroom and service centre in Petaling Jaya was opened in mid-February this year. The company expects the motorcycle business to contribute between RM6 million and RM7 million to its top line this year.

To further diversify its income stream, NWP has set its sight on the trading of seafood and controlled items, according to Kee.

“Besides catering to the local market, we aim to export to China, the Middle East and the US.”

Having slid 30% year to date, NWP’s share price closed at 17.5 sen last Friday, giving it a market capitalisation of RM87.59 million.  

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