KUALA LUMPUR (Nov 2): Agrochemical businessman Datuk Eddie Ong Choo Meng has emerged as Ipoh-based transport terminal and bus operator Perak Transit Bhd’s second largest shareholder with a 6.923% stake.

In a filing with Bursa Malaysia on Monday (Oct 31), Perak Transit announced that Ong — the CEO of Hextar Group — had surfaced as its new substantial shareholder, after acquiring a block of 13.726 million shares last Friday. The transacted price was not disclosed.

Following the acquisition, the 44-year-old savvy investor now owns a total of 48.4 million shares or close to a 7% stake in the company.

Notably, shares of Perak Transit have jumped by over 12% from 95 sen last Friday. The stock closed 8.5 sen or 8.6% higher at a record RM1.07 on Tuesday (Nov 1). It earlier hit an intraday high of RM1.13 in morning trade, up 15% from Monday’s closing price of 98.5 sen.

At RM1.07, the company has a market capitalisation of RM759.17 million. The counter is currently trading at a historical price-earnings ratio of 12 times.

When contacted, Perak Transit founder and managing director Datuk Seri Cheong Kong Fitt said he believes Ong had accumulated the shares in the open market last Friday, as the founding family did not offload any share to the Hextar boss.

“Perak Transit undertook a 10% private placement exercise in May, and it was then that Eddie took up about 4% stake in our company. Subsequently, he mopped up more shares last Friday,” he told The Edge CEO Morning Brief over the phone.

Cheong went on to say that he wouldn’t be surprised if Ong continues to raise his stake in Perak Transit.

“Overall, we view it positively, as Eddie has shown his confidence in Perak Transit. We are feeling comfortable with the situation, and we do not feel threatened by him raising stake in our company. It’s not a hostile takeover or something like that,” he stressed.

In fact, said Cheong, when Ong buys more shares, Perak Transit’s stock price might be able to perform better, although that also means less shares in the open market.

“Like it or not, many retail investors would take profit after they see some gains. So when they sell, the momentum is lost. It’s a different story when we have a long-term shareholder like Eddie, who is now our company’s second largest shareholder,” he observed.

Cheong is the single largest shareholder of Perak Transit, with a direct stake of 17.42% and an indirect stake of 13.6%, through CBS Link Sdn Bhd (8.35%) and his wife Datin Seri Lim Sow Keng (5.25%).

The 62-year-old Cheong acknowledged that he has known Ong for quite some time, even before the private placement exercise, but there have not been much business dealings between them until recently.

He further said that there are some synergies to be derived between Perak Transit and the Hextar group of companies.

“For instance, their KIP REIT owns some shopping malls, including AEON Mall Kinta City in Perak. We could build transport terminals and bus stations, or even offer bus services at their properties.

“Don’t forget, Perak Transit is also currently leasing and renting out the commercial portion of our terminals. Who knows, maybe in the future, we could collaborate with KIP REIT. There is a lot of potential and business opportunities to be explored,” Cheong said.

A retail-focused property trust, KIP REIT is 21%-owned by Ong, held through Hextar Rubber Sdn Bhd.

While there has been rising investor interest in Perak Transit lately, Cheong highlighted that the founding family members are still the major shareholders of the company, and they do not have any intention to sell their shares.

“So far, Eddie has not requested a board seat in Perak Transit. He already controls nine PLCs, and many other privately-owned companies. I think he is too busy to join our board. Most likely, he will just be a purely financial investor. But one thing is for sure, my family members and I do not intend to exit the company,” he added.

In an exclusive interview with The Edge in August, Ong revealed that he and his family control nine public-listed companies (PLCs) on Bursa Malaysia. They also have minority stakes in another 30 PLCs.

It will be interesting to see if Perak Transit would eventually become Ong’s 10th PLC.

In a brief reply, Ong told The Edge CEO Morning Brief that he will continue to buy into Perak Transit, as he sees the company’s shares are being undervalued.

“I intend to work together with the current owners and partners to achieve a greater height for the company. Transport is a long-term business, and if it can run well, it will be a good business and we will be able to help the society as well,” he said.

When pressed further on whether he intends to take control of Perak Transit, Ong declined to comment.

“For now, our plan is to have a bigger stake in the company and work with the current management,” he said.

Meanwhile, as Perak Transit’s market capitalisation breached the RM800 million mark on Tuesday morning, Cheong said the next target is to achieve RM1 billion within the next three- to six months.

“Of course, share price performance is beyond our control. What we can do is to focus on the fundamentals and continue to deliver good results for our shareholders,” he added.

Perak Transit operates two major terminals in Perak, with a combined net leasable area (NLA) of 338,071 sq ft. The group also operates more than 150 buses plying local routes.

Perak Transit’s maiden IPTT is the three-level Terminal Meru Raya, which has a NLA of 51,864 sq ft, and is Ipoh’s only express bus terminal. The group’s second terminal is the 11-level Kampar Putra Sentral, built at a cost of RM128 million, which commenced operations in September 2020. With a larger NLA of 286,207 sq ft, it houses a bus terminal and a commercial hub.

Perak Transit’s third terminal, Bidor Sentral, which will be built at a cost of RM135 million, commenced construction in FY21 and is slated for completion in FY23. The group’s fourth terminal is expected to be Terminal Tronoh, which it targets to commence construction in FY23.