This article first appeared in The Edge Malaysia Weekly on October 31, 2022 - November 6, 2022
Shareholders of Industronics Bhd are likely to be wondering what is going on at the company, and what direction its management is taking.
In early July, Industronics proposed a cash call, issuing 875.06 million rights shares on a two-for-one basis, at eight sen per share, raising up to RM70 million.
The rights issue was aimed at raising fresh capital to repay advances made by a substantial shareholder, to purchase inventories for its luxury watch trading business which saw it shift from an online model to include physical stores, and to expand its existing electronics and system integration business.
Barely a month later, in early August, the company announced that it had entered into a memorandum of understanding (MoU) with China’s State Development & Investment Corp (SDIC) to set up a collaboration on asset management and capital market services.
The bigger picture of this MoU is that Industronics is looking to acquire a 10% stake in Hong Kong-based stockbroking, asset management and credit firm, Bluemount Financial Group Ltd.
Another part of the plan entails Industronics setting up an investment bank in Labuan and working with regulators on compliance-related issues, while SDIC will provide access to funding of an estimated US$1 billion (RM4.72 billion).
Part of the plan appears to entail Industronics subsequently acquiring or collaborating with a local stockbroking firm in Malaysia to expand its offerings in capital markets services.
Considering Industronics has had 10 successive financial years of losses, it would be a fantastic turnaround for the company, if and when these grand plans do pan out. But with its stock closing last Friday at 7.5 sen — down 61% from a year ago— and Industronics’ market capitalisation at about RM35 million, the market doesn’t seem sold on its grand plans.
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