This article first appeared in The Edge Malaysia Weekly on December 28, 2020 - January 3, 2021
WHO would have thought that there would be a global pandemic in 2020? Covid-19 was an unforeseen risk that impacted many — some for the better, some for the worse.
The return of the retail investor
Retail investors, no doubt, have been a major reason for the stock market rally in 2020. Soon after the heavy sell-off triggered by the oil price slump in March, retail participation has been picking up traction, attributable to the six-month loan moratorium measure as well as the work-from-home model when the Movement Control Order began on March 18.
Of course, the low-interest-rate environment created by the easy monetary policy response to the pandemic also prompted investors to look for investments with better returns.
Compared with barely 24.5% in 2019, retail participation was exceptionally high at 45.9% in the first half of August, owing to ample market liquidity.
This was a phenomenon not seen on the local bourse for over a decade. Note that retail participation peaked at 59% in 1999, and dipped to a low of 21% in 2016.
A record-breaking trading volume of 27.8 billion shares was recorded on Aug 11.
Stocks favoured by retail investors included those from the industrial products and services, healthcare, technology, consumer and energy sectors.
Looking at the profile of retail investors, 36% are millennials, 61% are above 40 years old, and 3% belong to other groups (below 25 years old, nominee accounts and so on), according to HLIB Research. Gender-wise, males make up 71% of retail investors. By ethnicity, the Chinese comprise 70% of retail investors while bumiputeras are close to 30%, from just 20% two years ago.
No doubt, the advent of mobile trading platforms also spurred young and new investors stuck at home to tap into the market. E-broker Rakuten Trade, for example, saw new account openings triple to 145,000 by end-October from the start of the year.
As at Dec 11, retail investors were net buyers on Bursa Malaysia to the tune of RM13.14 billion, higher than local institutions’ RM11.16 billion, according to MIDF Research.
Meanwhile, foreign investors’ net selling has reached RM24.8 billion. — By Lee Weng Khuen
Tan Sri Dr Lim Wee Chai
Founder and executive chairman
Top Glove Corp Bhd
Well, this is an obvious one, isn’t it? Prominent glove tycoon Tan Sri Dr Lim Wee Chai saw the company he founded in 1991, together with his wife Puan Sri Tong Siew Bee, becoming the biggest direct beneficiary of the Covid-19 pandemic, before his factories in Klang became the country’s largest coronavirus cluster in the later part of the year.
Lim is ranked 14th on Forbes’ 2020 Rich List for Malaysia. The superb share price performance of Top Glove Corp Bhd this year has greatly increased his fortunes. His current net worth has ballooned to US$4.3 billion (or RM17.44 billion), as compared to US$1.05 billion (or RM4.263 billion) about a year ago.
As investors rushed to buy rubber glove stocks, Top Glove saw its market capitalisation more than quadruple to RM51.4 billion on Dec 15 this year, up from RM12.03 billion on Dec 31, 2019.
Notably, Lim had in September declared publicly that Top Glove’s market capitalisation could overtake that of Malayan Banking Bhd — the country’s biggest bank by assets — to become the largest listed company on Bursa Malaysia by end-September or early October.
His bold prediction did not come true.
While Top Glove remains highly profitable — recording its highest quarterly net profit of RM2.38 billion in the first quarter ended Nov 30, 2020 (1QFY2021) — the group has been under immense pressure over the last few months.
First, Top Glove’s dormitories in Meru, Klang, were identified as a new epicentre of infections, as the majority of those affected in the Teratai Cluster were the company’s foreign workers.
As a result, an Enhanced Movement Control Order was imposed at its dormitories, while its factories in Klang were ordered to close in stages to facilitate Covid-19 screening for over 5,000 employees.
To make things worse, Top Glove is also under scrutiny for the way it handles the workers’ housing and welfare issues. The group was urged by the government and non-governmental organisations to improve the living quarters and living conditions of its foreign workers.
In December, the Ministry of Human Resources opened 19 investigation papers against six companies related to Top Glove, following enforcement operations in five states, namely Perak, Kedah, Kelantan, Negeri Sembilan and Johor, amid the spread of Covid-19 in the Teratai Cluster.
On Dec 12, Top Glove reported the death of a 29-year-old worker from Nepal due to Covid-19 pneumonia with lung fibrosis.
Meanwhile, it was also reported that Top Glove had fired a whistle-blower who took two photos in May of fellow employees crowding into a factory before the virus outbreak.
On the corporate front, Lim also hogged the limelight as he mopped up shares of Top Glove at a time when the Employees Provident Fund continued to trim its stake in the company.
Besides Lim, two other parties that were also mopping up shares in the world’s largest rubber glove maker on the open market were Tropicana Corp Bhd and Top Glove itself. Lim is also the chairman and substantial shareholder of Tropicana. — By Liew Jia Teng
Datuk Eddie Ong Choo Meng
Non-independent non-executive director of Rubberex Corp (M) Bhd
Executive director of Hextar Global Bhd
Datuk Eddie Ong Choo Meng emerged as the new major shareholder of Rubberex Corp (M) Bhd with a 26.68% direct stake on Feb 28, before raising it to 32.5% as at April 16. It is learnt that he acquired the shares at 83.5 sen each.
The 42-year-old is executive director of chemical firm Hextar Global Bhd and non-executive director of industrial products supplier SCH Group Bhd. He was appointed to the board of Rubberex on April 23.
Ong is very much a chemical businessman as he runs Hextar Holdings Sdn Bhd, the country’s largest pesticide producer, founded by his father Datuk Ong Soon Ho.
In 2017, father and son took over locally-listed agrochemical producer and competitor Halex Holdings Bhd. Subsequently, Halex was renamed Hextar Global Bhd, following a major business injection by Hextar Holdings.
Back to Rubberex, the company was only valued at RM138.7 million on Jan 2, but is now a billion-ringgit company with a market capitalisation of RM1.32 billion.
The growth in Rubberex’s market capitalisation was driven not only by its strong share price performance, but also its expanded share base following a 10% private placement exercise, which was completed in the middle of May. Its trading liquidity was further boosted by a bonus issue exercise, which was completed in October.
On June 22, Rubberex revealed that Ong — with no experience in glove manufacturing — and his 90%-held Hextar Rubber Sdn Bhd had triggered an unconditional mandatory general offer (MGO) on the company.
Ong and Hextar Rubber raised their collective interest in Rubberex from 29.55% to 50.18% — above the 33% MGO threshold — after acquiring an additional 20.63% stake from Seng Sheng Enterprise Sdn Bhd, Datuk Seri Chiau Beng Teik and Peh Lian Hwa, via direct business transactions.
Interestingly, these shares were transacted at RM1.80 per share, representing a significant 38.4% discount from Rubberex’s closing price of RM2.92 on June 22.
The joint offerors were then obliged to extend an MGO to acquire all the remaining shares at RM1.80 per share, cash. But this was merely a technical GO as any logical shareholder would not accept the offer at RM1.80, which was a steep discount to its market price.
As at Nov 27, Ong remained as the controlling shareholder of Rubberex with a 50.09% stake, valued at RM811.5 million. — By Liew Jia Teng
Tan Sri Tony Fernandes and Datuk Kamarudin Meranun
Co-founders
AirAsia Group Bhd
“We would not harm the very companies that we spent our entire lives building up to their present global status,” declared Tan Sri Tony Fernandes and Datuk Kamarudin Meranun in February.
The statement followed their denial of all allegations of wrongdoing or misconduct in relation with the Airbus SE corruption charges, which implicated the two executives from the low-cost carrier and thrust them into the spotlight in February.
In March, BDO Governance Advisory Sdn Bhd, appointed by the board committee of AirAsia Group Bhd and AirAsia X Bhd (AAX) to assist in undertaking an independent review on corruption allegations related to the Airbus scandal against Fernandes and Kamarudin, gave the duo the all-clear.
Following that, Fernandes and Kamarudin were reinstated to their posts as group CEO and executive chairman of AirAsia respectively.
But just as the fog cleared for the co-founders, the Covid-19 pandemic hit the region in March, putting the brakes on travel not just internationally, but locally as well, hitting AirAsia Group’s earnings severely in the blink of an eye.
The group has two airlines: AirAsia, whose focus is on the Southeast Asian region as well as local Malaysian flights, and AAX, which focuses on mid-long haul travel.
Both AirAsia and AAX — like all airlines globally — were not spared from the fallout of Covid-19.
For its cumulative nine-month period, AirAsia’s net loss came in at RM2.66 billion compared to a net profit of RM80.72 million in the previous corresponding period, while revenue shrank 68% to RM2.87 billion from RM9.09 billion a year ago.
AAX saw its net loss widen for the nine months ended Sept 30, 2020, to RM1.16 billion, about three times the RM393.67 million a year earlier as revenue fell 66% to RM1.08 billion.
Building the group was no walk in the park and the co-founders did put AirAsia on the regional map, disrupting the airline industry as it introduced a low-budget carrier model so that “everyone can fly”.
AirAsia opened up routes within the region, providing consumers an affordable option to travel.
From an airline with two aircraft flying six routes in Malaysia in January 2002, AirAsia grew to cover over 152 destinations in 22 countries in the span of 17 years in 2019, prior to the Covid-19 outbreak. Up to 2019, AirAsia served the region’s 3.3 billion population from 24 hubs in six countries — Malaysia, Thailand, Indonesia, the Philippines, India and Japan.
Despite the dire situation facing all airlines globally, Fernandes and Kamarudin are not throwing in the towel. Instead, Fernandes, the face behind the brand, was quick to lead the charge, pivoting the group into food and grocery, as well as accelerating its pace into fintech as earnings from travel came to a standstill.
“We will work day and night to bring back every all-star (in reference to AirAsia staff) and we will come back stronger. We will fight all the way to keep the jobs that we have created,” a determined Fernandes said on Instagram in October.— By Joyce Goh
Datuk Lim Kian Onn
Deputy chairman
AirAsia X Bhd
Datuk Lim Kian Onn had planned to retire this year, but the Covid-19 pandemic put a stop to his plans. In June, he had passed the baton to his son, Gareth Lim Tze Xiang, at ECM Libra Group Bhd.
Effective June 1, Gareth was appointed CEO and redesignated as executive director while Kian Onn, who was managing director, became a non-independent and non-executive director. He remained a director of AirAsia X Bhd (AAX), in which he is an original shareholder with a small stake, but he did not hold an active management role.
Four months in, however, he was thrust into the spotlight when he emerged to take charge of a controversial debt restructuring proposed for AAX. The airline wants to reconstitute RM63.5 billion worth of debts, including future lease rentals, aircraft purchase commitments and advanced ticket sales, into a principal amount of up to RM200 million. Kian Onn was redesignated as deputy chairman, from director, in October, to lead the colossal restructuring which depends on the support of creditors, a few of whom are objecting to the massive haircut they are being asked to take.
AAX — whose business model is anchored on mid- to long-distance flights outside Malaysia — has been hit hard by Covid-19 as intercountry travel came to a grinding halt for most of this year.
As at Sept 30, AAX’s cash pile had declined to RM138.82 million, down from RM252.04 million in the preceding quarter.
For the nine months ended Sept 30, 2020, AAX’s net loss widened to RM1.16 billion, about three times the RM393.67 million a year earlier as revenue fell 66% to RM1.08 billion.
The writing was on the wall — AAX’s days were numbered and, clearly, something had to be done to try to save the airline.
Saving AAX in the current turbulent conditions seems like a herculean task, but that is not stopping Lim and the AAX team from giving it a go in hopes that the airline can fly high again.
A chartered accountant, he had worked at the Hong Leong Group and founded the Libra Capital Group in 1994 and co-founded the ECM Libra Group in 2002.
Kian Onn is an old hand when it comes to restructuring exercises. The seasoned dealmaker’s last restructuring was 18 years ago, when he led the restructuring of Technology Resources Industries Bhd and Celcom — one of the largest such exercises at that time, right after the Asian financial crisis.
Can he pull it off again with AAX? — By Joyce Goh
Datuk Seri Chiau Beng Teik
Deputy group executive chairman of Chin Hin Group Bhd
Former substantial shareholder of Rubberex Corp (M) Bhd
Datuk Seri Chiau Beng Teik surfaced as a substantial shareholder of Rubberex Corp (M) Bhd with a stake of 13.63% on May 15. It was reported that his entry cost was around RM1.23 per share.
Chiau is deputy group executive chairman of Chin Hin Group Bhd and non-executive chairman of Chin Hin Group Property Bhd (CHGP).
The 58-year-old, who started out as a building materials trader in Kedah in the 1970s, today heads a mini business empire and has major equity stakes in Chin Hin, CHGP and Solarvest Holdings Bhd.
Chiau and his eldest son Haw Choon also took over a company, Boon Koon Group Bhd, a Penang-based manufacturer of rebuilt commercial vehicles, in 2017. Boon Koon was then renamed CHGP to better reflect its corporate identity after it diversified into property development.
Notably, Chiau, who had already purchased some minority stakes in Rubberex earlier, was the sole subscriber of the private placement shares, whose issue price was fixed at RM1.23 each in May. Assuming that he acquired those shares also at RM1.23, his total entry cost would be about RM46.51 million.
But what was perplexing was that Chiau was willing to let go of his Rubberex shares at RM1.80 per share, which was a steep discount to the market price, to Datuk Eddie Ong Choo Meng and his private vehicle in June. — By Liew Jia Teng
Captain Izham Ismail
Group CEO
Malaysia Airlines Bhd (MAS)
Entering his third year as group CEO of MAS, Captain Izham Ismail had plenty of unfinished business to pursue. This included steering the national carrier to profitability after two failed attempts under the five-year MAS Recovery Plan, which was conceived in 2014. It missed its target to return to the black for the first time in 2018; the second in 2019.
Under the Long-Term Business Plan (LTBP) launched by Izham in early 2019, MAS was seen to be making headway both operationally and financially, with 2019’s net income after tax coming in 18% ahead of target compared with 2018, while revenue grew 7% year on year.
The unprecedented lockdown across the globe, which forced all airlines to halt operations and ground almost their entire fleets for most of March to June this year, however, derailed the recovery momentum.
In March, the carrier warned that it was at risk of going bust, and moved to cut costs by offering its 13,000 employees the option of taking no-pay leave, introducing pay cuts for its management team, seeking payment deferrals and renegotiating contracts with suppliers.
Still, it was not enough. On Oct 2, the carrier said it was seeking to restructure RM16 billion of its debts.
All eyes are now on Izham and MAS as they try to convince creditors and lessors to accept a haircut on their outstanding debt and reach a commercial agreement this month. Izham told The Edge in an Oct 12 interview that if the creditors and lessors decide against backing the debt-restructuring plan, he would have no choice but to shut the carrier down and operate under sister airline Firefly’s Air Operator’s Certificate to ensure the business continuity of the national carrier.
Attention is also on sole shareholder Khazanah Nasional Bhd shoring up the carrier’s cash as liquidity dries up, when Izham will unveil a revised LTBP and whether a possible merger with rival AirAsia Group Bhd will actually materialise this time. — By Kang Siew Li
Datuk Mohd Shukrie Mohd Salleh
Group CEO
Malaysia Airports Holdings Bhd (MAHB)
The former CEO of Pos Malaysia Bhd officially took charge as group CEO of MAHB in March, after two months in an acting capacity. He replaced Raja Azmi Raja Nazuddin, whose resignation came as a surprise after just one year on the job.
Prior to that, Datuk Mohd Shukrie Mohd Salleh, 46, served as MAHB’s chief operating officer (COO), having joined the group in May 2019 from AirAsia Group Bhd. Hopes of him finally restoring the often testy relationship between MAHB, under his predecessors, and its largest tenant AirAsia, were high. Those hopes were boosted by AirAsia group CEO Tan Sri Tony Fernandes’ praise of Mohd Shukrie when the latter was appointed COO of MAHB.
However, that was not to be. In October, MAHB launched a lawsuit against AirAsia’s long-haul affiliate AirAsia X Bhd (AAX), seeking RM78.16 million in outstanding aeronautical charges, as well as for the removal of its classification as an unsecured creditor under AAX’s proposed debt-restructuring scheme.
MAHB had also threatened to take civil and criminal breach of trust actions against the directors of AAX in their personal capacity for the non-collection of passenger service charges. The board of AAX has denied this.
Mohd Shukrie took the reins of MAHB during a tumultuous period, which saw air traffic coming to a near standstill as the Covid-19 outbreak decimated the aviation industry.
The group swung to a net loss of RM431.17 million for the nine months ended Sept 30, 2020, from a net profit of RM507.53 million a year ago, owing mainly to a significant 58.6% y-o-y decrease in revenue, in tandem with a 65.5% contraction in passenger movements due to travel restrictions because of the pandemic.
To conserve cash, MAHB cut capital expenditure for 2020 by 82% to RM320 million from the RM1.8 billion previously planned, putting on hold its airport expansion plan.
Going into 2021, Mohd Shukrie faces the unenviable task of returning the group to financial health, finalising its four new operating agreements with the government and the implementation of a regulated asset base framework. — By Kang Siew Li
Tan Sri Lim Kok Thay
Chairman and chief executive of Genting Bhd and Genting Malaysia Bhd
Executive chairman of Genting Singapore Ltd
Chairman and CEO of Genting Hong Kong Ltd
Many, including Genting group boss Tan Sri Lim Kok Thay and his late father Tan Sri Lim Goh Tong, who founded the gaming empire, would not have imagined that the roulette wheels would stop spinning and no cards would be dealt at the gaming tables for more than three months.
All the casinos owned by the Genting group in six countries were shut down concurrently for months due to the respective governments’ measures to curb the Covid-19 pandemic. This was unprecedented in the history of the global gaming industry. The hilltop Genting casino has only been closed once — for half a day when Goh Tong died.
Geographic diversification is not an effective mitigation in this unprecedented global outbreak.
Genting Hong Kong Ltd (Gent HK), Asia’s largest cruise operator, fell victim to the pandemic, although its sister companies managed to survive on the buffers that were built during their heyday.
Gent HK had to temporarily suspend payments to creditors to preserve cash in order to sustain itself as a going concern. This drew unwanted attention to Kok Thay.
Some view that his venture into the cruise business has been a rough journey for over two decades. That investment has yet to prove a good bet.
The unfortunate scenario buried the positive news that the Genting group, through Genting Singapore Ltd, had been invited to submit its bid for a casino licence in Japan.
Adding to his woes was news from Hong Kong that sparked concern that other companies in the Genting group were being used to salvage Gent HK, given its past track record.
In 1999, Genting Malaysia Bhd (GENM), which was then known as Resorts World Bhd, participated in a massive recapitalisation exercise of the cruise operator, then known as Star Cruises Ltd. Only a year ago, GENM emerged as a white knight, buying a 46% stake in cash-strapped Empire Resorts Inc from Kok Thay and injecting fresh capital into it after the acquisition. The equity stake was sold to GENM for US$128 million cash. — By Kathy Fong
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