This article first appeared in The Edge Malaysia Weekly on October 9, 2023 - October 15, 2023

COULD a new major shareholder from Sarawak turn Main Market-listed Bina Puri Holdings Bhd into an “East Malaysian play”?

The Tee family, who controls the loss-making civil and building construction firm, believes the emergence of Kevin Chai Chan Tong will help reverse its fortunes and add value to the company given his experience and contacts, particularly in Sarawak.

“We need new people to come in to help us. We do not want any Tom, Dick or Harry to be our major shareholder. We prefer someone who can add value and contribute to our company,” group executive director Datuk Matthew Tee Kai Woon tells The Edge in an interview.

“As you can see, we have some new board members, including Kevin. Since then, Bina Puri has secured some new jobs in Sarawak.”

On July 28, Chun Yang Bina Puri (JV) Sdn Bhd — a joint venture between Chun Yang Construction Sdn Bhd and Bina Puri — secured a two-year subcontract worth RM72.85 million for a Public Works Department project in the Dalat district in Mukah, Sarawak.

“We are confident and hopeful of clinching more contracts in East Malaysia going forward. If everything works well, we should be able to turn around as early as the next financial year ending June 30, 2024 (FY2024),” says Matthew.

Bina Puri slipped into the red with a net loss of RM54.1 million in FY2020 during the Covid-19 pandemic. The loss widened to RM63.91 million in FY2021, RM74.75 million in FY2022 and RM121.24 million in FY2023.

The company blames its weak financial performance on its construction division, which incurred a loss before tax of RM107.1 million in FY2023, mainly due to the prolonged Russia-Ukraine war, which has been “a major blow” to its project in Moscow.

Absolutely Stocks data show Bina Puri to be a highly geared company, at 3.13 times, with a net debt of RM344.2 million.

Bina Puri currently has nine directors: Datuk Amar Jaul Samion (chairman), the Tee father and son, Tony Tan Cheng Kiat (founder director), Chai and Ooi Hee Kah (executive directors), as well as Lynette Lee Hui Zien, Terence Chee Su Kyun and Azman Bujang (independent directors).

It is worth noting that Jaul, 65, who joined the board on July 1, was the Sarawak state secretary — the highest-ranking civil servant in the state — from 2019 to 2022.

Having served more than 42 years as a career civil servant, Jaul held many important positions in various capacities, including the permanent secretary of various ministries, and central bodies such as the Sarawak Economic Planning Unit and State Financial Secretary’s Office. He is currently an adviser in the Sarawak Premier’s Office.

Bina Puri was founded by Tony Tan, a licensed builder, in 1975, before passing on the baton to his nephew Tan Sri Tee Hock Seng, who has been group managing director (MD) since 1994.

In 2003, Matthew — Hock Seng’s son and Tony Tan’s grandnephew — joined Bina Puri as special assistant to the group MD, before being appointed as executive director in 2009.

While Matthew and his father Hock Seng collectively own 18.22% of the company, their shareholding has been overshadowed by Chai, who in December 2022 emerged as the single largest shareholder of Bina Puri.

Chai acquired 423.29 million shares, or a 20.38% stake, in Bina Puri via a private placement and on the open market on Dec 23 last year. About a month later, he joined the board as executive director.

Subsequently on April 18, Chai subscribed for 377.91 million shares in a rights issue, raising his shareholding in the company to 23.77%.

Although the Tee family did not have shareholding control, they had always been the biggest shareholder of Bina Puri, with either Matthew or Hock Seng being the face of the company.

Therefore, Chai’s emergence with a bigger stake prompted market speculation that the Tee family may be losing control of the company. Matthew is quick to rubbish such claims.

“As far as management is concerned, I think it is mostly status quo. My dad is still the group managing director and I am still the group executive director,” asserts the 48-year-old, who stresses the importance of teamwork and maintaining a cordial relationship with the major shareholders.

“We are really working as a team. It’s not just about who is in the driver’s seat. So far, we get along and we work well together. We must make sure there is no power grabbing. The old ones should welcome the new ones, and likewise, the new ones should respect the old ones,” he remarks.

Little is known about Chai, other than the fact that he is a 35-year-old entrepreneur with more than 10 years of experience in the construction industry, property development and management as well as trading businesses, according to Bina Puri’s Jan 19 filing with Bursa Malaysia.

“He is a founder and owner of several private companies in Malaysia and his companies are involved in projects spanning both public and private sectors, East and Peninsular Malaysia,” the filing reads.

When asked, Matthew elaborated that Chai is a low-profile businessman and contractor from Kuching, Sarawak, who was introduced by an intermediary to Bina Puri. He then decided to take up a majority stake in the company via private placement and rights issue exercises.

M&A Securities Sdn Bhd was the principal adviser and placement agent for Bina Puri’s private placement exercise in December 2022, as well as its rights issue in April this year, while corporate finance advisory firm Newfields Advisors Sdn Bhd was the financial adviser.

Matthew insists that there are no plans for the Tee family to exit Bina Puri, at least not at this stage. “We must be responsible to other shareholders and our existing business partners, not just at the Bina Puri level, but also our other businesses and ventures at our subsidiaries’ levels.

“So, to answer your question, who is really running the show at Bina Puri, I would say we [the Tee family] are taking care of the businesses here in KL, whereas Kevin is focusing on the East Malaysia side.”

One Bina Puri project of note is a homestead development called The Valley@Bentong in Pahang, which it has been developing for the past 10 years. The Valley@Bentong, spanning 1,606 acres, has a total gross development value (GDV) of RM545.28 million.

The first two phases of the project — Kerau@The Valley, next to Sungai Kerau — were launched in 2017 and completed ahead of time in 2019. The third phase, named Sarang@The Valley, which has a GDV of RM161 million, was launched in 2021 but its take-up rate was only 30% due to the disruption caused by the Covid-19 pandemic. The fourth phase, which has an estimated GDV of RM93.5 million, is expected to be launched by the end of this year or the first quarter of next year.

Meanwhile, over at its 250-acre Karak Spring durian plantation, within the area of The Valley@Bentong, the group owns 5,000 Musang King durian trees.

For perspective, Bina Puri controls a 70% stake in Karak Land Sdn Bhd (KLSB), the developer of The Valley@Bentong. The remaining 30% is owned by Datuk Gan Yeew Tian and three other business partners.

The Valley@Bentong is the brainchild of Matthew, Datuk Ng Kee Leen — former director of Gamuda Bhd — and his son Ng Keong Wee.

Meanwhile, KLSB has a 50% stake in its durian plantation unit Karak Spring Sdn Bhd (KSSB), while the other half is jointly owned by Gan and Keong Wee.

Kee Leen, a director of KLSB and KSSB, says The Valley@Bentong has been receiving many enquiries lately and the group hopes to maintain its sales momentum. He is hopeful Sarang@The Valley will achieve a take-up rate of 60% by the end of next year.

Kee Leen says Bina Puri’s prime activity in The Valley@Bentong is to sell the agricultural land outright and not to sell properties. “Our idea is to create a homestead township by selling land to high-net-worth individuals, plantation investors and fruit farmers who are passionate about farming and agriculture, as well as those who want to build their farmhouses there.”

Gan, another director of KLSB and KSSB, recalls that Bina Puri planted its first durian tree in 2017, and expects the first mass harvest next year. “Within the next three to five years, we should be able to see a meaningful financial contribution and positive cash flow from the durian plantation business. Conservatively, at the KSSB level, we are talking about a gross profit of RM10 million a year from 2028/29 onwards. Give us another three to five years, we are hopeful that The Valley@Bentong will become another prominent farm town in Malaysia,” he says.

The share price of Bina Puri had declined 78% over the past five years to close at 3.5 sen last Friday, giving the company a market capitalisation of RM117.94 million. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.