This article first appeared in The Edge Malaysia Weekly on December 18, 2023 - December 24, 2023

WHILE happy with the climb in its share price, which hit a six-year high, minority shareholders of ILB Group Bhd are likely to be wondering what will transpire next, given the slew of changes in the company’s shareholding.

Agrobulk Holdings Sdn Bhd is currently the single-largest shareholder of the logistics firm, with 34.96 million shares, or a 18.5% stake.

On Nov 30, Agrobulk bought 17 million ILB shares, or just under 9% equity interest, from Etern Group (HK) Co Ltd. About a week later, ILB executive vice-chairman Tee Tuan Sem sold 17.96 million shares in ILB to Agrobulk, halving his stake to slightly below 8%, from 17.48% previously.

Tee, who had been the CEO since 2001, was re-designated as executive vice-chairman in January. He is the third-largest shareholder after Agrobulk and BT Invest Cap Ltd, which holds an 11.2% stake. Tee did not reply to queries from The Edge regarding the changes in shareholding.

ILB’s share price soared to 76 sen — the highest level since August 2017. The stock, which is hardly traded, gained 77% since July 1 to close at 72.5 sen last Thursday.

“There must be something brewing … but no one knows what Agrobulk’s plans are. It’s all a guessing game for now, but Tee is now in his 70s, so, he is likely to want to take things easy,” says a source familiar with ILB.

Judging by its financials, Agrobulk appears to be a bigger company than ILB. It chalked up profit after tax of RM192.32 million for the year ended Dec 31, 2022, on revenue of RM3.36 billion. It had RM2.15 billion in total assets and RM1.28 billion in total liabilities as at end-2022.

On the other hand, ILB suffered a net loss of RM607,000 from RM42.28 million in revenue for its nine months ended Sept 30. For the corresponding period a year ago, it suffered a net loss of RM11.12 million on revenue of RM14.26 million.

ILB explained in its results announcement that the higher revenue was driven mainly by its solar-related business. Financial losses aside, the company has a relatively clean balance sheet, with a net cash position. Such entities are usually ideal takeover targets.

ILB’s balance sheet as at end-September showed its cash and cash equivalents were RM26.14 million, excluding deposits of RM31.36 million with a maturity period of more than three months and a RM3.35 million deposit pledged to the banks.

The company’s long-term borrowings amounted to RM19.71 million and its current liabilities were pegged at RM4.83 million. Its net asset per share was at RM1.16.

Despite its relatively low debt, for the nine months in review, ILB paid RM5.43 million in finance costs, up from RM1.32 million a year ago.

Nonetheless, the company is venturing into the solar energy industry to fuel future earnings growth.

“With ILB Group’s proven track record in implementing and operating solar projects, coupled with the improved cash flow, we are well positioned to scale up our solar businesses to generate higher sustainable earnings for ILB Group,” it says in the results release.

Agrobulk’s crown jewel, in which it holds a 81.55% stake, is Agromate Holdings Sdn Bhd, a well-known name in the plantation and agricultural industry. Other shareholders of Agromate are Ideal Force Sdn Bhd, which holds 13.45%, and AG Cap Sdn Bhd, with 5%.

For its financial year ended Dec 31, 2022, Agromate registered profit after tax of RM209.35 million on RM3.35 billion in revenue. As at end-2022, Agromate’s total assets stood at RM2.02 billion against total liabilities of RM1.25 billion. The company had retained earnings of RM566.19 million.

Agromate was founded by the patriarch of the Tang family, the late Raymond Tang Quee Huang, in 1979.

Tang & Co Sdn Bhd is the controlling shareholder of Agrobulk, with a 61.42% stake. Other substantial shareholders are Loo Tung Hua & Sons Holdings Sdn Bhd, with 11.25%; Tan Chai Swan, 6.04%; Leow Lay Lan, 4.84%; and shareholders who hold up to 1.42% each, according to the filing to the Companies Commission of Malaysia.

At Tang & Co, the majority shareholder is Lee May Lin, with 80% equity interest, while Tang Weihann and Tang Shyaan Yng hold 10% each. Interestingly, both Weihann and Lee have the same address in Tropicana Golf & Country Resort in Petaling Jaya.

Meanwhile, Tang & Co’s board member Edward Tang Ming Yng is CEO of Agromate.

According to its official website, Agromate has a presence in about 30 countries.

Besides the recent purchase of the stake in ILB, another listed company that Agrobulk holds a substantial stake in is Sabah-based plantation firm Golden Land Bhd, formerly known as Tanah Emas Corp Bhd.

Agrobulk bought into Golden Land 11 years ago. It is the second-largest shareholder, with a 25.39% stake, after Yap Phing Cern, who holds a 35.35% stake.

Golden Land is not performing as impressively as Agromate. For its first financial quarter ended September, Golden Land incurred a net loss of RM6.87 million on RM23.87 million in revenue. The plantation firm has suffered six straight years of losses.

Will the emergence of a new substantial shareholder open a new chapter in the history of ILB, which once prospered in the bonded warehousing business in China? Minority shareholders are most likely eager to know. 

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