THIS has been a busy month for Omesti Bhd. Just last week, the software and application developer announced a 10% private placement to third-party investors, and market talk has it that the potential shareholders being approached are “interesting”.
Sources familiar with the matter tell The Edge that several potential shareholders have already been met and the interest they are showing is encouraging. In line with the rumours, Omesti’s stock gained 11 sen or 23% to hit a six-month high of 58 sen last Thursday before shedding 3.5 sen to end trading at 54.5 sen.
Overall, Omesti shares have performed well, gaining 22% year to date.
“The [placement] exercise is not to raise funds but more to bring in a strategic shareholder or partner. It has not been firmed up yet,” a banker involved in the deal says.
For illustrative purposes, a placement of 43 million shares at 50 sen apiece could bring in about RM21.5 million for Omesti, and give the new shareholder just over 9% equity interest, that is if the entire 10% placement is taken up by the same individual.
Undertaking share placements is not something new for Omesti. In mid-July last year, the company issued 38.98 million shares at 50 sen apiece, raising RM19.49 million. The exercise was completed on Aug 24 last year. The bulk of the proceeds from the placement was used to repay bank borrowings, as working capital for general business purposes and for capital expenditure.
Nevertheless, for “interesting” shareholders to bite, there must be something in Omesti.
For its first three months ended June 30, the company suffered a net loss of RM460,000 on revenue of RM89.19 million. In the previous corresponding period, the net loss was RM3.57 million on revenue of RM94.96 million.
Omesti highlights in its notes accompanying its financial statements that it had turned around from a loss before tax of RM3.9 million in the previous corresponding quarter to a profit before tax of RM2.42 million in the quarter under review “mainly due to the higher gross profit margin recorded by the Business Performance Services segment”.
As at June 30, Omesti had cash and bank balances of RM56.5 million while on the other side of the balance sheet, it had short-term debt commitments of RM92.8 million and long-term borrowings of RM14.88 million.
The company’s top three largest shareholders are Datuk Mah Siew Kok with 19.06% equity interest or 81.13 million shares, Monteiro Gerard Clair with 17.84% or 76.89 million shares and Datuk Seri Thong Kok Khee, who, via his flagship Insas Bhd, holds an 11.3% stake or 48.66 million shares.
While he is not Omesti’s largest shareholder, Thong and his diversified holding company, Insas, have been generating considerable interest lately.
Insas’ businesses include stockbroking under M&A Securities Sdn Bhd, property development under Insas Properties Sdn Bhd, car rental under Insas Pacific Rent-A-Car Sdn Bhd, a 43% stake in the Melium group — a fashion retailer with brands such as Etienne Aigner, Hugo Boss, Christian Lacroix, Cole Haan, Ermenegildo Zegna, Furla, Mauboussin and Stuart Weitzman — and a controlling stake in Dome Café, among others. Yet another business is moneylending and project financing under Insas Credit & Leasing Sdn Bhd.
There are also a number of listed companies under Omesti and Insas, some of which have seen interesting movements and changes.
Earlier this month, Insas surfaced in Diversified Gateway Solutions Bhd (DGSB) with a 19.91% stake or 270 million shares, which it had acquired from Omesti for RM12.82 million. This means Insas now has a more direct shareholding as opposed to through its 11.3% stake in Omesti.
Omesti is now left with a 22.06% stake or 299.16 million shares in DGSB. It also has a 57.99% stake in another listed company, Microlink Solutions Bhd, and 13.26% equity interest in construction outfit Ho Hup Construction Co Bhd.
While DGSB is in the red, the other two are profitable entities. Ho Hup registered a net profit of RM23.22 million on revenue of RM68.99 million in its half year ended June 30 while Microlink made a net profit of RM4.79 million on revenue of RM58.02 million for its year ended June 30.
Nevertheless, it is not known what is being planned for DGSB, whose core business is computer hardware. For its first quarter ended June 30, the company suffered a net loss of RM173,000 on revenue of RM15.02 million.
While DGSB’s financial footing seems unsound, it is interesting that Datuk Tan Seng Chuan — the founder and executive vice-chairman of Inari Amertron Bhd, an electronics manufacturer and semiconductor packaging company — was recently appointed an executive director.
Through Insas and directly, Thong is the largest shareholder of Inari Amertron with 20.34% equity interest.
Tan’s move into DGSB in an executive position surprised many as the company had a small market capitalisation of RM115.2 million at its close of 8.5 sen last Thursday. In contrast, Inari Amertron, which ended trading last Thursday at RM2.85, had a market capitalisation of RM5.79 billion.
For its year ended June 30, Inari Ametron registered a net profit of RM227.85 million on revenue of RM1.18 billion. Its stock has gained almost 75% year to date.
“Something must be brewing in order for Tan to come into DGSB,” comments a market watcher.
Insas was a shareholder of Inari Ametron even before the latter’s listing in July 2011, and was a 44% shareholder before the IPO.
Meanwhile, Thong has 25.05% equity interest in Insas while his brother Datuk Thong Kok Yoon has 11.19%.
For its year ended June 30, Insas registered a net profit of RM180.89 million on revenue of RM347.94 million. In the year under review, the company had an earnings per share of 27.28 sen. Its net assets per share for the quarter ended June 30 stood at RM2.34, which was considerably higher than its share price of 93 sen last Thursday.
As at June 30, Insas had deposits with licensed banks amounting to RM461.09 million, and cash and bank balances of RM117.29 million. It had short-term debt commitments of RM288.59 million and long-term borrowings of RM21.87 million. Retained earnings stood at RM733.94 million.
Over the past year, Insas’ shares have gained more than 34%, and at its close last Thursday, the company had a market capitalisation of RM616.6 million.
Thong is a low-key businessman and did not want to be quoted for this article. Nevertheless, excitement about whatever he is planning has sent Insas’ stock up.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
SaraInvestment
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Posted by SaraInvestment > 2017-11-29 09:41 | Report Abuse
I've told u guys i'll be staying here until it reach my target price, cheers