Friday, August 24, 2012

Bonia: Am I seeing something weird? (Updated 26Aug)

Bonia is a company I Like. However I found something weird from its today's announcement. Read below:

Read the one in the red box, indicative price of RM1.80 to RM2.00. What is Bonia's price traded at now? RM2.59. Past few days assuming this news has been leaked it was trading around RM2.23.

I am thinking is there anything amiss in this deal?

I believe that the large chunk of shares that CSS, the controlling shareholder is looking at is from PNB. Look below where PNB is holding after selling major bulk of its shares over last few months. PNB has sold a lot of shares to my counting (there could be cross selling among the PNB controlled groups). Hence, PNB has reduced its holdings over the last few months. Who does PNB's group sell to, there are no reports. The selling was probably via direct trading and not through the market as Bonia's volume over the last few months did not indicate large volume traded.

Only few things I can think of:
  • Bonia has become unattractive at its current price of RM2.23 to RM2.59 - don't think so;
  • hard to dispose such a large chunk of shares - don't think so. Don't we have CIMB and Maybank who are best at what they are doing with IHH, FGV and Astro recently? That block is only at around RM150 million. I am sure it can be passed to some private equities..I am sure CSS would not want to have another shareholder. Look at what Thai Beverage did to Heineken.
  • PNB in need of money? Perhaps, but again why such a big block at such price? I know that this price is to make a General Offer unattractive as its price of RM1.80 to RM2.00 would not lead to minority shareholders disposing to the major shareholder.
  • There are news of PNB looking for acquisitions (as in this article by Business Times) in fact but the recent selling by PNB was an action which was otherwise and defied that logic. PNB selling to related or similarly interested parties? As a result of this, Bonia's management has taken action to increase their control? The biggest question is the pricing. It says that CSS is looking to acquire at RM1.80 to RM2.00. How on earth they can get that kind of price when we know that large controlling blocks could be more expensive. Again these strategies are to avoid other shareholders from selling to CSS as that price are deemed unattractive.
  • Whatever it is, these transactions could have involved third parties to avoid the minorities from selling during the GOs. 
  • These news put up by CSS is just a "BLUFF" calling as they are seeing third parties snapping up their shares (potentially dangerous to CSS)?
  • Or, someone making money somewhere else? This could be another logic which we cannot discount.

Just to add on - Bonia bought Jeco (a competitor with brands such as Braun Buffel, Renoma etc., 2 years ago): it was a sweet deal (not expensive) and you can basically see how smart the Chairman is - so much for once a tailor!


Anonymous said...

Can the minority watchdog do something about it?

felicity said...

I think until the deal is done, there may be some "noice" but I think minority watchdog will be the one.

Justin said...

Hi Felicity, happened to come across your blog, it is indeed superbly written, sure I will share with my serious investing friends.
Coming back to Bonia, I remembered PNB bought into Bonia in 2009 at an average price of RM1.90. If what you have thought is true, then PNB must have made a lousy investment decision. Especially when Bonia is about to report a record high profit in days time.

felicity said...

There was some mistake in the total shareholding as it seems PNB has sold a large chunk. EVen article by Business Times was very wrong.

This could turn out to be something very interesting

Justin said...

Felicity, we are about to see an interesting saga unfold. Who is the likely suitor for PNB blocks? Is Bonia is part of the non core assets PNB intended to divest?
I see the CSS move as a defensive one rather than offensive.For strange reason,I would prefer Bonia to have Bumi partner simply because Malay customers feed most of the bills.
The price of Bonia will surely crawl back soon

Justin said...

Felicity,do you agree CSS has already won the battle?

felicity said...

Perhaps. This is because the PNB block is already in the hands of the original owner.

They could have bought using multiple nominees and sold to a company FTSB which is owned by CSS