Saturday, November 9, 2019

Surin Upatkoon's new holding structure in WCE: Cleaner, better

I have been asked on the new structure for the second largest shareholder of WCE: Surin Upatkoon. What are the impact? Is he relinquishing his stake in WCE etc.?

Well, as a start his original stake in WCE is through several organizations i.e. a complex holding via 5 companies namely, Cypress Holdings Limited, Pinjaya Sdn Bhd (Malaysia), Hanton Capital Limited, Cedar Holdings Limited, Kularb Kaew Company Limited


The shareholding was as depicted below:


With the exercise, it seems that the shareholding is now cleaner i.e. as below:


As in the announcement, Hanton Capital, a company resided in a tax haven, Virgin Islands has sold its 99.9% stake of Pinjaya directly to Tan Sri Surin Upatkoon.

Well, I prefer this as it is cleaner and the actual shareholder is now back into Malaysia.

What makes it change then, as sometimes business people would prefer a more complex structure.

That could be due to several reasons:


  1. He just want a cleaner structure (surprisingly)
  2. Because of the rights issue, he may use bank financing to fund part of his subscription. Banks usually prefer a cleaner structure especially when they are the one financing the purchase.
  3. If one is to notice above, the holding is brought back to Malaysia. As toll business has gone riskier due to the threat of government's plan of toll elimination, I believe foreign financiers are more reluctant to finance it. The financing may be dependent on local banks and they do not want to be seen financing a company with complex web of structure.
If Surin relinquishing his holdings in WCE? I think not at all, especially when he privatised MWE partly because of this. 

Is there an impact on WCE? Minimal. But I prefer this structure better.

6 comments:

Anonymous said...

Hi Felicity.... My cost for wce around 1.2....from 0.3+ to up to 1.2, is it possible long term? Thanks.

felicity said...

Your cost will not be RM1.20 as it is split into 3 stocks due to the rights. Unless you do not take up the rights which is ex this Monday.

Anonymous said...

Mind to share the calculation if following your portfolio? Thanks.

felicity said...

(RM1.20 + 2(0.28))/3 = RM0.59 will be the costs

Anonymous said...

Last time right issue around 1.08...now rcps down to 0.24, wondering why so steep discount even though highway completion alr over 50percent. Anyhting wrong?

felicity said...

If you look at the stock, it did not change as much. Project has been delayed, yes. I think the lower price is reflected because of some people's fear of non-toll collection as well as reduced toll price from PLUS which is a small competitor. Generally, the value of WCE is hard to provide at the moment and when investor does not know the value they let the price go down.
The main thing is that project has moved on to more than 60% completion. And I do not think the government will stop any concession holder from collecting toll.
Otherwise, there will not be 4 parties interested in PLUS.