The recent share price hike in Hong Leong Capital Bhd (HLCap) has set tongues wagging.
Is this a sign of another attempt at taking HLCap private by its parent company Hong Leong Financial Group Bhd (HLFG)?
Interestingly, the rise in HLCap coincided with Rapid Synergy Bhd’s price increase in October.
What do these counters have in common?
Their common denominator is in the form of their shareholder - Datuk Dr. Yu Kuan Chon, who is also the chairman and executive director of YNH Property Bhd.
Recall that Yu, a medical doctor-turned-entrepreneur emerged as a substantial shareholder in HLCap after HLFG launched an offer to take the former private at RM1.71 per share in January 2013.
Subsequently, Yu owned close to a 9% stake in HLCap, whereby he managed to thwart the privatisation exercise in 2013.
Yu has since pared his shareholding in HLCap to meet the minimum 10% free-float threshold required for active trading and ceased to be a substantial shareholder in 2014.
According to HLCap’s annual report, the tycoon has some 4.4% in the company as at Aug 31, 2021.
As for Rapid Synergy, Yu has some 23.63% direct stake and 5.81% indirect stake.
Interestingly, Yu’s stakes in these two counters are mostly pledged shares. As such, given the rise in the counters, Yu would have wider access to financing lines.
If we look at Yu’s shareholdings, he normally takes positions in illiquid stocks, which are normally easier to ‘corner’ them.
Here is the list of Yu Kuan Chon’s interest in Bursa-listed companies:
Looking at the share price of HLCap, it has been charting impressive gains in a matter of less than 2 weeks.
Tan Sri Quek Leng Chan’s HLCap rose by as much as 25% on Oct 25 compared with RM7.03 on Oct 12.
In fact, at RM7.03, it was the first time since November last year that the counter had surpassed RM7.
This was likely triggered by news that it saw higher foreign shareholders.
HLCap announced on Oct 11 that its foreign shareholding had risen to 3.74% as at Sept 30, 2021 versus 2.83% as at June 30, 2021.
For the financial year ended June 30, 2021 (FY21), the company declared a final single tier dividend of 26 sen per share to be paid on Nov 16, 2021. The ex-date of the dividend declared falls on Thursday (Oct 28).
The company posted commendable results in FY21 where its net profit jumped by 115.83% year-on-year to RM203.29 million while revenue rose 20.59% to RM406.47 million from RM337.08 million in the previous year.
HLCap is in the business in investment banking, stockbroking business, futures broking, related financial services, nominees and custodian services, unit trust management, fund management and sale of unit trusts.
The group had previously been suspended for over five years for not meeting the required public shareholding spread.
It resumed trading on Nov 13 last year after its major shareholder HLFG had completed a private placement of 27 million shares or a 10.94% stake in HLCap,
This was to enable HLCap to meet the 25% minimum requirement of public spread, which was increased to 29.6% following the private placement exercise.
Yu emerged as a substantial shareholder in HLCap after HLFG launched an offer to take the former private at RM1.71 per share in January 2013.
Another counter controlled by Yu is Rapid Synergy, which saw its shares rise past RM9 to a record high on Oct 15.
The counter rose to an all-time intraday high of RM9.33, with a market capitalisation of RM1 billion on Oct 15.
Rapid Synergy, which is a precision tool manufacturer, posted a huge increase in its net profit rose to RM400,000 in the second quarter ended June 30, 2021 (2QFY21) from RM192,000 a year earlier, while revenue climbed to RM7.69 million from RM5.98 million.
It will definitely be interesting to see what is up Yu’s sleeve and if HLFG will take another go at the privatisation exercise.