Friday, 28 September 2012

Southern Acids up 8.93% on hope of bonus issue, corporate actions

Hot Stocks Southern Acids up 8.93% on hope of bonus issue, corporate actions
Business & Markets 2012

Written by Cindy Yeap of
Thursday, 27 September 2012 14:35

KUALA LUMPUR: Tightly-held oleochemical processor Southern Acids Malaysia Bhd rose 8.93% in the morning session, a day after its chairman told shareholders the board will consider having a bonus issue to help improve trading liquidity.

Southern Acids’ chairman Tan Sri Low Boon Eng told shareholders present at the company’s annual general meeting (AGM) that the board will consider their suggestion of a bonus issue in response to questions over the company’s thin share volume, reported yesterday.

At midday today (Thursday), Southern Acids added 20 sen or 8.93% to RM2.44 with 26,700 shares done. Its latest unaudited net assets stood at RM3.16 per share.

The counter is rarely traded as close to 85% of its shares are in the hands of its top 30 shareholders. Prior to today’s trades, Southern Acids last closed at RM2.24 on September 19.

At yesterday’s AGM, shareholders had also asked if the group would go into property development with Paramount Corp Bhd.

They also asked if Southern Acids would build more hospitals or dispose of the Sri Kota Specialist Medical Centre (SKMC) in Klang and use proceeds to raise dividend payouts.

Low told shareholders no firm decision had been made on these matters but said Southern Acids has no intention of disposing its investment in Paramount as it sees “synergies” in the investment. Southern Acids owns 4.57% of property developer Paramount as at April 13, according to Paramount’s latest annual report.
However, Southern Acids’ largest shareholders -- Southern Palm Industries Sdn Bhd and Southern Realty (Malaya) Sdn Bhd –which own some 40% of the group, are deemed interested in about 16% of Paramount.

In response to persistent questioning by minority shareholders, Low yesterday also said Southern Acids is still evaluating its options, including going into property development to unlock value of the 644.49 acres of PLANTATION [] land called the “Thangamallay Estate” in Klang. The land borders Kota Kemuning in Shah Alam and is carried at RM141.94 million in its books.

As it is, oleochemical is Southern Acids’ largest revenue contributor accounting for 67% or RM376.3 million in the last financial year but the plantations and milling business brings in the biggest profits.

In the year ended March 31, 2012, plantations contributed RM25.2 million or 61% of the group’s pre-tax profits while oleochemical contributed RM10.6 million. Healthcare, meanwhile, brought in RM3.3 million for the group and warehousing another RM3 million.

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