Johor Corp seeks to refinance the RM3.6bil loan obligation that will become due in the middle of 2012.

Saturday December 18, 2010

JCorp seeks to remove Muhammad Ali
By RISEN JAYASEELAN
risen@thestar.com.my


PETALING JAYA: Johor Corp (JCorp) is seeking to remove Tan Sri Muhammad Ali Hashim, its previous head for 18 years, from the boards of three listed companies it has direct stakes in.

The move seems to confirm speculation that Muhammad Ali, who had suddenly resigned as JCorp's CEO in July, is no longer in the good books of the powers that be in the state of Johor.

JCorp has called for EGMs at Kulim (M) Bhd, KPJ Healthcare Bhd and Damansara Realty Bhd (DRealty) for this purpose.

The removal of Muhammad Ali will be via ordinary resolutions at each of these companies, which means that a simple majority of shareholder votes would achieve the desired result.

While JCorp controls more than 50% of the equity of Kulim and DRealty, it owns only 237.8 million shares in KPJ Healthcare, according to the latest shareholding changes filed with Bursa Malaysia. And according to Bloomberg data, this number of shares amounts to only a 42.6% stake in KPJ.

Hence it appears that for Muhammad Ali to be ousted from KPJ's board, it is going to have to acquire more shares in KPJ or seek the support of other shareholders.

JCorp has been in the news recently after three bids had been presented to Kulim for its controlling stake in QSR Brands Bhd, which in turn is the parent company of KFC Holdings (M) Bhd.

After some delay, JCorp, via Kulim, finally said it was not selling QSR or its subsidiaries, noting that these were key assets in the group and that more value could be extracted from them.

That raised the question: if JCorp was not selling, how come the bids came in from such established names as private equity giants The Carlyle Group and CVC Capital?

It had been reported that insiders said Muhammad Ali could be responsible for putting QSR up for sale. Muhammad Ali is chairman of Kulim, QSR and KFC as well as of KPJ Healthcare and DRealty.

It has also been reported that Muhammad Ali's sudden departure from JCorp had to do with the mountain of debt at JCorp, which was built up via ambitious acquisitions of companies during his tenure as CEO, something that Muhammad Ali has denied in the past, noting that the group has sufficient assets that can be sold to repay off the debt.

Muhammad Ali's tenure at JCorp had attracted both praise and criticism. He had made JCorp one of the most dynamic state investment arms but detractors say he ruled the group like his own fiefdom and expanded the group too fast, accumulating too much debt in the process.

A strong advocate of what he calls business jihad, Muhammad Ali has said he believes business is a good way to help people as it can create wealth and jobs and eliminate poverty.

JCorp recently hired Kamaruzzaman Abu Kassim, its head of finance, as its new CEO.

Some insiders reckon that the action to remove Muhammad Ali signals a resolve by Kamaruzzaman to usher in the new leadership at the group in a post Muhammad Ali era.

It's actually not out of the ordinary. Muhammad Ali had stepped down as JCorp CEO some months ago although he has not relinquished his chairmanship and directorships at the JCorp-controlled companies. This is a matter of process more than anything else, which would likely lead to JCorp putting in a replacement for him as soon as the removal is completed, said one insider.

Kamaruzzaman recently told the media that JCorp would not be selling any of its assets to settle its loan obligations. Instead, it would seek to refinance the RM3.6bil loan obligation that will become due in the middle of 2012.

All three EGMs for Muhammad Ali's removal will be held next month, specifically on Jan 17 for Kulim, Jan 21 for DRealty and Jan 26 for KPJ Healthcare.

http://biz.thestar.com.my/news/story.asp?file=/2010/12/18/business/7647835&sec=business

QSR hits 52-week high of RM3.64

QSR hits 52-week high of RM3.64

Tags: 52-week high | QSR Brands Bhd

Written by Yong Min Wei
Friday, 09 October 2009 11:04

KUALA LUMPUR: QSR BRANDS BHD [] hit a fresh 52-week high of RM3.64 yesterday, as buying interest in the food and beverage (F&B) retail group continues, premised on the defensive nature of its businesses.

The counter rose to an intra-day high of RM3.72 before closing at RM3.64, with 225,100 shares done. A check with Bloomberg data showed that QSR has been rising daily since the beginning of this week from its close of RM3.25 last Friday.

In a research report yesterday, CIMB Research reiterated its outperform call on the stock, its top pick in the F&B sector, with a target price of RM5.94 from RM5.30.

CIMB said its revised price target yielded a 61% upside, as the research house rolled over its valuation horizon to calendar year 2011.

“QSR remains an attractive growth story with a three-year earnings per share compounded annual growth rate of 11.9%,” it said.

The research house said QSR offered a cheaper entry into the KFC business with the added attraction of the growing Pizza Hut business and higher dividend yields.

QSR owns 50.25% of KFC Holdings Bhd (KFCH), which runs both the KFC and Pizza Hut dine-in and fast-food restaurant chain in the country and overseas, including Singapore and Cambodia. CIMB said QSR commanded 70% of the country’s pizza market and 11% of the Western quick-service restaurant.

“But, investors are paying an undeservedly low price earnings of 3.2 times for the Pizza Hut business when it deserves to trade at a premium given its growth potential,” it said. CIMB added that QSR might open its first KFC outlet in India by year-end.

Under a deal with the global Yum! Group, KFCH would invest US$5 million (RM17 million) in Mumbai and US$1 million in Pune, with the target of opening 10 KFC outlets in Mumbai and two in Pune, with one slated for opening in Mumbai by year-end, it said. CIMB added that the Indian outlets were expected to be profitable in three years.

“KFCH’s entry into India is expected to provide the company with an opportunity to diversify its earnings base and reduce its dependence on Malaysia and Singapore.

“We understand that there are four existing KFC outlets in Mumbai, operated by three franchise holders which have done little to grow the franchise.

There are only about 40 KFC outlets in India while there are 35 McDonald’s outlets in Mumbai alone,” CIMB said. Meanwhile, QSR’s expansion in Cambodia was on track, with its Pizza Hut operations set to break even next year, the research house said.


This article appeared in The Edge Financial Daily, October 9, 2009.