KUALA LUMPUR: Oriental Holdings Bhd, which had seen its share price jump by as much as 16.5% in the past week, could be the next privatisation target.
Sources said this followed several announcements of corporate moves which would probably be a prelude for greater things to come.
“This will always catch the market by surprise. The buying of the Kingsley Hotel for about RM202mil is definitely a pointer to bigger things to come for Oriental,” a source said.
It is learnt that Oriental's single majority shareholder, Boon Siew Sdn Bhd, may decide to privatise the company to strengthen its position as part of efforts to regionalise the company.
Boon Siew Sdn Bhd, founded by the late Tan Sri Loh Boon Siew, has a 43% stake in the company. Today, it is controlled by Loh's family, which is said to be also undergoing a leadership transition very soon.
The word is out that their grandsons will take over the helm of the company within this year or next.
It is also understood that the company is in talks to purchase more land for its plantation ventures in Indonesia while the major shareholder also has big plans to purchase some parcels of land in Britain and the United States.
“They want to shore up their presence in the Western economies. But before this, they want to ensure the company is firmly in the Loh's family control.'' said another source.
Oriental, which had surged by 90 sen or 16.5% in the past trading week, could garner more interest once these leadership handover plans are firmly in place.
Market observers also point out that the share price decline by 27 sen on Friday could be a knee-jerk reaction to the lower year-on-year quarterly net profit, which was announced on Thursday.
Oriental recently announced that its year-on-year net profit for the fourth quarter ended Dec 31, 2011 declined by 12.8% to RM108.77mil on the back of a 15% drop in revenue to RM718.55mil.
However, for the full financial year 2011, Oriental saw its year-on-year net profit rising by 15.6% to RM288.5mil on a slight decline in revenue from RM3.23bil in FY2010 to RM3.1.3bil.
In notes accompanying its financial statements, Oriental said the lower revenue was due to inventory shortages in its automotive business segment, which was one of the main contributors to earnings.
However, profits rose because it was able to sell some of the existing models slightly higher than its carrying value
