MMosaics to be privatised?

Main board-listed maker and trader of mosaic and ceramic tiles Malaysian Mosaics Bhd (MMosaics) may soon be taken private, according to sources.

While details of the price or terms of a privatisation exercise were not available at press time, it is worth noting that the stock is currently trading at about half its net tangible asset value.

“Privatisation makes sense (for the controlling shareholder); the stock is already tightly held,” a source told The Edge Financial Daily.

The company’s largest shareholder is Gek Poh (Holdings) Sdn Bhd, a private entity controlled by Datuk Seri Panglima Lau Cho Kun. As at March 31 this year, Gek Poh held a 73.07% direct and indirect stake in MMosaics. Gek Poh is also the holding company of Hap Seng Consolidated Bhd.

MMosaics rose four sen or 2.9% to RM1.42 yesterday, on a volume of 60,900 shares. The company has a total of 78.34 million shares issued, and a market capitalisation of RM111.25 million.

At yesterday’s closing price, it would cost Gek Poh about RM29.96 million to buy the remaining 26.93% stake it does not already own in MMosaics. Gek Poh should be in good financial condition through its control of plantation group Hap Seng which has enjoyed high palm oil prices over the past few years.

MMosaics’ shares are trading at well below their net asset value. At RM1.42, the stock is trading at 0.51 times its latest net tangible assets per share of RM2.79.

As at March 31, the company had net debt (total borrowings minus cash and cash equivalents) of RM189.17 million. It also has RM250.99 million worth of property, plant and equipment and RM132.19 million in inventories.

For the financial year ended Dec 31, 2009 (FY09), MMosaics posted a net profit of RM14.51 million on revenue of RM322.22 million. For the first quarter ended March 31 this year, it posted an unaudited net profit of RM1.04 million on revenue of RM63.6 million.


This article appeared in The Edge Financial Daily, June 29, 2010.