Kumpulan Jetson Bhd’s board yesterday said the resignation of independent director Mohd Najib Abdul Aziz dated July 7 was valid and properly executed despite his retraction a day earlier.
In an announcement to Bursa Malaysia, the board said a lawyer assessing the issue “is of the opinion that the resignation letter was properly executed, is valid and takes effect immediately upon its execution”. However, the board said it was seeking a second opinion on the same matter.
Trading of Jetson’s shares was suspended on Wednesday from 9am to 10am in order to announce the retraction of Mohd Najib’s resignation. The price of Jetson’s shares and derivatives tumbled that day as news of a potential boardroom tussle in the company leaked out into the market. It is not clear why Mohd Najib decided to retract his resignation, but speculation had centred on the possibility of a boardroom tussle at the small construction company.
A feud is understood to be brewing between the sons of the late Tan Sri SM Nasimuddin SM Amin of the Naza group and Jetson’s managing director Datuk Teh Kian Ann.
The crux of the issue, sources say, is whether the Naza party, with the help of executive director Chow Chee Ken, is trying to increase their control over the company.
Chow has reportedly raised his stake in Jetson to almost 4.3% over several transaction last April and May.
Speculation of a boardroom tussle sent Jetson’s share price rallying to hit limit-up in yesterday’s morning trading session, after it fell to more than a 10-month low on Wednesday. Jetson’s share price had dropped to RM1.11 as at Wednesday’s close, but hit limit-up soon after the start of trading yesterday. Trading of the stock was halted from 10am onwards after its share price rose 30% to RM1.44.
Its shares resumed trading in the afternoon session, where they continued to rise, hitting a high of RM1.74 before closing at RM1.55, up a hefty 40% for the day. About 16.15 million Jetson shares were transacted, making it the fourth most active counter yesterday. Jetson’s warrants and loan stocks saw a similar rise. The warrants surging 45.5 sen, or 120%, to close at 83.5 sen, while the loan stocks gained 43 sen, or 39%, to close at RM1.54.
An analyst told The Edge Financial Daily that the sudden surge could be due to two reasons: the company’s fundamentals as well as the speculated boardroom tussle. “The PER for small construction companies is about 10 to 11 times while for large ones, it is 15 to 17 times,” the analyst said. “At RM1.11 per share, the historical PER for Jetson dropped down to 8.3 times, which is below historical lows. This is very cheap for a construction company with a going concern.” Jetson is slated to benefit from construction jobs for the Naza group’s large property projects, including the Matrade development off Jalan Duta in Dutamas.
But the bigger catalyst is likely the rumoured boardroom tussle. The analyst speculated that existing shareholders may be looking to accumulate shares to boost their positions if the company is indeed headed for a boardroom tussle.
Yesterday’s large trading volumes could be a telling indication of this. The 16.15 million Jetson shares traded yesterday alone accounted for a significant 26.7% of the company’s 60.59 million issued shares. A total of 11.83 million warrants were traded yesterday, and this accounted for a hefty 70% of the total 17 million warrants in issue.
This article appeared in The Edge Financial Daily, July 15, 2010.
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