Shares of Ho Hup Construction Co Bhd continued to rise yesterday after it revealed last week plans to buy two companies, part of a strategy to revive its business.
The builder’s share price added 5 sen, or 6.9%, to close at 77 sen with 859,600 shares traded. The stock had traded to an intra-day high of 85 sen and a low of 74.5 sen. On Monday, Ho Hup’s share price surged 37.14%, or 19.5 sen, to 72 sen.
This followed last Friday’s announcement that the company had entered into a memorandum of understanding (MoU) with one Raymond Tan to acquire Fivestar Development (Puchong) Sdn Bhd and Kolektra Recreation Sdn Bhd at a price to be determined later.
According to Ho Hup’s filing with the stock exchange, the purpose of the acquisition is to facilitate Ho Hup’s regularisation plan in accordance with the requirements of Practice Note 17 (PN17).
A dealer at a local stockbroking firm said the uptrend in share price could be attributed to the company’s regularisation plan to exit its PN17 status.
“It is unusual to see so much interest especially in a PN17 company and in such market conditions.
“Investors may see some hope that Ho Hup’s financial woes may be resolved with the addition of these two companies. However, everything is still at a preliminary stage,” she said.
It has also been speculated that Ho Hup might finance the purchase with new shares that could be issued at RM1 each, further fuelling the excitement.
Ho Hup shares attracted a lot of speculative interest at the end of last year, when disagreements between the management and a substantial shareholder became public.
Ho Hup’s share price reached a five-year high of RM1.99 (closing price) on Jan 6, but has since spiralled downwards, hitting a low of 43 sen last month.
Ho Hup fell into the PN17 category two years ago, but efforts to put it back on its feet had been bogged down by a boardroom battle led by two opposing major shareholders.
At an EGM in March, there was wholesale change in Ho Hup’s boardroom as directors nominated by Datuk Low Tuck Choy — the son of Ho Hup’s founder and a former managing director — took over from a group linked to ousted deputy executive chairman Datuk Vincent Lye.
Low was against Lye’s financial regularisation scheme and had offered a so-called alternative revamp plan to address the debt-laden builder’s financial woes.
Ho Hup was required to submit a regularisation plan to the relevant authorities not later than Aug 4, the company said earlier this month.
In tandem with the MoU, Ho Hup is seeking a further extension of six months until Feb 4, 2011 to submit its regularisation plan.
By ELAINE ANG
elaine@thestar.com.my
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