MSWG Weekly Newsletter 17 June 2017 (English)

Saturday, 17 June, 2017

19 June 2017


More than six months after EPF exited its entire stake in FGV, likely at a loss, the likely rationale behind its actions at that time now seem to have manifested; with the emergence of a very public and damaging tussle between Chairman and CEO.

FGV’s challenges are many and deep-rooted, but we do not feel -- at all -- that the appointment of Datuk Seri Idris Jala could have been effective, as he is neither independent nor neutral, by virtue of his position in PEMANDU as well as his former role as Minister in the Prime Minister’s Department.

And while his accomplishments at PEMANDU may have been commendable, no details are available as to his current role at FGV in the context of his exact terms of reference. We also understand his report has been submitted to Prime Minister Datuk Seri Najib – this is certainly fast but will the investigation be comprehensive and exhaustive enough to be effective? Will it leave no stone unturned? More importantly is will the critical weaknesses and lapses be clearly identified with remedial actions to be taken and how to put the Group onto a stronger footing. And will the report be made public?

Nor do we feel that FGV’s problems can be solved by the work of FGV’s internal auditors, simply because they work within the organisation and therefore subject to undue influence and duress, thereby impacting their neutrality.

Our stance has always been, and will always continue to be, that public listed companies should never, ever be managed and presided over by individuals with political affiliations. FGV’s political affiliations has been the albatross on its back since its listing in 2012, as evidenced by the questionable acquisitions into which it has entered into, the consequent depletion of its cash pile, declining profits and erosion of its market value.

As such, we vigorously believe that FGV must now accord this latest challenge with the highest priority and to appoint truly independent and neutral third parties with no interests whatsoever in FGV or the government to conduct a thorough and complete investigation into its affairs, and for the results to be made public so that the company may conduct a wholesale cleanup of its affairs and move forward from here.


16 June 2017



Bursa Malaysia announced the issuance of new Listing Requirements (“LR”) and various amended rules for the Leading Entrepreneur Accelerator Platform (“LEAP”) Market. The newly established market aims to provide small and medium-sized enterprises (“SMEs”) with fund raising access and visibility through the capital market.

Trading on the LEAP Market is limited to qualified investors, mainly those who fall within Part I of Schedule 6 or 7 of the Capital Markets and Services Act 2007 (“Sophisticated Investors”), according them with an opportunity to broaden their investment options in SMEs in a transparent and regulated environment.  The new rules are premised on three key underlying principles, namely cost efficiency, balanced and proportionate regulation as well as a qualified market for Sophisticated Investors.

The listing framework governing the LEAP Market as set out under the LEAP LR is as follows:

(a)  promoting a simple and easy listing regime where an issuer is required to issue an information memorandum instead of a prospectus;

(b) facilitating an efficient fund raising platform for initial listings and secondary fund raisings with short time to market;

(c) expanding the pool of advisers eligible to act in an initial listing (“Approved Advisers”) and post listing (“Continuing Advisers”) on the LEAP Market, to beyond the existing principal advisers and sponsors for the Main Market and ACE Market;

(d) adopting a market based approach where the Approved Advisers play the key role in assessing and determining the suitability of an applicant for listing based on prescribed considerations and providing advisory services to the listed corporation post listing;

(e)  ensuring commitment from promoters by requiring their shares to be placed under moratorium for 4 years from the date of admission;

(f)  facilitating ease and timeliness of secondary fund raisings by allowing the following:

(i)   a higher general mandate for directors to issue new shares or convertible securities i.e. 100 per cent of the total number of issued shares of a listed corporation in the case of an issuance on a pro rata basis and 50 per cent in the case of an issuance on a non pro rata basis, as opposed to 10 per cent only for Main and ACE Markets; and 

(ii)  both renounceable and non-renounceable rights issue; and

(g)  promoting a transparent and proportionate disclosure regime by requiring immediate announcements of material information/transactions, semi-annual financial statements and annual audited financial statements.

The new LEAP LR and amended rules have been approved by the SC and will take effect on 16 June 2017. All the existing 14 principal advisers and sponsors who are eligible to act on the Main Market and ACE Market are automatically admitted to the Register of Advisers of the LEAP Market. The Exchange also invites and welcomes all suitably qualified corporate finance advisers licensed by the SC to apply to the Exchange to act as an Approved Adviser or Continuing Adviser on the LEAP Market.

[Source: Media release on Bursa Malaysia’s website on 15 June 2017]



The Board of Directors of Mah Sing announced that the shareholders of Mah Sing had passed all resolutions at the AGM of the company which was held on 15 June 2017.

The voting in respect of the resolutions was carried out by way of poll and the results are as follows:




No. of Shares




To receive the Audited Financial Statements for the financial year ended 31 December 2016 together with the Directors’ and Auditors’ Reports thereon.

For discussion only




To approve the declaration of a first and final single-tier dividend of 6.5 sen per ordinary share in respect of the financial year ended 31 December 2016. (Resolution 1)







To approve the Directors’ fees of RM126,000 for the financial year ended 31 December 2016. (Resolution 2)







To re-elect the following Directors who retire pursuant to Article 102 of the Company’s Articles of Association:-

(i) Ms Leong Yuet Mei (Resolution 3)



(ii) Mr Loh Kok Leong (Resolution 4)

























To re-elect Datuk Ho Hon Sang, the Director retiring pursuant to Article 109 of the Company’s Articles of Association. (Resolution 5)







To re-appoint Messrs Deloitte PLT as Auditors of the Company for the financial year ending 31 December 2017 and to authorise the Directors to fix their remuneration. (Resolution 6)







As Special Businesses:-





Re-appointment of Director

Jen. Tan Sri Yaacob Bin Mat Zain (R) (Resolution 7)







Continuing in office as Independent Non-Executive Directors of the Company

(i)   Jen. Tan Sri Yaacob Bin Mat Zain (R) (Resolution 8)


(ii)   Captain Izaham Bin Abd. Rani (R) (Resolution 9)


(iii)  Mr Loh Kok Leong (Resolution 10)


























Authority to allot shares. (Resolution 11)







Proposed renewal of shareholders’ mandate for Recurrent related party transactions of a revenue or trading nature (Resolution 12)







Proposed renewal of share buy-back authority (Resolution 13)







To transact any other business of which due notice shall have been given.





[Source: Mah Sing’s announcement on Bursa Malaysia’s website on 15 June 2017]


All the independent Directors of the Company have served more than 9 years with one independent Director serving more than 20 years. Based on the poll voting results, only 53% voted for the resolutions to retain these independent directors.

It is MSWG’s principle not to support Independent Directors who have served more than 9 years. In this case, the poll results show that many shareholders of the company also did not support the retention of long serving Independent Directors. We also wish to highlight that increasingly more institutional shareholders are now beginning to vote against re-election of Independent Directors who have served more than 12 years. Gradually, retail shareholders are becoming more aware of this issue and may also exercise their votes in the same manner. Therefore, such directors may face increasing risk of not being re-elected. And this certainly calls for PLCs to seriously have in place their succession plan if they have not done so.

We hope the Board would look into the board succession plan as regards its Independent Directors. In accordance to the Recommendation 4.2 of the Malaysian Code on Corporate Governance 2017, if the Board wishes to retain the independent director after the twelfth year, the board should seek annual shareholders’ approval through a two-tier voting process. Under this two-tier voting process, both tier-1 (shareholders who either hold no less than 33% of the voting shares or be the largest shareholder of the company, defined as “Large Shareholder”) and tier-2 (shareholders other than Large Shareholder) shareholders will vote separately. The resolution is deemed successful only if both Tier 1 and Tier 2 votes support the resolution.


For this week, the following are the AGMs/EGMs of companies which are in the Minority Shareholder Watchdog Group’s (MSWG) watch list.

The summary of points of interest is highlighted here, while the details of the questions to the companies can be obtained via MSWG’s website at

Date & Time



20.06.17 (Tue)
10.00 am

Sarawak Oil Palms Bhd

Imperial Hotel, Jalan Pos, Miri, Sarawak

21.06.17 (Wed)
09.30 am

Tekala Corporation Bhd 

Hotel Sandakan, 4th Avenue, Sandakan, Sabah

21.06.17 (Wed)
10.30 am

Tekala Corporation Bhd

Hotel Sandakan, 4th Avenue, Sandakan, Sabah

22.06.17 (Thur)
02.45 pm

Muhibbah Engineering (M) Bhd

Concorde Hotel Shah Alam, No. 3, Jalan Tengku Ampuan Zabedah C9/C, Shah Alam


The points of interest to be raised:


Points/Issues to Be Raised

Sarawak Oil Palms Bhd

  1. Plantation Statistics on Page 5 of the Annual Report showed the planted area had increased from 63,517 hectares to 87,744 hectares and the Reserves, Unplanted, Buildings sites, etc, had increased from 9,136 hectares to 32,553 hectares for FY2016 compared to FY2015. The increase was from a Company acquired in FY2016.


  • With the increase in planted hectarage, what would be the expected total FFB production for FY2017 and what would be the estimated contribution from the Company acquired in FY2017?


  • What is the plantable hectarage from the total Reserves, Unplanted, Building sites, etc of 32,5353 hectares and could the Board share the timeline to commence planting on the plantable area?


2.   The Group OER achieved in FY2016 was 19.97%. As stated in the Chairman’s Statement on Page 17 of the Annual Report, the Group will focus on improving OER where there is still room for improvement.

Could the Board share the measures to be taken to improve the OER and what is the target OER to be achieved?

Tekala Corporation Bhd

As stated in the circular to shareholders on page 25, compared to the Target Group, some of the competitors are larger, offer a more diverse range of properties or have greater financial, marketing and other resources at their disposal.

a)   How would the Target Group be able to compete with the market players and withstand if the industry were to experience any downturn?

b)   What are the Target Company's strategies for survival if it is hard to replenish its land bank compared to its competitors who have greater financial resources?

Muhibbah Engineering (M) Bhd

1.   The Group Managing Director reported in the Management Discussion & Analysis (MD & A) that the outstanding secured order book for the Construction and Engineering Division stood at RM1.1 billion as at 30 March 2017 amid its on-going contracts secured in the previous years.   

(a)  What is the Board’s assessment of the Group’s performance, profitability and earnings for FY2017 given that the growth in revenue was driven by the increase in execution of contracts and revenue recognition in the Construction and Engineering Division that had exceeded RM1 billion for the recent years?

(b)  What is the breakdown of the Group’s outstanding secured order book including the contracts secured recently in the local construction sector and the overseas contracts for projects in the Middle East, Cambodia or elsewhere?

2.   The MD & A reported that the Crane Division had achieved the improvement in net profit margin and made inroads in its investment in its operations and maintenance business. The Division had also expanded the size of its own rental fleet for the home markets and completed the revamp of its four additional new tower crane models to be introduced for FY2017.

(a)  What is the Board’s business strategy for the Crane Division to improve its performance and results given its positive contribution to the Group’s bottom-line until 2016 when it encountered a decline due to the slowdown in the oil and gas industry?

(b)  What are the business areas of the construction cranes market that the Board had assessed would provide prospects for its expanded rental fleet and its new tower crane models across the cranes segment on a worldwide basis?

(c)  What is the expected return on investment in the Group’s operations and maintenance business from the perspective of its Marine, Ship Building and Ship Repair Division which had not made much progress in segment profit since 2012?



Ire-Tex announced that the company had on 8 June 2017 received a Special Notice in relation to appointment and removal of directors from two (2) persons representing themselves to be shareholders of the company holding not less than one-tenth of the paid up capital of the company carrying the right of voting at meetings of members of the company as at the date of deposit of the said Special Notice.

The company is seeking legal advice on the matter.

[Source: Ire-Tex’s announcement on Bursa Malaysia’s website on 8 June 2017]


According to the announcements released by MUH, an extraordinary general meeting (“EGM”) is scheduled to be held on Friday, 30 June 2017 for the purpose of considering and if thought fit, passing a resolution in relation to the appointment of a new auditor, namely Messrs Baker Tilly Monteiro Heng [AF 0117], in place of Messrs Deloitte [AF 0080] who has retired as Auditor of the company.

[Source: MUH’s announcement on Bursa Malaysia’s website on 14 June 2017]


Industrial Production Index rose by 4.2 pct in April

World Bank sees 4.9pc growth

Malaysia retail sales down 1.2% in Q1

Bank Negara’s foreign reserves up 0.7% to US$98b as at May 31, 2017

More MNCs moving their ops to Malaysia from Singapore

New Companies Act to reduce cost of doing business

Press Release on Financial Stability Board (FSB) Regional Consultative Group for Asia, 9 June 2017

Malaysia Productivity Report 2016/2017


China’s May exports and imports beat forecasts

China tightens grip on yuan to head off economic risks

US Fed raises rates, unveils balance sheet cuts in sign of confidence

Political uncertainty muddies outlook for UK economy

Japan core machinery orders down more than forecast

India keeps key interest rate unchanged

Rising industry output points to German economic upswing

ECB still behind the Fed even with eurozone outpacing US

Global growth headed for six-year high, says OECD

Saudi Arabia says oil inventory drawdown to accelerate in coming 3-4 months

MSWG Analysts

Lya Rahman, General Manager,
Rebecca Yap, Head, Corporate Monitoring
Quah Ban Aik, Head, Corporate Monitoring
Norhisam Sidek, Manager, Corporate Monitoring
Wong Kin Wing, Manager, Corporate Monitoring,
Hoo Ley Beng, Manager, Corporate Monitoring 
Nor Khalidah Khalil, Analyst, Corporate Monitoring
Vinodth Ramasamy, Analyst, Corporate Monitoring

Muhammad Faris bin Mohamed Yusof, Analyst, Corporate Monitoring


•           With regard to the companies mentioned, MSWG holds a minimum number of shares in all these companies covered in this newsletter save for Ire-Tex Corporation Berhad.

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17.06.2017 MSWG Weekly Newsletter 17 June 2017 (English)