Short Position – Restructuring of Johor Corp, Top Glove, digitalization
Restructuring of Johor Corp
JOHOR Corp Bhd is said to be in the process of restructuring. It would be a timely and potentially necessary move for the Johor State investment arm.
As StarBizWeek pointed out this week, big companies are under pressure to reorganize in light of the economic distress caused by the Covid-19 pandemic. This is a wake-up call for organizations to prepare for the future and address environmental, governance and sustainability issues.
In the case of JCorp, the group has a massive RM 23 billion in assets but also RM 14 billion in liabilities. JCorp has a diverse set of assets, in sectors such as plantations, hospitals, fast food chains, real estate development and real estate development trusts.
It also has stakes in a number of listed companies in other sectors. In the past, it was feared that JCorp had struggled to repay some of its debt, and as a holding company it could boast that it had valuable assets but had not been able to draw enough income. of its investments.
Important corporate exercises that JCorp was planning to do included the re-listing of QSR Brands (M) Holdings Bhd, which has more than 1,300 KFC and Pizza Hut restaurants in Malaysia and the region.
The first discussion about her listing took place in 2019 before the pandemic. It remains to be seen how far its profits have been hit over the past couple of years and whether it can guarantee a decent valuation in the market now.
Earlier this year it was reported that JCorp was looking to do a corporate exercise involving KPJ Healthcare Bhd, of which it holds 38%. The hospital group operates more than 28 specialist hospitals in Malaysia and also has investments in hospitals in Indonesia, Bangkok and Bangladesh as well as a retirement center in Australia.
Bloomberg had reported that JCorp was looking for an investor with experience in the industry or a merger with another hospital operator. While there are no updates on QSR’s list or KPJ’s M&A deal, JCorp will be closely watched as it looks like it begins its restructuring process.
This week, JCorp increased its stake in Damansara Holdings Bhd after purchasing 49.57% stake in the company for RM 78.91 million. JCorp had indeed sold this same stake in the company to a businessman in 2014, to buy it back this week at the same price. It remains to be seen what JCorp does now with the facilities and project management company.
Reverse a boom
THE suspense of Top Glove Corp BhdThe financial results of the epidemic were not as they were before when investors wondered what the impact of the start of the pandemic was on the rubber glove industry.
This time around, investors were greeted with a more realistic set of financial results after understanding closures and falling rubber glove prices across the rubber glove industry.
Top Glove’s financial results fell short of analysts’ expectations. The fourth quarter numbers showed a sharp contraction brought on by the shutdown, lower demand and lower prices.
Investors were aware of the decline in average selling prices for rubber gloves and this was to be expected. Nothing goes up in prices forever. The drop in demand was surprising, possibly caused by the now lifted US import embargo.
But the sharp drop in profitability has to be viewed from several different angles. First, the whole dynamics of the industry will change over the next few quarters. Expect average selling prices to drop in the future and demand would also follow as vaccination rates around the world rise.
Storage will not be as widespread as it used to be, which is also a factor that has also contributed to the spike in selling prices.
Then there is the impact on the entire industry. What happened during times of expansion was a rush of new entrants into the market. It has also added to the capacity of the industry which has been created not only by expanding the capacity of existing players, but also by companies that have ventured into the sector in search of increased profits.
The coming quarters will be interesting to watch for the ripple effects within the industry, at home and abroad.
The only obvious thing is that the rubber glove companies will make more money than before the start of the pandemic and maybe there will be a reassessment to recognize it in the times to come.
Follow your own path
FOR a very long time, it was always believed that the private sector knew best. This remains largely true, but it also depends on the complexity of the situation.
And when the business involves the use of government services, it may make sense for the government to want to embark on this act itself rather than leaving the profit of a seemingly simple business today in the hands of the private sector. .
The government has been talking about digitizing its services, and after a standoff and a pandemic, the options are really in favor of getting things done.
The government, through the Malaysian Communications and Multimedia Commission (MCMC), is seeking public comments on the development of a national mobile app or super app.
He said the app would potentially allow the public to pay bills, pay for traffic calls, renew driver’s licenses and road tax, make doctor’s appointments, access medical services. health online and register births and marriages online, among others.
The success and public willingness to adapt to the MySejahtera app will mean that there should be an acceptance of a centralized method of using digitization to perform government services. And it doesn’t need the role of the private sector to grant the public access to a suite of services digitally.