Poser over Dr Yu’s interest in Imaspro

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Poser over Dr Yu’s interest in Imaspro

Post by Cals on Mon 30 Mar 2015, 01:11

Poser over Dr Yu’s interest in Imaspro

[size=11]Saturday, 28 March 2015

Pesticide, fertiliser maker has strong cash pile of RM51mil
SO what is Datuk Dr Yu Kuan Chon’s interest in little known pesticide and fertiliser manufacturer and distributor Imaspro Corp Bhd this time?
Dr Yu’s entry into a stock is not to be taken lightly, mainly for two reasons. First and most obviously, he is seen as a savvy investor, and his entrance into a stock typically causes the share price to rally. (Imaspro’s share price rose 12% to RM1.78 on news of Dr Yu’s entrance).
Secondly, Dr Yu is seen to be a long-term investor who has done his homework, and sees value or potential that others have yet to see.
Over the last two years, Dr Yu has carved himself a solid name as an astute investor.
While Dr Yu was already a respectable figure as chairman and major shareholder of Perak-based property developer YNH Property Bhd, he consolidated his position as an investment figure when he became the second largest shareholder of Hong Leong Capital Bhd (HLCap).
He blocked the privatisation of HLCap by its major shareholder Hong Leong Financial Group Bhd, the ultimate shareholder of which is Tan Sri Quek Leng Chan.
Last year, Dr Yu emerged in PM Holdings Bhd and Rapid Synergy Bhd with stakes of 20.99% and 5.33% respectively. He has proposed to increase his stake in PM Holdings.
Upon completion of the sale, Dr Yu, together with persons acting in concert with him, will increase his interest in PM Holdings from 5.33% to 74.52%.
Over the week, it was learnt that Yu had started accumulating minority stakes in Imaspro and is looking at acquiring more interest in the company from some shareholders who are exiting.
Among the shareholders who have been reducing their interest in Imaspro include its non-executive chairman Mohd Shafek Isa. Filings with Bursa Malaysia show that Shafek has been steadily disposing of his shares since early March. From a 21.49% stake on March 4, he had a 10.28% stake or 8.22 million shares in the company via his vehicle Sunbina Dunia Sdn Bhd as of March 23.
Then on March 24, he ceased to be substantial shareholder of the company after selling a further 3.53 million shares of his company at a price of RM1.70.
Shafek has been selling the shares in tranches, in prices ranging from RM1.30 to RM1.70.
Executives close to Dr Yu said he was keen on Imaspro because it had cash backing per share of about 64 sen each and a stable business in supplying fertilisers and pesticides.
“Imaspro is the only Malaysia company whose Glyphosate product is of proven equivalent in the EU countries. This enables Imaspro to export to Europe. As a medical doctor, Dr Yu would appreciate the proven equivalent factor,” said the fund manager.
A big hint of Dr Yu’s entrance arose when Chan Weng Fui, who is his close associate, was appointed as independent and non-executive director of Imaspro on Dec 4.
Dr Yu is known to work closely with Chan in past transactions. Chan has also invested in Rapid Synergy and PM Holdings.
Why Imaspro?
The face and spirit of Imaspro has consistently been that of its managing director and founder, Tong Chin Hen.
Some people view Imaspro as a one-man show as Tong has more or less been solely responsible for the growth of Imaspro to becoming a leading exporting pesticide player in Malaysia.
Tong is known to fly across the globe every other week selling fertilisers and closing deals. Imaspro exports to 30 countries.

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[size=12]Tong has been solely responsible for the growth of Imaspro into a leading exporter of pesticide in Malaysia.

He has single-handedly led Imaspro to break new markets and increase its overseas presence despite growing protectionism in this segment. “He is very savvy and can talk to anybody. His networking in the international agrochemical business is very strong,” said the fund manager.
Tong is also the biggest shareholder of the company, and holds 40% in the company via his vehicle Swiss Revenue Sdn Bhd.
Business-wise, Imaspro is principally involved in the manufacture of pesticides and plant micronutrients, and the distribution, agency and trading of pesticides and other agrochemicals.
It has a further edge in the form of 277 product registrations in the domestic and overseas markets.
It is this 277 product registrations that has enabled Imaspro to secure new markets, particularly in the eastern European countries.
It also has a 43-acre research centre in Jasin, Malacca.
Imaspro was listed on Jan 20, 2008 at a price of 75 sen at a price earnings ratio of 7 times.
Thus, at Imaspro’s current share price of RM1.84, the stock’s share price has only appreciated 145% – and that’s after 7 years. Not exactly stellar.
The company’s earnings are stable. A check over the last five years show that the company consistently makes between RM6mil and RM9mil in net profits. The company has also been consistently paying 3.5 sen dividend every year over the last five years. The company has no gearing.
Cash pile
What has no doubt grown over the years is its cash pile. When it was first listed, it had some RM9.59mil in cash. Today, as of the second quarter to Dec 31, 2014, it has cash of RM51.32mil or a cash backing of 64 sen per share.
Some people feel that Dr Yu may have ideas on how to utilise that cash to fully unlock Imaspro’s value.
Since rumours of Dr Yu started circulating, the shares of Imaspro have indeed rallied.
Imaspro’s shares have risen from RM1.20 in early March to close at RM1.83 as of Thursday.
Despite the 44% year-to-date increase in its share price, the stock still only has a market capitalisation of RM147.2mil. At RM1.83, the stock is trading at a price earnings ratio of 16.99 times.
For the second quarter to Dec 31, 2014, Imaspro’s net profit was down 7.72% to RM2.44mil on the back of a 9.35% decrease in revenue to RM25.36mil.
For the six-month period, net profit was down 10.1% to RM4.28mil on the back of an 11.04% decrease in revenue to RM44.14mil.[/size][/size]

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