Eng Tek shares surge on talk of potential privatisation

KUALA LUMPUR: Eng Teknologi Holdings Bhd's stock yesterday surged the most in 16 months, after it said that some of its shareholders may come up with a corporate scheme which may lead to the privatisation of the company.


The stock jumped 19 sen to close at RM1.99 on a day when most of the markets were heading south.

The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index lost 14.67 points to 1562.58 points, with losers thumping gainers by a ratio of four to one.

In an out-of-the-blue statement to the stock exchange, Eng Teknologi said it was making the statement on the possibility of the company going private due to the unusual price movement and relatively heavy trading activity in its shares.

Nevertheless, Eng Teknologi also stated that it has not received any definitive proposal on the privatisation plan, but said that it will make the necessary announcement should there be any matter that requires an immediate disclosure.

Despite the company's vague statement on a possible privatisation exercise, investors threw caution to the wind and chased its shares.

Analysts, however, feel that if indeed there is a privatisation offer, the margins will be thin as Eng Teknologi's book value per share as at end of last year was RM2.22, while its last traded price yesterday was RM1.99.

The company last bought back its owns shares in October, paying RM1.83 a share to purchase some 14,900 of its own shares.

Also, investors normally give a 10 per cent discount to the offer price for a privatisation exercise, until the offer date nears maturity.

For the year ended December 31 2010, Eng Teknologi which makes hard-disk drives and consumer-electronics parts, posted sales of RM557.27 million and a group pre-tax profit of RM51.25 million compared with sales of RM474.89 million and a pre-tax profit of RM49.18 million in the previous financial year.