Johor Corp restructuring
JOHOR Corp Bhd is said to be in the midst of a full-scale restructuring. It would be a timely and potentially necessary move for the state investment arm of Johor.
As StarBizWeek has highlighted this week, large corporations are being nudged to reorganise themselves in light of the economic distress brought about by the Covid-19 pandemic. It is a wake-up call for organisations to future-proof themselves and address environmental, governance and sustainability issues.
In JCorp’s case, the group has a massive RM23bil worth of assets but also has RM14bil in liabilities. JCorp has a diverse set of assets, in industries such as plantations, hospitals, fast food chains, property development and real estate development trusts.
It also has stakes in a number of listed companies in other industries. In the past, there had been concerns that JCorp had struggled to repay some of its debt and as a holding company, it was one that could boast of owning prized assets but which had not been able to receive sufficient cash returns from its investments.
Among the significant corporate exercises that JCorp had been mulling to do include 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.
First talk of its listing was in 2019 prior to the pandemic. It is left to be seen how much its profit numbers have been hit in the last two years and if it can secure a decent valuation going to market now.
Earlier in the year, there were reports that JCorp was looking to do a corporate exercise involving KPJ Healthcare Bhd, where it owns 38%. The hospital group runs more than 28 specialist hospitals in Malaysia and also has investments in hospitals in Indonesia, Bangkok and Bangladesh as well as in a retirement resort in Australia.
Bloomberg had reported that JCorp was looking bringing in an investor with experience in the sector or a merger with another hospital operator. While there are no updates on the QSR listing or the KPJ merger and acquisition deal, JCorp will be closely watched as indications are that it is beginning its restructuring journey.
Just this week JCorp increased its stake in Damansara Holdings Bhd after buying a 49.57% stake in the company for RM78.91mil. JCorp had in fact sold that same stake in the company to a businessman in 2014, only to this week buy it back at the same price. It is left to be seen what JCorp does now with the facilities and project management firm.
Reversing a boom
THE suspense of Top Glove Corp Bhd’s financial results was not like what it was before when investors were wondering what the impact of the start of the pandemic was on the rubber glove industry.
This time, investors were greeted with a more realistic set of financial results after understanding the shutdowns and the tapering prices of rubber gloves have had on the entire rubber glove industry.
Top Glove’s financial results were not what analysts were expecting. The fourth-quarter numbers showed a big contraction that was brought about by the shutdown, falling demand and declining prices.
Top Glove HQ
Investors have known about the decline in average selling prices of rubber gloves and that was to be expected. Nothing goes up forever in prices. The fall in demand was surprising, possibly execrated by the US import ban, which now has been lifted.
But the steep drop in profitability has to be looked from a number of different perspectives. Firstly, the entire dynamics of the industry will change in the quarters ahead. Expect average selling prices to ease ahead and demand too would follow suit as vaccination rates worldwide rises.
Stockpiling will no longer be as prevalent as before, which is a factor that also contributed to the spike in selling prices.
Then there is the impact on the broader industry. What transpired during the boom times was a rush by new entrants into the market. That also added to the capacity the industry has that was built up by not only capacity expansion by existing players but also companies that have ventured into the business in search of a profit bump.
The next few quarters will be interesting to watch in terms of what will be the knock-on effects within the industry, domestically and abroad.
The one obvious thing is that the rubber glove companies will be making more money than before the pandemic started and maybe there will be a re-rating to recognise that in the time ahead.
Going its own way
FOR the longest time it was always believed that the private sector knows best. That remains largely true but it also depends on the complexity of the situation.
And when the business involves utilising government services, then it might make sense why the government might want to get into that act itself rather than leave the profit from a seemingly straightforward business today in the hands of the private sector.
The government has spoken about digitalising its services, and after a tug-of-war and a pandemic, the options are really in the favour of getting things done.
5G digital malaysia
The government, through the Malaysian Communications and Multimedia Commission (MCMC), is inviting public feedback on the development of a National Mobile Application or super app.
It said the app would potentially allow the public to pay bills, settle traffic summonses, renew driving licences and road tax, book a doctor’s appointment, access e-healthcare services, and register births and marriages online, among others.
The success and willingness of the public to adapt to the MySejahtera app will mean that there should be acceptance for a centralised method of utilising digiatlisation to conduct government services. And it does not need to role of the private sector to grant the public access to a suite of services digitally.