[1168] Of what is up with Suria Capital Holdings?

In between writing papers, I scourged the internet today to look for good companies which I could reasonably park my idle cash in. It did not include deep research but rather, just casual reading. After awhile, I stumbled upon Suria Capital Holdings Berhad and it looks reasonably okay. The company operates ports in Sabah and, according to various reports, is cash rich. Further, future outlook for ports in Sabah is rather rosy especially with increased production of palm oil as well as discovery of new crude oil fields in Sabahan waters. The ports of Sabah is expected to be beaming with activities. I was all excited, looking for the final push to buy Suria Capital’s share until I saw Parti Bersatu Sabah alleges that Suria Capital might be sold to private sector group:

KOTA KINABALU: Parti Bersatu Sabah (PBS) today urged the State government to confirm reports that it was in the process of selling its controlling shares in Suria Capital Bhd. to private sector groups. [PBS : BN government planning to sell Suria Capital. Parti Bersatu Sabah. Januart 29 1999]

At the moment, Suria Capital Holdings is controlled by the state government of Sabah.

Upon seeing that, I immediately realize that some of the risk associated with buying the a piece of the Company. It is politics of protectionism and it could be problematic. Yet, it was way back in 1999.

While I have not heard a real controversy involving the company yet, in my mind, the probability of such thing happening increased tremendously after I read a report written as late as January 2007 that a possible buyer of Suria Capital might be Temasek Holdings, the investment arm of the Singaporean government:

PETALING JAYA: Suria Capital Holdings Bhd, which operates all of Sabah’s seven ports, has caught the eye of Singapore government-linked companies (GLCs).

The GLCs are keen to acquire a substantial stake in Suria, sources told StarBiz yesterday. If a deal were struck, the Singapore GLCs would have equity exposure to the ports in Sabah, which is believed to be the world’s biggest exporter of palm oil. [Singapore GLCs eyeing Sabah ports. The Star. January 18 2007]

Whoa!

There is no other interesting news regarding Suria Capital except for this:

Suria Capital Holdings Bhd has proposed a two-into-one share capital reduction and the reduction of its share premium account to eliminate its accumulated losses, which stood at RM352.04 million as at Dec 31, 2006. [Suria proposes 2-into-1capital reduction. The Edge Daily. April 2 2007]

That led to this:

Suria Capital Holdings Bhd share price fell as much as 18.8% or 13.5 sen to a month’s low of 58 sen in early trade on April 3 after it proposed a two-into-one share capital reduction. [Suria down 18.8% to 1-month low on share capital reduction. The Edge Daily. April 3 2007]

In return:

Suria Capital Holdings Bhd’s capital restructuring plan will not have a negative impact on the value of its shares, its group managing director Datuk Abu Bakar Abas said.

He said on April 5 that the technical adjustment on the share price would reflect the same value immediately before and after the exercise. [Revamp no impact on Suria Capital share value, says MD. The Edge Daily. April 4 2007]

I will not pretend to understand why the price fell but it has since recovered some ground. For today in fact, the price has risen to approximately 75 sen from 68 sen.

So, should I buy or pass?

After making a killing at Dialog, I am feeling a little bit gung-ho. Hmm…

Nevertheless, with limited time for research and subsequently, information, the fundamentals seem to be there.