20 June 2012
Mulpha International Bhd's shareholders approved plans to undertake a dividend reinvestment plan to allow shareholders to reinvest their dividend in new ordinary shares, board of directors exploring ways to close gap between NTA and market price - executive chairman Lee Seng-Huang
Mulpha International Bhd, which is trading at a large discount to its net tangible assets (NTA), is looking at narrowing this gap, according to executive chairman Lee Seng-Huang.
“We are very frustrated with the share price performance. The market price and NTA gap is very large. The board (of directors) is exploring ways to close the gap,” he said after the company's AGM.
As at March 31, Mulpha International's NTA stood at RM1.32 while its share price was 41 sen at the close yesterday.
Lee said the group would close the huge gap between its share price and NTA either through a share buyback programme or assets disposal that was above NTA.
“We are also looking at acquisition opportunities in the region but so far have not seen anything that was compelling in terms of value. Thus, we see more value in our share buyback exercise,” he said, adding that Mulpha had bought back 3% to 4% of its shares.
Mulpha is one company which believes in rewarding shareholders through share buybacks rather than dividend payment. The company had made numerous share buyback exercises to boost its share price.
The company started buying back its shares in 2001 when the share price was trading below 40 sen for most of the time. It continued its buyback effort in 2002 and 2003 until it reached the maximum 10% of share capital allowed.
The exercise saw its share price appreciate. Subsequently, the company repeated the share buyback exercises over the past few years.
Lee explained that by selling land it could unlock the NTA and use the proceeds to buy another piece of land which was more value accretive.
Asked if its options included privatisation, Lee said: “That's not a decision of the board. The board cannot take the company private. Certain shareholders may have to consider the options.”
Meanwhile, he said the company was “pretty much done” in terms of disposing of its non-core business, adding that the company had sold off the crane and paint business.
According to reports, Mulpha recently sold its 31,516 sq ft land in Jalan Sultan Ismail for RM104mil, or about RM3,300 per sq ft.
At the AGM, shareholders also approved Mulpha's plans to undertake a dividend reinvestment plan to allow shareholders to reinvest their dividend in new ordinary shares of 50 sen each.
Separately, Lee said it was “not high priority” for the company to enter a new market, especially new developing markets like Vietnam. He said the company still had 2,000 acres of undeveloped land in Malaysia.