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KUB at another crossroads
Khairul Khalid 
Abdul Rahim is turning around the company by shedding non-core businesses
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Palm oil producer and restaurant chain operator KUB Malaysia Bhd has been gaining some ground since Datuk Abdul Rahim Mohd Zin came on board as president and CEO in 2015.

However, with the emergence of new major shareholder Anchorscape Sdn Bhd, there are concerns over the company’s future business direction.

Although Anchorscape has stated that it does not foresee major changes in KUB’s business and management, a local analyst believes it is still too early to tell.

“KUB is a politically-linked company. Elections are looming, and anything can happen. The new majority shareholder could lead to some changes in the company,” he tells FocusM.

When Abdul Rahim took over as head honcho, KUB was struggling with minimal profits 

He says investors will be particularly interested to see if KUB will stay the course with its restructuring plan.

“The new owner might open up new business opportunities in sectors that aren’t part of KUB’s core businesses. It will be interesting to see if KUB embarks on diversification and decides to venture into non-core businesses,” he adds.

When Abdul Rahim took over as head honcho, KUB was struggling with minimal profits. He implemented a three-year turnaround plan and hived off some non-core assets, resulting in significantly higher profit.

It is focusing on three core businesses – energy (liquefied petroleum gas), plantations (palm oil) as well information and communication technology.

Last month, KUB received an unconditional mandatory general offer (MGO) from Temasek Padu Sdn Bhd at 35 sen a share. KUB’s substantial shareholder Gaya Edisi Sdn Bhd, through its wholly-owned unit Anchorscape, triggered the MGO and exercised its call option to buy out the Minister of Finance Inc’s KUB shares at 35 sen each.

The call option was agreed upon in June 2015, two months before Abdul Rahim came on board and was due to expire last month.

Gaya Edisi says it would consolidate all its shares in KUB under Anchorscape. On completion of the exercise, Anchorscape will end up with a controlling 52.17% stake in KUB.

Offer not fair and reasonable

Subsequently, KUB’s minority shareholders were advised by independent adviser Affin-Hwang Investment Bank to reject the takeover offer because it deems the offer as not fair and reasonable.

Gaya Edisi is Anchorscape’s holding company and a wholly-owned subsidiary of Temasek Padu, which is deemed the ultimate offeror in the deal.

Temasek Padu is believed to be a well-connected company and wholly owned by Bank Islam Trust Company (Labuan) Ltd. Prominent lawyer Datuk Zulkifly Rafique of Zul Rafique & Co and his partner and KUB director, Tunku Alizan Raja Muhammad Alias, are said to control Temasek Padu via the trust company.

Zulkifly is the brother of former Federal Territories minister Datuk Zulhasnan Rafique. He is believed to be involved in the restructuring of some prime assets including Temasek Padu, which holds a 40% stake in Subang Skypark Sdn Bhd via Anggun Intelek Sdn Bhd.

Subang Skypark, headed by Tan Sri Ravindran Menon, operates retail shops and a private jet facility at the former Subang airport.

Temasek Padu has stated that it plans to maintain KUB’s status as a listed company.

For its financial year ended 31 Dec, 2014, Temasek Padu posted revenue of RM781.7 mil, net profit of RM20.75 mil, and had total assets of RM828.88 mil.

Although Anchorscape says it intends to continue with KUB’s existing businesses and operations, it still leaves the door open for potential changes.

“Nevertheless, the offeror (Anchorscape) may review KUB group’s businesses and operations and make any arrangements, rationalisation and reorganisation of KUB group that the offeror considers suitable for future growth of KUB’s group businesses and operations,” says Anchorscape.

Anchorscape, a dormant company incorporated in 2014, stated its business as “the export and import of a variety of goods without any particular specialisation,” as well as various real estate activities.

Its last filed accounts were for financial year ended Dec 31, 2014 when it posted no revenue, RM3,700 loss after tax and RM972 in total assets.

Radimax could open doors for KUB

Darhim Dali Hashim and Abdul Rahman Mohd Redza are named as persons acting in concert in the MGO exercise. Darhim is group CEO of Radimax Group Sdn Bhd, a company involved in shipyard and engineering, trading and services, marine transport and logistics as well as integrated facilities management.

Radimax, formerly known as Realmild (M) Sdn Bhd, is also a wholly-owned subsidiary of Temasek Padu, the prime mover in KUB’s MGO exercise.

“Radimax could open up other business avenues for KUB,” says the analyst.

For its financial year ended Dec 31, 2015, Radimax posted net profit of RM20.15 mil on the back of RM653.76 mil revenue.

Abdul Rahman is an Umno assemblyman in Linggi, Negeri Sembilan and a practicing lawyer at Zul Rafique and Partners, owned by Zulkifly, who is a director of Radimax and Gaya Edisi.

Prior to joining KUB, Abdul Rahim was Radimax group CEO from 2010 to 2015. Thus, the new major shareholder can be seen as a “friendly party” and the KUB CEO could continue to oversee his restructuring plan.

The analyst believes KUB’s restructuring has to continue although growth in its other businesses is still uncertain.

“The CEO (Abdul Rahim) has done a good job so far, putting KUB back into the black and shedding non-core businesses, but growth areas are still limited. For example, it remains to be seen whether its plantation expansion will add significantly to the bottom line. It will be interesting to see if the new shareholders will take the company into other sectors,” he says.

As part of its restructuring, KUB sold its 88.29% stake in A&W Restaurants (Thailand) Co Ltd in December 2015 to a Thai, Kulpavee Chalermmeateewong, for RM3.69 mil.

It also sold its 100% stake in KUB Builders Sdn Bhd to Dynacorp Asset Management (M) Sdn Bhd for RM2. In June 2015, KUB sold its engineering and construction business KUB Precast Sdn Bhd to Jeks Precast Sdn Bhd for RM19 mil.

For its first quarter ended March 31, KUB registered higher net profit of RM8.02 mil from RM5.57 mil a year ago on the back of higher revenue of RM148.59 mil from RM122.73 mil.

Another of KUB’s high-profile business is fast-food chain A&W Malaysia, which Abdul Rahim admits is still struggling. The company has been trying to sell the franchise for years, but failed to get the right price.

In its financial year ended Dec 31, 2015, A&W (Malaysia) Sdn Bhd posted a net profit of RM1.12 mil on the back of RM45.08 mil revenue and had RM17.92 mil in total assets.

This article first appeared in Focus Malaysia Issue 241.