Keck Seng's rising cash hoard and shrinking share price

Keck Seng's

rising cash hoard and shrinking share price

Towards the last several few weeks of end 2013, there were plenty of "hue and cry" about Keck Seng's then-potential bumper dividend of as much as nearly RM1.00 to be paid out - as the date -line was approaching.

Alas, there was no bumper dividend at all in the end apart from the normal final and interim dividend (which I am dammed sure many minority shareholders would frown at such peanuts' dividend payout).

There were talks that should Keck Seng decided not to pay out the bumper dividend, the "money" would be forfeited by the Inland Revenue Department. I remembered writing about Keck Seng in my blog dated : Dec 21, 2013  (The drum  finally stops beating for Keck Seng) asking if any readers would have any knowledge about what would happen to that "money" in the event of non-bumper dividend payout. There was not a single response at all from any readers regarding this question.

Rising cash hoard

Well, the money is still there in the bank and it is in fact rising by every quarter. The Annual Report 2013 of Keck Seng revealed that cash and bank balances stood at RM917,837 million (ending 2013) as compared to only RM761,093 million (ending 2012).

Since then, that amount of cash has rising even more to RM969,888 million by the end of 1st Qtr 2014. There is a very strong possibility that the cash hoard will surpass RM1 billion by end of 2nd Qtr or the latest 3rd Qtr 2014. If one is to include Keck Seng's investment securities's value of RM426,909 million (as at end of 1st Qtr 2014),  then "kiam siap" Keck Seng would be sitting on a massive cash hoard of nearly RM1.4 billion. How many listed companies in Bursa Malaysia do have that kind of money?

And we do not even talk about its three business i.e. Plantations and Manufacturing, Property and Hotel and Resort that normally yield positive profits every year.

What about its "never-revalued" big acres of land in Johore Bahru? Keck Seng has Freehold and Leasehold Land for Agriculture and Housing Development that were last revalued in ..... 1980! Imagine now is 2014. This means Keck Seng is still carrying its books value based on 34 years ago!

Keck Seng has also several buildings and hotels in USA, Canada, Kuala Lumpur, Singapore and Johor that were revalued at decades ago. It is a strange thing that the management of Keck Seng has chosen not to even revalue these "valuable" assets at all these past years.

Shrinking share price

Despite all well being for Keck Seng until at this point, its share price is not reflected at all. After peaking at RM7.97 on Nov 4, 2013, Keck Seng's share price started to hover at a lower range most of the times. The last nearly two months must be torrid moments for minority shareholders as its share price continued to head south from RM7.19 on June 11 to RM6.55 on Aug 1, 2014.

Although the current price of RM6.55 on Aug 1 is a decline of 18 % from its peak of RM7.97 on Nov 4, 2013, Kassim believes strongly that the downside seems less at the moment. The fundamental of Keck Seng is all there to see. What else can it go wrong?

Share buy-back

This must be a "non-existing" share buy-back exercise at all - in my opinion especially since June 2012. Why? Keck Seng only purchased 10,000 shares in June 2012, Dec 2012, July 2013, Dec 2013 and on July 2, 2014. Just a total of 50,000 shares only! Prior to that, at least Keck Seng was more active in its share buy-back exercise programme, purchasing as many as 1,245,300 shares BEFORE June 2012.

For a company with so much money, it is indeed very measly to spend so little to buy back its own shares from the open market.

"Fantastic Four" of Keck Seng

Regular readers  reading the online comments in the i3investor.com blogspot, would have noticed that Superdaddy, leslieroycarter, prudentinvestor and stockoperator have been actively sharing views and comments about Keck Seng for a long time.

And they are have been championing Keck Seng every now and then and sometimes with their good questions and answers. According to prudentinvsestor's comment posted on July 23, "EcoWorld would be a ready buyer of Keck Seng's plantation land next to Taman Kota Masai when its land is depleted within the next few years". If this is true, isn't this wonderful for Keck Seng as it just wait for a good offer from this "land-hungry" EcoWorld?

SYABAS to these fantastic four. Please continue to share comments and views in 3investor.com blogspot. Kassim really enjoys reading the comment everytime and look forward to it.

"Action" of Keck Seng's Management

What has the management of Keck Seng done so far this year? If one is to scroll through the announcement page of Keck Seng in Bursa Malaysia, very little action was being carried out by the very conservative management.

The latest (and in fact only action so far this year) was the announcement by Keck Seng (Malaysia) Berhad regarding its' wholly owned subsidiary, KSG Enterprise Limited.

It reads as : "Acquisition of Asset by wholly owned subsidiary, KSG Enterprises Limited

Reference is made to the Announcements made on 28 May 2014, 30 May 2014 and 3 June 2014 on the acquisition of Asset by  Keck Seng (Malaysia) Berhad's wholly owned subsidiary, KSG Enterprises Limited. (“the Acquisition”).

The Board of Directors of Keck Seng (Malaysia) Berhad ("KSM") is pleased to inform that the Sale & Purchase Agreement was subsequently assigned by KSG Enterprises Limited to KSNY Enterprises Limited, a newly incorporated and wholly owned subsidiary of KSG Enterprises Limited. The Acquisition has been completed on 24 July 2014, US Eastern Time as advised by KSM's Lawyer.

This Announcement is dated 25 July 2014."

Actually this is a Non Related Party Transcation.

Personally I believed that minority shareholders would have love to see the management being involved in more pro-actions activities that would have enhanced the value of its share price. But knowing the very conservative style of the management, it is not a surprise that nothing has been done so far this year. As such, the share price of Keck Seng will continue to drift sideways for some time to come.

As my spouse still holds 1,500 shares of Keck Seng, the 18 % decline is also being felt, too.

Syabas to the unsung heroes and heroines

Recently my dad was admitted at Hospital Lam Wah Ee, Penang for an appendicitis which required surgery in July. He was warded for nearly ten days at the Open Ward Section No. 515. I spent a lot of my time there looking after "his little needs of this and that" for hours over several days. I had the opportunity to observe and interact with the Staff Nurse (Male and Female), Assistant Nurse and those supporting staff (ex. serving meals and cleaning up the ward).

I must say my dad and myself were most pleased with the ways they performed their duties with most concern and care. They simply get on with their jobs without any tempers (despite the Open Ward being full with patients before Hari Raya). And questions and request for assistance were met promptly without any unpleasant feeling.

A BIG THANK you again for a job well done.

If any of the readers (who are working at Lam Wah Ee Hospital or have friends working there), please help to convey this deserving compliments from the bottom of my heart to them.

They deserved a big pat! They are truly the unsung heroes and heroines of the hospital who truly get on with their duties without any fuss and with full of diligence.