Keck Seng - The next decade

Keck Seng

- The next decade

Keck Seng (Malaysia) Berhad (Keck Seng) is a cash-rich and asset-rich company based in Johore. This is one company with a lot of lands that has not been revalued for over a decade or even longer than that.

Surprisingly, this Malaysian company is not majority owned by Malaysians, rather by three siblings from our "kiasu" neighbours, Singapore. I am really piqued how these three Singaporean siblings are able to own Keck Seng. There seemed to be no history or story about this as I could not find from any articles.

The three siblings, Ho Kim Swee (Executive Chairman), Dato' Ho Cheng Chong (Managing Director) and Ho Eng Chong ((Non-Executive Director) have been the "captains" of Keck Seng since more than several decades.

The three are not young anymore. Kim Swee is 70, Cheng Hong 68 and Eng Chong 65 know that time to managing Keck Seng is running out. How many more years can they hang on?

At the most, yours truly would give it a time frame of between five to ten years. Then whom do you think would be the new "captains" of Keck Seng?

If one is to read its 2014 Annual Report carefully, one is likely to find its clue there. Three of their sons and one nephew are sitting in the Board of Directors.

The nephew, Chan Kui Ming 45, is the Executive Director. The three sons, Ho Chung Kain 40 and Ho Chung Hui 39 are sons of senior Ho Kim Swee while Ho Chung Tao 41 is the son of Ho Kim Swee. These three sons  play the role as alternate Director.

In my opinions, these four are most probably likely to be next "new" group of captains of Keck Seng. Only time will tell if my prediction will be right or not. And I personally feel I should be also be spot-on this time.

Should my prediction be proven right, how will these new group of "young" chiefs  manage Keck Seng? Will it follow their seniors' style (China-man style as some commented) or will it be a new dawn for Keck Seng?

These "new" four juniors are also most probably educated in overseas unlike their peers and are more exposed in their thoughts. As such, there might be new changes in the direction of Keck Seng when the time comes.

Mind you, the present seniors have done a good job although not all will agree with it. Those who had kept Keck Seng shares (very patiently) for more than ten years ago would have seen their investment became free with the usual 8 to 10 sen consistent dividends over the period.

Not only that, Keck Seng has also done well in its investments in securities, notably realising a huge bumper profit from its investment in Parkway shares for a profit of RM260 million just a few years back.

The market had then anticipated that Keck Seng would distribute this windfall of almost 95 sen per share to its shareholders. But somehow, the  management must have thought differently and it became a BIG DISAPPOINTMENT to its shareholders. (I wrote about that on December 21, 2013, the title : When the drum stops beating for Keck Seng).

As a result of its good investments in securities and a bit of land sale to the government, Keck Seng has seen its cash ballooning over the years.

The 2014 Annual Report stated that its cash is RM972 millions (comprising  cash at bank : RM117, money market : RM186, deposit with licensed banks : RM457 and foreign financial institutions : RM223) millions respectively.

There are RM424 millions from its investment is securities (comprising quoted in Malaysia : RM155 and quoted outside Malaysia : RM268) millions respectively.

Keck Seng also has stakes in other listed companies, one of it is cash rich plantation company, Chin Teck Plantations Berhad (Chin Teck).

The latest 2014 Annual Report of Chin Teck showed that Keck Seng is the 6th largest shareholder with a 3.05% stakes or 2,784,375 shares.

Keck Seng must be holding onto "that" position in Chin Teck since more than a decade ago or even longer.

Till today, Keck Seng has also been very reluctant to even revalue its land bank (which some of not been revalued since decades ago). Revaluing its land bank at current time would have surely heighten up interest in this stock.

If it decides to do so, surely Keck Seng's current depressed share price of just over RM5 (compared to its near two year high of RM7.97 on Nov 4, 2013) would have seen some appreciation.

But wait, this is unlikely to happen anytime soon. The current management of Keck Seng are just contended with Keck Seng at the moment and are most probably happy with it.

Perhaps in the next decade, when that "anticipated" set of new management takes over then we might see some kind of new excitement play in Keck Seng? Until then, we just have to wait patiently .....

As one blogger of iinvestor.com by the name of prudentinvestor posted : Invest in Keck Seng only if you are extremely patient and have the holding power.

Incidentally, do you know of any investors who have been holding onto Keck Seng shares for more than 10 years? If you are one, I would be more than happy to know.

I believed I knew one investor who fits perfectly into that category. This investor has been holding onto her original 1,000 shares (now 1,500 shares) of Keck Seng since Nov 2, 1999. That is more than 15 years already!

This investor is the spouse of yours truly!