KUALA LUMPUR (Nov 30): A strange thing happened at Protasco Bhd on 24 November 2015, when it released a record profit of RM23.56 million in its third quarter ended 30 September 2015, and subsequently announced proposal to undertake a private placement of up to 34.07 million shares to raise RM51.1 million as working capital. The market had responded on the company surprised proposal, with share price tank from RM1.70 to RM1.56 as of first session closing 30 November 2015.

"The cash level is worrying, and why need a Private Placement to dilute all shareholders if business is so good?', commented a senior investment banker.

Cash drop quarter to quarter

In the company latest quarterly report ended 30 September 2015, year to year, amount owing by contract customers ballooned from RM102.11 million to RM250.81 million. Deposits with licensed banks plunge from RM187.61 million to RM36.97 million. Receivables had piled up to RM336.86 million compared to RM285.59 million previous year.

Another thing peculiar was an apparently sudden decision by independent director Mohd Ibrahim bin Mohd Nor, which resigned on 1 October 2015, ahead of quarterly report.

Earlier on 17 January 2015, Focus Malaysia Highlighted Protasco "other expenses" ranged from RM63 million to RM83 million between FY06 until FY13.

Dubious board independence raises governance questions

Market consensus perceives the current level of governance in Protasco does not provide much confidence to investment community especially under current single largest shareholder cum Managing Director, Dato Sri Chong Ket Pen. Chong has not less controversial in recent years and was disputed for fraudulent transactions when he ousted Protasco other major shareholders late year 2014, where his personal transaction with Protasco was reveal. Earlier in year 2012, his longtime partner Dato' Hasnur Rabiain bin Ismail resigned as Executive Director. The frequency and pattern of turbulence was perceived as power struggler and shareholder fight, where Protasco was used as a shield. During the period of year 2012 until early year 2015, Chong was the only executive director in Protasco.

What’s interesting is that there are at least two patterns in common. The cash level of the company is draining very fast over the years, coincidently parallel with Protasco loose of control by other major shareholders from year 2012-2015 except Chong. In other words, cash run is co-related to certain interest party power gain over time.

Of course, other than the very public boardroom tussle at Protasco Bhd last year, there’s no indication that these financial irregularity, especially the dubious oil & gas transaction was linked to Chong. "If the MD is the only executive director in the company, his finger print is every where." commented a banker.

Nevertheless, it’s worthwhile identifying the pattern that can be discerned from studying the companies’ Bursa announcements. The Private Placement is truly outstanding to test the governance level of corporate Malaysia.

[Governance Leak Report]

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KUALA LUMPUR (Nov 24): Protasco Bhd has proposed to undertake a private placement of up to 34.07 million shares to raise RM51.1 million as working capital.

In a filing with Bursa Malaysia today, the construction outfit said these new shares, which represent about 10% of its total issued and paid-up share capital, are meant to be issued to independent third party investors to be identified later.

The group also said the placement shares will be priced at a discount of not more than 10% to the volume weighted average market price for five market days, immediately preceding the price fixing date.

Based on an indicative issue price of RM1.50, Protasco said it expects to raise up to RM51.1 million, with RM49.9 million or 97.65% to be utilised as working capital.

The remaining RM1.2 million is set aside for estimated expenses incurred for the corporate exercise.

It noted its net gearing will reduce to 0.48 times from 0.56 times currently after completion of the proposed exercise.

The group expects the private placement to be completed by the second quarter of 2016.

Shares in Protasco closed unchanged at RM1.64, for a market capitalisation of RM554.1 million.

(source: http://www.theedgemarkets.com/my/article/protasco-raise-rm511m-private-placement)

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KUALA LUMPUR, Nov 24 — Protasco Bhd recorded RM23.559 million in profit after tax (PAT) in its third quarter ended Sep 30, 2015, compared to a PAT loss of RM61.261 million registered in the same period last year.

“The improvement was mainly due to the impairment loss provided on the investment of PT Anglo Slavic Indonesia during the current quarter in the last preceding year,” the company said in a filing to Bursa Malaysia today.

It said, however, taking aside the impairment, the group registered a growth of 9.4 per cent as compared to the same period in the last preceding year, mainly from the contribution of the maintenance segments.

Protasco’s revenue slipped to RM303.979 million versus RM318.985 million recorded previously. — Bernama

(source:http://www.themalaymailonline.com/money/article/protasco-records-rm23.5m-profit-after-tax-in-q3-2015)