Bursa Malaysia has publicly reprimanded Benalec Holdings Bhd and its 3 executive directors for breaching the Bursa’s Main Market Listing Requirements in 2012, including the failure to appoint independent advisers and procure shareholders’ prior approval for related party transactions involving Benalec agreeing to sell land to a company related to some of the directors. The Managing Director Dato’ Leaw Seng Hai was fined RM50,000. Datuk Leaw Ah Chye and Datuk Leaw Tua Choon, executive directors that resigned in 2013, were fined RM100,000 each (Bursa Malaysia).

Comments: There was controversy surrounding this transaction in the past that led to a family feud and the departure of the 2 executive directors. The move by Bursa Malaysia will not have a financial impact on Benalec as only the managing director and former executive directors are fined in their personal capacity. But there will be reputation damage for the company with regards to corporate governance. Maintain Hold on Benalec with RM0.73 target price, based on FY16E PE of 12x.

Source: Affin Hwang Capital Research - 12 Aug 2015