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CITAGLB [7245] : The journey to Becoming a Strong and Competitive Company

Publish date: Wed, 11 Jan 2023, 12:54 PM
You Never See It Coming...

The story of Citaglobal Bhd's transition began on June 15th, 2022 when the company announced its proposed acquisition of Citaglobal Engineering Services for RM140 million, with a profit guarantee.

ReferenceCitaglobal Bhd plans Citaglobal Engineering buy for RM140 mil, five-to-one share consolidation

Citaglobal Bhd, a company based in Malaysia has announced that it plans to acquire Citaglobal Engineering Services for a total cost of RM140 million, and to do so, it will issue 736.84 million new shares at 19 sen per share. The acquisition comes with an aggregate net profit guarantee of RM60 million for three full financial years of 2022, 2023 and 2024. As part of the deal, Citaglobal also plans to consolidate its shares, reducing the number of shares held by each shareholder but increasing the value of each share. Additionally, TIZA Global's shareholding in the company will increase from 0 to more than 33%, and as a result, TIZA Global will be obligated to extend a mandatory offer to acquire all the remaining securities in Citaglobal. The completion of the proposed acquisition is expected to be by the 3rd quarter of 2022, while the proposed share consolidation is expected to be completed by the 4th quarter of 2022.

Next, on August 31st, 2022, Citaglobal has won a RM373.5 million contract for the engineering, procurement and construction of an inland port in Perlis.

ReferenceCitaglobal wins RM373.5 mil Perlis Inland Port EPC contract

Citaglobal Bhd has been awarded a contract worth RM373.5 million to provide engineering, procurement and construction services for the first phase of the Perlis Inland Port (PIP). The contract was given to a subsidiary of Citaglobal named Citaglobal Land Sdn Bhd (CG Land) which is to undertake this EPC contract for a period of 24 months. This contract represents 85% higher than Citaglobal's current market value of RM202 million and is expected to contribute positively to the company's future earnings and net assets per share for the financial years ending December 31, 2022, to 2024. This EPC contract will double the existing order book of Citaglobal by June 30th to approximately RM755 million, from RM381 million.

On September 19, 2022, Citaglobal announced that the YDP Agong has announced that he has increased his shareholding by 12.4%. A very clear indication that Citaglobal is likely to experience sudden increase in value.

Reference :YDP Agong raises his stake in Citaglobal Bhd to 12.4%

Yang di-Pertuan Agong (YDPA), has increased his stake in Citaglobal Bhd from 9% to 12.4% through an off-market transaction of 32.1 million shares at 19 sen, according to sources. The seller is believed to be YDPA's cousin, Tengku Uzir bin Tengku Ubaidillah, who was previously the executive chairman and CEO of Citaglobal before Tan Sri Dato’ Sri (Dr.) Mohamad Norza Zakaria took over in 2019. The move comes a day after Bursa Malaysia approved the asset injection of Citaglobal Engineering Services Sdn Bhd, a private company of Norza, into the listed entity, which will help to increase his stake in Citaglobal to over 55%. The company also recently won a RM373.5 million contract for the design, construction and equipping of the first phase of the Perlis Inland Port, which may signal more opportunities in the future.

After that announcement, Citaglobal has issued an official statement that they have reached a final resolution with Datuk William Tan Chee Keong and Choi Chee Ken by agreeing that neither party will appeal the High Court’s decision in the RM59.21 million lawsuit relating to a profit guarantee.

ReferenceCitaglobal reaches settlement over 'profit guarantee' suit as King raises stake in group

Citaglobal Bhd has announced that they have reached a final resolution with two parties, Datuk William Tan Chee Keong and Choi Chee Ken, regarding a lawsuit involving a profit guarantee of RM59.21 million. Both parties have agreed not to appeal the decision made by the High Court and Citaglobal has also agreed to pay for their solicitors' costs. It was also stated that this settlement is final and no party is admitting to any liability. This resolved case is the latest development for Citaglobal, a company that is currently led by Tan Sri Mohamad Norza Zakaria, and is also a substantial shareholder for Yang di-Pertuan Agong Al-Sultan Abdullah Ri'ayatuddin Al-Mustafa Billah Shah.

Citaglobal announced on October 7, 2022 that they are entering the renewable energy (RE) industry through a collaboration with Genetec Technology Bhd on battery development. This is a clear indication that Citaglobal has taken steps to transition their business activities and upgrade their company's performance.

ReferenceCitaglobal to make foray into RE with Genetec battery development collaboration

Citaglobal Bhd announced on October 7th, 2022 that it is entering the renewable energy industry through a battery development collaboration with Genetec Technology Bhd. The two companies have signed an exclusive collaboration agreement to develop battery energy storage management systems, which would store and manage excess power during the generation of renewable energy. The collaboration is expected to form part of Citaglobal's strategic plans to transform into a conglomerate with involvement in renewable energy, facilities management, telecommunications, infrastructure, and technology sectors. The group is currently involved in civil engineering and construction, oil and gas, power generation, property development and manufacturing.

On December 21, 2022, Citaglobal announced that they have officially entered into a 50:50 consortium partnership with Reneuco to develop an independent power producer (IPP) project for the East Coast Rail Link (ECRL) network. 

ReferenceReneuco-Citaglobal consortium wins bid to develop IPP project for ECRL

Citaglobal Bhd and Reneuco Bhd has announced that they are officially entering into a 50-50 consortium to develop an independent power producer (IPP) project for the East Coast Rail Link (ECRL) network. The consortium, which , will be responsible for planning, designing, financing, building, installing, and operating the project. The proposal submitted by the consortium involves supplying renewable energy to commercial or industrial parks along the 640km alignment of the ECRL. The project's cost has not been revealed. The award is subject to a formal contract agreement between the consortium and MRL which will be executed in due course. The partnership will be focused on showing their ability to accelerate sustainability and green mobility, particularly along the ECRL alignment.

On January 9th, 2022, Citaglobal officially announced that it has signed a memorandum of understanding (MOU) for the proposed development of a battery cell manufacturing plant and battery energy storage system (BESS).

This MOU is in line with Citaglobal's announcement on October 7, 2022, where the company entered into a collaboration with Genetec Technology Bhd.

ReferenceCitaglobal inks deal with Indonesian state-owned firm for battery energy projects

Citaglobal Bhd has announced that it has signed a memorandum of understanding (MOU) for the proposed development of a battery cell manufacturing plant and battery energy storage system (BESS) in partnership with PT Industri Baterai Indonesia or Indonesia Battery Corporation (IBC). IBC is a corporation owned by four Indonesian state-owned enterprises with the goal of developing the battery industry ecosystem in Indonesia. The MOU will be in effect for one year and its intention is to capitalize on the growing market for electric vehicles and the increasing need for battery storage in the renewable energy sector.

I also want to remind all readers that on December 22, 2022, Citaglobal officially announced that it has exited the bauxite mining business.

Citaglobal exits bauxite mining business

Citaglobal Bhd announced that it is exiting its bauxite mining venture to focus on a portfolio of businesses that include civil engineering and construction, oil and gas, power generation, property development, manufacturing and renewable energy. They will be divesting its entire 49% stake in SE Satu to Spring Energy Sdn Bhd for RM4.8 million, but retain the 31.31ha of freehold agricultural land for the development of a renewable energy generation project along the East Coast Rail Link. This decision is in line with the company's vision of exiting legacy business and participating in technology-driven sectors. Citaglobal will end up paying Spring Energy RM5.28 million, being the net effect of the two transactions.

What do you need to know from all the stories above?

Citaglobal is moving towards a new, more competitive business dimension and this will increase the company's profits. The involvement of the YDP Agong is also an advantage for Citaglobal to move forward.

Based on fundamental analysis, it can be deduced that Citaglobal will have a positive impact and this will increase the stock market price to be higher than its current value.

In summary, a company that is actively expanding its business portfolio, especially in high-demand fields, is likely to yield positive returns in the future. I wrote this article to help you understand why Citaglobal is likely to have a high market capitalization in the future.

I am not promising any certainty but please refer to the article released about Cypark when the stock was at 42 cents.

Cypark Resources Bhd [5184] : A Compelling Investment Opportunity in Renewable Energy

Please note that all investment decisions are yours. I am just providing guidance for you to select stocks that will provide decent returns.

Enjoy the profit and thank me later!

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