Just sharing.

GRAND CENTRAL ENTERPRISES SDN (GCE) ripe to be delisted.

tigerboy
Publish date: Tue, 10 Jan 2017, 05:01 PM
Just sharing what I feel about some KLSE counter.

Based on GCE last listed price of RM0.60 per share, the capitalization of GCE= RM118.2M

The Tan’s family via Tan Chee Hoe & Sons Sdn Bhd (48.86%) and Hotel Grand Central Limited (23.79%) control a total of 72.65% of GCE. Assume that the Tan’s family decided to delist GCE with an offer of RM0.80 per share. The money required to delist GCE= 27.35% x 0.80 x 197M = RM 43.1M

Based on cash of more than RM66M as stated in GCE quarter report ended 30-9-2016, the Tan’s family can delist GCE and still have cash of more than RM20M after payment to the minority shareholders.

There are a few reasons why the Tan’s family will want to delist GCE:

1)      GCE is under-value with NTA greater RM1.20 per share while traded under RM0.60 for most of year 2016.

 

2)      Based on present price of RM0.60/share, GCE market capitalization =RM118.2M =SGD 39.4 M (using conversion RM 3 = SGD 1) which is less than 5% of Hotel Grand Central Limited, Singapore (firmly controlled by the Tan’s family) with capitalization of SGD 908M as on 10th Jan 2017. GCE is basically a very small brother associate of Hotel Grand Central Limited. It does not make much economy senses for the Tan’s family to spend time and money to maintain the listing of GCE. It makes more economic sense for them to make GCE a 100% subsidiary of Hotel Grand Central Limited.

 

3)      Many online accommodation booking services like Agoda.com , Booking.com etc. all had feedback that GCE hotels are all strategically located at town/city central but some of the hotels are old/neglected. What GCE hotels need are Hotel Grand Central Limited management expertise and care, then it will able to shine again. Presently as an associate of Hotel Grand Central Limited, it does not get the necessary attention and hence underperform despite of having so many strategically located hotels in Malaysia. It will not reflect well on the controlling Tan’s family if GCE performs misery in the stock market. 

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Discussions
Be the first to like this. Showing 4 of 4 comments

riskabsorber

If you are still young, you can wait for this company to be delisted. Otherwise, the management will maintain the listing status and pay themselves luxury salaries and director fees.

2017-01-11 08:07

tigerboy

Actually the management can still pay themselves salaries and director fees after GCE delisted. They will be directors of GCE which will then be 100% owned subsidiary of Hotel Grand Central Limited, Singapore. The reasoning for delisting is that they can have 100% of GCE (at RM0.80/share) plus RM 20M cash without having to consider for minority shareholders and all the listing requirement (which cost money also). After all they already own 72.6% of GCE.

2017-01-11 12:56

kakashit

Yes, it could be the next theStore.

2017-01-11 16:38

Jeffreyteck

Only few are generous to pay good premium to minority shareholders for delisting. Good luck to all.

2017-04-04 19:38

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