FINTEC GLOBAL BERHAD
KLSE (MYR): FINTEC (0150)
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5354_
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Posted by 5354_ > 2020-09-23 10:17 | Report Abuse
Cover Story: The unfathomable rise of F&B operator Focus Dynamics to become a RM4 billion stock
AMONG the stellar performers on Bursa Malaysia this year is Focus Dynamics Group Bhd. Year to date, its stock has gained more than 350%, closing at RM2.28 last Friday, translating into a whopping market capitalisation of RM4.66 billion.
This market value is quite an achievement considering that, in the decade from 2009, it has only managed to register net profits in one financial year — in FY2017, when it chalked up RM3.48 million in net profits from RM31.65 million in revenue.
In the first quarter ended March 31 (1QFY2020), the company, whose main business is running food & beverage (F&B) outlets, registered a 21.2% year-on-year increase in net profits to RM748,000 while revenue slipped 6.7% to RM9.30 million. It had cash and bank balances of RM3.7 million and deposits with licensed banks amounting to RM1.95 million. It had little in terms of borrowings, with its interest expense at a mere RM218,819 for the three-month period.
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Since the company’s flotation exercise on the Mesdaq market of Bursa Malaysia on Feb 10, 2006, Focus Dynamics has yet to pay out any dividends. This is despite its saying at end-November 2017 that it had adopted a policy “to pay an annual dividend of up to 20% of its consolidated profits after tax attributable to owners of the company in respect of any financial year, provided that such distribution will not be detrimental to the company’s cash flow requirements”.
It also added, “The company reserves the discretion to pay [a] higher rate of dividend as it deems appropriate”.
From the date of the flotation exercise to end-April last year, Focus Dynamics’ share price averaged 8.3 sen.
As at end March, its net asset value per share was only around two sen, with its main asset being an entertainment outlet in Menara Lien Hoe in Petaling Jaya.
In early July, when questioned by Bursa Malaysia on the meteoric rise of its share price via an unusual market activity query, Focus Dynamics said, “The group has been continuously on the lookout for opportunities to expand its core business in the F&B segment via mergers and acquisitions to enhance the group’s earnings and improve its financial performance.
“In recent weeks, the group has been in discussions for several opportunities to potentially acquire strategic stakes in F&B companies. In addition, the group is currently in an exploratory stage for a potential merger/acquisition exercise with another company that has a sizeable assets base.
“Notwithstanding the above, the group wishes to highlight that no decision has been made yet with regard to any potential proposal at this juncture as all discussions are still at a preliminary/exploratory stage. The group will make the relevant announcements in accordance with the Listing Requirements in the event of any material development pertaining to the above.”
What is going on?
“Irrational exuberance,” says a seasoned market player on Focus Dynamics’ rise. Another says hidden hands or syndicates — groups that push specific counters up or down — are at work.
Checks with market sources indicate that there are about 20 companies whose share prices appear to have been pushed up by the same group of people. When asked to name some of these counters, one source says, “Just look at the most actively traded on a daily basis … it’s all the same group.”
Nevertheless, there has been a number of developments at Focus Dynamics. For example, it announced a cash call in January 2018, but that has yet to take place with many postponements and several revisions and changes.
In its latest announcement on Aug 18, Focus Dynamics proposed a one-to-three share split, a renounceable rights issue of up to 2.04 billion new irredeemable convertible preference shares (ICPS) with up to 3.07 billion free detachable warrants on the basis of three warrants for every two ICPS subscribed. The proposal is a revision of the previous proposed exercise announced on Jan 9, 2018, it added.
The ICPS have a 10-year tenure and are convertible to new Focus Dynamics shares at a conversion rate of 10-to-one. Both the rights issue and conversion prices will be determined later, although the company has placed an indicative rights issue price of five sen per ICPS.
The free warrants, meanwhile, come with a tenure of five years with the exercise price also to be determined later.
https://www.theedgemarkets.com/article/cover-story-unfathomable-rise-fb-operator-focus-dynamics-become-rm4-billion-stock