Transmile’s sudden Spring to Life, what’s in the pot?

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Mar 28 2008
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Frankly, I was planning to buy some Transmile Group Berhad (KLSE: TRANMIL, stock-code 7000) shares if the stock hit below RM1.00. Seriously there were not many reasons that could justify the purchase since the company was literally ripped off under the previous management. And to think the former chairman could just chicken out as if there’s nothing happen can easily send your blood boiling. But that’s Malaysia whereby politicians or former politician in this case are basically immune from any wrongdoings.

Since the cargo carrier Transmile office was raided by Securities Commission back on 25th May 2007, the stock was hammered to as low as RM1.50 from its high of RM13.00 a share. Malaysia’s richest man Robert Kuok, JP Morgan, Goldman Sachs, the Singapore government and national postal company Pos Malaysia & Services Holdings (KLSE: POSHLDG, stock-code 4634) were speechless. The only reason why I would want to buy at below RM1.00 a share was because of Robert Kuok and nothing else. With investment below RM1.00 a share I was ready for a total-loss.

Transmile stock chartAfter Transmile’s cooked accounting book was exposed, Robert Kuok stood by the company, so much so that its’ main customer, DHL, was willing to give the new management a chance to right the wrong. Wong Yoke Meng, formerly Chief Operating Officer (COO) at RHB Capital was appointed the new Managing Director of Transmile. Along the way, Robert Kuok was rumored to be interested to privatize the company but I guess the company was too badly injured, or was it?

However my hope to become one of the minority shareholders vanished when the stock suddenly jumped and hit the 52-week high with speculations that new substantial shareholder may emerge. Some of the possible shareholders who might be interested in Transmile included:

Transmile to have New Shareholders?

  1. DHL – while it denied the speculation, this company is the most probable candidate since Transmile and DHL business matches perfectly, not to mention close business relationship. If the price is right, the deal would make sense.
  2. Pos Malaysia – with 15 percent stake in Transmile, this company could not run away from speculated as the potential buyer. Analysts however think Pos Malaysia will not dig deep into its pocket for the company. Furthermore Transmile business model might not be Pos Malaysia’s the cup of tea. But Robert Kuok could be planning something here.
  3. Konsortium Logistik Berhad – Konsortium holds 20 percent while Pos Malaysia and Transmile holds 42.5% and 37.5% respectively in CEN Sdn Bhd which in turns own CEN Worldwide, the marketing arm of Transmile. What role could Konsortium plays by acquiring Transmile?
  4. Malaysia Airlines Cargo Sdn Bhd (MASkargo) – does MASkargo needs to buy Transmile since both has the same landing rights? There’s no compelling reason for MASkargo to buy into Transmile.
  5. Local tycoon Tan Sri Syed Mokhtar Al-Bukhary – with over US$2 billion he’s the seventh riches man in Malaysia. I won’t be surprise if this guy emerge as the new shareholder since he’s in the transportation industry as well.

Wong Yoke Meng who was appointed the new Managing Director of Transmile in Sept 2007 has resigned today. Hence, the rumors about a new substantial shareholder might be true after all. It doesn’t make sense for Wong to resign after his short tenure in Transmile unless there’s a major development.

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