Thursday, April 18th, 2024

Will the third generation unlock value in cash rich stock?

Oriental Holdings: will the third generation unlock value in Oriental?

The shareholding of the Loh family in cash-rich Oriental Holdings Bhd has historically been stable, held through Boon Siew Sdn Bhd.

However, a change occurred following a planned internal restructuring of the private companies controlled by the Loh family. Recent announcements indicate that Pacific Carnival Sdn Bhd is now the largest shareholder in Oriental, with a 36.7% stake.

The largest shareholder in Pacific Carnival is Loh Kar Bee Holdings Sdn Bhd, which holds a 32.17% stake and is associated with Datuk Loh Kian Chong. Kian Chong, executive chairman of Oriental, is the son of Kar Bee, the eldest son of the late Tan Sri Loh Boon Siew. The second-largest block in Pacific Carnival is owned by Loh Wei-Lyn, with a 31.43% equity interest.

Two blocks of 17.8% each in Pacific Carnival are held by private companies belonging to Loh Phoy Yen and Loh Gim Ean, daughters of Boon Siew, who founded the Boon Siew Group that controls Oriental.

Oriental holds a cash pile of RM3.1 billion and owns large areas of plantation and development assets.

Before the restructuring, the Loh family held Oriental through Boon Siew Sdn Bhd and several other companies, including Penang Yellow Bus Sdn Bhd, Bayview Hotel Sdn Bhd, Boontong Estates Sdn Bhd, and Boon Siew Development Sdn Bhd.

After Boon Siew’s passing in 1995, the Oriental group was led by Datuk Loh Cheng Yean, his daughter, along with her brothers-in-law Datuk Robert Wong and Datuk Seri Lim Su Tong. The third generation, led by Kian Chong and several cousins, joined in 2015.

Until the recent announcements, it was unclear who held the majority stake. After the restructuring, the shareholding in Oriental is now clearly concentrated in the hands of Kian Chong and Wei-Lyn.

According to the announcements, the family of Cheng Yean, who are Singaporeans, holds a 6.8% stake.

While the shareholding structure is clear, it remains to be seen whether the third generation will unlock value in Oriental. The company possesses a healthy cash pile, generates strong cash flow, and holds land for development. Nonetheless, unlocking the value of these assets has been a slow process.

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