Ajiya Berhad: Key Investor Updates – Proposed Shareholders’ Mandate and Share Buy-Back Authority (2026)

Overview

Ajiya Berhad has released a comprehensive Circular to shareholders detailing significant corporate proposals that are set to be tabled at its upcoming 30th Annual General Meeting (AGM) on 5 June 2026. The two main proposals are:

• Proposed New and Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions (RRPTs) of a Revenue or Trading Nature
• Proposed Renewal of Share Buy-Back Authority

These proposals, if approved, could have material impacts on Ajiya’s business operations, capital structure, and potentially its share price.

1. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions (RRPTs)

Key Points:

• Purpose: Allows Ajiya Group to enter into RRPTs necessary for its day-to-day operations, potentially streamlining business processes and saving on administrative costs.
• Scope: Covers both a new mandate for transactions with specified related parties and the renewal of existing mandates for previously approved RRPTs.
• Major Related Parties Involved:
  • Signature Alliance Group Berhad (SAG Group)
  • PP Chin Hin Realty Sdn Bhd (PPCH Realty) and its subsidiaries
  • Chin Hin Group Berhad and its subsidiaries (CHGB Group)
  • Fiamma Holdings Berhad and its subsidiaries
  • Signature International Berhad and its subsidiaries

  These groups are connected to Ajiya’s major shareholders and directors, including Datuk Seri Chiau Beng Teik, JP, and Datuk Wira Chiau Haw Choon.

• Nature of Transactions:
  • Supply of metal roll forming, safety glass, zinc, aluminium products, and other building materials
  • Provision of property development, construction, project management, and shared services
  • Leasing/renting of properties, provision of kitchen systems, commercial vehicles, and hotel/hostel accommodations
• Estimated Transaction Values:
  • Some individual RRPTs have estimated values up to RM50 million each for the period from the 30th AGM to the next AGM, covering supply of materials and services to PPCH Realty Group and CHGB Group.
  • Other significant values include up to RM10 million for property development services by Fiamma Group and RM5 million for supplies to Signature Group.
• Review and Safeguards: Transactions are to be conducted at arm’s length, on normal commercial terms, and not detrimental to minority shareholders. The Audit Committee oversees and reviews all RRPTs at least quarterly, and directors/major shareholders involved will abstain from voting and deliberations.
• Disclosure: A breakdown of the aggregate value of RRPTs entered into during each financial year will be disclosed in the Annual Report.
• Financial Exposure: As of 31 December 2025, RM3.3 million was outstanding from related parties, of which RM2.6 million has since been collected. The Board believes there are no recoverability issues.

Why This Matters to Investors:

• Potential Share Price Impact: The scale of RRPTs (up to RM50 million per transaction) and the involvement of key shareholders and directors make this a price-sensitive matter. The renewal of these mandates enables continued business with related parties, which could significantly affect Ajiya’s revenue, cost structure, and market perceptions of governance.
• Governance Risk: Given the size and frequency of these transactions with related parties, investors should monitor the company’s disclosures and the effectiveness of the Audit Committee’s oversight.

2. Proposed Share Buy-Back Authority

Key Points:

• Authority Sought: Renewal of the authority for Ajiya to purchase up to 10% of its issued shares. As at 31 March 2026, the company had purchased 60,889,500 shares as treasury shares, nearly exhausting the current limit.
• Financial Capacity: The buy-back can only be funded from retained earnings, which stood at RM531.2 million as at 31 December 2025.
• Share Capital Impact:
  • If all purchased shares (max 10%) are cancelled, share capital would reduce from 609,168,968 to 548,252,072 shares.
  • If shares are held as treasury shares, they may be resold, used for dividends, or for employee share schemes.
• Market Impact: The buy-back is designed to stabilise the share price, especially if the market undervalues the stock, and could potentially enhance earnings per share (EPS).
• Historical Buy-Back Activity: Over the last 12 months (up to 31 March 2026), Ajiya bought back 60,889,500 shares, spending approximately RM64 million, with purchase prices ranging from RM1.01 to RM2.51 per share.
• Public Shareholding Spread: As of 31 March 2026, public shareholding was 26.27%, still above the 25% required by Bursa Malaysia’s listing rules.
• Takeover Code Implications: The Board states it does not intend to trigger a mandatory general offer by causing any single shareholder/group to exceed the 33% or 2% creep thresholds.
• Potential Advantages to Shareholders:
  • Share price stabilisation and enhancement of investor confidence
  • Improved capital structure flexibility
  • Possible increase in EPS if shares are cancelled
  • Potential for distribution of treasury shares as dividends
• Potential Disadvantages:
  • Reduction in financial resources and working capital, possibly affecting investment flexibility and future dividend capacity

Why This Matters to Investors:

• The scale and recent frequency of share buy-backs, alongside the significant retained earnings position, signal possible undervaluation or management’s confidence in Ajiya’s prospects. Share buy-backs can boost EPS and share price, especially if executed when shares are undervalued.
• However, the potential reduction in capital available for other investments/dividends should be considered.

3. Material Contracts and Other Disclosures

• Material Related Party Loan: In May 2024, Ajiya entered into a loan agreement with Chin Hin Group Berhad (CHGB) – its holding company and major shareholder – to provide up to RM250 million in financial assistance at 7.5% per annum for CHGB’s expansion and investment activities. This is a significant related party transaction, with a personal guarantee from Datuk Seri Chiau Beng Teik, JP.
• Asset Disposals:
  • Disposal of land and factory in Thailand for 208 million Baht (~RM26.8 million) in July 2024.
  • Disposal of two parcels of industrial land in Negeri Sembilan for a total of RM51.9 million, currently pending completion.
• No Material Litigation: As at 31 March 2026, there are no material litigations, claims, or arbitrations involving Ajiya or its subsidiaries.

4. Director and Major Shareholder Interests

• Both the RRPTs and the Share Buy-Back Authority involve directors and major shareholders (notably Datuk Seri Chiau Beng Teik, JP, Datuk Wira Chiau Haw Choon, and related entities). These individuals and groups will abstain from voting on the relevant resolutions.
• The shareholdings of these key parties may increase on a percentage basis if share buy-backs lead to a reduction in total shares outstanding.

5. AGM Details and Shareholder Action

• Shareholders are encouraged to review the full proposals and exercise their voting rights at the AGM on 5 June 2026. Proxy forms should be submitted at least 24 hours in advance if shareholders are unable to attend in person.

Conclusion: Why Investors Should Care

• The combination of large-scale RRPTs with major shareholders and directors, a robust share buy-back programme, significant related party loans, and multiple asset disposals make this a crucial period for Ajiya Berhad.
• These developments can be price-sensitive and may materially impact Ajiya’s future earnings, capital structure, and market valuation. Investors should monitor the AGM outcomes, subsequent disclosures, and trading activity closely.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any securities. Investors should review all official company documents and consult their financial advisers before making investment decisions. The writer and publisher are not liable for any losses arising from reliance on this information.

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