Thursday, July 30, 2015

TA Enterprise clear out rumours on Privatization

By Yimie Yong - The Edge

KUALA LUMPUR: TA Enterprise Bhd has no plans to sell its stockbroking business, its managing director and chief executive director Datin Alicia Tiah said, but it is open to merger and acquisition (M&A) opportunities to expand its business.

Tiah said the stockbroking business is still considered a "cash cow" for the group, although its profit contribution has fallen sharply to 20%, from 80% previously.

"It is profitable... We are quite comfortable to be able to earn over RM20 million per year from this business, which I feel is a cash cow for the group," she told reporters after the annual general meetings of TA Enterprise and its 63%-owned property arm, TA Global Bhd today.

She said the group had in April this year, sold its Hong Kong stockbroking unit, TA Securities (HK) Ltd, due to stiff competition from Chinese players, but the industry in Malaysia is "not as bad".

Indeed, Tiah said TA Securities Holding Bhd is diversifying its institutional customer base and expanding its fee-based and proprietary trading businesses.

She added that the group does not rule out any M&A possibilities to expand its stockbroking business, which complements its property development business that has a longer lag time in generating returns.

There has been speculation on and off for some years that TA Enterprise was talking to K&N Kenanga Holdings Bhd ( Financial Dashboard) to sell TA Securities. TA Securities is one of the few remaining family-owned stockbroking firms, following the merged entity of Affin Investment Bank Bhd and Hwang-DBS Investment Bank Bhd.

Commenting on the outlook of the stockbroking industry, Tiah said it is "challenging", given the weaker market condition with low crude oil and commodity prices and the lower commission of stockbrokers.

Meanwhile, TA Global executive director Kimmy Khoo Poh Kim said the property developer will have two launches worth a combined gross development value (GDV) of A$290 million, within its larger A$600 million Little Bay Cove residential development project in Sydney, Australia this year.

"There will be another two launches in Sydney next year," she added.

Khoo said the new launches are expected to contribute "quite substantially" to TA Global's financials for the financial year ending Jan 31, 2017.

TA Global (fundamental: 1.05; valuation: 1.1) currently contributes about 65% to TA Enterprise's profit.

* After so many years of rumour which makes the share fluctuate, TA Management had finally come public to state that Datuk Tony Tiah  is not privatizing TA and resell it. Instead, there are not ruling out opportunity for merger and acquisition (M&A).