PETALING JAYA: Tan Sri Lim Guan Teik, the largest shareholder of Muda Holdings Bhd, is said to be selling his stake in the paper mills and paper packaging company, after helming it for more than three decades.

Lim holds a 41.5% stake directly and indirectly in Muda, according to the company’s 2013 annual report. As at last Wednesday’s closing price of RM2.20, his stake in Muda is valued at RM278.6 million.

“The owner of Muda is selling his stake in the company. However, the identity of the buyer is still not clear yet at this juncture,” says a source with information about the ongoing talks between the Lim family and the prospective buyer.

Muda is the pioneer of paper milling and packaging in Malaysia, with its first paper mill in Tasek, Penang built in 1964, and a corrugator plant in Petaling Jaya in 1971, according to its website. The company is valued at RM671.1 million as at last Wednesday.

For the six months period ended June 30, 2014, Muda made RM14.73 million in net profits, which was 44.9% lower than the previous corresponding period’s earnings. This was because the profits in 2013 were inflated by the disposal of a 22.5% stake in KL Resources Pte Ltd.

Muda’s revenue declined slightly to RM501.08 million during the period, compared with RM507.53 million a year ago, due to poorer performance in its trading division. However, the company maintained a 17% gross margin during the period, similar in the first six months of 2013.

On the balance sheet side, Muda has total assets of RM1.53 billion as at June 30, 2014. It holds cash and bank balances of RM67.9 million, while its short-term borrowing was RM396.87 million. Muda’s long-term borrowing, meanwhile, was RM131.96 million.

According to Bloomberg, the largest shareholder of Muda is Hartaban Holdings Sdn Bhd with 37.36% stake.

Lim’s siblings Datuk Lim Wan Peng and Datuk Lim Wan Hoi, his wife Puan Sri Teow Sook Inn, and Datuk Kok Wee Kiat holds more than 65% in Hartaban, according to filings with Companies Commission of Malaysia. The other 35% is owned by Muda’s managing director Datuk Azaman Abu Bakar.

Besides that, Wan Peng, Wan Hoi and Teow hold direct stakes of 1.22%, 0.8% and 0.73% respectively. Lim’s sons Datuk Lim Chiun Cheong and Lim Soon Huat hold direct stakes of 0.23% and 0.46% respectively, according to Muda’s 2013 annual report.

Other major shareholders of Muda include Lim & Khoo Sdn Bhd with a 17.97% stake. Lim & Khoo is a wholly-owned subsidiary of another Bursa Malaysia-listed paper products manufacturing company Asia File Corp Bhd.

Directly, Asia File holds a 2.05% stake in Muda, giving the group an effective stake of 20.02%. Asia File acquired the stake back in 2008 for RM44.5 million, according to a Kenanga Research’s report dated Sept 18, 2014.

Muda’s share price has rallied by 176.26% over the last 52-week period to last Wednesday’s RM2.20. The stock reached its all-time high of RM2.41 on July 23, 2014. It was traded at 15.5 times financial year 2013 ended Dec 31 earnings per share of 14.2 sen.


This article first appeared in The Edge Financial Daily, on October 3, 2014.