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Winds of change at Advance Synergy

by April 15, 2017 General

Two notable developments and the stock is up 70% since start of year

LOW-profile Advance Synergy Bhd (ASB) has been garnering investor interest since the end of February.

The stock is up close to 70% since the start of the year to close at 18.5 sen at last look.

Two notable developments are taking place in ASB, which is majority-controlled by 70-year-old Datuk Ahmad Sebi Bakar, a corporate high-flyer in the late 1980s.

Firstly, the diversified group with interests in hotels and resorts, among others, is seeing a recovery in its fortunes. It returned to the black in the financial year ended Dec 31, 2016 (FY16) with a net profit of RM4.07mil as opposed to a net loss of RM11.59mil previously.

In its fourth quarter of FY16, its revenue came in at RM90.65mil, its strongest in recent years.

The other development took place at the board level where Ahmad Sebi’s son, Anton Syazi Ahmad Sebi, was appointed as non-independent director.

Is the veteran corporate figure preparing to hand over a bigger role to his 39-year-old son in their family flagship company?

According to Bursa Malaysia filings, Anton holds 30.47 million shares of ASB via Eighth Review (M) Sdn Bhd “which were treated as his father’s interest in the ordinary shares of ASB pursuant to Section 59(11)(c) of the Companies Act 2016”.

Father and son: Ahmad (left) controls ASB while son Anton is now a non-independent director at the company.

Father and son: Ahmad  controls ASB while son Anton is now a non-independent director at the company.

A graduate from the London School of Economics, Anton is not new to the group, having served in various capacities in the group since joining ASB in 2001. He is currently general manager-corporate development of the company and chief executive of Singapore-listed Captii Ltd, in which ASB controls 58.3%.

However, his appointment to ASB’s board signals that Ahmad Sebi could be looking to pass on the reins to the next generation as part of succession planning, reckon industry observers.

Two years ago, Ahmad Sebi sold down his stake in textile manufacturer Kumpulan Powernet Bhd, sparking some talk that the corporate figure would be winding down and reorganising businesses under him.

With Anton on the board, some dealers speculate a process of unlocking value could begin for the asset-rich but undervalued company.

ASB carries a net asset value per share of 68.4 sen as compared to its share price of 18.5 sen, which is a discount of 72% to the former.

At the current price, the stock’s market capitalisation stands at RM129mil vis-a-vis its net assets of RM515mil.

Ahmad Sebi is currently the group executive chairman and ASB’s major shareholder. He owns a direct 11.57% in the company and another 13.91% indirectly, latest filings on Bursa Malaysia show.

The tycoon also has a daughter, Aryati Sasya Ahmad Sebi, on the board of ASB. She was appointed director in 2013.

The company declined to respond to queries on its plans from StarBizWeek.

ASB is a diversified group with interests in many industries, including hotels and resorts, information technology, property development, travel and tours, education and coach building and card and payment services. Its hotel and resorts division under the brand name of Holiday Villa, travel and tour business, and information and communications technology (ICT) division are the main revenue contributors to the group.

It, however, has been loss-making in the last few years.

“The company is seeing an earnings recovery and there is potential for growth. With the low ringgit environment expected to boost local tourism, the stock is proxy to a tourism play,” says a dealer.

ASB is also cash-rich. It had RM141.54mil in cash and short-term deposits as at the end of last year – higher than its RM129mil market cap.

Short-term borrowings stood at RM25.10mil, while long-term debt commitments were RM78.14mil as at that period. However, the attraction of the stock lies in its assets – land and property.

The group’s Holiday Villa Hotels and Resorts is a leading Malaysian brand name in the hospitality industry and has established itself in many locations worldwide such as the Asia Pacific, Africa, the Middle East, the United Kingdom, the People’s Republic of China and Switzerland.

In the technology space, its portfolio is led by Singapore Exchange-listed Captii, which has been showing improved profits in the last few years.

Captii made a net profit of S$6.4mil (RM20.2mil) in FY16. It has a market cap of S$19.2mil (RM60.5mil) and operates in the technology and telecommunications space in South-East Asia, South Asia, the Middle East and Africa.

Back to ASB, it has a strategic plan in place to grow its core business and explore new markets, according to its statement that accompanied its recently released fourth-quarter results. In the case of its non-core loss-making businesses, it says the focus will be on restructuring and divestment plans.

The company had divested its manufacturing unit in early 2016. .

As for prospects in 2017, the company says it is “cautiously optimistic” on the implementation of its business plan.

“Our group will continue to focus on measures to improve operational efficiencies and productivity, coupled with cost-reduction efforts.”

Elsewhere, Ahmad Sebi also controls SJ Securities Sdn Bhd through private vehicle Carta Bintang Sdn Bhd. The corporate figure, who has kept away from the public eye in recent years, once held top management posts in The New Straits Times Press (M) Bhd and Sistem Televisyen Malaysia Bhd.

He was also chairman of United Merchant Group Bhd, which was 39%-controlled by ASB from 1995 to 2002. With Anton on board as director, some reckon it could spell a new era for the asset-rich penny stock.