The BUSINESS of MCA - Tong Kooi Ong

Recently, the President of MCA proudly declared that under his leadership, since March 2010, the party made RM107 million. I like to share a few interesting analysis, comments and questions:

1. As can be seen from the dividend table above, only the 1st interim dividend of 2010 and the special dividend are subject to tax. This taxable dividend amounts to 55.4 sen. Since Huaren and now MCA owns 313.3 million shares of Star Publications (M) Bhd, MCA received some RM173.6 million. At 25% tax rate, the tax savings of moving the ownership of The Star to MCA was RM43.4 million.

During the three years since 2010 under the present President, MCA made a further tax savings of about RM700,000 a year from the rental income of Wisma MCA. So, we add another RM2.1 million.

Total tax savings from moving the assets of Huaren to MCA is RM45.5 million. Now, where is the rest of the RM61.5 million?

2. From 2014 onwards, all dividends paid will be single-tiered in Malaysia. In other words, moving The Star from Huaren to MCA generates no future tax savings.

The question is, why then is The Star brought under the direct control of the MCA leadership?

3. Since March 2010, Star Publications (M) Bhd has paid over RM693 million in dividends. MCA received RM313.13 million. Add this to the income from Wisma MCA, the party would have received over RM320 million income.

How is this money applied? MCA bought Menara Multi-Purpose for RM375 million in 2011. What is the amount of loan taken to buy the building? How much was paid in cash? It is safe to assume that the party has a very healthy bank account.

4. Since March 2010 under the present President, the stock price of Star Publications (M) Bhd has dropped from RM3.35 to RM2.40 presently (or by 28.4%). Unrealised capital loss for MCA is RM297.8 million!

During this same period, Bursa Malaysia’s Composite Index gained a whopping 33%.

Firstly, I was surprised that the President of MCA articulated on making money as a political party. But even if that was an objective, it actually lost almost RM300 million instead. To be kinder, adding back dividends paid, it broke-even.

Don’t get me wrong. I have no interest in MCA politics. As an analyst, the recent debates call for an analysis of the facts. And in so doing, questions beg to be answered. – tongkooiong.com