Armed forces and police veterans group Patriot has called on the Armed Forces Fund Board (LTAT) to dispel doubts over the status of Boustead Heavy Industries Corporation Bhd (BHIC) following a drop in share prices.
The call came after BHIC traded lower at RM0.70 per share on Bursa Malaysia at the April 3 close, from RM1.00 two weeks ago. BHIC shares had traded RM1.24 at the start of the year on Jan 2.
LTAT is the controlling shareholder of BHIC with a direct 8.16 percent stake in the company while Boustead Holdings Bhd, LTAT's listed vehicle, controls 65 percent.
“Patriot views with great concern the performance of LTAT and the companies under its flagship because technically, the LTAT manages the pension fund for armed forces members, especially the rank and file.
“Special attention is paid to the business activities as it involves defence and security issues and what was envisaged in the first ever-tabled Defence White Paper,” Patriot president Mohamed Arshad Raji said in a statement.
According to a report by The Edge Markets in July, last year, when BHIC closed at RM1.26, the stock remained below the RM1.40 a share over the past 12 months - “lows unseen since 2007”.
Its last peak was on Jan 19, 2018, at RM2.11.
However, Arshad cited a Nov 11, 2019 article, also by The Edge, in which it reported BHIC received a letter from the Defence Minister, then under Pakatan Harapan’s Mohamad Sabu that the cost recovery the former sought for overruns in relation to the building of littoral combat ships (LCS) will be honoured.
It was also last November that the then government was expected to spend an additional RM1.4 billion for the completion of the ships. According to The Edge, all these were expected to improve BHIC’s earnings significantly.
According to Patriot, part of the variation orders amounting to RM1.4 billion should be taken as profit “as the cost has already been taken into account in the previous year”.
“What was reported in The Edge on Nov 11, 2019... and the latest BHIC quarterly report to Bursa Malaysia does not synchronise.
“BHIC’s quarter four, 2019 report to Bursa Malaysia as announced on Feb 22, 2020, making a loss of RM116,636 million for the financial year (FY) 2019 is worse than the reported loss of RM108,326 million for FY2018... No dividend will be paid for 2019.
“This is unacceptable to the ten of thousands of military personnel, especially the rank and file who have toiled and sacrificed for our nation, looking up to the LTAT fund as a source of financial security when they retire from service. Many have to retire young”
The much higher loss in 2019 is also unacceptable, he added, especially as the new management team had taken over just a year-and-half ago.
“In the interest, and for the welfare, of the serving armed forces personnel, Patriot suggests the management of LTAT makes an immediate statement to dispel doubts about the status of BHIC.
“Patriot further suggests that LTAT, Boustead Holdings and BHIC undertake price support and shares buyback before it becomes a penny stock.
This is to indicate to the market the real value of BHIC shares. It is also to indicate that the welfare of the military personnel is given high priority,” said the group. - Mkini
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