Neo Group's chairman and wife take stake in Asiatic from Tai Sin's Lims

The Edge Singapore
The Edge Singapore1/15/2021 06:30 AM GMT+08  • 3 min read
Neo Group's chairman and wife take stake in Asiatic from Tai Sin's Lims
Neo Kah Kiat of food caterer Neo Group and wife now hold 194m shares, or a 12.46% stake, in power plant operator Asiatic Group.
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Neo Kah Kiat, chairman and CEO of food caterer Neo Group, is now a substantial shareholder of Asiatic Group (Holdings). According to a series of filings made on Jan 8, Neo now holds 194 million Asiatic shares, equivalent to a stake of 12.46%.

According to filings, Neo bought the shares using an entity called Twinkle Investment, which is jointly held by him and his wife Liew Oi Peng, who is also an executive director at Neo Group. The shares were bought in tranches of 20 million, 80 million and 94 million shares, all via married deals.

The identity of the sellers were not listed in the Twinkle Investment filings but in separate filings, it seems that the Neos bought most of the shares from long-time Asiatic shareholders Bobby Lim Chye Huat and his son Bernard Lim Boon Hock.

On Jan 8, Bobby sold 94 million shares for $752,000 while Bernard sold his 80 million shares for $640,000. The average selling price for the two sales works out to be 0.8 cent per share. The Lims are better known for controlling Tai Sin Electric, which provides electrical cables, where Bobby is the chairman and Bernard the CEO. It is not clear who sold the remaining 20 million shares to the Neos.

According to Asiatic’s latest annual report, the single largest shareholder is one Stephen Leong, holding 14.91% via an entity called Sincom Holdings. Tan Boon Kheng and Tan Boon Siang, two brothers running the company as managing director and executive director, hold stakes of 9.07% and 9.01% respectively.

Asiatic’s share price has not been exactly outperforming. Since 2018, it has been trading at a very tight range of between 0.8 cent and 1 cent, which is at a significant discount off the company’s net asset value of 1.8 cents as at Sept 30, 2020.

For the six months ended Sept 30, 2020, Asiatic suffered losses of $833,000, from earnings of $0.5 million in the year earlier period. Revenue in the same period dropped by 6.47% y-o-y to $20.9 million.

The company runs two main businesses. The first is the sale of fire-fighting and protection equipment and services, which accounted for around a third of its total revenue. For the six months ended Sept 30, 2020, revenue from this business dropped 13.88% y-o-y to $6.9 million.

“Covid-19 has impacted the firefighting and protection segment’s revenue especially in the alarm and services divisions where access to the premises (where services performed) are restricted as well as in the Marine sector where projects and services are stagnant,” notes Asiatic in its Nov 11, 2020, earnings commentary, adding that the business is expected to remain weak, forcing the company to explore new markets.

The majority of Asiatic’s revenue is from its stakes in power plants in Cambodia and Malaysia — which it is in the midst of trying to divest. On Nov 19, Asiatic said it had commenced legal proceedings against its joint venture partner, Phnom Penh Special Economic Zone (PPSEZ). Asiatic is claiming at least US$14.4 million ($19.2 million) in damages because of a dispute over its power plant sited within PPSEZ, which was positioned as a back-up provider of power to businesses operating in the special economic zone.

According to Asiatic, PPSEZ instigated for revisions to be made to the electricity tariffs that applied in the SEZ and on June 30, 2020, the Electricity Authority of Cambodia revised the rates and allowed companies to opt for a supply of electricity from the national grid source without Asiatic’s power plant’s back-up feature.

As a result, the project’s operational and business model “significantly changed” and Asiatic expects to suffer losses operating this power plant.

According to Asiatic, the case has been referred to the Singapore International Arbitration Centre.

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