Hidden Assets

Talk about hidden assets.

Except for the most intrepid and learned investors and the stock market intelligentsia, few keep their ears on the ground to trends or policy measures.

The key-word here is privatisation. If Maxis had been taken private for personal profit, the other reason for taking a listed company private is the trend to remove multi-tiered listed entities to focus on just one listed entity.

Kumpulan Hartanah Selangor Berhad (KHSB) is currently in the process of taking Worldwide Holdings Bhd private. The market is now speculating that KHSB will be the next company targeted for privatisation by the State Government. It is only the timing that they are unsure of.

KHSB announced last week it proposed to sell 37.4 acres of land on Pulau Indah to the Fraser & Neave Holdings Bhd group for RM27.7mil cash. That works out to a price of about RM700,000 an acre.

The interesting aspect of that is KHSB owns 2,625 acres on the island, which are carried in its books at just RM79,000 an acre. KHSB did not disclose the profit on the sale. According to KHSB's Finance Manager, the profit was not disclosed because the land forms part of the Halal Hub to be developed, and KHSB has obligations such as to construct certain facilities. He added that profit will only be recognised based on the percentage of completion of the Halal Hub project and not on the outright sale of land.

He further informed that Pulau Indah is ear-marked for mixed development and part of it will be for residential usage including low and medium cost housing. The remainder is 900 acres of prime property frontaging the coastline with great prospects for super earnings for KHSB.

Kumpulan Hartanah Selangor Bhd (KHSB) is a subsidiary of Kumpulan Perangsang Selangor Bhd (KPS), which is in turn a listed company controlled by the Selangor State Government. So it looks like the only company to be listed on the board by the Selangor State government will by KPS.

Remember Cash-Band, the special vehicle created by the State Government to make KPS the parent company of KHSB and all its sundry investments? That has already been done legally. Cash-Band will be the main beneficiary of all the property-related businesses of KHSB. And who do you think is waiting in the wings to partake of the moolah? KPS, that's who. Profits galore awaits the shareholders of KPS - from the property, the water utilities and the toll highway projects; not to mention all the other projects that are still under wraps.

So, will KPS move as the news start sinking into the minds of analysts, fund managers and investors?

Heartsong