Shin Yang’s controlling shareholder ships in new business in diversification plans

SYGROUP has seen an continued upward momentum supported by the ongoing shares buy back exercise. The counter touched a low of 76.5 sen on Aug 5 and may regain its uptrend in the near term.

SYGROUP’s ongoing shares buy back exercise – which has amounted to 71.3m treasury shares or 5.9% of total number of issued shares. This may provide price support amid the current market volatility.

Shin Yang’s two core businesses are shipping and shipbuilding.

The group also undertakes shipping agency & forwarding services, door to door shipments, third party logistics transportation solutions, ship repairs, ship repowering & refitting, and many other specialised services and works.

Interestingly, the Ling family behind shipping company Shin Yang is injecting part of their Toyota and Lexus car dealership business in East Malaysia into the company for RM144.5 million, in a cash and share deal.

It involves the purchase of a 60% stake each in three other companies involved in related automotive businesses, including sale of spare parts, after-sales services, and the servicing and repairing of Toyota and Lexus vehicles in East Malaysia. The acquisitions are to diversify its revenue stream.

According to Shin Yang, Boulevard Jaya made a net profit of RM4.67 million for its financial year ended June 30, 2023, while the PAT for the Boulevard Motor group (in proportion to the 60% stake it intends to acquire) stood at RM20.11 million for their financial year ended Dec 31, 2022.
Shin Yang plans to fund the acquisitions using internal funds.

Shin Yang anticipates the acquisitions, which it expects to be completed by the third quarter of this year, to reduce the group’s dependency on its current shipping and shipbuilding business, and contribute positively to its future earnings.

"Shin Yang will leverage on the acquired companies' networks and client bases to cross-sell the group’s shipping services such as containerised freight transportation from Peninsular to East Malaysia, port-to-port freight services, port-to-doors haulage services, customs clearing, import and export documentation and port-related services," it said.

The group made a net profit of RM80.23 million for the nine months ended March 31, 2024 down about 40% from RM133 million it made in 9MFY2023. This is on the back of lower revenue dropped of RM709.87 million from RM716.52 million, while cost of sales rose 10% to RM610.86 million and tax expense more than doubled.

As at end-March, Shin Yang had cash and bank balances of RM392.32 million, and total borrowings of RM75.99 million. Based on its book value per share of RM1.12 as of end-Mar 2024, the shares are presently trading at a price/book value multiple of 0.81x.

Things are looking good for Shin Yang especially given that the major shareholder is holding more businesses in the listed company.