HWGB (9601)

Hoh Wah Genting Berhad (HWGB) is involved in manufacturing and trading of wires and cables, travel agent, healthcare, cryptocurrency, duty free shop. 

For my personal view, as a fundamental investor, i don't think HWGB is a good counter to invest in. This is because the company doesn't have a clear direction of its future development as its business is diversified into various unrelated industry. 

Besides, it's a loss making company (only make profit on 4 years out of 18 years since 2002) and has implemented few unfavorable corporate activities to investor in the past:

i) Share Consolidation on 2018 (4:1) 

ii) Take over with RM 0.12 while the price is closed at RM 0.21 (Update: The offer price is increased to RM 0.20 on 14 May 2020)

Hence, I assume HWGB is a company, that doesn't focus on its core business, and is more concern on its own profit rather than investor's profit.

From here, I will tend to analyse HWGB's intention of taking over the shares instead of its fundamental position.

From HWGB's announcement on 27 April 2020 relating to the take over, HWGB has shown its intention to maintain the listing status of HWGB. To maintain the listing status, HWGB needs to maintain at least 25% of public spread shareholding, which means HWGB at most will acquire 75% of the shares. 

Some may ask, how do this information related to changes in share price? 

Based on my personal assumption, HWGB's main purpose of the acquisition, is to maximize its profit from the capital market! 

The reason is, if HWGB expects its testing kits will bring enormous profit to the Group, they might as well propose to privatize the Group, instead of maintaining its listing status. 

Although I think that HWGB may able to have a turnaround by becoming the distribution agent of Covid-19 testing kits, as we know, it's highly demanded now. But as I said, HWGB may able to make more profit, by selling its share in a much higher price in future, as health care stock is in trending currently.

Besides, by owning 75% of shareholding, and having only 25% of public spread, it is much more easier to push up the stock price! (As at 9 May 2020, HWGB owns 48.99% of shareholding.)

In addition, the acquisition price has increased from RM 0.125 to RM 0.14, and RM 0.205. This means that, the management believe its fair price, is far exceed from current price. 

Given these reasons, I guess HWGB's share price has a higher chance to boost up in a near future. It may be a great opportunity for speculator. But for value investor, better don't touch it!