In response to a query from Bursa Malaysia on its purchase of RM34 million worth of stocks and warrants in CFM, Fitters said yesterday CFM would be “the ultimate company in the future specialising in its field”.
“We are optimistic that the government’s initiatives to promote next-generation vehicles in the country will stimulate the demand for electric vehicles (EVs) and we anticipate CFM will benefit from this trend,” the Fitters board said.
CFM, whose main business had been the printing and distribution of various types of forms, recently signed a joint-venture agreement with Thailand-based EA Mobility Holdings Co Ltd to venture into the EV sector.
Fitters, which is in the fire solutions and property development business, expressed confidence that CFM’s tie-up with EA Mobility would help to increase the use of EVs by up to 37% from 2022 until 2040.
It also said the favourable global growth in CFM’s major operating sectors would be beneficial for the company’s earnings in the long run.
An ill-timed investment?
The Fitters board first announced it had made the investment in CFM in a Bursa filing on March 9.
Its wholly-owned subsidiary Fitters Property Development Sdn Bhd had, on March 7 and 8, picked up 12,140,000 ordinary shares in the open market for a 4.54% stake in CFM for an aggregate sum of RM26,443,532.28 in cash.
Fitters also acquired 4.78% or 6,180,000 Class A warrants in CFM in the open market for RM8,334,931.47 in cash.
Fitters spent a total of RM34.77 million for the purchase of shares and warrants on the two trading days, at RM2.18 per share and RM1.34 per warrant.
The investment was significant, given that the total sum is more than half of Fitters’ cash balance of RM61.15 million at the end of 2022.
Unfortunately, the investment has already suffered a loss due to the poor timing of the acquisition.
On March 10, CFM’s share price plunged to RM1.42 and its warrants dived to 70.5 sen apiece from the purchase prices.
Fitters made the purchase while the share price was falling, and the trend accelerated on the second day of purchase.
The CFM share price dived nearly 30% on March 8, resulting in Bursa issuing an unusual market activity query to the company.
In response to the query, CFM said that apart from the joint-venture agreement it had signed with EA Mobility, it was not aware of any other factors that could have caused the price meltdown.
Shared interests?
Bursa had also requested that Fitters provide information regarding the shareholdings of any common directors between the two companies.
This led to the revelation that three individuals sat on the boards of both companies. They are Hoo Swee Guan, Wong Kok Seong and Khoo See Yiing.
However, of the three, only Hoo has a personal interest. He holds 40,000 shares for a 0.007% stake in Fitters.
More substantially, Fitters clarified that its largest shareholder Pang Chow Huat is also a major shareholder in CFM.
Pang owns 48.05 million shares or a 7.9% stake in Fitters and 145.17 million shares or a 54.25% stake in CFM.
He had purchased 133.19 million shares for a 64.97% equity in CFM on March 31, 2022.
He subsequently made an unconditional mandatory general offer (MGO) that saw his personal interest reduced to the current level.
At noon break today, Fitters’ Diversified share price had fallen 5.88% to 80 sen, giving it a market capitalisation of RM47.18 million.
Similarly, CFM’s share price slipped 6.43% to RM1.31, giving it a market capitalisation of RM350.53 million.