August 24, 2021

Major Shareholders Want To Get Out, What's Encorp's Stock Reaction?

 Encorp Bhd showed a surge at the beginning of today's trading session but there were rumors that its major shareholder, the Federal Land Development Authority (FELDA), wanted to divest its stake.

Encorp counters saw a four sen jump to 33 sen today with a total of 7.03 million shares traded.

But as of 11.01am, the stock was seen to show a decline of around 10 sen or 1.59% to 31 sen.

The increase in land developer share prices was in line with the rise on Bursa Malaysia which was driven by increasingly positive political developments as well as stronger corporate earnings expectations.

Examining the statement issued, there are reports that FELDA wants to lift a leg from Encorp at a demand price of RM1 per share.

The plantation giant is also reported to want to sell some of the shares to bumiputera entrepreneurs who can change the situation.

Based on last Friday's closing price of around 29 sen, FELDA owns assets worth RM57.15 million with an interest rate of 69.14% in Encorp.

In May 2014, through Felda Investment Corp Sdn Bhd, FELDA bought 49.5% of Encorp's shares for RM239.72 million or RM1.55 per share from Tan Sri Mohd Effendi Norwawi.

Meanwhile, FELDA has acquired 72.27% of the shares after issuing a total of RM306.11 million.

However, there are analysts who say that too much resistance to the sale could be done in the near future.

Judging by the annual report, Encorp's main assets are Strand Mall worth RM164 million and Red Carpet Avenue worth RM136.69 million.