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30th December 2020

 The current spate of selling off Boustead Heavy Industries Bhd (BHIC) shares by Urusharta Jemaah Sdn Bhd (Urusharta), the special purpose vehicle wholly owned by finance ministry in a depressed market, is baffling. It begs the question if there is an insidious hands-in-gloves operation to take over BHIC.  
Recently Urusharta had announced that it incurred a net loss of RM 9.95 billion in its financial year ending 31 December 2019. In December 2018 Urusharta acquired Lembaga Tabung Haji’s (TH) non-performing assets at its original book cost rather than the written-down market value. However, for the closing of the 2019 Financial Accounts, Urusharta was required to mark the value of the non-performing assets to market. This action resulted in the book loss of RM9.95 billion.  
If the shares from the equity assets were not disposed of, the losses remain as mere book losses rather than real losses. There is good prospect of recovery, especially for stocks with good fundamentals. However, any sale made at the current ridiculously low price would result in a direct and painful loss for Urusharta and the public taxpayers.  
Patriot had previously cautioned against selling off BHIC shares in the depressed market. Urusharta had acquired the 18,636,300 BHIC shares at RM2.50 per share in bailing out TH. This was well above the market price of RM1.30 at that time. There is no good reason to sell off the BHIC shares now; after all the sukuk issued in 2018 has a 10-year tenure.  
BHIC has strong fundamentals. Besides the littoral combat ship (LCS) project that currently sees hitches mainly due to Putrajaya’s hesitation to approve the variation orders, there are several contracts that bear profits. It has monopoly to supply and maintain the naval ships. Due to these reasons, outside parties are hoping to buy BHIC shares cheap in the open market and then follow up to acquire the balance with a negotiated price with the government.  
Currently five of the six LCS are in the various stages of construction. The project cannot be abandoned indiscriminately. As a maritime nation the ships are crucial for national security. The LCS project needs a new and committed team. Resumption of the LCS project is only a matter of time when good sense prevails, and when Mindef and Putrajaya are ready to commit the funds.  
In the meantime, Urusharta must not be hasty in disposing BHIC shares. Doing so is seen as playing hands-in-gloves with the vultures preying on easy picking.  
BG Dato Mohamed Arshad Raji (Rtd) 
Persatuan Patriot Kebangsaan