Shares in once-ailing timber firm, Harvest Court Industries Bhd, rose to a nine-year high Mohd Nazifuddin Najib, the 28-year-old son of Prime Minister Najib Razak, emerged as a shareholder in the company.
The stock jumped 30.5 sen to RM1.18 on Tuesday, while the warrants rose by 30 sen a piece to close at RM1.05. The PN17 status slapped on Harvest since December 2009 was finally lifted the end of October, 2011.
"Market thrives on speculation and it is no harm for retailers to take a punt or two but be very careful, especially when it comes to PN17 or ailing firms revived solely by political interest," a research director at a large brokerage told Malaysia Chronicle.
"Scomi shares had also jumped miraculously when Abdullah Badawi was taking over from Mahathir Mohamad. But there are no such things as guaranteed profits. Cronies and the families of the political leaders should actually refrain from using their status to drive up speculative interest in their stock. This is not bad practice."
There is little informationn about Nazifuddin, but he is one of the three children Najib had with first wife Tengku Puteri Zainah Tengku Eskandar. They were married in 1976 and divorced in 1987, paving the way for his second marriage to Rosmah Mansor, a former banker with whom he has two children - Mohd Norashman and Nooryana Najwa.
Nazifuddin is the second child from Najib's first marriage, and has two siblings - an older brother Mohd Nizar Najib and Puteri Norlisa Najib. The youth's entry into the corporate world in such a fashion conflicts with the hopes Malaysians had placed in Najib's government and economic transformation plans, assiduously promoted by Minister in the PM's Department, Idris Jala.
After decades of cronyism, begun in a serious way by former premier Mahathir Mohamad and his sons and continued by the Badawi family, Malaysians and investors had hoped Najib would gut away the political links to the business world, which have spawned decades of endemic corruption. But that may be asking too much, said pundits, as that was how the top political families in Umno amassed their wealth beyond imagination.
Penny stocks shoot up as economic situation turns murky
Indeed, the rapid rise in Harvest Court's share price has given created a spillover effect into other retail and penny stocks, and analysts have cautioned retailers to look before they leap pointing to the bubble in the Second Board of the mid 1990s which burnt many small-timers.
The last time the market had been set abuzz by a penny stock was early this year, when Ho Wah Genting rose to RM1 a share from 36.5 sen in a span of two months.
Usually, the penny stocks are always the last to stage a bull run, and usually this comes when the economy is about sour with owners injecting rumour-driven incentives to push up their share prices before selling into the burst of retail demand.
"It is always the small guys who will get stuck or burnt when the big fish cash out," the analyst said.
New corporate tag team - Nazifuddin and Raymond Chan - rake in huge profits
Filings to the stock exchange also show that Harvest Court's second largest shareholder, Raymond Chan Boon Siew, who controls Sagajuta (Sabah) Sdn Bhd, had also bought more shares in the company.
The 39-year-old Chan bought 5.1 million shares at 84.9 sen a piece on the open market last Friday, Bursa Malaysia's record shows.
Nazifuddin is also the chairman of the privately held Sagajuta, best known as the developer of the 1Borneo mall in Kota Kinabalu, Sabah. Sagajuta has several ongoing projects including 1Sulaman and 1Likas in Kota Kinabalu, and 1Gateway in Klang.
Both Chan and Nazifuddin joined Harvest’s board on Oct 28 after Chan emerged as a substantial shareholder of Harvest 10 days earlier, when he acquired 23.808 million shares, or a 13.85% stake, at 20 sen per share.
The value of Chan’s stake in Harvest has since more than quadrupled as investors anticipate he may inject Sagajuta’s assets into Harvest. Sagajuta has awarded a contract worth some RM7.03 million for the supply of door leaves.
Both Chan and Nazifuddin joined Harvest’s board on Oct 28 after Chan emerged as a substantial shareholder of Harvest 10 days earlier, when he acquired 23.808 million shares, or a 13.85% stake, at 20 sen per share.
The value of Chan’s stake in Harvest has since more than quadrupled as investors anticipate he may inject Sagajuta’s assets into Harvest. Sagajuta has awarded a contract worth some RM7.03 million for the supply of door leaves.
Chan’s entry into Harvest follows the abortion of earlier plans to inject Sagajuta into Jerneh Asia Bhd. About a week prior to Chan and Nazifuddin’s appointments, the company received an unusual market activity (UMA) query from Bursa Malaysia on Oct 17.
Old directors make way
Harvest managing director Ng Swee Kiat sold 600,000 shares and almost six million warrants, while non-executive director and chairman of the company's audit committee, Chua Eng Chin, sold 329,400 shares.
According to Jupiter Securities head of research, Pong Teng Siew, the directors might be making way for the new shareholders and their new businesses. He said the timber industry was getting tougher as timber resources were depleting, especially in Sabah and Sarawak.
"They have to find new business income streams. Therefore, new shareholders may emerge," Pong was reported as telling Business Times.
Indeed, Harvest Court's rise in recent weeks has been dramatic, and even its warrant have sky-rocketed, almost matching the underlying share.
The one-for-one warrants, which expires on November 19, 2019, has a conversion rate set at 25 sen, which is the technical jargon that means that an investor who buys the warrant will have to add an extra 25 sen to convert the warrants to the mother share.
While it might be that investors were attracted by the long life of the warrant, analysts warned that Harvest Court has already received as many as two unusual market queries from the stock exchange.
