OSK to acquire new businesses

KUALA LUMPUR: OSK Holdings Bhd, which sold its investment banking business to RHB Capital Bhd (RHB Cap) for RM1.98 bilion 2012, is looking to acquire new businesses and hopes to announce a deal in the next few months, its top executive said.
Its CEO and group managing director Tan Sri Ong Leong Huat hinted that the financial group is looking at expanding its property business.
He ruled out financial businesses due to a six year non-competitive agreement with RHB Cap, as well as utilities as it does not have expertise in the sector.
"Property is the most accessible area and we also have the expertise in that because we are involved in property. Property or property related business or any other business that we have knowledge in," he told reporters at a post-AGM briefing yesterday.
Ong said that any future venture must offer good returns with potential for growth and yield. He did not rule acquisition overseas as well.
The group recently received development order for the land beside Plaza OSK and expects to start work on it in the fourth quarter.
The RM1 billion project has net let-able area of one million square feet and will take three to four years to complete.
Ong said OSK has some RM100 million cash. With its gearing of 0.10 times, it has capacity to borrow to fund its future acquisitions.
"At this moment things are going fine, we have no problems with gearing, we're very comfortable, cashflows are there so I think we got time on our side to plan things in a longer term rather than short term ... there is no pressure for us to divest any group assets," he said.
"When the opportunity arise we will leverage on that and borrow so we don't have to sell the RHB shares...we can easily borrow RM1 billion without any strain," he said.
He added that it has no intention to divest its RHB shares as the valuations are low and there is still a lot of upside.
OSK Holdings total assets stand at RM2.6 billion, out of which RM2.1 billion is its investment in RHB.
"Today RHB shares' valuation is very cheap. They are trading at about 1.2 to 1.3 times book (value) compared with other banks which is close to 3 times.
"RHB is the fourth largest financial banking group in Malaysia. The value should come closer to what other people's valuations are."The sale of its investment banking business to RHB Cap gave it a 9.91% stake in the group.