MULPHA International Bhd (MIB), which is constantly on the look out for new business opportunity to enhance shareholders' value, still regards property development as it main core business.

According to chief executive officer Chung Tze Hien, the group will pursue new businesses that are beneficial to the group when opportunities come.
MIB was constantly evolving, with the main core business shifting from manufacturing and trading in the 70s and 80s, to property and construction in the 90s.
Currently, property development is MIB's main core business, with the bulk of the earnings coming from its Australian property projects. On the local front, the group's property presence is mainly through its upmarket Leisure Farm Resort in Johor.

Two years ago the group had decided to venture into financial investment activities that include corporate finance and advisory services to third parties.

Handled by its wholly owned unit Mulpha Capital Holdings Bhd, this new business initiative has since fared quite well, on track to become one of the group's future core businesses.

"What we have been doing in the past 2 years is to re-focus the group businesses. Two years ago we said the group would embark on divestment programmes to reduce our trading divisions, which is a non-core business.

"We have sold off Johnson Shoes Bhd (in December) and sold down our stake in Mudajaya Corp Bhd (in 2002).We will divest several other trading operations,'' Chung said.

The reason for the divestments was that contributions from the non-core operations were small to the group but they have consumed considerable time and resources from the management. "We think we can better divert our resources onto other areas,'' Chung said.

And by divesting those "tedious" businesses, MIB has been able to gather resources and talents to focus on property development both locally and abroad.
MIB history dated back to 1974. It has over the years expanded its wings to the region including Australia, Hong Kong, China, Singapore, the Philippines and Vietnam.

However, the group's most successful investment so far has been its Australian operations, undertaken by its wholly owned subsidiary Mulpha Australia Ltd (MAL).

"Australia has been our jewel; it has come on very well on us, in particularly Northwest Business Park and Sanctuary Cove (in the Gold Coast). If you look at our results in the last two years, practically all our profits came from Australia,'' Chung said.

He added that operations from Australia would continue to be the major income earner for MIB until the Malaysian property market recovered.

"We are very positive on our Australian operations, as both our property projects are doing very well.

"Going forward, we expect greater prospects for these projects as each is at the centre of development due to rapid population growth and the shift in population into those areas,'' Chung said.

"In the 3rd quarter of last year (FY03), we did substantially better than the year before (FY02). If the 3rd quarter tracking is anything to go by, we should do better in the 2003 financial year,'' Chung said.

For the 3rd quarter to Sept 30 last year, MIB reported a significant rise in the group's earnings, where pre-tax profit rose sharply to RM56.6mil from RM6.8mil in the same quarter a year before. This was achieved even though the group reported a lower turnover of RM226mil from RM329.2mil.

For the 9 months to September, MIB reported a cumulative pre-tax profit of RM41.4mil, doubling from RM21.5mil previously.

He pointed out that MAL earnings, when translated into ringgit, would be enhanced by the appreciating Australian dollar.

And based from on past tradition, revenue contributions from Australia would be strongest in the 4th quarter.

"The Australia dollar has appreciated strongly over the past year, giving us at least 30% forex translation gains for the same amount of profit contribution we made last year.

Financial advisory services Mulpha’s new core business (The Star)
Date : 16/02/2004

MULPHA International Bhd (MIB) has identified a new core business to replace its trading business which is undergoing a divestment programme.

MIB, through its wholly owned subsidiary Mulpha Capital Holdings Sdn Bhd that was set up 2 years ago, is building up its financial market services business, which includes providing corporate finance and advisory services to companies.

Over the past 2 years the group has helped advised and structured over a dozen corporate exercises that include fund raising in the fixed income market, management buyouts and other mergers and acquisition (M&A) exercises.

In an interview with StarBiz, Mulpha Capital executive director Derrick Tan said the company had helped clients raised over RM750mil from the fixed income market to-date. He said Mulpha Capital focused mainly on tier-two companies that had good fundamentals.

"So, we'll tell them how to go about getting on the right track and source cheap funding through the fixed income market. We also got involved in other corporate exercises. It's pretty much like being a corporate advisor to them, '' he said.

MIB chief executive officer Chung Tze Hien said the group would take up a bigger role in the corporate advisory businesses besides providing corporate consultancy and financial services.

"Although the division is only 2 years-old, it has already contribute positively to the MIB group. So far, it's been doing well, and we would like to go further into it, including making external acquisitions, when the opportunities arise,'' Chung said.


The more recent high profile exercise that the company had advised was the management buy-out (MBO) of Unza Holdings Bhd last year.

In August last year, executive directors and senior management of Unza, through special-purpose company Annexe Profile Sdn Bhd, Initiated a conditional voluntary takeover offer to acquire the entire stake In Unza from Cosway Corp Bhd for RM365.4mil or RM5 a share. That exercise has since been completed.

MIB has a subsidiary, Mulpha Credit Sdn Bhd which is involved in licenced money lending and provision of credit for corporate finance activities. The group has also obtained a licence from the Securities Commission to undertake investment advisory services.

Derrick said that although the company was doing what the merchant banks were doing, Mulpha Capital's service was more personalised.

"At the end of the day, we have to work closely with these financial institutions in relation to the deals that we have structured and packaged. The market is very big, and there are a lot of corporate deals out there. We believe we have developed a niche to package these solutions to our clients,'' Derrick said.

He pointed out that Mulpha Capital's strength lay on its strong corporate advisory team.
"In this business, it's about getting the right talents. We have a very strong team; our directors are very respectable people in their own fields. For example, we have Loong Caesar, a founding partner of Raslan Loong, Advocates and Solicitors; and Asgari Stephens, formerly the president of Malaysian Venture Capital Association.

Tan said the company was expected to secure a few more deals involving MBOs later this year.
"We are trying to kickstart more deals involving MBO exercises. We are seeing a growing trend where key management people want to take over the companies themselves. Our strength has always been able to package a good deal and get the deal funded,'' Tan said.

He said historically, those undertaking MBO exercises went to venture capitalists for funding but such funding was expensive.

"What we did with Unza is a milestone, as we want to show the market that we can get cheap funding even for this kind of M&A activities," he said.