Obviously Jaks has some problem with The Star. It got a piece of land from The Star few years ago. In return, it will have to construct an office building for The Star. Due to various reasons, the building is only 96% completed by due date. The Star called on the Bank Guarantee of RM50 mil. Jaks is seeking restraining order from Court. The company lost the first round and has submitted an appeal.
Jaks holds 50% of the affected property subsidiary. As such, its exposure is only RM25 mil. By declining from RM1.80 to RM1.04, market capitalisation has evaporated by RM415 mil where some considered is too excessive.
Another possible reason is KYY's so called forced selling. On 23 July 2018, KYY explained that his bankers had been force selling his shares in the past few days.
A total of 5883500 shares were disposed under KYY and 1250000 shares under Mdm Tan Kit Pheng. From 20 July until 25 July 2018, banks had forced sold about 7 mil shares.
As KYY holds more than 150 mil shares in Jaks (being 30% of 540 mil shares), the market's imagination ran wild and panicked.
Just imagine the wave and wave of selling ahead!!!
However some observers did not agree the forced selling in the forced story reasons being if bankers really want to deleverage KYY, they can place out JAKS shares to institutional or high net worth individuals via direct business transactions.
At current price (26 July 2018, JAKS is now trading at discount to its intrinsic value, which is backed by 30% stake in the valuable Vietnam IPP. The project is scheduled to be completed in approximately 18 month time … barring any major cock up of the Vietnam project.
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