KUALA LUMPUR (June 15): Berjaya Corp Bhd (BCorp)’s newly appointed Group Chief Executive Officer (CEO) Abdul Jalil Abdul Rasheed has unveiled a three-year strategic plan to return the conglomerate to profitability.
At a virtual press conference today, Abdul Jalil underscored the plan’s key initiatives, including recategorizing and streamlining existing operations, institutionalizing and monitoring performance, and ultimately unlocking value across the group.
The group will recategorize its businesses from currently seven reporting segments into five key segments by July: retail, food and beverage (F&B), real estate, hospitality and services (which will house the group’s gaming unit and financial technology unit).
Key targets include halving the group’s debt from RM5.04 billion to around RM2.5 billion over the next three years, in part through divesting assets or businesses valued at RM2-5 billion over the next two to 12 years five years.
“There is no sentimental value,” said Abdul Jalil. “Anything that isn’t synergistic for the group, we need to look at it again.”
“We’re also identifying the things that we’ve done very well over the years and where we have a competitive advantage and see how we can work better,” said Abdul Jalil, adding that the group has identified at least one deal This could go to the listing.
BCorp will also establish a dividend policy for its subsidiaries to structure a steady stream of income for the parent equity holding company, rather than capital gains previously practiced.
“BCorp is undervalued because despite all the big brands, the way the group is organized makes it difficult to locate and value the group,” said Abdul Jalil.
“The other goal is to ensure that the companies are self-sustaining and able to compete outside of the Berjaya group. We will also look at the cross-shareholdings,” he added.
To further strengthen the subsidiaries, BCorp will also limit powers while maintaining oversight – to ensure the subsidiaries can formulate their own strategies and funding plans in line with group management.
Another mandate, Abdul Jalil said, is to institutionalize the company — in the sense that operations can continue even if the people at the company are replaced.
Although BCorp is a large company with total assets of RM20 billion and a massive global footprint in more than a dozen sectors, BCorp has lost its shine with investors over the years. It’s heading into its fourth year in the red and hasn’t paid a dividend since 2015.
BCorp’s shares are currently trading at one-fifth of their 2010 high and less than 0.2 times their net book value of RM1.78.
But at 33.5 Sen, the tally is up 76.3% year-to-date after Abdul Jalil, former president of the government-linked fund Permodalan Nasional Bhd, became the group’s first non-Tan CEO to join the group in April has occurred.
Abdul Jalil has also since acquired 181.57 million shares of BCorp, accounting for a 3.61% stake.
“For me, it’s not just about business, it’s really about what we do after acquiring the companies,” he commented.
“We weren’t there [in terms of profitability]which is why the KPIs need to be better coordinated.
“But we’re 70% there – I’d say we’re pretty disciplined from a cost perspective; most companies already have the KPIs of the strategies, it’s more about optimizing them,” he added.
BCorp’s other public companies include Berjaya Assets Bhd, Berjaya Food Bhd, Berjaya Land Bhd, Berjaya Sports Toto Bhd and 7-Eleven Malaysia Holdings Bhd.
In recent years, the group’s largest contributors have typically come from the gaming segment, followed by real estate and hospitality. The retail segment, while generating large revenues, operates on a relatively thin margin.
Addressing the different segments, Abdul Jalil said the group has identified the needs and pain points that drive some of the future strategies.
This includes exploring the F&B value chain for better synergies, reviewing the hospitality segment’s operating models (as an operator or owner) and its branding choices, and expanding the retail and consumer goods segment into new markets while also seeking cost-cutting opportunities, e.g. resources bundle up.
