Some essays, some thoughts
Debut of YUNKONG
The space-age KLSE buildings launching gallery was filled with people, the clock ticked slowly and the people waited anxiously as the time approached 9:30 on Thursday morning, 2nd October 1997. Among the anxious people were the press, invited guests, representatives from our merchant bankers (Aseambankers Malaysia Berhad), management consultant (KPMG Peat Marwick Management Consultant Sdn Bhd), issuing house (MIDFCCS), KLSE officers and most important of all, the directors of Yung Kong Galvanising Industries Berhad (YKGI) in the persons of Chairman Mr. Dominic Hii Ngo Sing, President and CEO Dr. Peter Hii Wi Sing, Executive Director and Company Secretary Ir. Michael Hii Ee Sing and Executive Director Mr. Masayuki Tada. YUNKONG (code name for YKGI, stock number 7020) was privileged to be one of the first companies to have its debut at the new Kuala Lumpur Stock Exchange (KLSE) building at the Exchange Square, Bukit Kewangan, Kuala Lumpur.
Earlier at quarter past nine, the Senior Listing Manager, Puan Latifah Hj Mohd Yusof welcomed us to the Stock Exchange, showed us the computer terminals, explained the programs matching concept and taught us how to read the numbers appearing on the screens. The directors and their guests who were present for the first time at the gallery were much impressed with the ultra-modern set-up and the architecture.
Everyone present was enthusiastic, indeed very eager to find out the market valuation of YUNKONG - the first brave stock to have its debut amidst the worst possible negative environments. Why should investors put their hard-earned money in YUNKONG with US Dollar breaching RM3.50 level the day before, an all time low (not so long ago it was only RM2.50 and stable!) and a terrifying figure popularly attributed to the playful acts of the worlds most famous speculator Mr. George Soros, by now a perfect match to anyone who would play the game with him. With the weakening and unstable Ringgit, the cost of raw materials of YUNKONG is going to swell and it will erode away the profit. In tandem with the unstable foreign exchange, the stock market tumbled. Moreover, YUNKONG comes from Sarawak, a state where most investors dont think much of and poor performance on debut were stamped on their heads, fresh in the their minds was the latest flotation of Utama Banking Group which was trading below the Pink Form price of RM3.00! Hock Hua Bank was also traded below the IPO (Initial Public Offer) price of RM3.25 at the early stage of its debut a few years ago. And how about the recent Right Issue of Kim Hin at RM2.80, now trading well below the right price? Then CMS, one of the biggest and strongest group of Sarawak, fell from over RM20 during the AGM in June this year to below RM4 after the 1 for 1 Bonus Issue, in less than 5 months. True, the whole market is in turmoil together with the money crises, but is this Sarawak counter going to be another Utama? Are the lucky public who were balloted to become shareholders of YUNKONG going to fetch less than the IPO price of RM3.50?? Everybodys mind must be wondering.
Sarawak was not just famous for its longhouses and durians, it is now world famous for its engulfment by the unwelcome haze. As the API (Air Pollutant Index) soared above 500, a state of emergency was declared in Sarawak on the Friday 19th September 1997. All schools and government offices were closed, all factories were ordered closed, all people were advised to stay at home. With the factories forced to be closed and production schedules disrupted, could YUNKONG achieve its profit forecast of RM9.622 million for 1997 and RM8.960 million for both 1998 and 1999? Earlier in the year, Sarawak had the outbreak of a deadly disease caused by Coxsackie B virus, which attacked mainly younger children and had claimed quite a few innocent lives before the epidemic was brought under control. Under such unfavourable sentiments, what do investors expect of YUNKONG?
I had no idea what was running through the minds of the people present, Puan Latifah, Puan Shahnaz Radhiad, Encik Tajur, Yong Lee May, Yap Swee Thee, Choo Chee Beng, Gan Ah Tee, Wong Wing Siong, and especially the reporters - have they pre-written the debut story and only waiting for a few numbers to fill in the blanks?? Neither did I know what our directors were thinking, but I was pretty sure that they were worried about the opening prices. Despite the poor market sentiments, the directors had full confidence in our business, so if it opened at RM4 as the morning Chinese paper had predicted, we would be disappointed at the low premium. Any price higher than RM4 would be a bonus, and of course, if it opened double the IPO price, it would be a great joy!
"10, 9, 8, ..." Puan Latifah started the count-down at 9:29:50, her voice was echoed by all those present, the photographers were ready with their cameras, focusing at the stage, the directors and the gong. This was the Gong-Day and the Gong-Moment that everyone was waiting for. " ... 5, 4, 3, 2, 1." "Gong! Gong! Gong!" The Gong was struck three times by the President and CEO of YKGI Dr. Peter Hii. Lights from the cameras kept flashing as the photographers took the historic pictures. Then all eyes were turned towards the computer screens, waiting eagerly for the first numbers to appear.
Time stood still, seconds had passed, it felt like minutes, but there wasnt any number appearing. Why wasnt the screens showing anything? Wasnt anybody interested in our Company? Were they going to hold onto the shares until the haze is completely cleared? ... "Oh !" everybody shouted at the first sign of activity. Finally after a few long anxious seconds, or may be half a minute, the first match was found, the first lot was traded at RM5.00! For a moment there was silence, keen stillness; depending on ones own expectation most people were perplexed by the magical long-awaited number FIVE. My own hearts rhythm slowed 10 beats or so, shouldnt it be a 7 instead of 5 on the screens? Before the currency and stock market crises, all second board IPOs opened at least doubled the offer price, but then the haze, the weak Ringgit… Ah well, at least it was better than a 4!
The game was not over yet, as the seconds ticked by, all eyes were glued to the computer screens; after about 100 lots were done at RM5.00, time suddenly moved briskly with orders pouring in, the three best quotes showed the pressure was downward, and it was descending fast with selling prices of RM4.98, 4.88, 4.80, 4.70, 4.60, goodness me, were they going to push it all the way down to RM4.00?? Buyers prices and support were descending in tandem with sellers prices… My heart-beat and blood pressure fluctuated with the buy and sell orders. At last after 4 tense and uneasy minutes, a support level was found at RM4.64, 5 lots were traded at this price at 9:34 am. All of a sudden, the mood and tide turned, buying and selling prices moved up about 20 Sens, hovering around RM4.80 and RM4.90, by quarter to ten the initial excitement was all over with more than a thousand lots changed hand, then the activities slowed down to a snail pace. Silence was finally broken by cheers and applause, followed by mutual congratulations and endless hand shaking.
After the greetings and more photo-taking, all the people proceeded down stairs to the press conference room for the traditional meet-the-press session after a debut. Facing the press were President Dr. Peter Hii, franked by directors Mr. Tada and Ir. Michael Hii. Also present were Chairman Mr. Dominic Hii and Mr. Yap Siew Thee of Aseambankers. Dr. Peter was the spokesman. As expected, questions concentrated on the weak Ringgit which would greatly affect the performance of the Company. To combat the problem, we planned to import some raw materials from ASEAN countries since prices would be less affected by the US Dollars; at the same time wed try to reduce wastage from 2-3% down to 1-2%. After 15 minutes of questions and answers, the final conventional question was put forward - What do you say about the debut prices?. Satisfied, given the current scenario, was the answer from the President, on behalf of the directors.
As usual the reporters exchanged name cards with us after the conference. The assembly then moved next door for a light refreshment hosted by KLSE. Mee and Kuihs were served together with tea and coffee. While I was having some of the Kuihs, I noticed the reporters on the other tables were busy writing their news reports. There were about 6 tables fully occupied, implying the number of people present for the function of about 60. The ceremony was over by 10:30, we went upstairs to have a final look at the screens before heading back to Hotel Istana, which was only 5 minutes away by car.
In the Hotel we had a meeting at the coffee house. During the meeting, the latest information and sentiments on our stock were pouring in through the mobile phones. Although we could not see and feel the excitement at the trading tables of the remisiers, our feeling rode with the movement of the prices which was like the wave at the river mouth. The morning session closed at RM5.00 with a low of RM4.64 and high of RM5.25 and a volume of around 2,000 lots. Despite my disappointment, I was quite happy that there was strong support at the 5 Ringgit level, in any event, it was 1 Ringgit better than the newspapers prediction.
The afternoon session started at 2:30 pm with RM5.30 and up. Sentiment was good but the pulse was slower than in the morning. Highest price of RM5.55 was recorded at 3:54 pm after which it declined to close the day at RM5.00 at 5 oclock. Total volume traded on the first day of our trading was 3,855 lots. YUNKONG was the 5th most active stock of the day with a gain of RM1.50 on its debut.
On our way to the airport to catch the 5 oclock flight back to Kuching, we called at a stock broking firm near the landmark twin-tower building to have a look and feel of the trading mood. The buyers and sellers prices were flashing in front of our eyes, unlike in the morning, all the prices were above 5 Ringgit. I was hoping that it might reach 6 Ringgit, but it didnt. We couldnt stay long as we had a plane to catch, so we left after about 15 minutes. Further news were coming in from mobile phones and Di-Woo-Tai (Radio 5, Chinese Station).
The above is an account of my experience on the listing of our Company YKGI on the second board of the KLSE. It was a memorable day in the history of the Yung Kong Group. At last, 37 years from the new year day of 1960, Dr. Hii Yii Ngiik, my father and founder of Yung Kong should be happy that the Tree (Yung) which he planted long ago has now become a Shining Star (Kong) of Sarawak.
May YUNKONG shine brilliantly forever! Long live YUNG KONG!
- Ir Michael Hii, 1997
> ESSAY