The disparity in value was big enough for certain shareholders to take action more than a year ago. Ahead of KBG’s annual general meeting last year, the company received a requisition notice from shareholders Morph Investment, Ong Sze Wang and Chin Phak Lin, asking for the distribution of Oiltek shares in specie via KBE to be put to the vote.
They control around 21 million shares in total, but with the controlling Koh family members together holding more than half of the 438 million shares, this resolution was not able to muster enough support, with 42.16% for and 57.84% against.
Since April 2025, Oiltek’s shares have gained another 470%, exacerbating the disparity in value. Ahead of this year’s AGM on April 29, the same shareholders have put forward the same resolution, as announced by KBG on March 25.
Following the March 25 announcement, both KBG and KBE witnessed a gain of around 19.3% and 62.5%, respectively, in their share price, as investors position for a potential windfall if the distribution is to take place.
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However, KBG, which is headed by executive chairman and group CEO Francis Koh, held its ground this time round. On April 13, it announced that it had rejected this request and would not put the resolution to a vote. KBG maintains that it took into consideration, among others, that the current operating environment remains uncertain and volatile, the financing arrangements of KBG, the potential effects on the financial position of Oiltek, KBE and itself, as well as the ability to direct the strategy and future growth of Oiltek.
Following this, both share prices of KBG and KBE suffered a decline of 8.1% and 12.1%, respectively, on April 14. The million-dollar question now is — should KBG’s board have put forth the resolution and allowed all shareholders to vote in the upcoming AGM?
From the share price decline on April 14, the market is clearly sending a message to KBG’s board that it has to do more for shareholders and unlock value for them.
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Given the ongoing efforts by the Monetary Authority of Singapore and the Singapore Exchange on the value unlocking programme for our equity market, companies, especially undervalued companies, should start to do more to lay out concrete plans to unlock value for shareholders to bridge the valuation gap.
For KBG, it is even more important than ever before, given the valuation mispricing at both the company and the subsidiary level. With no concrete plans on how to monetise the stake in Oiltek, which KBE owns, price discovery will not happen, and its share price will continue to languish at depressed levels.
It is in the best interests of KBG shareholders to vote on a value-unlocking resolution at the upcoming AGM, which would benefit all shareholders. Clearly, KBG should have done better this time around.
