Brahmal Vasudevan is known for his investments in companies whose business model is driven by the need to meet consumer demand whether through technology or other ways such as retail and food outlets.
KUALA LUMPUR: While Wong Thean Soon of MyEG Services Bhd has exited Palette Multimedia Bhd, another known investor, Brahmal Vasudevan, has emerged in the company.
Brahmal’s emerged as a substantial shareholder with a 5.2% on Tuesday in the company that provides services to the mobile health . The stock went up by 5.5 sen the following day to close at 37 sen on a volume of 53.3 million shares. As of yesterday, Brahmal has some 20 million shares or a 5.89% stake now.
Brahmal said that his interest in Palette was for its product as well as the earnings prospects on the medium term.
“I expect it will take time for the company to yield full potential and one would need to be patient over the medium term. But the early signs are good and if the company continues to deliver, it could get rerated in the process,” Brahmal told StarBiz.
Brahmal is the founder and chief executive officer of private equity firm Creador Sdn Bhd and is known for his investments in companies whose business model is driven by the need to meet consumer demand whether through technology or other ways such as retail and food outlets.
Shares in Palette have been in the spotlight since Brahmal and other investors such as Wong first took an interest in the company back in August. Palette was only trading at six sen in the beginning of the year. Since the emergence of new investors, the stock has had a new lease of life, touching its high of 52 sen earlier this month.
Sentiments on Palette however dampened when Wong, better knowns as TS Wong, announced his exit from the stock and other investments, stating that he was merely a passive investor. Wong made public his announcement after some stocks where he held small investments ran ahead of fundamentals on speculation of a corporate exercise.
During Palette’s price weakness last week, Brahmal said that he took the opportunity to up his stake.
For the first quarter to Aug 31, 2017, Palette staged a turnaround, recording a net profit of RM3.03mil on the back of RM7.84mil in revenue. This was from a previous loss of RM516,000 on the back of RM222,000 in revenue.
If Palette’s earnings were to be sustained, this could potentially work out to RM12mil a year, which would mean a price earnings ratio (PER) of 10.2 times at its current price of 36 sen.
This sector valuation is between 15x to 20 times, depending on the growth and sustainable of the individual companies.
Meanwhile, Eg Kah Yee, the chairman of Palette, said that his priority now is to continue building and expanding the business and leave it to the capital markets to play its role.
“We welcome and appreciate all types of investors. Long-term investors provide price stability, while short-term investors add to the liquidity and both are needed.
“Brahmal visited us a couple of times to understand the business in greater detail and had expressed that he is a passive but professional investor,” said Eg.
Since March this year, Palette has been announcing a series of hardware platform sales to Trade House Atlantis Ltd. This company is associated with RKSS Group, one of the largest telecommunications system equipment developers and integrators in Russia.
While the contracts are for Internet of things platforms, they come with various cloud application softwares, including mobile health cloud and network access management.
For the month of October alone, Palette continued to win more Russian hardware contracts totalling RM7mil. To date, Palette has won a total of RM40mil worth of contracts.
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