Chua Ma Yu selling off his entire stake in Star Cruises

KUALA LUMPUR: Datuk Chua Ma Yu has sold off his entire 14.02% interest in Star Cruises Ltd (SCL), just eight months after he acquired the stake. Sources said the ex-stock broker sold the 1.01 billion shares in the cruise ship operator for 23.5 US cents (77 sen) each yesterday.

The buyer is believed to be Golden Hope Ltd, a company related to the Lim family, who is the major shareholder of Genting Bhd.

Chua, through his privately owned CMY Capital (L) Ltd paid a total of HK2.64 billion or HK2.62 (RM1.08) per share for the stake which he bought from Resorts World Bhd.

At that time the stock was about 33 US cents. Considering that he is disposing his block at 23.5 US cents per share, it would translate to about a total of HK1.8 billion. This means Chua suffers losses of some HK800 million within a space of eight months.

SCL was heavily traded on the Singapore’s stock exchange yesterday, surpassing the 1 billion mark. It touched a day high of US$0.225 and a day low of US$0.215.

Chua’s disposal comes as a surprise as he had stated that he was purchasing a block in the company based on its cheap valuations, that SCL has international exposure and is at the low end of the cycle.

The sale was viewed well for Resorts World as it no longer was required to equity account the volatile earnings of the SCL group. After the disposal of 14.02% in Star Cruises, Resorts World still had about 19.89% in the cruise operator.

When Resorts World announced the acquisition on July 13, many people were puzzled by Chua’s move. Many were questioning why an investor like him would pay in excess of RM1 billion for a minority stake in a cruise operator that was heavily in debt and was facing increasing operating costs?

Chua had told The Edge then that he was a contrarian and picks stocks that are shunned by others. `When they become popular, they will be fully valued. I don’t follow the herd, ‘ he had said.

In January this year, it appeared that Chua had played his cards right. Just months after he paid RM1.17 billion for the stake, SCL’s wholly-owned subsidiary NCL Corp Ltd, which is its Achilles heel, found a new shareholder in Apollo Management LP. Apollo’s entry saw the capital infusion of US$1 billion (about RM3.3 billion) into NCL Corp and reduced the burden shouldered by SCL of managing the Norway-based luxury cruise line.

The question now is why sell just eight months after acquiring a block and that too at a loss?

Source