21 January 2023, Kuala Lumpur, Malaysia: Rapid Synergy Bhd, KLSE: RAPID (7765); YU KUAN CHON, Director and Controlling shareholder of Rapid Synergy Bhd tricks Malaysia Security Commission in a Botched cover-up of his indirect shareholdings. YU KUAN CHON, Director and Controlling Shareholder, deceived the Security Commission by failing to reveal that CHAN WENG FUI is a Connected Party and Employee of YU KUAN CHON.
CHAN WENG FUI (Pictured above) is and has been a long-time poser for YU KUAN CHON and is employed as IR Director at YNH Property for many years. There is no question that he is a related party and connected person under the Security Commission regulations.
The last four Annual Reports of Rapid Synergy between 2018 and 2021 disclose the Top 30 Shareholders List. The List reveals that CHAN WENG FUI has been a long-term holder of Rapid Synergy Bhd ranging from 2% to more than 14% of the outstanding shares of the company making him a Substantial Shareholder of the company.
Combined with his boss YU KUAN CHON, they collectively own at least 40% of Rapid Synergy. If you include the other “official” related parties, this may well bring the group to over 50% of the outstanding shares of Rapid Synergy Bhd.
This is well above the mandatory 33% requirement for YU KUAN CHON and his related parties such as his brother and co-director YU KUAN HUAT to tender a Mandatory Takeover offer to the remaining non-controlling shareholders.
Just a year ago, on 28 September 2021, YU KUAN CHON and his inner circle were reprimanded and fined by the Securities Commission Malaysia for the exact same issue.
“Breach of Section 218 (2) of the Capital Markets and Services Act 2007 and Paragraph 4.01(a) of the Rules on Take-overs, Mergers, and Compulsory Acquisitions” by “failure to undertake a mandatory takeover offer on Rapid Synergy Berhad pursuant to the Group increasing their collective shareholdings to above 33% on 29 April 2019.”
The Security Commission Fined the Group including YU KUAN CHON, CHAN SOW KENG, YU KUAN HUAT, THE NAI SIM, YU CHONG CHOO, YU CHOON GEOK, and NG CHOON HUA a total of RM130,000 and officially Reprimanded the group. (no mention of CHAN WENG FUI who was at the time a holder of at least 2 million shares)
The group Deceived investigators by failing to include all the Related and Connected parties to this group. The Breach of the Capital Markets Service Act continues, YU KUAN CHON and his Group failed to reveal that CHAN WENG FUI is his Employee, Related Party, and Person Connected.
YU KUAN CHON thinks he fooled the authorities and avoided a mandatory takeover offer by hiding a big chunk of these shares with his employee. Let’s see if they pick up on this article and take action.
Rapid Synergy Bhd should be immediately suspended from trading and privatized. Yu Syndicate Shareholders should pay the non-controlling shareholders today’s share price of RM16.48 (closing price 20 JAN 2023) plus a premium and penalty for deceiving authorities and non-controlling shareholders.
Rapid Synergy is a front company for the YU Syndicate and exists to serve as only as imaginary collateral to banks and financial institutions for YU Syndicate Shareholders to pledge as collateral for loans valued as much if not more than 10 times the Net Tangible Assets (NTA) value of the shares.
The YU Syndicate has pumped the share price up so high that the company now has a P/E ratio of more than 550. That means it will take 550 years to obtain the earnings needed to support the existing value. At times in the recent past, the company’s P/E Ratio has gone beyond an astronomical 1000. Unheard of in the global marketplace for such a peanut-sized company with revenues of less than a typical restaurant, but without the profits to go with it.
Why do they do this you ask? Well, the market cap of Rapid Synergy is a whopping RM 1.762 Billion. These shares are used by the YU Syndicate as collateral for loans and credit lines from unsuspecting banks and financial institutions that are ignorant enough to allow Rapid Synergy’s as collateral.
The Net Tangible Assets (NTA) per share represent the true value of the shares. The 2021 Annual Report shows an NTA of RM1.48. The current total outstanding shares of Rapid Synergy are reported as 106,896,506 shares. This means the total NTA of Rapid Synergy is valued at no more than RM 158,206,844.00.
Shares of Rapid Synergy have been manipulated to a value of RM 1,762,000,000.00 (Yes, almost RM 2 Billion) and are actually worth no more than RM158,206,844. That is less than 10% of the current market price for a share in this company.
If you could get a RM 7,000,000 loan from the bank just using your RM 650,000 property as collateral, would you pay it back or just let the bank take the house? Well, this is what the YU Syndicate has done with Rapid Synergy.
According to all available information, nearly all the Shares of Rapid Synergy are pledged to financial institutions for loans. It is reasonable to assume that these accounts loan at least 60% of the value of the shares pledged. That means that financial institutions have loaned as much as RM 1,050,000,000 (again yes, RM 1 Billion) using collateral with a maximum value of only RM158,206,844. When the YU Syndicate decides it is time to exit, who will be left holding the bag for more than RM 900 million in losses?
YU Syndicate members both declared and not declared members, trade small amounts of shares back and forth to maintain false trading liquidity and to manipulate the price. The collective shareholdings with the share price of at closing on 20 January 2023 is RM 16.48 per share. This is a company with average earnings over the past 4 years of only RM 0.0332/share. If you have this share, it is time to get out and let the YU Syndicate buy it back.
If you are a financial institution and are providing hard assets like cash in return for Rapid Synergy Bhd shares that are based on less than 10% assets, you need to quickly cover your risk and reduce your exposure to below the NTA/Share value. Otherwise, you are going to be left holding an empty bag when the Yu Syndicate decides to bug out.
Kenanga Investors Bhd, one of the top security trading firms in Malaysia got wise early. Rapid Synergy Shares held in an unreported trust account for YU KUAN CHON along with share pledge accounts of CHAN WENG FUI were reported terminated in early 2020.
YU KUAN CHON transferred more than 10 million shares representing nearly 10% of the company into the name of CHAN WENG FUI and his two new proxy pledged accounts at both CIMB Bank and OSK Capital. But this was done is secret, so you don’t know about it.
CIMB Bank and OSK Capital hold 7.8 million shares as of 31 March 2022. At today’s over-inflated share prices, that is valued at RM 128 Million in worthless collateral. Let’s hope that these banks have less exposure than RM 11 million plus an additional margin for protection. If it is more, these loans have no collateral when they default.
Who would want to buy all the shares of a company trading at RM 16.48 when it is only worth less than RM 1.48? You can safely assume that the YU KUAN CHON would not do something so stupid. If he was forced to take over the company, he and the YU Syndicate would have to repay up to RM 900,000,000 in loans outstanding on the shares in the various pledged accounts. This is for a company only worth at most RM 148 Million. It will never happen.
Remember, this RM 1.7 billion company has less revenue than an average single McDonald’s restaurant outlet. Unlike the typical Mcdonald’s, Rapid Synergy makes less than 0.18% profit. Not even 1%. My savings account does better than that.
So why does YU KUAN CHON keep buying these shares and going over 33%? It is because no legitimate banker or investor worth his salt would ever touch a share with a P/E ratio of 500 and profits less than 1%. Most investors would not gamble on any stock with a P/E ratio over 30 unless they were blue chip stocks with great long-term profits and regular dividends.
It is likely that through Related Parties, those close to YU KUAN CHON that are not declared as Related Parties, friends, and his proxy undeclared holders control more than 90% of the shares of Rapid Synergy. Maybe even more.
The Malaysian Security Commission is not blind, there are systems in place to monitor companies. But yet somehow this has been happening right under the noses of authorities for a long time. Banks have been lending against shares of Rapid Synergy blindly and need to take a hard look at the YU Syndicate and the Risks associated.
In a search of all announcements both on Bursa Malaysia and on the company’s website. There is no mandatory announcement of CHAN WENG FUI becoming a substantial shareholder of Rapid Synergy.
According to Section 136 of the Companies Act 2016, a substantial shareholder is defined as a person who has an interest in one or more voting shares in a company and the number or the aggregate number of such shares is not less than 5% of the total number of all the voting shares included in the company;
In any other case, within five days after the person becomes a substantial shareholder, acquires or disposes of voting shares, ceases to be a substantial shareholder (Form 29-A); sending copies of the notification, in each case, to the CCM, per Section 141 of the Companies Act.
While the holder continues to own 5% or more of the voting shares before entering upon a new transaction, reporting is required for each change or cessation of substantial shareholdings within the time frame described above.
All shareholders above 5% are required to make announcements. Simple as that. There are no announcements for CHAN WENG FUI becoming a Substantial Shareholder for existing shareholders to see. Ever.
YU KUAN CHON is a director and substantial shareholder, yet has failed to report any of his trades or that of his many related parties since 18 October 2019. The Annual reports published show clearly that he has traded regularly and repeatedly between the top 30 shareholders and Directors of the company.
The Board of Directors, are all long-time YU Syndicate members. They completely disregard the regulations unless the Security Commission identifies irregularities and investigates them. After 20+ years of manipulating the Malaysian Public Markets resulting in unfathomable wealth, the YU Syndicate led by YU KUAN CHON is so brazen as to not even try and hide it anymore. They are happy to pay a small fine and move on to the next Breach in the rules.
Public records clearly show that YU KUAN CHON and CHAN WENG FUI are fully connected persons and therefore related parties. Both are substantial shareholders with combined direct shareholding in excess of 33% for a very long time. Where is the Take-over Offer?
The Minority Shareholder Watchdog needs to protect the shareholders of Rapid Synergy from the YU Syndicate Shareholders. The Malaysia Security Commission needs to open a formal investigation both on the prior Breach of Section 218 (2) of the Capital Markets and Services Act 2007 and review the submissions for fraudulent misrepresentation and deal with the ongoing breach.
People and organizations that do not act in the best interest of the public should not be allowed to participate in public companies. That is why we have rules to protect minority shareholders. It is time to use those rules and take enforcement actions and protect the financial security of Malaysia and further the interest of the Minority Shareholders of Rapid Synergy.
Information used in this story has been obtained primarily from public and corporate records and inside confidential sources close to the matter. This investigation is ongoing, and the facts and data will lead us to the truth. Stay tuned for more to come in the following weeks.
If you have information about the YU Syndicate, YHN, RAPID, or other related parties mentioned in this article, feel free to send us an email and help us expose the truth. If you are concerned about privacy, please use a new email account dedicated solely to this purpose. Contact us via the contact us links or by email ([email protected]). We welcome public assistance and will go to great lengths to protect our sources.
