Brief history of events:
In mid-January 2019, the share price of WZsatu jumped up because the Sultan of Pahang, Tengku Abdullah, became the Agong of Malaysia. The share price reaction made sense because Tengku Abdullah himself has a 9.98% total stake in WZsatu. The largest shareholder is his cousin, Tengku Uzir, who is also the Regent of Pahang.
The share price of WZsatu jumped again in mid-February when the government decided to lift the ban on bauxite mining. The government mentioned that demand for bauxite was high and royalties from bauxite mining was a huge contributor of money to the government. However, the share price corrected after that when Dr. Xavier Jayakumar, the Minister of Water, Land and Natural Resources issued a statement saying that the lifting of the ban did not mean that mining can start immediately. The minister said that the miners will have to agree to comply with a new Standard Operating Procedure (SOP) that will be issued by his ministry and also produce an environmental assessment report.
Everyone thought it was game over as knowing our government, the SOP will take months to be prepared. But everyone was caught by surprise when the government released a 175-page SOP on 31 March 2019, the last day of the ban on bauxite mining. This means that the government had been working on the SOP for a long time already and is very eager for bauxite mining to start.
Here comes the shocking part:
Some of the rules in the new SOP include:
1. Government will only give licence to miners who own mines more than 20 hectares in size.
2. There must be a permanent mining engineer and safety, occupational health and environment officer.
3. Must be able to prepare the capital and equipment suitable for the proposed mining method, as well as public liability insurance of up to RM1 million.
This new SOP effectively KILLS OFF THE SMALL PLAYERS AND WZSATU MAY BE A BIG WINNER. Some rules such as 2 and 3 above are easy to follow but the 1st rule means that the small players will not be able to get a licence from the government to mine. WZsatu is the largest bauxite miner in Pahang with 66 hectares.
If the small players cannot get a licence to mine, they may be forced to sell thier mines to WZSatu or JV with WZSatu. Either way, WZsatu will be able to force a low selling price because their mines will be worthless if they cannot get the licence.
The second catalyst is the resumption of the ECRL project. Tun Daim said last week that the ECRL negotiations should be completed this month. We know that a large part of the ECRL passes by Pahang. WZSatu will have a high chance of winning construction contracts for construction works in Pahang because of the people behind WZSatu. We all know how the SIPP-YTL JV won the RM8.6 billion Gemas-JB double track railway project, beating out other giants such as Gamuda, MMC, IJM, MRCB. SIPP is linked to the Sultan of Johor.
Notice that the sahre price of WZSatu has been moving up after the announcement of the bauxite mining SOP...
Based on these 2 major catalysts, WZSatu could have a strong rally this month.
https://klse.i3investor.com/blogs/shareseatreasure/200790.jsp
