Skip to main content


Showing posts from November, 2005
PMB & MAS Need To Give Up The Domestic Routes, Among Other Things...

Up until the Widespread Asset Unbundling (WAU) exercise in November 2002, Malaysia Airlines had been booking massive losses from its domestic air services division. At one point, losses amounted to RM360m a year. Under the WAU, the ownership of the domestic operations was transferred to Penerbangan Malaysia Berhad (PMB), with Malaysia Airlines retained as the operator. Since the transfer of the domestic division to PMB, these losses are no longer reflected in the national carrier's accounts. By the financial year ended March 31, 2003, the losses had narrowed to RM150 million, but a huge financial burden for PMB to bear nonetheless. Although the domestic division is of little concern to shareholders these days, how much longer should PMB/the government subsidise the operations. Is the WAU a temporary measure or a special purpose vehicle?

Most of the losses to the rural air services in Sabah and Sarawak. MAS cont…

Lessons From The Current Oil Shock

I came across one of the smartest article in Newsweek (31/10/05) written by Ruchir Sharma (co-head of global emerging markets for Morgan Stanley Investment Management) on the present oil shock. Many are confounded by the lack of calamity owing to the recent surge in oil prices. Sharma cited some clever insights and I would like to add to them:

a) The present oil price bull market is due to demand-surge factors and supply growth that could not cope. This is very different from previous oil price rallies which were more likely due to supply shocks (e.g. wars, embargos, cartel behaviour). What this means is that a very strong global economy is pushing demand for oil, and the usage of oil is more for production of goods which has an end market demand. Hence oil consumption is largely for "productive means". The higher cost of oil is more easily absorbed or passed on along the production and consumption processes.

b) It used to be that higher oil prices meant that we are lining the…

Need To Quicken The PN4/PN17 Process Even More

As reported in The Star (10/11/05) a public listed company that is financially distressed and makes little effort to restructure within the new time frame set by Bursa Malaysia faces de-listing. If, in the past, Bursa has been lenient in extending time for companies to restructure, that would no longer be the case. A specific time frame, for instance eight months, will be given. If nothing is done in that time, the exchange would no longer be “generous’’ in allowing extensions.

In the past, the exchange had often been lambasted for being too slow and too lenient in its actions to penalise companies that did not conform with listing requirements, e.g. negative shareholders’ funds. Previously, companies that were financially distressed were categorised under Practice Note 4 and given a lot of time to regularise or restructure.
There were times when up to two years' grace period was granted by Bursa for companies to restructure while minority shareholders of those companies held on to …

How Not To Do A Deal - Modular & Blue-I

As reported in The Edge Daily, Modular Techcorp Holdings Bhd has obtained the approval from the majority of the shareholders to buy a major stake in telecommunications services provider, Blue-i Network Sdn Bhd for RM21.5 million cash. Some shareholders had queried Modular's board over the acquisition of the 70% stake in Blue-i. The EGM, which was held in Kuala Lumpur on Nov 2, lasted over four hours. The acquisition of Blue-i will be funded by bank borrowings of RM10 million and the balance from its internally generated funds.

Dali: Why was the deal in cash? Would it not be better to issue new shares to Blue-I vendors? Or a part cash, part shares deal?

... and why was the meeting held on the week of Deepavali/Hari Raya holidays.. isn't it more prudent to have hold the meeting during a time where the public would not be taking extended leave... or is it that the company wanted less people to attend... I believe, if the deal is solid, and the terms are fair, plus the deal is value…