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Showing posts from November, 2006

As reported in theedgedaily today:
"Syarikat Takaful Malaysia Bhd chief executive officer (CEO) Md Azmi Abu Bakar failed to get re-elected as a non-executive and non-independent director of the company at its AGM on Nov 29. Md Azmi, 42, was appointed as CEO on Sept 15, 2005 and prior to the appointment, he was the chief operating officer from 2003. He took over as CEO from Datuk Mohd Fadzli Yusof, who also failed to get re-elected as a non-executive and non-independent director. Syarikat Takaful said the resolutions to re-elect them were rejected by the shareholders. It said the resolution to adopt the audited financial statements for the year ended June 30, 2006 was carried, but the auditor KPMG Desa Megat & Co had modified its report with an "except for" qualification. It did not elaborate on the qualification."

There is obviously something not right. If you were to glean through the NSTP BIz Times today you will find interesting sentences w…
Composite Index Reality

Its 11am and the Composite index is up a significant 14 points to 1078. However, everyone knows the underlying tone is not as strong as what the index is showing. What I am saying is, the market is good and there is good undertone to it but just not as strong as what the index is throwing off.

The index will have a very good chance this few days to tests the 1,100 level because:
a) the mega merger automatically pushes up a few index component stocks and will ensure that it stays there for some time owing to the merger proposals and premium pricing, as the deal is expected to take 12 months to complete, in a way the index will have a strong support level from these group of companies.
b) the view on plantations has been positive 6 months back on biodiesel, now most believe the palm oil prices will continue to surge ahead as biodiesel plants are actually up and running and even exported, bringing forward the reality, even the recent slump in oil prices did not deter …
Some Investing Pointers

1) Out of the blue - When someone ask you about a stock "out of the blue" (just like simon-alibaba below), gotta be suspicious. Especially if its a stock not on everybody's lips. Especially if its from someone who does not play stocks often as their sources have a higher hit rate.

2) Opening lower on huge volume - Look at MBf Corp today, top volume stock with a closing price yesterday of 21 sen. The stock opened at 16 sen and reached a high of 18.5 sen. You don't even have go looking for news, a stock that opens much lower on good volume, you can forget about bottom fishing. Its a very poor bet to buy now. Most investors have a big drawback, and that is Good Recent Memory, Poor Long Term Memory. Recent memory means we make recent experiences as a reference point - i.e. we are aware MBf Corp has risen and traded above 20-22 sen for the past few days, hence a pullback to 16 sen. looks bloody attractive. Poor Long Term Memory, sigh, remember 1997, …
Ranhill Baby

simon_alibaba said...
do you have any call on Ranhill Utilities or RUBHD?

What a nice name... Ranhill ... sounds so British. Ranhill Utilities is not on any brokers' watch list, i.e. no coverage, i.e. nobody will touch the stock. Let's be fair and have a view on Ranhill Utilities. Its 100% subsidiary, SAH Holdings holds the water supply concession in Johor - some hoo-hah with the state government to restructure the concession. The project IRR is about 18%.

The only stock that research houses cover within the umbrella of Ranhill is Ranhill Berhad (the other listed counters are Ranhill Power and Ranhill Utilities). Surprise, surprise, the only exciting counter of the 3 is Ranhill Utilities. The Ranhill Power is also good but is plagued with land acquisition issues in Sabah. Both the power and unitilities units contribute nearly 50% of turnover for Ranhill Berhad. At operating profit level, the figure is even more ridiculous as the two account for 95% of Ranhill Berhad&…
Kinsteel, Looking Good
Whats Driving The Profitability

If you were to check Kinsteel's share price and volume traded for the past couple of months, there is nothing to suggest anything "sinister" or devious was syndicate involvement. The share is pretty clean. The company reported a ridiculous RM422m net profit for the 9 month preiod. That's largely due to recognition of negative goodwill (don't ask... go take an accounting class). What is a more relevant figure is the net profit after minority interests which came in at RM49.6 million for the 9 months. That was still a huge jump of over 200% from the same period last year's net profit figure of RM16.4m. The cumulative EPS for the 9 month totals a staggering 42.5 sen (mother share rose to RM1.40 today from the previous day's close of RM1.18).

The overall improvement was due to the enlarged group which resulted in strong upstream activities, and overall improved demand from the region. ... That's basicall…
What Now, Brown Cow?
Just Don't Be A Bigger Sime Darby

If the end result of the mega merger of PNB companies result in just a much bigger Sime Darby, then don't do it. It is very silly and exhausting. I basically agree to the concept. There are a few questions though:

1) It looks like Synergy Drive was "created" as an independent party so that PNB could vote on the deal, which requires 50% plus 1 vote to push it through. If PNB has mooted the deal on its own, PNB will be forbidden from voting its stake. Hence Synergy Drive may not as "sinister" as the cynics might have it. However, Securities Commission could be tasked to look over Synergy Drive's existence, and whether PNB is in cohorts to circumvent the regulations to the detriment of minority shareholders. Ball in your court SC.

2) The entire exercise is expected to be complete by 4Q2007. This is one of the major hurdles we have to eradicate. By making companies having to jump through so many hurdles, an…
Mega Merger Of Sime Darby, GHope & Guthrie
The Good, The Bad & The Ugly

Well, its about time, and I thought it was never going to happen. Both Golden Hope and Kumpulan Guthrie have performed well in share price returns this year, while Sime Darby has been ignored. Based on pure palm oil play and the biodiesel rally, Golden Hope has gained some 21% over the last 6 months year while Guthrie has registered a scorching 53%, meanwhile Sime Darby just beat my savings account rate coming in at 2.5%. Is this to save Sime Darby? Despite that underperformance, there isn't a shadow of a doubt that the management at Sime is still top tier.... although they could do with a bit of reinvention and strategic shifts.

Already Sime Darby has been dragged lower due to the aversion by fund managers from conglomerates, why add more slices of bread to the pudding? In fact, Sime Darby would be better advised to properly distinguish the various business units into a cleaner structure. The work is on…
Advantage Kerzner!
Why Genting Will Not Win Sentosa

Sticking my neck out here but am pretty confident now that Kerzner will get the Sentosa IR project ahead of Genting. Let's look at Genting's bid details:
- partnering Star Cruises and Universal Parks
- build a Universal Studios theme park to draw 5m visitors a year with 16 new/unique rides
- new rides based on King Kong and Madagascar, Revenge of the Mummy and Waterworld
- larger than the one in Hollywood with room for expansion
- plenty of shade structures in keeping with the sunny weather
- some additional juice based on Universal's relations with NBC but no details as yet

The trouble with Genting's bid:
- another theme park thing, theme park thing is so 90s
- it's Universal but not Disney, and what if Nusajaya gets Disney (its a longshot but still a possibility)
- theme parks and fun rides does not add much "real value" to kids

After Marina has been awarded, the Sentosa IR would have to be awarded on being a diffe…
History & Stock Markets
We Are At Crossroads

Now that most equity markets are near or just surpassed their all time highs, most investors are loathed to put forward their opinions on the near future direction of equity markets. Most had been wrong for the past 6 months as they expected markets to be weakened by the high oil prices and the mess in Iraq.

As mentioned before, I am still bullish on equities globally, in particular on markets where their currencies are still deemed undervalued. That's because growth in earnings will be there, but equally as important is the inflationary aspect. The more undervalued your currency is, the better it is to withstand imported inflation by rising in value and yet not hurt your export competitiveness much.

While we are standing by and watching equity markets at highs, there has been a general wave of increase in almost all asset classes. Commodities did their thing over the past 24 months, and even with the correction, the prices are still …
Gawd, I Hope Nobody Finds Out That I Am So "Average"
An Investment Pro's Biggest Fear

Why so harsh on JP Morgan Asia? Well, just have a look at the share prices in Southeast Asia, which have climbed three times faster than in the Asia-Pacific region. Stocks in Indonesia, Malaysia, the Philippines, Singapore and Thailand, tracked by the FTSE/Asean Index, have gained 27 percent in dollar terms this year. FTSE Group's Asia Pacific Index has risen 8.6 percent. ... and our JP Morgan friend has the audacity to proclaim in a report just a few days old that they JUST RAISED Thailand equities to overweight and JUST RAISED Malaysia and Indonesia to NEUTRAL. So, Malaysia and Indonesia were to be underweighted or an avoid for the past few months, I guess! Its people like that that gives investment analysts and strategists a really bad name.

Let's checkout a recent Bloomberg survey on what investing pros were saying and rate their statements by their insights and intelligence, …
Better Late Than Never
But Why Are They Paid So Much For?

JPMorgan (JPM) has upgraded its recommendation on equities from Thailand, Malaysia and Indonesia, citing "pro-growth monetary policy" in all three countries. In a report released Monday on the 2007 outlook for emerging market equities, JPMorgan said it has raised Thailand equities to overweight and Malaysia and Indonesia to neutral. Other macroeconomic factors working in their favor include strengthening local currencies and increased domestic consumption as a result of lower gasoline prices, the report said. JPMorgan was more specific on its view on Thai equities, saying it "expects that both economic and profit forecasts will be revised higher over 2007." A more defined economic policy from the government during next year will also benefit Thai stocks.

As for the broad asset class of emerging market equities, JPMorgan predicts that conditions in 2007 will remain about the same as this year. Earnings growth …
Country Manager For A Day ... For Make Benefit Glorious Nation of Malaysia
If I Was An Invited Speaker At The UMNO Assembly...

I am basically a supporter of Malaysia's current PM Badawi. I believe his heart is good, just that he may be pulled by many "hidden forces" in all directions which prohibits him from doing a better job. May never be PM, but if I was, for a day, I would implement the following Ten Things:

1) Instruct all government depts to pay outstanding bills of more than 3 months, and work towards a target "to pay all outstanding bills within 30 days" from mid-2007 onwards

2) Remove KJ from UMNO

3) Raise Anti Corruption Agency's annual budget to RM250m a year, set conviction targets to triple current convictions (less than 100 a year), strengthen the independence of ACA with new regulations. Cash incentives for informers resulting in positive convictions.
Install a new Internal Audit department of all local government bodies, municipals, trade units, c…
The WSJ Asia 200
Now For The Smaller Companies

The cover pages of The Edge last week carried the top 10 companies from Malaysia which made the WSJ Asia 200 rankings. Ranking was based on:
Long Term Vision
Financial Soundness

Unfortunately, those which made the top 10 for Malaysian companies were all players which have been hanging around for some time, they include:
1) Maxis
2) Public Bank
4) YTL
5) Star Publications
6) Genting
7) Resorts World
8) IOI Group
9) UMW
10) Southern Bank

When you have hung around for so long, you must be doing something good. But what about the younger listed companies? Good companies if they possess the crucial growth traits and sensible management, will see their market cap expand exponentially over the years - hence it pays to spot them early. Here I have attempted to list my top ten for "stars-of-the-future" based on the same criteria as above:

1) Astro
2) Pelikan
3) CCM
4) Commerce/CIMB
5) IJM
6) NextNation
7) Pos M…
Asia-Pacific Brokerage Firms Rankings

Asiamoney provides good ranking services, but this year Thomson Extel has muscled into Asia Pacific territory by announcing the awards ahead of Asiamoney. The awards were voted by more than 100 fund management groups across Asia. Voting was conducted among 109 buyside firms in Asia.

Leading Equity House

Australia & NZ - Macquarie Equities
China - CLSA
HK - JP Morgan
India - Citigroup
Indonesia - JP Morgan
Malaysia - UBS
Singapore - Citigroup
South Korea - UBS
Taiwan - CLSA
Philippines - UBS
Thailand - Credit Suisse

What is surprising is the number of awards UBS managed to snare because despite their strong brand name, most of the employees at UBS do not get paid as much when compared to their peers. Head HR honchos at UBS always trumpet the fact that employees of UBS should be glad to have the opportunity to work there, and that money making is largely due to the company's name rather than the individual's efforts. Hmmm... Looks like UBS is going do…
Market Outlook

Readers of this blog would be aware that I have been bullish on all equity markets, yes, even Malaysian equity market, since the beginning of the year. The correction in oil prices was a boost to the underlying strong tone for equities. I did mention that if oil and gas prices fell too fast, it could hasten a more hawkish Federal Reserve. Thankfully, the biggest factor which is US housing has shown some weakness despite the dip in oil prices. The decline in residential construction could reduce GDP by 0.5 to one percentage point over the next 12 months. That’s not enough to push the economy into a recession but could easily persuade the Fed to leave rates alone for now and even to nudge it lower come 2Q2007. However, firm labour costs is the other side of the coin as many companies are reporting strong earnings growth and bonuses should be substantive and that may cause the Fed to leave rates alone for now.

The way it is now, markets will bring one another up, and natura…
The World Needs A Democrat President In USA

Like it or not, the global military, technology and economic leadership comes under the umbrella of USA. I think we have enough of the Bushes or Cheneys. I wouldn't have minded so much if Colin Powell stood for Presidency but he prefers doing something else. We need a more empathatic leadership from the US, a better way to mend fences and heal internal wounds and international bruises. Hilary Clinton should secure one of the nominations, and its high time for a woman to lead, and a crucial time to signal a new era for the world. Many countries have had wonderful female country leaders, and America is lagging. Its a big education for all, if a woman can be President of America, what institution, company dare to deny a similar fate. Young girls everywhere will be empowered even more to think big, and step out of the invisible box.

However, a spanner has been thrown in the works, now there is another very credible candidate from the Democrats…
MBF Holdings - A Goodie Or Baddie?

nothing wrong with MBFH and I believe it is NOT sanbumi...major share holder own more than 66 % and it is cutting dept fast...I think we should give the new management a chance as they took over 2004

Issued Capital: 570m
Market Cap at RM0.50 = RM285m
Cash flow per share 2005 +19.7 sen
Cash flow per share 2006 +19 sen
Net gearing: 1.6x
NTA/share: RM0.40
Net Profit 2005: RM50.6m
Net Profit 2006 (estd.): RM26.5m

2005 saw a RM32.7m one off gain owing to the deconsolidation of Alamanda Development. The Mandatory General Offer was at RM0.215, and now the share is above RM0.50 ... hmmm... wanna sell or buy?? Basically this pony has two main tricks, one is credit card and the other is the large exposure in plantation, auto merchandising but in Fiji and PNG. The rest are too small to matter to bottom line. The share has surged past NTA and with the kind of businesses they have, they should be at a discount to NTA, the company is not a Rothmans. So, a fair…