Friday, March 16, 2007

Nusajaya Dreamin'!

All The Leaves Are Brown & The Sky Is Grey

Some readers have been making wisecracks at my call on UEM World. Fair enough. RM14-15 might be a stretch for now with the repricing of risk into equity markets but I am still confident that the stock can at least get close to RM10 inspite of the troubled waters globally. The stock has fallen from above RM4 to nearly RM2.5 during the recent selloff and has since rebounded to RM3.20 or thereabouts. Hence my call is quite huge, a bit like George Bush Jr being tipped to win the Nobel Peace Prize, or HK having a genuine and truly democratically elected government, or NOT hearing a Singaporean tourist in other Asian countries commenting "waah... so cheap-one" all the time ...

A regular reader of this blog commented wisely that there are many similarities with the Nusajaya (IDR) project and the Multimedia Super Corridor. For those who are uninitiated, the MSC started off as a field of dreams to mirror the successes of Silicon Valley. MSC still exists but what we got in the end was probably just 5% of the stated goals. We did not have sufficient feeder universities and research bodies to generate ideas/innovations for it to be converted by VCs into cutting edge companies. We did not manage to lure a critical mass of innovators, students and companies as a mass incubation mix. We ended up as basically a pretty good outsourcing center with decent tech infrastructure. Remembering that the advisory group for MSC was this huge gathering of big wigs including Bill Gates: suffice to say that the reader did point out the similarity to the inclusion of Andrew Fung and Robert Kuok in the IDR advisory team.

The one thing I can say for my enthusiasm in IDR is that the MSC goals were mostly far fetched. However IDR is basically just a huge property/township development, it does not require too many Phds to figure out the concept and push it to fruition. C'mon, its just a property project not rocket science. This field of dreams, you don't even have to build ... they are coming already! You start to build, they will buy off the plan!

Even if the global markets were to be flattish for the rest of the year, I believe UEM World to start diverging positively much as the way plantations stock took on a life of its own in 2006. Anyone who has visited UEM World the company will be able to tell that the corporate culture is one of very high energy, and many of them have lucrative stock options to keep them motivated. UEM World will probably generate the most number of new millionaires per company after Microsoft over the next 2 years. It is not a staid GLC anymore. You go there, you'd think you are at a GE subsidiary, no kidding! My biggest fear is in the execution process, however, Khazanah seems to have laid down the catalysts to trigger the right responses from the company.

What if I tell you:

a) that there are already long term funds still accumulating shares. Legg Mason may have more than 5%, and the other institutional buyer include Kuwait Investment Authority. What if Goldman Sachs starts to appear as an investor?
b) that a few very significant companies have ALREADY signed deals to buy land for development in IDR, and all are in jvs format with Khazanah. What if I tell you that the companies already include Cheung Kong, City Developments and Capitaland. What if I tell you that Singapore's MRT has been roped in to do IDR's monorail infra?
c) that a couple of very big investors from Middle East are in the bag, just waiting for the right timing to annouce?
d) that Khazanah will want UEM World to stay away from the "in-house" relational projects awarding system, and to go for best bid-best developer basis? That UEM Builder will be spun off? That maybe UEM World will give away UEM Builder shares to UEM World shareholders as bonus so that it has no more links to UEM Builder? (UEM World holds 51.7% of UEM Builder, a bonus issue will mean 1 UEM Builder for 3 UEM World shares, good bonus if it happens).

These are all IFs. Your assessment will have to be on how reliable are my IFs. I can tell you here that my IFs are actually very high probables already. All that also hinges on Khazanah's masterplan and execution ability via UEM World. It appears Khazanah has already prepared the catalysts one by one, waiting for the right timing to roll out the barrel one by one. Just imagine the effect and impact when all my IFs above are announced one by one for the rest of the year!

Despite the 'fear' epidemic surrounding global markets, the timing is getting riper by the minute. Last week the government has lifted the ruling on "no more land deals within IDR" which was in effect for over 6 months past. You should hazard a guess on why there was an embargo, and now why the embargo was lifted. Last land deal was in October 2006 when UEM Land sold 4,500 acres in Nusajaya to Khazanah at RM7.30 psf. At RM8 psf, UEM World's NTA will rise to RM3.00. This is a big IF, if it matches Shah Alam's psf price of RM20-22 psf, you can do the math. If all my IFs turns into a reality you should be looking at RM30-45 psf. Its not going to happen overnight, but its looking mighty good.

I have already mentioned on the critical success factors for IDR. You may have the integrated townships, industrial clusters, the logistics hubs, Islamic finance hub, educity, healthcare hubs and leisure side; at the end of the day its the proximity to Singapore that counts. Its also the success in redeveloping Macau plus the potentially successful Intergrated Resorts in Sentosa and Marina Bay which will draw international investors to IDR.


doraiddd said...

errr... Dali, Legg Mason started selling aggressively in the second week of feb when the price went past 3 bucks. Close to a 100% return within 6 months. I too would be tempted to take money off the table.

perhaps i can get them to now buy back?

Btw i've always viewed the MSC as a property play cos when you skim past the froth, thats exactly what it was. Otherwise they could've stretched that 'C' in MSC all the way past penang to the kulim tech park. And wat abt that old requirement for MSC-status companies to be domiciled you-know-where?

Remember setia haruman?

Lately i've got this blardy irritating tune playing again and again in my head.....

M - I - C - K - E - Y
M - O - U - S - E....

doraiddd said...

Oh, I almost forgot, this is for your listening pleasure for your long drives for site visits south.

Mamas & the Papas

doraiddd said...

sorry, I just have to add one more thing.. Grab a copy of the IDR masterplan and have a look at how they've allocated the spending amts and prioritized it to which support sectors? Where's the priority? And most importantly to whom? Is this really a recipe for IDR's success?

Perhaps the air of urgency in their offices is NOT becoz of their soon-to-be lucrative stock options.
Did you say Stock options? HAHAHHAHA... who needs 'em??

better grab it fast too before it becomes OSA-ed.



Salvatore_Dali said...

i guess i would have to put u in the still cynical category, no problem, its a huge call anyway.... yes i have looked at the masterplan, and it looks good... another fact which was not published in malaysia (i don't know why) but was published in singapore was that some 60 mid-sized tech-mfg companies have signed confirmation MOUs to move to IDR once feasible... i thot that was big but it was not replayed in malaysia ... maybe they the big boys don't want the feeling that singapore companies are jumping ahead of other malaysian companies to get to IDR ... actually I feel that this IDR thing has more a positive feeling among singaporeans than malaysians ... fair enough, things has to gather steam, too many believers now will result in pure hype, 20-80 is about right for now, the sentiment on the stock should go along with right catalysts at the right time ... so i do respect those in the cynical camp...


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