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Showing posts from April, 2007
Tenaga: Nobody's Child

lionfish said... Dali,

What do you think abt the recent price weakness on Tenaga? There are a lot of call warrants on this big blue chip... Earnings are growing but the stock is a big laggard vs the KLCI... I think at current levels, the mother is trading end-2006 while the KLCI has moved up 20% YTD already...

yes, tenaga is a weird animal... most brokers and foreign ones esp have tnb as a buy for the longest time, its not even matching the index gains ... so there is a disconnect here:
a) funds don't like tnb's story
b) glc revamp impact not so great at tnb, maybe they have fewer kinks to start with

The biggest disconnect has to be the way IPPs have given a viable alternative for investing vis-a-vis TNB. Hence TNB's policy, or rather the govt. policies are to be blamed for being "too nice" to IPPs to the detriment of TNB. That doesn't seem to be changing much, hence the under-performance can be expected to continue.
Coffee Shop Talk Over The Weekend

Friend: Hey, I tell you something very exclusive ...
Me: Go on.
Friend: Unbelievable la...
Me: Go on or I will be going.
Friend: Maxis to be privatised la
Me: You got to be joking!
Friend: I know, some more its for 41bn ringgit
Me: If it was a stranger telling me this, I would whack him over the head already, but since its you, I'd give you the benefit of doubt. Very rarely do you find telcos being taken private because they need huge capital spending, need to tap capital market. Then they usually have a low NTA to share price as they have little real assets such as land or buildings. Their assets are in the infra they built and the subscribers they have.
Friend: Yea, its unbelievable but this source very choon-la.
Me: I guess they could take it private as Maxis is printing money, but they are also investing into Indonesia, India and Sri Lanka... which requires capital. Come to think of it, their free cash flow is sufficient to for that.
Friend: Think some m…
Ahead Of The Holidays

a) Better to reduce stock holdings substantially ahead of long holidays, and ahead of the tilting Chinese markets especially when they come back after the holidays.
b) Underlying tone of market still bullish for rest of the year. Will look for lower entry levels in a couple of weeks.
c) The May Factor. To sell in May and return after October is a good rule of the thumb, especially for "long only" players. In a revealing study:an investor who placed US$10,000 in the Dow average at the end of April each year since 1950 and sold at the end of October would have a net loss of US$272, while someone doing the opposite would have gained an astounding US$534,323.

There is a familiar saying in capital markets "Sell in May and go away", made popular by author Jeffrey Hirsch who publishes the Stock Trader's Almanac. It doesn't help that most of the major corrections have taken place between May and October. A factor which has not been cited for the M…
From A Boiling Pot To A Frying Wok

A news report just out said that home sales in Beijing nosedived in the first three months as hundreds of thousands of investors shifted from property investing and speculation to chase quick gains in the China share market. National Bureau of Statistics figures show that sales of completed residential properties in the capital dropped almost 60 percent year on year to 615,000 square meters during the first quarter. Presales of uncompleted flats also slumped more than 40 percent to nearly 1.8 million sqm in the same period. This bit of news would tie in nicely with the huge number of new share trading accounts being opened so far this. Surprisingly, despite all that, the National Development and Reform Commission released figures showing home prices in Beijing increased 9.9 percent in the first quarter. While home prices in Guangzhou were up less than 10 percent in the first quarter, while apartment prices in Shenzhen jumped more than 10 percent ami…
Shanghai Dim-Sum
Tidbits Of Useful Info

a) Turnover rose past 300bn yuan (US$39bn / RM132bn) for the first time ever in a day on Tuesday. I can see the remisiers and dealers gasping at the value in ringgit! For KLSE RM3bn a day, we are already shouting that the market is over-heated. b) Total number of new share account (A-share) opened in April 2007 alone was 3.31m. Total number of new accounts opened in 2006 was 3.084m. c) Year-to-date, the combined markets of Shanghai and Shenzen have risen 71% as of yesterday. d) Crazed retail activity not limited to mainland Chinese investors but international investors as well. There is a a near stampede by approved foreign mutual funds to launch new China Funds to cater to the insatiable demand from international investors who do not wished to miss the boat. AIG-Huatai has a 10bn yuan (US$1.3bn) new China equity fund. Guotai Asset Mgmt also has a new similar sized fund. China Asset Mgmt and Bosera Asset Mgmt have also launched / about to launch simi…
Valid Question

rask3: Hi, Thanks for your views. I enjoy your arguments as well as your humour. :) An avalanche of statistics can be trotted out to stress the validity of a projection. Yet those statistics can fail to capture a very crucial factor or point that casts reasonable and valid doubts on the prophecy. I would like to illustrate what I mean by an example from your own blog. Several weeks ago you called a buy on UEM World at around RM4.00 or thereabouts. Correct me if I am wrong. (I made a bigger call when stock went to RM3.20) You painted a rosy scenario on how the stock could double or triple from there, before the year is out. Well, you may turn out to be right and make many people rich by your prediction. Being the cynic that I'm I checked the stock on Bursa's website. You know anyone could do that easily. What I found was, insiders of UEM were selling the stock like crazy and en masse. Knowing that insider selling is not always an ominous sign, I considered the r…
China Shanghai & Shenzen Blues

I have mentioned before that the most dangerous external event that could rattle global equities is the Chinese markets. Extended Labor Day Golden Week holiday is coming in the first week of May, generally I would not expect the authorities to try anything silly before the mass exodus of Chinese back to their hometowns all across China. Economic growth was a stronger- than-expected 11.1 percent in the first quarter, compared with a year earlier, while inflation hit a two-year high last month at 3.3 percent. Apparently the authorities were not happy with the recent huge growth figures and higher than expected inflation. Some ten banks were roped in by the Banking Regulatory Commission and were reprimanded that they needed to rein in their loans growth rates in order to minimise future NPLs. The 10 are Construction Bank, Bank of China, Bank of Communications, Merchants Bank, CITIC Bank, Shanghai Pudong Development Bank, Minsheng Bank, Industrial Bank,…
Dow Jones / S&P500
Near Term Importance

Most Asian bourses are a bit wary now that almost all global markets are near or surpassing their all time highs. A lot will look towards the American markets for better guidance and confidence. Dow Jones will easily surpass the 13,000 barrier. The scenario is a bit different for S&P. Though everyone knows Dow Jones index because its been around forever, its not a true indicator of the underlying strength, depth and direction of US markets. The DJ only has 30 stocks, compared to the 500 for S&P. The trouble for S&P index is that some 30% of the 500 are in technology. Most are still some 50%-60% from their bubblish peaks during the internet-zany days. Hence for the S&P 500 to scale past its all time high would take a lot.

That's the not so good news. The better news is that all things being equal, how the tech stocks perform over the near future would determine to a large extent the vibrancy of the S&P 500. As most are st…
Market Strategy At 1,330

At or near all time high, all equity markets will behave the same way: volatile, profit taking activity and sharp buybacks. Judging from Asian bourses' excellent closing session last Friday and European/American bourses steady gains later that evening: many would be predicting a good week ahead. However, I was a bit hesitant and afraid that players would go overboard in the morning session today. Markets have opened for more than an hour now with the KLSE registering just RM606m value traded. I think many remembered the RM3bn day which was quickly followed by disaster. The way the markets traded this morning is one of cautious optimism, which is very good. A terribly strong surge may find weak legs later. I would expect all markets to try to establish a platform and not surge away over the next few days. It is important to form a base. Judging from the KLSE movements, its not a time for big caps to move, which would be wiser to stay away from stocks requiri…
Basis Of Commentary

Readers of this blog after a while would have surmise the basis of my kind of commentary. As I have mentioned before, its a daily blog, hence I do not want to talk too much about absolutely good undiscovered fundamentals, which may take forever to be undiscovered. I am not trying to be Warren Buffett here. I blog to have fun and share / exchange information. For cynics who find it hard to believe why I would do this for free, please read my posting on The Equaliser (29 March 2007) to get a better understanding of my persuasions. Free and public blogs do not get much respect, nobody would want to believe that good information is made readily available. Do I buy and sell shares? Yes. Do I buy before I post? Yes. Isn't that front running? Yes and no. I have to buy before I post, its believing in what you say. No, because the amount that I buy is not earth shattering. If I buy in millions, I would be posting this from my yacht off McMahons Point in Sydney, trust m…
Last Minute Shopping

AMMB- Call Warrant
Exercise price RM3.80
Mother share RM3.90
Expiry12 October 2007
5 covereds to buy one share
Foreign houses valuing mother share at RM4.30-RM5.00. Catalyst soon, removal of some board members and installation of ANZ people on board, bound to stir more institutional interest. Now this covered warrant is reasonably priced, buy up to 22 sen, sell above 30 sen.

Premium = 5 x 20 sen = 1.00 + 3.80 = 4.80 / 3.90 = 23%.
Gearing = 3.90/1.00 = 3.9x

The only decently priced new call warrant over the last 3 weeks.
You Are Invited To A Cringe Worthy Chinese Wedding In Malaysia

Came across this very funny posting on his 9 reasons why you know the wedding dinner you are attending is SHIT! For foreign readers who have never been to a middle class Chinese wedding, do click on the link and you will feel yourself being transported to Anthony Bourdain's worst nightmare. Its funny cos' its real. Damn the kids with the squeaky shoes!!!

Sapura Tech

Following the robust run-up in SapuraCrest, some savvy fund managers have been piling into Sapura Tech. ST is not as interesting as SC but it has what we call buffer and indirect play into SC. It has already been announced that ST will be privatised, for every one ST, they will be exchanged for one SC plus 40 sen. Hence savvy funds would be locking in a buffer of around 30 sen or 20% and get exposure to SC during a period where the EEC should be the thematic play. Downside is the 2-3 months lockup but AGM is to be held this coming Monday, which has hasten some to pile in on likely approval for the deal. Nothing terribly new or exciting but fund managers who do their homework would have a leg up on the rest. Buffer man, buffer!
Grasping At Straws
The New Media / China

As I have mentioned before, the excessive focus and deluge of coverage by the media on all things, and in our case the business world, have required us to have a more critical mindset and also layers of filters in place when coming across so called "news / commentary / analysis". Take yesterday's drop around the globe. News editors around the world would want an article written immediately; analysts will be pestered by journalists and clients for reasons for the declines; dealers will try to make sense of the whys and hows; and the general public will just pick up whatever that is being broadcasted as coffee shop talk. Note the vicious cycle reconfirming and validating the purported news / reasons. What I am trying to get at is that sometimes why the market moves like that is "nothing significant".Media and analysts claim that a sharp pickup in the pace of China's economic growth underscores the challenges Beijing face…
Corporate Hiring Strategy

Came across this well-written "half-joke half-non-fiction" piece. Certainly applies in most of the positions I have come across in my work.

How To Hire Well
Put about 100 bricks in some particular order in a closed room with an open window.
Then send 2 or 3 candidates in the room and close the door. Leave them alone and come back after 6 hours and then analyze the situation.

If they are counting the bricks.
Put them in the accounts department.

If they are recounting them.
Put them in auditing.

If they have messed up the whole place with the bricks.
Put them in engineering. If they are arranging the bricks in some strange order.
Put them in planning.

If they are throwing the bricks at each other, put them in operations.If they are sleeping.Put them in reception.If they have broken the bricks into pieces.
Put them in information technology.

If they are sitting idle.
Put them in human resources.

If they say they have tried different combinations, yet not a brick…
Dragon & Phoenix

Can you get a more Chinese name than that?? Stocks like DNP moves maybe once or twice a year, missed that and you might as well forget about the stock for the rest of the year. Been making good inroads on the volume charts and the perky property sector makes this stock worth exploring.
NTA RM2.00 Paid Up: 314.7m shares Wing Tai Holdings 52.9% The principal activities of the subsidiaries, associates and jointly controlled entity are manufacture and trading of textile garments, property development and investment, project management and maintenance of properties, restaurant operator, trading and fabrication of interior building materials. DNP is a leading garment manufacturer that supplies upper market garments to international renowned fashion labels including Polo, Fila, Gap, Lee, Denim, Banana Republic and Guy Laroche. The company operates seven garment factories in Peninsular Malaysia and two factories in Sri Lanka with a combined average monthly production of about …
High Anxiety

One of my favourite movies by Mel Brooks, and that's an apt heading for today's markets. The climb up was easier but not when you reached the peak, what now? To be cautious as the market tries to stay above the peak is good but also silly as the ones unwinding their positions are not blue chip buyers/holders or index stock holders/buyers but rather speculative trading type of shares. Geez, you are playing with half-rubbish and you like to think and trade like a blue chip investor??
Just remember how we got here, we were here before until the scary movie part 1, 2 and 3... read previous blogs please. So we have reconsidered the gravity of those so called risk and have basically brushed them aside, we have been here before. Scaling this further is not a big problem at all. China meltdown, brushed aside after looking at reality. Yen carry trade, over-exaggeration. Sub-prime, bears on a drunken rampage. These 3 were much bigger and real risks. Breaching all time highs, …
Oil & Gas
Dialog, SapCrest...
Dialog has gone up too much even though there are reports seeing the stock hitting RM2.60 or higher even. The 2008 PER is already in the 32x-35x range, which is why investors and institutional players are keener on Sapura Crest with its PER for 2008 at just 25x. Market cap for market cap, Sapura Crest has a long way to go and judging from inherent assets, Sapura Crest looks attractive still. Oil & gas plays has room to go because: a) oil prices is stubbornly above US$60 per barrel, this gives oil companies a huge buffer to spike up their drilling activities, and even to consider drilling difficult wells b) the reinvestment in drilling and exploration activities will compound in 2007 compared to 2005-2006 c) The spike in oil prices over the last 2-3 years has alerted companies that they have under-invested before and now needs to do a lot of upgrading work, maintainence work, finding new reserves and building of new facilities d) Following Nusajaya dream…
Thai To Remember, And If You Remember ... Then Follow ...

When a foreigner was caught for defacing pictures of the Thai monarch, it made headline news globally. It made headlines again when the Swiss man was convicted and jailed for 10 years. The global press basically insinuated that the punishment was grossly excessive to the act. We are controlled by the powers of the media, and the media powers is Western-controlled, and hence the line of reporting has that line of bias. Westerners may not get what I am trying to say here, but its OK. Not all kings are the same, a king in Netherlands, a king in Britain and a king in Thailand are not the same. The same king in Thailand is respected like you would not believe. Imagine the "goodness" of Einstein, Mother Teresa, Gandhi and JFK all rolled into one (I am not saying King Bhumibol is that kind of person, but if you appreciate the gravity of the respect, maybe you can understand a bit about how he is viewed in Thailand) - now that …
South Johor Being One-Upped By North Kedah

While everyone is doing Nusajaya Dreamin', things are happening up north (no, I am not talking about the shootings in southern Thailand). There will be an oil pipeline to be constructed across northern Malaysia, and the project has been signed, sealed and delivered. Due to start work on August 2007. The aim is to avoid the pirates-ladened and congested Melaka Straits.
The pipeline will cost RM50bn (US$14.5bn) and 70% will be from foreign sources. A large portion has been promised by National Iranian Oil Company (NIOC). The big losers here include Singapore and the US. Iran is not a close buddy of the US, Singapore is. The pipeline will divert stock away from Singapore thus lessening Singapore's influence and hence US strategic pawns in the region. Washington -Teheran ties are strained to say the least. Malaysia, always seen as the neutral-Islamic factor, can play the best of both hands. The ties that bind, the friend you need.
Cryptic Stock Tip

p/s I have to apologise for the puzzle, it seems to be more difficult than I anticipated. Got too many calls from my friends and readers. So, I will release additional clues/answers every ten minutes...

In my dream, I was walking in a lovely garden. The beautiful weather seems eternal, been like that forever. There is only one tree in the garden, couldn't make out the type but its the fruit bearing type. Then a wise looking man appeared from behind the tree and asked "What are you doing here?"
I replied, "Am I dead? Can I _BUY_ more time?"
God: What do you think this place is, like playing bacarrat in _GENTING_ ?(this cannot be "casino" because it would have to be "the/a casino", so its a proper name)
Me: If I am dead, I am sure you have the _POWER_ to do something about it.
God: You are not dead, go back and do better, where I _PLANT_ you, you have to bloom well.(for something to bloom, it has to be planted or a plant)
I woke up,…
26th HK Film Awards
Live This Weekend

Best Film Fu zi / After This Our Exile, Fong juk / Exiled Hak se wui yi wo wai kwai / Election 2 Man cheng jin dai huang jin jia / Curse of the Golden Flower Huo Yuan Jia / Fearless Deserved To Win: Fearless Personal Choice: After This Our Exile Most Likely To Win: Fearless / ATOE
Best Director Patrick Tam Ka Ming (Fu zi / After This Our Exile) Johnnie To Kei Fung (Fong juk / Exiled) Johnnie To Kei Fung (Hak se wui yi wo wai kwai / Election 2) Zhang Yimou (Man cheng jin dai huang jin jia / Curse of the Golden Flower) Jacob Cheung Chi Leung (Muk gong / A Battle of Wits) Deserved To Win: Patrick Tam Personal Choice: Patrick Tam Most Likely To Win: Patrick Tam / Zhang Yimou
Best New Director Law Wing Cheong (Tin sun yut dui / 2 Become 1) Daniel Wu (Sei dai tinwong / The Heavenly Kings) Patrick Kong (Duk ga si oi / Marriage with a Fool) Deserved To Win: Daniel Wu
Best Actor Aaron Kwok (Fu zi / After This Our Exile) Lau Ching Wan (Ngor yiu sing ming / My Name Is Fame) Tony L…
BS Galore!
Grow Up Fast
BS#1 - The share split of one 50-sen share into five 10-sen shares had made the counters more accessible to retail investors. In the past, its share price of around RM40 made it difficult for retail investors to buy into as a lot of 100 shares would cost RM 4,000. The surge in share prices was also liquidity driven as there were more shares in the market. The number of Genting shares became 3.69 billion while Resorts has 5.61 billion shares after the exercise. How-da, people who never study will think like that, but if there are enough people who think like that, you get the silly price jumps in a stock split event. A stock split is a non-event, not a life changing, nor value-added, nor fundamentals improving, nor intelligent corporate strategy move. Brady-hell, if you cannot afford RM4,000 go play 4D-lah. Already Bursa accomodated by allowing 100 share lots, still not low enough, how about 10 share lots then?? Then can we stop the stupid stock splits!!! It makes …
Eurovision Winner
The nice table was nicked from a popular blog by Paul Kedrosky. It is highly significant that the market cap of Europe has now gone past the US. Usually these sort of things indicate a deeper under-current and long term trends. The Euro-zone economies should grow at about 4.2%, assuming 2.2% inflation in 2007. US GDP may grow at 2.2%. This rate is not just for 2007 but if you have a look at the past few years, the differentials are there already. In Europe you have pockets where growth is huge and others a bit more sedated. These pockets of economy operating at various stages of an industrial life cycle affords the region a lot of room to manouvere. Outsourcing becomes a higher art form. Assuming Europe’s biggest companies grow profits at 8% in 2007, there could be a 12%-14% rise for the S&P Europe 350 this year. At the same time, big companies are putting more money into dividends, buybacks and acquisitions than capital expenditures. While the same thing is happe…
Pay Me Well

In 1996, Lee Kuan Yew said that low salaries will not attract able men who are or can be successful in their professions or business. Now they will be upping the peg of ministerial pay in Singapore to the top private sector earners again. Currently ministers earn just S$1.2m (US$1.836m) per year, and the repeg will put them at S$2.2m (US$3.36m) or higher if you are more "senior". Since 1994, the salaries of Singapore ministers have been set at two-thirds the median pay of the 48 best-paid bankers, lawyers, accountants, engineers, and executives in multi-nationals and manufacturing firms.
Naturally, there is a big outcry from the general public in Singapore. Bulk of who survive on a household monthly income of between S$2,000-S$6,000. Here are some thoughts:
a) Nobody is really deriding the repeg, just the quantum I guess. To peg to the TOP private sector earners is to imply that the ministers are also the top quartile. Is that the reality?
b) Another reason is that t…