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Showing posts from May, 2007
My Name Is Bond, 'Bond Analyst'
These guys deserve a big bonus. As highlighted by Zentrader, there were early spotters of "something deficient" in Transmile even as far back as November 2005 by the people at Ratings Agency Malaysia. Kudos to the team.
Back in November 2005, analyst Wee Yee Tat, issued the report with the heading: "RAM reaffirms AA3/P1 ratings of Transmile Air Services’ RM150 million CP/MTN; rating outlook revised from stable to negative".
To highlight the crucial elements in his report: a) The change in outlook is premised on the Company’s weaker balance sheet and debt-servicing ability due to its expansion plan and heightened business risks. As at 30 June 2005, the Company’s total debt and net gearing ratio stood at RM1,040.90 million and 2.17 times, respectively, compared to RM327.73 million and 0.52 times as at the end of FYE 31 December 2004. The additional borrowings have been util…
The Good, The Bad & The Fugly
Transmile Group Bhd said on Wednesday a special accounting audit had found there may have been an overstatement in its revenue by 30 percent in 2006 and by 36 percent in 2005. In the financial year ended 31 December 2006, invoices were issued and recorded for purported services to 20 companies totalling 333 million ringgit and representing 30 percent of the consolidated revenue stated in the unaudited consolidated results. The special audit also found that in financial year 2005, invoices were issued to 19 firms totalling 197 million ringgit, or 36 percent of Transmile's revenue.
The company said that assuming provisions are made for the estimated overstatements, Transmile will post a pretax loss of 126 million ringgit, from a pretax profit of 207 million ringgit in 2006. Earnings of 120 million ringgit in 2005 would change to a loss of 77 million ringgit.
Reverberations: a) Much worse than expected because there is a motive to inflate revenues, which…
Genius On Sale

Finally, the out of stock album by Paul Ponnudorai is finally back in stock as of today. Click on link below to sample some of the brilliant songs, and you can order straight away - cdbaby is a safe internet retailer, can use almost any credit card. Remember to buy a few, makes for an excellent Christmas present.
Tale Of 3 Cities
Bangkok - Thailand may be declaring a state of emergency later today as the Constitutional Tribunal will be announcing its verdict in the dissolution of both major parties. Nine members of the Constitution Tribunal will meet this afternoon at the Supreme Court to express their individual judgements on the party dissolution case. The case involves Thai Rak Thai and the Democrats as well as three small political parties accused of legal violations in connection with the April 2 polling last year. The likelihood of mass protests being held in Bangkok prompted the Australian, British, Canadian, French, Japanese and US embassies to update their travel advisories to warn their nationals away from possible demonstrations in Bangkok on Wednesday and Thursday. Some 13,000 armed forces personnel have been mobilised throughout the country today in anticipation of likely protest rallies which could lead to violence.
This is on the back of an announcement by the Finance Ministry yes…
Can The Chinese Markets Correct?
Looking more closely on the Chinese equity markets: I can only see funds being poured in and nothing much in having a release valve to get out. Foreign funds invested in Chinese stocks have mostly sold down but are still parked in China to re-enter at lower levels. Bank deposits growth has been slackening considerably over the last 6 months as people take funds out of deposits in banks to play the markets.
Liquidity has been growing non-stop for the past 10 years in China. How many times have analysts called for a correction in China properties, especially in major cities. I think I have seen more than two dozen such reports just over the last 3 years. Till today, despite the many increases in interest rates and even land construction tax, we have not seen any sizable correction in properties.
Up till end-2005, Chinese equity markets have had roller coaster days. There were sustained periods of bearishness in the 2003-2005 markets: generally the markets…
Tom, That's Not The Way Yum-Goong
I think Thaksin is a crook. I think Thaksin has taken advantage of his position and power for financial gain. I am happy he has been ousted. I think Thaksin has done some good for Thailand but the benefits accruing to himself were obscene. However, the ruling junta has made too many errors since then.
a) Too obsesssed with getting Thaksin or his family members in the slammer, by hook or crook. Just freeze their assets in Thailand and file charges, if they fail to show up and answer, repossess the assets, don't go to the press every couple of days to do this and that to Thaksin and his family. Be professional about it instead of going about it in a "gossipy-housewife-vendetta" (no slur on normal under-appreciated housewives).
b) Too paranoic over media control. Thai public welcomed the junta to get rid of Thaksin, and now most of the public feel that the junta has stayed too long and imposed themselves on some of the important liberties …
External Shocks
If we were to ignore the China equity markets (cannot read it anymore), the rest of the global equity markets are at a see-saw stage. Generally the undertone is still bullish, awaiting further signals from a number of US economic figures to be released towards the end of this week. All said, bulls and bears seem to have struck an understanding, and most equity markets are in a "safe" territory" (no comment on Chinese equities). Hence it is highly likely that any correction will be due some external shock to the global economy. That is very hard to grasp or discount properly. Due to the inter-connectedness of all markets nowadays, investors must constantly assess the probability of external shocks to the financial system. Just because its external, it is harder to predict, but its there.
Equity markets can discount future earnings; they can draw trendlines for PE ratios over the years and projected overselling and overbuying levels; you can incorporate the …
Its Elementary, Watson
The Singapore index plunged 400 points last Friday after a mistake which allowed a broker from DMG & Partners Securities to key in an order to sell 400,000 DBS shares at S$0.27. DBS' last traded price was S$24.50. The broker later said that he actually wanted to sell the warrants and not the parent company shares.
Any one who has been a dealer will confess that mistakes are part and parcel of the job. However, together with hordes of others, I am very shocked that the trading system in Singapore would allow such trades to get past the systems. A good trading system would have identified this as a human error, even the yahoo email will ask "are you sure you want to delete these spam files?". I find it very disturbing that SGX do not have in place these "circuit-breakers". There must be a limit in the volume to be entered and also a control on the price. The usual rule of thumb is that buys and sells cannot be more than 30% the previous d…
HK Dollar, The New Carry Trade

The HK dollar has been experiencing heavy selling even within its allowed trading band. So much so, the yuan has already appreciated past the value of the HK dollar and going further ahead on its own. Last year the yuan was still some 5% cheaper than the HK dollar. The HK currency is pegged to the US dollar. The economy was almost ruined in 1998-2000 when the island state management refused to devalue the HK dollar despite all other Asian currencies dropping like flies around them. That had the effect of pricing all goods & services in HK to be totally unsustainable and unfeasibly high. The secondary effect was that many industries had to be relocated out of HK to southern China in order to remain competitive. Even big HK listed firms had to outsourced as much of operations as possible NOT to be in HK in order to cut costs.

HK was lucky to recover as fast as it did, not so much because they did not devalue their currency but because of its proximity to…
Stocks That Didn't Do So Well
Some of you might have come across a blogger (ichi) who was pretty pissed off with my recommendation on Naluri as I did not answer his queries and then took the post off my blog. My bad, my apologies. I was just 3 months into my blogging venture and did not fully appreciate the do's and dont's. Btw it was back in end-2005.
Doing a public blog is a thankless thing. You highlight the ones you think will do well. If it does, good. If not, they will haunt you back. If you take the posts down, it will haunt you even more. So, I leave them on whether good or bad. If the strike rate is bad, the don't read la, no point following, I am ok with that. If the stock rises and falls and rises, I won't be able to hold your hand and tell you when to go out when to buyback.
I highlight stocks I like, if they do not perform well, so be it. I think they should do well, maybe timing not so good, who knows. Counters which some have complained Epic, RB Land, U…
Notable Developments
US markets on a 4 day slide despite the Dow gaining more than 100 points in the opening period yesterday. More likely, funds are squaring off positions ahead of Memorial Day weekend. Data released recently suggests that the Fed may not lower rates by 3Q as previously anticipated.
On the plus side, oil prices have dropped significantly (Nymex crude eased US$1.50) over the last couple of days, which should be good for equity markets. However owing to the holiday ahead, much of the data has been ignored.
Now whenever Alan Greenspan speaks, nothing good seems to come out. First is the "recession" thing in the US. Now its the China overvaluation. I think Greenspan can comment on the China issue. I still think he overstepped his boundary when he said what he did on the plausibility of recession in the US, as that went into the territory of Bernanke and would impact how Bernanke's policy would work. Greenspan should not impose his views there as investors may …
Market's Prognosis
It is surprising to see the markets going up but accompanied by lukewarm volume. To technical analysts, that is never a good sign. To momentum players, that is a sign to get out. However, that is what has been symptomatic of almost every market over the last 6 months. The general investing community keep looking for reasons to go down, reasons to reduce their holdings, fund managers keep looking for justifications to lock up profits and go away in May - but they all can't do so in a convincing manner.
Even the US markets are showing similar signs, up but not excessive volumes. Rather than seeing this as a technical weakness, I would see it as a sign of uncertainty and investors being not entirely convinced of the bull run going further with conviction. Even in the US, a similar scenario is unfolding. Shorts will pile up but then they themselves get nervous as the market does not slip up much, then they have to cover pushing prices higher.
Like it or not, the …
Paul Ponnudorai - Simply The Best
Been to many of his gigs around Malaysian pubs, shared many a Black Label on the rocks with the man. Know him only casually. As we both came from the same hometown, there was instant familiarity. Paul is easily the most gifted musician from Malaysia. Unfortunately the country is not ready to recognise greatness in his form of musicianship, neither is Singapore. I can also lump Indonesia, Thailand, South Korea, Japan and HK into the same group - all victims of pop culture to the detriment of recognising real musicianship and musical integrity. The only country in Asia which I think has a higher level and more varied base of appreciation is Taiwan. If Paul were to ply his trade in Australia, UK or US, I think he can achieve a similar level appreciation akin to John Legend or Norah Jones. Still, I think Paul would stand a better chance of getting the right exposure by playing at the various music festivals in Singapore. I believe great things will come fo…
Play Nice

G-8 meeting this week in Germany. The finance ministers will be discussing 3 main issues: 1) how to make hedge funds more transparent; 2) aid to Africa; 3) climate change issues. There is apparently no mention of excessive valuations in financial markets or excessive money supply growth ... hmmm! They obviously think that market intervention is not the correct strategy, and also the current global bull run in stocks is OK. and within limits of sensibility. Other than that, better and stricter regulation on hedge funds is long overdue. The adoption of more regulations over hedge funds will go a long way to cushion the time bomb.
Wolfowitz finally out of the World Bank. Surprisingly, Henry Paulson will not be attending the G-8 meeting. Something more important on his calender, the Chinese visiting Washington on May 23 onwards. I don't think Paulson is giving a lot of face to the Chinese, rather I think he wants to stay around to help pacify the "anger and rants" by…
Its Curlin!
I have ranted that the horse blundered in Kentucky Derby and the jockey did a poor navigational job which only saw Curlin rattling home for 3rd. The second leg of the Triple Crown saw Curlin show its true colours. A depleted field meant little traffic problem this time for Curlin. Curlin nipped Kentucky Derby winner Street Sense by putting his head in front on the final stride, winning the Preakness Stakes in a riveting finish Saturday and ending any chance for a Triple Crown this year. Street Sense seemed to have the race won after another of his long rallies, taking the lead in the stretch. But the colt was unable to hold off Curlin's late charge thanks to a much better ride by Robby Albarado.
Curlin came into the Preakness with just four career starts, including a third-place finish in the Derby just two weeks ago. Curlin won his first three races by a combined 28½ lengths, and was well back in the field of nine. As Hard Spun swung into the lead with a three-wide mov…
Two Steps Back, One Step Forward
The People's Bank of China said on its Web site late Friday that it will raise the benchmark lending and deposit rates by 18 basis points and 27 basis points respectively. This will be in addition to another 50-basis-point rise in the reserve requirement for banks. The PBOC also announced the widening of the yuan trading band from 0.3 percent to 0.5 percent against the US dollar.
Now it appears the PBOC is getting serious trying to halt the China stockmarkets. However, the widening of the appreciation band for the yuan will actually provide good support. PBOC had to do something with the yuan as there is a big visit to Washington this week by some Chinese big wigs. This is to provide some solace for Paulson to pacify the threats of American lawmakers. The rumblings are that there will be more tough questions asked during the visit. Unfortunately by allowing the yuan to gain more ground, it stokes the stockmarkets in China even more (currency gains in…
Rumblings At YTL Corp

Not many analysts like to research the group because they tend to keep too many things very close to their chests. A number of foreign research houses will only give a cursory view on the group, with little conviction going forward. As I am in favour of stocks with probable catalysts in the near term, I am beginning to warm to YTL Corp.

Suffice to say that the group is well managed. It would be a bit boring to hone in on the wonderful power generation, YTL-e's Wimax, YTL Cement's good outlook, etc... that everyone knows. The RNAV of the stock is anything between RM8.50-RM9.80 depending on which report you want to read. I can see two catalysts in the very near term:
a) Leveraging on Wessex Water's technical expertise to allow YTL Corp to get a foothold in Malaysia's water industry. There is estimated to be RM10bn worth of contracts to be announced soon for the water industry and the related fields. May get a a sizable bite there.
b) The on-off bullet t…
Best In KL & Some Say Batam As Well
I don't believe I have posted anything on food. Being from one of the northern states makes me a finnicky eater. Finding a decent place that serves good food in KL is like finding real stuff in Pamela Anderson's body. Nothing is as satisfying as discovering a place where really good food is served.
Came across this only a few weeks back even though this place has been around for ages. Reason for many people missing this spot is that it is open only for lunch (or early lunch) and at Lucky Garden , Bangsar to boot, not exactly near for office folks. Usually when friends say that they have to take me to the best fish head curry place, I end up disappointed. This place, you gotta go there early. They say lunch but people in the know come at 11.30am and if you arrive later than 12.15pm, be prepared to queue 10-person-deep to give the man his deserved money. If you arrive at 1pm, might as well forget it, all the good stuff taken.
Must try to com…
Syndicates 101 1. a group of individuals or organizations combined or making a joint effort to undertake some specific duty or carry out specific transactions or negotiations. 2. a combination of bankers or capitalists formed for the purpose of carrying out some project requiring large resources of capital.
3. a group, combination, or association of gangsters controlling organized crime or one type of crime, esp. in one region of the country.
4. to sell shares in or offer participation in the financial sharing of (a risk venture, loan, or the like): to syndicate a racehorse among speculators; to syndicate a loan among several banks.

From the start, I want to stress that the word syndicate may have a wider meaning in most, and in most countries the word is not immediately linked to something sinister. There is nothing inherently bad about syndicates, its just a gathering of a few like minded capitalists bent on making some money. But mention the word syndicate among stock investing folks a…
H-Shares As A Precursor Of Things To Come
Hang Seng Record Turnover - Following the news on QDIIs the HSI surged to an intraday all time high of 21,065 and ended up 2.5% yesterday. Turnover was a record HK$95bn (US$12.2bn / RM41.4bn). The previous record turnover was, wait for it, yes its February 28 this year just before the mini collapse, at HK$80.5bn. The H-shares, thought to be the prime beneficiary of the QDII ruling, rose 5.36%. The estd. US$7.5bn injection into H-shares in HK actually only makes up 1% of total mkt cap of all H-shares currently, so the market is running ahead of fundamentals on expectation of future releases.
H-Shares As An Indicator - H-shares are China mainland companies having a dual listing in HK. Similar shares in China have always traded at a huge premium to H-shares owing to the lack of choice in China. H-shares are generally the bigger caps and better run companies, hence China local investors accord an even bigger premium in Shanghai and Shenzen exchanges…
Nasdaq vs Shanghai

There is not much you can say about Nasdaq and Shanghai Index in the same statement. Not much you can say about the kind of companies in each of the exchanges. Looking at the chart, the trading pattern is eerily the same. Basically choosing the start dates are important. Some differences include some really spectacular earnings announced by a large number of Chinese companies in 1Q2007 (please read previous postings) while the Nasdaq Internet crazed was on hearsay and projections - but seriously folks, every excessive bull run will have their strong valid reasons at that point in time. Take from the chart what you will, or want to believe or conclude. To me, there are more similarities between the two markets than there are justifications for Shanghai index to break away from the fatalistic pattern of Nasdaq in 98-2000. When you look at the charts, it does not matter if it was Nasdaq to start with, it could be the chart for chillies or wagyu beef. What matters is the…
The Emperor Is Very Naked

Naked is naked, how to be very naked?! Much like the fairy tale, it seems only the townfolk themselves pretend that the Emperor has clothes on. All foreigners visiting the town can see that the Emperor is very naked. Of course excesses won't deflate itself immediately based on fundamental arguments alone. Excesses tend to overshoot before collapsing. Shanghai at 4,000 does not look to be the peak yet. Maybe 5,000 ... lol ... cry also no tears then. That's the difficulty trying to predict a correction.
Already the foreign research houses are churning out reports on the dangers. Goldman Sachs have urged the central government to take prompt action to curb the bubble forming in the equity market in order to prevent possible impairment in individual balance sheets and setting back years of progress on capital market reform. The risk of market euphoria is building up.
The domestic A-share market has risen by 50 percent in value this year so far, on top of th…
Insider Selling 101???

The SC and Bursa must look into these developments of possible insider selling. Moola has thrashed this Megan issue to death (and very well deserved too). The question is when did the directors and management came to be aware of the likelihood of default. Surely things like this cannot happen overnight. Significant events and reasonable time till event are issues which must be weighed and to ascertain the "motives, knowledge possession" and the planning to act on "inside information". More stringent guidelines must be in place on lock up periods for selling/buying by "insiders". Is selling a month or two or even three month before a very significant event considered "legal" and above board?

We can all debate on this but we must continually improve the integrity and regulatory side of the markets to rise to global best practices. This is small when you talk of Megan, I hope not to discover similar questionable selling in Tran…