A Good Long Look At Mieco Chipboard Again

I have written many a times on Mieco Chipboard before. ( Here is the link to the past articles that I had written before: click link here )

Today I try something new.

Yeah, most know that iCapital is a huge fanboy of the stock. So what I will do is make a new posting based on what iCapital wrote back in 2007.

I will mark in dark blue font as what I think as significant.

• Mieco Chipboard (Mieco, 5001)
  
  [Updated on 02/07/2007 07:49:00]
  
  Principal activities: Manufacturing and sale of chipboards and other related products.
  Major shareholders: Bandar Raya Developments Berhad, Lembaga Tabung Haji.
  
  This week, i Capital updates Mieco. A quick recapitulation. Mieco is one of the two largest particleboard manufacturers in the Asia-Pacific region. Mieco offers a wide range of plain and value-added products, including decorative melamine faced chipboard (MFC), decorative electron beam foil chipboard (EBFC), decorative polymer faced chipboard (PFC), worktop, direct post form (DPF) board, laminated flooring, and ‘Do-It-Yourself’ (DIY) type of furniture, which are sold under its ‘MIECO Livin Style’ brand.
  
  Sales
  Half of Mieco’s output is sold locally, while the remaining half goes to over 20 countries, including China, Taiwan, Japan, Korea, Hong Kong, South East Asia, the Indian subcontinent, the Middle East, Africa and the Australasian countries, with China remaining as its main export market. Mieco’s export markets mainly take plain boards, which give the group a margin of around 11-14%. In contrast, the domestic market takes both plain and value-added boards, such as MFC and PFC. Value added boards give better margins, around 8-10 percentage points higher than that of plain boards. Since domestic sales give a better margin, domestic sales constitute, in monetary terms, around 80% of the group’s total sales – see table 1.
  
  Update on its latest plant located in Kechau Tui, Pahang
  Mieco’s first and second particleboard lines, both located in Semambu, Kuantan, were respectively commissioned in 1976 and 1990. In 1995, the group installed a third production line in Gebeng, Kuantan. These production lines all together gave the group a total annual production capacity of around 300,000 cu m. Mieco had its new plant, which is located in Kechau Tui, Pahang, commissioned in Mar 05, and the near RM400 mln investment gives the group an additional yearly production capacity of 640,000 cu m, bringing the group’s total annual production capacity to 940,000 cu m. The new plant produces only plain boards. While older plants are running at full capacity, the new plant is currently running at around 70% of installed capacity.
  
  By the end of the year, the group will increase its capacity utilisation rate to 75%, without incurring any additional capital expenditure. In 2008, with an additional capital expenditure of RM40 mln to upgrade the group’s press line, the group will be able to run at full capacity in the beginning of 2009.
  
  Performance analysis
  
  While Mieco’s sales have been improving, the percentage of revenue that goes to the group’s earnings before interest, tax, depreciation and amortisation (EBITDA) has been on a declining trend, and the decline was accentuated when the group started running its new plant in 2005 – see figure 1. The main reason for the decline in profitability was the rising cost of raw materials. In 2006 alone, wood cost rose 48%. Cumulatively, over the past 5 years, costs of glue and wood have increased 56% and 129% respectively. Also, in 2005, as a result of low selling prices, the group’s sales, grew only 10% from 2004. This also contributed to the group’s lower profitability level in 2005.
  
  Particleboard selling prices plunged in 2005. The plunge was caused by regional industry-wide particleboard production capacity expansion. Similarly, Mieco was also one of those that embarked on an expansion process. Figure 2 shows the sales and EBITDA margin of Vanachai, which is the other large particleboard manufacturer in the Asia Pacific region. Similar to Mieco, which expanded its original capacity by more than double in 2005, Vanachai expanded its annual production capacity significantly from 498,000 cu m to near 948,000 cu m in 2004. Around the same time, other main particleboard players in Thailand had also significantly increased their production capacity. It has to be noted that Vanachai’s business model is different from Mieco’s, that is, besides manufacturing particleboard, its core operations comprise medium density fibreboard (MDF) manufacturing. Thus, compared with Mieco, Vanachai shows much a higher sales value and EBITDA margin.
  
  As demand did not pick up as fast as the capacity expansion, Mieco made a net loss of around RM8 mln in 2005 compared with a profit of RM30 mln in 2004. However, these trends did not apply only to Mieco, but to the particleboard industry as a whole. As such, industry players experienced significant squeezes in their margins, and plunging profitability, despite rising sales, which were mainly due to increased sales volume. Both figures 1 and 2 represent the trend that had been experienced by the industry players.
  
  However, things are turning around. Demand has been picking up quite well, and is thus, stabilising and improving selling prices. Besides, increasing demand particularly in Asia and Europe is expected to boost the group’s capacity utilisation rate. Rebounding demand from Europe would further improve particleboard prices and is also expected to lower the supply coming in from that region. Demand from Asia remains strong. Also, Mieco has successfully expanded its existing markets and entered into new markets such as India and the Middle East. In the longer-term, improving capacity utilisation and particleboard prices are expected to improve the group’s sales, and thus its bottom line. In the shorter-term, however, the situation is not expected to be all that positive.
  
  The reason is that while particleboard prices are improving, the Korean government has come up with a policy, stating that each person is allowed to own only one house in Korea. This has reduced the demand for particleboard from that country. Korea is one of Thailand’s main particleboard buyers. As such a policy has reduced the demand for particleboard from Thailand, manufacturers in Thailand have dumped their products in Malaysia, lowering particleboard selling prices. Currently, particleboard prices are softening and are hovering around RM125 per cu m. Such a situation is expected to continue for another few months, as the Thai manufacturers continue to dump their particleboard over to Malaysia. However, particleboard prices are expected to pick up towards the end of the year, as sales volumes are always stronger in Q3 and Q4.
  
  Q1 07 Results
  Compared with Q1 06, the group’s revenue in Q1 07 improved by around 40% from RM68 mln to RM95 mln, due to higher selling prices and higher sales volume. However, its EBITDA hardly changed. Compared with Q4 06, the group’s sales improved by 11% but its EBITDA declined 11%. Comparing Q1 07’s results with that of Q1 06 would give a more accurate picture of the group’s performance, as in this industry (being a cyclical one), sales are usually at their lowest in the first quarter, and will then pick up in the third and fourth quarters. In terms of loss per share, Mieco made a loss of 6 sen in Q1 07, a significant improvement compared with a loss of 43 sen in Q106.
  
  Although selling prices are expected to soften further in the coming months, the group has been working very hard to improve its production efficiency. A thermo plant, which is expected to be set up soon, is expected to give the group annual savings of around RM3-4 mln. Besides, the group’s effort in increasing its capacity utilisation rate will reduce its fixed cost per unit of production, contributing positively to the group’s bottom line.
  
  Rise in raw material costs tapering off
  Another good news for the industry is that the rising cost of resin and wood is tapering off. In the shorter term, the impact of the softening particleboard prices is expected to be cushioned by tapering raw material costs.
  
  As part of Mieco’s cost saving measures, Mieco will involve itself in reforestation soon. Mieco was granted an area of 10,000 acres. Also, Mieco managed to secure log supply from a total area of around 2,653 acres from FELDA’s rubber replanting area.
  
  Conclusion & Advice
  
  At RM1.02 and including its 100 mln warrants, Mieco is capitalised at around RM247.2 mln. For this, what do investors get in return ?
  
  Compared with Mieco’s market capitalisation prior to its expansion in 2005 of around RM317 mln to its current market capitalisation of RM247.2 mln, has the near RM400 mln investment added no value to the group? The investment has equipped the group with an additional yearly production capacity of 640,000 cu m, and prepared the group to reap the benefits from the rising demand for particleboard in the region. Also, the new plant has given the group a firmer foothold in the industry.
  
  As expected, recovering particleboard prices have contributed positively to the group’s top and bottom lines, and this trend is expected to continue in the longer-term. While in the near term prices are expected to soften further and lower the group’s margin and thus, its profitability, such a development is expected to be partly offset by the group’s efforts in improving its production efficiency. Despite the group taking up some debts to finance its new particleboard production line, improving profitability along with the contribution from improving prices and demand will enable the group to pay off its loans in a few years time. Based on the positive prospects of the industry as a whole, and together with Mieco’s prudent management, i Capital retains its longer-term buy rating for Mieco Chipboard.
  
  Disclosure of interests (required by the Securities Industry Act): The publisher and associates have an interest in Mieco Chipboard.

Here's my interpretation.

First and most important issue is the vested interest issue. When one has vested interest, how could one NOT have anything positive to say? Yes?

Now the first few bold blue lines.

Declining selling price coupled with rising raw material cost.

In regardless of what company, who is managing the company, who owns the company or who is recommending the stock, how would you interpret that? How would I?

This for me sounds like a real tough industry to be in. (remember Warren Buffett's famous investment advice on such business?)

And not helping at all is Mieco had decided to built a state-of-the-art plant costing some 400 million in 2005 when the tough time hit. One can call it bad timing or one can call it bad luck but fact remains is that Mieco built an extremely expensive plant when the economics of the particle business turned really bad.

400 million plant, plunging selling price and rising cost price simply equated to bad business.

So back in July 2007, iCapital suggested a buy. It said things are turning around. And they used the following reasoning.

• Compared with Mieco’s market capitalisation prior to its expansion in 2005 of around RM317 mln to its current market capitalisation of RM247.2 mln, has the near RM400 mln investment added no value to the group?

Firstly, let me say that, in my flawed opinion, what iCapital is doing here is rather risky.

It valued Mieco via market capitalisation. Valuing by market capitalisation is based ultimately on the stock price. Which is saying that the market is valuing the stock correctly and if one is in the game long enogh, one would understand the risk involved in making such a statement. Why? Any given stock can go up on any given Sunday and more often than not, in our local markets, fundamental reasoning and valuation do get dumped into the drain and stocks go flying without wings!

So is the market valuing the stock correctly back in 2005?

Or is the market valuing the stock wrongly back in 2007?

Before I attempt to answer those two questions, let's do a simple review.

Let's look at Mieco's earnings back in 2003.

Back in 2003, Mieco was a solid company. 180+ million and no debts. Growth is there too! ( Do refer this earnings report: Quarterly rpt on consolidated results for the financial period ended 30/6/2003. )

Aug 2005. Quarterly rpt on consolidated results for the financial period ended 30/6/2005. Mieco earnings is only 120k.

Aug 2005: Bandar Raya Bhd, who owns Mieco, "proposed a capital repayment which would be satisfied by the distribution of up to 119.1 million shares in Mieco on the basis of one Mieco share for every four BRDB share."

Not sounding good when the owner announces that they want to dispose Mieco shares!

Nov 2005. Quarterly rpt on consolidated results for the financial period ended 30/9/2005. Mieco is now losing money! Mieco posted a net loss of 3.742 million! Cash in its piggy bank is now only 16.883 million! Total loans stood at 210.849 million.

July 2007, iCapital wrote on Mieco.

Aug 2007. Quarterly rpt on consolidated results for the financial period ended 30/6/2007 Mieco losses increased to 6.075 million! Cash balances has now shrunk to 14 million. Total loans stood at 243.514 million!

How? Earnings went from profit growth to worsening losses. Balance sheet deteriorated. Cash shrank. Loans increased.

So if the market in 2007, values Mieco lowly, wasn't it justifiable?

Perhaps it would be better if I understand the business economics of the company, yes?

It was a business which had bad business economics, in which average selling prices of the product were falling and raw materials costs were increasing! Does this sound like a good business to invest in?

Or should I attempt to value a business in a difficult business environment?

And so Mieco had a 400 million new plant. But just what's the use? Correct or not? Mieco could have the the state of art plant and Mieco could have the best management but if the business economics is not there, what's the use?

( Coincidently see this posting S&P has a Strong Buy on Mieco Chipbaord!. I was bemused. )

Anyway, let's see how Mieco fared since then.

Jan 2008. Bandar Raya to reconsider disposal of Mieco. They tried it in Aug 2005. They failed. Now they try again! No joke. (ps: the Star business link still works. :D )

• But Jagan stressed that BDRB's plan to dispose off its stake in Mieco had “nothing to do with the chipboard maker's performance.”
  He believes Mieco would bounce back to the levels of its heydays. “The glut in the industry will subside when the supply of hardwood gets scarce,” he said. Also, he pointed out that the increasing environmental awareness would lead to a growing demand for chipboard, which is more environment-friendly.

May 2008: Quarterly rpt on consolidated results for the financial period ended 31/3/2008. Mieco lost money again. Losses totals 3.339 million.

Feb 2009: Quarterly rpt on consolidated results for the financial period ended 31/12/2008. Mieco lost some 14.5 million. Losses were compounded by the fact that they lost some rm5.9 million from disposal of plant and equipment.

May 2009: Quarterly rpt on consolidated results for the financial period ended 31/3/2009. Mieco lost some 22 million! Cash balances only left some 10 million. Total loans stood at 196.567 million.

July 2009: Bandar Raya continues to attempt to sell Mieco. LOL! Link to Business Times article titled 'BRDB bullish on Mieco but welcomes suitors' is broken.

Aug 2009: Did Mieco Chipboard Have A Turnaround??

Nov 2009, yesterday. Mieco announced its earnings. It lost 1.574 million. Cash is now only 6.221 million. Total loans is now 177.792 million.

Did you see the line 'Amount due to holding company' under 'Non-current liabilities' in the balance sheet?

Yeah, Mieco now owes Bandar Raya some 35.3 million!

Isn't it so clear why Bandar Raya had been trying to dispose Mieco since 2005?

Consider that fact.

If the holding company doesn't want, why would you want?

---------------------------------------------------------

Here's the business times article.

• BRDB bullish on Mieco but welcomes suitors
  
  Ooi Tee Ching Published: 2009/07/07
  
  Mieco is an attractive bride, but Bandar Raya Developments, as a parent, is very choosy of prospective suitors for Mieco, says Mieco chairman
  
  Property developer Bandar Raya Developments Bhd (BRDB) (1473) is optimistic of prospects for subsidiary Mieco Chipboard Bhd, but may sell the chipboard maker if there is a good enough offer.
  
  "Mieco is an attractive bride and is never short of dates. She has always had suitors and is frequently courted. It is just that BRDB, as a parent, is very choosy of prospective suitors for Mieco," Mieco chairman Datuk Mohamed Moiz JM Ali Moiz told Business Times in an interview in Kuala Lumpur.
  
  He disagreed with the view that furniture manufacturing was a sunset industry.
  
  "Furniture is a necessity, be it in a residential, commercial or industrial setting. This industry has legs to see through the tough times. We remain optimistic of the long-term prospects," he said.
  
  Last year, Mieco posted losses of RM36.3 million. It continued to lose money in the first quarter of this year. Mohamed Moiz admitted that it would be tough for Mieco to make money this year.
  
  However, the group has been cutting costs.
  
  "Mieco's monthly output used to be around 50,000 sq ft, but it has now dwindled to 15,000 sq ft. We have had to let go of 166 employees and close down the Hong Kong office.
  
  "In November 2008 we closed our plant in Kechau Tui (in Pahang), but this is temporary. Basically, we've done what we have to do. We've centralised marketing activities to Kuantan," Mohamed Moiz said.
  
  Mieco also has a total debt of RM150 million, but the chairman stressed that the chipboard maker was not defaulting.
  
  "Given the current weakness in global demand for chipboard, we need to take pre-emptive action with the banks. We're re-scheduling the loan repayments to give us some breathing space. We're looking at a two-year-extension. We hope to wrap up talks this month."
  
  Four years ago, BRDB's plan to demerge its stake in Mieco to BRDB's minority shareholders under a capital repayment exercise failed. Mohamed Moiz explained that property development and chipboard manufacturing were capital-intensive industries.
  
  "Back in 2005, BRDB directors saw it fit to just focus on property. We needed at least 75 per cent vote from other shareholders. But when it went to count, we didn't get the numbers. So we left it at that," he said.
  
  Asked if a demerger exercise might be revisited, he replied: "In business anything is possible. It does not necessarily have to be a demerger. We keep our options open.
  
  "We've been in the chipboard-making business for 35 years. We're in this for the long run."
  

What AirAsia Said About Its Earnings Performance

Of course I was rather anxious to read what AirAsia had to say to the local press in regards to its earnings performance announced last night.

I, for one, was Massively Disappointed With AirAsia's Earnings.

Excluding the forex gains, AirAsia's core profit was only a mere 33.834 million. Which is never going to be enough when one put into consideration that AirAsia has a total mind boggling debt of 7.215 BILLION!

Let's do the math. At 33.834 million per quarter, one year's total operating profit would only be less than 150 million.

Is that enough?

Let's be kind. Let's top it up to 200 million per year.

Hey... I will also ass-u-me that one day, don't know when, AirAsia will have to repay back these loans, yes?

So at 200 million per year, how many years would it take to repay that 7.215 Billion back?

Try 36 years!

And our poor government had granted (AirAsia) to date a whopping 930.591 million in deferred taxes!

Not in my flawed opinion it isn't! ( See past posting also: Just How Good Is AirAsia Earnings Performance Since Listing? )

Anyway on Business Times this morning.

• AirAsia swings to Q3 profit
  
  By Jeeva Arulampalam Published: 2009/11/21
  
  Low-Cost carrier AirAsia Bhd (5099) swung to a third quarter net profit of RM130.1 million on better passenger numbers and ancillary income.
  
  In comparison, it posted a net loss of RM465.5 million a year ago due to one-off provisions for contracts tied to fuel hedging and trades held by now-bankrupt investment bank Lehman Brothers.
  
  "Despite the third quarter traditionally being our weakest quarter, we did well and our Indonesian operation has turned profitable," said AirAsia group chief executive officer Datuk Seri Tony Fernandes.
  
  Speaking to analysts during a conference call yesterday, Fernandes said the airline was looking at a strong fourth quarter as underlying passenger demand remained positive.
  
  "We are well-placed and have seen good sales, especially with the latest one million free seats campaign. We are almost up 40 per cent each day since the campaign," he added.
  
  However, ticket prices for the fourth quarter are expected to be lower than the same period last year due to the challenging global economy.
  
  For the three months to September 30 2009, the airline's revenue grew 4 per cent to RM740 million driven by higher ancillary and other operating incomes.
  
  Fernandes said the airline's ancillary income would grow further in the next six to 12 months, having jumped some 57 per cent to RM36.2 per passenger for the third quarter.
  
  While passenger volume increased 19 per cent to 3.59 million passengers, AirAsia's load factor remained the same at 75 per cent from a year ago.
  
  The average fare was lower by 27 per cent at RM142 compared with RM195 in the third quarter 2008.
  
  If fuel prices continue to rise, AirAsia expects to be impacted negatively in the fourth quarter.
  
  It has taken partial fuel hedges to mitigate the volatility, with 20 per cent of the group's fuel (jet kerosene) requirement in the fourth quarter hedged at a fixed swap rate of US$75 (RM255) per barrel.
  
  Fernandes added that the group may reimpose a fuel surcharge if prices escalate above US$100 (RM340) per barrel.
  
  Meanwhile, AirAsia Indonesia posted a profit after tax of RM21.2 million compared with a loss of RM4.3 million from a year ago. The unit performed well due to its international routes to Australia and Singapore and utilisation of new fuel-efficient aircraft.
  
  However, AirAsia Thailand saw its losses widening to RM40.4 million from RM24.6 million a year ago, due to weaker consumer sentiment and lower fares.
  
  "We are confident of the Thai operations' ability to produce profits and its fourth quarter looks good," said Fernandes.

Hmmm... no mention of AirAsia forex gains of 102 million.

You would imagine that if one has an operating gain of 136.260 million and forex gains accounts for 102 million of the gains, or 74% of AirAsia's operation gains came from forex gains, you would assume that such an information is significant enough!

Apparently it isn't!

Here's the Edge Financial Daily version, AirAsia records net profit of RM130m in 3Q, which at least acknowledged the existance of the forex gains.

• KUALA LUMPUR: AIRASIA BHD posted net profit of RM130.07 million in the third quarter ended Sept 30, 2009 (3Q09) a turnaround from the net loss of RM465.53 million a year ago (3Q08) as revenue improved and it also benefited from a foreign exchange (forex) translation gain.

Just a plain mention that AirAsia benefited from a forex gain. Did not bother to mention how much!

74% of its gains was boosted by forex gain.

Surely that's a rather significant issue?

In regards to AirAsia Indonesia and AirAsia Thailand. I would assume that these two represented AirAsia so-called 'jointly controlled entity and associates'.

So why is AirAsia Indonesia and AirAsia Thailand owing AirAsia some 911.061 million in small change???

Why?

I was also thinking about AirAsia's balance sheet issue this morning and as many are aware I had posted many articles on AirAsia (clickable link to past postings) before.

Back in Aug 2009, I wrote It's A 20% Placement For AirAsia!

• AirAsia sees more than RM1b in coffers
  By Jeeva Arulampalam Published: 2009/08/04
  
  Low-cost carrier AirAsia Bhd (5099) expects to have more than RM1 billion in its coffers by the end of the year, as it grows its profits and undertakes a private placement, says its chief.
  
  “The cash will be used to lower the group’s gearing,” group chief executive officer Datuk Seri Tony Fernandes told reporters after the airline’s annual and extraordinary general meetings in Sepang yesterday

Compare that statement to what I wrote last night Massively Disappointed With AirAsia's Earnings

• Cash balances then was 231 million ( See here ) and total borrowings as at Aug 2009 were some 6.957 billion ( see here )

So after the stock sale (which raised some 508 million) and after the 'good earnings report', AirAsia's cash balances reported yesterday was 527 million. Total debts increased to 7.215 billion.

Makes you wonder doesn't it?

Massively Disappointed With AirAsia's Earnings

AirAsia announced its earnings tonight.

I saw the link and I took a guess of what to expect.

1. I expected them to show some earnings. Why? The USD had weaken a lot against the ringgit and this would translate to forex gains.
2. I expected some improvement in the balance sheet. Why? AirAsia sold shares to raise funds. If not mistaken the share sale would bring in some 500 million in cash.

Those were my humble expectations and since I had blogged quite often on AirAsia, I only thought it was correct that I made an update on its earnings.

I quickly look at the summary from DJ.

A net profit of only 130 million? Only 130 million?

This simply isn't enough! That was my first reaction. No joke!

I opened the pdf file attached and looked for its core operating profits.

Page 10.

That screen shot spoke everything about AirAsia.

Taking out the forex gain, core operating profits were only 33.834 million.

Is it enough?

Consider all the investment outlay that AirAsia had taken. Consider the mountain of debt AirAsia is in.

Is a core operating return of 33.834 million enough?

Point 2 or expectation number 2.

Firstly on Aug 2009, I wrote the following: A Quick Look At AirAsia's Latest Earnings

Cash balances then was 231 million ( See here ) and total borrowings as at Aug 2009 were some 6.957 billion ( see here )

Today, November 2009.


Cash balances has increased to a nice 527 million.

But is this enough?

100 PERCENT NOT!

Why? Because AirAsia cash balances were boosted by some 508 million from their share placement sale. Minus this out, AirAsia cash balances is only left with 19 million! Remember in Aug 2009, cash balances were some 231 million!

Where all the money go?

Then let's look at their borrowings.


Omigosh! Total debts is now 7.2 Billion!

How?

So despite raising some 508 million from a share placement sale, AirAsia balance sheet continued to weaken!

Back in Aug, I mentioned in the posting A Quick Look At AirAsia's Latest Earnings on the amount due to AirAsia from its associates.

I wrote the following.

• Look at the amount due from the 'jointly controlled entity and amount due from associates' which stands at 410.408 mil and 479.593 mil respectively. The amount totals 890.001 million.

Now if you look back at the earlier table which showed AirAsia cash balances, the "Amount due from a jointly controlled entity" totals 438.339 million and the "Amount due from associates" totals 472.722 million. Adding both totals, we get 911.061 million!

Holy cow!

Why is this happening?

With the mountain of debt AirAsia is in, should AirAsia allow its associates to owe them so much million? 911.061 million is one mountain of small change!

What on earth is happening with this company???

Regarding Aircel and Maxis

Flashback:

30th April 2007: How Much For Maxis?

• Recently there was an article on Star Bix, New chapter at Maxis.
  This line is most interesting.
  
  To grow in India, Indonesia and locally in broadband and 3G, the funding requirements are huge, but that is not really an issue, said Jamaludin. This year alone, the company needs RM2.77bil (of which RM1.57bil is for India and RM1.2bil for Malaysia) and in India alone..

And as argued ..

• If you are a current shareholder of Maxis, your share of this 2.725 Billion has already being invested in India and Indonesia by Maxis.
  
  How? Should there be a value placed on these investments?

May 1st 2007: Maxis Again

• Proposal to take Maxis private
  
  “Yes, we are shocked with the takeover plan but it does make a lot of sense to take it private, given that the current major shareholders see huge value in Maxis that the market does not. Maxis’ India unit, Aircel Inc, for one is a brilliant asset and the market is not valuing it,” an analyst said.

I was shocked. What about the minority shareholders interests? For sure the current major shareholders saw a huge value at Maxis. Hence the privatisation!

• “Taking Maxis private also allows the major shareholders to restructure it without having to deal with the minority shareholders. That gives them the flexibility of doing what they need to do with the group and some private equity investors may emerge to nurture the companies within Maxis.
  
  “At some point, we will not be surprised if Maxis makes its way back to the Malaysian bourse but it is expected to also have a dual listing somewhere on an international bourse and its units will also be listed separately,” he added.

Restructure because the major shareholders saw value, right?

And best of all by taking Maxis private, the major shareholders DOES NOT have to deal with the minority shareholders.

Anyway let's look at Aircel.

Here is the link to Maxis last quarterly announcement before it was taken private. click here for the pdf file

Page 18.

Back then, in 2007, revenue increased by rm 53 million in just one quarter. Net additions of 1 million subscribers for just one quarter.

Now during Maxis got relisting exercise, on 29th Oct 2009, OSK wrote the following:

Given what had transpired in 2007, I was not shocked at all that the Maxis overseas operations are not included in the relisting.

Hmmm.... got me thinking.

Maxis had a nice overseas operation. Its Aircel unit was declared to be a BRILLIANT ASSET back in 2007 and the growth in revenue and subcribers shown by 2007 data proved so.

But I am surprised by the statement by OSK: " Maxis will be listed without its loss-making overseas operations." Loss making? Hmmm...

Anyway on today's Business Times:

• Aircel to invest US$5.5b in India
  By Goh Thean EuPublished: 2009/11/20
  
  MOBILE phone firm Aircel Ltd, a sister company of Maxis, will spend US$5.5 billion (RM18.6 billion) over three to five years to expand its network and cover most parts of India.
  
  It already has US$3.5 billion (RM11.8 billion) in US dollar and Indian rupee loans. The rest will come from shareholders like Binariang GSM Sdn Bhd, which owns 74 per cent of Aircel.
  Binariang also owns stakes in Indonesia's PT Natrindo Telepon Selular and Maxis Communications Bhd.
  
  Countries like India and Indonesia are where growth will come from for Bina-riang. The group has just spun off Maxis Bhd in Malaysia, raising some US$3.3 billion (RM11.1 billion) in Southeast Asia's biggest initial public offering.
  
  "Aircel has really grown over the past few years, from a small company two years ago to the third most admired telecom brand. It is still growing at a healthy pace," said Aircel director Sandip Das, also the chief executive officer of Maxis Bhd, in an interview on Wednesday.
  
  Aircel now covers 18 circles in India and is expected to launch its services to all 23 circles by the middle of next year. In India, licences are given out for areas known as circles.
  
  "We are now adding one million new subscribers every month. We now have about 26 million subscribers," he said.
  

The last statement caught my attention!

• "We are now adding one million new subscribers every month. We now have about 26 million subscribers,"

OMIGOSH!

Aircel is now adding in ONE MILLION new subscribers every month!

Back in 2007, it was ONLY (what an understatement) doing 1 million per quarter!

And Aircel has 26 million subscribers.

WOW!

Now this got me thinking.

Assume, yeah ass-u-me, that I am a Maxis fanboy, and despite what had happened before, I am now a Maxis shareholder again. (Ass-u-me lah! ). Yeah, assume I had the share before, share got delisted and now I buy back again to be a shareholder again.

Now I wonder how would I feel to read about all this.

Maxis of old used to include all Maxis overseas operations. Yeah, the brilliant Aircel was included. Maxis of today is just a plain Maxis. No Aircel!

Yeah no Aircel.

A telco company that has a growth of 1 million new subscribers per month!

How lah?

On the Edge Financial Daily: Bold IPO bet pays off for Ananda Krishnan

• .......... Ananda's privatisation of Maxis angered investors, who had accepted RM15.60 a share. Ananda soon sold a 25% stake to Saudi Telecom at RM16.40 apiece.
  
  "It's a masterstroke — he forked out money to privatise, and then made more selling it to the Arabs," said the person with knowledge of the billionaire.

Poor minority shareholders... !!!

• The relisting of Maxis comes after the prime minister called for firms to list in a bid to boost Malaysia's sluggish and illiquid stock market.
  
  Ananda obliged — but this time, he is listing only the Malaysian operations, leaving the fast-growing Indian and Indonesian businesses with the parent Maxis Communications Bhd.

China's Empty City!

Highlighted by T&T::

YTL E-Solutions Should Not Be Considered Anymore As A Wimax Play

For prophet.

This is from YTL Communications home page here

• Our Background
  YTL Communications is a subsidiary and the communications utility of YTL Power International, a utility group active across key segments of the utility industry worldwide.
  
  Headquartered in Malaysia, YTL Power International operates in Malaysia, the United Kingdom, Singapore, Australia and Indonesia. Its core businesses include: power generation, retail and transmission, and water supply and wastewater services.
  
  YTL Power International is a subsidiary of YTL Corporation, a leading integrated infrastructure developer in Malaysia with global investments in utilities, cement manufacturing, construction, property development and investment, hotel management and development, as well as information technology serving over 12 million customers on three continents.
  
  Both YTL Power International and YTL Corporation are listed on Bursa Malaysia (the Kuala Lumpur Stock Exchange). Both companies are component stocks of the FTSE Bursa Malaysia composite index which comprises 30 of the largest companies based on market capitalisation.

And just how did this came about?

The following is a screen shot from a CIMB report back in Sep 2009.

See also this older posting: Comments On YTL's RM3 Billion Broadband Venture

So what about YTL E-Solutions now? Here are some comments from the same CIMB report.