Where is Ze Moola

And According To Sources ....

2012-03-02T11:58:00.001+08:00

Yeah, our financial news can be really incredible at times. Many a times, a story will be spun by our financial news wizard reporters. The way they write, the way they spin the story around and around, they can really make any given stock sounds soooooo sexy.

Let me highlight one OLD sexy told back in 2007.

Here's the article in full.

Saturday May 19, 2007
DiGi and Green Packet may join forces
By JOSE BARROCK

RELENTLESS best describes the speculative hype over DiGi.Com Bhd's rumoured tie-up with Time dotCom Bhd. Yet, both companies have consistently denied such a possibility when queried by Bursa Malaysia.

It appears now that there may be another tie-up being thrashed out by DiGi, but only this time it involves Mesdaq favourite Green Packet Bhd. A source says DiGi is in talks to take over Green Packet in an exercise that may involve share swaps. The planned merger will result in existing Green Packet shareholders owning an interest in an enlarged entity instead.

It is understood that talks are ongoing and the issue of pricing is being thrashed out. As at end-March this year, Green Packet's net asset per share stood at some 96 sen. The counter finished on Thursday at RM4.20 while DiGi ended the same day at RM20.40.

Green Packet has proposed a transfer to the main board of Bursa Malaysia upon the completion of a proposed bonus issue and share consolidation, which got the nod from shareholders at its recent EGM.

An analyst from a local brokerage says, “For tech companies such as Green Packet, the net asset per share is of little significance as the share price actually reflects the potential in the company's business. So the valuation will have to be based on that premise.”

“There were talks between DiGi and Time dotCom, but that was a cash deal. This one (DiGi and Green Packet) may involve a share swap which DiGi may more inclined towards,” says the source.

Company officials have stated that DiGi is looking to spend in the region of RM900mil this year to upgrade its network.

The impetus for DiGi to stage such a corporate manoeuvre is quite clear, in fact it has been chronicled umpteen times and yet the company has remained resilient throughout. To recap, it was not awarded a 3G license and was unable to secure a WiMax license, which would have enabled it to roll out broadband initiatives. Yet, the need to move into broadband is compelling for the telco as it continues to drive its business and expand its revenue stream.

On the other hand, Green Packet was one of the lucky four who clinched a WiMax licence earlier this year. The company via its unit Packet One International Sdn Bhd bought 55% equity in MIB Comm Sdn Bhd (a company awarded a WiMax licence recently) late last year for about RM6mil. With that, Green Packet's appeal to DiGi is easy to appreciate; it is eyeing the WiMax licence.

DiGi’s chief executive officer Morten Lundal dropped some vague hints recently at the company’s annual general meeting: “We are not against any acquisitions, but we are not on an acquisition hunt either. We’re looking at a long-term situation and we would like to have a broadband platform. We’ll seek spectrums and we’ll look at partnerships. When it arrives in a positive way for us, we’ll go further.”

Green Packet, presently the largest company by market capitalisation on the Mesdaq market, has already laid the groundwork to roll out its WiMax initiative, SONmetro solutions, which is both WiMax and Wi-Fi compatible, by year-end.

The company has a presence in China, the Middle East and North Africa among others and has an associate stake in GMO Ltd a company listed on the London Stock Exchange’s Alternative Investment Market. For its first financial quarter ended March this year, Green Packet posted a net profit of RM10mil on the back of RM31.4mil in sales, which is a gain of about 26% and 173% respectively from a year ago.

The company’s chief executive officer Puan Chan Cheong is the company's main driving force.

Since article is back in 2007, the Star Biz link is broken but the article can still be viewed at http://www.mobile88.com/news/read.asp?file=/2007/5/19/20070518222114

Here's my inteprtation of the article...

Saturday May 19, 2007DiGi and Green Packet may join forces
By JOSE BARROCK

Try to remember the wizard who wrote the article...

RELENTLESS best describes the speculative hype over DiGi.Com Bhd's rumoured tie-up with Time dotCom Bhd. Yet, both companies have consistently denied such a possibility when queried by Bursa Malaysia.

So at first, the market speculation was the tie-up between Digi and Time dotCom. But both companies had strongly ruled out such possibility.

So what's next?

Worry not. There's still a story to be spun....

Here comes Green Packet. Notice how this particular wizard, Jose Barrock, spins the story.

It appears now that there may be another tie-up being thrashed out by DiGi, but only this time it involves Mesdaq favourite Green Packet Bhd. A source says DiGi is in talks to take over Green Packet in an exercise that may involve share swaps. The planned merger will result in existing Green Packet shareholders owning an interest in an enlarged entity instead

It appears, may, according to a source.

Sounds familiar? Where have you hear such words before?

Compare it to financial articles written nowadays. Any different?

It is understood that talks are ongoing and the issue of pricing is being thrashed out. As at end-March this year, Green Packet's net asset per share stood at some 96 sen. The counter finished on Thursday at RM4.20 while DiGi ended the same day at RM20.40.

It is understood.

“There were talks between DiGi and Time dotCom, but that was a cash deal. This one (DiGi and Green Packet) may involve a share swap which DiGi may more inclined towards,” says the source.

So says the source.

Of course it's now 2012.

Look at DiGi and then look at Green Packet now.

How?

Don't you admire our financial wizard reporters who can spin out endless stories based on unknown sources?
Oh yeah... big wheels keep on spinning.....

More Shocking Revelations Made About Silver Bird

2012-03-02T10:36:00.000+08:00

Things are getting really serious at Silver Bird.

Posted on Star Biz:

Independent auditors find poor record-keeping, unable to verify sales transactions at Silver Bird

Friday March 2, 2012
Independent auditors find poor record-keeping, unable to verify sales transactions at Silver Bird
By FINTAN NG

PETALING JAYA: Poor record-keeping and the inability to verify sales transactions at Silver Bird Group Bhd are the reasons why Crowe Horwath, the independent auditors, has not been able to provide a basis for an audit opinion to the financial report for the financial year ended Oct 31, 2011 (FY11).

“During the course of our audit for FY11, we expressed concerns to the audit committee and the board of directors over the validity and recording of certain transactions for which we were not able to obtain the sufficient and appropriate audit evidence and satisfactory explanations from management,” Crowe Horwath said in the independent auditors' section of the financial report released on Wednesday.

The auditors said they were unable to verify the veracity of payments made amounting to RM7.6mil for the refurbishment of an existing warehouse and factory, as well as not being able to obtain information to verify additions of plant and equipment amounting to RM4.9mil.

Besides that, the auditors were not able to verify transactions undertaken with five customers for the sweetened creamer business with revenue and cost of sales amounting to RM31.9mil and RM31.3mil respectively, while they were not able to verify the veracity of sales transactions undertaken with six customers from the bakery and telecommunications businesses amounting to RM149mil, including RM83.9mil in gross telecommunications sales.

The auditors said the transactions cast a significant doubt on the financial performance and position of the bread and confectionary maker.

They added that the accounting and other records required by the Companies Act 1965 to be kept by the company and its subsidiaries “have not been properly kept in accordance with the provisions of the Act”.

“The audits of the subsidiaries have commenced but have not been completed as at the date of this report.

“As a result of the delay in the completion of the audit of the subsidiaries, we have not been able to consider the financial statements and the audit reports of the subsidiaries,” the auditors said.

Silver Bird issued a number of announcements to Bursa Malaysia on Wednesday, including notification of the suspension of group managing director Datuk Jackson Tan, executive director Ching Siew Cheong and general manager for accounts and finance Lai Poh Mei from Feb 24 to facilitate an internal inquiry into allegations of, among others, irregularities in the accounts.

The board also said in separate announcements that three of the subsidiaries were in default of payment to Bank Islam Malaysia Bhd, Malayan Banking Bhd and CIMB Bank Bhd amounting to RM5.37mil, and that the company had triggered the Practice Note 17 criteria after not being able to provide a solvency declaration.

In response to an inquiry from StarBiz on the solvency declaration, the directors said the company was “working on getting the solvency statement out as soon as possible”.

Meanwhile, Lembaga Tabung Haji (LTH) and Berjaya Corp Bhd, major shareholders of the company, declined to comment while Koperasi Permodalan Felda did not reply to inquiries.

“We'll leave it to the Silver Bird directors to issue any statements,” an LTH official said.

Silver Bird's share price fell 20 sen to 20.5 sen at close when trading resumed yesterday following a request by the company to suspend trading on Monday after its directors said the company was unable to comply with stock exchange requirements to issue the annual audited financial statements within four months from the end of the financial year.

This is about as serious as it can get.

The auditors cannot verify sales transactions, they cannot verify payments made ( so where did the money go???!!!! ) ... and the MD and ED are both suspended (go figure the implications ) .... and then ... there is default of payment!!!!!

More Shocking Developments At China Ouhua ( CNOUHA )

2012-03-02T09:41:00.000+08:00

Posted just the other day: China Ouhua Winery Announces Quarterly Losses

Last night, China Ouhua announced a shocker!

Ouhua COO, director quit after Q4 loss

Published: 2012/03/02

KUALA LUMPUR: China Ouhua Winery Holdings Ltd yesterday announced the resignations of its chief financial officer Zheng Le Le and director Tam Fook Cheong.

This came a few days after the company posted a fourth quarter net loss of almost RM7 million, against a net profit of more than RM7.3 million same quarter a year ago.

The company’s cash balances also fell during the financial year from more than RM300 million in 2010 to RM110 million, while trade receivables increased to RM228 million from a mere RM125 million a year ago.

Zheng said the resignation was due to “some personal reasons”, while Tam resigned due to heavy commitment to consultancy works. Tam was also the chairman of the audit committee prior to his resignation.

What??????

The CFO quits!!!!

The Chairman of the audit committee also quits!!!!

What???? What????? What????

Good grief!!!! How can this be happening????

How on earth could such a company be allowed to be listed in our stock exchange!!!!!

Latest Development On Envair

2012-03-02T08:13:00.001+08:00

Got the following set of comments from the posting "Since Listing, Smartag Had Reported Losses Every Quarter!"

Furex said...

Dear Moola, would you mind to share on your opinion on the latest development on Envair. Thanks

The latest development on Envair?

Well.... if I am not wrong... I think the stock is in play... but whether the current play would see the stock goes higher or lower... I have no idea.

However on the corporate side.. so this ... 'carpetman' .... has announced that he had purchased back shares into Envair.

LOL! Sorry for laughing but isn't this way too comical?

So the said and much publicised plan is to push Envair into an O&G stock.

And that's about it... that's the most educated opinion I can give.

Will the O&G move payoff? Could Envair make big bucks in the future in the O&G sector?

I dunno...

Is it wise to invest based on this factor?

Best opinion I can offer is.... perhaps from a sporting perspective. Enjoy footy? Say, I ... Moolah.... went and purchased a stake in a footy club in the English SECOND division.... and then ... following my purchase (with me being an unknown... one who owns a barnyard business ... and certainly no track record in the footy business) ... boldly announce that my team would be a future success and my team would make it into the English Premier League soon. And that's all I have announced. And I did not disclose any clear plans on the possibility of me injecting money into the team and no clear plans on the coach and the possibility of new players.

Would you bet that my team would be a success? Would you bet on me and my new business?

How?

Now back to Envair...... all I can say for now is..... How?

Deep Woes For Silver Bird

2012-03-01T18:56:00.000+08:00

From the EdgeMalaysia.

Silver Bird’s woes come to light
Written by Chua Sue-Ann
Thursday, 01 March 2012 10:43

KUALA LUMPUR: Bread and confectionery maker Silver Bird Group Bhd yesterday confirmed the suspension of three key executives with effect from Feb 24.

They are managing director Datuk Jackson Tan Han Kook, executive director Derek Ching Siew Cheong and general manager of accounts and finance Lai Poh Mei.

Silver Bird said the suspension of the trio was to facilitate an internal probe into allegations of irregularities in the company’s accounts.

The announcement confirms The Edge Financial Daily’s report yesterday that Silver Bird’s board had suspended Tan and two other managers to facilitate the internal investigation.

Silver Bird’s board said it is currently unable to ascertain the extent of the financial and operational impact of the alleged irregularities but estimates the maximum exposure to be approximately RM111.5 million.

Additionally, Silver Bird’s board has lodged a police report in relation to the alleged financial irregularities and reported the matter to the regulatory authorities.

Adding to its woes is the classification of the company as a PN1 and PN17 counter. In a filing with Bursa Malaysia yesterday, Silver Bird said it had triggered the PN17 criteria given that its auditors Crowe Horwath had expressed a disclaimer opinion on the group’s latest audited accounts for its FY11 ended Oct 31.

Furthermore, Silver Bird’s major subsidiaries were in default of banking facilities repayments, with the group currently unable to provide a solvency declaration to Bursa.

The three wholly-owned units in default are baked goods manufacturer Standard Confectionery Sdn Bhd, bakery goods and telecommunications products distributor Stanson Marketing Sdn Bhd and bread maker Stanton Bakeries Sdn Bhd.

The three units were in default of a total of RM5.36 million in bankers acceptance facilities from three lenders, Bank Islam Malaysia Bhd, Malayan Banking Bhd and CIMB Bank Bhd.

The bulk of the amount in default was incurred by Stanson Marketing, which owes RM4.42 million to its lenders.

Ironically, Silver Bird’s substantial shareholders include pilgrim fund Lembaga Tabung Haji with a 22.19% stake, tycoon Tan Sri Vincent Tan Chee Yioun’s Berjaya Corp Bhd (20.53%), Koperasi Permodalan Felda Malaysia Bhd (12.7%) and venture capital fund CVC Ltd (9.07%).

Tan is Silver Bird’s fourth largest shareholder with his 10.84% direct equity interest and has been at the helm of the group for over 10 years.

Silver Bird explained that the issues were brought to the board’s attention when the auditors expressed concerns over the validity and recording of certain transactions.

According to Silver Bird, its auditors had expressed concern on eight main issues including a RM10.6 million contract to refurbish an existing warehouse and factory, payments of RM69 million made to an equipment supplier and the common parties relationships between the group’s customers and suppliers.

Silver Bird added that its auditors also raised issues with the group’s new sweetened creamers trading business segment, the audit trail of all sales transactions and revenue recognition in the telecommunications segment.

Its auditors had also pointed out that the credit period for trade receivables appeared to be unusually high and that the cash collected and payment made were cleared by the banks after more than seven days from the balance sheet date, Silver Bird said.

What’s next for Silver Bird?
Now that Silver Bird is an affected listed issuer, it will have to submit a regularisation plan to the authorities, failing which its shares and warrants will be suspended from trading and subsequently delisted.

Nevertheless, Silver Bird said it intends to formulate a regularisation plan to address its PN17 status.

On the operations front, Silver Bird’s board had formed a special committee comprising its five non-executive directors to oversee the group’s operations in the interim.

Silver Bird also announced that it had appointed PKF Advisory Sdn Bhd to conduct a forensic review into the company’s affairs.

It also appointed Messrs Wong Kian Kheong as legal advisors and intends to form an inquiry committee to look into the investigation of Silver Bird’s group accounts.

The forensic accountants and inquiry committee have three months from Feb 29 to complete their investigations.

Silver Bird’s cash dwindles
In a separate announcement yesterday, Silver Bird’s board said that it had reversed its earlier decision to change its financial year end, opting to maintain it at Oct 31.

The group yesterday also issued its annual audited accounts for its FY11 ended Oct 31, 2011 in which its auditors expressed a disclaimer opinion.

In its FY11, Silver Bird’s net profit grew 35.12% to RM4.93 million from RM3.65 million a year ago, while revenue rose 22.13% to RM232.06 million from RM190.01 million.

As at Oct 31, 2011, Silver Bird’s cash and cash equivalents had plunged to RM3.55 million from RM21.32 million.

In its audited annual accounts, Silver Bird’s board warned that there may be bad debts and additional allowances that may need to be made for impairment losses on receivables.

Silver Bird’s shares and warrants will resume trading today after it was suspended from Feb 24 at the group’s request.

Prior to its suspension, Silver Bird’s shares took its steepest plunge in over two months, falling 5.81% to 40.5 sen on Feb 24 from 43 sen a day earlier.

This article appeared in The Edge Financial Daily, March 1, 2012.

I had posted on Silver Bird many times before. You can read them here: Silver Bird

Since Listing, Smartag Had Reported Losses Every Quarter!

2012-03-01T09:21:00.000+08:00

Posted several times before:

June 2011: Is Smartag Worth A Bet?
June 2011: Smartag: I Am Wrong Because The Stock Moved Higher?
Aug 2011: A Quick Look At Smartag's Earnings.

Smartag reported its earnings the other day. It reported losses again.

But the lack of sales revenue was most glaring.

Have a look.

Now if you look at the above snapshot, on 13th April 2011, Smartag made two quarterly earnings report. But Smartag made its listing debut on 18th April 2011. Which means those 2 set of earnings was made before Smartag was listed.

Now if I take this into consideration, since listing, Smartag had reported losses for every quarter!!!!

Yup!

Exactly!

Yet another QUALITY-LESS company being listed on our stock exchange.

Sigh!

And Ideal Jacobs Posts Losses

2012-03-01T09:02:00.000+08:00

Last year, a few ACE (ACE? Bah! For me, it's still MESS-daq ) stocks were listed and because of their stock performance, they caught the attention for all the wrong reasoning.

One of them was Ideal Jacobs.

The following postings were made..

What happened was the stock opened at an incredible premium.

It IPO-ed at 27 sen. Opened at 1.05, reach a high of 1.10... and then.... the stock collapsed and by the next day the stock reached a low of 35.5 sen. ( Hmm.. what's the precise description for such a stock play? Anyone? )

What irked me was the press had the gall to hail it as a promising debut.

Three months later the company reported quarterly losses! ( see Yet Another Brilliant Performance From A Newly Listed ACE Stock! )

Last night Ideal Jacobs announced its earnings.

It lost money again!

Below is the screen shot of what they have done since listing...

Oh... Ideal Jacobs last traded yesterday at 17 sen!!!

Yup!

Exactly!

Yet another quality listing on Bursa Malaysia!

Comeon... what's the point of listing such quality-less company in the exchange?

Is it to turn the exchange into a bigger casino?

Oh but wait... Bursa is business. It's a listed company. It has to make money!

A Massive Payday Awaits Tanjong Shareholders

2012-02-29T18:29:00.000+08:00

There's two rather interesting or revealing passages from the following article on the Edge :Ananda could see RM4b gain from Tanjong buyout

................
If the touted price tags for the power and gaming assets are true, Ananda would in less than two years managed to sell two of Tanjong’s prized assets for about RM12.85 billion — over RM4 billion or some 46% more money than the RM8.8 billion Tanjong valued using the RM21.80 per share minorities were bought-out for in July 2010.

.............

Secondly, Ananda’s investment cost is a lot less than the RM8.8 billion Tanjong was valued using the takeover price, as parties that offered to privatise Tanjong already had 49.96% of the group in hand .......

I remembered when Tanjong was privatised many hailed the privatisation because the offer was said to be extremely generous. They praised the generous premium over the stock price.

It was a fantastic payday.

Yeah... but ... have they even wondered if it was even a fair price?

Anyway.... now... apparently someone's going to have a even more fantastic payday!

Yeah... privatisation.... it's such a wonderful business.

But for who?

Much Lower Earnings And Much Less Dividends From Maybulk

2012-02-29T09:35:00.000+08:00

Maybulk announced its earnings last night.And no, it was not a shocker. Not for me. Do refer to last September's posting (it's a must read) : Maybulk: Does poor corporate governance have a negative impact on a stock? ( I wonder why some consider Maybulk as an investment grade stock given it's horrific corporate governance! )

Today Maybulk was featured on BTimes: Maybulk confident of staying profitable

Maybulk confident of staying profitable

By : GOH THEAN EU Published: 2012/02/29

MALAYSIAN Bulk Carriers Bhd (Maybulk) is expected to take advantage of the current depressed freight market by acquiring more vessels this year.

"We are monitoring the situation. We plan to reinvest our profits and to take opportunity of the current depressed freight market.

"If the current situation continues, we expect to see more shipping companies to be in financial distress and maybe face bankruptcy," said chief executive officer Kuok Khoon Kuan briefing yesterday.

He added that the value of vessels were at "rock bottom" and that buyers could "choose and pick" the vessels they want.

Maybulk, which now owns and operates a fleet of 17 vessels, including dry bulk carriers and product tankers, is due to take delivery of three new vessels this year, all of which are under long-term charters.

Currently, the industry is facing lower charter rates due to the oversupply of vessels in the market.

For Maybulk, the average charter rates of its dry bulk carriers were down by 36 per cent to US$16,519 (RM49,781) a day.

"The problem we are facing now is oversupply. There's still growth in the market but there's too much tonnage.

"During such times, too many players will be squeezed and there will be too many bloodbath," said executive chairman Teo Joo Kim.

Nevertheless, Teo believed that the situation will correct itself over time.

Kuok and Teo was speaking to the media and analysts during its full-year financial results briefing.

The company posted a fourth quarter net profit of RM16.81 million, a 75 per cent decline from the same quarter a year ago.

For the full-year, its net profit fell by 61 per cent to RM93.37 million. Full-year revenue declined by about 36 per cent to RM256.31 million.

"Although we reported lower numbers, we are thankful that we managed to stay profitable, especially in such challenging times," Teo said.

Yup, lower dividend and much lower set of earnings.

And Masterskill Education Group Posts Quarterly Losses ..

2012-02-29T09:17:00.005+08:00

Another company reporting losses was Masterskill Education Group. It reported losses of 1.57 million.

I wasn't expecting any good earnings result from Masterskill Education Group, given what had been blogged previously ( See And What About The Promise Made By Masterskill CEO? and How Now Masterskill? ) ( If you wonder how Masterskill fared during its listing day, see 18 May 2010: Masterskill listing day ) .

However.... what was written by Kenanga Research recently on 13th Feb was rather 'interesting' since Kenanga said it was expecting a flat result from Masterskill.

They made the following remarks...

Expecting a flat 4Q11. We recently met with the management of Masterskill and gathered that since the unfolding news on the reduced PTPTN loan offered in August last year, the group had been experiencing a declining student intake. There were 17,600 active students in 2Q11 and this figure dropped to 14,200 students in 3Q11 on the back of lower student intake in the month of September, this being the last intake for the year. Hence, we are expecting a flat student count in 4Q11 – this also having the impact of pushing the group to reduce its fees in the second half of FY11. Apart from that, the increased minimum entry requirement for the enrolment of nursing programme by the government has further dampened its student growth. On that note, we are looking at a rather flat q-o-q earnings for 4Q11 of RM6.4m as compared to RM5.5m in 3Q11, which is still a marginal 16.3% growth on the back of a low base. We expect the impact to be more evident on a y-o-y basis (compared to RM26.8m in 4Q10), which will represent a 76.1% decline.

Kenanga's Research team had met with Masterskill Education..... and they concluded that Masterskill should post a flat set of earnings.

But Masterskill posted its first set of quarterly losses. Listed May 2010. Now Feb 2012, already posting losses. (Yet another quality listing on Bursa Malaysia? )

And those famous words made by the boss: ( see last Sept's posting And What About The Promise Made By Masterskill CEO? )

>>>>>

“Well, I need to wait and see. Perhaps, anything below RM2 doesn't justify keeping the company listed,” Edmund said when asked on the amount of shares he intended to purchase.

Last December, he told StarBiz that the share price then of RM2.22 was not “justifiable” for a firm that made about RM100mil in net profit annually.He said that the company was fundamentally sound and that its Kuching campus was already in operation.

“The current share price weakness presents a great buying opportunity for Edmund to accumulate its shares,” an analyst said, adding that Edmund's move to purchase more shares may be a practical thing to do.

>>>>>>>

So Edmund... do show us the money.... could you please take MEGB private?

ps: Why do I keep repeating what Edmund said? In my flawed opinion and my shallow mindset, I strongly feel that CEOs should be more responsible when they make statements to the investing public. They should be more responsible and they should not talk like a stock salesman.

And now K-Star Reports Losses....

2012-02-28T23:25:00.000+08:00

And there I was posting about China Ouhua Winery Announces Quarterly Losses.

Tonight I saw K-Star's earnings.

K-Star was featured in the posting Them Chinese Shoe Stocks where the EdgeMalaysia featured a massive article called Can China shoe stocks remain at bargains.

The article reasoned the case for them Chinese stocks by saying..

...... Most investors are no doubt sceptical about China stocks listed on overseas exchanges, given the numerous accounting issues these companies have faced in the US and Singapore over the last few years.

However, analysts also noted that none of these issues has surfaced in Malaysia yet, and the Chinese companies listed here have consistently delivered strong earnings despite their lacklustre stock price performances.

Xingquan International Sports Holdings Ltd, the first Chinese company listed in Malaysia for close to three years now, has yet to disappoint investors in terms of earnings. Apart from Xingquan, four other shoe companies listed here are Multi Sports Holdings Ltd, XiDeLang Holdings Ltd (XDL), K-Star Sports Ltd, and Maxwell International Holdings Bhd.

According to calculations by The Edge Financial Daily, from 2006 to 2010, the five shoe companies chalked up a compound annual growth rate (CAGR) of at least 30% for both revenue and net profit.

The five China-based shoe stocks are sitting on large cash reserves and most have paid high-yielding dividends.

Their PERs are about two times — well below the market’s broader average of 15 to 16 times.

And the article said the following for K-Star

K-Star
K-Star is principally engaged in the design, manufacture and distribution of sports footwear under its own proprietary brands, Dixing and K-Star. The company generates over 700 designs annually.

Its product range covers athletic shoes for running, tennis, basketball and mountain climbing as well as leisure. K-Star is also an OEM and ODM for international sports brands including Umbro, Diadora, Kappa and China’s footwear brand, Double Star.

Its proprietary products are distributed across 18 provinces and three municipalities in China at over 870 retail locations. They are exported to Russia and other markets such as Ukraine, Belarus, the Czech Republic, Poland, Finland, Romania and Hungary. In 2010, K-Star expanded into sports fashion apparel and accessories.

Listed on June 4, 2010, K-Star closed at 28 sen last Friday, falling 60.9% from its IPO price of 71.7 sen (IPO price adjusted for a one-to-three share split on Nov 1, 2010)

It is trading at a 67.1% discount to its end-September 2011 book value of 177.97 yuan and close to its net cash per share of 25 sen. As at end-September 2011, it had cash reserves of 154.81 million yuan versus current borrowings of 17.68 million yuan, which translated into a net cash position of 137.13 million yuan.

In FY10, it paid a net dividend of 1.6 sen per share, representing a yield of 5.7%. From FY06 to FY10, the company’s CAGR for net profit and revenue was 47.8% and 43.8% respectively. For FY10, it posted a net profit of 88.25 million yuan on revenue of 670.87 million yuan.

For 3QFY11 ended September, it posted a net profit of 11.14 million yuan on revenue of 169.60 million yuan, down from a net profit of 31.16 million yuan on revenue of 191.48 million yuan previously. K-Star said the decline was mainly due to higher raw material and labour costs.

Its sports footwear segment contributed to about 95% of revenue, while its sports apparel and accessories accounted for the remaining 5%.

As part of its expansion plan, K-Star announced in October that it was buying a piece of state-owned leasehold land of 675 sq m in Jinjiang City in Fujian Province for 27 million yuan in cash.

As at end-2010, it had four production lines at three factories in Jinjiang City. Its estimated annual production capacity was 3.97 million pairs and output utilisation rate was 93.7% in 2010.

So K-Star was listed on July 2010.

It's now only Feb 2012 and K-Star has just reported quarterly losses for its 2011 Q4 earnings!

!!!!!!!

past postings on K-Star can be found here: K-Star Sports

China Ouhua Winery Announces Quarterly Losses

2012-02-28T00:00:00.001+08:00

China Ouhua Winery Holdings Ltd made its listing debut on Bursa Malaysia on 4th Nov 2010. It was the first winemaker to be listed on Bursa Malaysia.

A month before it was lited, Ouhua was featured on the EdgeMalaysia article:China Ouhua sees China's wine consumption doubling by 2013

KUALA LUMPUR: China Ouhua Winery Holdings Ltd expects wine consumption in China to double in the next three years. Its executive chairman and chief executive officer Wang Chao says annual wine consumption in the country is currently one million tons, and he expects it to double to at least two million over the next three years....

The huge 'expectations' were pledged to the investing public.

It's now Feb 2012.

Ouhua announced its Q4 earnings.

Well.... Ouhua lost money.

Receivables increased. (115 million vs 62.9 million a year ago)

Cash depleted. (55.469 million vs 160.695 million a year ago)

........ !!

And Prominent Xtreme's 5.3 Million Jackpot Is Highlighted...

2012-02-22T08:51:00.000+08:00

Posted last Friday: Prominent Xtreme Strikes 5.33 Million Jackpot

On today's Star that Prominent Xtreme issue was highlighted: KEuro under close watch after granted highway concession

Wednesday February 22, 2012
KEuro under close watch after granted highway concession

PETALING JAYA: Kumpulan Europlus Bhd (KEuro) has become a closely-watched company since the issuance of the letter of approval for the 60-year West Coast Expressway concession to its subsidiary, West Coast Expressway Sdn Bhd (WCESB), last month.

Even its recently-announced plan to acquire additional shares in WCESB from little-known Prominent Xtreme Sdn Bhd has come under scrutiny.

KEuro had on last Friday announced to Bursa Malaysia its intent to acquire a 15.8% stake, or about 4.59 million shares, in WCESB from Prominent Xtreme. The proposed acquisition would cost RM5.34mil, or RM1.16 per share, which KEuro said it would finance by internal funds.

Upon completion of the proposed acquisition, KEuro’s stake in WCESB would increase from the present 64.2% to 80%, while that of Prominent Xtreme would be reduced from 35.8% to 20%.

In the same statement, KEuro had explained that Prominent Xtreme was principally involved in investment holding and property development businesses.

As it turned out, filings with the Companies Commission of Malaysia showed that the nature of Prominent Xtreme’s business was listed as “dormant.” Shares in the privately held company were owned equally by two individuals, namely Liau Yoke Leang and Mohd Ruah Abdul Manan.

A further check revealed that Liau was formerly the senior general manager of Agrocon Sdn Bhd, a smallish property development company, whose director and major shareholder was Chan Keat Wan. (Chan is the sibling of Tan Sri Chan Ah Chye, who is the major shareholder of KEuro.)

Ruah, on the other hand, was a director of a smallish construction company called Ekspedisi Jasa Sdn Bhd. The information was based on records with the Construction Industry Development Board of Malaysia.

Prominent Xtreme had in October 2010 entered a deal to acquire Perak Corp Bhd’s entire equity interest in WCESB, comprising 3.3 million shares, or a 12.19% stake, for RM4mil. Since completion of the deal, Prominent Xtreme and KEuro were the remaining two shareholders of WCESB.

Analysts reckoned that KEuro would undertake further corporate exercises once the concession for the West Coast Expressway, which would be built at an estimated cost of RM7.07bil over a five-year period, is officially signed in the coming days.

P Gunasegaram: A perplexing settlement Between Danaharta And Tajuddin

2012-02-18T10:50:00.000+08:00

On Star Biz:

Saturday February 18, 2012
A perplexing settlement
A QUESTION OF BUSINESS By P. GUNASEGARAM

Danaharta's deal with Tajudin over RM589mil is unsettling given that it had a judgement in hand for the amount

AN out-of- court settlement when you already have a favourable judgment is allowing the bird already in hand to forever fly away. When those whom you ultimately represent have no idea why you gave that bird up in the first place it makes it doubly worse.

Such is the case in the perplexing settlement between prominent Malaysian businessman Tan Sri Tajudin Ramli and Pengurusan Danaharta Nasional Bhd. Danaharta had already obtained judgement from the High Court against Tajudin in 2009 for a huge RM589mil, probably the largest sum awarded in Malaysian legal industry.

The judgement gives interest rate on the RM589 million at 2% over Malayan Banking's base lending rate from Jan 1 2006. Assuming a simple interest rate of 8%, that amount would have now swelled to about RM840mil if the judgment were effected today. What could have made Danaharta lose that kind of money? And did it get anything in return?
Danaharta is the national debt management agency set up in the wake of the 1998 Asian financial crisis to sort out debt problems in the banking system and recover as much money as possible from borrowers.

It had filed a suit against Tajudin, a high-flying and favoured businessman, part of a group close to former Finance Minister Tun Daim Zainuddin, who at one time controlled Malaysia Airlines (MAS) and before that mobile telephone operator Celcom through his vehicle Technology Resources Industries Bhd (TRI).

Tajudin got into serious debt and lost control of TRI and eventually sold his 32% stake in MAS back to the Government in 2001 at the same price he bought it several years back and much higher than the then market price, drawing heavy criticism. He had taken a loan of RM1.79bil to buy the stake in 1994.

Earlier this week, when the case came up for hearing before the Court of Appeal, it was disclosed that an out-of-court settlement was reached and basically that was that. The terms of the settlement were not made public, despite the case being of great public interest and the fact that Danaharta is publicly funded and has at least a moral duty to explain why it went for a settlement.

Predictably, the way this case has been disposed off has started tongues wagging and the rumour mill churning with much velocity. With important questions unanswered, serious questions over governance and accountability have risen to the fore and can only be detrimental for the country and its financial and capital markets.

As one lawyer pointed out, with the High Court judgement, Danaharta was no longer a plaintiff but a judgement debtor while Tajudin was a judgement creditor. At least it would have been prudent on Danaharta's part to wait until the Court of Appeal had decided on Tajudin's appeal.

In 2009, the Kuala Lumpur High Court ordered Tajudin to pay RM589mil to Danaharta following debts incurred when purchasing MAS shares. The amount was the balance from the RM1.79bil loan taken to purchase MAS.

The High Court ordered him to pay Danaharta at Dec 31 2005 the principal sum of RM589mil owed plus interest at 2% above Malayan Banking's base lending rate from Jan 1 2006, until the loan was paid.

Tajudin made counter-claims amounting to some RM13.5bil. These claims are far in excess of the RM589mil in dispute, by over some 20 times. It was filed against 24 respondents, including former Danaharta chief executive Datuk Azman Yahya and former Danaharta officers Datuk Abdul Hamidy Hafiz, Datuk Zukri Samat and Datuk Kris Azman Abdullah.

He had claimed that Tun Mahathir Mohamad, who was Prime Minister then, had ordered him to buy the 32% stake in MAS to bail out Bank Negara Malaysia which had incurred foreign exchange losses. Mahathir denies this.

That's the intriguing tale about this whole issue. It offers a lesson on how corporate Malaysia is run with its close interlinks between big business, Government and politics. It was a refreshing decision to see Danaharta turn around and pursue to the end creditors who have the means to repay their debts.

But this settlement has negated all that and turned the hands of the clock back in terms of progressing to a more transparent and accountable environment with the proper standards of governance in place.

If there is indeed a convincing explanation for this, than it is incumbent upon all parties, and especially Danaharta, which spent money and effort to bring the miscreants to book and got a judgment in its favour, to make this public so that the rest of us understand.

Otherwise, we need to add this to yet another one of those things we must get to the bottom of and do something about.

P Gunasegaram notes that the final amount involved amounts to more than three times that of the RM250mil loan involved in the cowgate (National Feedlot Corp) scandal. (t.p.guna@gmail.com)

Prominent Xtreme Strikes 5.33 Million Jackpot

2012-02-17T19:32:00.000+08:00

On the Edgemalaysia.com

KEuro to buy 15.8% of West Coast Expressway, up stake to 80%
Written by Joseph Chin of theedgemalaysia.com
Friday, 17 February 2012 18:57

KUALA LUMPUR (Feb 17): KUMPULAN EUROPLUS BHD [] has proposed to raise its stake in West Coast Expressway Sdn Bhd (WCESB) to 80% a move to strengthen its control of WCESB after it secured the RM7.07 billion west coast highway concession.

KEuro said on Friday it was buying a 15% stake or 4.59 million shares of WCESB from Prominent Xtreme Sdn Bhd for RM5.33 million.

KEuro said together with the current 18.649 million shares or 64.20%, the acquisition would see it holding 80% equity interest.

“Upon commencement of the CONSTRUCTION [] of the West Coast Expressway, WCESB is expected to contribute positively to the earnings as well as the shareholders’ value of the KEuro group,” it said.

To recap, on Jan 26, 2012, WCESB received an approval letter from the Public Private Partnership Unit of the Prime Minister’s Department to undertake the proposed privatisation of the construction of the West Coast Expressway.

This would be based on build-operate-transfer (BOT) with a concession period of 60 years, at an estimated project cost of RM7.07 billion.

WCESB’s existing directors are Tan Sri Chan Ah Chye @ Chan Chong Yoon, Datuk Abdul Hamid Mustapha, Datuk David Frederick Wilson, Loy Boon Chen and Datuk Neoh Soon Hiong.

The company has been loss making over the past five years. It posted net losses of RM21,594 in the financial year ended Jan 31, 2011,

That one statement highlighted....

KEuro said on Friday it was buying a 15% stake or 4.59 million shares of WCESB from Prominent Xtreme Sdn Bhd for RM5.33 million.

My oh my!

A rm 5.33 million payout for Prominent Xtreme Sdn Bhd stake in WCESB????

WOW!

You might be interested in past postings...

And Green Packet Now Says .............

2012-02-14T12:17:00.001+08:00

Once upon a time, not too long ago, the following were muttered in our financial world...

Feb 2008: we expect the WiMAX business to be ebitda (earnings before interest, taxes, depreciation and amortisation ) break-even this year,"
May 2008: we are targeting EBITDA positive by end of next year.
May 2009: P1 will be EBITDA will break-even from next year.
Feb 2010: concurred that will be EBITDA positive in the second half of this year.
May 10: the company remained optimistic that it will be able to achieve an Ebitda break even
June 2010: Green Packet Bhd’s target to turn earnings before interest, tax, depreciation and amortisation (Ebitda) positive by year-end may be delayed to next year
Sep 2010: Puan added that Green Packet is maintaining that its Ebitda (earnings before interest, tax, depreciation and amortisation) will break even by the end of this year.
Nov 2010: "We're confident of breaking even no later than the first quarter. Ebitda (earnings before interest, tax depreciation and amortisation) turnaround is really at the corner," chief executive officer C.C. Puan said at a press conference in Petaling Jaya, Selangor, yesterday.
Feb 2011: defers its target of being EBITDA (earnings before interest, taxation, depreciation and amortisation) positive to end-2011.
May 2011: Green Packet Bhd is on track to achieve its EBITDA (earnings before interest, taxes, depreciation and amortisation) break-even target by this year-end, according to the group's managing director and chief executive officer Puan Chan Cheong.
Aug 2011: ... remained bullish that it will be a "ebitda positive" company by year-end

Oh yeah, we are talking about the one, the one and only one..... GREEN PACKET!

It was really hilarious when the following was written on the Star Biz last Nov 2011: Green Packet makes profit pledge again

It is a pledge familiar to shareholders. At the briefing, Puan was asked twice if he was indeed confident of delivering an earnings before interest, tax and amortisation (EBITDA) break-even by the end of this year. He did not clearly answer in the affirmative but said that looking at the current figures, he believed that the company was on its way to achieving that goal.

Well on today's Star Biz, a slightly different message was sent out... GPacket poised to turn around

The following statements were made...

..... “We are already EBITDA (earnings before interest, tax, depreciation and amortisation) positive at group level as at end 2011. At both levels we will be PAT (profit after tax) positive in 2013,” GPacket group managing director C.C. Puan said in an interview.

“As for P1, it will be an historic year, as in less than four years it will turn EBITDA positive this year. You must realise that we are in an industry where the gestation periods are long.”

For this year, he expects the depreciation for P1 to amount to RM100mil. Hence, that will have an impact on its earnings.

For the third quarter ending September 2011, GPacket reported a net loss of RM24.3mil versus RM13.7mil a year earlier. It is expected to announce its full-year 2011 results later this month...

Oooo lala.....

“We are already EBITDA (earnings before interest, tax, depreciation and amortisation) positive at group level as at end 2011. At both levels we will be PAT (profit after tax) positive in 2013.

We ARE .... that's what he said..... we shall see.... it's earnings will be out later this month.

“As for P1, it will be an historic year, as in less than four years it will turn EBITDA positive this year. You must realise that we are in an industry where the gestation periods are long.”

LOL!

Very strange isn't it?

Puan understands and has reminded that they ARE in an industry where the gestation periods are long.. but yet... the record showed that since 2008... he had kept on repeating and repeating and repeating and repeating and repeating and repeating and .......... repeating.........

XD

Them LOW PE Chinese Shoe Stocks Again

2012-02-14T09:05:00.004+08:00

Posted last night: Them Chinese Shoe Stocks

I was also extremely annoyed with the following statements on that EdgeMalaysia article.

The five China-based shoe stocks are sitting on large cash reserves and most have paid high-yielding dividends.

Their PERs are about two times — well below the market’s broader average of 15 to 16 times.

The first statement.

The five China-based shoe stocks are sitting on large cash reserves and most have paid high-yielding dividends.

Large cash reserves. Yes they all have the large cash reserves but as mentioned in the posting Them Chinese Shoe Stocks and recent postings on XDL, yes they have large cash reserves but MASSIVE sticky point is these companies earn relatively low interest income from their cash reserves, which begs the question how come? Do these companies know how to manage their cash reserves or is there something else we don't know?

The end bit of the statement. High yiedling dividends?

Where? Where? Where?!!!!

Except for Maxwell, where is the high dividend yields?

Take K-Star. How much dividends did they pay in the year 2011? How much? I see one. Just this one: Final Dividend

Take XingQuan. Did XingQuan even pay a single send dividend in the year 2011? !!!!

Take XDL. How much dividends did they pay in the year 2011? How much? Final Dividend

How?

Does this justify the statement "The five China-based shoe stocks are sitting on large cash reserves and most have paid high-yielding dividends '?

Or do you reckon that the statement is sooooo misleading?

The next statement:

Their PERs are about two times — well below the market’s broader average of 15 to 16 times.

Yeah PER of 2. So what?

Have a look at this posting: Buy That Chinese Stocks Cos Of The PE Is Very, Very Low

Allow me to reproduce it here in full once more....

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

Many of us are taught that low PE stocks are a buy. Some even add in yardsticks like ROE and cash per share. And as long as these requirements are met, they believe that they have a safety margin for their investment.

Me say? I feel the investors should look deeper. Understand the business and understand the company's books. Don't just simply invest in a stock because of the yardstick.

I believe more in practicals than theories.

I look for examples and as long as I could find an example that proves the theory wrong, then I feel one should be cautious.

Let me use .... Chinese listed stock (S-Chip) in Singapore as an example.

Take this OLD report from UOB Kay Hian back on April 2008. http://sinotechfibre.listedcompany.com/misc/UOBKH_SINBuyS-chips_030408%282%29.pdf

Let's look at page 14 of that pdf file.

Look at the data.

China Milk was trading then at S$0.675.

It has a ROE (%) 32.4 and net cash per Share (Rmb) 1.07.

UOB Kay Hian gave it a target price of S$1.32.

UOB reasoned...

Outlook. Demand for dairy products in China remains strong. C Milk has adopted a multi-prong strategy to steer growth and to better leverage on domestic consumption. The strategy includes the following: a) improving herd quality to bolster production of semen and embryos so as to expand margins, b) moving downstream to produce processed milk, and c) developing herd size through internal breeding, the import of highly-productive herds, and even possibly mergers and acquisitions. We expect a smooth implementation of all these plans, backed by the Rmb1.8b cash in hand.

Cheaper way to milk China dairy theme. C Milk is a cheaper way to ride on the rising dairy product consumption trend in China. The stock is trading at an undemanding 5.9x FY08 PE and 4.7x FY09 PE. Our DCFbased target price is S$1.32, representing 11.5x FY08 PE. Maintain BUY.

Trading at undemanding 5.9x Fy08PE and 4.7x Fy09 PE.

Sounds good, no?

Low PE, high ROE, got strong cash per share too....

What could ever go wrong?

Just about everything! Look at how China Milk Products shares have performed since April 2008!

The stock was suspended on Feb 2011!

And the story?

Scandal!

http://nextinsight.net/index.php/story-archive-mainmenu-60/912-2011/3971-shame-on-china-milk-management

From the article:

This was a company that once commanded a market capitalisation of S$1 billion and, since its listing in 2006, had wow-ed a lot of investors with its supposedly immense profit margin, its profitability and cash hoard.

Great profit margins and cash hoard!

The hard truth started to emerge when China Milk's convertible bond holders decided to redeem their bonds.

The company at first claimed it had the US$170.56 million to meet its obligations on the convertible bonds. It just needed time and special approval of the authorities to remit the money out of the country.

After all, it had said in its financial results announcement that as at end-September 2009, the group’s cash and cash equivalents stood at 2 billion yuan (S$409.7 million).

S$409.7 million in cash and cash equivalents. The bonds was only US$170.56 million.

As matters worsened, the Singapore Exchange directed the company to appoint a Special Auditor.

KPMG was the chosen one and it found a company whose cash hoard had been milked in major ways.
When it repeatedly asked the Group to arrange an interview with its bank manager in China, KPMG was told that the manager had no time and could not assist.

When KPMG asked to interview the main contractor which did US$72.9 million worth of improvement works, they were presented with a Mr Zhang Hong Tao who came across as being unfamiliar with the works done.

In the first place, he didn’t own a construction company.

The Group had commissioned improvement works to the farm and facilities and paid USD72.9 million over a period of 5 – 6 months ending in or around March 2010.

When KPMG visited the sites, it was unconvinced.

“One would expect salubrious farming facilities after spending USD72.9 million. However, the buildings and its facilities cannot be said by any stretch of reason to be no more than basic or at best average.” .....

And do read for from the shocking full report from KPMG posted on SGX website.

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_B8AB2097A023C947482578AA00383459/$file/2011_06_07_ChinaMilk_FinalReport_Executive_Summary.pdf?openelement

So how?

In China Milk Products we have seen how the sad outcome of an investor who invests in the stock based solely on yardsticks.

Investing solely based on yardsticks is never enough.

I strongly one have to really understand the business and with China stocks listed abroad, you just got to be more careful because you never really know if those numbers (cash included) could be trusted!

I know that last statement is rather ... tricky. Look, I am not insinuating that all Chinese listed stocks are scams but with all the accounting fraud going on .... how can one be sure?

How?

Yeah... yeah... no risk no gain babe! No sugar no honey! ..... but is this the risk you want to take?

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

Here's another article : http://www.sharesinv.com/articles/2011/03/25/s-chips-to-buy-or-not-to-buy/

Interestingly, one distinctive characteristic about these S-chips is that they hold a lot of cash. This is evident from the financial statements of China Hongxing Sports and Hongwei Technologies, which had Rmb1,738m and Rmb145m respectively as at 30 Sep-10. As such, investors are spooked by two basic questions: Is the cash really there at all? And is it true that buying into an S-chip, will generally turn into a bad investment strategy?
Detecting Red Flags
As you may sympathize, many of the minority shareholders in all of the companies above as well as China Hongxing Sports & Hongwei Technologies have invested in good beliefs. As such, is there any method for those investors with limited analytical skill in detecting the potential red flag on S-chips?

To put it simply, a company that has a lot of cash but refuses to give out handsome dividend may prompt the question on whether the cash is there in the first place, as in the case of China Milk. David Gerald, the president of Securities Investors Association (Singapore), said that companies with burgeoning cash balances should provide reasons why they are not declaring a cash dividend.
Moreover, many S-chips are making cash calls even though they are already cash-rich. As such, this could be an indication that the management lacks capital discipline or that the company’s growth is not sustainable. Furthermore, an ‘unreasonably high’ capital expenditure (capex) also signals that the firm may poorly manage their manufacturing capacity and their budget. More often, an unreasonably high capex is often linked to other issues such as inflated profits.
To top things off, JPMorgan Chase (JPMC) indicated that half of the S-chips are audited by a ‘Big Four’ accounting firm. And by contrast, three-quarters of Hong Kong-listed China firms do so. Astonishingly, the firms which do not hire ‘Big Four’ auditors are 60% more likely to fail than those who do, added JPMC.

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

How?

The problems and issues mentioned in regards to the S-Chip stocks. Do we same exact issue here?

Do we see a company with LARGE cash reserve making cash cashs via private placements and rights issue?

Do we see companies earning relatively low interest income for their huge cash reserve?

Do we see increasing receivables?

Do we see increasing profit but shrinking cash reserve?

How?

Would you want to be a LONG TERM investor and buy that LOW PE Chinese Shoe Stock?

Them Chinese Shoe Stocks

2012-02-13T17:59:00.000+08:00

On the EdgeMalaysia:

Can China shoe stocks remain at bargains
Written by Clint Loh
Monday, 13 February 2012 11:18

KUALA LUMPUR: After being battered down from their IPO prices, all the five China-based shoe companies on Bursa Malaysia are trading at large discounts to their book values and at low price-earnings ratio (PER) of around two times. Coupled with impressive double-digit growth and attractive dividend yields, how much longer can they remain at bargain levels?

Most investors are no doubt sceptical about China stocks listed on overseas exchanges, given the numerous accounting issues these companies have faced in the US and Singapore over the last few years.

However, analysts also noted that none of these issues has surfaced in Malaysia yet, and the Chinese companies listed here have consistently delivered strong earnings despite their lacklustre stock price performances.

Xingquan International Sports Holdings Ltd, the first Chinese company listed in Malaysia for close to three years now, has yet to disappoint investors in terms of earnings. Apart from Xingquan, four other shoe companies listed here are Multi Sports Holdings Ltd, XiDeLang Holdings Ltd (XDL), K-Star Sports Ltd, and Maxwell International Holdings Bhd.

According to calculations by The Edge Financial Daily, from 2006 to 2010, the five shoe companies chalked up a compound annual growth rate (CAGR) of at least 30% for both revenue and net profit.

The five China-based shoe stocks are sitting on large cash reserves and most have paid high-yielding dividends.

Their PERs are about two times — well below the market’s broader average of 15 to 16 times.

The recent listing of two China-based apparel stocks in Hong Kong could also provide a re-rating catalyst for the Malaysian — listed shoe makers. China Outfitters Holdings Ltd and Active Group Holdings Ltd were listed at PERs of six to seven times, three times more than their Malaysia-listed peers.

With such low valuations, the possibility of potential privatisations and corporate exercises cannot be ruled out, according to analysts. This almost happened in the case of XDL.

XDL’s share price saw some excitement recently when the company’s major shareholder revealed that he held informal discussions with Navis Capital Partners to sell a stake to the latter.

According to reports, XDL’s founder and managing director Ding Peng Peng was “frustrated with the stock’s lacklustre share price”.

However, the talks with Navis apparently did not pan out. Investors have started to take notice of XDL’s low valuations, and the stock has risen about 25% since the beginning of the year. It has proposed a bonus issue, private placement and warrants.

Edmund Tham, head of research with Mercury Securities, said the perception of China-based stocks in Malaysia will gradually improve over the years.

“It might take a couple of months or even years for investors to change their perception of China companies listed in Malaysia. Over time, with more roadshows and briefings, people will start to see that they are good companies, provided they continue to generate sufficient operating cash flows and profits,” said Tham.

According to Tham, a good business model and an attractive dividend policy will cause investors to take note.

He added that the public should not be doubtful about these companies as some of them have first- and second-tier global auditors such as BDO Binder and Grant Thornton.

Tham covers Xingquan, Xidelang, Multi Sports and Sozo Global Ltd (a China-based foodstuff manufacturer listed on Bursa).

Except for K-Star, all the companies are covered by a research house as a result of their participation in Bursa Malaysia’s CMDF-Bursa Research Scheme, which aims to enhance research coverage and interest in stocks, particularly smaller capitalised ones.

On July 10, 2009, Xingquan became the first China-based shoe company to be listed on Bursa. The last was Maxwell which was listed on Jan 6 last year.

Multi Sports made its debut on Aug 19, 2009, followed by XDL on Nov 11, and K-Star on June 4, 2010.

The Edge Financial Daily takes a look at the five shoe companies and their underlying fundamentals that appear to be attractively undervalued.

As at last Friday, the stock which had fallen the most from its IPO price was K-Star (-60.9%), followed by Multi Sports (-52.9%), Xingquan (-44.4%), XDL (-36.2%), and Maxwell (-23.1%).

These counters are trading at a PER of 1.8 to 2.4 times, according to Bloomberg data. They are also trading below their book values at discounts between 41% and 67% and all are in net cash positions from RM90 million to RM193 million.

Tham likes Xingquan as it registers the strongest earnings of more than RM100 million and has a strong leadership position in the outdoor casual wear market. Another analyst likes Maxwell as the stock is trading below its cash value per share.

“The share price is something beyond our control. We will continue to manage the company well, deliver good results and hopefully the share price will take care of itself,” Xingquan CEO Wu Qingquan told The Edge Financial Daily recently.

He believes the company can maintain double digit growth in its FY12 ending June.

Xingquan
Xingquan is principally engaged in the manufacturing and sale of shoes and soles, as well as the sale of apparel and accessories.

In 2004, it started its own brand manufacturing business for footwear under Addnice and in 2005 expanded into the sports apparel and accessories market.

Due to better growth opportunities, Xingquan left the sportswear market and ventured into outdoor casual wear with the launch of its Gertop brand in 2010. Its shoes, apparel and accessories are sold under the Gertop brand in the outdoor casual wear segment at more than 2,300 outlets via 31 distributors in 26 provinces in China.

Compared with the IPO price of RM1.71 in July 2009, Xingquan tumbled 44.4% to close at 95 sen last Friday. The closing price represented a 43.8% discount to its end-September 2011 book value of RM1.69.

At end-September 2011, it had cash reserves of 399.77 million yuan (RM192.05 million) against borrowings of 38 million yuan, which translated into net cash of 56.3 sen per share. From 2006 to 2011, Xingquan chalked up a CAGR of about 39% for both revenue and net profit.

For FY11, it posted a 16% rise in net profit to 252.29 million yuan from 217.27 million yuan a year ago, while its revenue increased by 22% to 1.5 billion yuan from 1.23 billion yuan previously. Shoes accounted for 49% of revenue, followed by apparel and accessories (33%), and soles (19%).

For 1QFY12 ended Sept 30, the apparel and accessories segment contributed 39% to revenue, compared with shoes (37%) and soles (24%). Due to higher contributions from its apparel and accessories segment in recent quarters, Xingquan expects the apparel division to be its main revenue driver.

For 1QFY12, Xingquan posted a 25.4% increase in net profit to 70.21 million yuan from 56.01 million yuan a year ago, in addition to a 26.8% jump in revenue to 426.30 million yuan from 336.09 million yuan previously.

Xinquan’s outlets in China grew to 2,382 in FY11 from 409 in FY06. The company said it will add 200 sales outlets in FY12. It will also expand its production capacity for soles to around 30 million pairs in FY12 from 24 million currently. Its current production capacity for shoes is about six million pairs.

For FY10 ended June 30, Xingquan paid net dividends of five sen per share.

To ensure sufficient funds for the planned expansion and working capital requirements, no dividends were declared by Xingquan in FY11.

Maxwell
Maxwell is an original equipment manufacturer (OEM) and original design manufacturer (ODM) in the sports shoe market. As an ODM the company is able to manufacture as well as design and develop shoes for its customers.

Its primary products are court sports shoes (soccer, tennis, skateboarding, basketball, badminton and baseball), which contributed to 88.4% of revenue in 2010. Its end-customers include international brand names such as Yonex, Diadora, Kappa, Brooks and FILA.

Since the debut at the IPO price of 54 sen in January 2011, Maxwell’s stock has tumbled by 23.1% to close at 41.5 sen last Friday. The closing price represented a 13.5% discount to its end-September 2011 cash per share of 48 sen and a 43.2% discount to its book value of 73 sen.

Maxwell paid its maiden dividend of 3.35 sen net per share in September last year, which represented a net yield of 8.1% based on last Friday’s close. Maxwell has set a dividend policy of 20%.

As at Sept 30, 2011, it was in a net cash position of RM193.12 million with zero borrowing. From 2006 to 2010, revenue and net profit grew at a CAGR of 46% and 53% respectively.

For FY10 ended December, it posted a net profit of RM65.14 million on RM335.92 million in revenue. About 96% of the revenue came from China. Customers are mainly trading houses and brand distributors based in China. These customers in turn export Maxwell’s shoes to Europe, South and North America, Asia and Africa.

For 3QFY11 ended September, Maxwell announced a 13.8% year-on-year (y-o-y) rise in net profit to RM22.59 million from RM19.85 million a year ago. Due to better sales, revenue also increased by 18.4% to RM114.7 million from RM96.88 million previously.

For the nine months to Sept 30, net profit remained flat at RM49.6 million against RM49.8 million in the previous corresponding period, while revenue grew by 10.8% to RM272 million from RM245.3 million previously.

Maxwell plans to increase its production capacity to 16 million pairs of shoes by adding four production lines to its current four. In 2010, it produced 11.27 million pairs of shoes, of which 47% was outsourced.

It is close to sealing a deal with a leading international sports shoe brand, the company added.

Multi Sports
Multi Sports stands out from the rest as its main business is to design, develop and manufacture shoe soles only.

It is a one-stop shoe sole specialist for China’s sports footwear industry. It is vertically integrated and is able to process raw materials into its needed shoe components. The company has produced over 300 designs suitable for a wide range of sports shoes.

Since listing on Aug 19, 2009, the shoe sole maker has dropped 52.9% from its IPO price of 85 sen to last Friday’s close of 40 sen. It is trading 41.2% below its end-September 2011 book value of 68 sen.

At end-September 2011, it had cash reserves of 365.3 million yuan versus borrowings of 27.5 million yuan, which translated into net cash per share of 31.2 sen.

In FY10, Multi Sports paid a net dividend of 2.5 sen per share, giving a yield of 6.3%, based on its closing price last Friday. From 2006 to 2010, it chalked up a CAGR of about 30% for both net profit and revenue.

For FY10 ended December, net profit increased to 139.14 million yuan from 113.94 million yuan for FY09, while revenue increased to 613.46 million yuan from 474.19 million yuan previously.

Multi Sports’ revenue comes from four types of soles it produces namely thermoplastic rubber (TPR), rubber, ethylene vinyl acetate (EVA) Model 1 (MD1), and EVA Model 2 (MD2). EVA soles are known to have better elasticity, softness and flexibility.

In FY10, its MD2 accounted for 56.3% of revenue, while MD1 contributed 31.2%, TPR (8.8%), and rubber (3.6%).

For 3QFY11 ended September, it posted a net profit of 49.7 million yuan on revenue of 239.60 million yuan, up from a net profit of 35.78 million yuan on revenue of 152.72 million yuan previously.

The company attributed the higher revenue to increased MD2 sales, but said profit margins had dropped due to higher labour and raw material costs, and depreciation expenses.

In its 2010 annual report, Multi Sports said annual production capacity is expected to increase to 84.4 million pairs in FY11 from about 35.6 million in FY10, with its new production centre in Jinjiang City.

On Dec 30, 2011, Multi Sports issued 67.5 million new shares or 15% of its existing issued and paid-up capital to sponsor a depository receipt programme in Taiwan, which entailed the issuance of Taiwan Depository Receipts. The issuance was expected to raise NT$236 million (RM24 million) for capacity expansion and working capital.

K-Star
K-Star is principally engaged in the design, manufacture and distribution of sports footwear under its own proprietary brands, Dixing and K-Star. The company generates over 700 designs annually.

Its product range covers athletic shoes for running, tennis, basketball and mountain climbing as well as leisure. K-Star is also an OEM and ODM for international sports brands including Umbro, Diadora, Kappa and China’s footwear brand, Double Star.

Its proprietary products are distributed across 18 provinces and three municipalities in China at over 870 retail locations. They are exported to Russia and other markets such as Ukraine, Belarus, the Czech Republic, Poland, Finland, Romania and Hungary. In 2010, K-Star expanded into sports fashion apparel and accessories.

Listed on June 4, 2010, K-Star closed at 28 sen last Friday, falling 60.9% from its IPO price of 71.7 sen (IPO price adjusted for a one-to-three share split on Nov 1, 2010)

It is trading at a 67.1% discount to its end-September 2011 book value of 177.97 yuan and close to its net cash per share of 25 sen. As at end-September 2011, it had cash reserves of 154.81 million yuan versus current borrowings of 17.68 million yuan, which translated into a net cash position of 137.13 million yuan.

In FY10, it paid a net dividend of 1.6 sen per share, representing a yield of 5.7%. From FY06 to FY10, the company’s CAGR for net profit and revenue was 47.8% and 43.8% respectively. For FY10, it posted a net profit of 88.25 million yuan on revenue of 670.87 million yuan.

For 3QFY11 ended September, it posted a net profit of 11.14 million yuan on revenue of 169.60 million yuan, down from a net profit of 31.16 million yuan on revenue of 191.48 million yuan previously. K-Star said the decline was mainly due to higher raw material and labour costs.

Its sports footwear segment contributed to about 95% of revenue, while its sports apparel and accessories accounted for the remaining 5%.

As part of its expansion plan, K-Star announced in October that it was buying a piece of state-owned leasehold land of 675 sq m in Jinjiang City in Fujian Province for 27 million yuan in cash.

As at end-2010, it had four production lines at three factories in Jinjiang City. Its estimated annual production capacity was 3.97 million pairs and output utilisation rate was 93.7% in 2010.

XiDeLang
XDL is predominantly involved in the design, manufacturing and marketing of its own Xidelang brand of sports shoes, as well as designing and marketing of sports apparel, accessories and equipment in China.

It churns out around 2,000 sports shoe designs yearly, of which 500 are commercialised. Its direct customers are intermediaries such as third-party distributors and retailers.

XDL’s products are retailed across 25 provinces and municipalities in China through a network of more than 2,500 retail locations, of which about 1,300 are concept stores.

Shares in XDL have been actively traded since the start of the year following speculation that a major shareholder plans to sell its entire 54.5% stake in XDL to Navis Capital Partners. However, XDL said in a Bursa announcement last month that it had not made any concrete plans or proposal on the matter.

Since Dec 30, 2011, XDL has risen about 25% to close at 37 sen last Friday. Despite the recent surge, XDL is still trading at undemanding valuations. Based on Friday’s close, the share price was at a 49.3% discount to its book value of 73 sen (as at Sept 30, 2011)

As at end-September last year, it had cash reserves of RM136.53 million and current borrowings of RM47.17 million, which translated into net cash of RM89.36 million or 20.3 sen per share.

In FY10, it paid net dividends of 2.5 sen per share, representing a yield of about 6.8% based on Friday’s closing price. From 2006 to 2010, the CAGR for revenue and net profit was 48.5% and 60% respectively. For FY10, it posted a net profit of RM68.19 million on revenue of RM77.91 million, all of which was derived from China.

XDL’s shoe segment contributed 53% of revenue, while the remaining 47% came from its apparel, accessories and equipment.

For its 3QFY11 ended September, its net profit increased to RM23.98 million from RM21.92 million a year ago, while revenue was RM132.94 million compared with RM125.25 million previously.

XDL said an increase in brand awareness and demand led to the improved performance.

On Jan 18, XDL proposed a private placement, bonus issue and rights issue of warrants to raise up to RM29.7 million for expanding production capacity at its new design and production centre.

The construction of the first stage of the centre is expected to be completed by the first half of 2012.

This article appeared in The Edge Financial Daily, February 13, 2012.

I do have some small comments on these 2 statements.

Most investors are no doubt sceptical about China stocks listed on overseas exchanges, given the numerous accounting issues these companies have faced in the US and Singapore over the last few years.

However, analysts also noted that none of these issues has surfaced in Malaysia yet, and the Chinese companies listed here have consistently delivered strong earnings despite their lacklustre stock price performances.

Ok..

The first statement, of course, it's a fact.

The second statement, is so twisted in my flawed opinion.

Of course, none of these Chinese stocks have been found guilty of accounting fraud yet but shouldn't we look and review the symptoms and characteristics of the Chinese stocks that were alleged to have committed of accounting fraud and then shouldn't we compare with the Chinese stocks listed here? Simple question, do they share the same questionable issues within their balance sheet?

That would be more logical yes?

Now take a look at this posting: Featured Posting: China Integrated Energy (CBEH): The Latest Alleged Chinese Fraud

CBEH was alleged to have committed accounting fraud.

Let's look at some of the symptoms and characteristics posted on that posting.

Despite generating $38.5 million in net income and $35.6 million in operating cash flow in the first 9 months of 2010, the company decided to issue a total of $37.4 million worth of new shares in December 2010. If CBEH is as profitable as it claims, does not need to dilute shareholders at an irrationally low valuation of 6.1 times net income.

Logical reasoning, isn't it?

Question: Do we see this here?

Are we seeing these Chinese stocks listed here raising more cash?

Are we not seeing some of them raising more money via private placement and rights issue?

If they are so cash rich, why want to raise more money?

Would you want to be an investor in such a company?

And here's my flawed thinking, if company is so cash rich and valuations is so really low and un-justifiable, why don't the owners take their company private? 2 times PER valuations mah... some even 1.xx PER valuation. Why doesn't the owners want to take it private?

The article then continues:

CBEH management has claimed that the Chongqing Tianrun biodiesel facility with capacity of 50,000 tons/year will generate $32 million in revenue and $10 million in net income in 2011. We believe that their projection is highly exaggerated. In reality, the AIC financials for Chongqing Tianrun show 2009 revenue of $1.5 million, a net loss of -$420,000, and total assets of $4.36 million, of which only $790,000 is property, plant and equipment. Given that CBEH recorded over $8 million in PP&E on its supposed 100,000 tons/year facility in Tongchuan City (which we also believe has exaggerated results), we question why CBEH is spending $16.5 million on an unprofitable, tiny company with less than $1 million in real assets.

Yeah, where is the MOOLAH??? We have here a Chinese company who claims to be rich but does not seem to earn much interest from the tons of money it said to have!!!!

Question: Do we not see the same issue with some of these Chinese companies?

Which is why the article makes the damning remark: 'We doubt that the $79.6 million cash on the balance sheet actually exists!!'

How?

See this is not stereotyping of these Chinese stocks.

In my honest opinion, these are simple issues that a long term investor have to address. Despite the stocks being cheap, several investing issues exists. Issues that makes the investor sceptical about the company.

And if one is sceptical, why take the risk to be a long term investor?

Investing in a stock just because of a low PER has its risks. ( Remember Megan Media? )

Ok, out of the list, I have to give credit to Maxwell. At least the company pays decent dividend and the owner had put his money where is mouth by buying more shares last year.

What has the other done?

The one that claims of being frustrated by low share prices.... why didn't he buy his own shares? Why don't he take it private? And what does his company do instead? A private placement and rights issue?

IOI Wants Your Money Again By Relisting Its Property Arm!

2012-02-13T09:57:00.001+08:00

On Star Biz: IOI mulls relisting of arm

Monday February 13, 2012
IOI mulls relisting of arm
By RISEN JAYASEELEN and DANIEL KHOO

PETALING JAYA: IOI Corp Bhd is mulling a relisting of its property arm that would see the group unlock values in that segment and enhance the attractiveness of the parent company to investors as a more plantation-focused company, according to reliable sources.

“The group is in discussion with two investment banks on this to get feedback, especially on the right timing of the exercise,” said a source.

Analysts said the relisting of its property division would increase the stature of IOI Corp as a pure plantation play which would likely have higher valuations.

“It will reduce the conglomerate discount and transform IOI Corp into a pure plantation play, with a controlling stake in a valuable property company IOI Properties. Sole industry companies usually tend to fetch higher valuations,” an analyst with a local bank-backed research house said.

IOI Corp may wish to also time the relisting of its property arm in line with a more bullish view on the property sector.

In a sales note to its clients issued in January, Maybank IB said that potential downsides had already been priced into the property sector and that it did not discount the possibility of raising its call on the property sector from “neutral” to “overweight” in the medium to longer term as developers today were “backed by considerable unbilled sales, providing near-term earnings visibility.”

IOI Corp had privatised its arm in 2009. Then known as IOI Properties Bhd, IOI Corp had on Februuary 2009 launched a takeover offer at RM2.60 per share.

The takeover was successful and IOI Properties was subsequently delisted on April 28, 2009. It is today wholly-owned by IOI Corp. IOI Corp has been actively growing its property business since.

In January it acquired six acres of land in Singapore for RM995.5mil to build high-end condominums and will have to settle the entire amount to the government of Singapore within 90 days from the date of the tender acceptance letter.

Presently, it has seven projects which it is developing locally with estimated gross development values (GDVs) of almost RM20bil.

Properties can testify to its track record in building property projects that have sold well. Excluding the latest land buy in Singapore, it is also presently developing high-end projects in the southern neighbouring island state with GDVs close to RM6bil.

IOI Properties has completed property development projects in Puchong, Putrajaya, southern Johor and Singapore before.

Meanwhile, banking sources also said that IOI Corp was in talks with banks to raise more funds.

“It is in a good position to do so, considering its huge cash flows from its plantation side of the business,” said one banker.

The funds raised should give IOI Corp sufficient funds to not only pay for the Singapore land acquisition but also ready funds in the event it chooses to buy more assets such as plantation land.

Based on its results for the first quarter ended Sept 30, 2011, IOI Corp had total short and long-term borrowings of RM688.24mil and RM4.87bil respectively. Most of these debts are denominated in the US dollar, the Singapore dollar and the yen.

IOI Corp had cash and cash equivalents of RM3.22bil as at Sept 30, 2011.

Seriously?

Seriously?

You seriously cannot be kidding!!!

For those who 'forgot', do read how IOI Corp treated their minority shareholders of IOI Properties when they took IOI Properties private at a shockingly low price and worst of all, the privatisation was made one year after IOI Properties had completed a rights issue!

( In my humble and flawed view, this was the WORST privatisation done in KLSE history! )

Do read past postings:

One More Question For Europlus

2012-02-09T11:22:00.000+08:00

Blogged last week: That 7 Billion Highway Project!!!

Now there was one rather interesting news clip regarding Kumpulan Europlus published on the EdgeMalaysia.com on the 6th Jan 2012.

http://www.theedgemalaysia.com/business-news/198946-kumpulan-euros-6m-shares-done-off-mkt-at-97-below-regular-trade.html

Kumpulan Euro's 6m shares done off-mkt at 9.7% below regular trade.
Written by Joseph Chin of theedgemalaysia.com
Friday, 06 January 2012 15:02

KUALA LUMPUR (Jan 6): KUMPULAN EUROPLUS BHD [] saw 6.0 million of its shares transacted in an off-market deal at an average price of RM1.11 on Friday.

Stock market data showed the shares, which were crossed at RM1.11 each, were 9.7% below its regular market trade of RM1.23.

The 6.0 million shares accounted for just 1.15% of the paid-up of 520.99 million shares.

So 6 Million shares were transacted in an off-market deal at an average price of RM1.11.

What was interesting was this deal was done 20 days before it was announced that KEuro won that amazing 7 Billion Highway Project!!!

Here's a news clip of the project award on 26th Jan 2012.

http://www.theedgemalaysia.com/index.php?option=com_content&task=view&id=200012&Itemid=79

Well, I am just curious.... who is the buyer of these 6 million shares at an average price of rm1.11?

Keuro last traded at 1.31.

MRCB Net Profit Rises to RM91.9M???

2012-02-09T08:34:00.003+08:00

On Business Times this morning:

MRCB net profit rises to RM91.9m

Published: 2012/02/09

KUALA LUMPUR: Malaysian Resources Corporation Bhd's (MRCB) net profit for the year ended December 31 2011 rose to RM91.92 million from RM73.79 million recorded previously.

Group revenue edged up to RM1.21 billion from RM1.07 billion a year ago.

MRCB said the improved performance was due to higher contribution from its ongoing and encouraging strata office sales of property development projects at Kuala Lumpur Sentral.

The group recorded a slightly lower net profit of RM31.95 million in the fourth quarter compared with RM39.2 million previously.

The lower profit was due mainly to recognition of full cost for variation order claims of which recovery of the same is pending clients' approval.

Group net asset per share increased to 98.1 sen as at December 31 last year from 93 sen recorded as at end-2010.

MRCB chief executive officer Datuk Mohamed Razeek Hussain said the group expects to deliver another year of revenue growth in 2012. This will be driven by ongoing property development projects in Kuala Lumpur Sentral, outstanding construction order book and the opening of the Eastern Dispersal Link Expressway (EDL).

"However, given the intense competition within the construction industry and the anticipated start-up losses from the EDL, the board expects the profitability growth for the group to be challenging," he said in a statement yesterday.

All sounds so rosy except for that statement highlighted in red...

The group recorded a slightly lower net profit of RM31.95 million in the fourth quarter compared with RM39.2 million previously.

rm 31.95 million compared with rm 39.2 million equals to 'SLIGHTLY LOWER'??

!!!

Here's the VERSION from the EdgeMalaysia... which is rather ......

MRCB 4Q earnings down 37% to RM26.1m from RM41.50m yr ago
Written by Joseph Chin of theedgemalaysia.com
Wednesday, 08 February 2012 18:55

KUALA LUMPUR (Feb 8): MALAYSIAN RESOURCES CORP []oration Bhd’s (MRCB) net profit fell 37% to RM26.11 million in the fourth quarter ended Dec 31, 2011 (4Q 2011) from RM41.50 million a year ago.

It said on Wednesday the group recorded a slightly lower profit before taxation amounting to RM42.5 million for 4Q 2011 compared to RM49.3 million in 4Q 2010.

“The lower profit reported was due to recognition of full cost for variation order claims of which recovery of the same are pending clients’ approval,” it said.

Its revenue rose 8.6% to RM470.38 million from RM433.12 million. Its earnings per share were 1.88 sen compared with 3.01 sen. It proposed dividend of 2.0 sen a share compared with 1.50 sen a year ago.

For the financial year ended Dec 31, 2011, its net profit rose 15.1% to RM77.46 million from RM67.27 million. Its revenue increased by 13.6% to RM1.213 billion from RM1.067 billion.

“The improved performance in revenue and profitability in the current financial year was due to higher contribution from the group’s on-going and encouraging strata offices sales from property development projects at Kuala Lumpur Sentral.

“However, this was offset by lower revenue from the infrastructure and environmental segment due to completion of existing environmental projects,” it said.

On the outlook for 2012, MRCB expected to deliver another year of revenue growth, driven by on-going property development projects in Kuala Lumpur Sentral, outstanding CONSTRUCTION [] order book and the opening of the Eastern Dispersal Link Expressway (EDL).

“However, given the intense competition within the construction industry and the anticipated start up losses from the EDL, the board expects the profitability growth for the group to be challenging,” it said.

Shall we say... dare to be different!!?

Well for what it's worth, here's the numbers highlighted by Dow Jones Newswire...

That 7 Billion Highway Project!!!

2012-02-02T08:55:00.003+08:00

On 28th Jan 2012, the following article was published on Star Biz.

Saturday January 28, 2012
Europlus’ RM7bil concession needs answers
A QUESTION OF BUSINESS By P. GUNASEGARAM

At a time when many concessions are near expiry, a 60-year toll-road one perplexes

A CONCESSION for 60 years may well be a record for Malaysia and the only thing that comes to mind, which is longer than that is Malaysia's agreement to supply water to Singapore for hundred years signed in the sixties when the latter moved out of Malaysia.

Even for the North-South Expressway, the original concession period was half of that at 30 years while its length was more than twice that of the proposed West Coast Expressway at over 770km.

Not only is the concession extremely long, it is also very expensive with a development cost before land acquisition estimated at a whopping RM7.07bn for 316 kms from Banting, Selangor to Taiping, Perak out which 224km or some 70% will be tolled.

Kumpulan Europlus Bhd (KEuro), a long-ailing public-listed company that had been involved in property projects especially housing, which had been mired in problems, announced that the concession was obtained by its 64.2% owned West Coast Expressway Sdn Bhd (WCE).

The project, KEuro said, received an approval letter from the Public Private Partnership unit of the Prime Minister's Department but it does not appear that a government announcement has been made so far.

KEuro, which is majority owned by entrepreneur Tan Sri Chan Ah Chye and another listed company IJM Corporation Bhd, said the project will be on a build, operate and transfer basis but it is clear that with a 60-year concession, many of us, including the project promulgators won't be around when the time for transfer arrives.

Apart from the long concession period, there are other features which make it very attractive to WCE, including assistance from the government with a support loan of RM2.24bil starting from 2013 with an interest rate of 4% a year.

Over and above this, there is an interest subsidy of up to 3% from commercial loans for 22 years. Both interest rate subsidies alone could be worth up to some RM4bil over the period, assuming a principal of RM6bil jand depending on how the principal is repaid.

Meantime, the land acquisition cost of an estimated RM980 million will also be borne by the government. But any toll revenue over an agreed traffic volume will be shared 70:30 with the government getting the lion's share. However, on full settlement of the loan, WCE will get 70% instead.

On almost every count, it looks like WCE has got itself a damn good deal. An examination of the deal based on earlier estimated construction costs and international costs again shows it to be favourable.

Curiously, KEuro had announced in May 2007 that WCE had obtained approval for the same concession but on much less favourable terms, raising questions as to why the deal appears to be so much better now.

At that time, it involved 216km and linked the same two towns, Banting in Selangor and Taiping in Perak, the main difference apparently being there was no construction of some 90-100km of non-tolled roads which there is now.

But still, the overall development cost estimated then was substantially lower at RM3.02bil and the concession period was less by almost a half but still very long at 33 years.

Comparing costs per km, it was substantially lower in the 2007 deal at RM13.9mil per km compared to RM22.3mil for the deal just announced. Over the last four years, WCE has been renegotiating the deal with the government and this seems to be the final outcome.

While the cost of construction of expressways differs tremendously among different countries and terrain as well as the type and quality of expressway, a 60% increase in costs over four years for essentially the same area and terrain seems way too much.

International comparisons are difficult because of different costs. India has a programme to build 1,000km of expressways for RS16,680 crores which works out to about RM10bil at current exchange rates. This translates to about RM10mil per km, less than half the figure for the West Coast Expressway.

Considering that roads are expensive and the public is already burdened by an extensive system of tolls, the government should be rather circumspect about granting toll road concessions, especially one for the hitherto unheard period of 60 years.

Before one can make a final judgement of whether this deal is fair, more details need to be released. The current and expected traffic on the highway has to be projected, the cost of construction established and a proper rate of return established so that a net value can be ascribed to the project.

To get the best deal for itself and for the rakyat, the government should have been transparent over the process and invited all qualified parties to bid to keep project cost, tolls and the concession period as low as possible.

It is still not too late to do that.

Independent consultant and writer P Gunasegaram (t.p.guna@gmail.com) hopes against hope for transparency, open tenders and proper evaluation to save public money.

The issues raised were serious and TI-M was quick to express its concerns over the lack of transparency. The following was posted on the EdgeMalaysia on 30th Jan 2012.

TI-Malaysia: Explain awarding of RM7.07 bn West Coast Expressway project Written by Joseph Chin of theedgemalaysia.com
Monday, 30 January 2012 18:36

KUALA LUMPUR (Jan 30): Transparency International Malaysia (TI-M) has expressed concern over the apparent lack of transparency and proper procedure in the awarding of the RM7.07 billion West Coast Expressway concession project.

Its president, Datuk Paul Low said this mega project would involve massive public financing of a soft loan of RM2.24 billion and payment of RM980 million for land acquisition, and an unprecedented 60-year toll concession.

“TI-M views with concern the apparent lack of transparency and proper procedure in the award. Given the public funding and long concession period, there could have been proper governance and transparency in the award through an open, transparent and competitive procurement process and public disclosure of the terms and conditions of the contract,” he said in a statement.

To recap, on Jan 26, KUMPULAN EUROPLUS BHD [] announced to Bursa Malaysia that its 64.2% owned West Coast Expressway Sdn Bhd (WCE) has received the government’s approval to build the 316-km west coast project costing RM7.07 billion.

The 316-km Banting to Taiping expressway would be on a build-operate-transfer (BOT) with a concession period of 60 years.

KEuro also said the land acquisition cost of up to RM980 million for the project would be borne by the government.

The company had also said a government support loan of RM2.24 billion, starting from 2013 at an interest rate of 4% per annum, and an interest subsidy, of up to 3% from commercial loans for a period of 22 years, would be granted to WCE,” it said.

KEuro had then said toll revenue in excess of an agreed traffic volume would be shared on the basis of 70:30 between the government of Malaysia and WCE till full settlement of the government support loan and subsequently 30:70 after the loan is settled.

However, on Monday, Low pointed out that such a mega project and also its impact on the public was an ideal candidate for implementing the Integrity Pact (IP), a tool for curbing corruption risks in public contracting projects.

“The government has recognised the potential benefits of IPs by a Treasury circular dated Dec 16, 2010 outlining guidelines for implementing IPs in government procurement.

“Further, MRT Corp., the GLC tasked with implementing the MRT project, has agreed to incorporate the IP in its procurement exercises,” he said.

Today, we have an article on BTimes.

I was shocked to read how BTimes would allow an UN-NAMED SOURCE to feature in the write-up. I thought the issues raised were dead serious and to have an un-named source making a lot of statements on the issue were rather disturbing.

Sigh.

Why can't the source be named?

Don't they know there's not much value and credibility in the article when everything is based on an unknown source?

Sigh!

What an insult!

'Incentives not sweetheart deal’

By ADELINE PAUL RAJ Published: 2012/02/02

LONG-TERM PLAN: Soft loan, perks for Kumpulan Europlus are to jumpstart expressway project, says source
THE RM7.07 billion West Coast Expressway (WCE) project awarded by the government to Kumpulan Europlus Bhd (K-Euro) is no “sweetheart deal”, says a source close to the project.

The deal, which involves the government providing KEuro a soft loan of RM2.24 billion at four per cent interest, among other supportive moves, as well as a 60-year toll concession, has drawn criticism that it favours the public-listed company at the government’s expense.

The source, however, argued that the deal was structured with government support in order to get banks comfortable enough to help fund the deal.

Without the soft loan, no bank would have come forward and the project would never take off, he said.

The 316km WCE, which will link Banting, Selangor to Taiping, Perak, is meant to be an alternative to the increasingly congested North-South Expressway (NSE).

It will take five years to complete the project, with work expected to start by yearend, the source said.

“Traffics in this corridor is generally quite low except for the Klang Valley area, but the government sees huge long-term potential in the project in reducing traffic pressure on the NSE,” the source told Business Times yesterday.

With low traffic projections and high costs, the government’s support loan provides “enough comfort for bankers to support the deal from the beginning”, he added.

The project now would cost more thandouble to build than it would have in mid- 2007, which was when the project wasoriginally planned, due to several reasons, including that building material costs were now substantially higher, the source said.

He said the estimated RM7.07 billion cost took into account the fact that the highway stretch was 100km longer than originally planned, and would include 5km of elevated sections (in the Klang Valley) that cost “four to five times more”, extra structures, and “fairly large” bridge crossings over four rivers.

On rising material costs, he said stones and sand as well as bitumen, for example, now cost about three times more than in 2007, while the price of steel has shot up by more than 150 per cent.

“All of these have contributed to the added cost,” he said.

It will take time to build up traffic volume on the WCE, which is why a longer concession period is needed, he said, adding that it could take 10 years before “decent” traffic builds up.

KEuro’s proposed 60-year concession is the longest known so far in the country.

By comparison, it was offered a concession of 33 years in 2007.

The traffic volume forecast in the current deal is about “20-odd per cent” lower than in 2007 and deemed more “realistic”, the source said.

This was why, he said, the company was prepared to share toll revenue in excess of agreed traffic volume with the government on a 70:30 basis, in favour of the government, for as long as it’s paying off its soft loan.

Under the current deal, the government is also providing KEuro subsidy of up to three per cent for commercial loan interest payments. Land acquisition costs of RM980 million is also to be borne by the government.

And here is my question. With this unknown source admitting that traffic is generally low, why this highway project????

Why?

Can the projected traffic justify that 7 Billion price tag?

****************************

ps: Oh yeah, I deeply deplore the usage of 'according to sources' in our financial news and reports. When the source is un-named, how does the reader know the credibility of the said article. And seriously, shouldn't financial news based on facts and quotable sources?

When the financial news is based on un-known source, the financial news becomes nothing more than a gossip tabloid!

I pray that such practise ends!

Malaysian AE Models 2Q net profit jumps 70%???

2012-02-01T10:47:00.001+08:00

The following article was posted on the Edgemalaysia.com

Malaysian AE Models 2Q net profit jumps 70% to RM3.34m
Written by Surin Murugiah of theedgemalaysia.com
Tuesday, 31 January 2012 18:33

KUALA LUMPUR (Jan 30): MALAYSIAN AE MODELS HOLDINGS [] Bhd (MAEMode) net profit for the second quarter ended Nov 30, 2011 jumped 70% to RM3.34 million from RM1.97 million a year earlier, due mainly to higher revenue and better profit margins from logistics projects.

The company said on Tuesday that its revenue for the quarter rose 44.24% to RM165.46 million from RM114.71 million in 2010.

Earnings per share was 3.12 sen compared to 1.84 sen a year earlier, while net assets per share was RM2.21.

For the six months ended Nov 30, MAEMode’s net profit surged RM7.76 million from RM2.82 million in 2010, on the back of revenue RM317.09 million compared to RM224.33 million a year earlier.

On its outlook, the company said it was confident on the improvements of the global economy that may enhance its future profit moving forward.

“With the current order book and barring any unforeseen circumstances, the board is optimistic that the group will remain profitable for the remaining quarters of the financial year,” it said.

Sounds good, yes?

However, this is one stock which I had blogged several times before and it was blogged based on all the wrong reasoning.

Past postings: http://whereiszemoola.blogspot.com/search/label/MaeMode

On 29th July 2011, my last posting on MaeMode was Maemode's Mind Boggling Q4 Earnings.

Let's review the issues.

1. Is there improvement in profitability?

Current half year sales revenue increased to 317.088 million. Current net profit totals 7.764 million. This equates to a margin of 2.4% only. Last fy 2011, MaeMode had margins of 3.08%.

2. Is there improvement in cash balances?

Company said its profits increased a lot. Well if the company is making more money, surely the company has more cash, right?

Here's a snapshot of MaeMode's balance sheet.

3. MaeMode has an issue with its receivables, is there any improvement?

MaeMode's total receivables, ie trade receivables+amount due from customers on contracts ( I wonder why the need to have list these items separately since both items essentially represent amount owed to MaeMode) now totals 499.464 million. Same quarter last fiscal year, the receivables totalled 442.443 million.

Receivables increased a lot once again!

Now, let's refer to table posted in the last posting: Maemode's Mind Boggling Q4 Earnings.

In FY 2006, MaeMode's receivables was 186.128 million. Receivables today stands at 499.464 million!

Is that mind boggling or is that mind boggling???!!!

4. Is MaeMode owing more money now?

One of the other issue was the MaeMode's loans kept on increasing. As at end fy 2011, MaeMode owed some 368.224 million.

Let's have a look at MaeMode's current borrowings.

MaeMode's current total borrowings now stands at 410.097 million!

It's borrowings increased a lot, once more!!!

But the most worrying issue is stated on notes B9.

Amount payable within next 12 months is 376.997 million!!

!!!

And Happy Chinese New Year To You Too!

2012-01-20T19:55:00.000+08:00

Here's to a splendid and blessed Chinese New Year!

Is XDL Talking To Air Or Talking Air?

2012-01-12T09:00:00.001+08:00

In the posting Would You Bet On XiDeLang (XDL) ???, I highlighted the new twist in bold published on BTimes.

Let me repeat once again:

"Ding will reject the offer from Navis, and instead put in a rival proposal to create liquidity in the market place," a person familiar with the company said yesterday.

It was utterly nonsense.

Think about it.

Fact: The talk with Navis was purely informal.

Fact: The talk happened FEW MONTHS ago.

And if that's the case, why on earth is XDL making such a big fuss over it? And worst still Ding is said to reject the offer from Navis.

How?

If he had NO intention to accept the offer, an offer made few months ago, why make such a big fuss? Heck, XDL was even suspended so that it can make this announcement of 'no substance' (Yeah, in my flawed opinion, there's no substance. It was an informal discussion and no price was even mentioned! )

But note the snakey spin put on it.

"put in a rival proposal to create liquidity in the market place,"

Oh yeah, with such a statement, XDL was going to have to answer to Bursa once more.

And the reply was not shocking at all.

Reference is made to the news article published on page B2 in the Business Times entitled “Xidelang board to meet over Navis’ buyout offer” in particularly the following sentences:-

“…instead put in a rival proposal to create liquidity in the market place”

“It will be a script based reward exercise”

“….Ding will likely propose that XiDelang to undertake a bonus issue and a warrant exercise so that…..”

XDL, after having made due and diligent enquiry with the Board of Directors, major shareholder, namely HongPeng International Holdings Ltd and all such persons reasonably familiar with the above matter, wishes to inform that the Management has merely engaged in exploratory discussions with various professionals to undertake various corporate proposals to enhance value for the Company and shareholders. However, no concrete plans or proposal has been finalised at this juncture.

XDL will make the necessary announcement to Bursa Malaysia Securities Berhad (“Bursa Securities”) in a timely manner in accordance with Bursa Securities Listing Requirements, should there be any further development on this matter.

Exactly!

Another exploratory discussion only.

NO CONCRETE PLANS yet!.

Is this talking to air or talking air?

I dunno.

I guess when the boss is frustrated with the stock lousy performance in the exchange, anything is possible!

And best of all, BTimes carried yet another article on XDL.

Yeah..... OMG!

Xidelang in talks to boost shareholder value

By Francis Fernandez Published: 2012/01/12

KUALA LUMPUR: Xidelang Holdings Ltd, China's second largest maker of running and skateboard shoes, says it's in exploratory discussions with various professionals to undertake various corporate proposals to enhance shareholder value.

The company said this in a statement to Bursa Malaysia yesterday, in response to an article in Business Times which stated that the mainland-based company is considering a script-based exercise to reward its shareholders.

Business Times had reported that Xidelang could introduce a bonus-cum-warrants exercise so that shareholders, who did not directly benefit from Xidelang's growing business, will be rewarded in the market place.

Xidelang's share price had fallen by as much as 35 per cent last year to 29.5 sen a share.

This year, however, the shares are up by as much as 25 per cent to close the trading day at 38 sen.

Up to the nine months ended September 30 2011, Xidelang's pre-tax profit stood at RM84.52 million, while for the 12 months of 2010, the company's pre-tax profit stood at RM106.78 million.

As it stands, Xidelang is the only China-based company traded here with a consistent dividend policy in place.

Xidelang paid out a 1.5 sen dividend in 2010 and a one-sen dividend the following year, giving shareholders a 12-month dividend yield of 2.63 per cent a year.

The company also has about RM134 million in cash, while its book value per share comes in at just under 60 sen.

Xidelang is the third China-based company to be listed on Bursa Malaysia.\

One huge article just to say "Xidelang Holdings Ltd, China's second largest maker of running and skateboard shoes, says it's in exploratory discussions with various professionals to undertake various corporate proposals to enhance shareholder value".

Duh!

Xian Leng's 52 Million Ringgit Loss Provision!!!

2012-01-11T10:36:00.000+08:00

Sae the following news clip on Xian Leng posted on Business Times.

Xian Leng impairment loss provision

Published: 2012/01/11

KUALA LUMPUR: Xian Leng Holdings Bhd is of the view that the provision of RM52.11 million for impairment loss provided for in its last quarterly report will not be recovered in the forseeable future.
The impairment was in respect of the value of fish ponds incurred by another unit involved in breeding of Arowana fish. The impairment loss exercise and provision is independent of the special audit that is still ongoing.
Shares of Xian Leng rose 3 sen yesterday to close at 40 sen.

Stock rose 3 sen yesterday? LOL!

Ok the special audit was highlighted in the posting Special Audit To Be Carried Out On Xian Leng!

A loss provision of 52.1 million???

What? What?? What???

I decided to check Xian Leng's announcements on Bursa website.

This is what Xian Leng said yesterday:

With reference to the announcement dated 27 December 2011 on the third quarterly result for the quarter ended 31 October 2011 in respect of the Provision for impairment loss on property, plant and equipment, the Board of Directors ("Board") wishes to furnish the following additional information for public release.

Impairment loss testing exercise is carried out based on information prevailing and available to the Board prior to the release of every quarterly results. In compliance with FRS 136, the Board will deliberate on the impairment loss computation based on discounted cash flow basis method as adopted in concurrence with the external auditors.

During the third quarter results which were under reviewed then, RM11.39 million impairment loss was provided for a subsidiary involved in the breeding of other tropical fish, such as guppy, platy fish and cat fish. No provision was provided to this subsidiary in previous years/quarters due to gestation period provided to assess the profitability of this said subsidiary project in respect of start-up period. As this subsidiary continues to incur losses after a reasonable period and based on information currently available, the Board is of the view that provision for impairment loss of RM11.39 million on property, plant and equipment relating to this project should be fully provided in this Quarter onwards. Revision will be made in the future if this subsidiary could generate positive contribution to the Group thereafter.

In addition, RM52.11 million of impairment loss was provided for in respect of the value of fish ponds incurred by another subsidiary involved in the breeding of Arowana fishes. Due to continuous and persistent drop in productivity and selling prices as compared to the previous year/quarters results, the forecast for future yearly/quarterly revenue (discounted cash flow basis) of the Company has deteriorated further and likely to trend downwards. In view of this latest development and assessment, , higher amount of fish ponds value incurred in respect of capital expenditures incurred with regard to expansion plan carried out in previous years is not envisaged to be recovered in the forseeable future. As such, the Board is of the view that the additional provision of RM52.11 million is necessary in accordance to the FRS 136 and thus impairment loss was provided in this Quarter onwards.

We wish to highlight that this impairment loss exercise and provision is independent to the Special Audit that was announced on 17 October 2011. Special audit is still on-going and the Board will re-assess the impairment loss ( if any) quantum and its impact to the financial statements once the Special Audit is concluded and the Final Report is received.

This announcement is dated 10 January, 2012

WOW!

Does it really cost that much?

11.39 million for the breeding of tropical fish such as guppy, platy fish and cat fish?????

Seriously that much money??????

Damn!

How much did you last pay for your guppies?

oO

Pos Malaysia To See 2 Billion In PROFITS???

2012-01-11T08:59:00.001+08:00

On Business Times:

DRB-HICOM sees RM2b Pos profit
Published: 2012/01/11
:
DRB-HICOM has identified 17 areas of new businesses that can be tapped through Pos Malaysia including collaborating with Bank Muamalat Malaysia

KUALA LUMPUR: DRB-HICOM Bhd expects Pos Malaysia Bhd to generate RM2 billion in earnings by 2015, said DRB HICOM's managing director Datuk Seri Mohd Khamil Jamil.

DRB HICOM owns 32.27 per cent of Pos Malaysia, the country's largest postal company. It acquired the stake from Khazanah Nasional late last year for RM622.79 million or RM3.60 per share.

For the year ended December 31 2010, Pos Malaysia earned RM1.01 billion in sales, while pre-tax profit stood at RM99.06 million. Up to the nine months ended September 30 2011, Pos Malaysia's revenue stood at RM883.98 million, while pre-tax profit came in at RM128.55 million.
Mohd Khamil said that DRB- HICOM had identified 17 areas of new businesses that can be tapped through Pos Malaysia including collaborating with Bank Muamalat Malaysia Bhd.

"The management of Pos Malaysia had put forward more than 39 points of its transformation plans," Mohd Khamil said, noting that Pos Malaysia had 39 points of transformation plan before it was handed over and after being acquired.

Moving forward, DRB-HICOM plans to take Pos Malaysia to the next level of growth despite the postal business being a sunset industry. Worldwide, postal businesses have slowed down as people are moving away from traditional postal mail.

"The margin to improve is tremendous if we concentrate on courier services," he said noting that courier services have about RM1.6 billion worth of business to tap on.

2 Billion in profits????

OMG!

Here we go again... the sound good news!

Would You Bet On XiDeLang (XDL) ???

2012-01-10T08:32:00.007+08:00

On the 4th Jan, the EdgeMalaysia highlighted the following article: Xidelang hits six-month high

... There were no new filings for substantial shareholding changes at press time.

Ding Peng Peng, its co-founder, managing director and CEO, owned 54.55% of the company as at May 3, 2011.

At yesterday's close of 37.5 sen, there is a 14.7% upside potential to the 43 sen apiece that Mercury Securities said the stock was worth in a note dated Nov 25, 2011.

Notably, Xidelang's unaudited net asset per share stood at 72.72 sen as at Sept 30, 2011, up from 56.14 sen as at Sept 30, 2010.

Xidelang, which recently got shareholders' mandate to buy back its shares from the open market, sold its shares for 63 sen apiece at its IPO on Nov 11, 2009.
The low valuations accorded by the market had sparked rumours that its major shareholder may take the company private, one source said. This could not be immediately confirmed at press time....

One source... said major shareholder MAY TAKE THE COMPANY PRIVATE!

All it takes is just one source.... and the stock flew up, up and awayyyyyy!!!

Nice eh?

Just one source. Don't care who the source is lah. It could be tea lady. The toilet cleaner. The car jockey. It's just one source and don't bother about finding out who that one source is lah. The EdgeMalaysia would not reveal their source.

So who cares, yes?

The stock flew!

The next day on BusinessTimes: Decisive year for Xidelang

His company’s profit has been soaring over the past three financial years only for the shares to keep heading south.

“It is a bit frustrating ... the investment community tells me that this has a lot to do with perception of being a mainland China company,” Ding, who is also the managing director of the company, told Business Times in an interview.
“Ever since then, mainland companies have been painted in one brush. Look, Xidelang is not a fly by night company. We have been here three years, been profitable and have been building on a dividend track record,” said Ding.

Then in mid afternoon, the EdgeMalaysia came out with this piece: Navis Cap keen to buy Hong Peng's stake in Xidelang

Navis Cap keen to buy Hong Peng's stake in Xidelang Written by Joseph Chin of theedgemalaysia.com
Thursday, 05 January 2012 15:10

KUALA LUMPUR (Jan 5): XiDeLang Holdings Ltd (XDL) says Navis Capital has approached the former's major shareholder Hong Peng International Holdings Ltd to acquire its stake.
It said on Thursday that 'Navis Capital had indicated their intention to acquire the entire shareholdings of Hong Peng in XDL during an informal discussion'.

Trading in the shares of XDL was voluntarily suspended from 2.30pm to 3.30pm following the announcement.
According to filings to Bursa Malaysia, the British Virgin Islands' registered Hong Peng owns 240 million XDL shares or 60% as at Nov 11, 2009.

XDL share price was up one sen to 37.5 sen before trading was suspended

And the next morning, BTimes followed it up: Navis makes offer for major stake in Xidelang - Business Times

Xidelang, China’s second second largest maker of running and skateboard shoes, is some 54.6 per cent owned by HongPeng International Holdings Ltd.

HongPeng in turn is controlled by Mark Ding Peng Peng, who is also the managing director of Xidelang.

Analysts said Navis’ plan to buy out HongPeng’s entire shareholding in XDL would trigger a mandatory general offer as its shareholding would breach the 33 per cent level.

“The likely outcome will be the new owners taking the company private,” Mercury Securities Sdn Bhd head of research, Edmund Tham, told Business Times.

Tham believed that Navis might offer between 60 sen and 90 sen apiece for the shares it did not already own in the company.

“It is obvious that Ding is looking to exit the company as he is disappointed with the performance on the local bourse but he may strike a deal with Navis to stay on the board,” Tham said.

In a filing to Bursa Malaysia yesterday, XDL said Navis had indicated its intention during an informal discussion with HongPeng International....

Yeah.. it is so obvious that Ding is frustrated with the stock performance on Bursa Malaysia... but ... the announcement just mentioned Navis intention during an INFORMAL discussion with HongPeng International...

Just an informal discussion hor... err... correct me if I am wrong.... but this is like a coffee shop chit chat isn't it?

INFORMAL discussion hor...

But yet XDL decided that it was improtant to announce it ....

The SunDaily also carried this 'NEWS' ... XiDeLang confirms takeover interest

With such 'news', the stock had a WILD trading day!

It opened higher at 38 sen (previous day closing price was 36.5 sen). The stock soared to 44.5 sen but soon plummeted to close the day lower at 35.5 sen!!!

Did the market realise that all the hoo-ha was based on an INFORMAL discussion? And yeah, no price was even mentioned!

Star Biz wrote on XDL the next day: XiDeLang: Navis showed interest in 55% stake

... Its announcement was in response to a news article published in a local Chinese daily which stated that Navis Capital was interested to acquire XiDeLang shares.

“There was no discussion on Navis Capital's offer price during the informal discussion,” it added.

The local Chinese daily mentioned was Nanyang Press.

Getting fuzzy?

Yeah, XDL had to make another announcement yesterday evening on Bursa website: OTHERS

Some 'interesting facts' mentioned in that announcement. (Thanks TK for your comments! )

XDL, after having made due and diligent enquiry with our major shareholder, namely HongPeng International Holdings Ltd (“HongPeng”) and the Board of Directors, wishes to inform that the discussions between Navis Capital and HongPeng held during October and November of last year were solely exploratory in nature and there was no offer being made or a price range indicated by Navis Capital.
These exploratory discussions were discontinued in late November 2011.

The so called talks were made during Oct and Nov 2011!!!!!!!!!!!!!

What??? What??? What????

Them talks happened few months ago?????

Huh????

Like this also can?

So what's the idea to highlight this issue to the media?

To stir fry the stock???????

Gee!!!

And the next statement obviously blew everybody's mind!!!

XIDELANG Holdings Limited's largest shareholder, Hong Peng International Holdings Ltd, has no intention of selling its stake in the shoe producer

WTH!!!!

HongPeng doesn't even have the intention to sell its stake in XDL!!!!

So what on earth were all the 'news' for?

Stir fry the stock, is it????

And then on Business Times this morning....

Xidelang board to meet over Navis' buyout offer

By Francis Fernandez Published: 2012/01/10

XIDELANG Holdings Ltd's board is expected to meet tomorrow to discuss the approach made by private equity firm Navis Capital to buy out the company's major stakeholder.

Xidelang, China's second largest maker of running and skateboard shoes, is 54.6-per cent owned by HongPeng International Holdings Ltd.

HongPeng is in turn controlled by Mark Ding Peng Peng, who is also the managing director of Xidelang.

Days before Xidelang had informed the stock exchange of the offer from Navis, Ding had told Business Times that he was frustrated with the lacklustre performance of the company on the stock exchange.
Xidelang is the third China-based company to be listed on Bursa Malaysia. Its share price had fallen by as much as 35 per cent last year.

Up to the nine months ended September 30, 2011, Xidelang's pre-tax profit stood at RM84.52 million, while for the 12 months of 2010, Xidelang's pre-tax profit stood at RM106.78 million.

Additinally, Xidelang also has about RM134 million in cash while its book value per share comes in at just under 60 sen.
"Ding will reject the offer from Navis, and instead put in a rival proposal to create liquidity in the market place," a person familiar with the company said yesterday.

The proposal, which Ding plans to table to the board, calls for the company to reward its shareholders.

"It will be a script-based reward exercise," said the source.

As such, Ding will likely propose that Xidelang understake a bonus issue and a warrant exercise so that shareholders who did not directly benefit from Xidelang's growing business will be rewarded in the market place.

As it stands, Xidelang is the only mainland-based company which has a consistent dividend policy in place.

Xidelang paid out a 1.5 sen dividend in 2010 and a one sen dividend the following year, giving shareholders a 12-month dividend yield of 2.63 per cent a year.

Navis, run by former executives of Boston Consulting Group, manages about US$3 billion(RM9.3 billion) in equity capital and is believed to want to take Xidelang private.

It also plans to group Xidelang with other shoe makers from China and list them as one entity on the Hong Kong Stock Exchange.

Sigh!

And so Mr. Ding feels so frustrated about the lousy stock performance from XDL.

I wonder why.

Yeah, if you open the announcement: Quarterly rpt on consolidated results for the financial period ended 30/9/2011, you would see that XDL have 136.5 million cash but its borrowing now totals 47.170 million!

Compare these figures to that posting I made on XDL last July 2011: Regarding XDL. Back then XDL had 98.3 million cash and loans of 19.3 million.

XDL's financial has weakened despite the strong earnings it announced.

And the issue mentioned in the posting Regarding XDL remains.

So XDL said it has so much money.

But yet despite having so much money, I CANNOT UNDERSTAND why XDL's cost of financing is more than its interest it gets for its cash deposits! Cash 136.5 million woh. Borrowings 47.1 million woh! So why XDL has financial costs of 905 thousand for the that quarter, while its interests received is only 315 thousand?

From The Edge Malaysia: UEM Land's Target Price Is ....

2012-01-06T16:33:00.000+08:00

UEM Land's closing price yesterday was 2.28.

And then I saw this stange article from the EdgeMalaysia. It said HDBSVR sees upside for UEM Land and the TP is rm 2.30!

I went... huh????

UEM Land last traded at 2.28 woh...

TP at 2.30???

Is HDBSVR going bonkers??? Or is the EdgeMalaysia goofing up?

Here's the article: http://www.theedgemalaysia.com/business-news/198913-hdbsvr-sees-upside-for-uem-land-tp-rm230.html

HDBSVR sees upside for UEM Land, TP RM2.30
Written by theedgemalaysia.com
Friday, 06 January 2012 09:11

KUALA LUMPUR (Jan 6): Hwang DBS Vickers Research (HDBSVR) sees the successful talks between the governments of Malaysia and Singapore as a strong boost to the prospects of Iskandar Malaysia.

The research house said on Friday that Iskandar Malaysia is expected to reach its tipping point in 2012 following the completion of key catalyst developments and infrastructure improvements.

The industrial cooperation work group may serve as a springboard for more investments from Singapore into Iskandar Malaysia which has received RM77.8 billion worth of committed investments as at Dec 2011.

HDBSVR said UEM Land will be the largest beneficiary of improving Malaysia-Singapore ties given that it is the largest landowner in Iskandar Malaysia with 11,000 acres in Nusajaya.

UEM Land is also the project manager for the M+S Pte Ltd developments (S$11bn) in Singapore. Assuming project management fee of 3% of GDV and a 50% share, it could boost UEM Land’s RNAV by an additional 1.3% or 5 sen/share.

“Maintain Hold call for UEM Land with RM2.30 TP, based on 40% discount to RNAV of RM3.82,” it said.

Ahh... the last line.... “Maintain Hold call for UEM Land with RM2.30 TP, based on 40% discount to RNAV of RM3.82,”

!!!!!

Another Fine Mess From OSK Research?

2012-01-04T09:02:00.001+08:00

A brand New Year and a brand NEW MESS from OSK Research?

Well, just in case you need to know, I am NOT a fan of OSK Research at all. It's well documented on this site, the reasons why I reckon they are simply way below par. (for example do read: QC And The Research Reports or past postings Featured Report OSK )

This morning, I noted this stunning snippet from Business Times: It’s OSK Research, not MCIL (do note, that BTimes link is not a permanent link! )

It’s OSK Research, not MCIL

Published: 2012/01/04

KUALA LUMPUR: Our report published on January 3 headlined “MCIL: Payout ratio of 60pc for next two years”, should quote OSK Research and not Media Chinese International Ltd (MCIL).

MCIL has clarified that it has not at any time released any statement which forms the basis of the article.

“We have also not given any statement stating that among others, we will be incorporating a payout ratio of 60 per cent for the next two years nor have we given any opinion on the exchange rate for USD into RM,” the company said in a statement.

So I decided to check Btimes 6 day's archive for yesterday's article: http://www.btimes.com.my/Current_News/BTIMES/6days_html?myday=Tuesday

That article could not be found. Googled it. I got this not working link: Media Chinese Int'l: Payout ratio of 60pc for next two years

But luckily I got a copy of that article. Business Times wrote the following:

Media Chinese Int'l: Payout ratio of 60pc for next two years

Published: 2012/01/03

KUALA LUMPUR: Media Chinese International Ltd (MCIL) sees that its dividend surprises are likely to go forward to right-size the group's balance sheet.

MCIL said it is incorporating a payout ratio of 60 per cent for the next two years, which translates into a decent yield of more than five per cent per year.

MCIL was formed by the merger of Sin Chew Media Corp Bhd, Nanyang Press Holdings Bhd and Hong Kong-based Ming Pao Enterprise Corp Ltd.

It emerged with four core daily publications in Malaysia, which are Sin Chew, Nanyang, China Press, and Guang Ming.

MCIL came off a stellar 2011 with a nine-month advertising and expenditure (adex) growth of 10.4 per cent year-on-year.

It saw a positive momentum spilling over to 2012, with adex likely to close at two times its 2012 gross domestic product growth forecast of 5.2 per cent.

"It is expected to be boosted by upcoming major adex-friendly events such as the national snap polls and Euro 2012 in the middle of the year," MCIL said in a statement last week.

Newspaper remains the largest advertising medium with more than 50 per cent share of total adex.

Newsprint makes up more than 40 per cent of MCIL's financial year 2011 operating costs.

It said that in the event of a sharp spike in newsprint prices, the negative impact would be partially mitigated by continuous weakness in the US dollar against the ringgit for which it is targeting to close the year at RM3 per US dollar compared with RM3.15 currently.

That was what Business Times wrote!

MCIL said it is incorporating a payout ratio of 60 per cent for the next two years

Now interestingly, the Sun Business carried the following article on 1st Jan 2012: MCIL is OSK's top pick in media sector ( I know, I know... it's sounding like a circus.... he says she says he says... )

MCIL is OSK’s top pick in media sector
Posted on 1 January 2012 - 08:18pm

PETALING JAYA (Jan 1, 2012): Media Chinese International (MCIL) is OSK Research's top pick in the media sector, supported by its strong management, sturdy 2012 advertising expenditure (adex) growth and its near-monopoly of the Chinese daily space in the country.

The research house has maintained its buy call on MCIL at RM1.27, with an unchanged fair value of RM1.47 based on 13 times CY12 price/earnings ratio.

"In view of the volatile global equity markets, we believe MCIL would also appeal to risk-averse investors given its decent dividend yield and relatively defensive earnings," it said in a report.

For the first nine months of 2011, Malaysia's adex grew 10.4% year-on-year and the momentum is expected to spill over to 2012, with adex likely to close at two times OSK's 2012 GDP growth forecast of 5.2%.

"It is expected to be boosted by upcoming major adex-friendly events such as the national snap polls and Euro 2012 in the middle of the year. Newspapers remain the largest advertising medium with more than 50% share of total adex. We believe that MCIL could again emerge as a key beneficiary, bolstered by its stranglehold in the Chinese daily segment as its adex share approaches a new high of 75%," OSK said.

With over 40% of its FY11 operating costs coming from newsprint, MCIL is expected to benefit from newsprint prices that are likely to hover at the current US$600-650 per tonne in 2012, given worries over the global economy and Europe's deepening sovereign debt crisis.

"In the event of a sharp spike in newsprint prices, which we believe is unlikely at this point of time, the negative impact would be partially mitigated by continued weakness in the USD against RM, for which we are targeting to close the year at 3.0 compared with 3.15 currently," said OSK.

As of Q1 FY03/12, MCIL was sitting on a net cash hoard of RM370 million, representing 15% of its current market capitalisation. OSK said the group is a cash cow in the making with its strong cash generation of an estimated RM320 million a year.

"And given its minimal annual capital expenditure of RM30 million, we believe that dividend surprises are likely, going forward, to right-size the group's balance sheet. We are incorporating a payout ratio of 60% for the next two years, which translates into a decent yield of more than 5% per annum," it added.
MCIL is the result of a mega-merger involving Sin Chew and Nanyang, with Hong Kong's Ming Pao. Today, it has four core daily publications in Malaysia namely Sin Chew, Nanyang, China Press and Guang Ming, one in Hong Kong under the Ming Pao brand, and a few magazine titles as well as a Hong Kong travel business.

The group's core Malaysian operations still contribute a significant 85% of group EBIT given its near-monopoly of Chinese daily publications, with the lion's share of 85% of the market.

Hmm.. and so for once (gulped) ... I would not fault OSK Research here. They have stated their reasoning ( ... but.. but... one could also start arguing the validity of OSK's reasoning, given the fact that MCIL had disputed this 60% payout assumption!!! ) and the Sun reported it as it is wheres Business Times just zoomed in to the juicy part and highlighted it!!!

Just to make it more interesting... the EdgeMalaysia reported the following yesterday evening. Media Chinese Intl director sells 400000 shares

Media Chinese Intl director sells 400,000 shares
KUALA LUMPUR (Jan 3): MEDIA CHINESE INTERNATIONAL LTd director Tiong Kiew Chiong disposed of 400,000 shares in the open market on Dec 30.
A filing to Bursa Malaysia on Tuesday showed he disposed of the shares, representing 0.03%, for RM1.19 a share.
After the disposal of the stake, Tiong’s stake was reduced to 3.607 million shares

Where Would You Keep Your Money For 2012?

2012-01-02T10:55:00.002+08:00

How?

Me?

How about some jewellery, like gold and diamonds. Me? I like them bling-bling stuff like diamonds. Could diamonds be a cow best friend?

I like stocks but I do think stock selection, as always, is very important. Any ideas? Me? I can only say that one should watch out for companies with high debts denominated in USD. We had recently seen these companies' earnings hurt by the stronger USD and with the USD remaining stubbornly strong, I do reckon that these companies would continue to face such difficulties.

Feedbacks and suggestions most welcomed.

Happy 2012 once again.

Cheers

Here's to 2012

2011-12-31T11:13:00.001+08:00

Stay healthy and have a blessed and happy new year!!

Here's another of my favourite.....

And According To Dunno What Sources, Box-Pak Will.....

2011-12-30T12:04:00.003+08:00

According to the UNKNOWN sources, a DEAL is BELIEVED to happen....

The share soars on the news.

Company denies the story. Share plunges.

Rinse... Wash... and REPEAT!

Yeah, babe.... nothing wrong here... just our local singing out these market sources songs.... and the market dances to the tune....

Very fun... and who knows.... who is making and who is losing money out of such spins.

Another day.... in our local stock market.

Check this out: Box-Pak awakened by possible takeover? (from the Edge Malaysia)

Box-Pak awakened by possible takeover?
Thursday 29 December 2011

KUALA LUMPUR: Shares of usually sleepy paper box and carton-maker Box-Pak (M) Bhd gained over a third in two days to hit its highest in 14 years yesterday, even as industry sources speak of a potential acquirer.

Tokyo and Osaka-listed Oji Paper Co Ltd (Japan), Japan’s largest paper company by sales, is believed to be the offeror, market sources said.

Box-Pak officials were not available for comment at press time.

Adding 37 sen or 17.6% to close at its day-high of RM2.47 yesterday, Box-Pak gained 33.5% in the two days after the Christmas weekend. The 2.81 million Box-Pak shares that changed hands yesterday were roughly 10 times the 30-day average volume of 284,950 shares and 100 times its five-year daily average volume of 26,700 shares.

Market watchers see Oji Paper — which has bought three Malaysian paper-related companies since 2010 — Genting Sanyen Industrial Paper, United Kotak Bhd, and HPI Resources Bhd — as a likely suitor for Box-Pak.

An offer may come through its wholly-owned Malaysian arm, Oji Paper Asia Sdn Bhd (OPA), the investment holding vehicle that acquired both United Kotak and HPI Resources, one source said.

To recap, Oji Paper in March last year bought 100% of Genting Sanyen Industrial Paper, a paper and packaging company that was formerly part of the Genting group, from private equity firm CVC Asia Pacific for an undisclosed amount.

December last year, OPA acquired United Kotak for RM1.40 per share at 10.9 times price- earnings ratio (PER) and one times price-to-book value (P/BV). In June this year, OPA offered RM4.40 per share for HPI Resources, which translates to 1.48 times book and 8.82 times earnings.

In comparison, Box-Pak’s closing price of RM2.47 yesterday values the company at 9.98 times PER and 1.32 times P/BV. Net assets per share stood at RM1.87 as at Sept 30.

According to Box-Pak’s FY10 annual report, Kian Joo Can Factory Bhd is its largest shareholder with a 54.83% stake, followed by Amanahraya Trustees Bhd with 5.16%. Kian Joo’s shares rose five sen or 2.42% to RM2.12 yesterday, up 31.4% year-to-date.

OPA did not appear to hold any shares in Box-Pak at the time of writing.

OPA’s conditional takeover offer for United Kotak came on Oct 12 last year, but not before the latter’s share price rose 66.6% from an average price of 73 sen in June 2010 to RM1.22 by Sept 30. Similarly, HPI Resources’ share price jumped 27.18% from RM3.09 to RM3.93 in one week leading up to OPA’s offer on June 15.

Notably, though, a July 13 report by The Edge Financial Daily that paper milling and packaging firm, Muda Holdings Bhd, could be Oji Paper’s next takeover target, was denied by Muda the same day.

The stock soars.... but ..... a DENIAL is issued. (article from Business Times)

Box-Pak shares soar on talk of privatisation

By Zaidi Isham Ismail Published: 2011/12/29

Kian Joo Can Factory Bhd is planning to privatise subsidiary Box-Pak (Malaysia) Bhd under a multimillion ringgit deal that will involve certain Japanese firms, sources say.

Kian Joo would pay RM3.20 a share for the remaining shares it does not own in its profitable corrugated carton boxes manufacturing unit, they said.

Meanwhile, Box-Pak shares were the second top gainer on Bursa Malaysia yesterday. The stock soared 37 sen to close at RM2.47 with 2.81 million shares traded. At RM2.47, its market capitalisation stood at RM148.26 million.

Year-to-date, Box-Pak has gained 107.56 per cent or RM1.28, with a low of RM1.09 on March 16 this year. Kian Joo Can owns 32.91 million shares, or a 54.83 per cent stake, in Box-Pak. Another single largest shareholder is Amanah Saham Bumiputera Bhdwith 3.1 million shares or a 5.16 per cent stake.

The sources said Kian Joo Can had hired Maybank Investment Bank Bhd to handle the privatisation deal. Kian Joo Can executive director Datuk Anthony See Teow Guan, when contacted yesterday, denied that it was planning such privatisation.

“No, there’s no truth in it. I don’t know who spread the rumours,” said See, who is also managing director of Box-Pak.

Besides corrugated carton boxes, Box-Pak also manufactures and sells die-cut trays, wrap-around cartons, Point of Purchase (POP) and paper palette for use in the packaging industry.

The company was incorporated in December 1974 and listed on the local bourse on July 18 1996. Box-Pak nearly doubled its net profit in the first nine months ended September 30 2011 to RM10.35 million, from RM5.79 million net profit a year ago.

The company attributed the improved profit to higher revenue and better production efficiency. Group revenue rose to RM178.39 million during the period, up from RM134.73 million previously..

The stock of course..... plunges..... (article from Star Biz today)

Friday December 30, 2011
Box-Pak plunges on denial
By CHOONG EN HAN

PETALING JAYA: Box-Pak (M) Bhd's shares plunged 24 sen, or 9.7%, to RM2.23 after its parent Kian Joo Can Factory Bhd refuted media reports that a potential privatisation involving its subsidiary might be on the table.
Shares of the paper box and carton maker reached an intra-day high of RM2.65 in the first trading session and pared its gains in the second session to reach a low of RM2.21 after Kian Joo's denial, with 5.35 million shares traded. Box-Pok was second on yesterday's list of top losers.

In their filings with Bursa Malaysia, both Kian Joo and Box-Pak said they were not aware of any formal discussions concerning the privatisation of Box-Pak.

Kian Joo also refuted allegations that it has hired any investment bank in relation to the said exercise.

A report citing unnamed sources said Kian Joo would pay RM3.20 a share for the remaining shares it does not own to privatise Box-Pak, with the involvement of a Japanese firm.

Kian Joo owns 54.83% of Box-Pak, followed by Amanahraya Trustees Bhd with a 5.16% stake.

Meanwhile, another report speculated that Tokyo and Osaka-listed Oji Paper Co Ltd is believed to be a potential offerer to acquire Box-Pak.

“As far as we know, nothing is happening yet. The only guidance from Japan's Oji is that they will not stop buying assets in Malaysia when the opportunity presents itself,” an industry source said.

Oji Paper was founded in Japan in 1873 as Shoshi Kaisha and was renamed Oji Paper in 1893. Its core business includes the sale of pulp, paper and paperboard such as newsprint, printing and writing papers, speciality papers, container boards and box boards.

In July, it was speculated that Oji Paper is interested in acquiring paper milling and packaging firm Muda Holdings Bhd, which was denied by the company on the same day.

Over the past two years, Oji Paper has been on a shopping spree, snapping up several Malaysian paper-related companies Genting Sanyen Industrial Paper, United Kotak Bhd and HPI Resources Bhd.

Notably, Oji Paper took over packaging product maker HPI Resources in June for RM258mil while it bought into corrugated carton maker United Kotak for RM63mil in February.

There!

Told you so!

Told you so that the stock market game is sooooooooooooo fun!

Making Money The Easy Way Via Envair Holdings

2011-12-22T20:04:00.001+08:00

From the Edge. http://www.theedgemalaysia.com/business-news/198283-envair-holdings-active-down-in-afternoon-session.html

Envair Holdings active, down in afternoon session
Written by the edgemalaysia
Thursday 22, December 2011

KUALA LUMPUR (Dec 22): ENVAIR HOLDING BHD [] shares were actively traded and fell on Thursday after Carpet Raya Sdn Bhd director Deepak Jaikishan ceased to be a substantial shareholder in the loss-making company.

At 2.50pm, Envair fell four sen to 28 sen with 13.96 million shares done.

A filing with Bursa Malaysia on Dec 21 showed that Deepak had disposed six million Envair shares in the open market on Dec 14.

Deepak had emerged as a substantial shareholder in Envair after he acquired a 5.06% equity interest or six million shares in Envair in a direct deal on Dec 2.

Let's see. On 2nd Dec, he purchased the shares at a price of 22 sen.

( refer Notice of Interest Sub. S-hldr (29A) - Deepak Jaikishan )

On the 14 December, Envair was trading between 34 sen and 38 sen!

Wanna try calculate the cool profits?

How cool is this?

Now consider this also...

On 6 December 2011: Jaikishan buys 5.06% stake in Envair for RM1.32mil

............ Envair told Bursa Malaysia that the 39-year old supplier of carpets recently in the news for his link to controversial statutory declarations had bought the six million shares at 22 sen apiece last Friday.

Envair last saw a Chinese national, Jiang Chuan Yi, selling off his entire stake of 6.75% in the company less than a month after acquiring it on Nov 1.
The sale was done via open market transactions at an undisclosed price.

Envair's stock had surged in early October from 11 sen to 40 sen in early November, just before the company unveiled its plans to move into the oil and gas industry by supplying two million barrels of light crude oil monthly for 60 months to a China-based company, An Hong Shenzhen.
The deal surprised analysts who questioned then how a little-known loss-making company could secure such a huge deal from a Chinese party.

Envair shares ended 2.5 sen higher to 31.5 sen yesterday.

The rapid exit of Jiang remains a concern in light of Jaikishan's recent purchase of the 5.06% block in Envair........

On the same day. the following article was published: Carpet Raya’s Deepak surfaces in Envair.

On the 10th December, the following was published: Envair gets support letter for financing

........ Jaikishan did not divulge from whom he purchased his block of shares, saying only: “I took it as an opportunity to come in on the cheap.”
In an interview with StarBizWeek, Jaikishan, whose family is in the business of carpet trading and property investment, said he bought into Envair based on the company's foray into the oil and gas industry.

“Right now, that's the only reason it is exciting,” he said.

While declining to comment on the profits his personal businesses generated, the 39-year-old businessman said he would like to contribute in terms of finance to Envair.

“But I also want to take an active role in Envair's business. I've met some of its (substantial) shareholders,” he said.

According to Jaikishan, Envair is expected to call for a shareholders' meeting soon to seek his appointment to the board.

He also said he was in discussions to further increase his stake in the company.

“I bought one million shares two to three days ago and another one million today (yesterday) off the market,” he said.

Mohd Anuar declined to elaborate when asked about the emergence of Jaikishan in Envair.

“Yes, I know him,” he said, adding that he (Anuar) himself had no stake in the firm.

For the third quarter ended Sept 30, Envair had a net loss of RM900,000 against a net loss of RM1.29mil a year earlier.

The stock ended 0.5 sen up at 27 sen yesterday.

Incredible eh? First a Chineseman and now a carpet seller! ( Wonder what's next? A Kway Teoh Seller? )

So on 10 December Deepak tells everyone his bullish views on Star Biz, one of our national newspaper but then on the 14 December, he sold all the shares!!!!!!

And this my friends, is how to make money in our stock market the easy way!

And The Motor Vehicle Sales Is Down And UP...

2011-12-17T11:50:00.000+08:00

Here's the Edge Malaysia version:

MAA: November vehicle sales at 48,702 units, dn 9% on-month
Written by Joseph Chin of theedgemalaysia.com
Friday, 16 December 2011 16:23

KUALA LUMPUR (Dec 16): The Malaysian Automotive Association expects vehicle sales to moderate further in December, extending the decline from November where sales were lower at 48,702 units.

It said in a statement on Friday the November sales were down 4,913 units or 9% from October’s 53,615 units. However, when compared to a year ago, sales climbed 9%.

MAA said the slower sales were also due to the severe floods in Thailand which had disrupted certain makes of vehicles. Of the 48,702 units, passenger vehicles accounted for 42,754 and the remaining 5,948 were commercial vehicles.

“Sales volume for December 2011 is expected to moderate further due to the preference of customers to wait and take delivery of 2012 production year stocks and also the impact of the floods in Thailand may affect supply,” it said.

The trade body said from January-November, total vehicle sales rose marginally to 552,561 units from 550,391 in the previous corresponding period. Passenger vehicles accounted for 492,884 units and the remaining 59,677 units were commercial vehicles.

MAA data also showed that total production in November declined to 35,355 units from 36,265 units a year ago. Year-to-date, it said production fell 4.6% to 501,755 units from 526,194 units in the previous corresponding period.

Link to article: http://www.theedgemalaysia.com/business-news/198008-maa-november-vehicle-sales-at-48702-units-dn-9-on-month.html

Here is the Star Biz version:

Saturday December 17, 2011
Vehicle sales up 8.6% in November
By FARAH FAZANNA ZULZAHA

KUALA LUMPUR: Total vehicle sales rose 8.6% to 48,702 units in November, from the 44,845 units sold in the same month last year, said the Malaysian Automotive Association (MAA).

It also said that November sales were down 9%, or 4,913 units, from October.

However, compared with a year ago, sales in November registered an increase of 9%.

Of the 48,702 units, passenger vehicles accounted for 42,754; the remaining 5,948 were commercial vehicles.

MAA said in a statement that the slower sales were due to the floods in Thailand, which had disrupted the production of certain makes of vehicles.

From January to November, total vehicle sales rose to 552,561 units from 550,391 in the previous corresponding period.

Passenger vehicles accounted for 492,884 units and the remaining 59,677 units were commercial vehicles.

MAA data also showed that November total production declined 2.5% from 36,265 units in a year ago to 35,355 this year.

Year-to-date, it said production fell 4.6% from 526,194 units to 501,755 units in the previous corresponding period.

“Sales volume for December is expected to moderate further and customers are advised to wait and take delivery of 2012 production year stocks and the impact of floods in Thailand may affect supply,” said MAA.

Link to article: http://biz.thestar.com.my/news/story.asp?file=/2011/12/17/business/10114594&sec=business

My Dearest Bursa Malaysia And My Dearest Securities Commission

2011-12-16T08:44:00.003+08:00

Dear Bursa Malaysia and Securities Commission Boys And Gals,

You invited and you have actively promoted corporate governance recently. You have invited minority shareholders to file their complains against unscrupulous corporates. Yes, if you have a complain, send all your details in and your case will be heard. Yes, I would say kudos to you boys and gals for taking such an initiative. It gives us, the minority shareholders, hope.

However, sadly this morning, I have to ask 'what's the point of hearing without even listening'?

Why am I so disappointed?

I was well aware of my good friend's recent complaint and I was rather impressed that you boys and gals granted a hearing (Mind you, this was a case that happened some three FULL years ago!). But again, what's the point of hearing without even listening?

Rather sad, in my flawed opinion. So a hearing is granted but on the hearing itself, you boys and gals came prepared in a team but instead of trying to understand and listen to the major issues pointed out in the complaint, you boys and gals were rather eagerly prepared not to listen and instead were more focus on dismissing the case. So sad. Did you really understand what the complaint is all about and why the complaint is such importance? Ironically, the complaint focused on the very topic you boys and gals were actively promoting; ie CORPORATE GOVERNANCE!

I wondered the past couple of days thinking how Bursa Malaysia can attract more investors (esp foreign investors)? You invite foreign investors to invest and when they have a legitimate complain, you boys and gals were not really interested to listen.

And the sad outcome of this lopsided hearing?

You boys and gals won!

Congratulations!

The complaint is now officially withdrawn!

Here's the letter written by M.A Wind (who is a foreign investor!!!! ): Withdrawal of complaints with SC & BM

"Dear Sir/Madam,

In light of the extremely disappointing performance of the authorities (most notably Bursa Malaysia) on my complaints regarding Bumi Armada and Maybulk/POSH, not seeing even a sliver of justice being done after stonewalling me in both cases for a full three years, with Bursa Malaysia being an interested party having approved all the documents in the first place and now having to check their own work (and thus not surprisingly approving it), I herewith withdraw all my complaints with SC/BM.

It is better to have no justice at all and it being painfully obvious, than to get a half-baked effort after 3 full years that would not even count as an slap on the wrist and some people boasting of actually having done their job.

I also don’t have the energy or the time to be involved in a process that leads to absolute nowhere.

Regards, M.A. Wind"

By the way do read this other posting too: Unsatisfactory handling of complaints by SC/BM

After the damage has been done (the RPT deal went through), SC/BM will look into possible complaints. My experience is that these investigations will go nowhere, I haven’t heard of a single complaint by a Minority Investor ever being approved. Normally SC/BM will drag their feet for a long time (often a few years), stonewalling the Minority Investor, changing the manager in charge many times and then answer with a one line reply that no rule has been breached. No reason will be given, no transparency at all. Investigations have to be conducted confidentially, this is of course correct, but SC/BM is abusing this rule very much. For instance there is no reason whatsoever not to reveal publicly available information why a complaint or argument is not valid. If somebody provides detailed information which rules are broken, then the SC/BM should be able to counter these arguments without breaking the confidentiality of the research. It is extremely disappointing (to say the least) to spend a huge amount of time writing a complaint with all the information gathered, doing all the work for the SC/BM, coming up with large amounts of supporting documents and then to be treated like this. Unfortunately, I have never heard of a different experience. SC/BM has a (very) bad image and most retail investors don’t even bother anymore to file a complaint with them, is my experience.

I can see the following reasons for the highly unethical and unacceptable behaviour of SC/BM:

(a) SC and BM might be pressured not to take action. For a long time there was suspicion regarding legal matters. Since the publication of the Lingam tape I think no person will have doubts anymore about what might be going on.

(b) SC and BM are not actually pressured in certain cases but think they are and act accordingly. This is an argument that is often brought forward to explain curious verdicts of judges that make no sense at all. The previous Chairman of the SC was (when he retired) asked by a journalist if he had instructions from above not to take action in certain corporate cases. The Chairmen said he wasn’t. Unfortunately, during his tenure the SC didn’t solve any major case (except of course for the usual illegal future trader and ticking off some small corporate players) although he inherited a huge amount of very large cheating cases of the 1997/98 crisis. Nobody dared to say that the Emperor was wearing no Clothes.

(c) SC and BM have already approved certain parts in the process, to agree with a complaint means admitting that they made mistakes in the past. Organisations that “police” their own actions will hardly ever take any action against their own people and the SC/BM seems to be no exception. There is really a need for an organisation totally independent from SC/BM to look into these cases.

(d) It is the "lazy" alternative, it means the manager doesn’t have to make investigations, interviews, research etc. Since the SC/BM doesn’t give any insight in on-going investigations (in itself understandable, but it is easily abused) and the SC/BM never gives any reason for its rejection, it can never be accused of making a mistake in the reason given. No transparency at all of course, but nobody seems to care.

(e) It has become the norm, for 20 years SC/BM have toed the line, why change?

(f) The personnel of SC/BM is simply not (always) up to the task and are not able to counter the army of fancy, well-paid advisors the Majority Investor has hired to defend his case. If this is the case, SC/BM should be allowed to use external advisors, but that would mean admitting that SC/BM is not up to the task and that will not be easy.

In my posting about recommendations I came with the following suggestions:

A small, fast moving, high-powered, totally independent commission to be formed, which will look at complaints (besides other issues).

The top management of SC and BM should make it very clear to all their employees that in the cases of GO’s and RPT’s Minority Investors have clearly the benefit of the doubt, not Majority Investors.

All complaints (except very rare, difficult cases) should be handled well within one year, with quarterly updates. A final answer will be provided containing information publicly available.

In general, SC and BM really should genuinely start to reach out to retail investors, bloggers etc, they can provide useful insights in corporate affairs, since they are putting their money where their mouth is. There are about 1,000 listed companies, much too much for SC and BM to keep tabs on.

I do have one small wish for this holiday season.

I hope you boys and gals really make an effort to listen. Please.

Thanks,

Merry Christmas and A Happy New Year
----------------

Footnote:

For those interested in M.A Wind's complain against Maybulk , do read the following posting:

SC & BM: (perceived) Conflict of Interest?
Maybulk/POSH: What happened to the Cash? * Fully recommended reading!*
Clarkson, the valuer who didn’t believe his own valuation * Fully recommended reading!*
Maybulk/POSH: KPMG's "independent" advice
Maybulk: before and after POSH

The KFC Takeover And The Power Of The Source

2011-12-14T19:16:00.001+08:00

On Business Times this morning:

JCorp to take QSR Brands private?

Francis Fernandez and Azlan Abu Bakar Published: 2011/12/14

The exercise is imminent ... it could be as early as this week, says a source

Johor Corp Bhd (JCorp) plans to take QSR Brands Bhd private, people familiar with the matter said yesterday.

The deal may also involve KFC Holdings (M) Bhd, the source said.

“The exercise is imminent ... it could be as early as this week,” said a source.

At least two independent sources told Business Times that a deal was in the offing.

JCorp owns 53 per cent of Kulim Bhd, which in turn owns some 57.5 per cent of QSR. QSR, in turn, owns 50.6 per cent of KFC, the country’s top fast food operator.

“The deal could be done at the Kulim level, but JCorp is the driver for the exercise,” the source said.

Top executives of Kulim and QSR, however, said they had no knowledge on the matter.

“We at the operations side are not involved. We know nothing about it so we can’t give any comments,” QSR managing director Jamaludin Md Ali said, when contacted yesterday.

Kulim managing director Ahamad Mohamad also said he had no knowledge of the matter and declined to comment.

An insider in Kulim, meanwhile, said the matter had never been raised at the Kulim board level.

In April this year, the Malay Chamber of Commerce offered to buy stakes in Kulim through its Johor chapter.

The offer came months after Tan Sri Halim Saad had attempted to buy QSR’s business for RM1.62 billion.

The offer, which had valued QSR shares at RM5.60 a piece, was eventually turned down by the ultimate owners of QSR.

Halim’s November 2010 offer was not the only one on the table, as a slew of foreign firms, including venture capital companies, were said to have shown interest in QSR.

The Carlyle Group had offered RM6.70 a share to gain a 100 per cent control of QSR.

Others said to be interested in QSR at that point of time were CVC Capital Partners Asia Pacific, and even, perhaps, Kohlberg Kravis Roberts & Co, foreign reports suggest.

QSR is a much sought-after asset as whoever controls the company will have control over KFC.

KFC has franchises in Malaysia, Singapore, Brunei, Cambodia and India.

It also operates the home-grown RasaMas chain of restaurants and Ayamas kiosks, while QSR operates some 260 Pizza Hut restaurants in Malaysia and Singapore.

QSR shares closed 10 sen higher to RM6, while KFC shares closed 6 sen higher to RM3.41 yesterday.

And of the Edge just now...

Johor Corp, CVC Capital launch takeover of QSR, KFCH
Written by Joseph Chin of theedgemalaysia.com
Wednesday, 14 December 2011 18:49

KUALA LUMPUR (Dec 14): Johor Corporation and CVC Capital Partners Asia III Ltd have teamed up to take over QSR BRANDS BHD [] and KFC HOLDINGS (M) BHD [] (KFCH).

Johor Corp and CVC Capital had on Wednesday, made the offer via a special purpose vehicle Massive Equity Sdn Bhd (MESB) in which Johor Corp holds a 51% stake and CVC Capital 49%.

MESB offered RM6.80 for the shares in QSR Brands Bhd and RM3.79 for the warrants. At RM6.80, this is 80 sen above the closing price of RM6 on Tuesday while the offer price for the warrants was a premium of 77 sen from the closing price of RM3.02.

MESB also made an offer to KFCH of RM4 per share and RM1 per warrant. At RM4, this was 59 sen above the closing price of RM3.41 on Tuesday but five sen below the closing price of RM1.05.

The securities were suspended from trading on Wednesday and resume on Thursday.

Johor Corp owns 55.9% of KULIM (M) BHD [], which, in turn, owns 53.9% of QSR. QSR has a 50.93% stake in KFCH.

Analysts had earlier expected only Johor Corp to take over QSR and KFCH and this did not include CVC Capital’s participation.

“By taking QSR and KFC Holdings private, Johor Corp would have more control and direct ownership over the cash flows and dividends of the crown jewels, KFC and Pizza Hut. QSR and KFC Holdings generate strong operating cash flows of RM250m million to RM300 million per annum but Johor Corp only get to enjoy less than half of it given their current stakes.

“A buyout of QSR and KFCH would increase the amount of dividends and cash flows that Johor Corp enjoys from this top fast food operator,” a research house said.

In December last year, Johor Corp had stated it has no plans to sell its prized assets, QSR and KFCH, which are held through its subsidiary Kulim.

Its president and chief executive Kamaruzzaman Abu Kassim had then said JCorp entered the quick service restaurants business in 2006 (through Kulim’s investment in QSR) and since then has seen tremendous growth in revenue and profit before tax (PBT) at an average of 13.8% and 3.7% per annum respectively.

“The results from this segment had contributed significantly, making up 47.5% and 44.1% respectively to Kulim’s revenue and PBT in the financial year ended Dec 31, 2009.

“It does not make sense to sell our core business,” he had then said in a statement.

Yeah, the power of the source...

Keyword: YESTERDAY ..... !!!!!

WTH!!!!!!

Another shiny day for Corporate Malaysia!

Sigh!

Featured Article: Rights issues by REITs a tough sell?

2011-12-12T17:12:00.000+08:00

On the Edge: http://www.theedgemalaysia.com/in-the-financial-daily/197658-rights-issues-by-reits-a-tough-sell.html

Rights issues by REITs a tough sell?
Written by Chua Sue-Ann
Monday, 12 December 2011 11:26

KUALA LUMPUR: It remains to see whether investors will warm up to recent proposals by Malaysian real estate investment trusts (REITs) to embark on rights issues for fundraising.

This comes as Hektar REIT and AmFirst REIT separately proposed rights issues in recent months. The former is doing so to fund new asset acquisition while the latter is seeking to reduce its bank borrowings. CapitaMalls Malaysia Trust (CMT) also recently told The Edge Financial Daily that it is considering a rights issue to raise fresh capital.

Analysts and market observers said it is generally undesirable for REITs to embark on rights issues as investors expect dividends from REITs instead of having to plough in more capital.

“Effectively, they are asking investors to spend more on their stock in these uncertain market conditions,” said a property analyst.

However, judging from the price performance of both Hektar REIT and AmFirst REIT, investors have not reacted negatively to the news. This, surprisingly, is in contrast to investors’ harsh treatment of Singapore-listed REITs that embarked on rights issues.

According to analysts, the reason why Malaysian REITs are now turning to rights issues to raise funds, instead of the usual way of borrowing or unit placement, could be because their gearing is already near the 50% threshold (of total asset value) permitted for a REIT to borrow, or that the capital they seek to raise is larger than what can be achieved with a placement exercise.

In Hektar REIT’s case, its gearing ratio is 43.4%, just below the 50% limit, based on its total debt of RM347 million and total assets of RM799.47 million as at Sept 30. AmFirst’s REIT’s gearing as at Sept 30 was 39.8% based on total borrowings of RM419.6 million and total assets of RM1.053 billion.

On Dec 8, Hektar REIT proposed a renounceable rights issue to raise gross proceeds of about RM98.4 million. Proceeds from the rights issue will be used to partially fund the acquisition of two shopping malls in Kedah for RM181 million cash.

Hektar REIT added that it would also obtain bank borrowings of up to RM87.1 million to purchase the assets. Note that it held cash and cash equivalents of RM21.3 million as at Sept 30.

The REIT has yet to finalise the actual number of rights units and entitlement basis will be determined later based on the final issue price of the rights unit.

Hektar REIT added that it will procure a written irrevocable undertaking from its substantial unitholders to fully subscribe for their entitlements, failing which underwriting arrangements would be made.

AmFirst REIT’s proposed rights issue, set on a three-for-five basis, is expected to raise gross proceeds of about RM218.8 million, based on an illustrative issue price of 85 sen per unit. The proceeds are to be used to pare down borrowings.

CapitalMalls Malaysia Trust, which also manages The Mines shopping mall, recently said it is also considering a rights issue to raise fresh capital.

AmFirst said the rights unit issue price is expected to be fixed at a discount of no more than 20% to the theoretical ex-rights price of the unit. “The discount on the issue price of the rights unit is intended to reward unitholders for their continuous support of the fund,” AmFirst said.

Thus far, investors have not reacted negatively to the REITs proposal to conduct rights issues. The unit prices of both Hektar REIT and AmFirst REIT are still traded near their peaks.

“It could be because the unit prices are currently near historical highs, and more interestingly, at the current high prices they still offer rather good yields as well [Hektar REIT at 7.6% and AmFirst at 8.6% historical yield], so unitholders are happy,” said a market observer.

Other than that, he explained that there is still strong demand for REITS in times of market volatility, especially among institutional shareholders.

“Pavilion REIT has gained 13.6% since last week’s IPO to RM1, and the yield is now only 5.7%. So, the management of REITs thought maybe a rights issue is a good idea,” he said.

The scenario is different in Singapore.

K-REIT Asia, a unit of the Keppel Land group, saw its unit priced plunge 9.7% to S$0.857 sen on Oct 18 after it announced plans to raise S$976.3 million (RM2.4 billion) through a 17-for-20 rights issue. Most of the funds raised by the REIT will be used to buy a 87.5% stake in Ocean Financial Centre (OFC) from its parent Keppel Land Ltd.

It was reported that investors didn’t like the pricing for the OFC deal, and the fact that it was a related party deal. It wasn’t entirely because K-REIT Asia had proposed to acquire it via rights issue funding.

“At the end of the day, REIT managements have to justify why they have to do a rights issue to ask for more money from the unitholders. While institutional shareholders are okay with a rights issue, it could be a turn-off for minority shareholders,” said a market observer.

Featured Articles: About Share Placements

2011-12-10T12:25:00.000+08:00

Old articles to share... :)

http://www.oaktree-research.com/index.php?option=news&task=viewarticle&sid=24

Share Placements - Good or Bad?

Roger Tan & Don See, 21 Oct 2003

The number of share placements made by listed companies has grown in recent days. Yes, we are in a bull market and perhaps in the midst of a global economic recovery. With a recovery, there are more opportunities for businesses, deals and contracts. It makes a lot of sense for these companies to tap the equity markets to raise proceeds for further investment at this early stage. However, we believe not all that glitters are gold. We question the intention of some.

We are not planning to give names as we have no facts but a mere conjecture on our part. One of our investee company announced that it would be placing a huge amount of shares through a financial institution to raise funds. This placement will allow them to raise a few million Singapore dollars to expand their operations overseas.

This is bad news to us as it seems the management is hinting to us that their shares are overvalued. However, instead of a drop, the share price rose after the news! Ordinarily, we must be pleased but we do not accept facts as they are. We begin to hypothesis the possibilities. We swam through both conspiracy and financial theories and came to a single deduction.

We threw out conspiracy theory and instead focused on a signaling theory. For the rest of the article, we will explain why the hype over the recent issues can be attributed to signaling theory and the issues are nothing more than an "overvaluation" signal through the "Pecking Order" argument.

Revisiting Capital Structure Irrelevance

Proponents of placement share issues argue that shareholders should be happy that the management has raised new funds to expand and grow businesses. Whether these funds are raised through debts or equity is not the most important concern - the potential returns on these new investments are what matter most.

Miller and Modigliani's Proposition I (MM I) propose that the capital structure of the firm is irrelevant to the value of the firm under the perfect capital market assumptions. Financing methods will not influence firm value. It is the incremental value that these funds can achieve that is critical to the valuation issue. Investors who are buying up shares in these companies attest to this belief.

Altering the Perfect Capital Market Assumption - Information Asymmetry

Roger mentioned in his previous article "Explaining Perfect Capital Market - The Final Frontier" that the perfect capital market assumptions forms a starting point of an analysis. What happens when we change the perfect capital market assumption to that of information symmetry?

It is a reasonable assumption and expectation to say that insiders and managers hold a greater deal of information than non-insiders. They are in the best position to hold proprietary information knows exactly the number of contracts they are chasing or the amount of utility bills they have been paying. If they have such an immense amount of information on hand, we can safely assume that they know if the company shares are overvalued or undervalued. If the managers are rational, their next course of action would be to place out new shares.

What can the shareholders do then? Observe! Though shareholders do not have superior information like managers, shareholders can observe and track the actions of the managers. In the event of a share placement, it would be reasonable to infer that if managers start selling shares (new or old), that the firm must be overvalued.

What about the other side of the coin then? Say the managers do predict a significant upturn in the economy and that today is the most appropriate time to begin investing in new facilities, equipment and machineries, then raising equity is very justified indeed.

Managers do raise funds for good projects but to raise equity would be sending signals that shares are overvalued. To avoid that, managers therefore would try to fund projects with funds that attract the least "attention" - retained earnings. When such funds are insufficient they would then use debts and then finally equity. This order of source of funds is known as the "Pecking Order". Pecking order also explains why companies try to keep high level of "Financial slack".

At this point, we will like to highlight our assumption that the managers are investing in new projects and capital goods that will produce an incremental value. This is basic managerial finance. They will be committing a cardinal sin if they raise equity to invest in projects that are not incremental in value. We certainly hope they are not raising cash for the sake of investment or following the crowd like what many did during the technological hey days.

Coming back, if we base our assumption on information asymmetry and the pecking order theory, placement share issue, as a result, is nothing more than a signal from management that shares are overvalued.

Implications of Discount on Placement Share Issues

What about the discount on the placements shares? We observe that many placements are made at prices lower than the current market price. Herein, we believe management and the placement agent will argue that in order to place out a huge placement successfully, a discount to buyers is required to attract them. However, in our opinion we think shareholders could be short-changed in this instance. The discount is a cost to the company and the shareholders. The discount will effect a wealth transfer from current shareholders to new shareholders and the financial intermediaries .

Indirect wealth transfer happens when new shares are sold at a lower price than its fair value. If prices are a discount of future cash flows, this discount means that the new placement shareholders are receiving higher returns than the current shareholders. When no new investments are made, this higher return of the placement shareholders comes from the current shareholders. When new investments are made, placement shareholders enjoy higher risk premiums then the current shareholders even though both undertake the same risk.

Right Issues For Corporate Governance

Proponents argue that rights issue is less favorable then placement issue because of at least 3 reasons:

rights are issued at a higher discount
rights may not be fully subscribed
rights issue entails higher float cost

These are all true but rights issue will demand stricter monitoring and governing on the corporate managers. How so?

Better managed companies keep a low financial slack because excess cash is a drag on return on asset. Don also wrote about signaling effect of dividends in his last article. He quoted Easterbook who argued that dividends force firms to maintain a regular cash payout and as a result lead them back into the capital markets to raise new cash when they need it for investment in NPV positive projects. He believed that firms that pay high dividend signals the managersEintent to maximize investorsEwealth and to subject him to capital market monitoring and reduces the potential for managerial self dealing and thus reduces agency costs.

Since good companies maintain a low level of financial slack in the company (through dividend and share buyback), they will often have to raise new funds when good investment arises. The high cost involved in issuing rights issue and the risk that shareholders may not fully subscribe to the rights (due to concerns of the investment) will discourage low quality firms from paying out high dividends or buy back their own company share as they rather invest in their own self.

As right issues are also offered at a substantial discount it will increase the cost of equity and capital. However, unlike a share placement, it does not have a wealth transfer amongst shareholders. The company will be extremely cautious on the use of the raised proceeds. They must scrutinize the projects or investments thoroughly before undertaking them.

Don't Give it if you Don't Want To

In conclusion, this article aims to dispel the myths on share placements. Indirectly, through this article, we would like to remind investors and shareholders that your managers have significant discretion powers simply because you have given them the right to do so.

A resolution to allow managers to place certain amount of shares at their discretion must be agreed by the shareholders in a general meeting before such placement can take place. I noticed that many such resolutions are passed (by the majority) but shareholders are unhappy after the placement. Don't Approve Such Resolutions If You are Not Comfortable.

Just another interesting point to note, if you realize that in the last three weeks alone, there are several companies that have placed out shares. However, not all have seen their share price rise after the placement. Some have and some have not. For reasons that are not difficult to see.

Remember all that glitters are not GOLD.

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Lost the link and date of the article below... :(
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Placements: three things to bear in mind

By R SIVANITHY

THESE days, placements are an increasingly common sight in the local stock market. This is to be expected since companies and vendors quite naturally want to capitalise on buoyant sentiment to raise cash (some observers believe a rising number of placements signals a market top, but we'll leave aside discussion of the market's outlook for now).

But the problem is that placements are often a double-edged sword for shareholders - they can work for you in some instances but against you in others. Worse, as is often the case in the stock market, things may not always be what they seem.

At the simplest level, placements can be viewed as creating an overhang of shares which would impede future progress. Thus, when it was announced last week that investment company Temasek Holdings placed out almost 800 million Singapore Telecom shares at a discount to the prevailing price, the market reacted understandably by selling down SingTel's shares to around the placement price. Several days after the announcement, the counter has still not recovered.

The reaction to the SingTel news was predictable and mirrors how the market generally receives news of more shares entering the market (for example, investors tend to take a dim view of a rights issue for the same overhang reasoning). For now, the basic lesson to be drawn is this: placements move prices.

Not all placements, however, are received negatively. For those who have tracked placements in the second line, it would be clear that sometimes the outcome is a price rise. One example of this is when a small or medium-sized company's main owner privately places out shares to a big-name player that the market perceives to be a sophisticated investor.

If the entrant commands an influential presence in the market, chances are good that the shares would rise after the exercise is completed.

Perhaps more importantly for shareholders, the price paid by the new shareholder forms a base in the market's collective psyche - a floor below which it is unlikely to fall. The reason for this should be obvious: markets always like to know what sophisticated investors have paid for their stakes so that when the price falls close to this level, investors, traders and punters invariably move in to buy, believing that the sophisticated party's entry price approximates true fair value.

Whether or not this is really the case is debatable and we'll discuss this point shortly. For now, we reach a second conclusion about placements: they serve as a signalling mechanism because when a big name moves in, the placement price signals a floor of sorts.

Things get a bit tricky from here on. If placements move prices and if they also serve as a signalling mechanism in certain circumstances, might it not be possible that sometimes, a false signal could be sent?

Put differently, might it not be in the interests of vendors, shareholders and big-name new entrants if the actual price paid for a placement is lower than that which is disclosed? It certainly bears thinking about - telling everyone that a sophisticated player has bought into a company at a higher price than that which was actually paid would clearly be beneficial all round.

Major shareholders or vendors gain because of the subtle signal of where the floor price lies; the new entrant benefits because it enjoys a large price cushion and is therefore in-the-money right from the start; and shareholders benefit because the signal ensures plenty of price support.

The only parties at a disadvantage in such situations would be the investing public at large, which leads us nicely to a third and final conclusion about placements: all of them should be viewed with scepticism.

Whether or not vendors deliberately send a false signal like the one just described is a matter of conjecture but it does bear thinking about - especially the next time a parcel crosses, the price starts to move and you're tempted to jump on board.

Dear Old Uncle Tony

2011-12-08T15:58:00.000+08:00

From my mailbox. Here's a joke to share....

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

Arriving in a hotel in KL Sentral he went to the bar and asked for a pint of draught Guinness. The barman nodded and said, "That will be one Ringgit please, Uncle Tony."

Somewhat taken aback, Uncle Tony replied, "That's very cheap," and handed over his money.

"Well, we try to stay ahead of the competition", said the barman. "And we are serving free pints every Wednesday evening from 6 until 8. We have the cheapest draught in Asia"

"That is remarkable value" Uncle Tony comments

"I see you don't seem to have a glass, so you'll probably need one of ours. That will be 3 Ringgit please."

Uncle Tony scowled, but paid up. He took his drink and walked towards a seat.

"Ah, you want to sit down?" said the barman. "That'll be an extra 2 Ringgit. You could have pre-book the seat, and it would have only cost you a Ringgit"

"I think you may to be too big for the seat sir, can I ask you to sit in this frame please"

Uncle Tony attempts to sit down but the frame is too small and when he can't squeeze in he complains "Nobody would fit in that little frame".

"I'm afraid if you can't fit in the frame you'll have to pay an extra surcharge of RM 4 for your seat sir"

Tony swore to himself, but paid up. "I see that you have brought your laptop with you" added the barman. "And since that wasn't pre-booked either, that will be another 3 Ringgit"

Uncle Tony was so annoyed that he walked back to the bar, slammed his drink on the counter, and yelled, "This is ridiculous, I want to speak to the manager".

"Ah, I see you want to use the counter," says the barman, "that will be 2 Ringgit please."

Uncle's face was red with rage.

"Do you know who I am?"

"Of course I do Uncle Tony"

"I've had enough, What sort of Hotel is this? I come in for a quiet drink and you treat me like this. I insist on speaking to a manager!"

"I will never use this bar again"

"OK Uncle , but remember, we are the only bar in Asia selling pints for one Ringgit... so that Now everyone can drink"

And MAHB Claims That It Was AirAsia That Asked For A Bigger KLIA2

2011-12-05T08:13:00.000+08:00

And the drama continues. On the Sunday yesterday: MAHB: AirAsia asked for bigger KLIA2

Sunday December 4, 2011
MAHB: AirAsia asked for bigger KLIA2
By B.K. Sidhu

PETALING JAYA: Malaysia Airports Holdings Bhd (MAHB) has fought back to say that it was building a bigger KLIA2 upon the request of its biggest customer, AirAsia.

It broke its silence after being criticised by AirAsia boss Tan Sri Tony Fernandes for building KLIA2 to cater to 45 million passengers, thus inflating the cost to RM4bil.

On its website, MAHB posted a document titled Why KLIA2 has to be bigger? which showed that AirAsia had estimated that passenger traffic at the new terminal would hit 28.7 million by 2015, 45.3 million by 2020 and 60.3 million by 2025.
The figures were more aggressive than MAHB's own projections for the same period, according to a graph included on the website.

MAHB said the new airport would cost between RM3.6bil and RM3.9bil and that AirAsia had asked for a fully automated baggage handling system from a semi-automated system, which caused the six-month delay in opening the airport.
KLIA2 will only be ready in April 2013.

AirAsia chairman Datuk Aziz Bakar said yesterday “we had requested MAHB to start thinking of building a bigger KLIA2 and to expand its capacity to cater to 45 million passengers since there has been a series of delays in the completion of the airport. The initial plan was for the airport to handle 30 million passengers and be completed in 2011”.

“(Now) if they do not start preparing for more passengers then we will not have the capacity as we anticipate to achieve 30 million passenger growth by 2015/16,” he said.

On the fully automated baggage system, Aziz said: “We had asked for a semi-automated system but MAHB decided on a fully automated system and we agreed to it.”

The controversy over the bigger airport has also sparked speculation over Tan Sri Bashir Ahmad's future in MAHB.

This led the market to speculate that he was supposed to meet Khazanah Nasional Bhd boss Tan Sri Azman Mokhtar yesterday. It could not be ascertained if the meeting took place.

Khazanah is a major shareholder with 54% stake in MAHB, and when contacted, its spokesman Mohd Asuki Abas said “we do not comment on speculation”.

On Friday, MAHB chairman Tan Sri Dr Aris Othman said Bashir had the full support of the management and board, quashing rumours the latter would be replaced.

See also: MAHB: AirAsia asked for bigger KLIA2

Me say?

AirAsia wants badly to market itself as a low-cost aircraft. However, to maintain its CHEAP look, it has separated a lot of charges from its ticket prices. When you use your credit card, AirAsia imposes an additional charge. Hello bankers! Aren't your merchants prohibited from making those charges? And then there's that idiotic check-in counter charges, which is the worst charge of the lot. What kind of charge is that?

Yeah, I think AirAsia should take a good look at itself first.

Featured Article: Why AirAsia Fighting The Airport Tax

2011-12-03T09:37:00.002+08:00

Good article posted on Business Times:

Why AirAsia is fighting airport tax hike

By Presenna Nambiar Published: 2011/12/03

AIRASIA Bhd could be bent on challenging airport operator Malaysia Airports Holdings Bhd's (MAHB) airport tax hike as a means to combat its own fast-rising charges.

Checks done by Business Times showed that the gap between Malaysia Airlines and AirAsia's long haul arm AirAsia X fares is fast closing in on a few routes.

A check on fares for London in January showed the fare difference between the two airlines was less than RM1,000.

For example, on both MAS and AirAsia X fares (excluding fees and taxes) for a return trip to Paris in January showed that MAS' fare was RM1,841 while AirAsia X's fare was RM2,108 (excluding baggage and meal charges) for return.

The differentiating factor, however, was its fees and taxes. MAS' charges stood at RM1,359 while AirAsia X's charges were RM606.

The increase in fees in AirAsia X are from a RM80 (return) carbon offset surcharge to be implemented in 2012.

It is believed that this charge is connected to the European Union Emissions Trading scheme, which comes into force January 1 2012.

The ruling requires airlines to pay up for carbon emissions, which have not been accounted for, in its air space.

"It could be because of all these charges that are coming up now. I guess they don't want to add on any other charges that don't actually help ease their own costs," an analyst who declined to be named said.

On claims that MAHB was profiteering from passengers, another analyst pointed out that a quick calculation of profit against number of passengers handled would show which company profits more from passengers.

A check showed that according to 2010 profit before tax (PBT) figures, AirAsia makes twice more money from passengers than MAHB.
MAHB made RM445 million in PBT for 2010, while AirAsia earned some RM1.1 billion in PBT.

According to this, AirAsia made RM42 per passenger, while MAHB earned RM15 per passenger. Only half of the 57.8 million passengers handled by MAHB are taken into account as it only collects airport tax one way.

"AirAsia is not being inconsistent to itself. Before it complies it's always visibly shown how unhappy it is. I think at the end of the day however, it will follow the letter of law and pay up if they have to," Maybank Investment Bank Bhd analyst Mohshin Aziz told Business Times.

The following was published on Star Biz yesterday.

Friday December 2, 2011
AirAsia and Malaysia Airports urged to bury the hatchet and move on
Friday Reflections - By B.K. Sidhu

IT does not look like the fight between Tan Sri Tony Fernandes and Malaysia Airports Holdings Bhd (MAHB) is going to end any time soon.

On Wednesday night, a day after MAHB explained why it would cost RM3.6bil to RM3.9bil to build KLIA2, AirAsia boss Fernandes fired yet another salvo. This time, his target was not the use of aerobridges, the high cost of KLIA2 or the MPs who questioned the AirAsia-MAS share swap. Instead, he was gunning for the rise in passenger service tax (PSC).

In his tweet, he said: “To all Malaysians. AirAsia has made flying affordable for all. Before, it was just for the rich. We won't allow Malaysia Airports to keep wasting money and increase charges for you. We will fight. Our campaign starts tomorrow.''
Yesterday morning, many AirAsia customers received an e-mail with the headline “Say NO to AIRPORT TAX INCREASE.'' This is the latest effort by Fernandes to garner support against MAHB over the airport operator's recent move to raise the PSC.

Initially, AirAsia was against collecting the PSC on behalf of MAHB. However, yesterday, the airline announced that it would continue to do so. Interestingly, it was MAS AirAsia's new partner that first wrote to MAHB to say it wouldn't collect the PSC effective Dec 1. Not long after that, it reversed the decision. Similarly, AirAsia's sister company, AirAsia X, had also send a similar letter to say it would not collect, but as soon as it was faxed over, it was withdrawn.

To recap, airport tax is imposed by the airport operator and is regulated by the Government. The world over, any traveller wanting to depart from any airport has to pay taxes for the use of airport facilities. The rates vary from country to country.

MAHB only got to raise the PSC after nine years of trying to convince the Government to give the greenlight. The new rates are RM25 to RM32 for travel via low-cost carrier terminal, which translate to a RM7 raise, and RM51 to RM65 (RM14 hike) for other airports in the country.
The next review is due in 2016, said MAHB managing director Tan Sri Bashir Ahmad at a recent briefing. He made it clear that the rate would remain even though the company is building a new airport for low-cost travel.

By turning to the passengers, Fernandes wants the travelling public to be the jury in deciding if the RM7 increase in the PSC is justified. His critics, on the other hand, have pointed out that AirAsia and AirAsia X too have introduced charges that can be a burden, such as the RM10 fee for counter check-ins.
AirAsia's very public attacks against MAHB is seen as a power struggle, and in most power struggles, there are losers. The question in this case is what will be the consequences if Bashir loses and what would it mean for MAHB; and if Fernandes loses, what would be his next move?

It is unfortunate that both parties cannot seem to work things out amicably. Perhaps they should spell out exactly why MAHB needs to raise the PSC and why Fernandes is so against the move.

MAHB and AirAsia should remember that both are Malaysian companies, and while both want to be seen to be doing their jobs MAHB needs to make money in managing airports and Fernandes needs to make sure travellers do not pay more they can avoid outburst in the public domain.
It is about time they bury the hatchet and find a solution that benefits all.

Deputy news editor B.K. Sidhu is amazed at the magnitude of work involved in building KLIA2.

Featured Posting: REITS: Where Is The Moolah?

2011-11-30T18:01:00.001+08:00

Read the following posting on M.A. Wind's Corporate Governance in Malaysia : The Reit myth busted

It's an incredibly good posting, one that deserves to be featured.

Let me reproduce the entire posting:

Very interesting article in The Business Times (Singapore) about REIT's. The rules of the MAS (Monetary Authority Singapore) do not align the interests of REIT managers and their shareholders. Shareholders like steady, large dividends. But REIT managers are paid for the amount of assets under management. So after paying out juicy dividends, they like to recoup the lost assets with rights issues, to which the shareholders have to subscribe if they don't want to get diluted (at a cheap price). Instead of receiving money in the form of dividends shareholders are actually transferring more money out in the form of rights issues.

I hope things are better in Malaysia, haven't really followed the REIT's very much. In general, this is also a very good warning against companies who often are involved in rights issues.

Published November 26, 2011
"Show me the money"

The Reit myth busted
Whatever Reits pay out in dividends, they will take back a few years later in the form of rights issuesBy TEH HOOI LING, SENIOR CORRESPONDENT

THE high yields of real estate investment trusts (Reits) are tempting. And indeed, they have been touted as a relatively safe and stable instrument to own if one is looking for a steady stream of income. As such, many investors see Reits as a good asset class to have in one's retirement accounts.

But you know what? That Reits are good income-yielding instruments is but a myth. The thing is, whatever they pay out in dividends, they will take back - all and more - a few years later in the form of rights issues.

Here's what I found. Of the 17 Reits which have a listing history of at least four years on the Singapore Exchange, only three have not had any cash calls or secondary equity raising. The remaining 13 have had cash calls, and many had raised cash multiple times. One had a few rounds of private placement of new units which diluted the stake of existing unitholders somewhat.
For many of these Reits, the cash called back far exceeded the cash received. So, the myth of Reits as almost comparable to a fixed income instrument is really busted.
Take CapitaMall Trust (CMT) which was listed in July 2002. Assuming that Ms Retiree bought one lot or 1,000 units at the initial public offering (IPO) for a total sum of $960. For the whole of 2003, she received $57 in dividends. However in that year, CMT also had a one-for-10 rights issue. To subscribe for her entitlement, Ms Retiree would have to cough out $107.

In 2004, she would received $89 for the total number of CMT units she owned. That year, CMT had another rights issue, also one-for-10. The exercise price was higher at $1.62. To subscribe, Ms Retiree would have to fork out $178.

In 2005, CMT again had another fund raising exercise via rights issue. Ms R would pocket $124 in dividends but in that same year, had to return $282 back to the Reit.

In the next three years - 2006 to 2008 - Ms Retiree felt rich and happy. She merrily banked in her quarterly distributions which amounted to $404 for her holdings of CMT. Her one lot, after three rights issues, had grown to 1,331 units.

In the following year, another $175 was distributed. But CMT wasn't going to let Ms R be happy for long. It launched a big one - a 9-for10 rights issue. To fully subscribe for her entitlement, Ms R had to empty her bank account of a whopping $982.

And you know what, the cash call came in March 2009, when the Straits Times Index fell below 1,600 points, and many retirees were dismayed to see their investment portfolios plunge by half or more. Many fret if they would have enough left in the pot to sustain their lifestyle. Having to cough up more money for a Reit was the last thing that they wanted to do!

Negative cash flowAnd here's the final tally. Since its IPO until today, a holder of one lot of CMT would have received $1,264 in cash distributions. However, in all, he or she had to return $1,549 back to the Reit so as to subscribe to their entitlement of new issues. That's a net outflow of $284 per lot.
It's the same story with K-Reit Asia, Capitacommercial Trust, Frasers Commercial Trust, Mapletree Logistics, First Reit, Lippo Malls Indo Retail Trust, AIMS AMP CAP and Saizen REIT in that what was taken back from investors was more than what was given out.

K-Reit has been one of the most aggressive fund raising Reits. Had you started with just one lot when it was listed in April 2006, you would have to dish out $8,399 to subscribe to your rights issue. Distributions amounted to $1,110, resulting in a net outflow of $7,289.
For Reits with at least four years of track record, only Fraser Centrepoint, Parkway Life and CapitaRetail China have not had any cash calls.

Instead of a rights issue, Suntec Reit raised funds by issuing new units to some institutional investors at a slight discount. Existing unitholders don't have to cough out additional cash, but they would have their share of earnings diluted somewhat.

Misalignment of interests
Reits are managed by managers, and managers are paid based on the size of the portfolio that they manage. So the incentive is for the managers to continue to raise money and expand the portfolio size. Sometimes this is not done in the best interest of unitholders.
The most recent controversy was over K-Reit's purchase of Ocean Financial Centre (OFC) from its sponsor Keppel Land. K-Reit has launched a 17-for-20 rights issue to pay for the purchase which was deemed by the market to be expensive at a time of uncertain outlook and when office rental is expected to ease.

BT reader Bobby Jayaraman argued that rather than be compensated based on factors such as the value of assets, net property income and acquisition fees, Reit managers should be paid based on a combination of growth in distribution per unit and market valuation of the Reit.
'If Reit managers were paid on the basis of distribution per unit and market valuation growth, would K-Reit have bulldozed its way through the OFC acquisition like they have done?

'The day K-Reit announced the OFC acquisition, its stock price fell close to 10 per cent and has continued sliding. Yet, its Reit manager will take home significantly increased management fees while shareholders would have lost a good chunk of their capital even as they bear significantly more risk in the form of higher leverage and potential property devaluations given the uncertain environment,' he wrote to BT.

Misalignment of interests aside, there are also unitholders who clamour for growth.

But while Reits may not be the perfect income yielding instrument that they are made out to be, they have proven their capacity for capital appreciation. Relative to the capital ploughed in, CapitaMall Trust has rewarded its unitholders with a return of 127 per cent. Most Reits have yielded positive total returns.

Instead of buying Reits for yields, some savvy investors only buy them when they see those with good quality assets trade at sharp discounts to their book value. For example in the first half of 2009, CMT was trading at 50 per cent its book value. Today, it is not as cheap. At $1.755, CMT is now trading at 13 per cent premium to its net asset value of $1.55.

Hence, valuation metrics which apply to a typical asset heavy stock would apply to Reits as well.

Hats tip for M.A Wind for this article.

And CIMB Nicely Upgrades JCY from 58 sen to 1.14

2011-11-30T14:00:00.000+08:00

Since I had blogged on JCY this morning in the posting A Look At JCY's 'Earnings Turnaround', I was rather 'excited' when I got hold of the JCY report from CIMB.

I wonder what they would say......

Well, CIMB UPGRADED JCY to a TRADING BUY with a target price of 1.14.

And this HOW they changed their earning estimate.

CIMB changed their previous JCY's fy 2012 earnings estimate of 138 million to 373.8 million!!.

YES!

The earnings estimate for JCY is now 373.8 million!!!!

I guess with such a nice, juicy, fantastic, lovely and sexy earnings estimate, JCY is worth 1.14.

**** JCY total earnings for its fy 2011 is only 14.553 million. ( CIMB estimate was 138 million!!! LOL! )

**** I can still remember CIMB giving an estimate of 359 million for JCY's fy 2010!! And how much did JCY actually earn for its FY 2010? 173.763 million only!!!!

**** Currently JCY last traded 73.5 sen. Down 3.3%.

A Look At JCY's 'Earnings Turnaround'

2011-11-30T10:08:00.001+08:00

JCY reported its earnings last night. It did MUCH BETTER than I had expected.

From the edge:

JCY records turnaround with 4Q net profit of RM26.4m
Written by Joseph Chin of theedgemalaysia.com
Tuesday, 29 November 2011 18:16

KUALA LUMPUR (Nov 29): Hard-disk drive manufacturer JCY International Bhd posted net profit of RM26.44 million in the fourth quarter ended Sept 30, 2011, boosted by higher shipments and a favourable US dollar exchange.
It said on Tuesday that the fourth quarter financial performance was a turnaround from the net loss of RM25.18 million a year ago. Rrevenue dipped 1.5% to RM439.92 million from RM474.71 million while earnings per share were 1.29 sen compared with loss per share of 1.23 sen.

JCY said when compared with the third quarter, its revenue rose 11.3% while profit before tax of RM26.4 million was also a turnaround from the pre-tax loss of RM31.8 million in the third quarter.

For the 12-month period, its earnings plunged 92% to RM14.55 million from RM173.76 million in the previous financial year. Its revenue fell 17.8% to RM1.671 billion from RM2.033 billion.

Elaborating on the fourth quarter performance, it said the increase in turnover was due to the overall increase in revenues arising mainly from increases in the shipment quantity and favourable US dollar exchange rates.

“The cost of sales decreased despite the increase in the overall sales due to efficient cost management and improvement in output through the better yield and improvements in operational efficiency,” it said.

JCY group chairman Dr Rozali Mohamed Ali said the results were satisfactory given the challenging business environment.

“We are very comfortable with our improvement in the operational efficiency, and we will continue to focus our efforts in improving our yields to maintain our sustainable profit improvement for the next financial year,” he added.

JCY is fortunate as its facilities in Thailand were not affected by the recent flooding. JCY continues to operate at full capacity in Thailand.

Rozali said JCY was taking a number of steps to increase its output from its factories in Malaysia and elsewhere, including restructuring its production output and product mix, and accelerating its expansion for its plants in China.

“We will continue to work closely with our key customers to meet their requirements for our HDD components over the next few quarters.

“However, the biggest challenge facing JCY in Malaysia continues to be shortages of its work force which constraints its output. JCY has increasingly implemented automation for its production and this has resulted in the improvement of its output yield recently,” he said.

And here's a look at JCY's earnings performance.

For its FY 2010, JCY recorded profits of 173.763 million. ( I can still remember CIMB giving an estimate of 359 million for JCY's fy 2010!!)

Last night, after its 'earnings turnaround', JCY made only 14.553 million.

Yeah, the EPS is rather so meaningless (if you have to know, it's only 0.71 sen!)

So how shall I put this 14.553 million into perspective?

RHB's research report back in Feb 2011, would be an excellent example. Back then, JCY was trading at 66 sen, RHB gave an extremely bold call, saying JCY should be valued at 22 sen!

See the arrow?

RHB had estimated that JCY earnings for its fy 2011 should be around 44.9 million. Based on an earnings of 44.9 million, JCY's EPS should be 2.2 sen. With an EPS of 2.2 sen, RHB reckoned that JCY should only be worth 22 sen.

Remember, on that Feb day, JCY was trading at 66 sen.

Today. JCY made only 14.553 million for its fy 2011. (RHB estimate was 44.9 million).

JCY is now trading at 76 sen. (Back then JCY was trading at 66 sen)

How?

ps: I don't think RHB has a report out on JCY. What a bummer! I would have loved to see what RHB had to say on JCY's earnings.

ps: SpAM postings would not be published.

Green Packet Makes Bullish Pledge Again Despite Losing Money For The 15th Consecutive Quarter

2011-11-24T09:09:00.000+08:00

I saw the Star Biz headline on Green Packet's earnings: Green Packet makes profit pledge again

PETALING JAYA: After reporting yet another loss-making quarter, wireless services provider Green Packet Bhd has again given a promise of profitability.

This time around, at a media briefing yesterday on the company’s third-quarter results, group managing director CC Puan said Green Packet aimed to report profits by the second half of next year.

It is a pledge familiar to shareholders. At the briefing, Puan was asked twice if he was indeed confident of delivering an earnings before interest, tax and amortisation (EBITDA) break-even by the end of this year. He did not clearly answer in the affirmative but said that looking at the current figures, he believed that the company was on its way to achieving that goal.

Green Packet has seen improvements of late and has narrowed its losses since a year ago.

Puan said the company could post a profit for 2013 on condition that it registered positive net additions in subscribers for every month in the next year.

LOL!

'Makes profit pledge again ...'

Oh yeah we heard it too many times before and it's great to see the Star biz actually write 'It is a pledge familiar to shareholders'!

And more interesting was Puan was asked TWICE if he was confident of delivering EBITDA positive by end of the year, after all if one had followed past posting, Puan had declared only on Aug 2011 that he remained bullish that the company will be 'ebitda positive' by the end of this fiscal year!

To recap the never ending record....

Feb 2008: we expect the WiMAX business to be ebitda (earnings before interest, taxes, depreciation and amortisation ) break-even this year,"
May 2008: we are targeting EBITDA positive by end of next year.
May 2009: P1 will be EBITDA will break-even from next year.
Feb 2010: concurred that will be EBITDA positive in the second half of this year.
May 10: the company remained optimistic that it will be able to achieve an Ebitda break even
June 2010: Green Packet Bhd’s target to turn earnings before interest, tax, depreciation and amortisation (Ebitda) positive by year-end may be delayed to next year
Sep 2010: Puan added that Green Packet is maintaining that its Ebitda (earnings before interest, tax, depreciation and amortisation) will break even by the end of this year.
Nov 2010: "We're confident of breaking even no later than the first quarter. Ebitda (earnings before interest, tax depreciation and amortisation) turnaround is really at the corner," chief executive officer C.C. Puan said at a press conference in Petaling Jaya, Selangor, yesterday.
Feb 2011: defers its target of being EBITDA (earnings before interest, taxation, depreciation and amortisation) positive to end-2011.
May 2011: Green Packet Bhd is on track to achieve its EBITDA (earnings before interest, taxes, depreciation and amortisation) break-even target by this year-end, according to the group's managing director and chief executive officer Puan Chan Cheong.
Aug 2011: ... remained bullish that it will be a "ebitda positive" company by year-end

Yes, since Feb 2008, Green Packet sang the same tune, over and over again. And everytime, the company fell short.

And for the record, this is the 15th consecutive quarters of losses and total net losses amount to 547.648 million!

And What About AirAsia's Earnings?

2011-11-23T09:25:00.000+08:00

My last update of AirAsia's earnings was done on May 2011 : Update On AirAsia Earnings.

Last night AirAsia reported its earnings. It's earnings wasn't impressive at all. That was expected as a stronger USD will cause huge damage to its books. ( Most of AirAsia's borrowings are denominated in US$ )

Here's some flashback. I think it's rather important to know what has happened.

Well, I had noted the positive changes in the company since Aug 2010.

In the posting , Positive Move That AirAsia Defers Their AirBus Order I had said the following...

However, let me say this, I have to give AirAsia some credit for eating the humble pie and for successfully persuading AirBus to allow them to defer the delivery of the air crafts and more so, this move really gives them a fighting chance to survive and to overcome their insanity of building a company which was clearly over burdened by the immense corporate debts they took upon to finance the building of their business.

Yeah.. AirAsia should be ok for the next one year or so... yeah.. this is a POSITIVE CORPORATE exercise... it's certainly extremely crucial that AirAsia made this postponement of delivery.... but... deferring is only a postponement.... and in regardless, these air crafts order still needs to be delivered!

And AirAsia the stock had done fairly well since then.

On 4 Dec 2010: A Look At AirAsia Stellar Earnings.

The positive moves from the deferment of the aircrafts was visible on the balance sheet. I made the following remarks.

The cash/debt level, has it improved?
The c.c or capital commitment column 'improved'. Would I pay attention to the value? Or should I pay attention to the number of aircraft to be delivered?

On 24 Feb 2011: What Do You Thnk Of AirAsia's Earnings?

Cash actually improved a lot compared to the previous quarter.
And debt increased slightly.
But the capital commitment... there was a huge improvement, yes?

I was focused on the improvement in the balance sheet.

For me, this is the MOST crucial thing. AirAsia used the debt leverage game to build its empire. Instead of just borrowing, it BORROWED. Way too hedge and in my opinion, it's like it's building a corporate which will be too huge to fail. And the massive borrowings is of course used to finance that rather insane order of aircrafts. Capital commitment contracted to purchased new aircrafts at one time stood close to 28 billion ringgit. ( do refer fy 2007 earnings ) and with AirAsia already saddled with a debt of 3.7 billion then (in fy 2007), the risk was so huge. My mind was thinking, how was AirAsia going to repay the debts, let alone finance its rather grossly optimistic aircraft purchase. That was my reasoning.

But as mentioned in Aug 2010, when AirAsia deferred its aircraft delivery, it gave itself a chance to survive. By not accepting new aircraft delivery, its loans ( which now has ballooned to some 7.8 billion - remember back in fy 2007, AirAsia loans was only 3.7 billion! - yeah it's loans doubled!!) stopped growing. The cash flow from AirAsia's operations is now used to rebuild its piggy bank and it also managed to pare down its debts. ( Ah.. that one private placement of shares did helped its balance sheet too!)

The chances could be seen.

Then came June 2011.

Another historical purchase order of aircrafts was made.

It blew my mind.

At that moment of time, out of an order of 175 new aircrafts, AirAsia only receive 89. Yeah remember in Aug 2010, it had to get a deferment in aircraft deliveries.

And less than a year later, in June 2011, after some improvement in its balance sheet, AirAsia did the unthinkable! It ordered 200 new aircrafts!

OMG!

I was thinking what grandiosity!

How will AirAsia finance its aircraft purchase???

Why the need to order so soon and so big??????

It blew my small mind. I was left speechless. So there's where we are at now.

So last night, when I saw AirAsia released its earnings, I was so interested to see its balance sheet.

Here's the updated earnings table I made. C.C stands for Capital Commitment for new aircrafts.

Cash shrunk a little and its debts were relatively unchanged but the most glaring thing is the current capital commitment of 57.450 BILLION!

Exactly!

AirAsia is committed to purchase aircrafts worth some 57.4 billion!

And what does AirAsia currently have in its balance sheet? 1.6 billion cash and loans of 7.6 billion.

And the question on my mind is how will AirAsia going to finance this order of such grandiosity???

KNM's Earnings Falling Way Short Of Its OWN FY2011 Profit Guidance

2011-11-22T21:34:00.001+08:00

On the Edge: http://www.theedgemalaysia.com/business-news/196613-knm-posts-net-loss-rm11629m-in-3q-.html

KNM posts net loss RM116.29m in 3Q Written by Surin Murugiah of theedgemalaysia.com
Tuesday, 22 November 2011 18:58

KUALA LUMPUR (Nov 22): KNM GROUP BHD [] posted net loss RM116.29 million for third quarter ended Sept 30, 2011 compared to net profit RM56.09 million a year earlier, due mainly to one off provision for foreseeable losses and credit impairments.

The company said on Tuesday that revenue for the quarter rose 6.41% to RM445.18 million from RM418.36 million in 2010.

Loss per share for the quarter was 11.88 sen compared to earnings per share of 5.69 sen a year earlier, while net assets per share was RM1.69.

There was no dividend declared or recommended during quarter under review.

However, KNM said it had adopted a dividend policy of distributing at least 50% of its consolidated net attributable after tax profit (subject to the availability of distributable reserves and compliance of financial covenants) with effect from financial year ending Dec 31, 2012.

For the nine months ended Sept 30, KNM posted net loss RM86.42 million compared to net profit RM110.57 million in 2010, while its revenue grew 19% to RM1.4 billion from RM1.17 billion.

Reviewing its performance, KNM said the higher revenue in this year was due to higher job recognition.

On its prospects, KNM said notwithstanding its strong order book, the company expects the business environment for the remaining quarter to remain challenging due to global uncertainties.

“However, the board is optimistic that going forward the prospects for the oil & gas industry remains positive,” it said.

For the current nine months KNM posted net loss of rm 86.42 million.

The most interesting me was KNM guidance issue. Posted on 9th March 2011: What I Think Of KNM's Earnings Guidance

KNM’s management had met with analysts earlier in the week and guided earnings before interest, tax, depreciation and amortisation (Ebitda) of RM363 million for its FY11 (ending Dec 31, 2011), while the Ebitda for FY12 is targeted at RM564 million.

KNM met and TOLD analysts they would have a EBITDA of RM 363 million this fiscal year but for the current nine months KNM posted net loss of rm 86.42 million.

And like mentioned before...

Let's compare KNM's guidance versus actual performance.

fy 2008, KNM made 336.175 million. (KNM guided 450 million)
fy 2009, KNM made 257.847 million. (KMM guided 700 million)

Do refer also this August posting: KNM: Of Profit Guidance And Corporate Governance

Open Letter For Samgoss: Allegations Of Being A Liar And A Cheater

2011-11-18T08:50:00.001+08:00

Dear Ah sam,

It was a change to see that you finally have the guts to post under your own blogger profile Samgoss.You certainly caught me by surprise after all these many years of posting under multiple blogger nicks. For me, it was an act of cowardice. Hiding under these multiple nicks you had made continued meaningless comments harassing other blogs, like fusioninvestor, malaysiafinance and nexttrade. And you even went on to make continued posting against these bloggers. And your continued war of words against nexttrade simply blew my mind. Why the need for such childish acts?

Makes me wonder. You claim you have 3000 subscribers. WOW! Good for you.

But as you are aware, ms. jackie made a serious allegation against you.

Let me repeat again what was written, just in case you forgotten all about it. You know, just to refresh your memory.

Moola, that guy is a cheater and liar and screwing his subscribers left right center. My girlfriend, who followed him, just complained to me that he is an unscrupulous man.
Why she said that ?
She told me that he made a call on PJDEV-WC long before market downturn. Price went down from more than 0.30 to less than 0.20, but not before most of his subscribers bought in at more than 0.35, because he always made the call to buy after he load up on the stock first (you get what I mean by cheater), so most will chase it up.
I was told that his average price was also slightly higher than 0.30 for 300 lots. and when market downturn, he advised his subscribers not to average down but hold onto whatever they have bought, because he himself is not buying and selling this counter.
then all of a sudden today, he posted up that his average price for PJDEV WC is now 0.24. when queried, he said he made a deal with one of his fan to share the fan's holding of this counter at sharing of profit and loss at 50/60 ratio.
she was really upset with this cos it showed that he can say whatever he wants to defend himself. He will always be right, no matter what. THat is why she is calling him a liar and cheater.
Well , what do i know, i am just a housewife who listens to my girlfriends' rants.
anyone is welcome to comment about this, including sam.

Now that's a very, very serious allegation. You charged members for subscriptions. Members pay because they wanted your so-called stock tip. When the stock fell good, you are accused of fudging your average buy price. By changing this average buying price lower, your stock portfolio certainly would look good. And yeah, a good looking stock portfolio is very important for your business.

According to jackie, you then told your subscribed members that your buying prices for PJDEV-WC is much lower. From an average buying price of 30 sen, your buying price suddenly became 24 sen.

Fudging and changing such important data is a massive no-no. You cannot be doing such a thing. It's bad for your subscription business. And yes, you will be called a liar and a cheater.

Oh yes, I shall give you credit for being brave enough to reply to jackie on this small blog of mine. However, I was utterly appalled by your shocking behaviour in your reply for it was simply unsavoury. Jackie declared that she was a housewife and her friend (which is girl) made these allegations. And what did you do? You asked if she was a lesbian!!

Duh!

Here's your exact comments.

to jackie..just curious...on first sentence , u put there..my girlfriend subscribed to sam blog, at last sentence u said " i am just a house wife " woww which is which..r u a lesbian ?
so... who is liar n cheater ^_-LOL!

Pjdev-wc? woww... asked ppl not 2 catch d falling knife oso wrong arh ? so.. r u guys making now ?
perhaps u should tell me those who hv made from " stocks in my radar 2 " a months ago... r there get cheated by me oso ? LOL!

u wanna 2 tell lie..pls make sense abit lah.. dun be so cheap like mo mo cow mah !

hello mo..thanks 4 posting up my comments...free ? aiyahh..where got free lunch in this world ... fyi... ppl only cares how much u can help them 2 make money ..d rest who cares..more over when come 2 shares info n tips...my integrity is always there , otherwise..how on earth I can get >3,000 members 4 my private blog ? how on earth I can survived since year 2000 ?
k..that is enuf 4 today..wait till this week end ok ? i will give u a good write up later! 88 n take care

And you refrained from answering the accusation that you changed your average buying price from 30 sen to 24 sen. That's a serious allegation. And you simply refused to answer. Instead you start of by asking if she is a lesbian! And then you divert the whole thing by saying others have made money from your other tips.

But that's not the point isn't it?

I can understand, you as a owner of a private subscription webstite, a website which charges a fee, that you want to look good with ALL of your stock tips. You cannot have a stinker of a stock recommendation. That stock you recommended to your subscribers at 35 sen fell to 20 sen. That obviously look really bad.

But for you to change your average buying price from 35 sen to 20 sen, is a big no-no. It's cheating and it's bad for business.

And the last passage in your reply to jackie:

aiyahh..where got free lunch in this world ... fyi... ppl only cares how much u can help them 2 make money ..

Oh yes, I agree so much in what you are saying on the free lunch thing. It's like Alex Lu of nexttrade. He post his own reasoning and recommendations free of charge in his free website. Hmm ... everything is FREE from Alex but the difference for you sam is that you charge money.

You charge your subscribers money. No money no entry to your private blog.

From this perspective, I am sorry but sam, by collecting these subscription monies, you no longer have the right to make such a statement. Yes, you collect money and when your stock tips go bad, you CANNOT tell your subscribers 'where got free lunch in the world'.

So it's so important that you answer that allegation against you.

Did you not change your average buying price from 30 sen to 24 sen?

And your subsequent reply to jackie...

2 jackie , another proof to show that samgoss is a conman, dare to click this ?;

http://samgang.blogspot.com/2011/10/v-someone-made-rm231000-from-my-china.html

TDM cost 2.68+ ^_-
latest update..sold all my remaining tdm @ 3.27 just now...bal is now zero..so jackie..how arh ? y yr friend never tell u about this meh ?

still cheating arh ? LOL!

Sorry but I have to LOL now!

LOL!

Diverting the main issue is simply pathetic.

What has your buying and selling of TDM got anything to with you changing the average buying price of your PJDEV WC?

And oh, your TDM.

Here's another good one.

On that reply of yours, you boasted your cost of TDM was 2.68 and you sold at 3.27.

Yes?

Now take a look at your last reply.

yah almost forgot...mr jackie... TDM closed @3.42 in mid day...another 12 cts up, yr so called "girl friend " still holding arh ? LOL

Ah.... I find it very strange you bring out TDM. Why? Because you have already state that you sold at 3.27 and you have zero balance. How nice. You sold and the stock moved higher and you still want to brag about it?

And then you now insist jackie is mr. From a lesbian to a mr. You seriously have something against female, ah? Do you have an inferior complex when you speak to a female?

But all this is still besides the point.

DID you change the average buying price for PJDEV-WC from 0.30 to 0.24?

This is an important issue for your business and for jackie and her girlfriend, I believe you owe them a sincere reply. No more beating around the bush, no more rudeness and just answer the question.

Not answering would simply be bad for your business.

Do take care.

Have a good weekend.

Yet Another Meaningless Attack From Samgoss

2011-11-16T10:16:00.002+08:00

Must be the season.

Hey do you remember this posting: Do You Want To Know ...... Oh yeah, the posting about the utterly meaningless. He created multiple blog user names to spam posting of hatreds on other blogs ( see how he attacked Alex Lu's blog shown in the posting Totally Meaningless and to top that, he was caught red handed using multiple blogger nicks to promote himself on his blog!

Check out this link on his blog. All the comments. under different names, comes from the same blogger profile! LOL! - http://www.blogger.com/comment.g?blogID=2900671137131972978&postID=2966191914182449127

A blog where the owner creates multiple users promoting how good the owner is. LMAO! What a tosser!

And as I said, this must be the season. This time Samgoss decided he was brave enough to post under his own nick!

Bravo!

Good that he finally has the balls to make an utter nonsense posting under his own blogger profile and not be a coward hiding under multiple nicks.

And by doing so, he has given yet another conclusive evidence of his past shenanigans ( I wonder if he understands this word. )

Now check this out. In the posting: http://whereiszemoola.blogspot.com/2011/11/airasias-tony-fernandes-utterly.html

Samgoss said...

to all bloggers in town , read this >

Tastless ?

Talk about low class n tastless, no one can beat mo mo cow !

critics Tan Teng Boon n osk r even low class than tony, not only akagi shigeru agreed on that, we samgang oso 100% agreed on how cheap ze mooloah can be !LOL!

Thief calling to catch thief !LOL!

Moolah always thought he got class n taste..LOL! ha ha

He always thought he is a class above others ^_- LOL!

Who r u moolah ? u r just an arrogant low class banana ! what better name can be awarded than this !? LOL !

Like I had mentioned in the posting, Do You Want To Know ...... , scroll over the name Samgoss, and you will get the blogger profile http://www.blogger.com/profile/08674531928566826301. Remember that profile number.

And the key phrase is this 'to all bloggers in town' .....

Hmm.... now where have I heard this phrase before?

Oh.... check this comments from the posting... http://whereiszemoola.blogspot.com/2011/09/look-back-again-on-mmc-purchase-of.html

Clearwater said...

To all bloggers in town , read what moolah's fan describe the character of mad cow .....

Now Clearwater blogger profile is the very same blogger profile highlighted in the posting Do You Want To Know ..... and the blogger profile number is 13845454760825339051.

Now check out this comments from the posting... http://whereiszemoola.blogspot.com/2011/07/buy-that-chinese-stocks-cos-of-pe-is.html. Can you the posting from Ms. Emily Leong? Yeah, she decided to join the fun. But Emily Leong has the very same profile as Clearwater which is 13845454760825339051. LOL!

One blogger profile, two blogger names but both using the same phrase 'to all the bloggers in town'...

LOL! Utterly childish or what?

Then in the posting http://whereiszemoola.blogspot.com/2011/07/bumi-armada-today-is-different-from.html. The same blogger profile 13845454760825339051 struck again. This time, the user name is jeremy tan and Mr. Jeremy Tan also decided to use 'to all the bloggers in town...'

LOL!

And then there is more! In the posting http://whereiszemoola.blogspot.com/2011/06/smartag-i-am-wrong-because-stock-moved.html, the same blogger profile strikes again. This time, the user name is KC and KC also uses 'to all the bloggers in town...'.

And check out all the contents. Why exactly the same like Samgoss one?

LOL!

I could show more but it's really getting boring and meaningless, yes?

Hmmm.... where should I file this posting?

Oh yeah... it goes under the label Utter Nonsense.

:)

AirAsia's Tony Fernandes Utterly TASTELESS Rant On Facebook

2011-11-16T08:41:00.001+08:00

On most newspapers (this was taken from thesundaily.my) http://www.thesundaily.my/news/209450

AirAsia chief launches attack on MAHB on social mediaPosted on 15 November 2011 - 11:19pm
Last updated on 15 November 2011 - 11:25pm

KANG SIEW LI

PETALING JAYA (Nov 15, 2011): AirAsia chief Tan Sri Tony Fernandes is in the news again, this time attacking Malaysia Airports Holdings Bhd (MAHB) in the social media realm, the same day the airport operator was raising the airport departure tax for international passengers as well as aircraft landing and parking charges for airlines.

Slamming MAHB's move, Fernandes, who is also a director of Malaysia Airlines (MAS), said: "With economic conditions as they are, MAS and AirAsia have given MAHB great ideas to increase their income by working with us and attract more (new) airlines (to operate from Malaysia)... then (MAHB should) reduce (airport) charges to the people.

"It's the passengers who pay airport tax. We are fighting for the people of Malaysia!" he posted on his Facebook page.

Incidentally, AirAsia had scheduled a press conference yesterday to address the hike in airport taxes by MAHB, but had cancelled it at the last minute, "due to an unforeseen circumstance".

MAHB had last month received the Transport Ministry's nod to raise airport tax at the country's 39 airports it manages, excluding low-cost carrier terminals (LCCTs), to RM65 from RM51 for international travellers. For departing international passengers at the LCCT in Sepang and Terminal 2 Kota Kinabalu, the airport tax will be raised to RM32 from RM25.

The aircraft landing and parking charges, meanwhile, will be gradually raised by up to 30% and 64%, respectively.

"Too many empty promises from MAHB. We as airlines get blamed for their poor performance," Fernandes said.

He also took a swipe at the Transport Ministry's decision to approve the hike, asking why it wasn't defending the people "to make sure they get good value for the (old) RM25 airport tax".

"They are the regulators. The ministry's secretary-general, Datuk Long See Wool, sits on the board of MAHB. How can he be objective and play fair to the airlines?" he asked.

Fernandes also questioned MAHB's recent move to build a 3.96km third runway at the new LCCT called KLIA2 in Sepang, the delay in its completion as well as the escalating cost of building KLIA2.

"Why is KLIA building a third runway when they don't use dual mode on two runways. London's Heathrow Airport has 60 million passengers with two runways. Fix the air traffic system, MAHB. That would have been cheaper than building another runway," he said.

"AirAsia wants MAHB to come clean. Terminal (KLIA2) is supposed to be operational by June 2012 and supposed to cost RM2 billion. What's the truth?"

When contacted by SunBiz yesterday, MAHB CEO and managing director Tan Sri Bashir Ahmad Abdul Majid said the airport operator will respond in due course.

Fernandes also hit out at the four MPs who had on Monday criticised him and Khazanah Nasional Bhd CEO and managing director Tan Sri Azman Mokhtar over the recent MAS-AirAsia share-swap deal.

"(The) four MPs have...made it very personal for five years. One MP said I rape poor villagers.

"(But) villagers could never fly before. We have worked so hard to make flying affordable and 130 million people have flown due to us. Why are these members of parliament not questioning the cost of airports and fighting for lower taxes for the rakyat?" he wrote.

Oh my dearest moo moo cow.

What are we, Malaysians, turning ourselves into???

A CEO using a social media network to launch a verbal attack on another corporation?

It now appears irrelevant on who is right and who is wrong but such verbal attack is utterly tasteless and low class. Seriously? That is not the right platform and as a 'leading' Malaysian CEO, Tony should have known better on what and what not to do.

Using Facebook to make a rant?

TSK! TSK! TSK!

That's utterly childish.

Letter On XingQuan Again

2011-11-12T09:38:00.009+08:00

Got this new set of comments from gwynwelsh.

Dear Investors,

Please excuse me for heading towards a different subject i.e. on Xingquan. I have just received the annual report and I have also went through analysing the top thirty largest shareholders of this company. I have been a shareholder of Xingquan for more than a year now and I must admit to all of you that my investment had been dismal. My investment shrunk more than 45% as of the time of this note. This is also why I pay particular attention on Xingquan and would very much glad to hear from fellow investors on this counter. The annual reports reveals that Koon Yew Yin, dubbed to be the Warren Buffet of Malaysia has holdings more than 11.12% in Xingquan. His holdings were held through his wife, family and himself. 11.12% means more than 34 million shares. The other notable shareholder of Xingquan is Dato Koh Kin Lip, through Rickoh Corp and himself. Dato Koh has 2.52% or more than 4.7 million shares. Malaysian government backed retirement funds were recorded to have some 6.15% holdings as well. Foreign banks have some 4.65% holdings. A major shareholder of IOI Corp, Madam Lai owns 0.26% in Xingquan too. From the report, we can safely say that all major shareholders apart from the Chinese themselves, are smart and perhaps long term investors. Xingquan is currently muddled in the ruts and its share price fell like a stone. Multiple issues were raised on this counter from non-payment of dividends to allegedly producing dubious accounting. These are detrimental news and until or unless views from Malaysian investors change, Xingquan would just continue to be in the rut. However, it was recently reported in the Taikors and Taikons under its private eye column that MBMR is planning a loan of RM50 million to Xingquan. The deal was purportedly to be announced this Nov 15 with MBMR holding Xingquan's preferential shares and a commitment that 35% of all future profits of Xingquan be declared as dividends. My fervent hope is that the deal as reported by Taikors and Taikons is true and the perception of Malaysian investors on this counter change thereafter. `

Hello there gwynwelsh.

It's not a problem that you have posted your opinions and views on this stock.

Hmm... Koon Yew Yin investment in XQ again? Well, here's food for thought. Even the man himself, Warren Buffett has acknowledged he has many a mistakes before. From this perspective, I am just wondering what's the chances of Koon Yew Yin (KYY) not making a mistake? KYY bought his initial 5.5% stake on 27/09/2010. Has his investment in the stock performed or has it under perform?

Why am I saying this?

Sorry but I get this feeling that you appear to me that you are anchoring your investment decision to STAY in this stock simply because Koon Yew Yin is a shareholder. Yes, I could be WRONG but I feel that you are still invested in this stock simply because of KYY.

Is that wise? But what if KYY is wrong? Have you thught about it from this perspective?

And I am aware you have posted several comments on XQ on this site before. Many thanks for sharing your views. And here's one from the posting: http://whereiszemoola.blogspot.com/2011/05/quick-look-at-xingquans-earnings.html

Quote: I have a feeling that Xingquan is reporting a pack of lies like any other Chinese based companies. It is definitely doesn't make sense to suddenly switch product brand and go through the re-branding exercise after establishing the old brand name. I think it is a way to siphon out money in the form or name of re-branding exercise. I have also found out that the real owner of XQ is the brother-in-law of the CEO who is not in the board. This Chinaman is the actual person running the show behind those iron curtains.

I have invested into XQ and I regretted of my mistake. I thought it was good to invest in such a low PE share but it turned out to be a farce.

I have also the feeling that the IR chap, Ooi Guan Hoe is posting his comments in this blog as well. I have screwed him up and he didn't reply any of my emails to him.

If XQ is good then why it is trading below IPO price and keep falling like a stone? F XQ

--------------------
How? You felt you had made a mistake back then and some of the reasoning does support that decision but yet you have decided to stay invested in this stock. Is this because of the KYY factor?

Anyway did you consider some of the points mentioned in the last posting http://whereiszemoola.blogspot.com/2011/05/chat-on-koon-yew-yins-investment-in.html

ps: Market sentiments towards penny stocks are extremely strong. Anything could happen, yeah? So let me say again, I have no idea and I certainly have no interest on how XQ the stock will fare in the future. ;)

ps: for investors perception to change.... hmmmm.... I think balance sheet improvement is one major factor. I am really sceptical to see companies saying they have tons of money in their balance sheet but yet they seem to get 'value' or interest income from their vast pot of money. Why? Is the money real or not? And worse still, despite all these cash, these chinese companies still wants to raise money via share placement sale and TDR. Why? Got tons of money mah... but still want to raise more? Errrr.... and then some of the capex made by these Chinese companies seems rather exuberant. In XQ's case, the rebranding exercise simply blew my mind. In short, it's simple. For the perception to change, investors do not want to see questionable issues in the company they are investing in. And sadly for the Chinese stocks listed here, these questionable issues are the very same issue raised in Chinese stcoks charged with fraud.

ps: XQ balance sheet issue. Ok, sales and improved a lot the last quarter but sadly, I would ask the same old question, so what? My last posting on XQ, Chat On Koon Yew Yin's Investment In Xingquan Again
, I wrote

Balance sheet cash. Cash is shrinking but most important thing is interest received. As mentioned several times by blogger snowball, why is the interest so low? Why is Xingquan getting so low value for its money? From the table above, we know that at the end of 4th Q FY2010, Xingquan had some 280 million cash. Nine months later, cash left is only RM 168.850 million. 168 million is a lot of money, yes? But from the cash flow, Xingquan said it's only getting some 563 thousand in interest. Err.. why so little value for their money?

Ok... cash as per their quarterly earnings report in Aug 2011. Cash did improve back to RM214.484 million. Lot's of cash right? Why still want the TDR? And what will it do with the money they get? What if they do another crazy rebranding stunt once more?

But the main issue... interest paid and interest received column in their cash flow.

Now as you are aware, XQ has 'very little borrowings' compared with its huge cash pile.

As per its quarterly earnings, XQ said it has some RM27.083 million in borrowings. Their cash pile totals some RM214.484 million.

Now surely, one would expect XQ to be getting more interest than paying yes?

Any well managed and prudent company would easily manage such a cash balance, yes?

But ... if you look at the cash flow statement....

Interest paid is rm1.839 million.
Interest received is 810k.

Ahem... for a company holding some 214 million cash and some 27 million loans, why so low value for its money????

And for me... I can't really understand this. I am sceptical. I am forced to ask two questions. (1) Why such a poor management of the company's cash? (2) Is the cash even real?

I dunno and I dun have any answer.

ps: The receivables.... 18 May 2011, this was posted A Quick Look At Xingquan's Earnings.The one statement from Jupiter Research stood out.

Higher receivables of RMB261.3m in 1HFY11 were due to higher sales in November and December and was within the 2-months credit period. Xingquan explained that the total amount has since been collected

Let me highlight my old table on XQ once more.

Now as you can see before 2011 Q1, receivables were less than 100 million.

But for 2011 Q2, receivables 'suddenly' rocketed by more than 100 million to 180+ million.

This made investors very sceptical.

Won't you?

But in May 2011, XQ TOLD Jupiter Research that the total amount has been collected.

But if you look at their Aug quarterly earnings, receivables stood rm167.352 million.

Errr....... how??????

So....... are these issues 'negative perceptions' or are they really questionable issues within the company itself?

Dutaland's Reason

2011-11-12T00:57:00.000+08:00

And Dutaland finally gives its reason why it rescinded the S&P with IOI.

Dutaland: deal rescinded to avoid prolonged legal tussle
Written by theedgemalaysia.com
Friday, 11 November 2011 20:04

KUALA LUMPUR (Nov 11): DUTALAND BHD [] and IOI CORPORATION BHD [], which mutually rescinded the sale and purchase agreement over the disputed RM830 million oil palm PLANTATION [] deal, had done so with a view not to prolong the legal dispute arising from the termination of the deal.
In a reply to a query from Bursa Malaysia Securities Bhd on Friday, Nov 11, Dutaland said the Deed of Rescission entered by the parties on Nov 9 would avoid protracted litigation, the outcome of which can be uncertain and this may have adverse implications on the company.

“Moreover a prolonged litigation would hinder any potential sales of the PROPERTIES [] in future,” it said.

Dutaland said that by entering into the Deed of Rescission, Sri Mayvin had retracted all its allegations and assertions made against Pertama Land.

It said Pertama Land had consistently maintained that Pertama Land has complied with and is not in breach of the SPA as alleged or at all by Sri Mayvin.

“In the absence of the sale proceeds from the Proposed Disposal, the Group may obtain bank borrowings and/or internally generated funds to fund/support the items stated in the intended utilisation of sale proceeds (i.e. purchase of Irredeemable Convertible Bonds, settlement of debts, funding of Kenny Heights project, etc),” said Dutaland.

To recap, IOI Corp and Dutaland on Nov 9 said they had agreed to mutually rescind the sale and purchase agreement over the disputed RM830 million oil palm plantation deal.

IOI Corp said on Wednesday that its unit Sri Mayvin Plantation Sdn Bhd and Dutaland’s Pertama Land & Development Sdn Bhd had entered into a deed of rescission in a move to resolve all issues and disputes relating to the SPA that involved 11,977.91 ha (29,597.42 acres).

“With immediate effect whereupon the parties are released from all obligations and liabilities in connection with the SPA and neither party shall have any further claim against the other in respect thereto,” it said.

IOI Corp said following from the execution of the deed of rescission, OSK Trustees Bhd, being the stakeholder jointly appointed by the parties, will proceed to refund the deposit earlier paid by Sri Mayvin pursuant to the terms of the SPA together with all interest accrued thereon to Sri Mayvin.

On Oct 25, IOI Corp terminated its proposed acquisition of the land from Dutaland, citing the cancellation was “due to non-compliance of certain terms and conditions”.

However, Dutaland had then said it did not accept the reasons for termination of the sales and purchase agreement and directed the stakeholder, OSK Trustees Bhd not to remit the deposit of RM83 million, which was the 10% deposit paid.

In a separate statement on Nov 9, Dutaland said that with the rescission, Sri Mayvin has retracted all its allegations and assertions made against Pertama Land as contained in Sri Mayvin’s letters dated Oct 4, 20 and the 21.

"Pursuant to the deed, Sri Mayvin has further confirmed that it has not lodged and will not lodge any private caveat(s) or any encumbrances(s) over the properties," it said.

Dutaland also said its board having sought legal advice and after taking into consideration all relevant aspects of the termination of the SPA, was of the view that protracted litigation would hinder any future sales of the properties.

"Furthermore, the outcome of litigation can be uncertain and this may have adverse implications on the group. In the meantime, the group shall continue to manage the properties to generate positive returns," it added.

Source: http://www.theedgemalaysia.com/business-news/196041-dutaland-deal-rescinded-to-avoid-prolonged-legal-tussle-.html

And Dutaland and IOI Both Rescind Their 830 Million Ringgit Deal

2011-11-10T09:03:00.000+08:00

Posted last month: Yet Another Multi Million Screw Up From IOI Corp? and And IOI Corp Gave Its 83 Million Reasoning Why It's Cancelling The Deal With Dutaland

On the Edge: IOI Corp, Dutaland rescind RM830m oil palm estate deal

IOI Corp, Dutaland rescind RM830m oil palm estate deal
Written by Joseph Chin of theedgemalaysia.com
Wednesday, 09 November 2011 19:34

KUALA LUMPUR (Nov 9): IOI Corp Bhd and DUTALAND BHD [] have agreed to mutually rescind the sale and purchase agreement over the disputed RM830 million oil palm PLANTATION [] deal.

IOI Corp said on Wednesday that its unit Sri Mayvin Plantation Sdn Bhd and Dutaland’s Pertama Land & Development Sdn Bhd had entered into a deed of rescission in a move to resolve all issues and disputes relating to the SPA that involved 11,977.91 ha (29,597.42 acres).

“With immediate effect whereupon the parties are released from all obligations and liabilities in connection with the SPA and neither party shall have any further claim against the other in respect thereto,” it said.

IOI Corp said following from the execution of the deed of rescission, OSK Trustees Bhd, being the stakeholder jointly appointed by the parties, will proceed to refund the deposit earlier paid by Sri Mayvin pursuant to the terms of the SPA together with all interest accrued thereon to Sri Mayvin.

To recap, on Oct 25, IOI Corp terminated its proposed acquisition of the land from Dutaland, citing the cancellation was “due to non-compliance of certain terms and conditions”.

However, in a separate statement, Dutaland said it did not accept the reasons for termination of the sales and purchase agreement and directed the stakeholder, OSK Trustees Bhd not to remit the deposit of RM83 million, which was the 10% deposit paid.

Huh?

That's it?

WTH!

Comeon... this is a 830 million ringgit transaction. Surely, both companies have a duty to show some respect to the investing public by explaining why the deal was rescinded. Mind you, when the deal was first announced, Dutaland shares soared. The investing public chased the stock because they speculated that there could be a potential cash windfall arising from this sales and purchase agreement. And Dutaland minority shareholders would like to know why the company is NOT fighting for the 83 million deposit paid.

Here's Dutaland announcement on Bursa.

We refer to the announcements made by the Company dated 28 July 2011, 26 September 2011, 11 October 2011, 25 October 2011 and 27 October 2011, in relation to the Proposed Disposal. (Unless otherwise defined, all terms used in this announcement shall have the same meaning ascribed to them in the aforementioned announcements)

The Board of Directors of the Company (“Board”) wishes to inform that the Company’s wholly-owned sub-subsidiary, Pertama Land as Vendor and Sri Mayvin as Purchaser have, on 9 November 2011, entered into a Deed of Rescission (“Deed”) to rescind the SPA and to record the arrangements consequential to the rescission (“Rescission”). Pertama Land had vide its letter dated 25 October 2011 disputed Sri Mayvin’s termination of the SPA on 25 October 2011. The primary objective of the Deed is to resolve all issues and disputes relating to the termination of the SPA by Sri Mayvin.

The salient terms of the Rescission are as follows: -

1. With the execution of the Deed, the SPA has been rescinded whereby both Pertama Land and Sri Mayvin have been released from all obligations and liabilities in connection with the SPA and neither party shall have any claim against the other in respect thereof.

2. With the Rescission, Sri Mayvin has retracted all its allegations and assertions made against Pertama Land as contained in Sri Mayvin’s letters dated 4 October 2011, 20 October 2011 and 21 October 2011.

3. Pursuant to the Deed, Sri Mayvin has further confirmed that it has not lodged and will not lodge any private caveat(s) or any encumbrances(s) over the Properties.

4. The Stakeholder shall, simultaneous with the execution of the Deed, refund the Deposit of 10% of the Sale Consideration amounting to RM83 million together with all interest accrued thereon to Sri Mayvin.

The Board having sought legal advice and after taking into consideration all relevant aspects of the termination of the SPA, is of the view that protracted litigation would hinder any future sales of the Properties. Furthermore, the outcome of litigation can be uncertain and this may have adverse implications on the Group.

In the meantime, the Group shall continue to manage the Properties to generate positive returns.

After considering the above, the Board is of the view that the Rescission is in the best interest of the Company.

The Rescission is not expected to have a material effect on the earnings, net assets and gearing of the Company and the Group for the financial year ending 30 June 2012 as well as the issued and paid up share capital of the Company and the shareholdings of the Company’s substantial shareholders.

What's the main reason to rescind?

Why the lack of transparency?

This is from IOI.

Reference is made to the Company’s announcements dated 25 October 2011 and 27 October 2011 relating to the termination of sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd (“Sri Mayvin”) and Pertama Land & Development Sdn Bhd (“Pertama Land”) for the Proposed Acquisition.

To resolve all issues and disputes relating to the termination of the SPA, both Pertama Land and Sri Mayvin have on 9 November 2011 entered into a Deed of Rescission to mutually rescind the SPA with immediate effect whereupon the parties are released from all obligations and liabilities in connection with the SPA and neither party shall have any further claim against the other in respect thereto.

Following from the execution of the Deed of Rescission, OSK Trustees Berhad, being the stakeholder jointly appointed by the parties, will proceed to refund the deposit earlier paid by Sri Mayvin pursuant to the terms of the SPA together with all interest accrued thereon to Sri Mayvin.

This is announcement is dated 9 November 2011.

Just like that?

Case closed?

Here's Dutaland chart...

See how Dutaland, with the announcement of this 830 million transaction, soared from 50 sen to a high of 68 sen?

Yeah, see how Dutaland crash and burned once IOI said it was pulling out from this deal?

How?

Is this acceptable?

Look at the bigger picture. One of the bigger Malaysia corporate signed a S&P to make a 830 million land purchase. Deposit is even paid but yet..... such a deal can have be 'GOSTAN-ED' ..........

If this is going to be the normal practice amongst corporate Malaysia, can you wonder the future of investment in Malaysia stocks? How's Malaysia going to attract foreign investors when our corporations behave so unprofessional? One buys and signs the agreement but the next minute, the agreement is cancelled.

Yeah and what good is signing an S&P?

Could investors trust the signing of any S&P in the future when IOI and Dutaland have shown how easily the S&P could be rescinded?

WTH!

Ok, assuming IOI reasoning to withdraw from the deal is valid. However, the main question is why didn't IOI make a thorough inspection before they sign the S&P? Why sign and pay deposit then only say they want to withdraw? Very unprofessional isn't it? And they put their 83 million deposit at risk.

They Call Mems A Landmark Case For SC?

2011-11-09T10:13:00.000+08:00

Posted earlier this year: How Much Fine For Cooking Your Books? Part III

THE High Court has allowed the Securities Commission Malaysia’s (SC) appeal against the Sessions Court’s sentence of RM300,000 fine each on the former directors of MEMS Technology Bhd, Ooi Boon Leong and Tan Yeow Teck.

The High Court retained the Sessions Court’s original fine and enhanced the sentence with a six-month imprisonment term each following the appeal by SC for a higher sentence in view of the severity of the offence.

In February last year, Ooi and Tan, had pleaded guilty before the Sessions Court and were fined RM300,000 each for authorising the furnishing of misleading information to Bursa.

I thought the sentence was way too light!

Why?

They recorded sales transactions that NEVER took place!

That's downright cheating in my opinion!!!

By recording sales transactions that NEVER existed and the stock market valued Mems as a growth stock and the company was handsomely valued some extra 500 million!

And the description of the fine? 'Providing misleading information' was way too kind. They fudged and they cheated on their books! And the fine of 300,000 and jail term of 6 months? That is absurb. Too kind.

With such a crime, how are we ever going to stop corporate crimes like this?

On Star Biz: Landmark decision for securities cases

Wednesday November 9, 2011
Landmark decision for securities cases
By CHOONG EN HAN

PETALING JAYA: In a landmark decision for securities cases, two former directors of MEMS Technology Bhd saw their six-month jail terms imposed by the High Court being upheld by the Court of Appeal last Friday.
The Securities Commission said in a statement that the Court of Appeal affirmed that a custodial sentence was necessary in order to ensure that investors would not lose confidence in the local market and to deter potential wrongdoers.

“The Court of Appeal emphasised that knowingly furnishing misleading information to the stock exchange is a serious offence because potential investors, both foreign and local, rely on such information,” the commission said.
The two former directors of MEMS, which was de-listed in November 2010, were charged for authorising the furnishing of a misleading statement to Bursa Malaysia in MEMS's condensed consolidated income statement for the 12-month period ended July 31, 2007.

They were charged in the Sessions Court in Kuala Lumpur in 2009 for falsifying the company's reported revenue of RM73.416mil which contained over RM30mil of sales that did not take place.

Both Ooi Boon Leong and Tan Yeow Teck had on Feb 25, 2010 pleaded guilty to committing the offence and were fined RM300,000 each, upon which the public prosecutor appealed to the High Court on the ground that the sentence was manifestly inadequate.

Then in January 2011, High Court Judge Datuk Ghazali Cha imposed an additional six-months jail sentence to the fine of RM300,000, citing public interest as a reason for the increased sentence, pointing out that the offence affected the integrity of the capital market.

Ooi and Tan had then appealed to the Court of Appeal.

I still think it's inadequate. It's way too light.

And how can they call it a landmark case?

Really? Comeon!

Ironicaly on Star Biz also: Rajaratnam ordered to pay $92.8 million in SEC case

Rajaratnam ordered to pay $92.8 million in SEC case

NEW YORK (Reuters): A federal judge ordered Raj Rajaratnam, the Galleon Group hedge fund founder sentenced to 11 years in prison for insider trading, to pay a record $92.8 million penalty in a related Securities and Exchange Commission civil case.

( See past postings Rajaratnam: Guilty On All Counts! and Trading: Is success guaranteed from INSIDER NEWS/TIPS? )

11 years in prison and US$92.8 million penalty!!!

Now this is what I will call a LANDMARK case!

Mems? It's still a joke. The penalty is way too light!

And do consider this May 2008 posting: Mems Asks For Support!!

Bernama's Amazing Article On Lingui

2011-11-05T12:28:00.000+08:00

Just noticed the following article from Bernama published on Star Biz: Lingui first quarter pretax profit up 65%

Saturday November 5, 2011

Lingui first quarter pretax profit up 65%

KUALA LUMPUR: Lingui Developments Bhd registered a 65.15% increase in pretax profit for the first quarter ended Sept 30, 2011 to RM24.04mil from RM14.56mil in the corresponding three-month period.

Its revenue grew 19.16% to RM435.01mil from RM365.06mil.
In a statement, Lingui said gross profit for the period increased 58.61% to RM34.03mil from RM21.46mil previously.

“The increase in the group’s core profit before taxation was mainly attributed to strong operating results from the logs segment. In addition, the return to profitability of the group’s plywood and veneer operation also contributed significantly to this quarter’s performance,” it said.

Lingui said the group’s performance in future quarters might be affected if the correction in timber prices following Japan’s delay in commencing its post earth quake reconstruction, was prolonged.

“Although faced with a volatile and uncertain operating environment, the group continues to work on improving operational efficiency by enhancing the productivity of its workforce and equipment fleet and emphasising tight control over cash cost of production,” it added. — Bernama

How?

Sounds pretty good, yes?

Now compare that article to this one from the Edge: Lingui posts RM28m 1Q net loss

Lingui posts RM28m 1Q net loss Written by Max Koh
Friday, 04 November 2011 11:52

KUALA LUMPUR: Lingui Developments Bhd posted a net loss of RM28.1 million for 1QFY12 ended Sept 30, compared with a net profit of RM39 million a year earlier. Revenue was up 19% year-on-year to RM435 million.

In its notes to Bursa Malaysia, the timber company attributed the net loss to changes in fair value of biological assets less estimated point-of-sale costs of RM25.9 million, foreign exchange differences amounting to RM15 million, and losses in associates and joint-controlled entities of RM8.6 million.

Lingui also noted that it saw lower sales of its timber products during the quarter.

Lingui sold 186,501 cubic metres of hardwood logs at an average price of RM484 per cu m during the quarter. “Prices for hardwood logs achieved by the group remain stable due to tight log supply and relatively robust demand from India and China,” it said. It also sold 133,188 cu m of softwood logs at RM299 per cu m, and 55,910 cu m of plywood at RM1,902 per cu m.

Lingui posted an operating profit of RM19.5 million in the quarter compared with RM9.6 million a year earlier.

At the company AGM yesterday, managing director Yaw Chee Ming said Lingui is planning to invest RM143 million in FY12 for timber replanting efforts, infrastructure and upgrading of equipment. He said Lingui is looking at replanting 10,000ha to 15,000ha of its Sarawak timber plantation in FY12.

“Our hardwood trees mature between eight and 10 years. We have planted some 30,000ha and hope to replant up to 15,000ha,” he said, adding that replanting costs RM4,000 to RM5,000 per ha.

Lingui is planning to invest in and upgrade its machinery to cope with the worker shortage in Indonesia.

On its softwood plantations in New Zealand, Yaw said Lingui plans to increase its harvest to 800,000 cu m per year in the next two to three years, with the upgrading of infrastructure and amenities.

“We are investing between RM8 million and RM12 million to build roads and other infrastructure that will help increase our harvest,” he said. Lingui harvested 520,000 cu m of softwood for FY11.

On its outlook, Yaw said hardwood prices have softened and are expected to maintain at current levels given the stable demand from China and India. “Demand for hardwood from India has been quite stable despite concerns of inflation. Demand from China has remained stable although there was a slight decline,” said Yaw.

He added that plywood prices have already peaked on speculation on the rebuilding in Japan after the March 11 disaster. “The price has eased since. We expect prices to pick up again once the rebuilding in Japan begins and the stock depletes,” said Yaw.

Analysts are expecting the rebuilding in Japan to begin next year, which would increase demand for plywood. Lingui exports 60% of its plywood to Japan.

For FY11, Lingui posted RM191.7 million in net profit on the back of RM1.65 billion in revenue. It has 721,00ha of forest concessions in Sarawak and 35,000ha of forest plantations in New Zealand. It also has an associate stake in Glenealy Plantations (Malaya) Bhd.

Lingui’s stock has fallen 40% in the last six months to a low of RM1.10 before closing at RM1.54 yesterday.

This article appeared in The Edge Financial Daily, November 4, 2011

In short..

How?

Hello Bernama!!!

And so Manchester United Got Hammered By Citeh

2011-10-29T17:51:00.000+08:00

It's been a while since I last wrote something about Man United and how could I not given what had happened last week. Yes last week. Remember that six in the city?

Well, many would point out that United controlled the game pretty well in the first half and City scored from the only half chance they had. Yes, it was a half chance but that 'Why Always Me' dude, took the chance first time and the boy that finish was top class. There's no defending against that. It was not like our defence was poor but Balotelli did not take another touch on the ball, he just fired it first time. There was no time for the defenders to react and his shot was right on the sweet spot . No goalie in the world was going to save that. It was simply magical.

However, for me, despite United controlling much of the first half, I wasn't at ease. United was simply a step slower and they could not find the space. Without space, their wings were clipped and speed in their game went missing. Too many balls were played to the feet. Players retrieving these passes were waiting for the ball and not running into spaces for the balls. This took out the speed and it made defending against United rather easily. And many pases were missed too. This ain't cutting it and this ain't gonna to open up a team like City who came to Old Trafford happily to sit deep in their own half in the first half.

And yeah, Evans got send off.

And United got hammered. We lost. We got beaten.

The incredible thing was, this hammering made many people happy. It's not that their team won. It's simply that United got whipped badly at home in a derby match.

And no, I will still support Man United and I believe many will still do for a long time. We did not support United just because they were winning.

And I will be cheering for them against Everton later.

And no, I won't be cheering like a cow on steroid just because the other team lost.

And IOI Corp Gave Its 83 Million Reasoning Why It's Cancelling The Deal With Dutaland

2011-10-28T08:55:00.000+08:00

Last night, IOI Corp explained in detail on why they are pulling out from the deal to buy the plantation land from Dutaland.

I find it very unacceptable how IOI is handing this whole saga.

Their first announcement made on 25 Oct 2011:

Reference is made to the Company’s announcement on 28 July 2011 pertaining to the sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd ("Sri Mayvin"), an indirect wholly-owned subsidiary of the Company with Pertama Land & Development Sdn Bhd (“Pertama Land”), a wholly-owned subsidiary of Duta Plantations Sdn Bhd, which in turn is a wholly-owned subsidiary of Dutaland Berhad ("DutaLand") to acquire 11,977.91 hectares (or equivalent to 29,597.42 acres) of oil palm plantation land ("Plantation Land"), for a total cash consideration of RM830 million ("Proposed Acquisition").

The Company wishes to announce that Sri Mayvin had on 25 October 2011 issued a notice to Pertama Land to terminate the SPA due to non-compliance of certain terms and conditions which had been communicated to Pertama Land. Under the provision of the SPA the rights and obligations of the parties shall lapse and be of no further effect from the date of termination notice, save and except that OSK Trustees Berhad, being the stakeholder shall within a period of seven (7) days from the notice of termination refund to Sri Mayvin the deposit of RM83 million which is equivalent to 10% of the purchase consideration and interest accrued thereon.

That was it.

They terminated the S&P to purchase the land because "non-compliance of certain terms and conditions".

This is a 830 million ringgit transaction that they are terminating and at stake is a 83 million ringgit deposit paid.

The lack of detail was utterly disappointing. Surely, as one of Malaysian leading corporates, IOI Corp, could have shown the decency and respect to the investing public by explaining in detail what exactly was happening.

Now given what happened three years when IOI Corp forfeited 73 million ringgit when they pulled out of a deal to buy Menara Citibank, IOI Corp should have realised that it's absolutely crucial that they explain in full detail to the market what exactly was happening.

But no, they decided not to.

Was it an act of arrogance? I dunno...

Last night, 27 Oct 2011, IOI made another announcement. I was shocked at IOI Corp's inefficiency. Why can't they just announce it on the 25th? Why the need to make another separate announcement? Gosh! I just find it so unacceptable. Why the utter lacking in professionalism?

Anyway, this is what they said.

We refer to the Company’s announcement dated 25 October 2011 pertaining to the termination of sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd (“Sri Mayvin”) and Pertama Land & Development Sdn Bhd (“Pertama Land”) for the Proposed Acquisition.

The Company wishes to announce that Sri Mayvin has communicated incidences of non-compliance/ breach of the SPA to Pertama Land vide letters dated 4 October 2011, 20 October 2011 and 21 October 2011. In summary, the incidences of non-compliance/ breach by Pertama Land of the terms and conditions of the SPA may be, among others, categorised as follows:

1. Adherence to the obligation for the continued upkeeping/ maintenance of the properties in accordance with accepted agronomic practices;
2. Discrepancies in the particulars relating to the properties; and
3. Integrity of the title of Pertama Land in relation to one of the properties.

Finanlly.... a proper reasoning is given to the investing public.
How?

Are these three reasoning valid for IOI to pull out for the deal?

And at a stake, a 83 million ringgit deposit. Huge money at stake here!

How?

On Business Times today, IOI Corp was featured again.

IOI maintains stand on deal turned sour

By June Ramlee Published: 2011/10/28

KUALA LUMPUR: IOI Corp Bhd, which stands to lose an RM83 million deposit to Dutaland Bhd from a deal turned sour, yesterday insisted that the latter had breached their sale and purchase agreement (SPA).

Dutaland, however, maintained that it had not acted in breach of the SPA relating to a piece of plantation land.

IOI previously announced that it had terminated the SPA to buy 11,977.91ha of oil palm plantation land in Sabah from Dutaland for RM830 million.

IOI then said the cancellation was "due to non-compliance of certain terms and conditions".

On July 28 this year, IOI's unit Sri Mayvin Plantation Sdn Bhd had signed the deal with Dutaland's unit Pertama Land and Development Sdn Bhd.

Yesterday in a filing to Bursa Malaysia, IOI maintained that Dutaland, among others, had failed to continue upkeeping and maintaining the properties. It also claimed that there were discrepancies in the particulars relating to the properties, and that Sri Mayvin had communicated the alleged breaches to Pertama Land.

Dutaland, in its latest filing to the stock exchange, said Pertama Land had consistently maintained that it was not in breach of the SPA as alleged.

There had also "been non-compliance on the part of Pertama Land under the SPA as alleged or at all by Sri Mayvin", it added.

Meanwhile, analysts said there will be a minimal impact on IOI's overall earnings if it loses its RM83 million deposit from the deal inked with Dutaland Bhd a few months ago. This is because IOI is a cash-rich company with profits of close to RM2 billion to RM3 billion a year.

Losing the RM83 million deposit on that deal would not make a big difference as the potential loss will only lower its earnings by three to four per cent, said several analysts when contacted by the Business Times yesterday.
"It's too early to say (if the deposit will not be returned) but if they can prove that it is non-compliance, then they should be able to get their money back.

"But if they lose their deposit, then there would be minimal impact on the company as it makes RM2 billion in profits in a year, so it won't hurt much," said one analyst.

It will not be the first time IOI will lose its deposit. In 2008, the company had forfeited its deposit of RM73.4 million after it walked away from buying Menara Citibank.

Analysts, however, said the Citibank and the Dutaland deals cannot be equated, given that the company had decided to walk away from the former deal.
Dutaland earlier said it was seeking legal advice and had notified OSK Trustees Bhd not to remit to Sri Mayvin the deposit of RM83 million being the 10 per cent deposit paid by Sri Mayvin under the SPA and any interest accrued.

I do not agree some of the points mentioned.

Losing the RM83 million deposit on that deal would not make a big difference as the potential loss will only lower its earnings by three to four per cent, said several analysts when contacted by the Business Times yesterday.
"But if they lose their deposit, then there would be minimal impact on the company as it makes RM2 billion in profits in a year, so it won't hurt much,"

Errr.... I am simply lost.

How could these analysts take the 83 million and compare it against what IOI Corp is making as whole? Yeah, IOI Corp could be making rm 2 billion a year but goodness me, 83 million ringgit is 83 million ringgit is 83 million ringgit. This is money way beyond most of us Malaysians.

Well, what if everyone starts having such an attitude and mindset such as 'hey we make 2 billion a year, it's ok to blow away 83 million... it's just a bloody spit in the ocean....' ?

How?

Is that acceptable behavior?

No, that's not for me. Not in a million years.

But then ... looking at recent losses from IOI Corp - the 300 million forex losses, the 73 million forfeited deposit and now this.... you begin to wonder.....

And last but not least...

Analysts, however, said the Citibank and the Dutaland deals cannot be equated, given that the company had decided to walk away from the former deal.

Huh?

How could it not be equated?

Tell me.... sigh.

In the Citibank debacle, IOI Corp pulled out 3 months after signing and the S&P. For this Dutaland purchase, IOI is again pulling out 3 months after signing the S&P.... how are they not the same?

Two of the reasons given last night by IOI...

2. Discrepancies in the particulars relating to the properties; and

3. Integrity of the title of Pertama Land in relation to one of the properties.

The discrepancies and the integrity of the title... shouldn't this be thoroughly examined by IOI Corp themselves before they sign the S&P?

Hey, it's a 830 million deal... surely you want to examine everything in full detail... before you sign, yes? Why sign and paid the deposit only to now claim discrepancies and integrity? Why risk losing the deposit paid? Is 83 million ringgit small change?

Now? It looks like the fate of the 83 million ringgit lies in the hands of the court.

On Star Biz: IOI, Dutaland in war of words over termination of RM830mil deal

Yet Another Multi Million Screw Up From IOI Corp?

2011-10-26T09:37:00.002+08:00

I was shocked when I read the following set of news last night:

IOI Corp had signed a deal on 28 July 2011 to purchase 11,977.91 ha (29,597.42 acres) of plantation land from Dutaland. A 83 million deposit had already been paid.

Last night, just 3 months after signing the deal, IOI Corp said it's cancelling this deal.

And of course, Dutaland quickly responds by saying it's taking legal advice since it's not accepting IOI's reason for termination.

And as you can guess, Dutaland has asked that the deposit of 83 million not be remitted back to IOI Corp.

And this looks like yet another woeful corporate exercise from IOI Corp.

Just what on earth are they doing?

This is a 830 million transaction. You just don't sign any 830 million corporate deal without making thorough due diligence before agreeing to purchase. And IOI explanation on why it's cancelling this deal is simply a " non-compliance of certain terms and conditions".

This is simply pathetic and it reminds me of the recent Citibank debacle that happened back in Nov 2008.

Here's an article on Star Biz back then.

Saturday November 29, 2008
IOI Corp should better explain why it’s losing its RM73mil deposit
By P. Gunasegaram

REALLY, listed companies should be a lot more careful before they pay a deposit for their proposed acquisitions. If they can’t complete their deals for any reason, they can lose hefty sums of money and raise needless suspicion over board integrity.
Boards of listed companies and CEOs should realise that they have a statutory duty not only to their major shareholders but also to each and every shareholder – and there are many minority shareholders to consider.

The least that listed companies should do when they abort their deals is to offer a full and fair explanation of why it was aborted, what were the events that had changed and why these things had not been anticipated in the first place.
Take the deal called off inexplicably by IOI Corp after having signed on the dotted line less than three months ago and losing over RM73mil in deposits paid in the process.

It had announced on Aug 28 the effective acquisition of Menara Citibank in Kuala Lumpur for RM586.7mil through the purchase of Inverfin Sdn Bhd which owned the building. Inverfin is owned in turn by Citigroup unit Citi Holding (50%), Singapore’s CapitaLand (30%) and Amsteel Corp (20%).

On Thursday, Nov 27, IOI Corp, just a day short of three months of the earlier announcement, told Bursa Malaysia that it has decided not to proceed with the acquisition.

The reason in IOI Corp’s own words: “However, due to the recent sudden adverse developments in the global economic environment which have spread to this region and impacted negatively on business sentiments, the Company has, after due and careful deliberations, decided that it would be in the overall best interests of the Company and its shareholders not to proceed with the Proposed Acquisition.”
It further announced that the vendors were forfeiting the deposits paid of RM73.4mil together with interest and added that it was “seeking legal advice as to the propriety and quantum of the aforesaid forfeiture”.

It is instructive to note what IOI Corp said in its original acquisition announcement: “The Proposed Acquisition will provide IOI with an immediate substantial rental income stream. With its choice location at the heart of Kuala Lumpur and well served by the surrounding infrastructure and amenities, Menara Citibank is presently enjoying close to 100% occupancy rate with quality tenants consisting of multinational companies and reputable companies in their respective industries.

“In addition, the 50-storey Menara Citibank is well-maintained and well-equipped with high quality mechanical and electrical equipment and good security system. Its distinctive design and quality also distinguish itself from the competing office buildings in the vicinity.

“On the whole, the Proposed Acquisition is a strategic move which augurs well for the IOI Group as it accords the Group with the golden opportunity to own one of the few available high-rise Grade A office buildings in Kuala Lumpur with first class location and prestigious address.”

So, why is that changed in three months? Was there an exodus of tenants from Menara Citibank? Did the rental income drop? Was there a collapse in office space prices? Why is the acquisition not strategic anymore?

Why could not IOI Corp have foreseen these problems earlier? After all, the subprime crisis was already upon us. Why did it pay the deposit which it now has most likely lost if it had felt there could be problems?

IOI Corp’s explanation is poor at best and we really don’t know what it is at worst. Investors certainly expect a lot more from this company, once the darling of the stock market. And so should regulators. Minority shareholders certainly have a right to be seriously upset.

Coming so soon after its recent debacle where it reported foreign exchange losses of over RM312mil for the quarter to end-September, the latest episode will put another dent in its reputation, largely unsullied until the forex episode.

See the similarities?

IOI Corp back in 2008, had also terminated a deal 3 months after signing the deal!!!!

And IOI lost its 73 million deposit back then. Me? I won't be surprised one bit if IOI loses 83 million ringgit this time for cancelling its deal with Dutaland.

It's simply embarrassing and if I am a minority shareholder in IOI Corp, I would be deeply annoyed to see what's happening. IOI Corp is supposedly one of our country's biggest corporation. In 2008, IOI lost 73 million by rescinding a deal to buy Citibank. 3 years later, IOI could now lose 83 million by cancelling this deal to buy land from Dutaland. What the hell? Does IOI have so many million ringgit to give away???

Would you blame any minority shareholder for asking 'Is IOI Corp the biggest water fish in corporate Malaysia?'

Good grief!

ps: Looks like Dutaland could get 83 million ringgit free!
ps: I got some barn yard. Does IOI want to agree to buy and then cancel to buy from me? :P

And Genting Malaysia Rewards Its Shareholders With Yet Another RPT

2011-10-25T14:05:00.000+08:00

And so Genting Malaysia announced its 4th RPT last night.

Snippet from CIMB report:

What We Think
At first glance, the news of yet another RPT by Genting Malaysia is negative. Although Genting Malaysia expects to reap cost savings from the acquisition as it is E-Genting’s largest customer, the RPT might not sit well with investors. This is the fourth RPT in four years, the others being Walker Digital, Wisma Genting and Genting UK.

However, we take comfort in 1) the size of the acquisition, which is small at 3% of net cash and 0.4% of total shareholders’ funds, 2) fair pricing of 5.2x P/E and 2.0x P/BV for E-Genting, and 3) the profitability of E-Genting’s business. Genting Malaysia also accounts for close to 80% of E-Genting’s revenue. Ascend International only has minimal operations at this juncture.

What You Should Do
Any share price weakness from this news should be viewed as an opportunity to accumulate the stock. Genting Malaysia’s defensive earnings and strong operating cash flow are appealing in uncertain times like these.

My comments?

It's the 4th RPT lah.

When will Genting Malaysia respect its minority shareholders and stop all these Related Party Transactions (RPT) nonsense?

Is it so difficult to respect?

CIMB said '.. we take comfort in 1) the size of the acquisition, which is small at 3% of net cash '

Gosh! This deal is worth 50 million ringgit. Is 50 million ringgit small? WTH? And how could CIMB insult the intelligence of its readers by comparing it versus the 'net cash'?

50 million ringgit is 50 million ringgit is 50 million ringgit!

And the last part... it's advice "What You Should Do - Any share price weakness from this news should be viewed as an opportunity to accumulate the stock.'

Oh yeah, as usual any share price weakness is an opportunity to accumulate the stock... but just what kind of stock is one accumulating? What kind of company is this? Does the investor looks smart investing in a company who only does nothing but RPTs? Does it make sense?

And if the minority does nothing, such transactions will keep on happening over and over and over again.

Past postings:

9 Dec 2009: Genting Malaysia Buys Properties From Genting Bhd
16 Dec 2009: MSWG Slams Genting Malaysia For Its RPT Land Deal!
2 Jul 2010: Genting Malaysia's UN Fortunate Entry Into UK Casino Business
25 Aug 2010: Shame On The 60.39% Who Voted For Genting Malaysia's UK Casino Purchase

Sigh!

And FBM KLCI Decided To Have Its Own FLASH CRASH!

2011-10-21T17:12:00.016+08:00

Say cheese!

Was that fun or was that fun?

The culprits?

Pick your poison.... in random order

Sime Darby

Petronas Dagangan

IJM

DIGI

MISC

KLK

IOI

TENAGA

PPB Group

HLFG

MHB

HL Bank

MISSED OUT....

PETGAS

AIRPORT

ps: see the volume..
ps: where's the calculator...
ps: did i miss out any stock?
ps: Wanna know more about flash crash? Click here: Flash Crash

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

From the Edge Malaysia: KLCI plunges 70 pts due to trades keyed by broker

An official from Bursa Malaysia Securities Bhd in an e-mailed statement confirmed that the drop of the index at 4.41pm on Friday was due to trades keyed in by the said broker.

Among the stocks that fell steeply before paring down losses were KLK, DiGi and PPB.

Err... is that all there is to say?

-----

This was on Business Times. ( Small piece -- it's like NOTHING happened.

Bursa: Sharp fall due to broker deals

Published: 2011/10/22

KUALA LUMPUR: Malaysia's stock exchange operator, Bursa Malaysia Bhd said a sharp drop in the FTSE Bursa KLCI, its benchmark index, was due to trades keyed in on select index component stocks by a broker.
The KLCI dropped 4.8 per cent at 4:41pm to 1,371.92 points from 1,440.52 points before recovering 10 minutes later.

The benchmark index closed down 0.2 per cent for the day at 1,438.83 points.

Bursa did not say if the trades were made deliberately or by accident. - Reuter

Read more: Bursa: Sharp fall due to broker deals http://www.btimes.com.my/Current_News/BTIMES/articles/BURTA/Article/index_html#ixzz1bT5W6VQL

Here's Star Biz comments: KLCI down on cautious stance

Flash crash? What flash? ( I guess the flash must be really such a flash that they saw absolutely nuthin'! )

And Bursa Malaysia Gets Serious And Fines ex-Remiser Rm 60,000

2011-10-18T19:02:00.001+08:00

And then there is the case of the ex-remiser who got fined rm 60,000.00.

RM 60,000?

Er... seriously... what kind of fine is that?

I mean if this fella is found guilty... then he's guilty... but the fine of rm 60,000???

Goodness me!

With such a MASSIVE fine.. this sure will stop any future shenanigans!

Comeon... who's insulting who?

Oh yeah... forgot to mention the fine was for 'unlawful trading'.

Gosh! What on earth is 'unlawful trading'?

Comeon!

How does one expect our stock exchange to improve and rid itself of such pathetic nonsense in the future?

On the Edge:

Bursa Securities fines ex-remisier RM60,000 for unlawful trading Written by Joseph Chin of theedgemalaysia.com
Tuesday, 18 October 2011 17:51

KUALA LUMPUR: Bursa Malaysia Securities Bhd rapped and fined a former dealer’s representative Mohd Zahir Abd Manan RM60,000 for unlawful and unethical trading activities.

It said on Tuesday, Oct 18 that it had also ordered Mohd Zahir be struck off from the Register as a dealer’s representative in unlawful and unethical trading activities in the securities of H-DISPLAYS (MSC) BHD [] and HDM-Carlaw Corp Bhd.
It said Mohd Zahir, who at that time a commissioned dealer’s representative of PM Securities Sdn Bhd, triggered and breached the provisions of the Rules of Bursa Securities.

“Bursa Securities views misconducts that compromise the integrity or honesty of registered persons seriously as registered persons, including dealer’s representatives are required to uphold the interest of their clients and the investing public,” it said.

Bursa Securities said Mohd Zahir had carried out numerous unauthorised sale and purchase transactions in the securities of H-Displays and Carlaw over a period of time via two of his clients’ accounts.
His unauthorised transactions resulted in substantial contra losses which were disputed by the clients when they were subsequently informed of the losses.

It added he had colluded with a third party, who was not a person allowed and authorised, in writing, to trade on behalf of these clients. In this regard, instructions to trade via the two clients’ accounts were received from the identified third party and were carried out by Mohd Zahir. The commission generated from these trades was shared between Mohd Zahir and the third party.

“Mohd Zahir had also colluded with the identified third party to manipulate these two securities by maintaining their prices at certain levels. The manipulative trading activities had impacted the price of these securities during the relevant period.
“Mohd Zahir’s misconduct in carrying out these unauthorised trades and participating in unlawful activities, including price manipulation of these securities over a period of time, demonstrated his blatant disregard of his obligations as a responsible dealer’s representative,” it said.

Sigh!

Comeon... why can't Bursa just gets really tough on these buggers?

RM 60,000?

Bah!

Where got enough?

I Screwed UP My Earlier KNM Posting

2011-10-10T12:46:00.000+08:00

Arrrghh....

I screwed up.

:P

KNM - Would Poor Corporate Governance Have A Negative Impact On The Stock?

That posting have one MASSIVE flaw.

What happened? Well, I relied on the little bells provided by RHB charting. I did not verify the data and if I did, I would realise that RHB missed out the events that happened on Aug 2004. Meaning to say there was a 1 into 2 share split ( see announcement: Entitlement - Others ) and after the share split, there was a bonus issue of 1 for 2 ( see announcement: Bonus Issue )

Which means my entire posting is beyond repair.

LOL!

Excuse? I was too lazy and incompetent to check my facts.

Ok... please line up and aim all the rotten eggs over here!

ps: pls be gentle.

ps: I am too lazy to recount. hehe. But if anyone is kind enough, I welcome them to do the entire calculations for me. :P

ps: It is Monday, isn't it?