Skip to main content

Posts

Showing posts from May, 2006
Snippets, Snipes & Snides
29 May - 31 May 2006

Las Vegas Sands To Break Even In 5-8 Years?
The world's largest casino firm by market value, expects its Singapore casino to reach break even within five to eight years after the start of operations. The firm, which runs the Venetian in Las Vegas and a successful Macau casino, last week won the 30-year concession for the first of Singapore's two planned gambling resorts after promising to invest more than US$3.2 billion in what will be the world's most expensive casino. Bearing in mind that their first casino in Macau repaid itself in full within the first year of operations, the 5-8 year payback is more for the masses. How do you like it if you come out and say that the project will be profitable in a couple of years? (even if its true or plausible).... thta is not good PR. Its interesting that Sands almost immediately started work on the Marina Bay project - sigh, I guess they did not want anyone to start protesting the dec…
Bursa, Mesdaq & Bonus Issues
Good Move By Bursa

Bursa Malaysia Securities Bhd has announced that public listed companies whose accumulated losses exceed their reserves are not allowed to undertake bonus issues. In a statement announcing amendments to its listing requirements and Mesdaq market listing requirements in relation to bonus issues, Bursa Securities said PLCs were disallowed from undertaking bonus issues “if their accumulated losses exceed the reserves to be capitalised for the bonus issue''. It said the amendments were made as part of Bursa Securities' continuous efforts to enhance investor protection under its regulatory framework and listing requirements. The amendments will take effect immediately for all applications for listing of securities arising from bonus issues submitted to Bursa Securities on or after yesterday. Bursa Securities is a wholly-owned subsidiary of Bursa Malaysia Bhd.

We have had a spate of proposals, mainly from Mesdaq counters, asking …
Lion Forest Industries
Attractive Trading Patterns

Lion Forest Industries, which was featured in my blog on Mega M&A Deals In Malaysia on 22 May, has been trading attractively for the past 3 days. Its stock code on KLSE is 8486. While every single market in Asia dwindled and dawdled on Monday and today, the buying pattern has been very solid in Lion FIB for the past 3 days (you can check out the buying which looks like strategic accumulation, but not very subtle, which leads me to believe the buying is largely genuine rather than syndicate based). As mentioned, the NTA is RM8.21, hence any deal to sell should be struck around RM6.50-RM7.00 at the bare minimum.

LFI through its 97.78% owned subsidiary, Sabah Forest Industries Sdn Bhd is Malaysia's largest producer of printing and writing papers. SFI's main products are paper, pulp, sawn timber, plywood and commercial logs. The subsidiary also produces other products like building materials, lubricants, spark plugs, industrial e…
Top Hedge Funds Earners
Mind Boggling Numbers

You need to make US$130 million in 2005 to make the top 25 earners in hedge fund managers ranking by Institutional Investor. When it comes to pure wealth creation — arguably the biggest motivation for the majority of hedge fund managers — times have never been better. Thanks to the power of hedge fund math, driven by management fees and performance incentives, more managers are making more money today than ever before. One year ago Edward Lampert of ESL Investments made headlines when he became the first manager to earn US$1 billion in a year. This time there are two who broke the billion-dollar barrier: James Simons of Renaissance Technologies Corp. and BP Capital Management’s T. Boone Pickens. In 2005 math whiz Simons, we calculate, earned a staggering US$1.5 billion, edging out oil tycoon Pickens, who took home an equally astounding US$1.4 billion from two hedge funds he quietly launched ten years ago. Although Lampert saw his earnings cu…
Asian Currencies On Tenterhooks

The dollar's slide against Asian currencies could provide a catalyst for greater regional economic cooperation in an effort to avoid another financial crisis. So far this year the US unit has fallen by between five and eight percent against the Thai baht, Malaysian ringgit, South Korean won and Indonesian rupiah amid worries about global economic imbalances and upward pressure on the Chinese yuan. This is putting pressure on Asian economies by making their exports less competitive and cutting into companies' repatriated profits and leaders in the region are worried that the dollar will continue to decline.

Somehow, the smaller Asian nations' central banks are willing to let their currency appreciate vis-a-vis the dollar because they see real competition coming more from the Chinese yuan rather than pricing in US dollars. In the global export paradigm, the blackboard is denominated in yuan and not US dollars. Current and future competition amo…
Sand In My Face
Casino IR Goes To Las Vegas Sands

Well, it was supposed to be between MGM and Harrah, since both have local partners in Capital Land and Keppel respectively. It cannot be that Sands have a highly superior proposal, can it?!! I mean, MGM and Harrah also busted their guts, and all things being equal, surely the ones with local partners should get it. Assuming the submissions are almost equal in attractiveness, the fact that Sands got it may mean:

a) the committee wants no local players to be involved
b) that automatically means Genting will be the frontrunner for Sentosa

I still think giving it to Sands is a mistake because Sands investments in Macau is a few times bigger than the Marina Bay IR - however you want to cut it, priority and preferential treatment will go to Macau, be it entertainment, high rollers, incentives, etc.... Sands have more to lose if Macau fails than the Singapore project. Giving it to just a foreign company with no local participation will start to …
WorldCup2006
Brazil vs South Africa

It is just before the Bafana Bafana v Brazil match. Ronaldinho goes into the Brazilian changing room to find all his teammates looking a bit glum.
“What’s up?” he asks.
“Well, we’re having trouble getting motivated for this game. We know it’s important but it’s only S.A. They’re sh*t and we can’t be bothered.”
Ronaldinho looks at them and says, “Well, I reckon I can beat them by myself—you lads go down to a pub in Soweto.”
So Ronaldinho goes out to play Bafana Bafana by himself and the rest of the Brazilian team go off for a few jars. After a few pints they wonder how the game is going, so they get the landlord to put the teletext on. A big cheer goes up as the screen reads “Brazil 1 – Bafana Bafana 0 (Ronaldinho 10 minutes)”. He is beating Bafana Bafana all by himself! Anyway, a few pints later and the game is forgotten until someone remembers, “It must be full time now, let’s see how he got on.” They put the teletext on.

“Result from t…
Snippets, Snides & Snipes
22 - 26 May 2006

Oops, UEM World & UEM Builder
Following the news on Penang Bridge project (and maybe the expose on Disneyland Nusajaya), both shares decided to surge over the last 20 minutes yesterday. Before anyone here thinks that I would have the clout or resources to move shares up or down, let me assure you that I only blog on what I know, what I hear or interesting information that fall upon my ears. I will only blog if what I write somehow adds value or has some commentary / analysis. Investors who act on information in my blog do so on their own initiative - you will not give me a share of your gains, and neither should you bitch to me about your losses.

More Talk On HK's Peg
Chief Executive Donald Tsang have reiterated that the yuan will need to be fully convertible before HK considers replacing its currency peg to the US dollar. The Hong Kong dollar was trading at 7.7562 versus its US counterpart Thursday afternoon. Hong Kong has fixed its c…
Malaysia's Most Caring Employer Award
Cannot Be A Plantation Firm

On 13/5/2006, the National Level Labour Day Celebration was held , organized by the Human Resource Ministry. In this event, Golden Hope Plantations was awarded the MOST CARING EMPLOYER AWARD! I must say, they have a very effective corporate communications department, one that dishes out tons of information via their annual reports and website. Check out their website at www.goldenhope.com.my and you will find a darn good website for financials and other news and activities that make them a better corporate citizen. You can do one thousand and one things but if the bulk of your employees are not treated well - you do not deserve the "most caring employer" award.

It matters little if you have a zero burning rate policy (some plantations, especially in Indonesia will burn before replanting thus causing massive pollution) .... it matters little if you have good transparency in revealing financials and in corpora…
Disneyland In Johor?
Trumping Singapore (Again)

Prime Minister Badawi is in Japan at the moment. Word on the street has it that he will be meeting with the Japanese partner for Tokyo Disneyland, with the aim of bringing Disneyland to Nusajaya, near the Second Link in southern Johor. Apparently, officials from UEM Land, a 100% subsidiary of UEM World, are tagging along with Badawi in Tokyo for the pitch. The PM's contingent also includes Azman Mokhtar, the MD of Khazanah, which is also UEM World's largest shareholder. Badawi is said to have already met top Disney officials early this month when he was attending the World Congress for IT 2006 in the US. People familiar with the Disneyland-Nusajaya overture believe that Abdullah's team is in Tokyo to make a serious pitch, with sweeteners that may include offering Disney an internationally competitive package of incentives. Should the pitch be successful, any announcement of Disney making an entry into Malaysia would improve dra…
Netherlands

WorldCup2006

The team is young, many would not recognise half the team. Older players are left out including Seedorf, Maakay and Davids. One of the reason France did poorly in 2002 was because they were old, famous, rich and the defending champs - did that, done that, money in the bank, nothing left to prove. You need hunger and youth in the squad as they will fight and have a lot to prove. It will be the ticket to doubling or tripling your value as a player.There is a sufficient mix of experience in Nistelrooy, Van Der Sar, Heitinga, Van Bronckhorst, Van Bommel and Robben. Whether Holland does well or not will depend on how well the newbies perform - especially Vennegoor, Van Der Vaart, Sneijder and Kuyt.

The trump card for Holland this time around is that there is a lot less internal bickering, and the team does play for more than just themselves and their country, they also play for their coach. Marco Van Basten, easily the top 3 players ... ever ... from Holland, and pro…
Events Searching For Reasons
The Poor Man's Analyst

The markets' slide yesterday in the afternoon confounded everyone. What was so bad that caused some panic selling? Nobody could tell really. When things happen that is out of the ordinary, we go searching for reasons... sometimes there isn't any. Sometimes there is but it is something we already knew. If there were no new information, then the fall yesterday is not justifiable, right? When a girl gets dumped by a guy, we can safely say she might cry and be bothered for a couple of weeks, but she might also go and kill herself or go to a singles bar - many things happen for the same reasons... when there were no new information that caused her to do so many things. We can only predict the first few things but we cannot estimate the length, gravity of the reverberations correctly.

The following were the cited reasons, and I have market their credibility out of ten points (the higher, the more credible the reason for yesterday&…
Mega M&A Deals In Malaysia
A Precursor Of Things To Come?

KLSE had lacklustre year in 2005 when almost every Asian equity market performed better than the Malaysian bourse. However, last week saw two mega M&A deals rocking the investment scene in Kuala Lumpur.

MMC Corp Bhd announced last Wednesday its proposal to buy all the assets of independent power producer Malakoff Bhd for RM9.3billion (US$2.58 billion) cash. That will greatly expand MMC's girth, especially in 2008 when it will have full-year impact from the large 2,100MW Tanjung Bin power plant that will soon be commissioned in phases. That is expected to enable MMC's earnings to step up from current levels of RM300 million a year to about RM600 million, if it retains 100% of the power assets compared with its current shareholding of 22% in Malakoff.

Just one day earlier, OYL Industries Bhd said Daikin of Japan offered RM5.73 or a total of RM7.6 billion (US$2.1 billion) cash for all its shares. That was the largest…
Market Risk - Asia Pacific
Malaysia & India Examples

Global equities is slightly jittery after the slump in commodity prices and fears of higher inflationary pressures in the US. To assess market risk, one should look to the earnings of the top tier companies in each country. India deservedly got the biggest whacking as its markets also rose frothily over the last year and a half. Despite that hiccup, the Bombay Stock Exchange is still up by some 77% over the past 52 weeks. The BSE has been gaining an average of 7%-8% for the past few months, which was clearly unsustainable. Figures from IMF shows that foreign investors accounted for 6% of Indian market's turnover and about 13% of its capitalisation. That ratio has to be one of the highest in Asian markets. In Asia, the markets are not all the same. In terms of being overdone, India, China and Australia are markets which have leapt the highest and with the most froth. Hence a 5%-10% pullback is not alarming but necessary.

As for …
Finally Some Smart Comments
Dr Hilmi Yahaya, The Voice Of Reason

It is heart warming to hear smart comments from an indispensable department of the government in Malaysia. Dr Hilmi Yahaya, the parliamentary secretary for Finance Ministry said CEOs of government linked companies who failed to perform have been advised to retire early. During a parlimentary session last Thursday, Dr Hilmi said that four of the 15 largest GLCs in the country suffered losses last year - they were Bank Islam Malaysia, MAS, UEM World and Proton Holdings.

The problem of having a paternalistic government is that peole entrusted with responsibilities doesn't get "penalised" if they performed poorly. Thankfully, Khazanah recognises this, and in a very indirect way is basically telling the CEOs of GLCs to buck up. Already some of the driftwood have been asked to leave last year. Only by imposing the Key Performance Indicators can there be accountability. Heads will have to roll for the "managem…
Rebuttle To Comments By SC & Bursa
Designation, Disclosure, Speculation & Transparency

This has been an eventful week for stocks, and if you are involved in Malaysia and Singapore stocks, the week was even more evntful on the issue of stock designation and disclosures. Huge articles were written in The Edge and The Star Biz on the related issues. Interviews were conducted with the head of SC and Bursa, and here are my rebuttals and comments:

Yusli (Bursa head honcho): In deciding to designate, retail sentiment is a concern but not necessarily a primary one. What is of paramount importance is the maintenance of a fair and orderly market ..
My comments: Good answer, retail sentiments should not be a primary factor is designation.

Yusli: In the case of IRIS, an UMA and Market Alert were issued previously to warn investors not to be driven by excessive speculation in their investment decisions relating to IRIS.
My comments: The warnings were not serious enough. Investors do not take th…
HK Dollar's Peg Gotta Go
Even Tsang Is Worried

Having voiced concerns over Hong Kong's competitive edge amid the robust economic development in the mainland and after calling for better financial and economic integration, Chief Executive Donald Tsang Yam- Kuen said Hong Kong could consider pegging its currency to the yuan. But he insisted that the existing currency peg to the greenback would remain the SAR's long-term policy. He said he also hoped that yuan bonds would eventually be issued in Hong Kong, helping foster closer financial ties with the mainland and allowing SAR traders to prepare for the full liberalization of the currency. With the yuan being allowed to appreciate and rise above the key level of eight to the US dollar last Monday, Tsang said the current peg remains the long-term policy though the government could still study the feasibility of a link between the HK dollar and the yuan. But he noted that the free convertibility of the yuan must be the prerequisi…
My Problems Are Bigger Than Yours
Abberations Revealed During Pullbacks

There are problems and then there are ... their problems. When global equities have a pullback, everyone suffers, but some suffer more than others. Of course, when looking at markets that got hammered more than yours, its kinda gratifying that you did not have it as bad as some. Rejoicing in the suffering of people worse off than you -- aahhh... the joys of the wretched! One of my favourite lines from Ally McBeal was when she was asked why her problems are more important that other people's. Without missing a beat, she said "Because they are mine". That sums up the whole thing we call perspective.

Back to the sufferers:

a) India markets have it so bad, they even lost more than 6% in just one day of trading this week. India was even riper for a correction than the rest as it had gone ballistic over most of 2005 and carried on this year. I have been rating India as way overbought in my blogs, thanks largel…
Asian Markets Opening Comments
Thursday 18 May

Bourses followed the US lead in sympathy, rather than in actual weakness. In the US, stocks declined the most since January after consumer prices increased 0.6% in April. Excluding food and energy, so-called core prices rose 0.3%, Labor Department data showed. Economists had forecasted 0.5% and 0.2%increases. So what's new? Readers of my blog will know these are not new factors, but the gradual unveiling of the natural course of events:

a) US wants a weaker dollar and a stronger yuan to combat the deficit. The weaker dollar is also a preferred strategy by the Fed though not often announced publicly.

b) Yuan is appreciating very slowly but surely, other developed and developing currencies are gaining a bit faster against the dollar. Other countries have a built safety device to absorb inflationary spikes via their appreciating currency.

c) The Fed has no choice but to engage in a regular raising of rates. Holders of US bonds for the past 6 …
2006 Top Buys #7
Unexpected By Many

I cannot tell you how many times I have wanted to make this stock as a Top Buy for 2006 but the share price just runs and runs. I have never read ONE report calling this stock a buy, but I have read many credible research reports calling this stock a Strong Sell or Avoid. Currently, Standard & Poor's has the stock as a rare "Strong Sell". I don't think I can wait anymore. I was thinking that the overall global equity pullback for the last two days may see a more decent entry price... but NO. Funny thing is, I have attacked this company many times in my blogs. Want a scathing report, read my blog on 10 March 2006 on this company. For an even more scathing critique, take a peek at the 16 February 2006 blog.... lol. Then you will understand better my liking for the stock.

The reason why I can criticise this stock for the longest time is that there are so many areas they can easily improve. There are signs that the new machinery in ma…