Saturday, December 29, 2007

Looking Back at 2007

2007 has been truly a wonderful year for me.

I would like to take this Saturday to reflect back what I had blogged on this year.
Jan 3rd 2007.
Insane Money Yet Again addresses the issue of CEO compensation getting out of whack. There was a wonderful interview with Mr.Charlie Munger on this issue.

  • * How did CEO compensation get so out of whack?

    Some of the worst sinners are compensation consultants. I have always said that prostitution would be a step up for these people. "Whose bread I eat, whose song I sing."

    It isn't that the CEOs are such terrible people. It's that the system, with its envy-driven compensation mania, has developed to a place where it brings out the absolute worst in good people. ( Here is another great posting on Charlie:
    What about Charlie? )
Do you love them words of wisdom from Warren Buffett? Here's a collection of Warren's quotes and some nice articles written on Warren.

  1. Buffett's Wisdom (Of Permanent Value) Part I
  2. Buffett's Wisdom (Of Permanent Value) Part II
  3. Buffett's Wisdom (Of Permanent Value) Part III
  4. Buffett's Wisdom (Of Permanent Value) Part IV
  5. Secret of Warren Buffet's Success
  6. Warren Buffett Articles I
  7. Warren Buffett Articles II
  8. Warren Buffett Articles III
  9. Warren Buffett Articles IV
  10. Warren Buffett Articles V
  11. Warren Buffett Articles VI
  12. Warren Buffett Articles IX
  13. Warren Buffett Articles: X
  14. Buffett Time!

Talking about missed opportunities. As mentioned by Warren Buffettm is it a sin to missed an opportunity? It's almost 2 years ago, Jan 2006, I remember wondering the investing case for Gamuda. Was it or was it not an opportunity back then? This made me to blog Looking Back: Gamuda back in Jan 2007.

  • On the 19th Jan 2006, Gamuda reached an intraday low of 3.04.

    Was there a valid investment case for Gamuda?

    Yes, valuation at this price does not seem expensive but that's what one had been saying all this while, as far back as in Sept 2004. Valuation based on current earnings has always been cheap during this massive downtrend. And if one buy based just on the earnings as far back as in Sept 2004, would have seen their investment getting whacked the living daylights. Anyway, should one invest now?

    On 23rd March 2006, Gamuda Q2 earnings showed more decline. Its quarterly earnings is not only 40.027 million. Its trailing earnings totalled only 213 million, which indicated a serious decline in its earnings momentum. And perhaps due to seriousness in the decline, one should probably be well aware that on an annualised basis of earnings around 40+ million, Gamuda fiscal earnings for 2006 could be as low as in the 160+ million region.

    This time around, the stock had rallied instead. Gamuda last traded on the 23rd at 3.78. The next day, after reporting the poor earnings, the stock closed down 10 sen and held on steadily.

    And another incredible thing happened. Based on the current prices and current earnings, Gamuda was suddenly trading at a higher earnings multiple of 15.8x and based on an annualised basis, it was trading at an even higher pe multiple of 18x. WOW!

    Perhaps it was a good time in January 2006 when Gamuda was trading at 10.1x current earnings multiple. Perhaps it was for the stock rallied to as high was 4.24 on 10th May 2006. Incredibly the stock then tumbled.... (do read the rest...
    Looking Back: Gamuda ) (My conclusion last Jan: For me, I could not find the window of opportunity to invest in this stock. Too bad. - yeah, too bad dude! You simply cannot win it all!)

Gurus like Marc Faber became rather prominent. Jan 2007, Dr. Faber was mentioned in the following posting: Global Markets Face `Severe Correction,' Faber Says

  • ``The price of gold will continue to go up and probably very substantially,'' Faber said. ``In the long run, it's very clear that central banks are basically increasing the supply of money and the supply of gold is obviously very limited.''

More Dr.Faber stuff.

  1. Some commentary from Dr.Faber
  2. Dr.Marc Faber: A Modern History of Investment Booms
  3. Beware the driving forces behind surging asset prices
  4. What do you think are some common mistakes investors make while taking an ‘exit’ or ‘sell’ decision
  5. Gloom or Doom for Global Markets?
  6. Gloom or Doom for Global Markets? II
  7. Another Interview with Dr.Marc Faber

On Feb 2007, Nasioncom was Caught Inflating Sales Revenue! Yes, it was ugly and what was even uglier for me was posted on NasionCom & Our Financial News Again!

Titan Chemicals was a popular stock mentioned back in Feb 2007. Regarding Titan, Chat on Titan and Titan's Dividend.

Then came Feb 27th 2007. The day Dow tumbled some 417 points. The next day, I asked, Is this the Perfect Storm?

  • On Valentine's day, I posted the following posting: US Market Soars ... but....

    Which highlights the issue about the insane going on in China. Now this blog posting is not too boost my ego and neither is a I-told-you-so posting but for those interested, I thought it would be good if I brought up the points mentioned again.

    I am and has been extremely wearly about the extremely stong turbulance beneath it all. Can a strong market simply mask all the woes underneath?

Note two issues mentioned in this Is this the Perfect Storm?

  1. It will literally unfold all around us with a Housing Crisis – Check!, a Banking Crisis – Check!, and ultimately, a Currency Crisis – Check!. Check, Check, Check!
  2. Mortgage giant Freddie Mac said Tuesday it will no longer buy high-risk home mortgages that it deems to be highly vulnerable to foreclosure.

The warning signs were there, yes?

And more postings were made mentioning subprime. How Now Brown Cow?

This posting simply says it all: Do you reckon that the worst is over? (Should not be missed as it simply describes how things got so bad )

And even Jim Rogers posted a huge warning on US property market back in March 2007: And what about Jim Rogers Views? (update July 2007: Weekend with Jim Rogers )

And not forgetting the incredible AsiaEP story. See Update on AsiaEP.

Ms. Teh Hooi Ling, writer of the Show Me The Money column on Singapore Business Times, do pens great investing articles. Here are some: Great Article: Short-term versus long-term investing, It's Bubble Everywhere, Born to Be Good?

And not too be forgetting is the Fountain View of Shame: That Fountain View Again ( Regarding That Fountain View Again )

How could I leave out Megan Media. My first (? - yeah, make that a huge question mark, for I would later publish tons of postings on Megan in 2007!) posting in 2007 on Megan was posted on March 2007: What about Megan?. Megan had announced its earnings but I stressed that investing is not based just on numbers and I questioned the godzilla sized debts in Megan!

Here are more postings on Megan

  1. Auditing Megan
  2. Reply to Auditing Megan
  3. Re: Megan again (highly recommended - long posting!)

From that posting:

  • There is this old blog posting I have made before. It's called Price Versus Value.

    I believe everyone understands that the current stock market is rather hot. Some would go for the hot stocks, while some were search the market for the low PE stocks - the laggards. But do understand there is risk involved in such a strategy. And since as mentioned, this advice was given to you, perhaps you might want to consider a second opinion on the advice itself. What if such an advice based on such a strategy could be faulty? Do not get me misunderstood here at all. I am not saying that all low PE stocks are bad and neither am I against this strategy at all.

    But I believe there is risk involved here. And if not reasoned out carefully, such advice could turn deadly. This is because of the tendency of folks to be focused solely on the price of the stock. And sometimes they focus solely on the earnings, without giving a second thought about what is the driving factor behind the earnings. And by doing so, they simply focus on the price of the stock being traded on the market and they simply failed to understand the value of the company.

    Simply put, a stock selling on a cheap PE does not equate that one is investing on a quality company. Sometimes, these stocks are selling at a cheap PE has a simple reason. They are cheap because the markets simply do not rate the stock at all due to all the inherent risk involved in the company. In simpler and cruder terms, they simply know that the company is lousy.

    So what's so wrong with Megan?

And PSCI turned out to be one huge winner although I made no entry into the stock: Regarding PSCi. But it was significant event for me, for during this period, I created a blog based on trading, Cows Don't Trade, and one of the posting was focused on PSCI: Is there a possible trading entry now for PSCi?

With the collapse in Megan, attention was finally focused on cash flow. Yes, cash flow is an important issue not to be discounted in investing. Would a company deemed as a wonderful business if it does not have a solid cash flow? (See Regarding Cash Flow ) And also not to be forgotten was the posting on Financial Shenanigans and Spotting Them LOSERS!

And do you think that Research Reports Good For Stocks??

  • Here is my opinion.

    Charging rm30,000 simply is too much. It's insane. Think about it.

    From the owner's perspective.
    Would you pay so much money for coverage?

    From the analyst's perspective.
    Would you not tend to be a bit generous on your viewpoints?

    From the investor perspective.
    With so much money involved, would the investor get an un-biased report?

    How?

    On the other hand, let's look at the positives if Bursa was to foot the bill.

    1. From Bursa 's perspective, this CBRS is part of a program to generate interest and awareness in their own business. More awareness equals to more business. Yes?

    2. At this moment, coverage is still lacking. So many companies aren't being covered. Is the rm30,000 the reason? So without being forced to pay, we, the investors could see more coverage on more companies, right?

    3. Without the rm30,000 price tag, the analyst has more freedom. Perhaps, we could avoid cases where analysts are being way too generous in their write-up. Meaning we avoid incidents where analysts give way too optimistic target prices and recommendations.

And then Genting share split caused utter havoc! Genting's confusing Share Split , More confusion on Genting split issues, Update on More confusion on Genting split issues and Genting Share Split Gets Highlighted!!

And the Karensoft saga, it ended! MOVED over who? The FINAL Saga!

One of my favourite posting was of course: Systems and Old Mistakes

I did gave some second opinion on some stocks: Regarding Keck Seng , Kencana, PCCS , PCCS II , Ornasteel , Review on OrnaSteel Again, KPJ Healthcare, NextNation, NextNation II , NextNation III, Cymao, Cymao II , Cymao IV, Ye Chiu Metal, YLI Holdings, Update on YLI Holdings, A Mammoth Issue, BCT, BCT Part II, BCT III, EPIC, Gadang Holdings , Pintaras Jaya, Pintaras Jaya II, Notion Vtec, Notion Special Issues of Shares, Notion Vtec II, Mieco Chipboard: VII, S&P has a Strong Buy on Mieco Chipbaord! , Review on Yi-Lai, Review Of Uchi Again, Uchi and its ESOS, Englotechs Trade Receivables, EcoFirst (Kumpulan Emas), Them OnG Stocks! Crest Builder 2007 , Timber and Tekala, Random Musing on the Timber Sector and Is PriceWorth really Worth Investing? and Reply to comment on PriceWorth and Is PriceWorth really Worth Investing? II

And of course I blogged a lot on that Silver Birdie, Silver Bird says confident of turning around (see the links included) and Silver Bird Again

Call warrants, of course, was simply a sizzling hot trading item in 2007. The Profitable Call Warrants II. For me, these simply were trading stocks.

  • And as can seen from the above charts, I do not dispute that there existed the window of opportunity for the smart trader to make money from these two call warrants but as seen from the exercising of warrants, if one buys these call warrants in hope of profiting from the exercise price, then this example would show clearly how risky these venture are.

And then Maxis it got privatized! Quick update on Maxis, Maxis Implication? , How Much For Maxis? , Maxis Again , Oh Maxis, 20% VGO premium for Maxis? , Windfall for Maxis? and Aseambankers Advisory on Maxis

Sunrise and its projectiles were amusing as usual. Aseambankers on Sunrise and Them Sunrise Projectiles!

4th May 2007, I blogged The Receivables Issue And Megan. It was incredible timing! Later that evening I wrote First Strike Call For Megan Media!

6th May 2007, I then wrote Megan And MJC. The next day, I wrote How now for Megan?

  • I really see so much more pain before anything else!

    Given current situation, I would sincerely reckon that acknowledge this investing mistake and move along is probably the wisest thing to do. There is still time now!

    By not doing so, one is stubbornly hanging on and refusing to admit one is clearly wrong on a poor stock selection!

And to make matters worse, Look Who HAS Sold Their Shares in Megan Media!!!

And the rest were history!

  1. Were There Warning Signs For Megan?
  2. Strong Sell on Megan Media
  3. Answers to Questions On Megan
  4. Strike Two For Megan
  5. Strike 3 for Megan
  6. Megan, do you think that it's so scandalous?
  7. What's Left of Megan?
  8. Cooking And More Cooking!!
  9. Megan Media posts RM1.14b net loss in 4Q
  10. The Naked Truth in Megan
  11. Megan's Other Bossie
  12. Megan: The Naked Truth Part II
  13. Suit Filed Against 2 Megan Officials

Then came the Transmile episode:

  1. Transmile Receivables,
  2. How about TransMile?,
  3. TransMile,
  4. More on TransMile,
  5. 50 Million Adjustment for TransMile?
  6. The Full audit Statement on Transmile!
  7. Reviewing the events at TransMile
  8. Cooking And More Cooking!!

Symphony was incredible: Symphony Again and Symphony sees Strong Revenue Growth!

And of course, Bumi Armada plans to be lised again was rather disgusting: Bumi Armada Sailing Again???

And of course, in a hot market, them sources were simply everywhere. It had Ranhill striking oil! According to Sources: Ranhill Strikes Oil!!!!!!!!. Which raised the following issue yet again: Do you think that Bursa should take action against misleading reporting?. Which received some interesting feedbacks: Do you think that Bursa should take action against misleading reporting? Part II

See example: Tamco: Misleading Article? and Misleading Article: Tamco Part II or what the power of the source in Bandar Raya thingee: Bandar Raya To Be Privatized? and The Power of the Source In Bandar Raya Alleged Privatzation!

Of course the incredible thing was Do you Trust What You Read?

OilCorp and OilCorp II and OilCorp III was a story in itself!

And I like these postings: Poker and Investing! and Business Like Investing and When Setback occurs in a Business and Interview with Zweig: Your Money and Your Brain and Profiting From Our Mistake(s)

Of course, PSCI was a messy stock. Some simply took my blog posting for granted: Regarding PSCI issue again.

Which prompted the following posting: Disclaimer & Closure & Some Random Musings.

  • See, I never thought this issue of disclaimer was important, for I thought it was redundant since I do not make any stock recommendation or advice on this blog. Second opinions, yes. A couple many times I have made open second opinions on stock. However, I have always leave my commentary open to the readers' own interpretation.

    Anyway do remember this:

    Now I do believe that you realise that I am a mere blogger and I am not an investment advisor or any sort.

    Meaning to say, I offer no one any guarantee card here. There is no 'pink borang to isi' if and when anyone decides to buys or sells any shares based on what I had blogged on.

    So this is to say, I do not owe anyone anything and neither does the reader owe me anything
    .

And not to be forgotten, in that blog posting, I mentioned the following:

  • This for me is so strange. We are talking about the stock market here and ultimately opinions and market strategies will differ. Should we go on hating someone because their opinion differs from ours? Or should we hate someone because they posted criticisms against the stocks we hold? Sadly, I seen this happening quite often.

Salcon and its contracts were simply amazing! Salcon So was Masteel diversification into BioTech.

And then OSK did a wonderful job warning on Mems. Yes, OSK did warn about Mems! OSK comments on Mems and then the rest was indeed histoy for Mems net earnings were reduced from 21.47 million to just 13.45 million!

MP Tech was a saga too! ( see here also )

  • So what more can I say about MP Tech?

    Got listed via RTO of Kelanamas in 2004. Insolvent by Jan 2007. To be delisted on Dec 2007!

    Now value destruction or what!!

And oh yeah, Team www.Sahamas.net finished 2nd in BursaPursuit

And then we have PMI's rescue package and What about MUI Ind?

Updates were done on Update on NextNation and Update on EcoFirst

Well, as mentioned, 2007 has been a truly wonderful year for me. The market has been truly kind to me. I do really hope it has been kind to you too.

And last but not least, many thanks for reading and I would like to wish all a grand 2008!

Cheers!

Wednesday, December 26, 2007

Talking Balls?

I just realised I posted footie talk on this blog!

Yeah, I am pretty nuts about that game called footie and as you can tell, I am a Man United fan.

Over the weekend, Manchester United was extremely lucky against Everton. United was gifted by that moment of madness from Pineer. How could he stuck his foot out to the back is simply beyond comprehension. And Ronaldo duly slotted in the penalty kick for his second goal of the match.

Boy, Ronaldo is having a truly wonderful season.

The following video clip is a wonderful compilation done on Ronaldo.



Saturday, December 22, 2007

Season starts tonight!

Manchester United was given an exciting draw with Lyons in the Champions League last night. Trust me, it should be extremely interesting for Lyons ain't no walkover.

On the premiership front, both Manchester United and Arsenal won.

Chelsea lost the game the minute John Terry went off after a ruthless and extremely nasty tackle from Eboue. He should have been send off for it! He's terrible. A gangster on the football pitch!

In the earlier match, in my opinion, Rafa lost the plot again, handing the match to United on a platter. Rafa started on a much disguised 4-4-2 formation but it was clearly that it wasn't a 4-4-2 formation. Why does Rafa likes NOT to play to his team strength? Does he even know who is his strongest team? Kyut started alongside with Torress but Kyut was lost in the midfield. And the two wide players, were no where to be seen. And Liverpool ended playing way too narrow, right down the middle. With Anderson and Hargreaves giving extra cover to Rio and Vidic, Liverpool despite all the possession was choked right down the throat.

This weekend, Arsenal host Tottenham and United host Everton.

Arsenal should win but I am feeling strong vibes from Spurs. Spurs have kept 2 consecutive clean sheets and are playing much, much better under Juande Ramos. So I do not expect Spurs to get thrashed or whacked. Worse case, they might lose by an odd goal to Arsenal. In fact, it would not surprise me, if Spurs gets a result.

Manchester United, on the other hand host, Everton on Sunday. This is going to massive match for United. Everton is on form and they are on an amazing 13 match unbeaten form in all competition. Moyes had rested Horward, Yakubu, Arteta, Cahill and Yobo in their midweek clash against AZ Alkmar in the UEFA Cup. Two key players are Arteta and Yakubu. It's so important to see how Arteta would fare against Anderson and Hargreaves. If Arteta is contained, Everton would be contained. And that should nullify the deadly Yak attack for Yakubu has always played well against Man United in the past.


A 2-0 victory for United?

And on the side note, my most impressive player so far this season for United is Anderson. For his age his performance against Liverpool last week, was simply beyond comparison. Truly awesome! And it was great to see players like Ronaldo acknowledging his potential. (
More )

Friday, December 21, 2007

Update on EcoFirst

Here is an update to the blog posting, EcoFirst (Kumpulan Emas). Ecofirst announced its earnings on Wednesday. Quarterly rpt on consolidated results for the financial period ended 31/10/2007

It posted a lost of 2.4 million for the quarter.

Now if you refer to the posting
EcoFirst (Kumpulan Emas), this means that this is the 8th consecutive quarterly earnings of losses posted by EcoFirst!

Now I noted that the Edge had an article on EcoFirst.

  • 21-12-2007: Ecofirst expects more aggressive construction unit

    PETALING JAYA: Ecofirst Consolidated Bhd is expecting its construction division to move forward more aggressively next year, said its group managing director Datuk Clement Hii Chii Kok.

    He said the company was in the final stage of negotiations for a few key projects locally amounting to about RM250 million.

    “We are now focused on turning our new and existing businesses into profit generating divisions,” he said, adding that it had been less than two years since a change in the management of the company.

    It is currently constructing the Casa Subang Service Apartments in Subang Jaya comprising two blocks of 25-storey apartments.

    Speaking to The Edge Financial Daily last Wednesday, Hii said its key asset was the South City Plaza in Seri Kembangan and was looking to revamp the tenant mix and giving the property a facelift by next month.

    Its other main activities are in property development, food services and multi-level marketing. The property and construction division currently contributes 60% to the group’s turnover.

    Its subsidiary EcoFirst Hartz Sdn Bhd has a flagship Hartz restaurant in Subang Jaya, Selangor. It has a 15-year area trademark licence agreement (West Malaysia) signed in Sept 2006 with Hartz Chicken (Malaysia) Sdn Bhd, the licensee of all Malaysia and Brunei rights to the marks of “Hartz Chicken Buffet.”

    Hii said EcoFirst, as the area sub-licensee, was looking at opening four new restaurants within a year. The ultimate licensor is Texas-based Hartz Chicken Inc. EcoFirst can sub-license Hartz Chicken Buffet restaurants to other third party.

    Ecofirst has also entered into a joint venture with the Johor state government to develop a 1,000-acre biotechnology driven agricultural farm in Desaru, Johor, to set up and run greenhouses and open crop farms. It is currently in the first of three phases.

    The JV is part of the group’s expansion into more areas of agro-biotechnology, specifically organic farming using high end and environmentally friendly technology.

Wednesday, December 19, 2007

What about MUI Ind?

Let's have a look at what MUI IND (3891) has done this decade. What I will do is a simple look at MUI Ind's yearly Q4 earnings report posted at Bursa website.

Date announced: Feb 2000. Quarterly rpt on consolidated results for the financial period ended 31/12/1999

MUI Ind made 42 million for the fiscal year. (Note: Its previous fiscal year, MUI Ind lost 562 million!)

Feb 2001. Quarterly rpt on consolidated results for the financial period ended 31/12/2000

MUI Ind lost 64 million for the fiscal year.

Feb 2002. Quarterly rpt on consolidated results for the financial period ended 31/12/2001

MUI Ind lost 17 million for the fiscal year.

Feb 2003. Quarterly rpt on consolidated results for the financial period ended 31/12/2002

MUI Ind lost a WHOPPING 981 million for the fiscal year!

Feb 2004. Quarterly rpt on consolidated results for the financial period ended 31/12/2003

MUI Ind lost 166 million for the fiscal year.

Feb 2005. Quarterly rpt on consolidated results for the financial period ended 31/12/2004

MUI Ind lost a WHOPPING 409 million for the fiscal year!

Feb 2006 Quarterly rpt on consolidated results for the financial period ended 31/12/2005

MUI Ind lost a WHOPPING 396 million for the fiscal year!

Feb 2007. Quarterly rpt on consolidated results for the financial period ended 31/12/2006

MUI Ind lost a WHOPPING 218 million for the fiscal year!

How?

Amazed?

You reckon MUI Ind should be awarded with a record for its ability to burn so little money since 2000?

Well, if my calculator fails me not, thats about some 2.2 billion ringgit that has been .....

Update on NextNation

First blogged on Nextnation on 31st May 2007. here

Two points mentioned then..

  1. Net margins show some weakness but the growth is impressive!
  2. The biggest concern for me is that NextNation has an issue with its receivables and because of this, one do not really see wealth being generated in the company's cash flows despite its very impressive earnings.

Nextnation announced its next earnings on June 29th. Quarterly rpt on consolidated results for the financial period ended 30/4/2007

  1. Sales dropped on a q-q to 21.533 million.
  2. Earnings dropped to a mere 480k.
  3. Receivables is at 67.092 million
  4. There goes the GROWTH stock status!

I wrote a simple posting. http://whereiszemoola.blogspot.com/2007/06/nextnation-ii.html

  • Well, from an investing perspective, it's pretty ugly.

Nextnation announced its next earnings on Sept 2007. Quarterly rpt on consolidated results for the financial period ended 31/7/2007

  1. Sales dropped on a q-q to 17.797 million
  2. Earnings improved slightly to 611k.
  3. Receivables is at 61.702 million

Nextnation announced its earnings last night. Quarterly rpt on consolidated results for the financial period ended 31/10/2007

  1. Sales were flat at 17.868 million.
  2. Earnings dropped to a mere 145k!!!
  3. Receivables is at 56.702 million.

How?

Here is how Nextnation has performed as a stock!

Tuesday, December 18, 2007

PMI's rescue package

I found the following article from the Edge Weekly extremely interesting: 17 Dec 2007: Corporate: Khoo forks out RM150 mil to save PMI. My comments will be in purple fonts.

17 Dec 2007: Corporate: Khoo forks out RM150 mil to save PMI
By Risen Jayaseelan

Pan Malaysian Industries Bhd (PMI) is inching closer to extricating itself from dire straits. The plan that Tan Sri Khoo Kay Peng has put in place for the PN17 status company involves him injecting more than RM150 million of his cash into it.

The money will be used to reduce PMI's debts and acquire properties that will give the company a stable income.

"Khoo is putting his money where his mouth is. PMI's restructuring is unlike others where asset injections or paper shuffling are involved. This is hard cash that is being injected in and indicates the seriousness of the owner to make things better for his company," notes an investment banker.

Last week, PMI submitted a revised restructuring plan.

"This, together with the fact that Khoo — the ultimate shareholder of the MUI group, which PMI is part of — is underwriting a share sale exercise by PMI means the restructuring plan has a high chance of being accepted by the authorities," another banker says.

The exercise involves PMI selling shares it owns in Malayan United Industries Bhd (MUI) to its (PMI's) shareholders. PMI currently has a 46.56% stake in MUI. It intends to reduce that to 20% by selling 26.56% of its stake.

( Ok... PMI is selling its stake in MUI back to PMI shareholders. This is why I find it so strange, cos PMI as stated, currently holds a 46.56% stake in MUI. Why sell it back to PMI? Why can't MUI sell it to other parties? Does PMI shareholders even want MUI shares? )

Khoo's portion alone is RM50 million, but since he is underwriting the offer, he could potentially end up spending RM154.6 million on the MUI shares.

Khoo controls 32.4% of PMI and only has a 2% direct stake in MUI. With his stake in PMI, Khoo is entitled to purchase 8.3% of MUI under the share sale agreement. If Khoo only takes up his portion, his direct stake in MUI will increase to 10.3%, and with PMI's remaining stake in MUI, he will be deemed to control about 30% of MUI.

Khoo's deemed stake in MUI could rise further and perhaps even trigger a mandatory general offer for MUI shares if PMI shareholders do not take up the offer. (This is because Khoo is underwriting PMI's offer for the sale of the shares.)

Two weeks ago, PMI announced it had secured the High Court's order for a par value and share premium reduction. Getting the court order for this is a necessary step before other aspects of PMI's restructuring can kick in.

Here's what PMI is essentially planning to do: It wants to shrink its share capital by 90% and reduce its share premium account of RM265.6 million. The next and more substantial step is to make a restricted and renounceable offer for sale of 515.4 million shares in MUI to its (PMI's) shareholders. This will be done at an indicative price of 30 sen, although it may be higher if MUI's share price appreciates closer to the fruition of the proposed sale.

Of the RM154.6 million that will be raised from the share sale, RM84 million will be used to reduce PMI's borrowings from RM207.7 million currently to RM123.7 million. If the shares are sold at a higher price, more money will be raised and more of PMI's debts will be settled.

The proposal states that RM50 million from the proceeds will be used to buy properties that will become "a new area of activity for PMI". These new properties are to generate rental income and positive returns for the group.

The first property is Menara PMI, a 15-storey building in Jalan Changkat Ceylon. Ten storeys of this building are occupied by offices while the first five storeys comprise a retail podium and two basement car parks. The building has a net lettable area of 104,011 sq ft and 87 parking bays. Almost 96% of the building has been tenanted to various companies within the MUI group. It recorded an approximate rental income of RM4 million per annum last year. The vendor of the property, another MUI group company, Pan Malaysian Holdings Bhd, acquired the building in 1994 for RM35 million. The property had a net book value of RM28.9 million as at Dec 31, 2006.

PMI is forking out another RM10 million to pay MUI Properties Bhd for 1,478 sq m of land located along Jalan Mayang, near Jalan Ampang, Kuala Lumpur. The plot lies between two high-end condominiums, Mayang Court Kondominium and D'Mayang Kondominium. MUI Properties bought the land in 1995 for RM1.9 million and the net book value of the property is RM2.4 million. Both properties have been valued by credible valuers.

However, the question is, why is PMI buying properties from within the MUI group? Could PMI not buy other land with the money it is raising?

( Again, I find it so complicating. One on hand, PMI is selling its stake in MUI to its PMI shareholders. And then, PMI is buying properties from MUI Prop. ????? Errr.... say what? I am lost here!)

A banker familiar with the proposal says as far as PMI is concerned, the properties have a lot of potential. "Hence, the source of the land shouldn't matter. What matters is Menara PMI will provide stable rental income while the land provides growth potential," he says. It is understood that the land will be used by PMI to put up a high-end condominium project, considering its strategic location. If done successfully, PMI could reap the necessary earnings to breathe life back into the company.

>>>>>>>>>>>>>>

Anyway.... the first line, PMI is inching closer to extricating itself from dire straits.

I decided to have a peep at what PMI has done as a stock

May 2000. PMI had a Rights Issue

  • Renounceable rights issue of 978,421,500 new ordinary shares of RM0.50 each with 978,421,500 warrants attached at an issue price of RM0.55 per share, payable in full upon acceptance, on the basis of one (1) new ordinary share with one (1) warrant attached for every one (1) existing ordinary share held in Pan Malaysian Industries Berhad at 5.00 p.m. on 23 June 2000

Let's look at the quarterly earnings posted at Bursa. (links are clickable)

30th May 2000: Quarterly rpt on consolidated results for the financial period ended 31/3/2000

PMI reported a loss of 8.596 million for its fy 2000. (previous year, it lost 222.790 million)

30th May 2001: Quarterly rpt on consolidated results for the financial period ended 31/3/2001

PMI reported a loss of of 96.548 million.

23rd May 2002: Quarterly rpt on consolidated results for the financial period ended 31/3/2002

PMI reported a loss of of 384.254 million.

29th May 2003: Quarterly rpt on consolidated results for the financial period ended 31/3/2003

PMI reported a loss of of 510.411 million.

4th June 2003: Another rights issue: Rights Issue

  • The ratio of the Rights Issue of two (2) Rights Shares for every five (5) existing ordinary shares of RM0.50 each in PMI held on the Entitlement Date as stated above is based on Scenario I (as defined below) for illustrative purposes only. The final basis of the Rights Issue will be determined immediately after the Entitlement Date depending on the number of Warrants exercised on or prior to the Entitlement Date under Scenarios I, II or III (as set out below).

21st May 2004. Quarterly rpt on consolidated results for the financial period ended 31/3/2004

PMI reported a loss of of 83.878 million.

20th May 2005. Quarterly rpt on consolidated results for the financial period ended 31/3/2005

PMI reported a profit of 102 million.

9th March 2006. PMIND-Classification as a new PN17 Company

31st May 2006. Quarterly rpt on consolidated results for the financial period ended 31/3/2006

PMI reported a loss of of 172 million.

30th May 2007. Quarterly rpt on consolidated results for the financial period ended 31/3/2007

PMI reported a loss of of 123 million.

Not an impressive track record, yes? And if not mistaken, PMI had a rights issue back in 1998 too!

My...

Monday, December 17, 2007

Team www.Sahamas.net finished 2nd in BursaPursuit

Many congratulations to team Sahamas (www.Sahamas.net ) who finished 2nd in the first ever Bursa Pursuit investment challenge.

Team members:


  1. TheChargingBull
  2. JLMouse
  3. Random
  4. Faruq
  5. LEEYA2004

* ps. due to some technical hitches, the team finished second. In my opinion, they should have finished first!!!

Well done guys!

Here's their proud trophy!



The Star Biz had a write-up: Bursa’s online game ends with a bang
  • Monday December 17, 2007


    Bursa’s online game ends with a bang

    By Fintan Ng

    BURSA Pursuit, the online investment challenge game organised by Bursa Malaysia Bhd, ended on a festive note recently at a prize-giving night entertained by local artistes.

    Contestants, their family members and friends attended it, which was held at a leading hotel's artificial beach.

    The game, which attracted over 55,000 virtual investors, ran from Oct 1 to Nov 30 and was divided into three leagues - main, sub and pro with a young investors category added due to the overwhelming response from younger contestants, of which 72% were below 30 and 62% had not traded before.

    Each individual or team was given a virtual capital of RM250,000.

    Bursa Malaysia worked with four broking partners, Hong Leong e-broking, RHB Invest, OSK 1888 and CIMB i-trade, to develop the game, which was based on real market conditions of the game period.

    The game's aim was to attract and educate a younger set of retail investors, especially those in the 20 to 29 age bracket.

    Prizes were given to each of the three leagues as well as to the top 10 male and female investors grouped by age in the young investors category.

    Prizes worth up to RM560,000 were given away in the form of trading limits and cash.

    The first, second and third prize winners of the three leagues were each given RM100,000, RM30,000 and RM20,000 in trading limit where they would designate a broker to manage their funds.

    Those in the young investors category were each given RM1,000 cash.

    Bursa Malaysia equities marketing head Azalina Adham said told StarBiz on the sidelines of the event that the exchange organised the game because it wanted to grow the retail market, which was hard hit by the Asian financial crisis 10 years ago and suffered from a dearth of younger investors.

    “Most of the retail investors and dealers today are older, certainly above 35, so when we first came up with the idea of an investment game, we were apprehensive because we were not sure if the targeted group would be interested,” she said.

    She added that Bursa Malaysia's chief executive officer Datuk Yusli Mohamed Yusoff was pleasantly surprised that there was such an overwhelming response.

    “We know it takes time but this is the first step, we decided that in order to get younger people interested we had to interact with them via channels they were comfortable with such as the internet and through the hitz.fm Hitz Cruisers,” Azalina said, adding that there were a few hiccups at the start due to bandwidth access since there were many people who entered the game.

    She said market information as well as the trading was done via the electronic trading platform and several trading tools were made available to the contestants in order that they would be able to get the information for their trading.

    “The other objective was to make them comfortable in the equities market environment through educating them about what various corporate movements were,” Azalina added.

    “The exchange does not want people to go in blindly, what we want is for people who hear about any market movements or tips to go find out through the trading tools.”

    The trading tools available during the game period were NextView, Bursa Station and Integra Stock.

    “In all likelihood there would probably be another game next year,” Azalina said.

    Meanwhile, in the main league's individual investor category, first prize winner Chong Chen Keng, who attended the prize-giving ceremony with partner Edmund Ngui, was still in a state of euphoria.

    “I came to know of the game through friends from OSK Investment Bank's Seremban branch,” she said.

    “I am new to trading and seldom checked the business pages of newspapers or even go online for business and economic news until now.

    “The trading tools and tips really helped me, I caught up really fast and build up a strategic portfolio,” she added.

    For Ching Hong Tat, who led the team “Glorious Winners” consisting of family members, the game was an opportunity to educate the younger family members of the team on how to make their investment decisions and how to grow their wealth wisely.

    The team took the top prize in the sub league for non-professionals.

    Because the game was based on the real market, Ching felt that it was a good way to learn.

    “The underlying principle is that you have to know what you are investing in, understand your stocks before you invest in them,” he said.

Saturday, December 15, 2007

Regardings Mems Again..

Here is a follow-up on the blog posting on Mems: More on Mems Restating of Its Earnings.

Read the following article posted on the Edge.
14-12-2007: Major MEMS Tech shareholder disposes of 1.8m shares


  • AKN Equity Ventures Sdn Bhd, a substantial shareholder of MEMS Technology Bhd which is being investigated by the Securities Commission for possible irregularities in its financial statements, has reduced its direct shareholding by selling 1.8 million shares or a 0.27% stake in the open market.

    A filing with Bursa Malaysia on Dec 12 showed that after the disposals on Dec 7, 10 and 11, AKN Equity’s direct interest in the Mesdaq company was reduced to 126.9 million shares or 19.35%. The share price closed at 21, 20.5 and 20 sen respectively on the three days.
    MEMS share price tumbled 16 sen or almost 45% on Nov 28 after the company told Bursa Malaysia it could not issue the audited accounts due to concerns over certain transactions.

    Subsequently, the counter has been hovering between 19.5 sen and 21.5 sen with an average of 5.64 million shares traded daily.

    On Nov 30, the company said it was not able to issue its audited financial statements for the financial year ended July 31, 2007 for public release, within the four months from close of the financial year, which falls on Nov 30.

    The board of directors of MEMS wishes to announce that the company is not able to issue its audited financial statements by Nov 30, 2007, as the company’s external auditors have expressed concerns over certain transactions relating to revenue and property plant and equipment.

    ”In light of the above, and after due deliberation, the board has resolved not to recognise revenue of RM19.72 million. As a result of this, the unaudited consolidated revenue for the financial year ended July 31, 2007 will be revised to RM53.7 million.

    This will consequently result in the unaudited profit after tax for the financial year ended July 31, 2007 to be reduced from RM21.47 million as announced on Sept 27, 2007 to RM13.45 million,” it said.

    Bursa Malaysia Securities on Dec 4 rejected the company’s application for an extension of 45 days from Nov 30, 2007 to submit its audited financial statements for the financial year ended July 31, 2007 (FY07).

    Late last month, a SC spokesperson confirmed that the company was being investigated for possible irregularities in its financial statements.

Do you like what you see in this company?

Company restates its earnings, company major shareholders dispose their shares, company not able to submit its earnings in time. Rather terrible, isn't it?

Wrote the following on Sahamas back on Nov 28th 2007.

  • All this is giving us (our stock market) such a bad name.

    In Mems case, yes it was not as drastic as say Megan or Transmile but over stating earnings is simply unacceptable.

    Consider the following...

    If Mems did not over-state their earnings, there would be no growth for 3 years!

    Without the growth, MEMS would have been rather unattractive and most of all, it would never had commanded such a rosy stock price.

    Just in July 2007, MEMS traded at a high of 81 sen, giving it a market valuation of 531 million.

    Now based on an actual earnings of 13 million, surely this 81 sen would have been an insane stock price for Mems!

    Now consider this. Let me flip it around.

    Mems is now trading at 25 sen. Its market valuation is only some 163 million.

    So if the market valuation now is about fair for a company making only 13 million, then Mems is worth only some 163 million.

    However, due to the overstated earnings, MEMS was valued as much as some 531 million!!!

    How?

Just for the record, Mems closed yesterday at 19 sen.

Friday, December 14, 2007

Give The World A Helping Hand

My Dearest Readers,

I have received a petition regarding OUR Earth's climate changes. I am a firm believer. Hence, I am passing on this urgent call for help!


Do sign the petition!



  • I just signed an emergency petition trying to save the crucial climate change talks in Bali, Indonesia right now by telling the US, Canada and Japan to stop blocking an agreement. You can sign it here:

    http://www.avaaz.org/en/bali_emergency/98.php?CLICK_TF_TRACK

    Almost all countries have agreed to cut rich country carbon emissions by 2020--which scientists say is crucial to stop catastrophic global warming, and will also help bring China and the developing world onboard. But with just 24 hours left in the conference, the US and its close allies Canada and Japan have rejected any mention of such cuts.

    We can't let three governments hold the world hostage and block agreement on this desperate issue.

    There's still 24 hours left to turn this around - click below to sign the petition - it will be delivered direct to summit delegates, through stunts and in media advertisements, so our voices will actually be heard. But we need a lot of us, fast, to join in if we're going to make a difference. Just click on the link to add your name:

    http://www.avaaz.org/en/bali_emergency/98.php?CLICK_TF_TRACK


Wednesday, December 12, 2007

Do you Trust What You Read?

This blog was mentioned on the Weekly Edge: 10 Dec 2007: Corporate: Trusting 'educated' thoughts and rumblings


  • 10 Dec 2007: Corporate: Trusting 'educated' thoughts and rumblings
    By Cindy Yeap

    Investors today have a new source to turn to when seeking information or a prognosis on, say, how much Warren Buffett's recent comments on China and South Korea have affected regional market sentiment — weblogs.

    More commonly known as blogs, these have evolved into something much more than an online diary in recent times.

    Even leading news publications like the Wall Street Journal are paying attention to weblogs, recognising their increasing appeal to an online audience. Many online news sites, including the WSJ's, have begun to tag news articles with links to related blog postings alongside associated write-ups. BusinessWeek, for instance, has an entire section dedicated to blogs on its website, where its editors post investing insights into the latest on Wall Street. The publication also invites experts from other fields to offer their perspective of subjects ranging from automotive to management trends and even the effects of climate change on business.
    But for every blog backed by a named organisation or individual, there are countless others put up by anonymous ones. The situation is probably similar in Malaysia. There is a growing group of individuals here which is well ahead of most, if not all, local news organisations when it comes to capturing an online audience via blogs.

    And among them are people who post discussions on the Malaysian stock market — everything from newsbytes and stock rumours to why an entire team of analysts are quitting en masse. Some of these blogs are merely opinions on business news articles and analyst reports, while others take things a step further by offering their own prognosis on the direction of the stock market and making stock picks.

    Some of these stock market-related blogs do have some following, going by the feedbacks posted on them. This may be because some of the stock market-related content is contributed by people who claim to be experienced in the capital market.

    Also, it is not just retail investors who are paying attention to these blogs. An article by a blogger who goes by the pseudonym S Dali was last week published in a widely circulated local business daily. This anonymous blogger at "Malaysia-Finance" (Malaysiafinance.blogspot.com) describes himself as an ex-analyst and ex-fund manager, with a background in accounting. His more recent blog postings include rumblings on the Chinese government's sovereign wealth fund China Investment Corp, his take on Chinese coal-mining company China Shenhua and his view on the tussle for control at Kian Joo Can Factory Bhd. There are also postings from other blogs, including "Where Is Ze Moolah?" (whereiszemoolah.blogspot.com), which Dali credits as among the earliest to highlight the fact that analyst recommendations on MEMS Technology Bhd were overly optimistic.

    As it happened, MEMS Tech last month said it could not come up in time with its audited results for the year ended July 31, 2007, because external auditors had raised questions about certain transactions.

    Now, is it a good thing that more people are taking blog content seriously, especially the kind that promotes certain stocks? More importantly, should they?

    "I don't think it's necessarily bad to read blogs. Blogs can be good as they can be a good forum for discussions, a place for idea generation, but definitely not a place to find out which stocks to buy. Like any other piece of information, blog postings should be read with some measure of scepticism. After all, a blog is someone's opinion. Just like any other type of blog, there will be some that stand out and gain more following with time," says investment director Wong Shou Ning, who helps manage RM500 million in funds at Amara Investment Management Sdn Bhd.

    What's important, Wong adds, is how a reader treats the information found on these stock market-related blogs and not so much if people are paying attention.

    "Reading blogs is not unlike reading an analyst report from a broker. It's just that the amount of scepticism increases for a blog because you can assume that the broking house is willing to back up its report. It puts its name on the report whereas in the case of most blogs, people have no idea who is behind them. There is no assurance that the blogger has met the management of the company mentioned, or if he has done spreadsheets to analyse the necessary numbers.

    "When it comes to investments, you cannot take everything you read or hear at face value. It's up to you to do your own research and investigation. For fund managers, it's critical to have that kind of discipline," Wong says.

    An analyst with a local brokerage agrees.

    "I think not many licensed people will own up to reading these blogs, but there are definitely people in the industry who read them. Some postings have in the past been circulated in emails, not unlike how one would forward an interesting write-up or joke," he says.

    Like any other channel, there will be people who will misuse blogs to spread rumours with the intention of ramping up a stock.

    "Yes, some people do buy on talk (speculation) and sell on news, but it is essentially up to the reader to decide whether he can trust any information he gets. It's like the talk you hear on the street, newspaper articles quoting anonymous sources or overly bullish statements made to reporters by the management (of a company). It's just that they're now posted on someone's blog. Investors should know the distinction between fact and rumour. If they put money into a stock after reading a blog and lose money, they well deserve it. That's the consequence of not doing their homework," the analyst adds.

    When asked for its comments, the Securities Commission (SC) reminds investors that they should only seek investment advice and services from investment professionals who are qualified and licensed. The full list of people licensed to give investment advice is available on the SC's website, its spokesperson says.

    "The SC continuously conducts surveillance, monitoring and enforcement of the capital market to ensure appropriate conduct by market participants and the highest standards of investor protection. The SC takes action where there is evidence of wrongdoing," the spokesperson adds.

    So, essentially, there will be no shortage of information and prognosis on the Internet. The commentaries posted on the anonymous stock-market or financial blogs could well offer good insights, on top of being an entertaining read. But when it comes to putting good money into stocks, investors should always first check the facts.
Back in Jan 14th 2006, there was an article posted on Star Biz.

  • Blogging about Bursa

    ACCOMPANYING the proliferation of online financial and investment portals is the steady accumulation of blogs and online forums that discuss the same subject, namely counters traded on Bursa Malaysia.

    Short for web log, a blog is essentially a website on which journal entries are posted. Both blogs and forums allow swift, unfettered discussion on a variety of subjects. Undoubtedly, the anonymity afforded by the Internet is part of its appeal, but this anonymity can easily become a two-edged sword.

    Perhaps the single greatest obstacle preventing many blogs or online forums from achieving credibility is the fact that their administrators conceal their identity from the public. Many observers feel that even on the odd occasion they make a point, the use of a pseudonym counts against them.

    “For most blogs and forums, I think the sophistication in terms of depth is lacking. I've come across many instances in which investors recommend buying certain stocks for highly personal reasons – to them it's not so much of a forum, but more of an opportunity to promote a vested interest,” says Yeoh Keat Seng, CIMB Bhd's head of private client services.

    He isn’t alone. The overwhelming majority of those polled by BizWeek were either unaware or dismissive of the local blogging community’s discussions about the stock market.

    “How reliable are they?” asks Tan Teng Boo, iCapital.biz’s managing director. It’s a good question, and is probably the one that’s on everyone’s lips.

    A sampling of some blogs on offer reveals that many bloggers go about their business in an orderly manner, with many collating and making available research reports from a variety of local and international research houses.

    However, there are a number that throw their weight behind certain stocks, either relating a personal experience or a closely-held belief that the counter’s price trend will soon see an upswing.

    But do they truly reflect investors’ mentality in Malaysia?

    “Many Malaysians are inherently suspicious of anything that comes for free,” comes one dissenting voice. “There is no harm in being aware of the information provided by such sites. I feel that most investors may use it as one of the factors in choosing to buy or sell a stock, but probably not the sole reason.”

    Just like so many other things, it looks like the Bursa Malaysia-related blogosphere needs to be regarded with discretion by the potential investor. Look at it as caveat emptor for the digital age.

    Illegal advice

    People may often be suspicious of freebies, but the old get-rich-quick schemes seem to be as popular as ever amongst Malaysians. Slapped with a fresh coat of paint for their Internet incarnation, these schemes run the gamut from high-return, low-risk plans, to an invitation to invest in an exotic commodity or currency.

    In collaboration with agencies such as the Malaysian Communication and Multimedia Commission (MCMC), the Securities Commission (SC) has also stepped up its surveillance and enforcement activities with regards to online capital markets.

    Last year, the SC shut down four websites that were illegally offering investment advice, following which it issued a press statement warning the public to be extremely careful when seeking investment advice and services on the Internet, as such services may be illegal and unlicensed.

    In a press release, the SC provided a number of warnings, including the fact that some websites may be professionally designed to resemble a legitimate business, and may even be equipped with real-time stock prices, market commentary, news, and links to other financial websites.

    All investment advisers require a license to operate. This point is doubly important, for despite the protection afforded by the SC with regards to securities-related laws, this protection is only available when dealing with licensed parties.

How now my dearest Brown Cow? How do you rate our local financial weblogs?