Thursday, September 30, 2010

And What Happened To The Credible Information Published In Our Financial news?

Blogged on 28 Sep 2010: Ah... According To Sources

In the Edge Financial Daily:



  • Syabas may get tariff hike
    Written by Jose Barrock
    Tuesday, 28 September 2010 12:12

    KUALA LUMPUR: A water tariff hike of between 15% and 20% may be in the offing for Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), sources said.

    The increment would be a lifesaver for the water treatment players, Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash) and Konsortium Abass Sdn Bhd, which are both on the verge of defaulting on their debt commitments.

    Syabas has not paid the water treatment players, which supply the treated water, because the tariff hike that was scheduled to kick in early last year did not materialise.

    It is understood that the federal government has agreed in principle to the tariff hike for Syabas, but has yet to get the green light from the Selangor state government which is run by the opposition Pakatan Rakyat.

    Syabas has the mandate to supply treated water to Kuala Lumpur, Selangor and the federal capital of Putrajaya and under its concession agreement was supposed to get a 37% tariff hike last year.

    “The federal government has more or less agreed, it’s up to the state now. The situation is critical as the water players, the water treatment plant operators are in jeopardy,” a source told The Edge Financial Daily.

    It is not clear how Selangor will react to the new tariff hike as it had opposed the implementation of the 37% hike and attempted to terminate Syabas’ concession on the grounds that Syabas had not lived up to the main tenets of its concession, such as reducing the level of non-revenue water to 28% in 2008.

    However, the state may be agreeable to the lower tariff hike this time considering the adverse impact that the delay has had on the industry.

    Both Splash and Konsortium Abass are seeking legal redress against Syabas.

    Konsortium Abass is at loggerheads with Syabas, and sent an originating summons dated Oct 5, 2009 for about RM63 million for payment of electricity cost and purchase of water invoices, among others.

    Meanwhile, Splash initiated legal proceedings against Syabas in November last year, pressing for the payment of RM196 million for unpaid invoices from as far back as December 2008 to August 2009.

    As the water operators have not been receiving their payments, both Malaysian Rating Corp Bhd and RAM Ratings have downgraded all their debt papers.

    According to insiders, total bonds issued by the Selangor water players are in excess of RM6 billion.

    The federal government has been giving Syabas soft loans to help it sustain its operations. Industry players say the company utilised the loans to pay 50%-60% of its overdue payments to the water treatment companies.

    Under the current structure, water companies borrow short to finance long-term projects, which brings about the need for tariff increases every now and then.

    A thorn in the side of the industry and both the state and federal governments, has been the issue of the water players defaulting on their bonds.

    The other water treatment player in Selangor is Puncak Niaga (M) Sdn Bhd (PNSB). PNSB is wholly owned by Puncak Niaga Holdings Bhd. Puncak Niaga also has 70% equity interest in Syabas, which explains why PNSB is not seeking legal redress against Syabas.

    Puncak Niaga is 41.25% owned by businessman Tan Sri Rozali Ismail, who is said to be closely linked to Umno. The Barisan Nasional controlled Selangor prior to Pakatan Rakyat coming to power.

    The share price of Puncak Niaga was up five sen to RM2.85 yesterday.

    Konsortium Abass, meanwhile, is 55%-owned by Kumpulan Perangsang Selangor Bhd (KPS) and 45% by Operasi Murni Sdn Bhd.

    Splash’s shareholders are Gamuda Bhd, which has 40% equity interest, KPS (30%) and businessman Tan Sri Wan Azmi Wan Hamzah’s The Sweet Water Alliance Sdn Bhd (30%). KPS is a 60% unit of Selangor’s investment arm Kumpulan Darul Ehsan Bhd and has 30% equity interest in Syabas.

    Konsortium Abass manages the Sungai Semenyih Water Supply Scheme implemented by the Selangor government and supplies treated water to Syabas to distribute to southwest Kuala Lumpur, Petaling Jaya, Shah Alam, Klang, Putrajaya, Cyberjaya, Sepang, Puchong, Seri Kembangan, Bandar Baru Bangi, Kuala Langat and surrounding areas.

    The latest deadline for the consolidation of the water industry in Selangor is slated for year-end after several postponements, but most water players are not optimistic that such a consolidation can be concluded so soon due to the political factors.


    This article appeared in The Edge Financial Daily, September 28, 2010.

Makes you wonder how this very reporter and his source.

Puncak the stock, of course, rose.





The stock soared 14 sen yesterday!

And today, theSun, publishes: Khalid: No water tariff hike

  • ... Speaking to reporters after the state executive council meeting today, Mentri Besar Tan Sri Abdul Khalid Ibrahim pointed out that the negotiations have stalled as there are parties that do not make the interest of the people their priority.

    "In fact there are concessionaires that are demanding for returns as high as 70% each year for the acquisition process," he said.

    "Selangor will not allow the concessionaires to incur losses as a result of the acquisition, but we will not entertain exorbitant and greedy demands because it is the people who will have to pay for these demands," he added.

    On Tuesday, The Edge Financial Daily reported that the federal government had agreed in principal on a 15% to 20% water tariff hike for Syabas, but the company needed the green light from the state government.

    Khalid said although the federal government has agreed to allow the hike, Selangor refused to do so until restructuring negotiations are wrapped up.

    "As per the agreement signed between Syabas, the federal government and the state government, water tariff hikes must have the approval of the federal and state governments," he said.

    "The state government will not change its stand despite Syabas’ claim that it is incurring losses because it cannot increase the rates."

    He said the state government intended to protect the interest of the five million consumers in Selangor, Kuala Lumpur and Putrajaya; the people of Selangor therefore need not be worried about reports of a water tariff hike.

    "The state has always been committed towards concluding the Selangor water industry restructuring negotiations, keeping in mind benefits for the consumers, and towards a more efficient water services management with fair pricing," said Khalid.

    Selangor has maintained that a review of water tariffs can only be done after the water industry restructuring exercise is completed.

    "Only a wholesome solution can ensure that the water industry is managed in a effective manner with reasonable tariffs that will not burden the people," said Khalid.

Well... NO water hike!

And Puncak the stock is now vomiting back the gains (it's now down 10 sen) it made from that Edge Financial Daily article.

How?

Reporter publishes an article based on un-named sources.

Stock flies.

The article is denied.

Stock falls.

And it happens over and over and over again.

Where's the credibility of our financial news? Yeah and what about the credible information? Credible article of facts based on unknown source?

ps: don't you think it's high time the reporter is hauled up and questioned about his source?

I still remember so much that article on the Sun: Credible information vs speculation.

Don't you want to read financial news based on credible information?

Valencia 0 Manchester United 1

For long spells United didn't look like it could pull off its first away win of the season.

United played with Anderson, Fletcher and Carrick in midfield. Nani and Park were deployed on the wings and Berbatov played alone up from. The creativity just wasn't there.

And Park was losing the ball too often in the first half and Carrick was way below par.

Chichi came on for Anderson and within minutes, he came within whiskers to scoring. In the 84th minute, Nani's first decent cross was almost turned in by Chichi at the far post. The ball came off the woodwork with the goal begging.

SAF smelt blood and made a huge move. He took out in form striker, Berbatov, and brought in young Macheda.

A minute later, the move payed off. Nani beat his man on the wing and squared the ball to Macheda. Macheda's touch was brilliant and he set the ball squarely to Chichi... and the rest was history!




21 Weeks And 73 Billion Redeemed From Equity Funds

Here's the latest data from ICI.




Yeah, 21 consecutive weeks of redemptions of equity mutual funds.


Past postings tracking the fund outflows.

Wednesday, September 29, 2010

Quick Review Of Kencana's Earnings

Kencana reported its earnings tonight.






On 29th June 2010, I blogged Should I Be Optimistic On Kencna?

Quick Update On Hai-O Earnings

Hai-O reported its earnings.

This is how things look...



How?

Previous posting on Hai-O: Hai-O Warns Of Challenging Next Year

Ambrose Evans-Pritchard: Shut Down The Fed

On UK Telegraph: Shut Down the Fed (Part II)

  • ......... We have a very odd world. The IMF has doubled its global growth forecast to 4.5pc this year, and authorities everywhere have ruled out a serious risk of a double dip recession.

    Yet at the same time the Bank of Japan has embarked on unsterilised currency intervention, which amounts to stimulus, and both the Fed and the Bank of England are signalling fresh QE.

    You can’t have it both ways. If the US is not in deep trouble, the Fed should not be thinking of extra QE. It should step back and let the economy heal itself, if necessary enduring several years of poor growth to purge excess leverage.

    Yes, U6 unemployment is 16.7pc. But as dissenters at the Minneapolis Fed remind us, you cannot solve a structural unemployment crisis with loose money.

    Fed is trying to conjure away the hangover from the last binge (which Greenspan/Bernanke caused, let us not forget), as if to vindicate its prior claim that you can always clean up painlessly after asset bubbles.

    Are the Chinese right? Are the Americans and the British now so decadent that they will refuse to take their punishment, opting to default on their debts by stealth?

    Sooner or later we may learn what the Fed’s hawkish bloc of Fisher, Lacker, Plosser, Hoenig, Warsh, and Kocherlakota really think about this latest lurch into monetary la la land, with all that it implies for moral hazard and debt contracts.

Quick Review Of Analabs Earnings

Just saw that Analabs had reported its earnings last night.

Of course, I am interested in it because I was interested to see how it fared because I had blogged on this company before.

First, here's the past postings:

  1. What's The Potential Of Coveright Surfaces To Analabs Resources?

  2. Update On Analabs Earnings

  3. A Look At Analabs Earnings

  4. Analabs

( ps: LOL! I hope I won't be accused of obsessive for making this posting! LOL! )

Flashback.

In the posting # 3, A Look At Analabs Earnings, on March 2010, I stated why I decided to blog on this stock.

  • The jump in its q-q earnings has been very impressive this year.
    So why am I posting about this stock?
    Well, I had not been positive on this stock before.

Yes, I had not been positive on the stock before. See Analabs. I was NOT impressed. However, in the corporate world, anything can happen. Really. Bad companies can become good and even good companies can turn bad. Yeah, they call it turnaround. And since it was apparent that Analabs could have a positive turnaround for the better, I thought it was only fair that I blogged on it, yes, to acknowledge and to give credit. ( Yeah, Analabs jumped 13 sen to 1.39 on that morning! )

The next quarter, June 2010, I wrote the following: Update On Analabs Earnings. Let me re paste here what I wrote.

Analabs reported its earnings. It made a net profit of 3.640 million for the quarter, giving it a total earnings of 15.389 million for its fiscal year 2010.

Which is very impressive when one starts comparing it versus what it had achieved the previous year.

But then... on a q-q basis, the earnings was terrible.

Ah yes, yet another interesting issue. Should one look at a y-y comparison or should one look at the q-q comparisons?

On a y-y comparison, its 3.640/15.389 million earnings was very impressive. Last year, Q4, it made only 1.376 million and had a total earnings of 9.373 million for the fiscal year. Bravo.

On a q-q comparison, last quarter, it made 5.639 million. So the 3.640 million is rather a shocker yes? Why such a big decline?

Balance sheet comparisons.

1. Cash. This quarter 9.949 million. Last quarter 11.848 million. Last year 32.272 million.
2. Receivables. This quarter 26.924 million. Last quarter 25.275 million. Last year 7.812 million.
3. Investments in quoted securities. This quarter 14.544 million. Last quarter 14.863 million.

Fast forward present day.

Last night Analabs said it made 3.118 million from a sales revenue if 35.562 million.

I knew it was going to look impressive when compared to previous year, same period but on a q-q basis it was rather weak! Same scenario as in June 2010.



The balance sheet.

Of course the most interesting issue was the healthy cash flow. Cash balances increased by some 4.092 million.

And yeah, Analabs still had its 'investment in quoted securities'. It's worth some 14.786 million and it's property had been revalued to 90 million.

And regarding Coveright? This quarter it only contributed some 2.201 million to Analabs bottom line.

Er... do I have to put my disclaimer. I think I better. People do act rather strangely when it comes to stock markets! LOL!


Disclaimer
1. I am a nobody.
2. I am not responsible for anyone's investments.
3. I am not a sotong. :D
4. I am certainly not an independent investment advisor.
5. Since I am not an in dependant investment advisor, I cannot guarantee that you should lose money.
6. Most important, I find no motivation to talk about stock price movements. Yeah, I do not indulge in guessing what a stock price will or will not do. So please spare me all the chats that you think this stock will go down by so much or this stock will soar by so much.
7. Oh, if you insist, I am obsessive! :P

Tuesday, September 28, 2010

Ah... According To Sources

For the desperately in seek of the mighty tomato sauce...

In the Edge Financial Daily:

  • Syabas may get tariff hike
    Written by Jose Barrock
    Tuesday, 28 September 2010 12:12

    KUALA LUMPUR: A water tariff hike of between 15% and 20% may be in the offing for Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), sources said.

    The increment would be a lifesaver for the water treatment players, Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash) and Konsortium Abass Sdn Bhd, which are both on the verge of defaulting on their debt commitments.

    Syabas has not paid the water treatment players, which supply the treated water, because the tariff hike that was scheduled to kick in early last year did not materialise.

    It is understood that the federal government has agreed in principle to the tariff hike for Syabas, but has yet to get the green light from the Selangor state government which is run by the opposition Pakatan Rakyat.

    Syabas has the mandate to supply treated water to Kuala Lumpur, Selangor and the federal capital of Putrajaya and under its concession agreement was supposed to get a 37% tariff hike last year.

    “The federal government has more or less agreed, it’s up to the state now. The situation is critical as the water players, the water treatment plant operators are in jeopardy,” a source told The Edge Financial Daily.

    It is not clear how Selangor will react to the new tariff hike as it had opposed the implementation of the 37% hike and attempted to terminate Syabas’ concession on the grounds that Syabas had not lived up to the main tenets of its concession, such as reducing the level of non-revenue water to 28% in 2008.

    However, the state may be agreeable to the lower tariff hike this time considering the adverse impact that the delay has had on the industry.

    Both Splash and Konsortium Abass are seeking legal redress against Syabas.

    Konsortium Abass is at loggerheads with Syabas, and sent an originating summons dated Oct 5, 2009 for about RM63 million for payment of electricity cost and purchase of water invoices, among others.

    Meanwhile, Splash initiated legal proceedings against Syabas in November last year, pressing for the payment of RM196 million for unpaid invoices from as far back as December 2008 to August 2009.

    As the water operators have not been receiving their payments, both Malaysian Rating Corp Bhd and RAM Ratings have downgraded all their debt papers.

    According to insiders, total bonds issued by the Selangor water players are in excess of RM6 billion.

    The federal government has been giving Syabas soft loans to help it sustain its operations. Industry players say the company utilised the loans to pay 50%-60% of its overdue payments to the water treatment companies.

    Under the current structure, water companies borrow short to finance long-term projects, which brings about the need for tariff increases every now and then.

    A thorn in the side of the industry and both the state and federal governments, has been the issue of the water players defaulting on their bonds.

    The other water treatment player in Selangor is Puncak Niaga (M) Sdn Bhd (PNSB). PNSB is wholly owned by Puncak Niaga Holdings Bhd. Puncak Niaga also has 70% equity interest in Syabas, which explains why PNSB is not seeking legal redress against Syabas.

    Puncak Niaga is 41.25% owned by businessman Tan Sri Rozali Ismail, who is said to be closely linked to Umno. The Barisan Nasional controlled Selangor prior to Pakatan Rakyat coming to power.

    The share price of Puncak Niaga was up five sen to RM2.85 yesterday.

    Konsortium Abass, meanwhile, is 55%-owned by Kumpulan Perangsang Selangor Bhd (KPS) and 45% by Operasi Murni Sdn Bhd.

    Splash’s shareholders are Gamuda Bhd, which has 40% equity interest, KPS (30%) and businessman Tan Sri Wan Azmi Wan Hamzah’s The Sweet Water Alliance Sdn Bhd (30%). KPS is a 60% unit of Selangor’s investment arm Kumpulan Darul Ehsan Bhd and has 30% equity interest in Syabas.

    Konsortium Abass manages the Sungai Semenyih Water Supply Scheme implemented by the Selangor government and supplies treated water to Syabas to distribute to southwest Kuala Lumpur, Petaling Jaya, Shah Alam, Klang, Putrajaya, Cyberjaya, Sepang, Puchong, Seri Kembangan, Bandar Baru Bangi, Kuala Langat and surrounding areas.

    The latest deadline for the consolidation of the water industry in Selangor is slated for year-end after several postponements, but most water players are not optimistic that such a consolidation can be concluded so soon due to the political factors.


    This article appeared in The Edge Financial Daily, September 28, 2010.

LOL!

Can you count all the 'according to source' , 'may', 'according to insiders' and 'it is understood'.

LOL!

Typical.

Take all those away, what does one get?

:-)

Credible information? Credible article of facts based on unknown source?

I still remember so much that article on the Sun: Credible information vs speculation.

ps: the Sun can so easily ask the Edge Financial Daily eh?

ps: Why Can't Our Financial News Have More Credible Information?

Reply From BB: Don't Get Too Excited Over Insider Selling

From the posting: Sep 28: Are Insiders Buying Or Selling?

  • The net sum of all the buying and selling on the stock market is zero. The market doesn't notice who owns the shares.

    The market goes up and down according to a combination of perceived value and prevailing mood.

    In investing, a funny thing happens when prices are quoted minute-by-minute throughout the working day. People start to care less about the underlying value of the shares themselves and instead become fixated on where they think their prices are headed.

    And because a stock's underlying value will ultimately be realised, the net effect for all investors of buying a stock above its value will be a loss, while the net effect for all investors of buying a stock below its value will be a gain.

    We did have some fun here:

    http://fusioninvestor.blogspot.com/2008/07/blog-capsule-bullbear-vs-moolah-on.html

And ...

  • From your post:

    Oracle ELJ: He exercised a share option of 10 million shares in Apr 2010 and sold these in Sept 2010. His pre and post-option exercise shares is about the same.

    Tiffany MPW: Has sold his shares in Mar 2009, Jan 2010 and Sept 2010. In all, sold down 11.7% of his initial holding.

    MHS DJP: Sold in Aug 2009 and Sept 22. He sold at the market price and then switched to exercise his share options at lower prices.

    MHS KL: (Did something quite similar to MHS DJP)

    Amazon VHB: Sold in Sept 2009 and Sept 2010 at market prices. Share options exercised at zero cost. Now holding slightly more shares (85,000) than before (80,000).

    Moolah,

    I would not get too excited over these insiders selling. There are many reasons for these. Some may not wish to be invested in their own company. Others may already have too many stocks in their own company. Perhaps, one of the above needed some money badly for various reasons.

    What do they do with the money after selling their shares? Perhaps, some have reinvested into the stock market in other shares.

    Eh.. it is interesting to highlight all these, but what is your point? :-)

LOL!

Quote: " it is interesting to highlight all these, but what is your point? :-)"

See this is where my small brains fails me.

If this was a DOWN market and all these transactions were PURCHASES instead of sales, what would be the interpretation?

And seriously, I have no point. LOL! :-)

All these are plain market facts. No extra coatings and what have we seen for 3 weeks in a row?

Think about it... the market is saying it's going up. The so-called charts are a nice uptrend but then for 3 weeks, insiders reckons it's a good time to sell. How would you want to interpret this? Me? I am nobody. I am lousy. I am obsessive. LOL!

All I did was highlight the facts and perhaps like the continuous equity mutual fund redemption, all these means nothing. :-)

And perhaps the 'negative mindset' are horribly wrong. Yeah, the short term market voting machine are saying they wrong because the markets are moving up. Hence these issues are irrelevant. Yeah, it doesn't matter what the fundamental reasonings. Most important is the market is saying they are wrong. It doesn't matter if these 'negative mindsets' understand why the market is completely rigged and fundamentally flawed. Yeah... it simply doesn't matter.

Anyway, let's look at Oracle again.

It was my intention to highlight the link to show who was selling and the past transactions made. No need to hide anything.

Anyway, let's look at Oracles's ELLISON LAWRENCE JOSEPH disposal of shares again.

Here's Oracle 'data' sheet from finviz.

http://www.finviz.com/quote.ashx?t=orcl




( nice eh? )

And the CEO, Ellison Lawrence Josesph reckons it's a good time to dispose a chunk of his shares at around a price of 27 bucks (according to Bloomberg article ). What was interesting to note is that on finviz's data compilation on Oracle was the Street's opinion on what the stock is worth. ( Wait, I know you understand that such opinion's such be discounted but as a brief indicator, the Street reckons the stock is worth much higher and just like the general market, the Street keeps telling everyone the market should move higher. :P )

The Street's views compiled..

  • 27-Sep-10 Reiterated Barclays Capital Overweight $30 → $34

    17-Sep-10 Reiterated RBC Capital Mkts Outperform $28 → $32

    17-Sep-10 Reiterated FBR Capital Outperform $30 → $32

    17-Sep-10 Reiterated Caris & Company Buy $31 → $35

    17-Sep-10 Reiterated Barclays Capital Overweight $29 → $31

Yeah, they reckon Oracle should be worth above 30 bucks but apparently, the CEO reckons otherwise and voted with his feet.

And what was even better was that Oracle's CEO started selling on the 17 Sep, the very same day, four firms decided to uplift Oracle's target price. And yes, the gap up on the chart, happened on the 17 Sep! LOL!

ps: good or bad, I have no idea. Me just stating the facts. :D

ps: I get excited when I watch footy. Stocks and markets? They are a bore. :-)

ps: if I do get excited I do pole dancing! :-)

Monday, September 27, 2010

Sep 28: Are Insiders Buying Or Selling?

From Bloomberg: http://www.bloomberg.com/news/2010-09-27/weekly-insider-buying-and-selling-by-s-p-500-companies.html

From ZH: http://www.zerohedge.com/article/insider-selling-buying-surpasses-1400-1

Previous postings:

Top insider sale was Oracle. CEO disposing: http://www.finviz.com/insidertrading.ashx?oc=901999&tc=7

Next was Tiffany. http://www.finviz.com/insidertrading.ashx?oc=928264&tc=7

Next Medco: http://www.finviz.com/insidertrading.ashx?oc=1257287&tc=7http://www.finviz.com/insidertrading.ashx?oc=1387813&tc=7 (both option exercise and sale)

And then Amazon, where the biggest chunk came from Senior VP who does the option exercise and sale. http://www.finviz.com/insidertrading.ashx?oc=1193122&tc=7

Highlighted By BB: UK Private Investors Are Back!

On the UK Telegraph: http://www.telegraph.co.uk/finance/personalfinance/investing/shares-and-stock-tips/8023310/Private-investors-pile-back-into-stock-market.html

  • Private investors pile back into stock market
    Investors traded £1.8bn of stock in the last six months as private shareholdings hit a two-year high.

    The six months to the end of August was the busiest trading period since 2007, according to Capita Registrars.

    The net buying over the summer coupled with the good performance of the market saw private investor shareholdings rise in value. At the end of August, they reached £163bn, up from £158bn at the end of May, and from a crisis low of just £108bn in December 2008.
    By the middle of September, market movements had taken their holdings even higher, rising to £173bn, the highest in two years. Not only that, but the proportion of the market in private investor hands also rose for the first time in two years, reaching 9.5pc, up from an all-time low of just 9.3pc in May 2010.

    Justin Cooper, chief operating officer at the firm, said: "Private investors bought heavily when the stock market bottomed out in spring 2009, anticipating the nadir of the recession. This year they did so again when the market dipped sharply in July, perhaps anticipating the brighter economic news that subsequently emerged about the strength of the recovery.

    "This followed profit taking in the spring when the stock market peaked. Once again, we have seen retail investors timing equity purchases astutely, buying on weakness and selling into strength."

    Capita Registrars said that between June and August, private investors bought £852m of defensive shares and sold £335m of cyclical shares. The most favoured sector was utilities, while resources stocks (including mining and oil shares) and financials were sold down. Industrials (which includes construction and manufacturing) and consumer

According To ZH: Further Confirmation On The Irrelevance Of Stock Markets

The following was posted on ZH: ( I love the trading volume chart highlighted in the posting from FT.com)





--------------------------------
Further Confirmation On The Irrelevance Of Stock Markets


Last week we pointed out that Jefferies group, one of the last few remaining non-BHC broker-dealers, has just experienced its single most disastrous drop in trading volumes, as its principal trading revenues plunged by 80% QoQ. This is merely confirmation of what we have been warning ever since we started highlighting the series of 20 consecutive outflows from domestic equity funds: banks will soon be forced to lay off thousands of people as the primary revenue driver for the bulk of Wall Street firms - stock volumes - is now gone. BofA and RBS have already confirmed they are letting people go. Next up: the electronic trading giants such as ITG, Knight and Schwab. And it will only get worse. As the FT reports, September trading volumes are already 8% below August's, which in turn was the lowest in 3 years! Of course, the Fed is fully confident that if the DJIA ends September at 11,000, investor confidence in stocks will return. We have one word for that - LOL.

From FT:

  • The continuing decrease in volume reported by the US’s largest electronic trading groups has triggered a fear among analysts that the fall in market activity might be more than a seasonal phenomenon.

    Trading-focused groups such as ITG, Knight Capital and Charles Schwab enjoyed upbeat second quarters when the European debt crisis sparked extreme volatility. As fear has given way to unease with the global economy, however, trading volumes have fallen sharply.

    You’re starting to see some real pain,” said Christopher Allen, an analyst at Ticonderoga Securities. “September is not a material improvement over August. Aside from possibly the US election, I’m not sure what the catalyst is for trading.” A record-long streak of outflows from equity mutual fundsnow 20 successive weeks beginning in May, according to the Investment Company Institute and reluctance by even normally bold hedge fund managers to take big bets has suggested that there are more than seasonal factors at work.

    Mr Allen’s figures, compiled last week, show that trades for the trading industry are down 8 per cent so far in September from August, when trading fell to a three-year low.

And what is funniest is that the decline in volume is blamed on the (lack of) intervention in the HFT's daily attempts to pickpocket slow money institutions

  • Diego Perfumo, an analyst at Equity Research Desk, said that efforts by global regulators following the May “flash crash” were reducing volumes by high-speed firms, which was making it more difficult for other investors to trade.“Higher trading scrutiny combined with tighter regulation is drying up the liquidity provided by high- frequency traders. Lower liquidity is symbiotically affecting volumes from traditional investors,” he said

Oh really? Has anybody been affected by the "decline" in liquidity in SPY, Amazon or Apple? Last time we checked the only three products that trade had no problem with hitting bids (of course, front run several trillion times by $0.0001 bids just ahead of the submitted one to get the price high enough so that the last HFT bagholder can offload to you). Instead of lying, perhaps Diego and his firm, which incidentally makes money from the status quo and sees to lose millions should HFT scalping be impaired, as it seems the firm provides "Execution services from ITG, Credit Suisse, BNY and Instinet", but oddly enough the FT did not feel relevant to disclose this blatant conflict of interest, should look at the primary cause for volume collapse: that confidence in stock markets is gone, period. Nobody dares to hold stocks overnight, as nobody still has any clue why the market crashes 1,000 point in the span of a few seconds. If anyone hopes to revive faith in the stock market without someone getting punishment for the most ridiculous market crash since October 1987, they have another thing coming.

Wall Street may have gotten off scott free from the greatest absolute household wealth destruction episode in history, but when it comes to capital formation, pretty much everyone save for a few vacuum tubes, have had enough. And luckily, that means that worthless HFT, and other high volume parasite traders, will soon be out of a job. No tears will be shed as equilibrium reestablishes itself, and those providing absolutely no value to the stock market will become extinct. If the market will not self-correct, the market will be forced to self-correct.

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

ahem...

  • A record-long streak of outflows from equity mutual funds – now 20 successive weeks beginning in May, according to the Investment Company Institute – and reluctance by even normally bold hedge fund managers to take big bets has suggested that there are more than seasonal factors at work.

Even FT.com highlights this issue.

LOL!

Reply From Kokanart: Time To Highlight The Other Side Of Your Obsessive Focus

:-)

yeah: 20 Consecutive Weeks Of Fund Outflows And 71 Billion Withdrawn From Equity Funds

Reply From Kokanart: Time To Highlight The Other Side Of Your Obsessive Focus

From the posting: 20 Consecutive Weeks Of Fund Outflows And 71 Billion Withdrawn From Equity Funds

  • kokanart said...

    It's time to highlight the other side of your obsessive focus:
    US small investors fleeing their mutual funds.

    A recent report on Bloomberg says:

    Record-low interest rates are stoking the biggest increase in share buybacks ever.

    U.S. companies have announced $258 billion in buybacks so far this year,
    compared with $52 billion in the first three quarters of 2009, according to data compiled by Birinyi. The almost fivefold increase is the largest for any January-to-September period since at least 2000, when the Westport, Conn.-based research firm started tracking the data.

    Corporations are using debt to pay for buybacks.

    Companies from Microsoft to PepsiCo and Hewlett- Packard are taking advantage of low-cost financing, purchasing their stock to boost per-share earnings.

    So, are the small investors the smart money this time or will it be the big insiders ( thru company buybacks ) ?

    Time will tell ...

    PS: the local market may be hot but we are discussing the US market.
    Also, as swifz pointed out, it is senseless to highlight only one side of the story.
    Do try to be more balanced.
    Mr. Soros said: I'm only rich because I know when I'm wrong.

The other side of my obsessive focus?

LOL!

Oh dear.

Such a nice message to kick off a Monday morning.

You do realise that this is a mere blog of mine and a blog is a collection of personal writings and notes.

And if you do realise this issue then you should have an open mind and realise that I owe NO ONE nothing.

I blog based on my personal preference and this blog reflects who I am. I am not going to bow to anyone to dictate what I shall blog and shall not blog.

Now I do hope you understand such a simplistic issue.

Regarding stock mutual fund redemption. That's a fact inside? 20 consecutive weeks, since 28th April, Americans have been making net redemption from their stock mutual fund holdings. And this issue is not about their stock market going up or down? ( Hmm.. are you afraid that I am the bearer of the bad news that could end this jolly good bull run? LOL! Comeon.. seriously?)

Yeah, dude, I am merely stating this fact.

Seriously, is this fact disturbing? And have I stated that the markets will crash?

Yes, is the fact that 72 billion had been withdrawn form their funds a huge worry for you?

Now I been updating this issue since it became an issue. Should I stop because some feel I am obsessive? Would I be doing justice to all those who are interested to see when the redemptions would end? Yeah, should I stop blogging on this issue and let other readers guess what has happened?

Ah... companies using debts to do share buybacks.

Is that good? If your opinion is that's is good, then I surely respect your opinion.

:-)

Oh... the other side of the coin would be the good news side, eh?

Do I need to turn this blog into one of the countless good news blog cheerleaders? Nah, I don't. I have no desire and no motivation. And if you think this is a blogging mistake, then it's a mistake. I have no problems with what you think of my blog. But if you need to read ONLY the GOOD news, then I am so sorry that this blog shall disappoint you and perhaps it should not be in your click zone!

Yeah man, live on the vitamins of good news and all other news that are potential negative issues just simply taboo and should not be mentioned. :-)

ps: the fact that insiders have been disposing their shares is NOT a worry too. ( Don't worry I did NOT state the markets will crash because of this. Just stating the facts. )

ps: That's a nice word of advice from Mr. Soros. :-)

=======================================

Apparently, I got another comment:

  • kuan said...
    Moola ,I forgot to add my last line - Can millions of small investors be wrong ?

    Why not?

    They can also be right, when people like Soros are wrong.

    No one's perfect all the time.

LOL! LOL! 'Forgot to add my last line'?

Are you saying that you and "kokanart" is the same?

LOL! LOL! LOL!

ps: so fun to post in multiple 'names' eh?

ps/ps: next time, don't bother.

ps/ps/ps: try growing up. :-)

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

Amazing isn't it? To stress a point, does one have to go thru extremes like 'creating multiple nicks'?

ps: winning an internet argument? LOL! LOL! LOL!

ok.. ok... I lose. :-)

Friday, September 24, 2010

Update on Green Packet

Blogged on 17 Aug 2010: Green Packet Announces 10th Consecutive Quarter Of Losses!

I asked one question which needed to be answered: 'At this rate, got enough cash ah?

Let me reproduce what was written:

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

Green Packet announced its earnings last night and as expected, the earnings were horrible.

How should I put everything into perspective? Well, on 13th May 2010, I wrote the following posting: Oh Yeah, Green Packet Lost Less Money. I list out a list of facts. I reckon it's best I update the list of facts.

I will update the list and use red to strike out the past 'facts'.

Fact. It lost some 44 million 35.9 million for the quarter.

Fact. This is the 9th 10th consecutive quarter of losses. 30 month of losses,

Fact. Green Packet's total losses for last 27 30 months equals some 275 310.9 million!

Fact. Green Packet raised some 98 million via rights issue last Aug. 2009.

Fact, Jan 2010. Green Packet raised some 69.176 million from a share placement.

Fact. After the rights issue, the following quarter, November 2009, Green Packet said it had some 174 million cash and some 209 million in borrowings.

Fact. After tonight's earnings, or 6 9 months later, Green Packet said it had some 111.699 102.800 million cash and some 256.376 264.214 million in borrowings.

Fact, Nov 2009, Green Packet had 68,691 in trade payables. In Feb 2010, trade payables grew to 159.192 million. Today payables total some 188 200.870 million. (Why so much payables nowadays? Who is Green Packet not paying? )

So how?

Green Packet owes its bankers more money, yes? It's debts had increased.

It has less money, despite the rights issue and placement of shares.

So is less cash and more debt good?

At this rate, got enough cash ah?

------------------------
I forgot all about P1's deal with SK Telekom.

GREEN PACKET BERHAD ("GPB" OR "THE COMPANY") PROPOSED ISSUANCE OF 979,474 CLASS C ISLAMIC IRREDEEMABLE CONVERTIBLE PREFERENCE SHARES OF RM0.10 EACH (“CLASS C ICPS-i”) IN PACKET ONE NETWORKS (MALAYSIA) SDN BHD TO SK TELECOM CO., LTD. FOR A TOTAL CASH CONSIDERATION OF RM322.91 MILLION (EQUIVALENT TO USD100 MILLION) (“PROPOSED ISSUANCE”)

Yeah.. many thanks to SK Telekom, Green Packet does have extra 322 million to burn.

ps: This posting is merely to state the facts yo!

Seriously? I do not make postings with any hidden intent.

Wait... here's my disclaimer again.

Disclaimer
1. I am a nobody.
2. I am not responsible for anyone's investments.
3. I am not a sotong. :D
4. I am certainly not an independent investment advisor.
5. Since I am not an in dependant investment advisor, I cannot guarantee that you should lose money.
6. Most important, I find no motivation to talk about stock price movements. Yeah, I do not indulge in guessing what a stock price will or will not do. So please spare me all the chats that you think this stock will go down by so much or this stock will soar by so much.

Thursday, September 23, 2010

Warren Buffett: Is US In Recession Or Not?

On 14 Sep 2010: Buffett Rules Out Double-Dip Recession Amid Growth

  • Warren Buffett ruled out a second recession in the U.S. and said businesses owned by his Berkshire Hathaway Inc. are growing.

    “I am a huge bull on this country,” Buffett, Berkshire’s chief executive officer, said today in remarks to the Montana Economic Development Summit. “We will not have a double-dip recession at all. I see our businesses coming back almost across the board.” ....

On CNBC: Warren Buffett to CNBC: "We're Still In a Recession"

  • Warren Buffett tells CNBC that by his own "common sense" definition, the U.S. is "still in a recession.

    In a taped interview with Becky Quick airing this morning on CNBC's Squawk Box, Buffett says, "I think we're in a recession until real per capita GDP gets back to where it was before."

    While Buffett continues to believe the U.S. will eventually emerge from its economic downturn, "We're not gonna be out of it for awhile."

Eh?

The CNBC article continues...

  • BECKY: So-- how are small businesses faring right now, if you had to-- look overall? Obviously, everyone's in a different position. But overall, how do you think they're doing?

    BUFFETT: I think they're doing about like the economy is. That they-- they've been through-- a terrible period... And-- and basically, the government did the right thing in-- in terms of-- of getting the economy going again. It can't do it overnight or anything of the sort. I think most small businesses have come back somewhat. But they've-- they-- they're nowhere near their peaks.

    BECKY: The NBER said this week that the-- recession officially ended back in June of last year.

    BUFFETT: Well, they define it differently. (Laughs.) But I-- I mean, I-- I define it-- I think we're in a recession until real per capita GDP gets back to where it was-- before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any-- on any common sense definition, the average American is below where he was before, or his family, in terms of real income, GDP. We're still in a recession. And-- and we're not gonna be out of it for awhile, but we will get out of it.

    BECKY: We're not gonna be out of it for awhile meaning, you can see what? A quarter, two quarters, a year down the road? Just from your business is-- is telling you?

    BUFFETT: Our businesses are coming back-- on average, we've got 70-some businesses. But most of them-- the great majority are coming back slowly. If you take our railroad business, and our railroad business is typical of the other railroads in the company. If you take the peak period for shipments and then you go all the way down to the bottom, we're 61 percent of the way back up. That's better, I think, than most businesses are in the country. I don't think most businesses are 61 percent-- our-- our carpet business, our brick business, our insulation business, they're not back 61 percent, but they are moving back.

20 Consecutive Weeks Of Fund Outflows And 71 Billion Withdrawn From Equity Funds

Did someone said that global markets is on a BULL run?

Apparently not for the American stock markets.

From ICI website, equity fund investors had withdrawn another 3.6 Billion from their equity mutual funds!




And that's 20 consecutive weeks of fund outflows!

Twenty!



And yes, that's some 71 Billion withdrawn from the equity funds!

Imagine... funds without funds? How?

And the question to ask is WHY? They Just Don't Trust Wall Street? Is that the main reason?

Or do they really know and understand that their economy and business fundamentals is really poor?

And consider the fact that the insiders are selling!

How?

Past postings tracking the fund outflows.

Let me repeat again...


It be wise not to ass-u-me. This posting merely highlights the very fact that Americans are withdrawing their money from their long term equity funds. And they have been doing it in regardless of whether the stock market is going up or down.

And naturally it would be damn silly to suggest that this posting is suggesting anything!

LOL! Sorry but I need to put this disclaimer in. The local markets is hot and people have nothing better to send in senseless comments saying I am suggesting this and that.


ps: So why do you think the Americans are withdrawing money out continously from their long term equity funds? Let me list out some possible flawed answers. Let me know what you think could be the reason....

  • They hate the stock markets.
  • They no longer have faith and they no longer trust the stock markets, more so with the recent FLASH crash. Yes, HFT should be outlawed!
  • They think the stock markets is going to crash because they can see it in their daily lives that their economy is sooooooooooo bad.
  • They found a better option to invest their money.
  • They need the money!

How?

Would you have a better reasoning?

Wednesday, September 22, 2010

Sep 22: Morning Notes

ZH: ABC Consumer Confidence Drops, Poll Gets Downright Cynical: "Recession Ends, Nobody Notices"

  • This week 89 percent of Americans rate the economy negatively, 75 percent say it’s a bad time to spend money and 55 percent rate their own finances negatively"

NC: How Serious is the GMAC Problem? Pretty Serious and Not Just GMAC

On CR: On the GMAC Foreclosure Stories

Mish: Amazing Arrogance, Gall, Chutzpa, and Unmitigated Effrontery from Berkshire Hathaway.

  • Nauseating Insensitivity

    If that kind of arrogant insensitivity does not make you nauseous, what will?

    It's hard to know where to start, but let's start with a blatant lie. This was no "little bailout", this was a multitrillion bailout, not just from the Fed and Congress but from every central bank in the world.

    One of the beneficiaries of course was billionaire Charles Munger. Middle class America was the loser.

    Displays of Ignorance

    The biggest display of ignorance in Munger's rant is his comparison of the current financial mess to Weimar Germany. Forgive me for asking but pray tell in what kind of fairytale fantasyland is the current deflationary credit bust remotely related to the war reparations imposed on Germany after the end of World War I that gave rise to Hitler?

    Need for a Culture Change

    The ridiculous Weimar comparison was not the Munger's most galling statement, however.
    This is: “Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies.”

    The one thing we desperately need is a culture change. Instead, we made too big to fail, too bigger to fail. We preserved a culture that benefits billionaires like Munger and greedy CEO's that helped cause this mess. That culture benefits no one else.

    Yet Munger wants us to “suck it in and cope” and expect to be happy that he did not get wiped out.

    You know what? It would have been a damn good thing if the culture died and assholes like Munger got wiped out. Munger just proved beyond a shadow of a doubt Wall Street's culture was not worth saving.

Mish: HSBC Commercial Account Manager responds to "Amazing Arrogance, Gall, Chutzpa, and Unmitigated Effrontery from Berkshire Hathaway"

  • In Third World America: How Our Politicians are Abandoning the Middle Class and Betraying the American Dream, Arianna Huffington describes how Wall Street insiders used the financial crisis to bribe, coerce, and manipulate Washington into bailing them out and handing them unprecedented, unconditional windfalls.

    Warren Buffett Jumped the Squid

    Today's interested men defend the bailouts and subsequent absence of felony indictments. They include Warren Buffett, Chairman and CEO of Berkshire Hathaway, and Berkshire's Vice-Chairman, Charlie Munger.

    Charlie Munger's War

    Andrew Frye of Bloomberg News reported Charlie Munger's recent remarks to law students at the University of Michigan. Munger suggests we shouldn't be "bitching about a little bailout;" we should have wondered why the bailout wasn't even bigger.

    Munger conjured the specter of Germany's Weimar Republic in an attempt to justify the bailouts: "We ended up with Adolf Hitler." ZeroHedge, home to finance's mainly masked throw downs, spoke for many (including me), when it retorted that Germany's hyperinflation was born from "wanton money printing" and set the stage for Hitler.

    When it comes to bailouts that will hit middle class taxpayers most, Munger has a double standard:

    "The 86 year old told the 25 million of Americans who comprise the 16.7% of the underemployed population in the country, to "suck it in and cope." Not only that, but apparently, all those who have been without a job for 99 weeks and more and no longer have recourse to insurance benefits, should "thank God for bank bailouts." Why of course he would say that: after all $26 billion worth of direct BRK investments were the recipient of over $95 billion in bailouts."

    [From] ZeroHedge, September 20, 2010: Munger Tells 25 Million Americans To "Suck It In", And To "Thank God For Bank Bailouts" As BRK Benefits From $95 Billion Of TARP Funding

    We bailed out banks that were the key architects of much of our national misery and currency destruction. Those living in poverty will have a much more difficult time bettering themselves, as much of the middle class sinks.

Jesse: Slouching Towards Bethlehem: Double Dip or Banana Split?

Kathy: Compare the FOMC Statements

Tuesday, September 21, 2010

Reply From Simon Templar: Swee Joo Bhd-Behind The Curtains of Deceit

Comments received from the posting: And Swee Joo Comes Crashing Down

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

Due to some random advice, the posting had been edited out. Sorry.

Moolah.

Charlie Munger: We Shouldn't Be Bitching About A Little Bailout!

I really do not agree what Charlie Munger have said this time.

Seriously.

Alice Shroeder has the following piece on Bloomberg.

  • You’ve gotta love a man who speaks his mind, even when he’s wrong.

    We “shouldn’t be bitching about a little bailout” of the banks, Berkshire Hathaway Inc. Vice Chairman Charles Munger told students at the University of Michigan on Sept. 14.

    That’s a strong statement, but Munger is one of those refreshing few who can be counted on to deliver his thoughts uncensored in words unminced.

    Munger feels the bank bailouts were “required to save your civilization.” He suggested that burdening the economy with bank failures would have results similar to the economic collapse in Germany after World War I and led to the rise of Adolf Hitler. Meanwhile, “the culture dies” if you bail out individuals. People in economic distress should “suck it up and cope.”

    Apart from what some might consider his tasteless hyperbole, the problem is the false dichotomy it presents. The choice wasn’t between the bailout or no bailout. It was between the bailout we financed, which didn’t resemble capitalism in any known form, and a bailout more intelligently executed.

    No one made us bail out shareholders along with the banks’ bondholders. We didn’t have to preserve institutions that are still too big to fail in any meaningful sense of the term. We could have propped them up temporarily, then recapitalized them as smaller, more manageable entities, with former equity holders assuming the cost of the risk they assumed.

    We missed the chance to reduce systemic risk by comprehensively rewriting regulation for the financial-services industry. Instead of withdrawing government guarantees, we increased them. So there are plenty of reasons to complain about the bailouts.

    Munger in Chief

    To give him credit, I’m pretty sure if we gave Munger unfettered dictatorial power, he would have structured the bailouts more intelligently than what actually took place. In his remarks, he wasn’t defending the form of the bailouts, only their size. If anything, “it should have been bigger,” he said.

    Munger’s reference to a massive bailout needed to ward off another Germany-style hyperinflation also wasn’t necessarily hyperbolic. It echoed his partner, Berkshire Chief Executive Officer Warren Buffett, whose ongoing theme is that we’ve experienced an “economic Pearl Harbor.”

    Both of these men look at the situation as impersonal oddsmakers. By this logic, if the damage from too much stimulus is tolerable, and the damage from too little stimulus is intolerable, the expected value of the outcomes reveals that we should run the lesser risk of overstimulating. This is throwing people off the lifeboat to keep it from sinking.

    Money Talks

    In spite of this logic, people may wonder whether Munger’s statements are influenced by Berkshire’s large holdings in Wells Fargo & Co. ($8.5 billion), the U.S.’s biggest home lender, as well as its $5 billion investment in Goldman Sachs Group Inc. It happens that Munger’s financial interests do line up with his words.

    If that’s not a coincidence, it’s probably because he puts his money where his mouth is rather than the other way round. In choosing sides between the opposing interests that inevitably arise in commerce, Munger and Buffett identify with the lender, not the borrower; with the bank, not the depositor; and that’s how they invest.

    It’s therefore not surprising that Munger focused on the vital role that banks play in society when he said that people should suck it up and cope. Maintaining the trust that binds creditors and debtors is essential to the security of a culture.

    Bad Incentives

    What’s unfortunate about this concern about bad incentives is that Munger didn’t extend it to qualify his support for the bank bailouts and the tremendous moral hazard they created. It may seem appropriate, in a Darwinian sense, to reward the thrifty savers by securing their deposits while leaving feckless borrowers to fend for themselves, until you consider that the banks were the worst abettors of the feckless borrowers.

    As for trust, financial institutions have so much leverage with their customers these days that the relationship is rarely based on reciprocal values. It’s inappropriate that the requirement of trustworthiness should run in only one direction, in favor of the bank.

    Munger’s prescription for the foreclosed masses suggests the result would be a form of justice that does us all a favor. Bailing out homeowners would be “shoveling out money to people who say ‘My life is a little harder than it used to be,’” Munger said.

    I’m all for self-reliance, and this perspective on misfortune deserves some latitude, coming as it does from a man who was raised during the Great Depression. I find it refreshing that Munger speaks his mind and is fearless of being found politically incorrect. In the end, though, coming from a billionaire, “suck it up” veers a bit too close to “let them eat cake.”

http://www.bloomberg.com/news/2010-09-21/billionaire-munger-offers-us-a-false-choice-alice-schroeder.html

Pulai Springs Talks About Record NET PROFITS!

On Business Times:


  • Pulai Springs upbeat on record net profit

    By Vasantha Ganesan Published: 2010/09/21

    Pulai Springs says the years 2008 and 2009 were tough but the company expects to return to the black this year


    PULAI Springs Bhd (5059) expects to achieve a record net profit in the current financial year ending December 31 2010 and is even more positive about its outlook in 2011, its top official says.

    Executive director Nick Mah Siew Chean, who emerged as the new major shareholder in the company three years ago, said things are looking brighter after a difficult run in 2008 and 2009.

    Excluding an extraordinary gain from the sale of the Novotel in Kuala Lumpur, the hospitality-cum-property developer would have posted a net loss in the financial year ended December 31 2009.

    "The years 2008 and 2009 were tough for us. We expect to return to the black this year. Operationally we are positive," Mah told Business Times in an interview.
    In the first half ended June 30 2010, the resort operator posted a net profit of RM221,000 and revenue of RM25.15 million.

    "We expect to achieve the best year in terms of bottom line this year, since the takeover from the previous owners in 2007," Mah said.

    The expected better performance this year and next will be attributed by sales of the remaining 85 units of Cinta Ayu All Suites. A total of 300 units were built within Pulai Springs Resort.

    The company has made some RM80 million from the sale of the units and expects the remaining units will be sold by end-2011 and fetch RM50 million in sales.

    Pulai Springs also plans to launch some niche developments within the resort. It has 3.2ha of land available for development. It is now conducting a feasibility study to decide on the type of property units it should build. The units are likely to be launched at end-2011.

    In 2007, Mah took over Pulai Springs from one of its founders, Datuk Chua Jui Leng, and emerged as a major shareholder.

    Meanwhile, Mah dismissed talks in the market that the company was up for sale. "We are here for the long term," he said, adding that the units within the resort were the ones that are available for sale.

    On foreign ventures, Mah said Pulai Springs will look for opportunities for both hotel operations and property development in China. These projects can be via acquisition of existing assets or be built from scratch.

    "We understand the China market and are confident about China," he said, when asked if Pulai Springs is looking at other countries within the region.

    This is because his family business already operates a 18-room hotel in Kunming, China.

    Although a joint-venture agreement to jointly bid for a development project in Kunming was withdrawn in July following unsuccessful negotiations, Mah said the company will continue to pursue for other projects in the republic.



    Read more: Pulai Springs upbeat on record net profit here

That one line says it all...

  • In the first half ended June 30 2010, the resort operator posted a net profit of RM221,000 and revenue of RM25.15 million.

A first half net profit of rm 221,000 from a revenue of rm 25 million?

221 thousand?

And the company is on OUR financial media talking about record profits????

Yeah... the global market is hot.. everything just wants to talk UP!

Sep 21: Are Insiders Buying Or Selling?

The 'markets' are hot yes?

Here's the chart of S&P 500.


Yes, the market is clearly moving much higher. Yes, the good times are back or what!!!

But then... the glaring thing of course is the utter lack of volume. Volume means market participation and volume is less than 4B! And mind you traded volume of around 4B is already utter dismal. Yeah, it's the market broken or dead?

And then we have seen the incredible amount of money redeemed from equity mutual fund investors.

And last week, posted last Tuesday: Are Insiders Buying Or Selling?

We have Bloomberg publishing the list of S&P corporate insiders disposing their shares. The total amount of shares disposed totally dominates the amount of corporate insiders buying shares.

Which begs the questions to be asked, 'If the markets are really so hot, why are the insiders selling their shares like plaque? Why are mutual fund equity investors fleeing the stock markets? Surely they can tell that the market is hot, right? So why the disposals?'

If things are getting better then why are these insiders, who probably are more privy to the information regarding the health of their business, disposing their shares?

Anyway, here's the latest update: Weekly Insider Buying and Selling by S&P 500 Companies. ( Before you click the link or read the below, have a guess. Markets are 'so hot', what do you think the insiders are doing? Are they buying or are they selling?)

The buyers...



Yeah... that's all.

The sellers...



Well as per Bloomberg data, the SP 500 Insider Buyers purchased some 1.4 million worth of shares. The SP 500 Insider Sellers disposed some 411 million worth of shares.

How do yo want to interpret this?

Let's look at the list of sellers.

Top of the list is Heinz. Some 75.8 Million worth of shares were disposed by insiders!

Amazingly, Heniz is a featured BUY stock ( LOL!) from the Street.com (LOL! LOL! )

http://www.thestreet.com/story/10866128/4/breakout-stocks-of-the-week.html



  • Shares of Heinz have managed to trade above some heavy overhead resistance at around $47 a share. This overhead resistance level is very important, because since March the stock has failed to take it out to the upside. Investors are now going to want to watch to see if volume can continue to expand above the three-month average daily volume of 2.5 million shares. Follow through volume that is greater than the previous trading session is exactly what is happening here on Heinz. That is bullish action for any stock.
    >>>Top-Rated Food Product Stocks
    If this breakout can hold above $47, then this stock could be setting up to test the next key area of overhead resistance at around $50 to $52 a share. However, if I was long Heinz, I would not want to see the stock come back and close under $47 on heavy volume. A move like that would have me cautious on on the shares in the near term.


Here's data on Heinz: http://www.finviz.com/quote.ashx?t=HNZ&b=2

Current PE of 16.33 and a Forward PE of 14.42.

And here's the Heinz insiders who are selling..


Then we have Google.


http://www.finviz.com/quote.ashx?t=GOOG&b=2

The recommendations from the Street on Google.


Doesn't look too 'shabby' or 'bad' yes?

Most rate Google above 600. :D

And Google last traded at ONLY 508.28.

But... the insiders.... thinks otherwise. (ps the list is rather so long so I only show since Aug)


Then we have Starbucks.

http://www.finviz.com/quote.ashx?t=SBUX&b=2

Current PE 24.56, Forward PE 18.38.


Recent calls from the Street reckons that the stock should be worth around 30 bucks at least.

And what does the Insiders reckon they should do?

Apparently, even Howard Schultz, the Chairman and President, reckons that it's a wonderful time to exercise their options and dispose (or issit dump) them onto the market! (ps: did you see that the bulk of his options cost was only 10.09! And he disposed them at around 25 bucks! hey world, corporate America, the system works! Reward the rich, screw the poor! )

So the top 3 disposals from insiders.

Consider the industry/sector of their business.

And they are disposing!

How?

Of course... they could all be wrong in disposing their shares but what if they are correct?

Monday, September 20, 2010

Goodway Integrated's Possible Indian Merger: Credible Information Or Speculation?

Posted last Friday: Why Can't Our Financial News Have More Credible Information?

Quote: The following commentary was made by theSun in the essay entitled Credible information vs speculation.



  • .... but most quoting unnamed sources.

    Some media organisations, even those which are traditionally conservative, are so caught up in getting the juiciest, most sensational and horrific details of the case that they throw caution to the wind and forget their responsibility to report truthfully, accurately and factually
    .

Here's a FRESH example.

The following article, Goodway rises on rumours of possible merger with Indian player was published on the SAME day theSun essay, entitled Credible information vs speculation, was written. LOL! What irony. :P

A look at that article:

  • Goodway rises on rumours of possible merger with Indian player
    Written by Melody Song
    Friday, 17 September 2010 16:14

    KUALA LUMPUR: Rubber compounding and tyre retreading outfit Goodway Integrated Industries Bhd has seen growing interest over the last two weeks on the back of rumours that it may be in talks with an Indian company for a potential merger.

    On Tuesday, a block of 10 million shares was transacted in an off-market trade for a total of RM2.18 million or 91 sen per share. The block represented about 11% of Goodway’s total paid-up share capital and was traded two sen higher than its closing share price of 89 sen on Wednesday.

    The company’s shares, which saw a spike in trading volume from the end of August, have also been on an upward trend. Goodway’s 52-week high was on Sept 7 and Sept 15, 2010 at 89 sen, while its 52-week low was on Oct 22, 2009 at 48 sen.

    A source told The Edge Financial Daily that the most likely candidate for the partnership was Bombay Stock Exchange-listed Indag Rubber Ltd. The New Delhi-based company has been profitable over the last four years and has been paying out dividends to its shareholders for the last three years.

    Goodway and Indag had recently signed a memorandum of understanding (MoU) to “consider joint opportunities which are expected to strengthen both parties’ market position in the rubber compounding and retreading industry”, although details of the partnership are yet to be announced.

    “This MoU does not create legally binding obligations on the parties and shall not give rise to any rights and liabilities to a contract. Therefore, the aforesaid MoU shall have no material effect on the earnings and share capital of the company and its group,” said Goodway in its Aug 25, 2010 announcement.

    “We are not sure if one company will take over the other, or vice versa, but we believe it is to leverage on each others’ strength in rubber compound research and development, as well as explore the possibility of expanding market share,” the source said.

    “Right now, talks are still in its preliminary stages, but the share price has been moving because investors have somehow got wind of the speculation and have been buying up shares,” the source added.

    Meanwhile, Goodway told The Edge Financial Daily that it assumed the recent movement in its share price and trading volume was due to its recently-announced joint venture with Greece-based tyre distributor World Rubber Trading.

    According to news reports, Goodway expects to increase the export of its off-the-road (OTR) tyres via its 75%-owned subsidiary Bigwheel OTR Sdn Bhd. Under the agreement, World Rubber would supply OTR tyre casings to Bigwheel for retreading at its plant in Nilai, Negeri Sembilan.

    At present, Goodway has four retreading plants — two in Malaysia and one each in China and Australia. The company also has a rubber compound plant in Nilai and a press production plant in China.

    When asked about the possible merger between Goodway and Indag, a spokesperson for the company said the MoU was still at the information collection stage and the decision of whether to move into a joint-venture partnership or merger was still unknown.

    “Assuming we do combine our businesses, it would be to enhance market growth in the retreading segment and would involve some exchange of technical knowledge,” said Goodway’s spokesperson, adding that at present it did not have a market presence in India.

    Goodway’s financial performance for the second quarter ended June 30 showed a 22.3% improvement in net profit to RM2.14 million, or 2.4 sen per share, from RM1.75 million a year earlier, while revenue rose 31.7% to RM60.25 million from RM45.76 million.

    For the cumulative six-month period, Goodway’s net profit was up 254.8% to RM3.02 million, or 3.5 sen per share, from RM850,000 previously, while revenue rose 40.6% to RM118.34 million from RM84.15 million. At the end of the quarter, its net assets per share stood at 86 sen.


    This article appeared in The Edge Financial Daily, September 17, 2010.

Firstly, the journalist declared it was rumours.

A source fed the Edge Financial Daily with all the 'good stuff'.

That article was published late on Friday afternoon after 4 pm.

Stock gained half a sen on Friday,

Today, the stock rallied and shot up 7.5 sen or 8.38% to close at 97 sen.


And yes, the power of the mighty source drove Goodway higher.

However, just published on the same website, Goodway Integrated says no development in MoU with India’s Indag

  • KUALA LUMPUR: GOODWAY INTEGRATED INDUSTRIES [] Bhd said there has been no material development following the signing of the MoU with India’s with Indag Rubber Ltd.

    The MoU signed on Aug 23 was to consider joint opportunities which are expected to strengthen both parties’ market position in the rubber compounding and retreading industry.

    The company said on Monday, Sept 20 “that as at to date, there is no material development in regard to the aforesaid MoU”.

My say?

I think it would be a splendid idea if theSun asks their Edge Financial Daily who supplied such credible information to their financial news!

Credible information vs speculation????

* whistle *


K1's BIllion Dollar Target

Now don't get me wrong because there's nothing absolutely wrong with having personal goals and targets. Without ambition, without goal and targets, one lacks the motivation to strive to be a better person. And it's certainly great to see a company setting out targets because with the targets set, the company strives to be a better company.

On today's Business Times, there's an article on K1's Billion Dollar Ambition.

  • K-One confident of RM1b annual revenue

    By Goh Thean Eu Published: 2010/09/20

    K-ONE Technology Bhd (0111), an electronics product designer and developer, aims to grow its annual revenue to RM1 billion within five years, more than 10 times of what it achieved last year, as it does more jobs for existing customers and diversifies into new businesses.

    "We have done extremely well in the first half of this year, and we expect to do much better in the second half. Based on what we are experiencing, we believe the momentum is sustainable ... Over the next five years, we aim to become a billion-ringgit company," its executive chairman Edwin Lim told Business Times in an interview.

    "To compete in the global arena, you need to at least have that kind of magnitude," he said.
    Still, becoming a billion-ringgit company is not enough in the electronic product design industry, as that will only make K-One a medium-sized player.

    Lim said K-One has been growing at a "tremendous pace" since its beginning about 10 years ago.

    "Since we started 10 years ago, we have grown by triple digits or high double-digits per year. We were flying, but more like a sparrow. As you know, like a sparrow, you can fly, but not that high.

    "Today, we are moving into a new phase of growth. We are no longer a sparrow, but more like an eagle, we fly higher,"
    said Lim.

    About 80 per cent of K-One's revenue is derived from its three main pillars: mobile phone accessories, consumer electronics and computer peripherals.

    Although each of the segment has been growing, Lim believes that the company can do more.

    "We see a lot of potential in other industries such as solar-powered products as well as household appliances. These will be the new business segment of the company's product portfolio," he added.

    Within three to five years, Lim hopes that the new segment will contribute 30 per cent to its total revenue.

    So far, it has done several small projects in household appliances such as designing one of the components of a washing machine.

    Lim said this is a good start as in time, its customers will start giving them more jobs, just like what it is experiencing now with other existing customers.

    "We managed to grow our revenue last year despite the global economic slowdown. Our customer base is still the same, but the difference is that we do more projects with them. The fact that we managed to deliver, serve them and still be around during the global financial crisis has somewhat increased their confidence in us," said Lim

    Read more: K-One confident of RM1b annual revenue here

And as usual... the focus is on REVENUE.

Now I am never a fan of companies who set their goals on REVENUE.

Revenue is just nice to see, nice to watch. The meat is in the profits. Without profits, what's the use?

It's like footy. You see a team scoring goals, lots of goals. But it also keeps conceding lots of goals. And when that happens, these teams don't win as much games and points as they should ( ahem! :P ) and ultimately the dropped points will cost them championships!

It's so same with REVENUE. Again, a company with growing revenue sure looks impressive. Company is bigger because it's doing more business but without the profits, what's it good to its minority shareholders/investors? Does the shareholder get rewarded for a company's revenue growth?

Ah... some say... why so negative?

With revenue growth, profits should increase sooner or later.

Let's look what K1's revenue growth since listing. ( Yes, I have to say it's VERY impressive.)

For its fy 2005, K1 had a saves revenue of 32 million. However, since K1 was listed in early 2006, I would really discount those 2005 numbers and use fy 2006 revenue of 45.3 million as the initial yardstick. In fy 2009, it did 84 million!!!

And current trailing twelve months revenue is 114.8 million!

Yes, it's very impressive!

Now in fy 2006, K1 had profit of 6.080 million.

Let's look at K1's profit growth since fy 2006.


How?

Discount the fy 2009 cos of the global crisis.

Current ttm profit is only 6.341 million. Ok fy 2010 is looking good, first half profits is already 3.8 million and on an annualised basis, it should hit some 7.6 million or so,

So in fy 2006, it earned 6.080 million. This year, K1's earnings 'might' reach 7.6 million.

Now that's not really as impressive as their sales revenue growth, yes?

How?

In my flawed opinion, I would rather see companies like K1 focusing on 'profit' growth rather than sales growth.

Achieving sales growth is always much easier. Just sell it cheaper!

Achieving profit growth is a totally different ball game and as a minority shareholder or potential investor, isn't this what's wanted and desired?

ps: 1 billion target within 5 years? Some more 'confident'! Sure bo?