Tuesday, September 27, 2011

The Governments Don't Rule The World, Goldman Sach Rules The World!!

... the governments don't rule the world, Goldman Sachs rules the world! Goldman Sachs doesn't care about this rescue package, neither does the big hedge funds!

Monday, September 26, 2011

Defensive And Attacking Stocks!

I am always bemused when I read financial articles asking investors to go for 'defensive stocks'.

Yo! Are we playing a game or what? Defensive stocks? I guess when markets are good, they would suggest investors to go for 'offensive stocks'? And then they might say, 'Oh, right now, your portfolio, needs to have an offensive line-up'.

Yeah, market is hot, let's buy some attacking stocks! Market is bearish, let's go buy some defensive stocks!

Me I don't like to judge just based on my mindset. I like to compare what was said versus what has happened or what is happening.

Recently on the 2nd Sept 2011, on the Edge business, there was this article saying: Sticking to defensive stocks

  • Sticking to defensive stocks
    Written by theedgemalaysia.com
    Friday, 02 September 2011 14:05

    KUALA LUMPUR: The outlook on the global economy and the European sovereign debt crisis remains hazy going into September especially after the selldown in global equities, says OSK Research.

    The research house said on Friday, Sept 2 that for September, it would continue to stick to its defensive top buys which have recession resilient business models and some capacity to rebound after the recent sell-off.

    It said despite the 6.5% drop in the FBM KLCI in August was in line with the global sell-off in equities, it believed the outlook on the global economy and the European sovereign debt crisis remained hazy.

    OSK Research said investors should avoid aggressive bottom fishing and it advised investors to stick to defensives with some rebound capacity, especially with 2Q2011 earnings looking decidedly weak.

    “We foresee a 1% - 2% cut in our earnings growth forecast and KLCI year-end target,” it said.

    The research house cautioned the selldown in global equities in August reflected uncertainties over global economic growth as well as the concerns over sovereign debt positions in Europe.

    “We believe these uncertainties have yet to be resolved,” it said.

    To recap, OSK Research said August, which was the month of Ramadhan, saw strong news flow in Malaysia.

    Among the corporate news were the share swap between shareholders of MALAYSIAN AIRLINE SYSTEM BHD [] and AIRASIA BHD [], the sale of ExxonMobil units to San Miguel, the award of a small field contract to Dialog and Sime Darby’s purchase of a 30% stake in Eastern and Oriental Bhd being amongst the more noteworthy news.

    OSK Research, which was scheduled to issue its full results round-up on Monday, Sept 5, said the preliminary indications were the 2Q2011 results were below expectations.

    “As such, we are likely to see a 1.0 to 2.0 percentage point cut in our 17.1% earnings growth forecast for 2011 and 12.8% estimate for 2012.

    “This will likely lead to a cut in our year-end 1557 pts KLCI target although we will likely leave our 2012 KLCI fair value of 1,466 intact on a higher price-to-earnings ratio (PER),” it said.

    OSK Research said despite the 6.5% fall in the KLCI in August, it believed that uncertainties on the global economic outlook would linger.

    It advised investors to continue to focus on defensive stocks while nibbling at some rebound plays in September.

    “For those with a higher risk appetite, trading in recession resilient Mid Caps that have been sold down such as AirAsia, KPJ Healthcare and Supermax is an option,” it said.

    It also advised strongly against aggressive bottom fishing at this level as yet.

    The research house said it continued to see a potential KLCI maximum for the remainder of the year at 1,557. The potential KLCI minimum for the remainder of the year was 1,378.

    As for 2012, the KLCI fair value was 1,466, it said.

    Despite the cautious outlook, OSK Research said a short term rebound was possible.

    “Given the reasonable rally in global markets over the past week when the KLCI was closed for holidays, a modest rebound in the KLCI is to be expected. Nonetheless, given uncertainties in the global economic outlook, we would caution against an aggressive bottom fishing strategy at this point in time,” it said.

    OSK Research said in view of the strong possibility of an early general elections by year-end, the re-election of the current Barisan Nasional government might spur a modest rally in the market post elections.

    Hence, its view was that a better time to bottom fish might be when profit taking accelerates ahead of the election date.

    “Some trading positions may be taken in Mid Caps. While we continue to advocate a generally Defensive strategy, investors with higher risk appetite may wish to trade in selected Mid Caps that have been sold down of late and might appear attractive,” it said.

    The research house advocated Mid Caps with longer term recession resilient business models such as KPJ Healthcare and Supermax.

    It explained bashed-down Mid Caps tend to outperform when a recovery sets given their high degree of recovery.
It mentioned AirAsia, KPJ and Supermax.

The closing day price for these stocks on 2 Sep 2011 was AirAsia 3.32, KPJ 4.35 and Supermax 2.80.

Ok, before I started comparing these prices to Friday's 23 Sep 2011 prices, I for one, had noted this market perspective had been repeated recently.

Yes, it wasn't a new idea!

Now this is important. I feel investors should always check the date of when the 'idea' was first suggested. Yes, when you read a stock tip on a forum or on a blog or on a twit or on facebook, which includes a research on the stock, pay attention to the date of the report. If the report is outdated (ie the report was written some 3 months or more ago) then it's very likely the recommendation could very well be unjustifiable because some events might have happened since then. Events that might cause the stock recommendation to be invalid!

That's my flawed thinking. Know when the report was written. Don't bet your investment based on outdated facts!

Check this out: On 6th Aug 2011, On Business Times:  OSK: Local stocks will keep climbing

  • It has recommended six alternative defensive stocks for the longer run that would benefit in the event a recession does set in early.

    The alternative stocks recommendation varies from airline, healthcare, media group, food, education and rubber glove stock. They are AirAsia Bhd, KPJ Healthcare Bhd, QL Resources Bhd, Media Chinese International Ltd, SEG International Bhd and Supermax Corp Bhd.

    "These stocks will benefit from a drop in incomes and commodity prices and are generally more inward looking as we believe domestic incomes should be more resilient," it said.

    OSK Research has given a "buy" call on the six stocks based on a 12-month outlook.

Six alternative defensive stocks! The nicely drawn table..

But that wasn't it.

A few days later, on Aug 10th: Resilient and defensive stocks to ride through the volatility

  • Resilient and defensive stocks to ride through the volatility
    Written by Chong Jin Hun
    Wednesday, 10 August 2011 12:50

    KUALA LUMPUR: As the prospect of a weaker global economic landscape batters global stock markets, the experts are recommending a defensive stance in their investment strategy.

    While analysts and fund managers believe Asian equities might see a rebound after the sharp correction in the last two days, they are also mindful that these gains might be technical and temporary as they factor in the still weak global economic backdrop as growth slows in advanced economies.

    Below are several stocks recommended by OSK Research for their longer term prospects:

    AirAsia Bhd
    The largest low-cost carrier in Asia will gain from declining jet fuel prices in tandem with the fall in crude oil rates. Although an economic downturn will result in less travel, the drop in corporate and personal income may prompt business and leisure travellers to switch from full-service to budget airlines.

    Trading of AirAsia was suspended in conjunction with a share swap exercise with rival Malaysian Airline System Bhd. Prior to the suspension, AirAsia’s last traded price was RM3.95 per share as at last Friday. The stock has gained 56% this year.

    KPJ Healthcare Bhd
    The largest private hospital chain in Malaysia will continue to see good business in spite of an economic downturn due to the relatively recession-proof nature of the healthcare sector. While some may argue declining income may prompt consumers to switch from private to public healthcare, analysts said the disparity between the two in Malaysia is quite large.

    With the lower cost advantage in Malaysia, it is believed KPJ will lure back Malaysians who used to seek treatment abroad and attract cost-sensitive medical tourists. KPJ shares closed unchanged at RM4.50 yesterday. The stock has advanced 21% this year.

    Media Chinese International Ltd
    The largest Chinese newspaper company in Malaysia is expected to gain from declining commodity prices, which in turn lead to cheaper newsprint, a major cost component. Demand for newspapers is anticipated to stay firm in the event of an economic downturn given the relatively inelastic purchase of newspapers. Media Chinese shares ended unchanged at RM1.09 yesterday for a year-to-date (YTD) advance of 27%.

    QL Resources Bhd
    The country’s second largest producer of chicken eggs and Southeast Asia’s largest producer of fish paste could see demand for its products increase as consumers downtrade to cheaper food products during an economic downturn.

    While QL’s expansion plans in Indonesia and Vietnam may slow down, earnings from domestic operations would be enough to sustain the company. QL shares fell five sen to close at RM2.93 yesterday. The shares have gained 0.34% this year.

    SEG International Bhd
    The country’s largest private education provider with a student base of 23,000 is expected to gain from more students seeking more affordable courses locally as a possible recession and a stronger US dollar will inflate the cost of overseas education. SEGi saw its shares decline six sen to RM1.83 for a YTD gain of 71%.

    Supermax Corp Bhd
    The world’s second largest rubber glove producer by capacity is expected to gain from cheaper natural rubber in tandem with declining crude oil prices. Analysts said cheaper raw materials will improve the company’s profit margins as demand for healthcare-related rubber gloves remains resilient. Supermax shares shed 18 sen to RM3.26 yesterday for a YTD decline of 18%.

    This article appeared in The Edge Financial Daily, August 10, 2011.
Same report re-broadcasted a few days later.


And needless to say, the article headlines was rather amusing.

On the 6th Aug 2011, the chosen headline was OSK: Local stocks will keep climbing

On the 10th Aug 2011, the chosen headline was Resilient and defensive stocks to ride through the volatility.

From climbing to resilient.

So this morning I did a comparison of three set prices.

First set price was based on 6th Aug's prices. Next set was based on 2 Sep prices. Last set was based on 23 Sep prices.

So AirAsia: 3.95 vs 3.32 vs 2.82 means AirAsia was 3.95 on 6 Aug. On 2 Sep AirAsia prices was 3.32 and on AirAsia closed at 2.82 on Friday, 23 Sep.

The current results:

  1. AirAsia: 3.95 vs 3.32 vs 2.82
  2. KPJ Healthcare: 4.60 vs 4.35  vs 3.93
  3. QL Resources: 3.09 vs 2.95 vs 2.58
  4. Media Chinese: 1.19 vs 1.13 vs 0.935
  5. SEG: 1.90 vs 1.82 vs 1.77
  6. Supermax: 3.61 vs 2.80  vs 2.37
Like how these defensive stocks are faring?

Ok, I am aware that these stocks were recommended based on a 12 month outlook and it would be fair that I compare the results next Aug 2012. Nonetheless, what do you think of the current performances of these so-called 'defensive' stocks?


I am not a fan of 'defensive' and 'offensive' stocks.

In my flawed opinion, there always should exist a better reason to own a stock than this. Yeah, a stock should be invested based on its own merits.

Saturday, September 24, 2011

Maybulk: Does poor corporate governance have a negative impact on a stock?

From fellow blogger M.A. Wind's posting: Bursa: long term returns

  • My best overall guess of the long term yield including dividends and costs incurred of a portfolio is in the range of 4-5% per year. This is rather disappointing given the GDP growth of Malaysia. Western countries have had less growth in GDP but higher returns on investing in shares. I think that the reason for this is the lower degree of Corporate Governance in Malaysia, which is directly influencing these returns. Related Party acquisitions at (highly) inflated prices and General Offers with delisting threats at (very) low prices are directly lowering returns.
Aren't you curious about the issue of lower degree of Corporate Governance and how Related Party Transactions is directly lowering returns?


Does poor corporate governance have a negative impact on a stock?

Let's take a well known stock, a stock where some have claims as an 'investment grade' stock,

I certainly wasn't impressed.

Company makes 62 million losses and it doesn't even attempt to explain how these losses incurred.

And by Dec 2008, I was wondering Why Is Maybulk So Active In the Share Market?

Let me reproduce that entire posting here again...

Yes, why is Maybulk so active in the share market?

Caught the following announcement on Bursa Malaysia:
Dealings in quoted securities pursuant to Paragraph 9.21 of the Listing Requirements

  • Malaysian Bulk Carriers Berhad ("MBC” or "the Company”) wishes to announce that the MBC Group has, for the period from 31 January 2008 to 22 December 2008, purchased quoted securities from the open market. These purchases have exceeded 5% of MBC's latest audited consolidated net assets ("NA") as at 31 December 2007, details of which are set out below:-

    1. The aggregate purchases for the period from 31 January 2008 to 22 December 2008 amount to RM91.38 million. This represents 5.15% of NA;

    2. The total cost of all investments in quoted securities as at 22 December 2008 is RM143.80 million;

    3. The total book value of all investments in quoted securities as at 22 December 2008 is RM122.12 million;

    4. The market value of all investments as at 22 December 2008 is RM122.93 million; and

    5. There were sales of quoted securities during the current financial year and the losses on disposal amounted to RM11.23 million
    This announcement is dated 23 December 2008.
Fact from 31 January 2008 to 22 December 2008, Maybulk purchased shares amounting to RM91.38 million.

Aren't you shocked at what it is doing?

Don't you think that the amount is way too much?

Someone once mentioned that Maybulk's management is highly 'reputable'. Well that the fact that Maybulk chose NOT to disclose what they bought and the fact that they bought more than 5% of its total Net Assets as of its audited accounts as at 31st Dec 2007 places a massive question mark over the management. Won't you agree?

And honestly, what do the management of the company think they are? Is Maybulk a securities trading firm?

Does the management reckons that they are super traders or super investors?

Well, the fact that they loss some rm 11.23 million speaks volumes about their stock market skills!

Seriously, don't you reckon that Maybulk should stop this?

Look they aren't good, are they? And if so, why dabble in the share market?

Does Maybulk have so much money to lose in the share market?

And if you are a minority shareholder, do you honestly like what you see?

Aren't you appalled by all this?


I was certainly appalled with all these. I dislike the idea of our listed companies dabbling in the share market. This is a no-no for me. I feel the management should always focus on its core business.

Well that's my flawed thinking.

And then of course there is that massive related party transaction issue between Maybulk and POSH.

Unfortunately, I did not post anything on it.

However, many thanks to blogger M.A. Wind, he is kind enough to share his horrific experience.

Do read the following posting: Maybulk/POSH: What happened to the Cash?

According to Wind:

So far we have seen the following significant breaches of rules:
  • no mentioning of the purpose of Maybulks investment in POSH
  • no recently audited accounts (less than 6 months old)
  • incomplete financial picture leaving out (for instance) non-interest bearing debts
  • incorrect calculation of the gearing ratio
And according to Wind there is more! (Do check out his blog http://cgmalaysia.blogspot.com/ for more updates based on his personal experience on Maybulk.

This is however only the top of the iceberg. The next two episodes will be:

  • Clarkson, the valuer who didn't believe his own valuation
  • the magical accounting tricks of KPMG
And so we have here... Maybulk, a stock, flush with massive corporate governance issues.

So how?

Does poor corporate governance have a negative impact on a stock?

My say?

I would always avoid stocks that have poor corporate governance.

When I invest in a stock, I regard myself as being a small business partner of the business. And as a business partner, how can I trust my business partners who have poor corporate governance? Am I a business partner for them to take advantage of? Yes, would I be short changed the very minute I turn my back? How could this equate to a smart investment for me?

And with the poor performance of Maybulk the stock, it appears that this isn't such a poor decision!

Friday, September 23, 2011

Conflict Of Interests In Investment Advisory

Yesterday I had questioned: How To Expect Proper Governance With All These Conflict Of Interests?

When Swee Joo announced that it is to be delisted on 26 Sep 2011, this reminded me of a conflict of interest between iCapital And Swee Joo that I had written back on July 2009.

I had always disliked the the conflict of interest between iCapital the fund management and iCapital the investment advisor.

As a fund manager, iCapital was already making money. Why the need to be an investment advisor at the same time? Why?

How can one trust the integrity when the same said company manages fund and gives investment advice at the same time? Fund buys, investment advisor gives advice to buy the stock at the very same time. A rather tacky issue, yes? How can one trust if the company is giving a pure independent and trustworthy investment advice?

Let's look back at iCapital And Swee Joo incident once more and the said conflict of interest.

Now let's look at iCapital.biz 2008 annual report announced on 11th July 2008, Annual Report 2008.

  • In the year ending 31 May 2008, your Fund made a number of purchases. New investments were Boustead, Hai-O Enterprise, Suria Capital, Swee Joo, Telekom Malaysia and TM International.

And here is the snapshot of the portfolio as at 11 June 2008.


iCapital.biz had purchased some 2,083,100 million shares worth some 2,858,552 million. This works out to 1.37.

Now iCapital's 2008 fiscal year runs from 1st June 2007 to 31st May 2008. Somewhere in between these dates, iCapital is said to have invested in Swee Joo at an average cost of 1.37.

Here now is the chart. The top section with all the foot prints denotes the time frame between 31st May 2007 and 30th May 2008. This is where iCapital 'might' have purchased Swee Joo at an average cost of 1.37.

Now Swee Joo was listed in Oct 2006.

First yet of earnings I would use is what Swee Joo reported on Feb 2007. Quarterly rpt on consolidated results for the financial period ended 31/12/2006. Swee Joo made 12.571 million.

May 2007. Quarterly rpt on consolidated results for the financial period ended 31/3/2007 Swee Joo made only 5.043 million. Less than more than half of what it made the previous quarter.

Only these 2 set of earnings and the second set of earnings reported on May 2007, showed a drastic decrease in its earnings.

Would that be considered a 'value' investment'?

Nonetheless, 2 months later, on 20th July 2007, iCapital investment advisory makes a buy for longer term call! And yes, it openly declared the vested interests in the investment report.

Let me reproduce it in full once more.
  • [Updated on 20/07/2007 15:41:00]
    Principal activities: Shipping & related businesses
    Major shareholder/s: Leonard Linggi Anak Jugah,Goodlink S/B, Limar Management Services S/B

    The principal activities of Swee Joo Bhd (SJB), an East Malaysian group that is fast catching the headlines, comprise mainly shipping services, shipping agencies and shipping-related services like haulage, distribution, warehousing, container handling and repairs.

    The shipping services provided by SJB are mainly domestic and some regional routes. Domestic refers to routes between East, Peninsular Malaysia and Brunei and coast to coast refers to Sarawak while the regional shipping liner covers Bangkok, Ho Chi Minh City, Jakarta, Surabaya, and Singapore. Currently, one of the strengths of SJB lies in its comprehensive coverage of the East Malaysian ports. Domestic shipping services contribute the bulk of the group's revenue and earnings. In 2001, SJB formed an alliance with a large global shipper, Evergreen Marine Corp. The tie-up with Evergreen increases its revenue with the trans-shipment of goods from international to domestic routes. SJB is allowed free use of Evergreen's containers for 30 days. Presently, the feeder freight revenue contribution from Evergreen makes up 4.3% of SJB's sales. The group's revenue is primarily denominated in Ringgit, while a substantial portion of its cost is in US$. Unfortunately, the group does not undertake currency hedging. Due to the rise in oil price, bunker costs have been rising but this event affects all shippers.

    The two main 100% owned subsidiaries of the group are, Johan Shipping Sdn Bhd (Johan) and Swee Joo Coastal Shipping S/B (SJ Coastal). Johan, which provides domestic container shipping services, started business in 1983. It offers scheduled shipping services between west Malaysia and Singapore to East Malaysia and Brunei. In addition, Johan also provides regional shipping services to Indonesia, Bangkok, and Ho Chi Minh City. Johan expanded its shipping services to Ho Chi Minh City and Bangkok in 2003. In 2006, Johan recorded a turnover of RM206.5 mln with a net profit of RM20.3 mln. On the other hand, SJ Coastal provides scheduled services between the various towns in Sarawak. In 2006, it recorded revenue of RM36.5 mln with net profit of RM2.33 mln.

    SJB also provides services such as warehousing, container depot, consolidation and deconsolidation of cargoes at Port Klang, Pasir Gudang, and in the major parts of Sarawak. Repair and maintenance of container services are done at Port Klang. The group has 54 prime movers and 189 trailers. The haulage business had sales of RM8 mln in 2006 and net profit of RM0.11 mln.

    Presently, SJB operates a fleet of 14 container vessels, 10 general cargo ships and backed by 7 support vessels. No single client, market segment or industry dominates in terms of revenue or profit contribution to the group. In 2007, Johan is adding one 713-TEU container vessel, 1 dual-purpose CPO/container barge and 1 general cargo vessel for transporting rice and is entering the Myanmar and East India markets. SJ Coastal would be adding one 2,400-tonne CPO barge in 2008. Asia Bulkers Sdn Bhd, which mainly transports palm oil products and logs, will be adding one 7,000-tonne product tanker, and 2 sets of tug and CPO barge in 2008.

    Conclusion & Advice

    Imagine a company that has proven management, earnings that have grown rapidly and are expected to continue growing rapidly and with some of its businesses enjoying strong market positions, how much would you be willing to pay for such a company? Although the shipping business is capital intensive and the company has high borrowings, the current market valuation of RM278 mln for SJB seems to be on the low side. Hence, i Capital rates Swee Joo a Buy for the longer-term.

    Disclosure of interest (required under the Securities Industry Act) : The publisher and associates have an interest in Swee Joo.
The key issue for me is the disclaimer.
  • The publisher and associates have an interest in Swee Joo.

With just two set of quarterly earnings. with the second set of quarterly earnings showing a huge decline in earnings, iCapital investment advisory makes a bold buy call on Swee Joo.

Was the buy call from the investment advisory really justifiable, was it a truly independent investment advisory or was it influenced by the fact that the publisher and its associates have vested interests in the stock?

Think about it... iCapital.biz the stock, purchased the stock between 31st May 2007 and 20th July 2007 then the investment advisory quickly issues the buy call!

With Swee Joo announcing it would be delisted next Monday, one would be wondering what happened to iCapital.biz's stake in this stock.

Their cost of purchase was rm 2,858,552. (Bought sometimne between May-Jul 2007)

They reported they dispoed the stock in their Annual Report 2010.

Disposal value was rm 1,005,659.

Loss from disposal was rm 1,852,893.


This posting is not to make a mockery of iCapital's loss but to stress on the conflict of interest between an independent investment advisory and its fund managing business.

Like I said, I dislike such conflict of interest. I do not like to see an investment advisor making a buy call while its own fund management had already bought a substantial stake in the stock.

In Swee Joo's case, the buy call made on July 2007 was so questionable. It was a newly listed stock and there wasn't much financial evidence that suggested it was worth an investment. All it had was two set of quarterly earnings, with the second showing decline in earnings. But yet iCapital's investment advisory deemed it fit to issue a buy call. Was the call influenced by the fact its publisher and associates had vested interest in the stock?

And what about the research reports we read daily? All the buy calls. Are the calls truly independent or do they also carry the same conflict of interests?

Thursday, September 22, 2011

And Swee Joo Is To Be Delisted On 26 Sep 2011

On today's Edge: Swee Joo to be delisted on Monday

  • KUALA LUMPUR: SWEE JOO BHD [] will be delisted with effect from 9am on Monday, Sept 26.

    The company said on Thursday, Sept 22 that it was informed of Bursa Malaysia Securities Bhd’s decision on Wednesday.

    It said it was advised by Bursa Malaysia that this action was in pursuant to paragraph 16.11(2)(C) of the Main Market Listing Requirement.

    Trading in the shares was suspended since July 19
This brings an end to these postings.
  1. 1 Sep 2010: And Swee Joo Comes Crashing Down
  2. 12 Aug 2010: Swee Joo In Deep Water
  3. Feb 2010: More Losses Recorded By Swee Joo!
  4. Dec 2009: Review of Swee Joo's Earnings
  5. Aug 2009: Featured Report: KN on Swee Joo **
  6. Aug 2009: A Quick Look At Swee Joo's Earnings
  7. Jul 2009: iCapital And Swee Joo
  8. Feb 2009:Update On Swee Joo's Earnings
  9. Nov 2008: Shipper Swee Joo Announces Losses

How To Expect Proper Governance With All These Conflict Of Interests?

Of course MSWG had questioned the Sime/E&O deal.

  • Minority Shareholders Watchdog Group (MSWG) chief executive officer Rita Benoy Bushon had also questioned the deal and asked if there would be an MGO although the share purchase was below the 33 per cent threshold to trigger a mandatory buy.
    “Where does this leave the minority shareholders? Is it fair to them?
    “We believe that in the circumstances, the Securities Commission should investigate whether the other conditions for an MGO have been fulfilled,” Bushon wrote in The Star newspaper yesterday.
But here lies the problem.

Fair to which minority shareholder?

Because the problem is the conflict of interest between SC Chairman and and E&O chairman. They are related. Husband and wife.

And E&O chairman stake would still be considered a minority shareholder.

So if MSWG and SC calls it unfair to the minorities and forces Sime to do an MGO, what's the implication?

What if someone asked for whom did MSWG and SC fought the case for?

See the complication caused by this conflict of interest?

In my opinion, this conflict of interest must be stopped.

The local stock market cannot have A Securities Chairman whose husband is so actively involved in the stock markets.

Yesterday, blogger M.A.Wind blogs on SC & BM: (perceived) Conflict of Interest? 

Let me highlight this following issue from that posting.
  • Conflicts of Interests

    An integral part of ethics and integrity is the avoidance of conflict of interest. In this regard, all SC staff and their immediate family members have the obligation to avoid putting themselves in situations of conflict where their personal interest is conflicted with the interest of the SC. A process on declaration of interest has been put in place within the SC to ensure that SC employees adhere to this requirement.
(Mind you that was taken from SC own website! http://www.sc.com.my/main.asp?pageid=980&menuid=983&newsid=&linkid=&type= )

!!!! Exactly!

Despite what was written, the Malaysian stock market have this messed up conflict of interest between SC Chairman and her husband!

Where's the integrity in the stock exchange if this was to continue on?

Consider one older incident.

Now, I have seen many privatisations deals in the market the past several years. Most of the time, the minorities shareholders attempt to stop the privatisations failed. There was this case where a privatisation attempt actually failed. Jan 2010: Be fair to minority shareholders

For me, despite what was written, it wasn't a clear case against the privatisation offer. And as mentioned, in the article, the offer carried a decent premium.
  • On Jan 11, when the proposal was first mooted, that would have given entitled shareholders a chance to exit their investment at a premium of about 23% and 33% over the five-day and three-month volume-weighted average market price. Of course, the shares have since rallied in response to the news, and today, sit just short of the offer price
But thanks to MSWG, the minorities won. I was surprised.

And guess who is one of the minority shareholder in MBF Holdings? Datuk Azizan Abd Rahman!


How would you want to interpret this?

And from a conflict of interest perspective, won't one question why MSWG fought so hard to stop the privatisation? And why didn't MSWG fought harder in many more clear cut cases where the minorities shareholders were clearly shortchanged?
And yes, sadly, that MBF Holdings case would have been one stellar victory for the minorities but the problem is that one of the minority is such a prominent figure, and one who is related to the Securities Commission.


Isn't it all so disappointing?

Tuesday, September 20, 2011

And Ambang Sehati Is Rewarded With 73.6 Million From Their Purchase Of BRDB's Prime Assets

From Bandar Raya Development Bhd's annual report:


    Dialogue Between The Company And Investors The Board recognises the need for and the importance of effective communication with shareholders as well as potential investors and the public. T he Group communicates with its shareholders and stakeholders regularly through timely release of financial results on a quarterly basis, press releases and announcements which provide an overview of the Group’s performance and operations and disclosure of material information. In addition, the Group has established a website (www.brdb.com.my) which shareholders and members of the public can access for corporate information and news/events relating to the Group and for channelling their queries.
That was their pledge. They wrote that in their annual report.

They recognised the need for and the importance of effective communication with shareholders. They also announced the importance of the disclosure of material information.

However, when Bandar Raya announced that the Chairman had offered to buy assets from the compan in yet another LUDICROUS RPT Transaction, all that was announced that the board was just given two weeks to reply to the offer.

Just two weeks. WTH!

They didn't even have the decency to disclose the offer price to the investing public.

So what's the point of making that pledge in their annual statement?

Does Corporate Malaysia ever keep their words? Or is really talk so cheap from Corporate Malaysia.

I wonder.

And the manner of the offer was utterly ludicrous. Two weeks to accept the offer! Was the world coming to an end that Bandar Raya had to make such a rush decision?

And the board decision?


  • BRDB to reward shareholders with 80c a share
    Written by Chua Sue-Ann of theedgemalaysia.com
    Monday, 19 September 2011 20:15

    KUALA LUMPUR: Bandar Raya Development Bhd's (BRDB) board has accepted the offer from major shareholder, Ambang Sehati Sdn Bhd, to acquire four of BRDB's investment assets for RM430 million net of liabilities of RM484 million.
    BDRB said on Monday, Sept 19 that following the proposed disposal, BRDB would distribute part of the proceeds to the shareholders via a net cash dividend of 80 sen per share.

    Ambang Sehati - which owns 18.88% of BRDB - had on Sept 5 proposed to acquire BRDB's four investment PROPERTIES [], namely CapSquare Retail Centre, Permas Jusco Mall, Bangsar Shopping Centre and Menara BRDB.

    The four properties have a total net lettable area of 907,817 sq ft and a total carrying value RM942.4 million, according to BRDB's latest annual report.

    Ambang Sehati's shareholders include BRDB chairman Datuk Mohamed Moiz JM Ali Moiz, Datuk Seri Akbar Khan Mohamed Khan and Abdul Sathar MSM Abdul Kadir.

    BRDB chief executive officer Datuk Jaganath Sabapathy said the board would table the offer to shareholders by the end of this year.
Four prime assets sold for RM430 million net plus liabilities of RM484 million???

Their pdf announcement can be downloaded  here

I would like to look at that so-called deal sweetener, that 80 sen per share carrot.

So BRDB is going to use 390.121 million from the sale of these assets and used it as dividends.

And each shareholder is to be rewarded some 800 ringgit for every 1,000 shares held.

But is it really a reward?

Or let me put it this way, for whom does this 'reward' benefit?

Think about this...

Ambang Sehati owns some 18.8% shares or some 92,070,812 shares. 

A 800.00 per 1,000 shares 'reward' will mean that Ambang Sehati will get some 73.6 million!

Now isn't this sweet.

They buy these prime assets, and they are also rewarded 73.6 million for this purchase of prime assets!



Or is it just plain ludicrous???

Goodness me!

And tell me, is this 914 million purchase of these 4 prime assets even fair?

Do check their so-called valuation method posted in the Bursa announcement here: http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/FF67....pdf

Is it even fair?

Do tell me!

Four prime assets sold at a time when currently there is huge demand of shopping malls from local and foreign buyers!

Sold within two weeks!


If BRDB wanted to sell, if they put in an effort, I am sure they would get a much better price than what's offered!

Seriously? I think RPT should be stopped!


Just what is wrong with Corporate Malaysia????

Friday, September 16, 2011

What If Sime Is Forced To Do A MGO?

So much had been said about the shambolical Sime/E&O deal.So SC is reviewing the deal thoroughly. I could be wrong but that's something I don't see too often,

And yesterday Sime shares were spooked and Sime shares tumble on MGO worries.

Now let's think about it... I am not sure about you about I am certainly wondering about it. Ok, a MGO perhaps might be fair and it could benefit the minorities .... but then.....

Remember the Chairman? Yeah , And All The E&O Chairman Said Was 'He Was Not Aware .... '

Here's the so called transaction.

Changes in Director's Interest (S135) - Datuk Azizan Bin Abd Rahman

From that announcement he owns some 4,500,000 shares in E&O.

Just imagine... if Sime is forced to do the MGO.... errr.....

And then of course.... the conflict of interest .... the conflict of interest between SC Chairman and E&O Chairman....


Now this doesn't represent good corporate governance, does it?

And then...... what about the minority shareholders of Sime then? What would they be feeling if Sime is forced to make this MGO?

Tuesday, September 13, 2011

And All The E&O Chairman Said Was 'He Was Not Aware .... '

On Business Times:

  • Zarinah steps aside in Sime-E&O review
    Published: 2011/09/13

    The reviews are being led by the two most senior commission members, Datuk Francis Tan and Datuk Gumuri Hussain

    Kuala Lumpur: The Securities Commission (SC) chairman, Tan Sri Zarinah Anwar, will not be involved in the regulator's review of a corporate deal to avoid a conflict of interest.

    The SC is examining if Sime Darby Bhd should make a general offer (GO) for the rest of Eastern & Oriental Bhd (E&O) after buying 30 per cent of the developer. It is also looking at all stock transactions by all parties.

    "In accordance with the SC's internal governance processes, the reviews are being led by the two most senior commission members, Datuk Francis Tan and Datuk Gumuri Hussain and the SC chairman had, from the onset, recused herself," an SC spokesperson said.

    On August 28 2011, Sime agreed to buy the stake from Datuk Terry Tham, Tan Sri Wan Azmi Wan Hamzah and Singapore's GK Goh Holdings.

    Zarinah's husband, Datuk Azizan Abd Rahman, the chairman of E&O, had bought E&O shares prior to the announcement.
    The SC was responding to questions from Business Times on whether Zarinah had issued an internal memo to her staff about the deal.

    The SC did not deny that such a memo was sent out.

    A copy of the internal memo obtained by Business Times also stated that Zarinah had briefed Prime Minister Datuk Seri Najib Razak on the matter.

    "You would have read in the papers and the blogs the criticism and allegations in respect of the purchase of E&O shares by Sime Darby. While this is a commercial decision made by Sime Darby, it does raise the issue of whether the transaction has takeover code implications and an MGO (mandatory general offer) should be carried out.

    "The second issue of course relates to my husband's purchase of shares in E&O. He has been the chairman and shareholder of E&O since 2002 and has purchased shares in the company since then.

    "The latest acquisition is just part of his normal acquisition, with all purchases made in the open and duly reported to Bursa. Naturally he had no knowledge of the Sime Darby purchase at the time as this is a sale by the major shareholders and the board was not told of the negotiations until later.

    "In any case, I have instructed that both the issue of the MGO and the acquisition of shares be thoroughly looked into. Given that I am conflicted, in accordance with our governance procedures, I have recused myself and have asked our two most senior commissioners, Datuk Francis and Datuk Gumuri, to lead the review of this case working together with Dr Nik and Datuk Ranjit," the memo said.

    "I have also briefed the Prime Minister who had expressed his understanding," she added.

    Datuk Francis Tan Leh Kiah is also the managing director (MD) of Azman Davidson & Co, advocates & solicitors, while Datuk Gumuri Hussain is SME Bank chairman.

    Datuk Dr Nik Ramlah Mahmood is the SC's MD and executive director for enforcement while Datuk Ranjit Ajit Singh is the MD and executive director in charge of market supervision.

    The Edge weekly, in its latest issue, quoted Sime Darby's president and group chief executive officer Datuk Mohd Bakke Salleh as saying that the deal was within the law.

    Sime Darby also wanted a 30 per cent stake mainly because it did not want to make a GO without the benefit of a due diligence.

    Datuk Azizan, meanwhile, said that he was not aware of the transaction between the three vendors and Sime Darby at the time.

( For reference: posted last friday: Featured posting: Sime Darby's E&O bid poses policy dilemma )

The most tacky issue in my opinion is that  Zarinah's husband, Datuk Azizan Abd Rahman, the chairman of E&O, had bought E&O shares prior to the announcement

The Chairman of E&O purchased shares just prior to the announcement?

And all he said he was not aware!!!!!!!!!?

That's it?

Are you satisfied?


I am not.

How could the husband of the SC Chairman holds position in any listed company?

How could this even happen?

How could the investing public trust that there's no conflict of interest at all?

How could the investing public believes in good corporate governance when the SC itself cannot keep its house in good order?

Something just got to give!

Monday, September 12, 2011

Ordos: China's Empty City Remains..... Empty

Posted Nov 2009: China's Empty City!

Posted 2 days ago:

Friday, September 09, 2011

Featured posting: Sime Darby's E&O bid poses policy dilemma

Blogger M.A. Wind featured an article by writer Leslie Lopez written on the Straits Times: http://www.straitstimes.com/Money/Story/STIStory_711037.html

The opening line of the article:

  • The plot tickens and all the attention is on the SC. With the Chairman of the SC being married to the Chairman of E&O, who bought shares of E&O just before the takeover by Sime Darby, making things even more intriguing. It is time for SC's next move, and everybody is watching.


The Chairman of E&O BOUGHT shares before the takeover???

And he's married to Chairman of SC?


Do read the rest of the posting Sime Darby's E&O bid poses policy dilemma

In another blog, the following was posted: GO or no GO, Zarinah and SC under scrutiny

Thursday, September 08, 2011

A Look Back At MMC Purchase Of Senai Airport Terminal

In light of  Bandar Raya Asset Sale: Yet Another Ludicrous RPT Transaction, I remembered what I wrote back on July 2011 in the posting: Just Another Feedback On Corporate Governance

One of wish was on 

  • And I want to see more done on the issue of related party transactions ( RPT ). Nowadays, related party transactions seems to be increasing more and more. It's rather shocking and sometimes I wonder how the company manage to get the votes of approval for all these transactions. I have seen so many listed companies with so many RPTs that it so unreal. Why do these major shareholders have links to almost most of the transactions done by the company?
One of the recent re-highlighted case was 

And I think it's time we revisit another past case involding MMC and

The issues (as highlighted in the local papers then) involving this deal:

  • Based on the announcement, MMC has undertaken to advance RM417.2 million which is owed by SATS to the vendors. The vendors in the deal are Semarak Sestu Sdn Bhd and Suria Kemboja Sdn Bhd which own SATS. Both companies are believed to be linked to MMC’s major shareholder Tan Sri Syed Mokhtar Albukhary....
  • In the first place, does MMC need more land? Even if it does, why must the deal be done now, especially in cash? Is it necessary for MMC to undertake the deal at this juncture when asset prices are fast coming down?
  • When will Senai Airport and the land around it contribute to the bottom line of MMC positively? Also, what is the true valuation of Senai Airport and land that comes together with it?
  • The unaudited net tangible asset (NTA) of the SATS Group and loss after tax as of June 30, 2008 are RM295.5 million and RM24.8 million.
  • The proposed purchase of the 2,718 acres for RM9.45 per square foot (sq ft) is also questionable.Based on previous reports, the land was acquired from Lee Rubber at less than RM3 per sq ft. Now it is sold for three times the amount transacted less than two years ago.
  • Why does it need more long term assets?
  • Without strong cash flow, MMC will be sitting with a lot of assets but no cash to develop them.
On the back of global financial crisis that was bringing companies down to their knees, MMC wanted to buy SATS, a company that is losing tons of money, in a CASH deal??? Only rm1.7 Billion!!!! And yeah, SATS so happened to be owned by MMC boss also!!!!

There was this one nice table published on Star papers.

The very glaring part was SATS was MMC forecasted SATS to make some 93.3 million for its fy 2010!

Needless to say I was shocked since SATS was losing money all the while and minute MMC suggested that they wanted to do this RPT deal, SATS suddenly was forecasted to make a whopping 93.3 million. ( Later on this issue)

Hwang DBS decided to use implied price per passenger as one of their yardsticks to justify this RPT!

Price per passenger? ( Huh? Exactly! )

I guess with SATS having a history of losses, they ran out of yardsticks to use. Yeah, a loss making company was sold for 1.95 Billion.
And MSWG did try to fight against this clear lopsided deal. See MSWG Gains Vital First Victory In Its Battle Against MMC's Senai Airport Terminal Purchase

But sadly... Another Sad Day For Corporate Malaysia As MMC's Senai Airport Deal Is Approved!

Let me highlight an article on Business Times back then.

  • MMC shareholders say Yes to Senai Airport deal

    By Adeline Paul Raj Published: 2009/03/21

    MMC Corp Bhd's (2194) shareholders approved its controversial plan to buy Senai Airport Terminal Services Sdn Bhd (SATS) for RM1.7 billion despite strong objection from minorities.

    At an extraordinary general meeting (EGM) yesterday, which dragged on for four hours,
    minority shareholders were vocal, making it clear they were against MMC paying such a hefty price in the related-party deal.
    MMC is owned by Tan Sri Syed Mokhtar Al-Bukhary, who is also a shareholder in SATS.

    "The minorities were very unhappy and almost wanted to stage a walkout. But we managed to tell them not to do so, and vote," said Minority Shareholder Watchdog Group (MSWG) chief executive officer Rita Benoy Bushon, who attended the EGM.

    Bushon said the MMC chairman had invoked his discretion to have a poll instead of a vote by hands and, in the end, 97 per cent voted in favour of the deal.

    This was because minority shareholders were few in number.
    The majority of the non-interested parties who could vote on the deal comprised institutional investors.

    MMC is to pay RM580 million for SATS' loss-making Senai Inter-national Airport and RM1.12 billion for land which will be developed as an "airport city".

    "I'm not against them buying SATS; it's just the price. It's a valuation argument, that's all," a minority shareholder said.

    He, and others, was irked that valuations were based on projected values rather than the current value.

    Some felt that MMC, which has some RM20 billion debt, should be preserving its cash now that the economy was slowing down. Others felt that it should wait for a better price.

    For MMC, the buy enables it to exploit SATS' potential to become a regional cargo and logistics hub.

    MMC chief executive officer Hasni Harun did not face the press yesterday, but in a statement reiterated that the SATS purchase was commercially viable and in the long-term interest of the group and stakeholders.

    "With this, MMC will own the only privatised airport in the country and it will create value to the group's transport and logistics business," he said.

    Asked if she was happy the deal would go through, Bushon replied: "I had expected that the board would have somehow looked at the valuation again."

    She said the board had given assurance, however, that it would be accountable for the purchase
    . The deal is expected to be accretive in two years.

Today, I would like to focus on the very last passage.
  • She said the board had given assurance, however, that it would be accountable for the purchase.The deal is expected to be accretive in two years.
This deal was expect to be accretive in two years.

That was March 2009.

Today, its Sep 2011.

It's more than 2 years since this deal took place.

Here's MMC Q4 earnings posted on March 2009: Quarterly rpt on consolidated results for the financial period ended 31/12/2008. MMC had net profit of 527.319 million then.

So after this deal... surely MMC earnings would improve yes?

After all, MMC did say that they said SATS could be earnings some 93 million for its fy 2010.

So this is MMC earnings reported on Feb 2011: Quarterly rpt on consolidated results for the financial period ended 31/12/2010 MMC's net profit? 344.940 million.


I then looked at MMC's segmental earnings. I was curious to find out SATS contribution to MMC. From the pdf file attached to that Feb 2011 quarterly earnings:

I guess SATS is classified under 'Transport and logistics'.

But then MMC also has its own port business and also Smart. And these would probably be classified under as 'Transport and logistics' business too. ( Err... not very clear, yes? )

I then proceed to search its Annual Report.

And I am glad to say the info is there and Senai Airport is indeed not losing money.


Quote: "The company recorded a PAT of RM63.2 million, due to the recognition of a substantial deferred tax income during the year."

Ahem... back in 2009, MMC promised 93.3 million in profits from SATS.


Well, no matter what's said here again, this related party transaction, worth some 1.95 billion is a done and dusted deal.

But then I thought about it...
The current corporate governance feedback seeked by SC came to mind.

I am confused.

They keep asking for feedbacks but what good is feedback without ENFORCEMENT of corporate governance?


We can have all the nice blue prints and feedbacks... but what's most important is... I want to see action la.

Can ah? Can I wish for better ENFORCEMENT?

That's not asking too much, yes?

We have all this guidelines and rules but if the enforcement isn't there, then what's the point?

Think about it....

Current Bandar Raya current attempt to do a related party transaction involving its chairman and its key prime assets.


Board is given one week to accept the offer.

But... no price is stated.

Like this also can?

PS: Just in case, you have better feedbacks, email your opinions and views to Gblueprint@seccom.com.my.  You need to do this by 15 September 2011.

Or if you prefer to send in writing, mail it to:

CG Blueprint Team
Securities Commission Malaysia
3, Persiaran Bukit Kiara, Bukit Kiara
50490 Kuala Lumpur, Malaysia

Wednesday, September 07, 2011

Bandar Raya Asset Sale: Yet Another Ludicrous RPT Transaction

I have always been against

And on Monday, Bandar Raya decided to do one SMALL little related party transaction.

  • KUALA LUMPUR: Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, chairman of Bandar Raya Developments Bhd (BRDB), has proposed to buy three properties from the group for a yet to be determined cash amount.
    Moiz, through Ambang Sehati Sdn Bhd, plans to buy The Bangsar Shopping Centre and Menara BRDB, CapSquare Retail Centre, and Permas Jusco Mall. The properties are valued at RM942.37 million based on BRDB's latest annual report.
    Ambang, which holds 18.88 per cent of BRDB, will buy the assets based on fair value as determined by an independent valuer to be mutually agreed.

    "Ambang Sehati believes that this would enable the group to monetise these assets and achieve a more efficient utilisation of its capital," BRDB said in its statement to Bursa Malaysia yesterday.

Incredibly unreal. ( Those statements were taken from Business Times article yesterday.)

Think about it.

Chairman's own company... plans to buy Bandar Raya's 3 prime assets ... and says that this purchase would enable Bandar Raya to monetise these assets and achieve a more efficient utilisation of its capital.

Errrr... correct me if I am wrong or STUPID here but isn't the Chairman saying that currently Bandar Raya is badly managed since the need to monetise these assets means that Bandar Raya has a bad management of its cash and Bandar Raya needs  a better utilisation of its capital!

Do you agree? Or I am wrong here?

But then... my problem is...... he's the Chairman for crying out loud!

And the Chairman's idea to solve this problem is to have Bandar Raya dispose of these prime assets to his own company?????

What? What? What?

Is this a joke or what?


And yeah.. it's a

  • Questions over Bandar Raya property offer

    By Shahriman Johari
    Published: 2011/09/07

    Should Bandar Raya Developments Bhd (BRDB) sell choice assets to its major shareholders?

    Ambang Sehati Sdn Bhd, which holds 18.88 per cent of BRDB, has offered to buy selected properties from the group.

    These are arguably the best of the lot within BRDB's stable of assets, with The Bangsar Shopping Centre and Menara BRDB top of the list. The rest are CapSquare Retail Centre in Kuala Lumpur, and Permas Jusco Mall in Johor.

    The assets are worth close to RM1 billion with BSC and Menara BRDB making up 70 per cent of the total value, according to its 2010 annual report.

    Does BRDB need the money? It probably does. As at June 30 this year it has total debt of some RM769 million. It paid about RM35 million in interest last year, which is more than a quarter of its net profit in the same period.

    Analysts also agree that it needs cash for further property development. It only has some RM73 million in cash and short term deposits.

    But should the board of BRDB restrict the buyer to just Ambang, owned by four investors led by BRDB chairman Datuk Mohamed Moiz Jabir Mohamed Ali Moiz?

    It shouldn't. If the objective is to raise as much money from an asset sale, it should invite other bidders. Indeed, rumour has it that a lot of parties have approached BRDB about buying just the BSC. Having other bidders would probably help BRDB to get more money which would also benefit its shareholders.

    Industry executives also say that shopping malls are currently in demand by local and foreign investors. In May, Hong Kong's Cheung Kong Group bought three Malaysian malls for more than RM400 million.

    Another important question is why would BRDB want to offload assets that provide steady income to the group. It is now a common theme for developers to have that recurring base to offset lean years.

    BRDB's property business made a pre-tax profit of more than RM146 million in 2010, its biggest contributor. Its manufacturing and construction business made pre-tax profits of less than RM3 million last year.

    This means that Ambang or any other interested party must fork out quite a sum to compensate BRDB for lost future earnings.

    In less than two weeks, the board of BRDB will have to decide on Ambang's offer. Although the promise of quick cash is tempting, ultimately, minority shareholders will have to decide since the offer is a related party deal.
And that's another shocker!!!!

Less than two weeks for the board of BRDB to decide???????

What the......

2 weeks to decide?????

Comeon..... are we talking about lobsters here?????

Holy cow!!!!

And best of all, the price is yet to be determined!!!!!!!!!!!!!!!!!

How can la!

Come on Bursa.... what kind of stock exchange is this???

2 weeks to decide this deal and no pricing?????

If I am on the BRDB board, I would tell the board where to stick this proposal ........


Tuesday, September 06, 2011

Recommended Reading On PMI And MUI

Here's a highly recommended posting: MUIB and PMCorp: a horrible deal from the past

Friday, September 02, 2011

And What About The Promise Made By Masterskill CEO?

I always do not like it when the CEO comes broadcasting on the local media suggesting that their shares are cheap and so on and that they (the CEO) would most likely to buy/invest more into the company.

Of course, the stock gets some boost from such an endorsement but after some time, perhaps some market players would have already forgotten about it, the talk appears more than empty promises.

And this is where I would like to raise the question.

In such incidents, are these CEO promises nothing but empty promises or perhaps our local stock market gatekeepers should ask the simple question.

Are those promises nothing but cheap marketing gimmick to boost their share price and a misleading statement to seduce the investing public to buy more of their shares?

Well, I do hope nobody would ask me what's wrong with issuing misleading statements to the investing public.

For it makes an utter mockery of the stock exchange and imagine the ensuing chaos whereby CEOs are granted the freedom to mislead the investing public with whatever statements they wish to make.

Yes, I find it strange and sad that we do not see censorship on CEO making such wild statements.

Let's examine this posting made on May 2011: How Now Masterskill?

Let me reproduce the entire article here:


So we have the Green Packet boss and management who had contiuned talking about being EBITDA positive since Feb 2008. ( refer And Green Packet Says The Magic Word Once More )

And then we have the KNM boss and his MBO. (refer KNM: Are you IN it to win IT? Or are you IN it to LOSE IT??? )

Today I noted one of the big loser is MEGB. It's currently down some 4.1%.

The chart is coloured specially for a reason.

It represents the period since MEGB's boss gave an interview with Star biz: Masterskill CEO may raise his stake in company.

Friday February 18, 2011
Masterskill CEO may raise his stake in companyBy LEONG HUNG YEE

KUALA LUMPUR: Masterskill Education Group Bhd group chief executive officer Datuk Seri Edmund Santhara is considering to up his stake in the group.

In a filing with Bursa Malaysia on Wednesday, the education-based Masterskill said Edmund, who owns some 90.6 million shares, or 22.1% stake in the company had announced his intention to deal in his securities in Masterskill.

“(I'm) looking at purchasing at this price,”
Edmund said when contacted by StarBiz yesterday.

However, he said he could only buy the shares today as per Bursa Malaysia rules.

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

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

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

The analyst said most companies undertake share buybacks if they believe their shares are undervalued, or to send a signal of confidence in the company.

Masterskill, which raised RM771.3mil from its initial public offer (IPO) in May 2010, has succumbed to selling pressure yesterday.

The counter fell to a record low since its listing after Fidelity Management and Research (FMR) LLC, the parent of Fidelity Investment, sold 280,000 shares in the former.

The counter fell 8 sen, or 4.32%, to RM1.77, its lowest since its listing on May 18, 2010.

However, Edmund remains unperturbed by the divestment by FMR.

“It's a simple portfolio investment, so it's normal. The company fundamentals remain strong,” he said.

Edmund was confident its share price would stabilise soon. “As the company is good, the price will soon stabilise after the seller is gone, mainly Fidelity Investments,” he said.

FMR, one of Masterskill's substantial shareholders, has been trimming its stake in the education group since October. Following the disposal of 280,000 shares, FMR held a direct stake of 20.6 million shares, or 5.02% in Masterskill.

Dealers attributed the price slide the stock has fallen some 30 sen from its one-month high of RM2.34 on Jan 13 mainly to the recent selling pressure. However, they believed the selling might not be done as yet.

As at Sept 30, the nursing and allied health sciences education provider has 17,613 students. It posted a net profit of RM26.2mil for the third quarter ended Sept 30 on revenue of RM80.7mil.

The education group is due to announce its fourth quarter ending Dec 31, 2010 financial performance tentatively next Wednesday. Bloomberg's consensus estimates expect Masterskill to post RM104.6mil in net profit for the full financial year ended Dec 31, 2010.


Let's look at that chart again.

The coloured area showed roughly the preiod when MEGB had been trading below 2.22 - remember 'Last December, he told StarBiz that the share price then of RM2.22 was not “justifiable” for a firm that made about RM100mil in net profit annually' and then on Feb 2011, he said 'anything below RM2 doesn't justify keeping the company listed,”

MEGB now trades at 1.85.

And if I am not mistaken, there's isn't a SINGLE buy transaction done by the boss.

Doesn't it makes you wonder?

Why did he on Feb 2011 tell out loud to the local investing public that he intends to purchase shares in MEGB?

Where are the share purchases since?

Is talk really so cheap?


So let me ask a simple question. Since Feb 2011, there was ZERO purchase of shares in MEGB announced by Masterskill CEO.


How could he make that promise on the local media and fail to keep it?

Is it a question of empty promise? Or is there an intend to mislead?

Think about it...

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

If an investor trusted Edmund and purchase shares of Masterskill back on Feb 2011, how now?

Masterskill last traded at 1.18 today!


My one naive wish?

I wish that CEOs shows MORE RESPONSIBILITY  when they make statements about their shares when making a press interview.

I feel it's not right if any CEO makes any misleading statements to the press.

I understand that as an CEO they are probably rich enough but there are some of the investing public who are trust what they read in the press. I do hope the CEOs don't make a fool out of these folks and their precious hard earned money. Money which required some serious blood, sweat and tears to accumulate.