Saturday, May 30, 2009

Would Current Trade Protectionism Issue Hinder Global Financial Recovery?

Would Current Trade Protectionism Hinder Global Financial Recovery?

This is the issue brought by UK's prime minister, Gordon Brown,
Gordon Brown urges focus on repairing world trade

  • The prime minister said trade was the "most serious casualty" of the global financial crisis and its collapse the "most immediate issue we face".
    Writing in the Wall Street Journal, Mr Brown called for renewed efforts to ensure that trade barriers are not erected by countries trying to protect their economies, and called for a fresh push to finalise a new world trade agreement

    He said: "The simple truth is that trade is the most serious casualty of the global financial crisis, with a vicious circle emerging of falls in exports leading to falls in production and rising job losses leading to further falls in consumer demand.

    "We used to think that the countries most affected by the global financial crisis would be those with the largest financial sectors.
    "But it has become increasingly clear that the countries hardest hit are those most reliant on exports.

    "That is why all major economies need to do whatever is necessary to support growth this year and next, managing their economic policies to maintain global demand as we make the necessary adjustments towards achieving balanced global growth."

And it does not help when we hear Buy American. Even the Canadians aren't too happy. Their International Trade Minister Stockwell Day blasts `Buy American' movement

  • ``If this continues - the Buy America provisions - people everywhere are going to get hurt,'' Day told reporters after his speech. ``Workers will be hurt in Canada and the United States, and we want to see this turn around.''

    Day said the Harper government would like to see U.S. President Barack Obama sign an executive order overruling a decision by Congress to expand Buy American rules that bar Canadian companies from bidding on $787 billion US worth of economic-stimulus projects.

    The fallout is already being felt in Canada, as some municipal and state governments are prohibiting Canadian firms from bidding on lucrative infrastructure contracts.

Professor Michael Pettis editorial is worth reading The coming of a US savings culture? as he highlights the trade frictions.

  • To continue on trade-related issues, I thought I would refer to an article in last week’s Financial Times with the ominous title “US lawmakers to revive China tariff bill.” According to the article:

    A group of Republican and Democratic lawmakers will on Wednesday revive a bill that threatens to raise tariffs on Chinese goods to punish the country for what they call “currency manipulation”. Highlighting the protectionist sentiment within Congress, the bill would let companies apply for tariffs on imports from countries deemed to be deliberately undervaluing their currencies to be more competitive. China is its main target.

    “By illegally subsidising its exports through the undervaluation of its currency by 30 per cent or more, China distorts the gains from trade, creates barriers to free and fair trade, harms US industries and has destroyed millions of US jobs,” those sponsoring the bill said in a statement.

    Their move comes as countries across the world consider protectionist trade rules in the face of recession. Measures such as anti-dumping investigations rose 18.8 per cent in the first quarter of this year against the same period in 2008, according to research by Chad Bown at the Brookings Institution, with China’s exporters the target in two thirds of those cases

    As I have said many times before, I am very pessimistic about our ability to prevent a sharp rise in trade friction and an equally sharp contraction in international trade. The OECD website is currently running an article called “World trade set to fall 13 percent, OECD urges governments to avoid protectionism” in which they claim that world trade will drop 13% from 2008 to 2009. Not surprisingly China is worried, and today’s People’s Daily discusses one of the now-familiar response:

    Chinese Premier Wen Jiabao announced Wednesday that China will shortly send another buying mission to the European Union (EU) to increase imports from Europe. The Chinese trade promotion mission sent to the EU immediately after Wen’s European tour in January had produced positive results, Wen told reporters at the end of the 11th summit between China and the European Union (EU).

    “China is ready to work with the EU to further promote mutual investments, enhance cooperation in small- and medium-sized enterprises, trade facilitation, science and technology, transportation and post, in an attempt to fight all forms of trade and investment protectionism,” said Wen. He expressed the hope that the EU will loosen control over export restrictions on high-tech products and nurture new growth potential in economic and trade cooperation in order to further promote China-EU trade.

    In spite of the good-will generated by these buying missions (and I am not sure how much good will this really creates — my European corporate friends are extremely cynical about these missions), I don’t think there are a lot of warm and fuzzy feelings about trade anywhere in the world just now. The various claims by interested parties don’t seem to be making the prospects very bright.

    To show how confused the debate has become, and how unlikely we are to see a good resolution, I recently participated in a panel with a Chinese economist from a leading local investment bank who gave an impassioned argument against financial protectionism in the US. Among her claims were that China is totally open to foreign investment whereas the US and the West are almost wholly closed to Chinese investment which, she seemed to think, was extremely unfair. This is a claim I have heard so often in China that I am worried that it has become entrenched in local thinking.

    The economist argued as evidence of this unfairness that that any foreigner could start a joint venture in China, or engage in any form of FDI, whereas the opposite was almost impossible. But this is mistaken on many counts. First of all, the restrictions on Chinese investments abroad have not been on FDI or other related start-ups and joint ventures. They have occurred when Chinese companies tried to buy large, existing companies that were considered, rightly or wrongly (and more often wrongly, I think), strategic assets.

    But, and contrary to what the economist claimed, foreign purchases of equivalent Chinese assets are far more restricted. Almost every large company in China that a foreigner has tried to purchase has been prevented on the grounds of strategic interest, even some amazingly bizarre recent cases, and generally speaking most foreign companies don’t even try to buy large companies in China because everyone expects that transaction automatically to be turned down by the regulators. China, for example, would have never even considered anything similar to the purchase of IBM by Lenovo, and so no foreign company wonders about the possibility.

    On the other hand, it is true that foreigners can fairly easily start new companies, enter into joint ventures in China (well, fairly easily – a lot of industries are off limits), and otherwise engage in FDI, but there are likewise almost no restrictions for Chinese investors in the US or elsewhere in the West to do the same. Any Chinese company that wants to start a company in the US from scratch can do so, with very few restrictions that would not apply to US or other fd heeoreign investors.

    The point is that many Chinese sincerely believe that the restrictions facing their expansion abroad are much more onerous and stringent than the restrictions facing foreigners in China. Foreigners, of course, sincerely believe the opposite. Both sides feel aggrieved. Regardless of who may be right, the fact is that these very sincere beliefs make accommodation difficult

And here is OECD views. World trade set to fall 13 percent, OECD urges governments to avoid protectionism

  • Speaking at a meeting in Brussels to present a new OECD publication on trade policy, International Trade: Free, Fair And Open?, OECD Director for Trade and Agriculture Ken Ash warned that government actions to discriminate against foreign goods, services, firms or workers “could have a devastating effect in terms of prolonging and deepening the recession.”

    1. Consumers would be hurt by higher prices and reduced choice.
    2. Domestic industries would face higher input costs, as a huge amount of trade today is in intermediate goods and services.
    3. Exporters would be penalised twice: through higher costs and through retaliation from other countries. The net effect on the economy would be even bigger job losses than otherwise.

And on the Russian front Protectionism hinders global trade

  • May Russia's First Deputy Prime Minister Viktor Zubkov said Russia would apply protectionist measures in agriculture.

    "Most countries are using such measures to protect their agriculture. We cannot allow our agriculture to be left without such protection," he said.

    Measures to protect Russian agriculture will be discussed at the World Grain Forum in St. Petersburg on June 6-7, 2009.

    Not only Russia is focused on agriculture. Europe, the Untied States and Canada are taking extraordinary measures to help their farmers. Assistance to farmers amounts to 16 kopecks per ruble in the United States, 32 kopecks in the European Union, and only 6 kopecks in Russia. Only countries with a more favorable climate, such as Australia and Brazil, spend less on their farmers.

And just a couple of days ago. Japan warns on global rise in protectionism

  • TOKYO (AFP) — Japan warned of rising protectionism and unfair trade practices amid the global downturn in a report Thursday, raising concern about a recent "Buy American" plan and China's stricter IT rules.

    "Amid the serious economic crisis, protectionist moves are continuously occurring in countries around the globe that are aimed at securing jobs at home," the trade ministry said as it published the annual report.

    The ministry said it would prioritise resolving moves by its top trade partners China and the United States as well as India and Russia, and listed 118 policies and measures worldwide that it said restricted free trade.

    The government report pointed to the controversial "Buy American" clause and criticised China's plan to require foreign IT companies to disclose key information for a variety of digital products.

    The report also listed moves by India to levy tariffs on imports and by Russia to raise tariffs on vehicles.

    Earlier this year, US President Barack Obama came under fire for including a clause that said new infrastructure projects must use American-made manufactured materials in his economic stimulus package.

    The clause was later softened with a provision that procurements would have to be in line with Washington's international free trade obligations.

    "It is regrettable that the United States established such a clause of preferential procurement for national goods," the Japanese report said, adding that the ministry would closely monitor further developments.

    Meanwhile, China has said its inspectors would start to examine and certify 13 types of imported IT products, including anti-hacking software, raising fears overseas Beijing would use the process to learn high-tech trade secrets.

    Under pressure, China recently postponed the implementation of the rules from this month to May 2010. It also said the certification would apply only to government deals, not all commercial sales.

Are Things Looking Good As Baltic Dry Index Closed At 3494??

Some articles I was reading on the Baltic Dry Index. Freight rise is unsustainable: John Kemp

On the issue of the fright rise, Kemp argues that..

  • But there are good reasons to think record ore imports, and the strength in freight rates, will not prove sustainable.
    Inventories at the main ports have risen almost 30 percent from 58 million tonnes to 75 million tonnes over the last three months. Stocks at the two largest ports on the Shandong peninsula are close to maximum capacity.
    Volumes will have to slacken at some point this summer, and when they do, freight rates will fall back.

Anyway what caught my attention was Kemp's reasoning on why China is buying iron cores like crazy.

  • As ore prices fall, China's high cost mines, which produce a relatively low-grade ore, are struggling to compete with lower-cost competitors in Australia and Brazil. The fall in global ore prices, which favours overseas production, is being partly offset by a rise in carriage costs.

Hmmm.. isn't this yet another evidence that Made In China Products No Longer The Cheapest!

In an other article, Baltic dry freight index at eight-month high (yeah the Baltic soared again), many do thinks that the rates would fall soon.

  • But analysts have questioned whether the rally can last as iron ore stockpiles in China have been rising while demand for steel remains sluggish. Shipping costs have also moved up.
    Inventories at China's main ports have risen almost 30 percent from 58 million tonnes to 75 million tonnes over the last three months, which has given momentum the Baltic index's rally.
    Stocks at China's two largest ports in the eastern province of Shandong are close to maximum capacity.
    "Iron ore imports can't continue at the same pace," said Maria Bitri, analyst with shipbroker Galbraiths. "It just cannot be sustained."

In another article Bulk shippers draw cheer from Baltic index rally

  • By Swati Pandey

    MUMBAI (Reuters) - Analysts and investors are turning optimistic on Indian shipping companies, thanks to the Baltic Dry Index's surge since early April, but officials say high capital costs will continue to be a worry for the industry.

    The London-based index, which tracks costs to ship key commodities, has risen over 18 percent so far this week, surpassing 3,000 points, for the first time since October 2008.

    It has more than doubled since early April, according to Reuters data, on rising merchant trade, especially iron ore from China and some easing of trade financing by banks.

    "There is demand from China. Now letters of credit are also being issued easily (by banks to shipping firms), unlike a few months back. Over the past one week, things are looking better," Kapil Yadav, an analyst with Dolat Capital, said.
    Indian shipping firms were reeling under the impact of a global economic slump on commodity trade, but the stimulus packages announced by the various economies has led to a revival of freight demand, analysts say.

    Morgan Stanley this week upgraded its view on the global commodity shipping industry to "attractive," saying it is turning incrementally bullish.

    "There was some inventory build in January-March, but since then inventories are leveling off, supporting our view that the dry bulk market has entered a period of sustainable recovery," analyst Ole Slorer wrote in a research note to clients.

    Religare Hichens Harrison this month upgraded its rating on India's Mercator Lines to 'buy' due to "improving sentiments in the dry bulk market, where the company has maximum exposure', while ICICI direct rated it an 'outperformer'.

    Shipping stocks also reflect this new-found optimism, outperforming the 30-share BSE index which rose 47 percent between April 1 and May 28.

    Shares in Mercator Lines and Essar Shipping have more than doubled, Shipping Corp of India has risen 73 percent while GE Shipping about 50 percent in the same period.


    Although shipping costs have surged from their lows hit in late 2008, new vessels will still make losses due to high capital and interest costs and high depreciation, officials said.

    "Even at these rates, definitely, there are losses," a senior official at state-run Shipping Corp of India said.
    "Only the older bulk carriers which are 20 years or so old will start breaking even at the current market price."

    Companies are still preferring to operate vessels on the spot as the market is still very volatile to lock-in an asset for long-term, officials and analysts said.

    Capesizes or large cargo vessels are earning over $20,000 a day currently compared with $150,000-$200,000 a day in late 2007 while the smaller ones - panamaxes and handysizes - charge between $14,000-$19,000 a day, around their break-even cost.

    "Freight rates are going up so shippers are getting higher revenues. Its still not time to lock-in. This spurt is mainly because of China and how long will it last we don't know," an analyst with a Mumbai-based brokerage, who has a neutral rating on GE Shipping, said.

Lastly do read again... The Fool's Game In The Baltic Dry Index


Commentary From Tim Wood

Interesting editorial from Tim Woods on Warning! Counter-Trend Moves Spark False Hopes

  • But, the technical data I’m looking at tells me that the bottoms seen in these markets were not THE BOTTOM, but were rather temporary bottoms. The advance out of these bottoms are counter-trend moves and should ultimately be followed by still lower prices. Now, that being said, I must also say that my cycles work anticipated and allowed me to identify each of these bottoms as they occurred and this is all documented in my newsletters. At present, I must also say that my intermediate-term Cycle Turn Indicator remains positive, which means that as of this writing these counter-trend moves are still intact. In my work, the key to identifying the top of these counter-trend moves is my statistical data and the intermediate-term Cycle Turn Indicator. Once this indicator turns the counter-trend moves should be done. The danger that I see with these counter-trend moves is that they have fostered false hopes. These rallies have offered people the opportunity to recoup some of their losses. But, the longer a particular market rallies the more the false hopes set in. This in turn allows the wish to begin to father the thought. It is the greed to recover the losses that will ultimately cost the average investor even more in losses. As the advance continues the greed sets in and people wish for more and more of an advance as they hope to further recoup their losses. In the end, the bear market will take the gift that is has given by these counter-trend rallies back. Yes, in the end most investors will find themselves with even larger losses than they had at the previous bottom. The greedy public does not recognize these moves as counter-trend and they will sit on their wishes as the market turns back down and their recovered losses turn into yet bigger losses. One does not have to be blindsided by the coming downturns. It is indeed possible to identify the pending downturn out of these counter-trend moves with the proper technical tools, such as the time proven intermediate-term Cycle Turn Indicator. Sound unbiased technical methods are the only way I know to navigate the ongoing financial disaster that we are dealing with. The politicians, Republican or Democrat, nor the mainstream media warned you of the previous declines because they did not know they were coming and even if they did they would not have told you. Do you really think they would tell you anything any different this time around?

AirAsia Again

Maverick said... (refer blog posting Let's Cheer AirAsia's Best Quarter Ever and AirAsia Announces Massive Profits! )

  • The results look good, although the story about the derivatives is very strange.

    Interesting is that at the same time there is an announcement from Air Asia:

    "The extension of time was made in view of a proposed corporate exercise to obtain shareholders’ approval at an Extraordinary General Meeting to be held on the same date as the AGM for inter alia, financial assistance to associated companies and general mandate for recurrent related party transactions of revenue in nature. The above is subject to the formalisation of the respective definitive agreements and further announcements will be made to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) pursuant to paragraph 8.23 (2) (c) and Chapter 10 of the Listing Requirements of Bursa Malaysia."

    Air Asia has more or less parked losses of hundreds of millions of RM in its companies in Thailand and Indonesia, without accounting for it. It does however gave huge loans to these same companies. In my humble opinion, you cant have both, either you top up your investments in those companies (and thus write of the losses so far), or you write off your loans (since these companies must have huge negative equity).

    May be the accountants dont like the current situation anymore? It is all vague, but I would not be surprised. If that is the case Air Asia would have to write off 300+ million.

Yes it's indeed very strange for their derivates and I do see your point here.

Anyway couple of other stuffs.

Did you see in the earlier posting I wrote, AirAsia Announces Massive Profits!, AirAsia has now an entry called "Provision for loss on unwinding of derivatives" worth some 151 million in its Current Liabilities section.

And then the forex losses.

I MADE A FLAW earlier when I stated that AirAsia had forex gains. It actually had forex LOSSES! Yeah, I did mention my views are usually flawed, no? :P

Anyway, here's a puzzling thing issue for me. Sorry but I ain't no accountant.

Page 9 of its earnings note.

See how the 90.374million is ADDED back into AirAsia's core operating profit of 165.963 million?

Yeah, that's how I flawed the first time around. Had a quick look and saw some 90.374 was added into the core operating profits, so I naturally assumed it was forex gains!

I am not sure exactly why the forex losses is added into AirAsia's core operating profit.

Any idea Maverick?

Anyway, as it is, I think I have to stress that I believe that AirAsia's borrowings and financial costs is clearly unsustainable. Of course, I could be flawed as usual. :P

3 months ago AirAsia total loans were at 6.690 Billion. In the recent earnings, AirAsia total loans were at 6.934 Billion. And we know the total loans should be increasing.

And these borrowings aren't cheap!

In its February quarterly earnings, AirAsia's bank borrowing costs was 45.918 million.

The below table shows what AirAsia current borrowing cost.

AirAsia's bank borrowing costs is now at a whopping 98.1 million!!!!!!!!!!!!

3 months ago it was 45.918 million!

An increase of over 100%!!!!

And what about capital commitments. In the posting Would You Define AirAsia Debt As A Bubble?, AirAsia total capital commitment then was some 24 Billion ringgit.

Capital commintment as at 31/3/09 is now at 27.2 Billion!!!

I mean, how much more can AirAsia borrow?

And the following comments were interesting for me from Aseambankers report.
  • Unwinding of fleet ownership is key to near-term profits. AirAsia entered into a sale and leaseback agreement for an A320 in Feb 2009, making a RM33m profit. This follows the RM52m gain in 4Q08 from selling two new A320s. This helped ease AirAsia’s stretched balance sheet with a net gearing at 3.7x as at end-1Q09 (end-4Q08: 4.0x).

Resorting to sales and leaseback on new planes? I wonder if the leasebacks is causing AirAsia's bank borrowing costs to increase so much!

I guess I am not too impressed.


FA vs TA: Mine One Better Than Yours One!!

My Dearest Brown Cow,

  • I've yet to meet an impressive person who has needed to impress people - Dr. Brett Steenbarger

That's about sums it all, isn't it?

The need to impress. The need to tell everyone that they are good. And in the stock market, the ever need to insist that their way, the method is the best. Have you not heard the endless, endless, endless talk on Fundamental Analysis (FA) vs Technical Analysis (TA) vs the hybrid FATA way.

Well this posting is different. I am NOT going to tell you which method is the best. :D

Now just for a minute.

Think about the following...

In a stock market, in any stock market, there is a mixture of good stocks (good as in sense that it has the so-called 'fundamental values' - but debates will exist on the branding of such a stock) and also bad stocks ( and just as good stocks - debates will also exist on the branding of which stock is bad! ) and also the so-so average stocks.

That in the stock market there are good and bad stocks.

Is this agreeable?

And on any given day, except on Saturdays and Sundays, any of these stocks can move up and down.

Is this not a fact?

So when a good stock goes up but the TAs missed the stock pick due to mixed technical signals or perhaps the trader was not comfortable with the trading setup seen.

Does this means the trader is lousy for not wanting to trade that stock?

Or in a nutshell, does the trader have to be in every single stock that stands a chance to move higher?

And what about the 'bad, lousy fundamental' stocks shooting for the stars? Not possible? If the investor chooses to forgo the potential possibility of making money in the stock by not to investing in it, does it mean the investor is lousy?

Or in a nutshell, does the investor have to invest in every single stocks that stands a chance to move higher?

How now my dearest Brown Cow?

Could you understand why folks always want to impress others by insisting their method is simply the best?

Or could you understand why when one xyx stock moves up, these folks, with the desire to impress, feels the urge to declare that ** method does not work if ** method does not suggest/recommend a buying position in the stock? For example, a bad, lousy stock moves up, does it make sense to declare that FA does not work if FA does not recommend the buy for the stock?

Now since you know I am always flawed and needless to say I know nothing, perhaps it's best you pay not much attention to what I am mumbling about now and decide for your own good self which method best fits you.

So if FA is good for you and can make money for you, stick to it!
Or if TA is good for you and can make money for you, don't go changing!
Or if TaFa is the only method that makes sense for you, stick to it!


Damn.. accidently clicked on the 'publish' post!

I could go on and on and on...

Perhaps it would be good also to understand really what each method is for.
Perhaps it would be good also to understand why and when the method won't work.

And needless to say, have you not seen folks declaring THE method to be lousy when not realising that perhaps they are flawed themselves?

Not possible? Me? I have seen it way too often. ;)

Using a fishing rod to fish a cow, just doesn't work! LOL! Sorry for the pun, my dearest but I think you do understand what I am trying to say here.


Friday, May 29, 2009

Let's Cheer AirAsia's Best Quarter Ever

As expected, the local media bangs the gong on AirAsia Announces Massive Profits!

What can one expect when the CEO is the one doing the goating.

Business Times: AirAsia has best first quarter

  • The budget carrier's net profit grew 26 per cent to RM203.15 million in the three months ended March 31 2009

    Busget carrier AirAsia Bhd (5099)is back in the black with a net profit of RM203.15 million in the first quarter of 2009, after posting two consecutive quarterly losses previously.

    In the three months ended March 31 2009, its net profit grew 26 per cent as revenue increased 33 per cent to RM714.2 million due to better ancillary income and stronger passenger growth.

    "This is our best first quarter ever and demand has continued in the second quarter," AirAsia group chief executive officer Datuk Seri Tony Fernandes told reporters at its quarterly briefing in Sepang yesterday.

    Fernandes said AirAsia's outlook was positive as passenger growth continued. Seats sold year to date are up 21 per cent to 5.2 million.

    "There is still demand if the price is right. The growth comes from low fares and we are well positioned because of our cost structure and marketing abilities," he said.

    AirAsia targets to carry some 24 million passengers by the year-end and capture half of the market. Currently, it has 44 per cent market share.

    The budget carrier will also see further growth with the liberalisation of air service between Malaysia and Singapore from June 1.

    "We will be plying routes to Singapore from Penang, Langkawi, Miri and Tawau," Fernandes said.

    He added that capacity and flight cuts by Asia's legacy carriers had created opportunities for AirAsia.

    Owing to the lower traffic at many Asian airports, they are competing to secure AirAsia's business on more desirable terms for the airline, he said.

    AirAsia saw its core operating profit surge to RM166 million in its first quarter, almost six times that a year ago.

    Despite passenger travel seeing a decline globally, AirAsia has beaten all odds as its passenger numbers increased 21 per cent to 3.1 million. Load factor, however, declined 2 per cent to 70 per cent.

    Ancillary income more than doubled to RM91 million, representing some 12.8 per cent of total revenue.

    "The ancillary income will act as our buffer for future fuel increases as additional revenue from ancillary income is equivalent to US$30 (RM106) recovery in fuel price," Fernandes said.

    Associate airline Thai AirAsia delivered operating profit of RM30.5 million, while its Indonesian affiliate posted RM11.5 million loss.

On Star business: AirAsia profit soars on high passenger growth

  • Friday May 29, 2009
    AirAsia profit soars on high passenger growth

    Budget carrier’s operating profit jumps 591% to RM166mil in first quarter

    SEPANG: AirAsia Bhd has posted an unaudited operating profit of RM166mil for the quarter ended March 31, a 591% jump against the previous corresponding period.

    Group chief executive officer Datuk Tony Fernandes attributed the increase to robust passenger growth and ancillary income.

    “These are the best first-quarter results ever by the company although we are facing a global economic slowdown and the A (H1N1) flu outbreak,” he said at AirAsia’s results briefing yesterday.

    Revenue for the quarter grew 33% to RM714mil from RM525mil previously.

    Fernandes said passenger numbers for the period grew 21% to 3.1 million as the carrier had successfully stimulated the market, captured share from competitors and launched new routes.

    Ancillary income, a key area for growth, more than doubled to RM91mil due to the strong support of new services, including “Supersize” baggage and “Pick a Seat” assigned seating services launched during the period.

    On overseas operations, Fernandes said Thai AirAsia had performed exceptionally well to counter the weakening domestic consumer sentiment as a result of the internal political disturbances. It posted an operating profit of RM30.5mil for the period.

    AirAsia Indonesia, however, produced a small loss of RM11.5mil, he said.

    On the market outlook, Fernandes said although many airlines cut capacity, terminated underperforming routes and retrenched staff, the situation provided unique long-term opportunities for AirAsia to grow rapidly, open new markets, win market share from competitors and speed up the pace of the industry consolidation.

    “Our strategy to continuously conduct aggressive promotions and enhance customer service has been successful in driving strong traffic growth,” he said.

    He added that AirAsia would continue to expand its market share as more people switched from legacy carriers to fly with AirAsia.

    He said that based on forward booking trend in the second quarter, the underlying passenger demand remained robust and the ancillary income was also growing strongly.

    In another development, AirAsia has been given extension of time to table its financial statements for the financial year ended Dec 31, 2008.

    In a filing with Bursa Malaysia yesterday, AirAsia said the Companies Commission of Malaysia, via its letter dated May 20, had granted the company time extension to table its financial statement at its AGM on or before Aug 31.

    The low-cost carrier said the extension was made in view of a proposed corporate exercise to obtain shareholders’ approval at an EGM to be held on the same date as the AGM for inter alia, financial assistance to associated companies and general mandate for recurrent related party transactions of revenue in nature.

    AirAsia said it would issue its annual report on or before June 30 to comply with Bursa’s listing requirements.

    This move was to reduce substantial administrative time, inconvenience and expenses associated with the convening of general meetings on an ad hoc basis, it added.

No mention about the one-off Rm48.53 million item gain?

No mention on how its earnings of 203 million was boosted by its deferred tax 'gain' of 79 million?

No mention of the forex gain LOSS of 90 million?

No more blaming Exceptional item drags down AirAsia Q4 results?

(Oops.. silly me.. there are no losses now... so no need to mention exceptional items. :D )

Truly incredible because aren't these exceptional items that drove AirAsia earnings to its best ever earnings?

How now my dearest Brown Cow?

Since everyone now can fly, would you want go flying? :D

See also last nights posting: AirAsia Announces Massive Profits!


Older side note.

March 2009.

  • “This ‘strong’ performance is purely ‘technical’ as the massive unwinding of the out-of-money fuel hedges and interest rates during 4Q (of which losses were regarded as ‘exceptional’) means AirAsia could immediately in 4Q benefit from the much lower spot fuel prices and current interest rates,” RHB Research added.It said that the airline’s clean up of its books could additionally put more strain on its already stretched balance sheet. (taken from article Differing views on AirAsia )

Update On Sino Hua-An

Sino Hu Ann announced its earnings last night. As expected losses were made.

I had blogged on this stock several times already.

  1. Regarding Sino Hua-An
  2. More On Sino Hua-Ann
  3. Who wants Sino Hua-An?
  4. Still Who Wants Huann?
  5. Sino Hua An Q3 Earnings.

And the last one I wrote was Massive Losses Posted by Sino Hua-An

I was more curious now on the issues I posted on that blog posting. Let me reproduce the table on the issues mentioned.

See the much higher trade receivables?
See the much lesser bank balances?
See the much higher trade payables? (why is Sino Hua-An not paying its trade creditors?)

Here's a screen shot on the same area from Sino Hua-An's latest earnings.

Let's look at issues again.

See the much higher trade receivables? Much improvement! Receivables only totals 78.327 million compared to 154.635 million the last quarter.
See the much lesser bank balances? Bank balances improved to 45.733 million compared to 28.754 million the last quarter.
See the much higher trade payables? (why is Sino Hua-An not paying its trade creditors?) Payables rose to 142.098 million compared to 95.240 million. Now this massive increas would put a doubt on the bank balances issue. Reasoning is simple. If one does not pay its creditors, than one surely will have more money. However, needless to say, all debts have to be paid.

Given these 'facts', would you 'invest' in this stock?

In the posting, Would You Have A Punt On The Steel Stocks?

I highlighted a newsclip where RHB mentioned.

  • “While we anticipate Sino Hua-An to report a dismal first quarter in financial year 2009 (1QFY2009), we view the company as the best proxy to invest in the booming steel sector in China, given that the demand for metallurgical coke is tied directly to China’s steel output,” said RHB.

    RHB has an indicative fair value of RM3.02 for Ann Joo, RM1.25 for Kinsteel and 60 sen for Sino Hua-An.

Fair value of 60 sen for Sino Hua-An and as mentioned, they HAD already priced or discounted in the possible dismal earnings.

Priced in or priced up...

Let's see would you buy? :p2

The bad earnings, the losses are as expected. Hua-Ann balance sheet looks like there are improvement.

Let's see.. Sino Hua-an closed at 46 sen yesterday. Let's have a look and see how Sino Hua-an has been trading lately.

Like ALL the other steel stock, Hua-An had rebounded from its March lows. (ps did you also see the massive losses posted by Malaysia Steel Works and Lion Diversified?)

But its March lows was 17.5 sen! It's now 46 sen!


But RHB said fair value should be 60 sen!

How now my dearest Brown Cow?

Another buy high sell higher strategy?

Thursday, May 28, 2009

AirAsia Announces Massive Profits!

On the Financial Edge: AirAsia post net profit RM203.15m in 1Q

  • KUALA LUMPUR: AirAsia Bhd’s earnings rose 26% to RM203.15 million in the first quarter, up 26% from RM161.28 million a year ago.

    It said on May 28 the higher earnings were due to higher yields, lower unit costs and one-off Rm48.53 million item gain. Revenue rose 33% to RM714.18 million from RM535.32 million.

    Yield rose 12% to 13.7 sen per ASK, while unit costs fell 18% to 8.6 sen per ASK while load factor declined to 69.7%.

On Forbes: Budget carrier AirAsia's profit jumps 26 percent

  • Budget carrier AirAsia's profit jumps 26 percent
    By EILEEN NG , 05.28.09, 06:42 AM EDT

    Budget carrier AirAsia said Thursday its net profit surged 26 percent in the first quarter from a year ago, reflecting the success of its aggressive network expansion amid the global economic slump.

    AirAsia rebounded from two straight quarterly losses to a record a profit of 203.2 million ringgit ($56.4 million) for the quarter through March, it said in a statement.

    Revenue increased 33 percent to 714 million ($198 million), buoyed by a sharp rise in passenger volume and increased contribution from ancillary income, it said.

    "AirAsia once again delivered record profit growth despite operating in one of the most challenging economic environments," Chief Executive Tony Fernandes said in a statement.

    He said the airline carried 3.15 million passengers during the period, up 21 percent from a year ago, showing that it had successfully stimulated the market to seize share from competitors.

    AirAsia accounted for 44 percent of passenger traffic at Malaysia's main airport during the quarter.

    "We're adding routes, increasing frequencies, hiring more staff, enhancing our capabilities and growing our airline...our strategy to continuously conduct aggressive promotions and enhance customer service has been successful in driving strong traffic growth," he said.

    AirAsia said it expects passenger growth of 15 to 20 percent this year despite the economic crisis. In 2008, it carried 11.8 million passengers, up 22 percent from a year ago.

    Last year, AirAsia posted its first-ever loss of 471.7 million ringgit ($131 million).

    Fernandes said passenger demand remained robust based on forward booking trend in the second quarter.

    "The dramatic cuts in flights and capacity by many of Asia's legacy carriers have resulted in severe traffic decreases at many of Asia's airports. This is creating enormous opportunities for AirAsia," he said.

    The carrier, which lost money in the previous quarter after unwinding fuel hedges and interest rate swaps related to aircraft loans, said it is now buying fuel on the spot market and enjoying low prices.

    As of March, it said it has a fleet size of 74 operational aircraft and has expanded capacity by 19 percent as it launched seven new routes in the first quarter.

    AirAsia said its Thai affiliate posted its best quarterly profit of 298 million baht ($8.5 million) during the January-March period, thanks to increased sales as its rivals scaled back and canceled flights.

    Its Indonesian unit is still in the red but losses have narrowed by half to 37 billion rupiah ($3.2 million), it said.

Everyone knows I am such a fan. :D

Net profit of 203.150 million woh!

  • "AirAsia once again delivered record profit growth despite operating in one of the most challenging economic environments," Chief Executive Tony Fernandes said in a statement.

Let's see how AirAsia has delivered. :D

Firstly as stated on the Financial Edge article.

  • It said on May 28 the higher earnings were due to higher yields, lower unit costs and one-off Rm48.53 million item gain

Why wasn't this mention on the Forbes/Associated Press article?

On 27 February 2009, I wrote AirAsia Reported Massive Losses Again!!. Of course, AirAsia were quick to stress on the media that Exceptional item drags down AirAsia Q4 results

Now that one time off rm48.53 item gain wasn't the only thing.

Of course there is the forex gain of 90.374 million. (sorry made an error - should be losses!)

And then of course there is the deferred tax of 79 million. You can see how the deferred tax is added into the earnings.

Back on Feb 27th, on a Dow Jones newswire, the following was said.

  • KUALA LUMPUR (Dow Jones)--AirAsia Bhd (5099.KU) no longer has any fuel hedges, after it has unwound its positions for the remaining hedges in the fourth quarter ended Dec. 31, Group Chief Executive Tony Fernandes said Friday.

    "We have decided to unwind our hedges in the fourth quarter...(We have) no more fuel hedges," Fernandes said in a conference call.

    In the fourth quarter, AirAsia took a hit via a MYR426 million exceptional loss relating to the unwinding of its derivative structures, which included fuel hedging.

    This resulted in the budget airline posting a quarterly loss of MYR176.9 million, compared with a MYR245.7 million net profit a year earlier.

    Fernandes said the airline doesn't intend to re-hedge its fuel requirements until volatility stabilizes and is "looking at doing something" about fuel hedging in 2010 or 2011 but hasn't firmed up plans yet.

    AirAsia also "decided to take some short-term pain" by unwinding its currency hedge and interest rate swap, which it had taken at around 4.5% to 5.0%, as it felt that those should be replaced at lower rates that can be obtained in the market currently.

So they got burned.

And guess what's happening now?

Waaa.. old habits die hard, no? Hedging all over again. Serial hedger ah? :D

  • As at 31 March 2009, the Group has a net sell Put position of 2.2 million barrels at prices of USD 35/barrel and USD 42/barrel for the period up to June 2010. These net sell positions will expire progressively up to June 2010. As at end of today (28 May 2009), the net sell position is 1.6 million barrels.

Err.. sorry for being such a noob but is AirAsia making money now with these hedges?

And Maverick, I know you will be reading this. Did you see the following new entry in its balance sheet.

And oh....

Congratulations to AirAsia for posting Massive Profits! You have delivered so well, under such difficult operating conditions.

Jolly good job!

15 May 2009: OSK Said Buy Lion Industries. Target Price 1.90

27/2/2009 Quarterly rpt on consolidated results for the financial period ended 31/12/2008

Lion Industries lost some 45.9 million.

Lion Industries just reported its earnings.

Of course Lion Industries quarterly earnings caught my attention. It was one of OSK featured stock in its Long Steel research report dated 15th May 2009.

Look at the nice price target of 1.90 given by OSK.

Lion Industries closed at 1.35 today.

The above snap shot showed how Lion Industries, the stock, had performed the past 3 months.

It was just on 17th March 2009, Lion Industries was trading as low as 0.57.

And on May 15th 2009, Lion Industries soared to 1.27. And it doesn't take a genius to see that the stock had more than doubled what it was trading almost 2 months ago.

But yet, OSK insisted on making a huge buy recommendation on Lion Industries and gave it a rosy target price of 1.90.

Isn't this the typical buy high sell higher recommendation?

Today Lion Industries announced it lost more than 250 million for the quarter!

  • For the nine months of the financial year, the Group posted a lower revenue of RM3.6 billion compared to RM4.8 billion a year ago. Demand for steel products of the Group was adversely affected by the global economic slowdown. In line with the steep plunge in global steel prices, the Group had recognised a provision for diminution in value of its steel inventories amounting to RM440 million.

    The Group recognised a negative goodwill of RM123 million arising from the acquisition of Silverstone Corporation Berhad by its listed subsidiary, Lion Forest Industries Berhad.

    After accounting for lower profit from the associated companies and lower finance costs, the Group registered a loss before tax of RM297 million for the period under review against a profit of RM407 million a year ago.

And yes, that negative goodwill from its so called acquisition of Silverstone. Yeah, some might call it bail-out. And since it's a group related transaction, there are many who simply aren't too impressed.

Anyhow, OSK said BUY woh.

Target Price of 1.90....

How now my dearest Brown Cow?

You mau?

Driven By Iron Core, Congestion And Lack Of Ships BDI Soars To 3164

The Baltic Dry Index has closed at 3164!!!!!!!!!


On Bloomberg news:
Baltic Dry Index Exceeds 3,000 for First Time Since October

  • May 27 (Bloomberg) -- The Baltic Dry Index, a measure of shipping costs for commodities, surpassed 3,000 points for the first time since October, buoyed by Chinese demand for iron ore.

    The index tracking transport costs on international trade routes rose 222 points, or 7.6 percent, to 3,164 points, according to the Baltic Exchange today. The measure posted an 18th straight gain, its longest advance in two years.

    Such is demand that shippers “are almost pleading” to hire vessels, Stuart Rae, co-managing director of M2M Management Ltd., a hedge fund group that trades freight derivatives and operates carriers, said by phone today. The rally “is being driven by iron ore, by congestion in China, and by a lack” of ships available for hire in the Atlantic.

    China’s 4 trillion-yuan ($586 billion) package to stimulate its economy “gives hope for a V-shaped” economic recovery there, Sam Walsh, chief executive officer of Rio Tinto Group, the world’s third-largest mining group, said yesterday. Chinese buying is setting a floor for bulk commodities prices, Goldman Sachs JBWere Pty analysts said.

    Rental rates for capesize vessels advanced 12 percent to $56,698 a day, according to the Baltic Exchange. Daily rentals for smaller panamax ships added 10 percent to $20,934. A capesize normally hauls about 175,000 metric tons, while a panamax is half the size.

    “It feels very strong out there,” Michael Gaylard, strategic director at broker Freight Investor Services Ltd., said by phone today from London.
    The supply of capesizes is “really tight in places, so it’s driving some routes higher.”

    Iron Ore

    The Baltic Dry Index advanced fourfold since the start of the year, recovering some of last year’s record 92 percent collapse. China’s iron ore imports ran at a record pace in February, March and April, according to customs data.

    The line of capesize vessels at Chinese ports has climbed to 70 from 33 two months ago, according to data from Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. The carriers are waiting nine days to unload, compared with five on March 25.

    Contracts indicating future freight costs surged. July-to- September forward freight agreements, bets on the exchange’s future price assessments, rose 21 percent to $47,000 a day for rentals on capesizes. Panamaxes gained 16 percent to $21,250.

One Of The Worst Investments In This Period!

Was reading the following blog posting on Temasek and it's wall of fame or is it shame investment in Bank Of America. This is Becoming Hilarious - and Shameful!!

Love the two charts posted.

Some issues worth noting.

  • What else could you possibly deduce from the fact that Bank of America’s shares have surged 74% since our dear Ho Ching & company decided to divest of their BoA shares?

The blogger, : inspir3d, highlights a New York Times article which has some rather strong comments.

  • Regarding Temasek’s decision to sell BofA shares near the low - perhaps sovereign wealth fund managers are really just government bureaucrats masquerading as fund managers? If anyone is going to take a loss on an investment - I’m glad it’s them.
    — Posted by Jay Young
  • Temasek is run by Ho Ching, Lee Kuan Yew’s daughter in law. The GIC, which is the other Singapore Govt SWF is run by Lee Kuan Yew. His son is Prime Minister. No transparency, no accounts. Its a little traditional Chinese family business. Out of their league. They need professionals, and a new business model; not family members.
    — Posted by raoul hernandez

And of course CNBC's Faber Report caught wind of the happening and brands it "One of the worst investments in this period!"

( See also Temasek Admits To Their Terrible Investing Mistake In Bank Of America By Cutting Losses! )

Sell In May And Go Away... Again?

Featured on The Financial Edge: Sell in May and go away

  • Sell in May and go away
    Written by Richard Quest
    Thursday, 28 May 2009 11:14

    There used to be an old saying, “Sell in May and go away”. It was reflective of a much more gentle time in the markets when long lunches were the norm and a man’s word was “his bond”. You could afford to take the long view.

    Today’s financial world is a lifetime away from those lazy hazy days of selling stocks for the spring and summer. Then, it was quite acceptable to say you were taking a proper vacation.

    Now, if you are not immediately contactable via BlackBerry or mobile phone you are considered deficient — a slacker; lazy; someone suspicious; definitely not a team player.

    No matter how much we may fight this, it’s easy to understand why we feel the need to be in such constant contact. Markets trade 24 hours, and what happens in Tokyo affects the London open which can set a tone for when New York kicks in.

    Why do I write about this now? Because this week is the Memorial Day holiday in the United States, the unofficial start of the summer season. And in Europe too, we are going to move into a different mindset as people prepare for long weekends and glorious weeks away.

    Hang on — can you afford to be away ignoring the markets with such abandon? The Dow Jones is still up nearly 30% since its March 9 lows, and if recent movements have taught us anything it’s that profits can evaporate quickly in exceptionally volatile markets.

    So whether the gains we have seen are going to hold in the days of May is anyone’s guess. Last week, on Quest Means Business, Robert Parker, vice-chairman of Credit Suisse Asset Management, told me he thought May and June would see profit taking and fallbacks in the major markets and the next run-up wouldn’t start until the third quarter.

    It is not hard to see why there is pessimism about the immediate future which could suggest, even in these hectic times, there is some sense in the good old-fashioned ways.

    “Sell in May and go away” might still be the way to go, especially for those of you hoping for a peaceful summer season where you can concentrate more on your tan than your trades.

    Remember — nothing in this article is giving advice. Nothing!

    Richard Quest is a CNN correspondent based in London, host of the weekday one-hour programme Quest Means Business (


You might want to see : Is Sell In May And Go Away An Unwise Option This Year?

How now my dearest Brown Cow?

Barcelona 2 Manchester United 0

Barcelona is the 2009 Champions League Champions. They truly deserved it.

United played well below par. United DID NOT challenge Barcelona as there were simply too many missed passes made throughout the game. What a shame.

Congratulations to all Barcelona fans.

Wednesday, May 27, 2009

Update On Parkson Holdings Earnings

Parkson Holdings.

If I remember correctly, many had argued that it was ok to buy Parkson Holdings based on more than 50x times earnings because for Parkson case was special. Special because it had an incredible growth story.

Now what if the earnings growth is gone? Is this not possible?

A couple of months ago, on 25 Feb 2009
Quarterly rpt on consolidated results for the financial period ended 31/12/2008

Parkson announced that it made 104 million.

Today? It's earnings fell to just 75.935 million.

How now?

Still can consider as a growth stock?

Or should one twist and turn and rebrand Parkson as a value stock?


Last November 2008, I wrote A Quick Look At Parkson Holdings Earnings and Reply To Comment On Parkson Holdings and I highlighted the issue on receivables and borrowings.

I wrote the following.....................................


Here's my reason why I think it's unreal.

a. Last I checked, Parkson Holding is a retail business and in the economics of a retailing business, I cannot understand how Parkson can even have receivables. What exactly are they selling on credit? Who OWES Parkson Holdings so much money? And why? I for one cannot see no logic in why a retailer would even have a receivables account!

b. The size of the receivables. At 451.349 million, the figure is insane. It's simply too high! In a short span of 3 months, the receivables jumped 175.804 million!!!!!

Now try not to think about stocks for a moment. Indulge with me for a moment.

Think of a real life normal business where you and your business associate has setup. And imagine you went on a holiday and upon your return, your partner shows you the accounts and you find out that suddenly so many people owe you so much money. How? Wouldn't you not be concerned? Wouldn't you find it so unreal?

I do not know about you but I write what I feel. And in this instance, for Parkson Holdings, I find it so unreal.

Borrowings. I find the amount of borrowings Parkson Holdings is unreal too. Yes, in my flawed opinion, it's in my opinion that Parkson Holdings is too unrealistically high for me to consider Parkson Holdings as an investment grade stock. Do understand that for the borrowing issue, this is my own opinion, which like I said it is obviously flawed, hence, I do hope you take my view points stated here with a pinch of salt. And since I have repeatedly said that I am no investment advisor, I do hope you take all these comments as a mere second opinion and if you disagree, it's your rights to do so.


Let's see the current receivables as reported in Parkson's earnings today.


Receivables is now at 807.282 million!!!!!!!!!!


And the loans?

If the business is truly making good money, why are the loans still increasing?

Its total loans as reported is now some 2.116 Billion! Last November it was 2.061 Billion!

Some would say that the Lion group sure love building up its total loans!

Yeah the earnings growth looks gone. No worries. The loan growth and the receivables growth are still intact!



So don't worry, just be happy and just buy. :p2

Yeah, them wise ones would say all bad news are already priced in!

LCL and Its Dubai Woes

LCL reported its earnings.

As expected not good.

From the company's quarterly earnings notes...

  • Compared to cumulative preceding year corresponding quarter, the Group has recorded lower revenue of 22.19% to RM 80.334 million. This was mainly due to some of the on-going projects have coming close to completion and hence resulted in the lower progress billing to date. The Group also recorded a loss before taxation of RM 16.433 million as compared to profit before taxation of RM9.537 million. The continuous cost overrun of on-going projects in Dubai, mainly due to the prolongation of projects and additional financial cost incurred resulting from slower collection, has negatively impacted the financial performance of the Group.

  • The Group recorded a decrease in revenue of 30.68% to RM 80.334 million as compared to preceding quarter of RM 115.894 million. However, there has been some marginal improvement in the financial performance whereby the loss before taxation recorded narrowed by 22.26% to RM16.433 million as compared to RM 21.138 million recorded in the preceding quarter. During the quarter, the Group has embarked on aggressive collection exercise and has written down some receivables after commercial settlement reached with clients on payment of contract proceed due. The on-going consolidation and scaling down exercise of selective non-profit contributing operations have also contributed to the unsatisfactory performance of the Group.

Hmmm.... "mainly due to the prolongation of projects and additional financial cost incurred resulting from slower collection".. that's the main issue right?

Why is the prolongation of the projects happening? Would the answer be the property market in Dubai crashed!

Why is the slower collection happening? If the property market crashed, wouldn't the developers have a difficult time paying?

And with LCL's own balance sheet extremely stretched to extreme high borrowings, would you say that an investment in LCL is extremely risky?

Oh, how ironic it is that on the Financial Edge: Dubai leads global housing-market slump

  • LONDON: Dubai, home to the man-made Palm Jumeirah and The World island developments, suffered the biggest reversal among global housing markets following the collapse of an investment bubble, Knight Frank LLP said.

    House prices in Dubai, the second-largest of the seven sheikhdoms that make up the United Arab Emirates, fell 32% in the 12 months ended March 31, according to a report by the London-based property broker published yesterday. A year earlier, homes appreciated at an annual rate of 48%.

    Dubai “is in a mess”, said Nick Barnes, head of international residential research at Knight Frank. “
    A lot will depend on developers and how long they can hold on before getting into fire-sale territory.”

    The sheikhdom was hurt more by the global financial crisis than other property markets because of the construction boom that created thousands of new homes just as demand began to evaporate.
    Within a year, Dubai went from being the fastest rising of 46 markets monitored in the Knight Frank global house-price index to the second-biggest decliner after Latvia.

    Deyaar Development PJSC, the Dubai-based company that put a quarter of its projects there on hold, will announce a 500 million-dirham (RM478.45 million) property fund to buy distressed assets within three weeks, chief executive officer Markus Giebel said in an interview on May 14.

    In the first quarter of 2009, house prices in Latvia dropped 36%, while Singapore was the third-worst performing market with a slide of almost 24%. They were followed by the US and the UK, where prices declined about 17%.

    The biggest increase in property values tracked by Knight Frank was for Israel, where homes appreciated by almost 11%. The Czech Republic and Jersey came second and third respectively, the broker said.

    “In Israel, demand still outweighs supply,” said Werner Loval, founder of Anglo-Saxon Real Estate, an Israel-based property broker. Israel’s largely Jewish foreign buyers are motivated “more by sentiment” than by speculation, he said. — Bloomberg

Yup, that super nice looking Palm Jumeirah and The World island is in trouble! (do see Dubai's House Prices Drop 41% In Q1!! and also No Longer The Same Dubai As Global Economic Crisis Hits Dubai Hard. )

Past postings on LCL

Champions League 2009 Final: Barcelona Vs Manchester United

It's been a long time since I wrote a preview.

Tonight's match would be special, I hope.

The best team, the current champions from La Liga, Barcelona, plays the best team, the current champions from Premier League, Manchester United, in Rome.

It should be fun, I reckon.

From an injury perspective or the availability of the first team players, Manchester United is probably the firm favourite.

Let's look at who is missing from Barcelona. Milito and Marquez are out with injury, while Alves and Abidal are both suspended. Alves will be sorely missed! Everyone who watches Barcelona knows so well that Alves offers so much to this Barcelona. And this is very much Barcelona's back four.

And then there is doubt on Iniesta and Henry too.

However, as of now, current indications are both could very likely feature since they both trained. I have a strange feeling that Iniesta would play but not Henry. If Iniesta do not play, Busquest would most likely take his place and sorry, I do not rate Busquet too highly.

United's main doubt is only Rio, although Rio has declared himself fit to play.

So when one talks about strength, it's clear that United has the edge and I do seriously reckon that United should win this.

Here's my reasoning. Both sides attacking options are superb. Both team can score. This is a fact. But when we add in the old adage that defence wins championship, which back four would you choose? Barcelona's back four who are missing all their key players versus United's backfour who could be missing Rio? I would choose United. Which means I believe that United has a better chance to stop Barcelona's attack over Barcelona's ability to stop United's attack. And not forgetting, United had shown that it can use the 4-5-1 formation to do another smash-and-grab job over Barcelona! Can Barcelona do this? I reckon not. Which goes to say, I also do not think Barcelona can defend a lead as well as United. This is simply because this is not Barcelona's style of play.

Yes, I reckon that United should win! :D

As usual, I do hope that I am not flawed.

Anyway, this is the line-up I hope Ferguson would field.

JoS, RioO, Vidic, Evra,
Carrick Anderson
Park Giggs Rooney

It's still very much a 4-5-1 formation with Ronaldo playing the role of lone forward. Parks and Rooney to play on the wings with Giggs sitting in front of Carrick and Anderson. And Anderson to give extra protection for Evra. This is needed for Messi is indeed one great ball player. He is good.

Score prediction: 2-1 United. :D

Man of the match? Wayne Rooney.


Comments On Public Bank's Bright Star Savings Account

Got a call from this Auntie.

She asked me to comment about Public Bank's PB Bright Star savings account. She told me that she saw an ad on the Star newspaper.

Well I checked the website instead. :D

Looks interesting till the very last line.
Click here for latest interest rates.

Yeah, what kind of interest rates are we talking about here?

Well if you click that link,

Ooo... 1% for the first rm50,000.00 and 1.3% for above 50,000.00

Bright savings rewards from Public Bank! So generous!


Money for nothing again!