Thursday, August 30, 2012

Sime Darby's earnings

Sime reported its earnings last night.

Here's Business Times news clip:
  • Sime Darby net profit soars to RM4.2b

    By Ooi Tee Ching Published: 2012/08/30

    Sime Darby Bhd’s net profit for the year ended June 2012 rose 13 per cent to RM4.2 billion from RM3.7 billion a year ago, thanks to strong performances in its car and heavy machinery divisions, said president and group chief executive officer Datuk Mohd Bakke Salleh.

    The plantation business, which typically makes up more than half of the group’s annual profits, saw a slight dip.

    In a briefing held here yesterday, Bakke said plantation net profit of RM3.2 billion was 2.3 per cent lower than the previous year because the group harvested less fresh fruit bunches.

    Erratic weather conditions, alternating between drought and heavy rainfall, stressed the oil palm trees and these had led to lower yields.

    Sime harvested 9.8 million tonnes of palm fruits, 3.4 per cent lower than last year’s 10.1 million tonnes.

    Interestingly, the group managed to sell its palm oil at RM2,925 per tonne, marginally higher than RM2,906 per tonne in the previous year.

    Oil extraction rate, however, was a little bit higher at 21.8 per cent compared with 21.4 per cent, previously.

    Following Indonesia’s palm oil tax restructure in October 2011, Sime’s refinery business suffered RM62.3 million in losses.

    This has narrowed from the previous year’s RM74.6 million loss which included an impairment of RM114 million.

    Sime’s heavy machinery division experienced brisk business when it sold more mining equipment in Australia. This division chalked up RM1.4 billion in pre-tax profit, 27 per cent higher than previously, as it included maiden contribution from the newly-acquired Bucyrus business.

    The property division’s operating profit inched 2 per cent to RM467 million from RM456 million.

    Meanwhile, the energy and utilities division operating profit climbed 36 per cent to RM335 million, thanks to recognition of the deferred revenue from its power plant in Malaysia. Its China seaport business enjoyed higher cargo handling throughput at Weifang Port.

    The healthcare division’s operating profit maintained at RM26 million, as the high number of patients was moderated by the slower nursing education sector and start-up expenses for the new Ara Damansara hospital.

    Sime’s other businesses posted RM68.8 million in profits, a welcome relief from last year’s RM42 million loss.

    The turnaround was attributed to higher contribution from Tesco and the insurance brokerage business, which included RM29.7 million profit from the impairment of an investment sale.

    For the full-year ended June 2012, Bakke highlighted Sime’s RM4.2 billion net profit surpassed its key performance indicator of RM3.3 billion by 27 per cent.

    “Return on average shareholders’ funds improved 16.6 per cent, surpassing our 13.3 per cent target. This is the second consecutive year we’ve exceeded our targets.

    “We are well on track to realise the long-term targets outlined in our five-year strategy blueprint,” he added.

    On the outlook for the current year ending June 2013, Bakke warned of challenging times as the group’s earnings are highly dependent on palm oil prices.

    “Palm oil is trading at a significant discount of US$260 per tonne from soya. So, there’s still a lot of upside. But then again, there are also factors like the restructuring of Indonesian palm oil taxes that are pulling down prices,” he said.

    On a positive note, Bakke is hopeful of the palm trees recovering from stress, enabling the group to harvest 10.4 million tonnes of fresh fruit bunches. This represents 6 per cent more than 9.8 million tonnes recorded in the year ended June 2012.
Net profit soars to 4.2B? They used the ytd figures.

Here's  the SunDaily version.
  • Sime Darby Q4 profit down 16 percent Posted on 29 August 2012 - 01:12pm
    Last updated on 29 August 2012 - 09:32pm

    KUALA LUMPUR (Aug 29, 2012): Malaysian palm oil giant Sime Darby said Wednesday its net profit sank 16.2 percent in the fourth quarter due to a decline in its plantation business earnings.

    The world's largest listed palm oil producer by acreage said net profit for the three months ended June 30 was 1.10 billion ringgit ($353.2 million) compared with 1.31 billion ringgit during the same quarter a year earlier.

    The company remained "mindful of the uncertainties in the business environment as we move ahead amidst volatility in the global economy," Mohamad Bakke Salleh, Sime Darby president and Group CEO, said in a statement.

    Revenue for the quarter ending June 30 grew 8.1 percent to 14.12 billion ringgit from 13.06 billion ringgit, it said in a filing to the stock exchange.

    The company said the quarterly profit decline came in large part due to a slight decline in fresh fruit production.

    For the entire financial year, however, net profit increased 13.0 percent to 4.35 billion, up from 3.85 billion ringgit the previous year, it said.

    Revenue for the fiscal year increased to 47.60 billion ringgit from 41.86 billion ringgit.

    Sime Darby is involved in plantations, property and healthcare and operates in over 20 countries. It is one of the largest companies on the Malaysian stock exchange, with a market capitalisation of 58.9 billion ringgit. – AFP

Wednesday, August 29, 2012

Bonia's MGO at 2.04 per share!

Posted on Business Times on 25 Aug 2012:

  • Bonia's CEO strengthens grip

    By ADELINE PAUL RAJ Published: 2012/08/25

    EYEING CONTROL: Chiang Sang Sem in talks to acquire stakes in the company at an indicative price of between RM1.80 and RM2.00 a share

    BONIA Corp Bhd's chief executive officer Chiang Sang Sem and his family may raise their stake in the leatherwear firm to over 50 per cent, a move that would trigger a mandatory general offer (MGO) for the rest of the shares.

    Bonia, in a stock exchange filing late yesterday, said Chiang is in discussion with several parties to acquire "certain stakes" in Bonia at an indicative price of between RM1.80 and RM2.00 a share.

    The shares last traded at RM2.59, a 6.1 per cent rise from the previous day.

    Observers say Chiang's move to strengthen the family grip in the entrepreneur-driven company could be to stave away a potential takeover from Permodalan Nasional Bhd (PNB).

    Speculation had been rife late last year that state-owned fund management PNB was eyeing a takeover of Bonia shortly after its takeover bid for property firm SP Setia Bhd.

    PNB, which had owned a 32.98 per cent stake in Bonia at that time, just slightly under the 33 per cent level that would have triggered a MGO, has since been selling off some shares in the market.

    PNB currently owns a direct 12 per cent stake in Bonia, but together with some of its funds, own a collective 21.04 per cent stake.

    Chiang, who is also the group executive chairman, and his family currently hold 32.98 per cent of the company.

    Bonia said when the Chiang family's purchase of over 50 per cent in the firm was completed, they would be obliged to extend a MGO for the rest of the shares at the same price.

    They intend, for now, to maintain Bonia's listing status on the Main Market of the stock exchange.

    "Their intention will be firmed up upon completion of the potential acquisition," Bonia said.

    The move by Chiang comes amid expectations of more mergers and acquisitions (M&As) in Malaysia's consumer market.

    OSK Research, in a report earlier this week on the sector, said consumer companies have to "conquer or be conquered".

    "In recent years, consumer companies in the emerging markets have been consolidating to strengthen their presence and improve operating efficiencies," it noted.

    It said this was because cash-rich companies from the developed world have been on the lookout for opportunities to venture into new markets, especially in emerging markets.

    "We believe there will be more consolidation or M&A moves in the consumer sector, which may in turn spur a re-rating of the sector," it said.

    It had a "buy" call on Bonia with a target of RM3.15 a share.

    In the year ended June 2011, the company posted a net profit of RM42.6 million.

    Chiang told reporters in December last year that he hoped to see double-digit growth in the current financial year.
The Bonia shares were traded at 2.59.

The Bossie said he wants to buy more... but at a discount... between 1.80 and 2.00.

A move that would tragger a MGO.

With MGO offered at steep discounts, how not to panic?
  • The stock fell by as much as 9.3 per cent during the day to RM2.35, before gaining some ground to close at RM2.49, or 3.9 per cent lower than the previous day.
And of course the situation was 'helped' by OSK comments.
  • Bonia shares too cheap to let go, says OSK Posted on 27 August 2012 - 09:04pm

    PETALING JAYA (Aug 27, 2012): Minority shareholders of Bonia Corp Bhd are unlikely to accept a potential offer from its group executive chairman and CEO Chiang Sang Sem to increase his stake in the retailer, as the RM1.80 to RM2 per share offer price is deemed too low, OSK Research Sdn Bhd said.

    "Chiang will have to offer a higher price in the potential mandatory general offer (MGO) in order to entice the company's minority shareholders to give up their shares," the research firm said in a note to clients today.

    "(But) assuming the proposal went ahead and triggered an MGO, we still do not think that it would achieve the delisting threshold of 75%," it added.

    Last Friday, Bonia told Bursa Malaysia that Chiang is in discussions with several parties to acquire certain stakes in Bonia in a bid to increase his stake in the company. The potential acquisition, when completed, would result in Chiang and his family collectively holding more than 50% stake.

    Currently, Chiang and his family hold 32.98% of Bonia, while Permodalan Nasional Bhd, the second largest shareholder, has a direct 12.1% stake, followed by Skim Amanah Saham Bumiputera with 8.9%.

    "We believe the proposal is targeted to strengthen the Chiang family's grip on the group. On its completion, the proposed acquisition would result in Chiang (who is also the company's founder) and his family collectively holding more than 50% of Bonia, which will trigger an MGO to acquire the remaining shares they do not hold in the company," said OSK.

    However, OSK noted that the indicative price for the proposed acquisition of RM1.80 to RM2 per share, which translates into a financial year 2012 price-to-earnings ratio (PER) of 6.3 times to seven times, represents a deep discount of 22% to the last traded price of RM2.59.

    "Moreover, the offer price is way below the valuations of recent acquisitions for retail companies of around 9-10 times PER. Thus, we believe the potential acquired stake might be coming from Chiang's friendly parties," it added.

    OSK is maintaining a "buy" rating on Bonia at RM2.59, with a RM3.15 fair value.
Have to offer a higher MGO price?

So sure?

Then on yesterday afternoon:
  • Bonia sees 35mil shares done off-market at a discount Written by Cindy Yeap of 
    Tuesday, 28 August 2012 15:51

    KUALA LUMPUR (Aug 28): Bonia Corp Bhd saw 35.93 million shares or 17.38% of its share base done off-market at RM2.04 apiece or a 20% discount to prevailing market prices in the afternoon session.

    The buyers and sellers for the six blocks of shares done between 2.41pm and 2.54pm were not immediately certain.

    On August 24, Bonia said its group executive chairman cum CEO Chiang Sang Sem was “in discussion with several parties to acquire certain stakes in Bonia” in the range of between RM1.80 to RM2 apiece.

    The deal, if sealed, would trigger a mandatory general offer by Chiang as he and his family would hold more than 50% of Bonia’s share base.

    Bonia was up 6 sen to RM2.55 at 3.23pm
17.38% done off market? At 2.04?

That's a huge chunk!

And then on this morning papers:
  • Bonia founder launches takeover offer of RM204.9m

    By Adeline Paul Raj Published: 2012/08/29

    KUALA LUMPUR: Bonia Corp Bhd's founder Chiang Sang Sem launched a takeover offer of RM204.9 million, or RM2.04 a share, for the leatherwear firm after he and his family increased their stake past 33 per cent yesterday.

    However, analysts doubt that shareholders will agree to the takeover, given that the cash offer is at a significant 20.9 per cent discount to its last traded share price of RM2.58.

    At least two research houses that track the stock, OSK Research and Affin Securities, have a fair value of RM3.15 and RM3.05 respectively on it.

    The mandatory offer came after Chiang - who is also chief executive officer and executive chairman of the group - and his son Chiang Fong Yee bought some 35 million shares (or a 17.38 per cent stake) in the company via Freeway Team Sdn Bhd at RM2.04 a share yesterday.

    This increased the stake held by them and parties acting concert to about 50.2 per cent from just under 33 per cent before.

    Going past the 33 per cent level meant they had to make a mandatory general offer (MGO) for the rest of the shares they don't own.

    Bonia, in a stock exchange filing just before the market closed yesterday, said its board has deliberated on the MGO and does not intend to seek an alternative offer.

    It will appoint an independent adviser to weigh the offer. The offerors have said they intend to maintain the listing status of Bonia.

    The offer price of RM2.04 is at a 17.7 per cent discount to Bonia's five-day volume weighted average price (VWAP) up to August 27 and at a 10.5 per cent discount to its one-month VWAP.

    It is understood that Chiang's move in going for a controlling stake in Bonia is to stave off the possibility of a takeover by any other party, including its second biggest shareholder Permodalan Nasional Bhd.

    Bonia shares, which were halted from trading in the last few minutes yesterday, will resume trading today.
So the MGO is set 2.04.

Of course.... minority shareholders do not have to agree. They do not have to sell....

Tuesday, August 28, 2012

DRB's Latest Earnings

On SunDaily:

  • DRB-Hicom's Q1 net profit falls 64% Posted on 27 August 2012 - 08:45pm

    SHAH ALAM (Aug 27, 2012): DRB-Hicom Bhd's net profit for the first quarter ended June 30, 2012 (Q1) fell 64% to RM32.6 million from RM91.1 million a year ago due to higher finance cost following the acquisition of Proton Holdings Bhd and losses incurred by Proton's subsidiary Group Lotus Plc.

    Its revenue, however, rose 119% to RM3.5 billion from RM1.6 billion following the inclusion of Proton's revenue in Q1. DRB-Hicom had completed its 100% acquisition of Proton on June 26.

    "The impact of Proton's acquisition on the group's bottom line is transient. With the recent addition of Proton into the group, there is tremendous potential to realise a number of synergistic opportunities for us," DRB-Hicom group managing director Datuk Seri Mohd Khamil Jamil said in a statement today.

    "We are also looking at the implementation of several initiatives to improve cost effectiveness, quality and delivery efficiency to further enhance the group's performance — all geared towards ensuring growth and profitability for both Proton and the group.

    "These initiatives will leverage the group's extensive business and technical know-how as well as its experience working with global partners, who are market leaders. The initiatives transcend the entire automotive value chain, which includes manufacturing systems, localisation, vendor development, distribution, marketing and after sales," he added.

    With all these initiatives in place, the board expects the group's performance for the financial year ending March 31, 2013 to remain satisfactory.

    "We also look forward to further growth in the auto industry on the back of the increase in total volume of motor vehicle sales of 301,224 units in the first six months of 2012, compared with 297,203 sold a year ago," said Mohd Khamil.
This is DRB's core numbers...

This is Business Times version. (the headline focused on the revenue. why? guess. :P )

  • DRB-HICOM Q1 revenue soars 119pc to RM3.46b
    Published: 2012/08/28

    KUALA LUMPUR: DRB-HICOM Bhd's revenue jumped 119 per cent to RM3.46 billion for the first quarter ended June 30 2012 from RM1.58 billion in the corresponding period last year, after it included Proton Holdings Bhd's revenue in the period under review.

    However, the group's pre-tax profit dropped to RM97.9 million from RM146.3 million a year ago. This is due to the higher finance cost following the acquisition of Proton as well as the losses incurred by Proton's wholly-owned subsidiary, Lotus, it said in a statement yesterday.

    DRB-HICOM completed its 100 per cent acquisition of Proton on June 26 2012.

    The group's managing director Datuk Seri Mohd Khamil Jamil said the group is looking at the implementation of several initiatives to improve cost effectiveness, quality and delivery efficiency to enhance its performance that is all geared towards ensuring growth and profitability for both DRB-HICOM and Proton.

    He added these initiatives will leverage on the group's extensive business and technical know-how as well as its experience working with global partners.

    The initiatives transcend the entire automotive value chain, which includes manufacturing systems, localisation, vendor development, distribution, marketing and after sales, he said.

    "The impact of Proton's acquisition on the group's bottom line is transient. With the recent addition of Proton into the group, there is tremendous potential to realise a number of synergistic opportunities for us," he said.

    DRB-HICOM's performance is expected to remain satisfactory for its financial year ending March 31 2013 with all the initiatives in place.

    Mohd Khamil said the group looks forward to grow in the automotive industry on the back of the increase in the total volume of motor vehicle sales to 301,224 units in the first six months of 2012, compared with 297,203 sold last year.

Another one for my Best Fit News section.

Saturday, August 25, 2012

Want To Go For Astro IPO?

Posted on the EdgeMalaysia:

  • Astro Malaysia to take one-third of IPO proceeds Written by Cindy Yeap of 
    Thursday, 23 August 2012 09:15

    KUALA LUMPUR: The re-listing of Astro Malaysia Holdings Bhd is expected to raise some US$1.75 billion (RM5.47 billion) from the sale of 29.2% of the company.

    However, only 31.2% of proceeds raised from the sale of up to 1.52 billion new and existing shares at the comeback IPO will go to Astro Malaysia, according to an updated draft prospectus dated Aug 17 on the Securities Commission’s website. Of the total 1.52 billion shares, slightly over a billion shares are sold by existing shareholders T Ananda Krishnan and Khazanah Nasional Bhd, while the rest are new shares.

    From the sale of the 474.3 million new shares estimated to net around RM1.7 billion, some 58% of gross proceeds has been earmarked for capital expenditure, while 29.35% will go to repay bank borrowings. This leaves 8.6% of proceeds for general working capital and 4.1% for listing expenses.

    Astro Malaysia, which is expected to come to market in September, did not provide an indicative pricing in the updated version to the initial draft released on Aug 8.

    Nonetheless, the IPO is expected to raise RM5.47 billion for the company and its controlling shareholders using the indicative price of RM3.60 apiece that a Reuters report last week said bumiputera investors had been offered.

    This values Astro Malaysia, which is listing without its foreign operations in India and Indonesia, at RM18.7 billion — significantly above the RM8.3 billion the old ASTRO ALL ASIA NETWORKS PLC [] was worth at the RM4.30 privatisation price. Like the re-listing of Ananda’s Malaysian mobile arm Maxis Bhd, Astro Malaysia is widely expected to market itself as a dividend play, having promised a minimum pay-out ratio of 75%.

    Astro Malaysia is widely expected to market itself as a dividend play, having promised a minimum payout ratio of 75%.

    Ananda,who privatised the pay TV operator with Khazanah two years ago, will continue to control about 50% of Astro Malaysia’s enlarged share base post-IPO. Khazanah’s effective interest will be 20.8%, according to the updated draft document, bringing their collective interest in Astro Malaysia to 70.8%.

    The updated document also named former Chief Justice of Malaysia Tun Zaki Tun Azmi as Astro Malaysia’s independent non-executive chairman, with Usaha Tegas Sdn Bhd director Augustus Ralph Marshall as executive deputy chairman.

    Set to be Malaysia’s third largest IPO so far this year after Felda Global Ventures Holdings Bhd and IHH Healthcare Bhd, some 1.26 billion shares or 95% of Astro Malaysia’s offering are for institutions. Of this, some 597.69 million shares or 11.5% of the company’s enlarged share base will go to bumiputera investors.

    This leaves 259.87 million shares, or 5% of its enlarged share base, for the retail offering, including that for Astro directors, employees, contractors and customers. The pool for the general public is 103.95 million shares or 2% of Astro Malaysia’s share base, half of which are for retail bumiputera investors.

    As at April 30 this year, Astro Malaysia had RM479.1 million cash. Borrowings and finance lease liabilities stood at RM3.69 billion, of which RM3.66 billion is long-term liability.

    While its 3.1 million customers already account for over 50% of Malaysian householders, Astro Malaysia said there is still growth to be had. Astro Malaysia intends to stay the market leader with continued investments of RM1 billion annually in content. It also intends to derive new income stream from smart and targeted marketing of additional products to its existing customer base.

    Listing without the foreign pay TV operations housed under the de-listed Astro All Asia Networks, Astro Malaysia would be sheltered from the on-going courtroom disputes between Ananda and former Indonesian partner the Lippo Group as well as the wider group’s run-in with authorities over corruption allegations in India that has yet to be fully laid to rest.

    CIMB Investment Bank Bhd, Maybank Investment Bank Bhd and RHB Investment Bank Bhd are joint principal advisers for the IPO.
Taken private at 8.3 Billion.
Seeks relisting at 18.7 Billion???


Are they really serious?? Can life be soooooooooooooooooooo good????

Want to go for this new listing?

And mind you, just like Maxis, Astro is seeking listing without its overseas operations!!!

Do refer this past posting on 31 March 2010: Astro Privatisation And Sun Direct TV's Immense Potential. Allow me to post the following from that posting.


Then the following statement from him struck me.
  • "(Astro) has better value in being taken off the market with the current stage of development of high definition television (HDTV) and the Indian market,"
The Indian market.


This reminds me of Aircel!

Flashback the posting: Regarding Aircel and Maxis. It seems that as mentioned in a Business Times article in Nov 2009, Aircel had 26 million subscriber growing at one million new subscriber per month!

That was the jewel in Maxis.

The incredible growth in Aircel.

Which got me asking, what about Astro's growth in India.

Sun Direct TV.

So I asked Google.
  • As per its website, Sun Direct reaches approximately 5.3 million homes, whereas Tata Sky has a subscriber base of more than 4.5 million and Dish TV has about 6.5 million subscribers.
That article was dated 4th March 2010. Here's a newer one. DTH aims peak subscriber growth in FY'11 on back of sports
  • Tata Sky has 16 per cent of the incremental subscriber growth while Sun Direct has 21 per cent and Big TV 12 per cent, the sources add
Sun Direct has 21% subscriber growth?????

And here is from Sun Direct own website.

Check this out.

7th July 2008
  • Sun Direct TV Pvt. Ltd one of the leading DTH service provider announces the achievement of 1 Million DTH subscribers in 200 days.The one million subscriber base comes from only 4 southern states i.e. Tamil Nadu, Karnataka, Kerala, Andhra Pradesh and the union territory of Pondicherry.

    On the eve of this 1 Million subscriber achievement , Sun Direct has launched 14 add-on packages ranging from as low as Rs. 10/- to Rs. 140/- "Packages to suit every pocket" in a "Pay for what you watch" concept for the very first time in Indian DTH scenario.
1 million subscribers in 200 days! WOW!

8th April 2009.
  • Another landmark achievement for us is crossing the 3 million mark subscriber base by March 2009, as committed earlier; this achievement qualifies us to be the No 2 service DTH provider. In the coming fiscal year we look forward to occupy the pole position. We have added more customers than any other DTH player in the last one year and in the coming days we will be adding more innovative features, services and channels in our offerings.” Added Mr. D'Silva
From July 2008 to March 2009, Sun Direct went from 1 million subscribers to 3 million subscribers!!
Sep 2009.
  • Fastest growing DTH player to touch 4 million base in less than two years time
    Chennai, 7th September, 2009: Sun Direct Pvt Ltd, the leading direct-to-home (DTH) service provider in the country achieved another milestone by crossing the 4 million subscriber base; the fastest growing player in the DTH market to do so in under two years, since its launch in December 2007.

    Setting up a scorching growth pace in the market with its Value for Money offer, right regional content mix, deep distribution across the country and offering flexi-content pricing, all of which have enabled Sun Direct to become the fastest growing DTH player in the country today.
4 million subscribers now!!!!

What incredible growth!


Don't you think Sun Direct is a company with incredible potential?

Then the Maxis saga, the listing, delisting and relisting came to mind.

Hmmm... very much possible, yes? What if Astro delist... goes private.. and relist only the Malaysian operations only. Just like Maxis. Dare we say not possible? The new Astro without Sun Direct! Just like Maxis without Aircel.

I know I am usually wrong, so could I be wrong here?


Spot on!

Astro now wants to relist without Sun Dircect and they want to sell you this IPO at a more expensive price!!!!


Life is so good, yes?

So how is Sun Direct doing today?

Last year, Sun Direct was reported to have 7 million subscribers!

Remember company only started in 2008. By 2011, it had 7 million subscribers. What an incredible growth rate. (And apparently by March 2012, Sun Direct now has 7.5million subscribers! )

Yeah, Sun Direct USED to belong Astro All asia.

But now they want to relist Astro but without Sun Direct!!!

I wonder how those who sold their Astro All Asia shares feel now......

Now do you understand why companys are delisted and relisted again?

ps: Regarding the IPO. I have no idea how this BRAND new IPO will perform. I am just not interested to know. All I know is I want no part of such!

Featured Article: Malaysia Flush With Middle East Cash

From CNN Money:

  • Kuala Lumpur, Malaysia (CNN) – When Facebook went public in May it became the biggest stock launch of the year, but the two next biggest initial public offerings had something in common - they were both Malaysian companies.

    In June, Felda Global Ventures Holdings raised $3.1 billion in shares, and a month later IHH Healthcare raised $2.1billion. Both are Malaysian and for both, key investors came from the Middle East.

    “Middle East investment is highly important,” Fung Siu, Asia editor for the Economist Intelligence Unit, told CNN’s Ayesha Durgahee.

    Siu added: “There are synergies to be had between the two countries - not least because they are Muslim-dominated countries, they have that in common. Sharia law is common to both countries and they try to leverage that in the Islamic finance sector - particularly Malaysia which is at the vanguard of Islamic finance.

    “So the Middle East could actually use and tap Malaysia as its financial center and hub, and source of finance as well.

    “Foreign direct investment is crucial to Malaysia's transformation into a high-income economy by 2020."

    Malaysia's economy is growing rapidly, with the country's GDP rising by 5.4% over the past three months.

    A report by HSBC in January predicted that Malaysia will be the world's 21st-largest economy by 2050, with income per capita jumping from $5,224 to $29, 249.

    “It’s still an export-led economy, buoyed by palm oil, the oil and gas sector, the manufacturing sector is also very strong ,” said Ahmad Jauhari Yahya, CEO of Malaysia Airlines. “You can only export to a certain extent. What the government is trying to do is to encourage more the consumer economy.”

    Boosting visitor numbers could be part of the formula. Tourism currently accounts for 8% of the country's GDP. A change in foreign-ownership rules could increase it to 13%, which could generate a total of $54 billion in revenue by 2020.

    “We have nine airlines flying from the Middle Eastern region,” said Chong Yoke Har, director of Tourism Malaysia. “Malaysia is very strategically located in the middle of Southeast Asia, and therefore foreigner investors look at this as a very attractive area to invest in.”

    And they've already started to bite. Qatar Holding, owner of Harrods department store, announced in July that its first Harrods hotel will be built and launched in Kuala Lumpur.

    A launchpad for hotels and a potential springboard for investment, Malaysia's multicultural roots are helping to change the economic landscape of the country, whilst moving the Middle East closer to Asia.

Thursday, August 23, 2012

Guan Chong's Aborted Listing Plans And Its Earnings

One of the stocks in highlight was Guan Chong when it suddenly withdrew its plans for a secondary listing on Singapore. The reason Guan Chong gave left much to be desired.

From a report on the EdgeMalaysia:

  • Instead, in a statement yesterday evening, Tay said: “After much consideration, we wish to reassess our strategic direction with regards to capital requirements for expansion.”

    “The group remains committed to expanding our global reach and broadening our profile as one of the leading cocoa processors in the world, going forward. Ultimately, we remain focused on implementing growth strategies to bring sustainable benefit to Guan Chong,” he added.
Surely, it could come out with a better explanation than the above, since the market was rather hyped with its secondary listing plans. Many had hoped that the stock could reach new highs with the said listing.

'To  reassess our strategic direction with regards to capital requirements for expansion? What exactly does that mean? A dual listing was said to be a good source of funding for Guan Chong's capital requirements. Why the need to reassess its strategic plans in the 11th hour?

Guan Chong's exact statement on Bursa Malaysia:
  • We refer to the earlier announcements in relation to the Secondary Listing and Bonus Issue. On behalf of the Board of Directors of GCB, Hong Leong Investment Bank Berhad wishes to announce that the Company does not intend to proceed with the Secondary Listing on the SGX-ST for the time being as the Company wishes to reassess its strategic directions with regard to capital requirements for the expansion of its business.
Surely Guan Chong could have been more professional and more transparent in explaining why it is abandoning its listing plans.

As the EdgeMalaysia rightly stated:
  • The company’s statement did not specifically say if the exercise had been pulled due to weak market conditions or if Guan Chong still needed to comply with additional regulatory requirements for its Singapore dual-listing.
Yes, did Guan Chong secondary listing complied with requirements?? Was this the reason for the aborted listing plans?

Also another good point made in that news report was:
  • Nonetheless, one analyst who tracks Petra Foods Ltd in Singapore pointed out that Petra Foods, which is larger and more established, had in their recent earnings announcement for the second quarter ended June 30, 2012, flagged that margins for it cocoa processing business had been hit by over-capacity in the industry.

    Another Johor-based cocoa-ingredients processor, JB Foods Ltd, which debut on the SGX last month closed below its IPO price of 30 Singapore cents per share yesterday (Thursday, Aug 16). It added 1 cent or 2.39% to close at 30.5 cent today.
Now Guan Chong was a stock that I had blogged and reviewed before. Guan Chong had performed remarkedly well despite the concerns I had posted. See I am no market doomslayer! I have no voodo stick that could cause a stock to crash :P

Guan Chong's superb stock performance for the past two years.

Here are my past postings on Guan Chong:

Aug 9, 2010: Review Of Guan Chong's Earnings
Aug 10, 2010: Update On Guan Chong's Posting
Feb 1, 2011: Update On Guan Chong's Earnings
Aug 12, 211: What About Guan Chong's Earnings

Now this indeed is rather interesting. The concerns against Guan Chong is rather justfied but yet the stock moves against one's reasonings.

Is our reasoning wrong because the stock market said so?

Which rather messes with one. Are we really wrong? How could our reasoning be correct, when the stock market is sending the stock to the moon? Should we abandon our reasoning and just do what the market says? How could a fundamentally flawed stock moves up so high??

Yeah, it could drive one crazy.

Maybe I should just fold and admit that I am terribly flawed (as usual. :p)

Guan Chong reported its earnings last night. Hence, I was rather interested to review its earnings. Perhaps I could learn more... :)

Here's the link: GCB-2ndQ2012 Interim Financial Statements.pdf

Before I go in the details here's an interesting article on the Edge back on Jan 2011:
  • For nine-month period, Guan Chongs's revenue nearly doubled to RM836.3 million from RM424.8 million. Net profit soared more than seven-fold to RM56.17 million from RM7.66 million in the same period a year ago. (the soaring earnings)
  • Johor Baru-based Guan Chong is an upstream cocoa processor that converts raw cocoa beans into semi-complete ingredients like cocoa butter, cocoa cake and cocoa powder.
  • “Our prospects are good moving forward. Sales have indeed been great,” Tay added.

    “You see, whether at high or low prices, the big boys have to buy cocoa from middleman like us. Once we use our supplies, we immediately hedge it on the futures market to replenish the stock for the coming already kept this [increasing raw material costs] in mind when making their orders,” he explains. ( we will come back to this 'high and low prices' later.)
  • A one-month ban on cocoa exports from Ivory Coast, the world’s biggest cocoa producer, has added more upward pressure on prices. Cocoa prices rose to US$3,366 a tonne yesterday, from US$2,745 in late August last year.  Commodity analysts quoted by news agencies say that prices might even soar to the US$3700-level, the highest since 1979, should the supply of cocoa get even tighter. (ah,.. the soaring cocoa prices)
  • The stock surged to a record high of RM2.72 yesterday, up 51% from RM1.80 in mid-December. Analysts say the company’s improved financial performance could be attributed to the large stocks of raw cocoa beans it keeps in storage, which is now worth much more based on current prices.
Another article on March 2011:
  • On the impact of high cocoa bean prices, Tay said the soft commodity, which was traded at a 32-year high of US$3,706 a tonne yesterday is not expected to hurt Guan Chong’s financials because the company is able to pass the additional expenses to its customers. “We buy high and sell high,” Tay said. He added that existing high cocoa bean prices may lead to less competition in the cocoa processing industry. (buy high and sell high???? )
Feb 2, 2012:
  • For instance, cocoa futures for March delivery were up by as much as 15.9% from US$2,028 (RM6,165.12) per tonne on Jan 9 to US$2,350 per tonne on Jan 12. However, prices are still low compared with a peak of US$3,593 per tonne in March 2011. (cocoa prices have plunged since hitting the highs last year! )
  • “We sell forward as far as a year [into next year] and stock up more than two months of our needs of raw materials,” Tay said. (ahh... they claim they stock 2 months inventory)
So now we have a rough idea on what's Guan Chong's about.

Let's review the blog postings:

Aug 9, 2010: Review Of Guan Chong's Earnings
Aug 10, 2010: Update On Guan Chong's Posting
Feb 1, 2011: Update On Guan Chong's Earnings
Aug 12, 211: What About Guan Chong's Earnings

Now what I would now do is compare those concerns posted from those blog postings and compare it versus Guan Chong's latest earnings.

Would such an  exercise make sense?

If say our concern was on cash back then, and current cash level now is lower compared to back then, wouldn't it suggest that our concern was justified?

From the first blog posting on 9th Aug:

The concerns was on the cash versus loans and receivables.

Here's a screen shot from Guan Chong's current earnings.

1. Trade receivables. Down to 111.800 million. Ok this has improved a lot.
2. Cash. Cash today stands at 27.361 million. Improved but we need to review its loans.
3. Inventory. 512.4 million???? Say what?????

Ok, I have to jump right in to the inventory issue since it's staring right in the face from the screenshot above.

From a comment from the posting on Feb 2011:
  • K C said:  it appears that almost all of GC's profit is from coco future (and stocking up of inventory of coco)
The high inventory issue highlighted before in 2011 has gotten insanely high! Why on earth is Guan Chong keeping such an insanely high inventory level???

Remember from the news article on the Edge on Feb 2, 2012:
  • “We sell forward as far as a year [into next year] and stock up more than two months of our needs of raw materials
The company claims to stock up more than 2 months of its raw material needs. (which is justifiable)

However if you look at Guan Chong's sales revenue for the current quarter, its revenue is at 312.8 million or roughly a sales revenue of 104 million per month. But from its earnings notes, Guan Chong inventory is now at a staggering 512.4 million!!!!!

What? What? What?


Now back to Guan Chong's cash/loans issue.

Guan Chong's loans is now at a staggering 510 million! When I first posted on Guan Chong ( Review Of Guan Chong's Earnings ), Guan Chong's loans was only 243.233 million!!!!

This would mean that Guan Chong's financials had only gotten worse since 2010, yes? They now owe the bankers so much more money.

Yeah, they now have so much more inventory too!

Is that a consolation?

How? How would you rate this concern? Has this concern gotten worse?

And needless to say, it's so alarming to have the company boss declaring a 2 month stock policy a couple of months ago (on Feb 2012) only to have his statement contradicted by the company's accounts!!!

Next we see the cash flow...

We can see...

1. The purchase of 'property and plant'...
2. The significant increase in bank borrowings. Loans increased by some 65.2 million!
3. Dividends increased. Guan Chong dividends payout currently stands at 26.9 million. Last fiscal year Guan Chong only paid some 7.1 million in dividends for the current period.

How? Guan Chong clearly needs funding, yes? It's bank borrowings is forever increasing. If so why again is Guan Chong abandoning its secondary plan listing? And again, why is Guan Chong paying out so  much in dividends when it is clearly need of financial funding? We can clearly see that the dividends payout was ONLY helped by that significant rise in borrowings - borrow more to pay more dividends???!!!  Make any sense?

And then we have the issue brought up by K C.

Is Guan Chong (GC) an upstream coco processor or a derivatives speculator? .

From the posting back on Aug 2010: Update On Guan Chong's Posting

Now here's the latest update:

What do you see?
What do I see?

Ok, no doubt there's much lesser money in the derivatives but where the money is at is utmost glaring!

Guan Chong has now put more money into the Forex contracts and much lesser in the commodity futures contracts.

Well.. the Ringgit versus the USD has shown some wild swings recently.. and the cocoa prices are not booming anymore.... or...commodities futures not hot, forex very hot!


Whether Guan Chong is making money via these contracts is rather immaterial for me. The fact that Guan Chong shifted so much more money into forex market, only suggests that Guan Chong looks much more of a trader. ( But hey this is my opinion... and what's yours?)

So how?

The concerns back then in 2010 versus the concerns now. Have the concerns gotten worse? Were the concerns justifiable?

ps: I have no idea how this stock will trade in the future... :P
ps: I find Guan Chong's explanation on why it is abandoning its secondary listing to be so pathetic!

Saturday, August 18, 2012

More Comments On That E&O Price Surge And Collapse

On today's Star Biz:

  • Saturday August 18, 2012
    The E&O price surge – and collapse A QUESTION OF BUSINESS

    There can be no excuse for market manipulation and every instance needs to be investigated and the culprits brought to book

    THE recent limit-up in the shares of Eastern and Oriental (E&O) on the back of rumours that Sime Darby will be required to make a general offer (GO) is just one illustration of how share prices can be manipulated.

    That incident shows why regulatory authorities must stand at watch always to ensure the integrity of markets and be prepared to take action whenever there is indication that things are not quite right.

    The situation arose, when Sime Darby, in a controversial deal a year ago, paid RM766mil cash for a 30% fully diluted stake in E&O. It paid RM2.30 a share, which was a massive 60% premium to the market price at that time, raising eyebrows.

    Sime Darby had purchased its stake from three shareholders E&O managing director Datuk Terry Tham; Tan Sri Wan Azmi Wan Hamzah, a close associate of former finance minister Tun Daim Zainuddin and formerly involved in failed property company Land and General; and Singapore-listed GK Goh Holdings.

    Minority shareholders of E&O, predictably, were up in arms because they did not receive such a good offer for their own shares. Some of them lobbied strongly for the Securities Commission or SC to rule that Sime Darby should make a GO for the shares.

    The situation became more complicated because the E&O chairman, Datuk Azizan Abdul Rahman, the husband of the SC chairman then, Tan Sri Zarinah Anwar. Azizan was reported to have increased his stake in E&O ahead of the Sime Darby purchase but it was not established that he had prior knowledge of the deal.

    Such a tale, and true at that, resulted in much controversy and the public gaped open mouthed as it unfolded. In the end the SC, in a decision in which Zarinah did not participate, ruled that Sime Darby need not make a general offer because control of E&O had not changed hands.

    That was not surprising because the trigger for a GO under the Takeover Code is 33%. Also, Sime Darby did not make any move to change management.

    Further, there have been many cases of companies acquiring just short of a 33% stake in a listed company without making a GO even when there were significant changes in directorships and eventually management. Any other ruling would have meant that the SC was acting inconsistently.

    The SC ruling disappointed minority shareholders who could not look forward to their windfall, including those who had accumulated shares in anticipation of a GO. It also meant that Zarinah's husband too would not have got any gains, something overlooked by those who like to point out that he had E&O shares.

    That could have become the end of matter, notwithstanding the question of whether Sime Darby paid too much for the shares and whether it could have bought it by other means, but a minority shareholder decided to sue the SC over the issue.

    The Singapore Straits Times reported in December that Michael Chow Keat Chye was seeking to overturn the waiver from the GO granted to Sime Darby by the SC.

    “If obtaining control of the company (E&O) was not the basis, motive or reason for Sime Darby's acquisition, then it would have acquired the company's shares over a period of time in the open market at a considerably lower price,” the newspaper quoted Chow as saying in his pleadings to the High Court.

    One would have thought that everyone would have waited for the court ruling but that was not to be. News website The Malaysian Insider reported eight days ago that the SC would make an about turn and order Sime Darby to make a GO.

    It quoted a government source as having said that the decision was made after a review by the leadership under new SC chairman Datuk Ranjit Singh. The E&O share price galloped, hitting limit up at RM1.92, up 30%, on Friday Aug 10.

    The SC promptly not only denied the report but said that it was starting an investigation into trading of the shares. Market observers called for an investigation into possible market manipulation of E&O shares. On Monday, E&O shares fell back, giving up its gains, losing over RM400mil in market value.

    Here's what is very interesting. On that fateful Friday, 447 million E&O shares, yes 447 million I checked twice, were traded compared to just 29 million shares the previous day. And they amounted to some 40% of the paid-up capital of the company!

    In just that one day, fortunes of up to about RM190mil (447x0.42) could have been made or lost, given the share price increase of 42 sen and the subsequent fall.

    It may not be as good as if Sime Darby had made a GO at RM2.30 but quite a number of minority shareholders could have made quite a killing, especially if they knew that the story about the SC reversing its story was untrue.
    Most certainly this sorry state of affairs needs to be investigated thoroughly and the question of how such a story could have been carried has to be answered. Those who profited illegally from such trades should be brought to book.

    Nothing less than the integrity of our markets is at stake here. For too long, market manipulation and insider trading have been excused on the grounds that it makes the market, that it provides excitement and that it provides opportunities to make money for both traders and brokers.

    But really, that's not the purpose of the market. The purpose is to provide a place where investors and others can seek a fair value for the assets they buy and sell through a fair, transparent and straightforward process that provides equal information and opportunity to all.

    The economic aim for all that is to provide investors with a place to raise capital efficiently so that business can flourish.

    It is lamentable that this basic aim of capital markets seems to be lost and it has become a place for wheelers, dealers and plain crooks to make money in less than honourable, and even illegal, ways. What a shame! And will it ever change?

    ■ P Gunasegaram believes that the dog should wag its tail always. And capital markets should serve the economy.
Well, I do agree with what's being said. Someone obviously made a killing.

Here's how E&O surge on that day after the said rumours were published.

Here's  how E&O performed the next day, the day after S&C denied everything.

As Mr.Gunasegaram puts it:
  • It may not be as good as if Sime Darby had made a GO at RM2.30 but quite a number of minority shareholders could have made quite a killing, especially if they knew that the story about the SC reversing its story was untrue.
That's the whole issue isn't it?

What if someone had released those false rumours knowing very well that SC will NOT be reversing the GO decision? What if someone released those rumours hoping to profit from it?

Not possible?

Now if that case, what kind of investigation are done on the reporter and are investigation being made to uncover who that government source is? Is the source even real?


I, for one, would dearly like to know what happened exactly.

The integrity of the market is under serious threat here. How could the market allow wild rampant rumours dictate the market?

And the integrity of our financial press is under serious threat also.

What good is our financial news when news reports are based on 'unknown' and 'unrelaible' sources who are only leaking unfounded news so that great monetary profit can be made based on these wild rumours?

Will we ever see the culprits be brought to justice?

Please don't let us forget that this shambolic event did take place in 2012........

previous postings:


Thursday, August 16, 2012

And Our CEOs Are Paying Themselves Even More Money This Year! (Updated!)

On Business Times today:

  • Big bucks for directors

    By Kamarul Yunus Published: 2012/08/16

    MALAYSIAN BUSINESS SURVEY: Top 20 companies forked out RM534.95m last year

    LISTED companies paid out higher remuneration to their directors in 2011 compared to 2010 despite the cautious economic climate brought about by the eurozone debt crisis, a Malaysian Business annual survey of the "highest-paid directors" revealed.

    According to the August 16 issue of the business magazine, the top 20 companies forked out RM534.95 million last year, up 17 per cent from 2010, in terms of total payouts.

    "Out of the more than 600 companies surveyed, close to half paid out more than RM1 million in remuneration to their highest-ranking executives in 2011," Malaysian Business said.

    Apart from payouts, the survey also reveals director remuneration from a sectoral perspective and what government-linked companies dished out to their head hanchos.

    "It also gives readers a peek into the ACE Market's top executive earners," it said.

    Genting Bhd topped the list with a big payout of RM117.69 million to its board. However, this was a modest rise of 5.6 per cent as opposed to what it had paid out previously.

    IOI Corp Bhd came in second with a total board payout amounting to RM60.30 million, up 7.1 per cent from 2010.

    Genting also had the highest remuneration band of RM113 million to RM113.05 million for a single director.

    However, the company did not name who the director was. The top executive listed is its executive chairman and chief executive officer Tan Sri Lim Kok Thay.

    In the highest remuneration band for a single director, the second top company was IOI Corp Bhd, which paid out a remuneration band of between RM56.75 million and RM56.80 million to its highest-ranking director.

    "We assume that the recipient was IOI Corp director and founder Tan Sri Lee Shin Cheng," Malaysian Business said.
The table posted with the article:

Guess what?

Compare that table to the one posted last year posting: The Incredible Growth In Malaysian CEO Pay. Here's the table again for easy reference.

What do you see?



How much is enough?

Apparently it's never..........

ps: here's the old news article dated 2004. Yes, The Incredible Growth In Malaysian CEO!!!!!

  • August 02, 2004 21:28 PM
    Malaysia's Directors Paid More Money In 2003

    KUALA LUMPUR, Aug 2 (Bernama) -- Directors of Malaysian public-listed companies are generally paid more money in 2003, given the improving economy and rising profits, according to a survey on directors' remuneration carried out by Malaysian Business magazine.

    The survey finds that there were more millionaire directors last year compared with 2002 as more top executives earned bigger bucks, Malaysian Business said.

    Top executive directors of companies such as Safeguards Corporation, IJM Corporation, Malaysia Airlines and Choo Bee Metal saw their pay packages hitting seven-digit figures.

    Meanwhile, their counterparts in IOI Corporation, Star Publications, Hwang DBS and Maxis Communications also enjoyed hefty hikes, as these companies enjoyed increasing profits, Malaysian Business said.

    The survey, which entered its third year, studied 548 companies which paid RM300,000 and more per annum to their highest paid directors.

    In total, these companies paid out a whopping RM1.13 billion to their directors in 2003.

    Malaysian Business said that Corporate Malaysia's highest-paid director is from Genting Bhd (Genting's chairman/president and chief executive officer (CEO), Tan Sri Lim Kok Thay who gets between RM40.15 million-RM40.20 million).

    "His remuneration package within the RM40.15 million-RM40.20 million band makes him possibly one of the very few, if not the only Malaysian director, to take home an eight-digit figure compensation," it said.

    The second highest paid director is from Resorts World, a subsidiary of Genting Bhd, whose compensation is in the RM16.65 million-RM16.70 million band. (Resorts World chairman, president cum CEO, Tan Sri Lim Koy Thay (RM16.65 million and RM16.70 million),

    These payouts, however, might have been paid to the same person taking into consideration the possibility of double counting.

    Ranking third is an executive from Berjaya Sports Toto, who earned a compensation package in the RM8.15 million-RM8.20 million band (Berjaya Sports Toto CEO, Tan Sri Vincent Tan gets between RM8.15 million-RM8.2 million).

    IOI Corporation dished out between RM6.90 million-RM6.95 million to its top executive putting him in fourth place (IOI Corporation executive chairman, Tan Sri Lee Shin Cheng (RM6.90 million-RM6.95 million).

    The fifth spot is taken by a director of IOI Properties, a subsidiary of IOI Corporation, with a remuneration of RM6.90 million-RM6.95 million (IOI Properties' executive chairman Tan Sri Lee Shin Cheng (RM6.90 million-RM6.95 million).

    Again this payout may have been paid to the same person, the magazine said.

    Malaysian Business also said that while the mountain of wealth got larger for some, there were also directors who took sizeable pay cuts in 2003.

    But more peculiar were the instances of directors being paid top dollar although the companies they helm fell further into the red or are in the Practice Note 4 category, which groups companies with negative shareholder funds, it said.

    The magazine said this phenomenon highlights a troubling issue about directors' remuneration in Malaysia -- that there is generally an absence of a link between company performance and directors' remuneration --.

    Nevertheless, it said that more companies have displayed good transparency standards by going beyond the minimum requirement to disclose the exact amount paid to each of their directors last year, but these companies still remain in the minority.

    "Strangely a handful of companies, which took that extra disclosure step in 2002, regressed to the minimum requirement of `band-width' disclosure in 2003," Malaysian Business said.

    Others in the list are:

    Star Publications (Malaysia), group managing director and CEO, Datuk Steven Tan Kok Hiang (RM6.35 million-RM6.4 million), Hwang-DBS (Malaysia), executive chairman and managing director Datuk Seri Hwang Sing Lue (RM4.42 million) Rashid Hussain executive chairman, Datuk Sri Sulaiman Abdul Rahman Taib (RM4.3 million- RM4.35 million).

    RHB Capital executive chairman, Datuk Sri Sulaiman Abdul Rahman Taib (RM4.3 million-RM4.35 million), MK Land executive chairman, Tan Sri Mustapha Kamal (RM3.652 million), Public Bank non-executive chairman Tan Sri Teh Hong Piow (RM3.65 million-RM3.7 million).

    Yu Neh Huat executive chairman, Datuk Dr Yu Kuan Chon (RM3.6 million-RM3.65 million), Landmarks managing director, Mohamad Abdul Halim Ahmad (RM3.1 million- RM3.15 million), PPB Group executive chairman, Ong Le Cheong (RM3.1 million- RM3.2 million), Edaran Digital Systems executive director, Mohd Shu'aib Ishak (RM3.05 million-RM3.1 million), Malayan United Industries chairman cum CEO, Tan Sri Khoo Kay Peng (RM2.9 million-RM2.95 million).

    Berjaya Group chairman cum CEO, Tan Sri Vincent Tan Chee Yioun (RM2.85 million-RM2.9 million), British American Tobacco (M) executive director, Russell Scott Cameron (RM2.812 milion), Berjaya Land CEO, Datuk Robin Tan Yeong Ching (RM2.8 million-RM2.85 million) and DRB-HICOM group chairman, Tan Sri Mohd Saleh Sulong (RM2.60 milllion-RM2.65 million).

    Malaysian Business, the country's premier business magazine published by Berita Publishing Sdn Bhd, also features every year the country's 40 Richest Malaysians and the MB100 list, comprising the choicest companies on Bursa Malaysia.
Let's take the following into perspective.
Let's compare then and now.
Take the following into persperctive.

Let's compare the earnings for fy 2003 and compare it with earnings fy 2011 and of course the pay..... (reasoning is simple. We note how much the pay increase and then we see if the company made such similar progress with its earnings... )

I will use IOI Corp as an example. Why? In 2003 CEO was paid 6.95 million. Today the CEO is paid 60.3 million. So when we compare 2003 and 2011, we are looking at an increase of 53.35 million or an increase of 867%!!!!!

867% babe!

Holy cow!

You got it babe!

Let's see if the CEO paid is justified when we look at its earnings.....

IOI's  2003 Q4 earnings: Quarterly rpt on consolidated results for the financial period ended 30/6/2003

IOI Corp made 53.24 million for fy 2003 according to that earnings notes.

Huge Mistake! (Was looking at the EPS! Duh! )

IOI made 502.052 million for fy 2003.

IOI's 2011 Q4 earnings: Quarterly rpt on consolidated results for the financial period ended 30/6/2011 

IOI's 2011 made 2222.899 million or 2.2 billion according to that earnings notes.

Which is an increase of 2169.659 million or 2.16 billion. Which works out to an increase of 4170%.

This would mean an increase  of 1720.847 million or 1.7 billion only.

Which works out to an increase of 442%.

Would that be justifiable?

The profit increased some 41.7  4.42 times since 2003.

BUT the CEO pay only increased some 8.67 times since 2003!!!!!

Where's the logic?

Is this even justifiable???

Does a mankind really needs to even live on 10 million a year???

Wednesday, August 15, 2012

Media Prima's Outlook

The version on Star Biz:

  • Wednesday August 15, 2012
    Media Prima MD sees positive Q3
    KUALA LUMPUR: Media Prima Bhd group managing director Datuk Amrin Awaluddin says he expects the results of the third quarter to be better than the second quarter.

    “FY11 (financial year ended Dec 31, 2011) was very challenging especially in the fourth quarter, even for corporate results. Because (there are) a lot of activities in the third quarter and in the fourth quarter everything is quiet. We are targeting to perform better than in FY11,” he told a press conference yesterday.

    He said newsprint prices were on a downward trend because of the worldwide economic slowdown.

    The company reported that its second quarter net profits rose 27.8% to RM56.8mil on revenue of RM447.62mil from RM421.67mil in the previous corresponding period.

    It had also declared an interim single-tier dividend of 3 sen per share for FY12 which will be paid on Sept 28


The version on Sun Daily:
  • Media Prima warns of challenging outlook Posted on 14 August 2012 - 07:45pm
    Last updated on 14 August 2012 - 07:52pm

    Eva Yeong

    From left: Amrin, Media Prima chairman Datuk Johan Jaafar and group CFO Mohamad Ariff Ibrahim at the analysts and media briefing on its Q2 financial results. Saiful Hizam Mansor/THESUN

    KUALA LUMPUR (Aug 14, 2012): Media Prima Bhd, which posted a 27.7% rise in second-quarter net profit to RM56.8 million from RM44.4 million a year ago, has warned that the operating environment in the media industry will continue to be challenging.

    "(This is) not only for television, but across all the platforms that we are in, including radio and newspaper... (sales) cannibalisation is happening not just in specific media platforms but across all media platforms," its group managing director Datuk Amrin Awaluddin told reporters today when announcing Media Prima's financial results for the second quarter ended June 30, 2012.

    "In terms of the introduction of new pay channels, new platforms such as the advent of digital TV and mobile players becoming IPTV (Internet Protocol television) players, it poses a challenge but it is also good for Media Prima because we are a content company," he added.

    Media Prima is thus strategising itself to sell content and reduce its dependence on advertising revenue. TV and print media currently contribute 40% each to the group's revenue, with the rest coming from outdoor media, radio networks and new media.

    For Q2, Media Prima saw its revenue grow 6.16% to RM447.6 million from RM421.7 million a year ago, due to continuous investment in content creation.

    It declared an interim single-tier dividend of three sen per share for the current financial year ending Dec 31, 2012 (FY12), payable on Sept 28.

    Amrin also attributed the improved Q2 revenue to higher advertising spending during the Euro 2012 football tournament and a general improvement in the economy.

    "We will continue to be innovative in our business while developing new products and new markets. Our viewers watched the Euro 2012 matches not only via TV3 and ntv7, but through our Tonton portal as well as on big screens at our ground events," he said.

    However, Media Prima saw its net profit for the first half fall 2% to RM77.6 million from RM79.2 million a year ago, dragged down by a weak performance in Q1.

    Revenue rose 1% to RM782.9 million from RM775.9 million a year ago.

    For Q3, Amrin expects an improvement in the group's performance due to events and festivities namely Olympics Games, Hari Raya and Deepavali.

    "The big question is the fourth quarter of this year, with the impending general election and US presidential elections (taking place). For instance, Q42011 was a very challenging period where many companies' results were down due to the global economic uncertainty. We hope to have a better overall year but much depends on the economy," he said.

    The group has embarked on a strategy to solicit new types of advertisers such as small and medium enterprises, which hardly advertised in the past.
Source: Confusing post titles?

Monday, August 13, 2012

And E&O Plunges After SC Denies MGO Rumours

The day after And The Sources Strikes Big At E&O

  • Published: Monday August 13, 2012 MYT 9:17:00 AM
    E&O slides after SC refutes MGO report
    KUALA LUMPUR: The securities of Eastern & Oriental Bhd (E&O) fell after the Securities Commission refuted a portal news report that it would force Sime Darby Bhd to undertake a mandatory general offer for the remaining E&O shares.

    At 9.01am, E&O fell 30 sen to RM1.60 with 2.57 million shares done, the call warrants, E&O-CA fell 10.5 sen to six sen, E&O-CE tumbled nine sen to 10.5 sen and E&O-CG lost 6.5 sen to 20.5 sen.

    The FBM KLCI rose 2.74 points to 1,648.10. Turnover was 29.13 million shares valued at RM25.05mil. There were 81 gainers, 45 losers and 94 counters unchanged.

    Last Friday, the SC said its position on the MGO requirement in the Sime Darby E&O share acquisition remained unchanged as per the SC statement issued on Oct 11, 2011.

    "The decision is now subject to judicial review which is pending in court," it said in a statement.
Here's how the stock traded today.

The daily chart tells a better picture.

But none tells a better than the following chart.

Note how the stock shot up after the 'according to sources' news was posted after 4 pm.

Shall we say thanks to the 'sources' now....

Saturday, August 11, 2012

And The Sources Strikes Big At E&O

Far too long I have been highlighting the According To Sources issue on this blog. After a while this blog gets caught in a repetitious cycle of repeating and repeating and repeating itself. Is like, do you guys and gals really care? Or perhaps it only matters if it happens to us ( I do hope not). I just don't know.

As mentioned before:

  • Yeah, our financial news can be really incredible at times. Many a times, a story will be spun by our financial news wizard reporters. The way they write, the way they spin the story around and around, they can really make any given stock sounds soooooo sexy.
And sexy stocks do sexy stuff. The stock prices soar.

Think about it.

I write an article, I throw in the 'according to sources' this and that and that is going to happen. It's going to make Fly Kacang Fly Bhd fly!

Punters read the story, they treat those words as gold.

They get on the phone, they call their remisers and orders truckloads of the Fly Kacang Fly stock. Or they just let their fingers walk the talk by keying their truckloads of the stock via on-line trading.

And as long as they make their money, they don't care whether the story is really true or whether the story just cooked up to seduce them to punt the stock 

Take for example, the last posting made on this According To Sources issue: And According To Sources .... . Did that sexy story came out exactly as what the so-called sources clam??

And I said many times, anyone could a source of imformation. The Fly Kacang Fly's mak cik who brings the tea for the Boss could be a source of information, yes? The toilet cleaner also could be one. Anyone in Fly Kacang Fly could be a source. Whether they are reliable source is another issue.

Or what if the source does not even exist? What if the 'according to source' is used just to lend some form of credibility to the said rumours?

Not possible?

Anyway, yesterday, the SOURCES hit big time. Really big time. Center stage. It's showtime!

On MalaysiaInsider:

  • SC to order Sime general offer for E&O, say sources August 10, 2012

    KUALA LUMPUR, Aug 10 — In a volte face, the Securities Commission (SC) will now order Sime Darby Bhd to make a general offer for Eastern & Oriental Bhd (E&O) shares after buying a 30-per cent stake last year, say government sources.

    The Malaysian Insider understands the decision was made after a review by the leadership under new SC chairman Datuk Ranjit Ajit Singh.

    “The SC has reviewed the matter and decided to overturn the earlier decision made when Tan Sri Zarinah Anwar was the chairman,” a government source told The Malaysian Insider.

    Ranjit, who was the SC managing director, took over as chairman after Zarinah ended her term last March 31.

    Another source confirmed the review and said the decision will be made public soon.

    Sime Darby purchased its controlling 30 per cent interest in the property developer from three major shareholders — managing director Datuk Terry Tham, Singapore’s GK Goh Holdings and a group of investors led by businessman Tan Sri Wan Azmi Wan Hamzah — at the end of August last year in a deal that valued E&O shares at RM2.30 a piece.

    The purchase price represented a 60 per cent premium over the value of the shares in the company on the open market when the deal was announced.

    The RM776 million deal triggered unease over the widely-perceived coddling by the agency of large state-controlled companies at the expense of minority shareholders when exercising its authority on corporate takeovers.

    The SC ruled six weeks after Sime Darby’s purchase of the three blocks that the plantation-based conglomerate need not make a general offer, prompting E&O minority shareholder Michael Chow to sue the SC for failing to compel Sime Darby to make a general offer for the rest of the shares.

    The legal suit has renewed debate over the SC’s handling of alleged irregular trading activities and had put pressure on Zarinah, whose husband — the E&O chairman — had raised his personal stock holdings in the company just weeks before Sime Darby announced the acquisition.

    The SC has also filed an application to recuse the judge hearing the suit as he used to be with the regulator. But the judge dismissed the application, only for the SC to file an appeal with the Court of Appeal, which heard the case yesterday.

    Singapore’s Straits Times reported last January that a SC task force found that Sime Darby was obliged to make a general offer for E&O shares after acquiring a 30 per but was superseded by the regulator’s top ruling authority.

    The daily reported that the task force was of the view that a general offer obligation had been triggered as a new “concert party” was created between Sime Darby and Tham, who jointly controlled more than 33 per cent in the property concern after the deal.

    Malaysia’s takeover rules stipulate that any party that acquires more than a 33 per cent interest in a publicly-listed entity must carry out a general offer for the remaining shares.

    A general offer can also be triggered if a new party buys less than 33 per cent but secures management control of the target company.

    But the SC’s final ruling three-member committee adjudged “in a majority decision” that there was no general offer obligation as Sime Darby and Tham were not acting in concert, according to an affidavit by the agency’s second-most senior commissioner Datuk Francis Tan, which was sighted by the Singapore daily.

    The committee also accepted the task force’s recommendation that the three groups that sold the blocks of E&O shares to Sime Darby did not collectively control the company and that the disposal did not trigger a general offer.
That news came late in the afternoon.

This sexy piece of stock started a buying frenzy. It was incredible. Some were screaming for the stock to go limit up. This piece of news whose sole credibility was based on  sources, un-named sources. ( Ever wonder who these sources are?)

Notice how E&O took off for the moon at around 4 pm.

And then came the news at 5.50pm.

  • Published: Friday August 10, 2012 MYT 5:50:00 PM
    SC's position on GO in Sime-E&O remains unchanged By Joseph Chin

    KUALA LUMPUR: Sime Darby Bhd does not have to make a general offer for the remaining shares in Eastern and Oriental Holdings (E&O) after it acquired a 30% stake, according to the Securities Commission.

    The SC said in a statement on Friday that its position on the GO requirement in the Sime Darby-E&O acquisition remained unchanged as per the statement issued on Oct 11, last year.

    "The decision is now subject to judicial review which is pending in court," the SC said.

    Securities of E&O surged in active trade late Friday on a news portal report that the SC would now order Sime Darby to make a GO for the remaining E&O shares.

    E&O surged 42 sen to close at RM1.90 with 44.74 million shares done while its call warrants E&O-CA jumped 16c to 16.5 sen.

    In the Oct 11 statement, the SC had stated it concluded the review of the circumstances surrounding the acquisition of 30% equity interest in E&O by Sime Darby for any Take-Over Code implication.

    The SC had then stated in the course of the review, parties involved in the transaction were interviewed and relevant documents procured.

    It said the review included an assessment of possible concert party relationships between and amongst the parties involved. Precedents in Malaysia and practices and rulings in other jurisdictions on similar issues were also examined.

    "Having analysed all the evidence gathered, it is the SC's finding that the acquisition of the 30% equity interest in E&O by SDB had not given rise to a mandatory offer obligation under the Malaysian Code on Take-Overs and Mergers 2010," according to the statement.
Oh oh!

How now brown cow?

SC is now denying the news published on Malaysia Insider.

And this is a delima. A massive delima for punters who punted based on the news released by Malaysia Insider.

All thanks to Malaysia Insider's un-named government sources, these punters will be worried about the fate of their punt made yesterday afternoon.

Will the denial send the stock plunging?

How now brown cow?

Would you continue to punt on stocks based on news sources who quotes un-named sources?

( see also: )

( ps: if this blog posting was published at 4:30 pm, I wonder what would be the reaction?  Would I get 'Here we go again... pouring cold water again... Ah Chi Ah CHor so much ..... )