MMC Privatisation Offer For Aliran Ihsan

MMC is taking its 62.8% owned subsidiary Aliran Ihsan private in a deal valued at RM 181.1 million.

On Business Times:

• MMC to take AIRB private
  
  By SHAREN KAUR Published: 2012/07/10
  
  EARNINGS CONSOLIDATION: RM181.12m deal will be conducted via selective capital reduction and repayment exercise
  
  MMC Corp Bhd plans to take Johor's top water concessionaire, Aliran Ihsan Resources Bhd (AIRB), private in a deal valued at RM181.12 million, or RM1.84 a share.
  AIRB, which is 62.82 per cent-controlled by MMC, is the third largest supplier of treated water in the country.
  
  Its core subsidiaries are Southern Water Corp Sdn Bhd, Southern Water Technology Sdn Bhd, Southern Water Engineering Sdn Bhd and Aliran Utara Sdn Bhd.
  
  These companies are involved in the operation, maintenance and management of water treatment plants, rehabilitation of water treatment plants and construction of water works.
  
  The offer price of RM1.84 by MMC is a five per cent premium on AIRB's closing price of RM1.75 last Friday. Based on the closing price, AIRB's market capitalisation was RM463 million.
  
  The securities of both MMC and AIRB were halted from trading yesterday. MMC closed last Friday at RM2.61.
  
  In a filing to Bursa Malaysia yesterday, MMC said it planned to take AIRB private via a selective capital reduction and repayment exercise.
  
  The plan will result in the reduction of the issued and paid-up share capital of the company from RM264.74 million, or 264.7 million shares, to RM83.8 million, or 83.6 million shares.
  
  This is by way of cancelling 181.1 million shares comprising all outstanding AIRB shares amounting to 98.4 million held by the shareholders and 82.7 million held by MMC.
  
  MMC said upon the completion of the exercise, it would hold 83.6 million AIRB shares, representing the entire issued and paid-up capital of the company.
  
  MayBank Investment Bank Bhd is advising MMC on the deal.
  
  MMC Corp group managing director Datuk Hasni Harun said the privatisation exercise was timely, given the near-term expiry of its main concession/contract, coupled with the illiquidity and lower trading volume of AIRB shares.
  
  "This move will allow MMC to fully consolidate AIRB's earnings into its accounts and also enable both companies to derive more benefits from each other," he said in a statement.
  
  The proposed selective capital reduction and repayment initiative is expected to be completed by the first quarter of 2013.
  
  Besides AIRB, MMC's other core businesses are Port of Tanjung Pelepas (Malaysia's largest container terminal), Johor Port (the country's leading multi-purpose port), and Malakoff Group Bhd (the largest local independent power producer).
  
  It also has interest in Gas Malaysia Bhd (sole supplier of natural gas to the non-power sector) and Senai Airport Terminal Services Sdn Bhd, among others.

The offer carried a 5% premium over last traded share price!!!!

On Star Business: http://biz.thestar.com.my/news/story.asp?file=/2012/7/10/business/11632585&sec=business

• Tuesday July 10, 2012
  MMC to privatise AIRB
  
  It proposes to take Aliran Ihsan private via capital reduction, repayment
  
  PETALING JAYA: MMC Corp Bhd has proposed to privatise its 62.82%-owned subsidiary Aliran Ihsan Resources Bhd (AIRB) via a selective capital reduction and repayment exercise (SCR).
  
  Upon completion of the proposed SCR, expected to be by the first quarter of 2013, MMC would emerge as the sole shareholder of AIRB, whose other significant shareholders at present include Lembaga Tabung Haji, Effective Strategy Sdn Bhd and Public Dividend Select Fund.
  
  In a statement to Bursa Malaysia, MMC explained that the proposed SCR entailed a reduction of the issued and paid-up share capital of AIRB from RM264.7mil, represented by 264.7 million units, to RM83.6mil, represented by 83.6 million units by way of cancelling a total of 181.1 million AIRB shares.
  
  Shares to be cancelled comprised the 98.4 million units held by the shareholders other than MMC, and 82.7 million units held by MMC.
  
  Upon successful completion of the proposed SCR, MMC said it would hold the entire remaining 83.6 million shares in AIRB, resulting in the latter becoming a wholly-owned subsidiary of MMC.
  
  It would delist AIRB from Bursa Malaysia.
  
  MMC said pursuant to the proposed cancellation of 181.1 million AIRB shares, qualified shareholders would be entitled to receive a capital repayment of RM181.1mil, which was equivalent to RM1.84 per AIRB share, while MMC would waive its own entitlement for the capital repayment of RM82.7mil under the proposed SCR.
  
  The capital repayment exercise would be funded through the internal funds of AIRB.
  
  “The intention of privatising AIRB is timely given the near term expiry of AIRB's main concession/contract, coupled with the illiquidity and lower trading volume of AIRB shares,” MMC said in a statement.
  
  “This move will allow MMC to fully consolidate AIRB's earnings into its accounts and also enable both companies to derive more benefits from each other,” it added.
  
  It was noted that the bulk of AIRB's operating revenues are generated from its concession-related businesses, namely, Southern Water Corp Sdn Bhd (SWC), Equiventures Sdn Bhd (ESB) and Aliran Utara Sdn Bhd (AU).
  
  The concession/contract for SWC and AU would be expiring within the next 24 to 28 months, while the concession for ESB had already expired last month.
  
  Both MMC and AIRB were suspended from trading yesterday. AIRB was last traded at RM1.75, and MMC at RM2.61.
  
  Both counters will resume trading today.

A quick look at Aliran Ihsan's last reported quarterly earnings: Quarterly rpt on consolidated results for the financial period ended 31/3/2012 

Aliran's Balance Sheet:

Aliran Ihsan said it had cash deposits worth 273.124 million.

Hardly any borrowings.

Better earnings and the prospects is said to be good with the group's revenue expected to increase....

So how?

MMC will be forking out 181.12 million for a company that has 273.124 million in its piggy bank!!!!

Now is this a great deal or is this not a great deal?

(ps: Good for a read: MSWG Asking Why So Much Money Donated By Syed Mokhtar Firms To Albukhary International University )

A Look Back At MMC Purchase Of Senai Airport Terminal

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

One of wish was on 

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

One of the recent re-highlighted case was 

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

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

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

On the back of global financial crisis that was bringing companies down to their knees, MMC wanted to buy SATS, a company that is losing tons of money, in a CASH deal??? Only rm1.7 Billion!!!! And yeah, SATS so happened to be owned by MMC boss also!!!!

There was this one nice table published on Star papers.

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

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


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

Price per passenger? ( Huh? Exactly! )

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

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

Let me highlight an article on Business Times back then.

• MMC shareholders say Yes to Senai Airport deal
  
  By Adeline Paul Raj Published: 2009/03/21
  
  MMC Corp Bhd's (2194) shareholders approved its controversial plan to buy Senai Airport Terminal Services Sdn Bhd (SATS) for RM1.7 billion despite strong objection from minorities.
  
  At an extraordinary general meeting (EGM) yesterday, which dragged on for four hours, minority shareholders were vocal, making it clear they were against MMC paying such a hefty price in the related-party deal.
  MMC is owned by Tan Sri Syed Mokhtar Al-Bukhary, who is also a shareholder in SATS.
  
  "The minorities were very unhappy and almost wanted to stage a walkout. But we managed to tell them not to do so, and vote," said Minority Shareholder Watchdog Group (MSWG) chief executive officer Rita Benoy Bushon, who attended the EGM.
  
  Bushon said the MMC chairman had invoked his discretion to have a poll instead of a vote by hands and, in the end, 97 per cent voted in favour of the deal.
  
  This was because minority shareholders were few in number. The majority of the non-interested parties who could vote on the deal comprised institutional investors.
  
  MMC is to pay RM580 million for SATS' loss-making Senai Inter-national Airport and RM1.12 billion for land which will be developed as an "airport city".
  
  "I'm not against them buying SATS; it's just the price. It's a valuation argument, that's all," a minority shareholder said.
  
  He, and others, was irked that valuations were based on projected values rather than the current value.
  
  Some felt that MMC, which has some RM20 billion debt, should be preserving its cash now that the economy was slowing down. Others felt that it should wait for a better price.
  
  For MMC, the buy enables it to exploit SATS' potential to become a regional cargo and logistics hub.
  
  MMC chief executive officer Hasni Harun did not face the press yesterday, but in a statement reiterated that the SATS purchase was commercially viable and in the long-term interest of the group and stakeholders.
  
  "With this, MMC will own the only privatised airport in the country and it will create value to the group's transport and logistics business," he said.
  
  Asked if she was happy the deal would go through, Bushon replied: "I had expected that the board would have somehow looked at the valuation again."
  
  She said the board had given assurance, however, that it would be accountable for the purchase. The deal is expected to be accretive in two years.

Today, I would like to focus on the very last passage.

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

This deal was expect to be accretive in two years.

That was March 2009.

Today, its Sep 2011.

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

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

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

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

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

Ahem!

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

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

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

I then proceed to search its Annual Report.

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

But...

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

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

How?

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

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

I am confused.

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

Exactly!

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

Can ah? Can I wish for better ENFORCEMENT?

That's not asking too much, yes?

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

Think about it....

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

How?

Board is given one week to accept the offer.

But... no price is stated.

Like this also can?


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


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

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

The What IF Blue Sky Valuation Strikes Once Again

And ................. OSK strikes again!

Slightly more than a year ago, on March 2010, OSK wrote a report on MMC. Their head of research introduced a brand new yardstick called Blue Sky valuation.

I kid you not!

Let me reproduce what was posted on March 2010: OSK's What If Blue Sky Valuation!Today the same writer is pulling the very same stunt!

Truly amazing la.

Is it too much asking to ask the writer to come up with a better seduction method? As it is, it's rather same old, same old.

Anyway, what do we have?

Today we have What IF.

Oh, he added the BLUE SKY valuation!

OMIGOD! OMIGOD!

I kid you not!

I guess this is the first of the kind in the world.

Ho ho ho ho!

Mr. Blue Sky!

ROFLMAO!

First he states the risk in one small passage...

Then he comes out with his gun banging...

So if my Blue Sky comes, the fair value is rm 3.26. Else it's a plain boring price of 2.41 with an un-seductive target price of rm 2.80!

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

And so how did MMC fared? Well apparently it was cloudy and Mr. Blue Sky was not to be found: Comments On MMC Earnings

And the remarks on MMC's earnings was remarkable. So What Is OSK Saying Now About MMC

And that was then.

Now is 27th April 2011 and OSK head of research is now no longer talking about Mr. Blue Sky. Instead it's the CROWN JEWEL...

ps: Naturally the SOP (sum of parts) value is increased.
A good trade. With Syed Mokhtar definitely appearing to be in the good books of the government currently, we do expect that it will only be a matter of time before something comes MMC’s way. As such, we maintain our Trading Buy call on the company with our SOP fair value unchanged at RM3.62.

MMC's 75 Million Bucks Contribution To University

Posted the other day: MSWG Asking Why So Much Money Donated By Syed Mokhtar Firms To Albukhary International University

• The Edge Financial Daily learnt that Syed Mokhtar’s flagship MMC Corporation Bhd’s AGM at end-April was also a fiery one, with shareholders questioning a RM75 million contribution to the university.

Now there's one very interesting thing to note here.

This donation/contribution (not sure how you would call it) was made from MMC's fiscal year 2009.

Here are MMC's quarterly earnings for fiscal year 2009.

1. Q1 Quarterly rpt on consolidated results for the financial period ended 31/3/2009


2. Q2 Quarterly rpt on consolidated results for the financial period ended 30/6/2009


3. Q3 Quarterly rpt on consolidated results for the financial period ended 30/9/2009


4. Q4 Quarterly rpt on consolidated results for the financial period ended 31/12/2009

I could not find any mention of the 75 million contribution/donation. ( I hope my eyes did not fail me but if it did, please do point to me where. :D)

So I checked the annual report: Annual Report 2009

Page 56 (I use the pdf paging number):

• EDUCATION AND COMMUNITY DEVELOPMENT
  
  The MMC Group is committed to creating education improvement around the country. Indeed, we strive to make education a part of MMC’s culture, and are pleased to work together with numerous government and non-governmental organizations in giving back to society.
  
  We believe that everyone should have access to quality education. We are involved in the development of the Albukhary International University, a non-profit university catered for the poor and less privileged. We are actively involved in adopting schools, sponsorship of books and supplies to underequipped schools and disadvantaged students, organising annual motivation camps and other endeavours towards elevating education for our young as the country progresses into a knowledge economy.

And then page 130 (I use the pdf paging number)

Yeah, the contribution is only mentioned under the Profit Before Tax statement.

Which means, if the minority shareholder did not scrutinise the Annual Report in detail, the minority shareholder would have missed out this 75 million contribution.

75 million babe.

Not a small change.

In the Edge Financial article: Tradewinds unfazed by high debt, lack of corporate governance claims there was this nice little table.

MSWG Asking Why So Much Money Donated By Syed Mokhtar Firms To Albukhary International University

I do want to highlight the following article posted on the Edge Financial.

• Syed Mokhtar-linked firms’ donations questioned
  Written by Jose Barrock
  Thursday, 17 June 2010 11:07
  
  KUALA LUMPUR: Tradewinds Plantation Bhd’s (TPB) AGM today could be an interesting affair as the Minority Shareholder Watchdog Group (MSWG) has sent to the company a set of questions ranging from crude oil pricing to a donation of RM10 million made to the Albukhary International University, sources said.
  
  Of particular interest to minority shareholders will be the RM10 million donation, which is deemed as excessive, representing about 20% of the company’s net profit. MSWG’s list of questions also include seeking clarity on its plans to build palm oil mills.
  
  TPB’s 69.76% parent Tradewinds (M) Bhd is also understood to have received a letter from MSWG over its own contribution of RM10 million as well, to the same university. Tradewinds’ AGM is slated for June 22.
  
  The RM10 million contribution by Tradewinds works out to about 12% of its net profit for FY09. Issues have cropped up as Tan Sri Syed Mokhtar Albukhary controls almost 43% of Tradewinds and has an interest in the university as well.
  
  The RM350 million Albukhary International University in Alor Setar, Kedah comes under the control of the Yayasan Albukhary, which in turn is controlled by Syed Mokhtar.
  
  This will not be the first fiery AGM in the businessman’s stable of companies.
  
  The Edge Financial Daily learnt that Syed Mokhtar’s flagship MMC Corporation Bhd’s AGM at end-April was also a fiery one, with shareholders questioning a RM75 million contribution to the university.
  
  For FY09, MMC posted a net profit of RM236.71 million on RM8.44 billion in revenue, which means the contribution to the Albukhary International University amounted to over 30% of the net profit. Syed Mokhtar, via his vehicle Seaport Terminal (Johore) Sdn Bhd, controls about 42.47% of MMC.
  
  Even more interesting was a contribution by water player Aliran Ihsan Resources Bhd, which gave away some RM20 million to the university. Aliran Ihsan’s net profit for FY09 amounted to RM30.23 million, meaning that the company forked out almost two-thirds of its net profits to the university.
  
  Syed Mokhtar’s MMC has more than 70% equity interest in Aliran Ihsan.
  
  Another company the tycoon controls, Padiberas Nasional Bhd (Bernas), has forked out RM20 million to the Albukhary International University. Bernas is 72.57% owned by Tradewinds.
  
  In total companies linked to the tycoon is understood to have donated anywhere between RM135 million and RM150 million to the university. Another Syed Mokhtar-controlled company, DRB Hicom Bhd, has not done so.
  
  According to MSWG’s letter to TPB, such donations are normally in the 2% or 3% range of net profits and that “the (TPB) board should provide more clarification on the substantial contribution”.
  
  “Giving out to charity or such causes is fine; just ensure the company pays out dividends and then pay it from your own pocket,” an industry observer said.
  
  
  This article appeared in The Edge Financial Daily, June 17, 2010.

Link: http://www.theedgemalaysia.com/in-the-financial-daily/168106-syed-mokhtar-linked-firms-donations-questioned.html

How?

So much money... going to just one university.

Here is Albukhary International University website: http://www2.aiu.edu.my/

Here is one blog posting on AIU last year:

http://syedcardiac.blogspot.com/2009/07/albukhary-international-university.html

• The proposed University Campus, located near Alor Setar city center will be built on approximately 70 acres of land. It is envisage that this university will be a modern and progressive Islamic Institution, focusing on Islamic knowledge in Science, Technology and Arts.

Do check it out as it as pictures of the University loaded.

So What Is OSK Saying Now About MMC

Blogged this morning. Comments On MMC Earnings

Just got a copy of OSK latest report on MMC.

Here's OSK comments.

• MMC’s results disappointed again, pulled down by continued losses at Zelan and high tax and MI rates. While we expect the high tax and MI rates to normalize, the disappointment at Zelan leads us to forecast zero associate earnings for 2010 and strip out Zelan from of our Sum of Parts value for MMC. Due to the lower net profit forecast (down 5%-6%) and a higher attributed WACC due to market volatility, our SOP fair value is reduced to RM2.54. Nonetheless, there is still value in the company, and the upcoming 10MP as well as hopes for expansion of the Tanjung Bin power plant prompt us to maintain our Trading Buy call.
  
  

So it's Zelan's losses, higher tax rates and MI rates.

It's not the fault of the researcher who had assigned such incredible earnings forecast of 424 million.

Yeah, MMC is only expected to see an earnings growth of ONLy 79.3%.

So if MMC disappoint, it's not all MMC's fault and not the fault of the researcher who assign such an incredible earnings forecast.

Hey, researcher cannot be wrong, yes?

Now here comes another incredible thing.

MMC only earned some 34.3 million for the first quarter. OSK did revised down the earnings forecast for MMC.

Earnings estimate fell from 424 million to 399.1 million. Yeah, OSK downgraded the earnings estimate to 399.1 million.

Yeah, after MMC earnings on a Q-Q basis fell from 107.7 million to 34.3 million, OSK still expects MMC to have a yearly growth of some 68.6%!!!

WOW!

No wonder MMC is still considered a trading buy despite having its target price revised down from 2.80 to 2.54.

Incredible!

Let's see.. one year has 4 quarters. First quarter MMC only earned some 34.3 million. To reach 399.1 million, MMC needs to earn some 364.8 million for the remaining 3 quarters!. Oh, this equates to roughly an earnings of rm 121.6 million per quarter.

LOL!

Good or what??!!

Comments On MMC Earnings

I just saw Business Times article on MMC earnings.

• Power, ports drive MMC profit jump
  
  Published: 2010/05/26
  
  MMC Corp Bhd (2194), a power producer and port operator, said its first quarter net profit rose by a tenth, driven by its power and logistics businesses.
  
  The group, controlled by Tan Sri Syed Mokhtar Al-Bukhary, expects to do better for the year to December 31 due to a better Malaysian economy. It made a net profit of RM236.7 million for 2009.
  
  MMC made a net profit of RM34.4 million for the quarter to March 31. Revenue was up 8.2 per cent to RM2.1 billion. Its pre-tax profit jumped by almost a third to RM210.4 million.
  
  The group's energy and utilities division, which posted a revenue of RM1.7 billion in the quarter, reported improved results. Its share of the group's pre-tax profit rose by 19 per cent.
  This was "mainly driven by better performance of Malakoff Corp Bhd and higher volume gas sold by Gas Malaysia Sdn Bhd," MMC said in a statement to Bursa Malaysia.
  
  Its transport and logistics division's share of pre-tax profit surged 75 per cent due to higher throughput volume from port business, following the global economic recovery.
  
  However, there was lower contribution from its engineering and construction division due to the lower contribution from the double-track railway project. This is due to revisions in the overall margin, MMC said.
  
  Shares of MMC fell 1.3 per cent to close at RM2.26 yesterday.

It is sounding good eh?

Then I look more carefully.

That one line "It made a net profit of RM236.7 million for 2009." made me curious.

Last year, it made 236.7 mil. Now the first quarter it only made 34.4 million. At this rate, surely MMC would make much less money.

Time to do some digging. :D

Feb 2010: Quarterly rpt on consolidated results for the financial period ended 31/12/2009. MMC made 107.7 million.

Nov 2009: Quarterly rpt on consolidated results for the financial period ended 30/9/2009. MMC made 90.534 million.

Doh!

MMC said it made only 34.4 million!

Then I realised something..... hey... Mr. OSK, did write something on MMC and I blogged on it. OSK's What If Blue Sky Valuation! LOL! the report was written by Head of research, himself, Chris Eng! Hello Is The Stock Market Heading For Better Times Or .... Not???

Hmm... my mind started racing. LOL!

Seriously... LOL!

I was so excited... cos...I forgot how OSK made their valuation on MMC already and I was wondering how is MMC earnings compared to OSK's forecast made.

Oh my!!!!!!!!!!!!!!!!!

Quote:

• While we are conservatively sticking to our earnings forecast for now

Chris Eng's conservative forecast earnings for MMC Corp was rm 424.2 million!!!!!!

Come lah.. how can this be considered conservative when the earnings forecast was assumed to grow at 79.3% this year!!!!!!!!!!

Does earnings grow so easily????

79.3%!

LOL!

Oh... MMC only earned 34.4 million!!!!!!!!!!!!!!!

How lah?

OSK's What If Blue Sky Valuation!

Randomly dedicated. :p4

I seriously wonder if history will repeat itself!!!!

Back in December 2009, I wrote this A Stock Called Ramunia And A Research Report Titled 'The Big IF'

Did you see the report? The Big IF!

Today the same writer is pulling the very same stunt!

Truly amazing la.

Is it too much asking to ask the writer to come up with a better seduction method? As it is, it's rather same old, same old.

Anyway, what do we have?

Today we have What IF.

Oh, he added the BLUE SKY valuation!

OMIGOD! OMIGOD!

I kid you not!

I guess this is the first of the kind in the world.

Ho ho ho ho!

Mr. Blue Sky!

ROFLMAO!

First he states the risk in one small passage...

Then he comes out with his gun banging...

So if my Blue Sky comes, the fair value is rm 3.26. Else it's a plain boring price of 2.41 with an un-seductive target price of rm 2.80!

I kid you not!

ps: stock had already done very well considering its recent history.

ps/ps: How come so boring one? No new style to cook meh?

Again On MMC And Senai Airport

Posted last March: Hwang-DBS Advises MMC Shareholders To Vote For SATS Purchase???

Here's a screen shot of what I wrote..

Yeah, Hwang DBS recommended MMC shareholders to approve the deal based on that incredible out-of-this-world earnings forecast of 93.3 million!!

And after that debacle, on yesterday's Financial Daily, MMC gets first cargo client at Senai airport

Yeah, first cargo client at Senai airport!!!!!!!!!!!! Let's celebrate yo!

And can someone tell me again, how much did MMC pay for the Senai Airport?

Great to allow RPT eh? (RPT = related party transaction)

On today's business times, Senai Airport to break even in 2013/2014: OSK

• SENAI Airport Terminal Services Sdn Bhd (SATS) will only break even in 2013/2014 despite new deals and plans, OSK Research says.
  
  SATS is a unit of MMC Corp Bhd, which has secured a deal with MAS Cargo Sdn Bhd to launch a new weekly freighter service to Narita, Japan, and received a notification last week from the International Trade and Industry Ministry to proceed with the development of the country's second high-tech park, namely Senai High Tech Park.
  
  "In both cases, there are no changes to our forecasts and we continue to see SATS only breaking even in 2013/2014," said OSK in its research report yesterday.....

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

When you own shares in a listed company, there are issues that you can vote for.

If you see a listed company comes up with a proposal and you think it stinks so bad, it is your right to vote. And when you don't vote, these stinking deals will pass. It's so simple.

The very least you can do is attend the EGM and voice out why you think the deal is not fair to you, the minority shareholders. It is your right. It is your money.

And when you do not attend then most likely than not, these unfair deals would repeated over and over again.

And that is why the minority shareholders get the short end of the stick.

Unless you are the smarter ones and you had already voted with your feet!

Yesterday, it was voting day for MMC and it's rather absurd Senai Airport deal.

• MMC shareholders say Yes to Senai Airport deal
  
  By Adeline Paul Raj Published: 2009/03/21
  
  MMC Corp Bhd's (2194) shareholders approved its controversial plan to buy Senai Airport Terminal Services Sdn Bhd (SATS) for RM1.7 billion despite strong objection from minorities.
  
  At an extraordinary general meeting (EGM) yesterday, which dragged on for four hours, minority shareholders were vocal, making it clear they were against MMC paying such a hefty price in the related-party deal.
  
  MMC is owned by Tan Sri Syed Mokhtar Al-Bukhary, who is also a shareholder in SATS.
  
  "The minorities were very unhappy and almost wanted to stage a walkout. But we managed to tell them not to do so, and vote," said Minority Shareholder Watchdog Group (MSWG) chief executive officer Rita Benoy Bushon, who attended the EGM.
  
  Bushon said the MMC chairman had invoked his discretion to have a poll instead of a vote by hands and, in the end, 97 per cent voted in favour of the deal.
  
  This was because minority shareholders were few in number. The majority of the non-interested parties who could vote on the deal comprised institutional investors.
  
  MMC is to pay RM580 million for SATS' loss-making Senai Inter-national Airport and RM1.12 billion for land which will be developed as an "airport city".
  
  "I'm not against them buying SATS; it's just the price. It's a valuation argument, that's all," a minority shareholder said.
  
  He, and others, was irked that valuations were based on projected values rather than the current value.
  
  Some felt that MMC, which has some RM20 billion debt, should be preserving its cash now that the economy was slowing down. Others felt that it should wait for a better price.
  
  For MMC, the buy enables it to exploit SATS' potential to become a regional cargo and logistics hub.
  
  MMC chief executive officer Hasni Harun did not face the press yesterday, but in a statement reiterated that the SATS purchase was commercially viable and in the long-term interest of the group and stakeholders.
  
  "With this, MMC will own the only privatised airport in the country and it will create value to the group's transport and logistics business," he said.
  
  Asked if she was happy the deal would go through, Bushon replied: "I had expected that the board would have somehow looked at the valuation again."
  
  She said the board had given assurance, however, that it would be accountable for the purchase. The deal is expected to be accretive in two years.

Another sad day for corporate Malaysia.
Past postings:

• Hwang-DBS Advises MMC Shareholders To Vote For SATS Purchase??
• MMC And Its Senai Airport Terminal Purchase!
• More On MMC And Its Senai Airport Terminal Purchase!

Hwang-DBS Advises MMC Shareholders To Vote For SATS Purchase???

Blogged previously: MMC And Its Senai Airport Terminal Purchase! and http://whereiszemoola.blogspot.com/2008/12/more-on-mmc-and-its-senai-airport.html

On today's Star Business: Hwang-DBS advises shareholders to vote for SATS purchase

• Wednesday March 11, 2009
  Hwang-DBS advises shareholders to vote for SATS purchase
  By YEOW POOI LING
  
  PETALING JAYA: Hwang-DBS Investment Bank has advised shareholders of MMC Corp Bhd to vote in favour of the company’s controversial proposal to buy Senai Airport Terminal Services Sdn Bhd (SATS).
  
  Last August, MMC proposed to buy SATS for RM1.95bil via issuance of shares but the offer was revised downwards in December to RM1.7bil, to be paid with internally-generated funds, disposal of assets and external loans.
  
  The exercise, however, has fallen under scrutiny due to the present economic climate and the nature of the transaction, which involved a common major shareholder and parties related to Tan Sri Syed Mokhtar Al-Bukhary.
  
  In a circular to shareholders last Friday, MMC attached a recommendation letter from independent adviser Hwang-DBS, which deemed the overall terms of the SATS acquisition as “fair and reasonable,” and not detrimental to the non-interested shareholders of MMC. “There are sufficient merits to the rationale of the proposed SATS acquisition and it is in the long-term interests of the company,” Hwang-DBS said.
  
  SATS operates the Senai International Airport in Johor and holds 100% of Enigma Harmoni Sdn Bhd (EHSB), which owns 1,098.1ha designated for development into Senai Airport City.
  
  The investment bank said SATS was envisaged to play a key role in the transport and logistics segment of MMC given the strategic location to become the country’s southern logistic hub.
  
  It added that the discount rate of 10% to 12% used by Ernst & Young to value the Senai International Airport operations was within range of the cost of equity of companies involved in airport business.
  
  The implied price per passenger of the Senai International Airport of RM395 was significantly lower than other airports’ average price of RM700 from 1986 to 2006, Hwang-DBS said.
  
  Based on the price consideration of RM1.12bil for EHSB and its adjusted net asset of between RM1.18bil and RM1.35bil as at June 30, 2008, it translates into price over net asset of 0.83 times to 0.95 times, which were within the range of its peers of 0.26 times to 1.67 times.
  
  Hwang-DBS also said the valuations of EHSB’s land by IPC Island Property Consultants Sdn Bhd and Knight Frank Ooi & Zaharin Sdn Bhd were within Ernst & Young’s adjusted valuation range.
  
  IPC estimated the land at RM2.2bil while Knight Frank valued it at close to RM2bil. Knight Frank’s appointment as the second valuer complied with the Minority Shareholders Watchdog Group’s request for an alternative opinion on the valuation.
  
  The proposed acquisition of SATS would lead to MMC’s earnings in the current fianancial year being negatively impacted by RM44.06mil, or earnings dilution of 1 sen per share, assuming that the acquisition was funded entirely by bank borrowings.
  
  However, it would contribute positively to the future prospects of the enlarged MMC group.
  
  “As the Senai International Airport is already operational, there is no financial commitment required from MMC to put the existing airport business on stream,” Hwang-DBS said.
  
  SATS has stayed in the red in the past five years due to additional capital expenditure, high operating costs and financing payments.
  
  For the six months ended Dec 31, its revenue fell 3% to RM12.8mil from the previous corresponding period while losses almost doubled to RM7.9mil year-on-year. This was due to lower revenues generated and higher depreciation charges arising from the revaluation of the lease of the airport land in 2008.
  
  The MMC board, however, has forecast SATS to report a profit after tax of RM93.3mil for the 14 months ending June 30, 2010 on the back of property and sublease contracts sales as well as the success of SATS’ application for a 100% investment tax allowance.

Implied price per passenger?????

Holy cow great yardstick!!

Let me loook back at the following list of issues highlighted on the local papers.

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

Let me try to understand hor.

On the back of global financial crisis that is bringing companies down to their knees, MMC wants to buy SATS, a company that is losing tons of money, in a CASH deal??? Cash??? Only rm1.7 Billion!!!! And yeah, SATS so happened to be owned by MMC boss also!!!!

And this is good for MMC shareholders???

And what's Hwang-DBS advice again?

In the Star Business article there is a chart.

Can you see all the years of loss making?

And 2010.. the incredible forecast is a profit of 93.3 million.

LOL!

Life is good.

MSWG Gains Vital First Victory In Its Battle Against MMC's Senai Airport Terminal Purchase

Last December I pointed out that MMC was rightly sold down due to its incredible unjustifiable RPT transaction for Senai airpot. MMC And Its Senai Airport Terminal Purchase!

It made zero sense in my flawed opinion.

More On MMC And Its Senai Airport Terminal Purchase

Some of the points highlighted in the local papers which I agreed so much.

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

Yesterday on Star Business.

• Wednesday March 4, 2009
  MMC investors want second opinion on SATS deal
  By DANNY YAP
  
  KUALA LUMPUR: Minority institutional and retail investors of MMC Corp Bhd want a second independent valuation on the proposed acquisition by MMC of the entire stake in Senai Airport Terminal Services Sdn Bhd (SATS).
  
  They reached the decision after two separate meetings held yesterday with the Minority Shareholders Watchdog Group (MSWG).
  
  A number of the minority shareholders, both institutional and retail, present at the meetings had expressed their concerns to MSWG over the valuation process.
  
  The first valuation on SATS, valued by IPC Island Property Consultants Sdn Bhd, was tagged at RM2.229bil.
  
  However on Aug 4, 2008, MMC announced to the stock exchange that the SATS valuation would be RM1.95bil to be satisfied by the issuance of 696.4 million new MMC shares at RM2.80 per share.
  
  But on Dec 5, 2008, MMC told Bursa the company was prepared to acquire SATS for RM1.7bil and that payment would be made by cash in full, via internally generated funds and disposal of some assets as well as external borrowings.
  
  This prompted the stock exchange to query MMC on Dec 10 on the reason for the revised mode in acquiring SATs (from shares to cash) and also the fall in price.
  
  Minority shareholders at yesterday’s meetings said since the acquisition involved a hefty sum of money, they felt a second independent valuation of SATS was warranted to ensure an objective and fair market price.
  
  Moreover, SATS was still a loss-making entity, they said.
  
  The minority stakeholders also wanted to know in greater detail how the acquisition of SATs would benefit and enhance their interest, especially in terms of future dividends and the impact on MMC’s performance, going forward.
  
  “We are not against MMC’s acquisition of SATS so long as the purchase price is fair and is potentially yield-accretive but we need to be given sufficient knowlegde by the company to make an informed decision,” one shareholder said.
  MSWG chief excutive officer Rita Benoy Bushon said the meetings were held to enable institutional and retail investors to voice their concerns so that MSWG could relate their views to MMC’s management on Wednesday.
  
  “We will be seeing them (MMC management) tomorrow,” she said, adding that MSWG would be having more of such meetings in future with minority shareholders to benefit all stakeholders.
  
  Bushon said the meetings were also to educate minority shareholders on their rights as shareholders so that they could make an informed vote.
  
  MMC’s AGM could be in this month and an EGM for minority shareholders to vote on the SATS acquisition was expected before the AGM.
  
  It is believed that the proposed SATS acquisition would further increase MMC’s intangible assets and goodwill upon consolidation.
  
  Bushon said that since the SATS acquisition by MMC involved a related-party transaction, the minority shareholders’ votes were critical in the decision-making process.
  
  She said this was MSWG’s first meeting on such issues and that while the turnout was encouraging, it could have been better.
  
  “MSWG would like to see greater participation from retail and institutional investors in future meetings since they are financial custodians to many smaller investors.”

Great job Rita!

Great job MSWG!

And yes, I agree with what Rita is saying about participation.

In this MMC deal, the RPT nature of the Senai purchase made utter no sense in my flawed opinion. And if the minority shareholders wishes NOT to get the short end of the stick, they should participate in such events. It's their money, their rights and it makes only logical sense that the minority shareholders fight for what is just!

And on today's Business Times, there were some 'form' of positive development!

• MMC agrees in principle
  
  By Adeline Paul RajPublished: 2009/03/05
  
  MMC Corp Bhd (2194) has agreed in principle to get a second opinion on the value of its proposed acquisition of Senai Airport Terminal Services Sdn Bhd (SATS), says Minority Shareholder Watchdog Group (MSWG).
  
  "MMC has agreed in principle, subject to their board's approval, to obtain a second valuation by a reputable independent valuer to give comfort to the minority shareholders," MSWG chief executive officer Rita Benoy Bushon said after meeting with MMC's management yesterday.
  
  She said the board's approval was needed as it would be a costly exercise for MMC to appoint another valuer.
  
  If approved, the new valuation would take into consideration the current market situation.
  
  MMC's plan to buy the loss-making SATS for RM1.7 billion is controversial as it is a related-party transaction.
  
  Institutional and minority shareholders are worried as to whether MMC, a conglomerate owned by Tan Sri Syed Mokhtar Al-Bukhary, is paying a fair price for SATS, which is also owned by Syed Mokhtar.
  
  The first valuation, by IPC Island Property Consultants Sdn Bhd, tagged SATS at RM2.23 billion, but minorities argued that the sum did not reflect the current market situation and have been insisting on another independent valuation.
  
  MMC, meanwhile, said yesterday that it would address all concerns over the SATS deal in a circular to shareholders sometime this month.
  
  It is targeting to hold an extraordinary general meeting, at which shareholders can vote on the deal, by the end of the month.
  
  "All their concerns will be addressed in the circular, which has been submitted to Bursa Malaysia for approval," senior general manager of corporate services Azlan Shahrim told Business Times yesterday.
  
  The circular will provide sufficient information for shareholders to make an informed decision and determine whether the deal is earnings-accretive to MMC, Azlan said.
  
  MMC's management had an hour-long meeting with MSWG yesterday afternoon to discuss the SATS deal.
  
  MMC took note of MSWG's views, including concern, over the valuation process, Azlan added.
  
  According to Bushon, MMC had said that borrowings for the deal would be minimal and that the credit line was available.
  
  Minorities had been concerned that MMC's cash funds of RM3.8 billion would be reduced after the proposed acquisition. It already has large long-term borrowings of almost RM20 billion.

My fingers are crossed for a positive ending in this annoying RPT transaction in MMC.

More On MMC And Its Senai Airport Terminal Purchase!

Posted earlier: MMC And Its Senai Airport Terminal Purchase!

Just saw this article on TheEdgeDaily. It's excellent!

• 10-12-2008: Institutional shareholders should scrutinise Senai deal
  Commentary by M Shanmugam
  
  As the economy skids, companies are conserving cash to weather the storm ahead. Some have called off deals to buy property, and they included IOI Corp Bhd which in the process lost a deposit of RM73 million.
  
  On the other hand, others such as YTL Corp have splurged billions scooping up power generation and property assets in Singapore.
  
  MMC Corp, it appears, is following the YTL example by proposing to pay RM1.7 billion cash to acquire Senai Air Terminal Services Sdn Bhd (SATS), which holds Senai Airport and 2,718 acres of land around the Senai Airport.
  
  Based on the announcement, MMC has undertaken to advance RM417.2 million which is owed by SATS to the vendors. The vendors in the deal are Semarak Sestu Sdn Bhd and Suria Kemboja Sdn Bhd which own SATS. Both companies are believed to be linked to MMC’s major shareholder Tan Sri Syed Mokhtar Albukhary.
  
  Last week, MMC announced that the price tag for the airport and land had been reduced from RM1.95 billion to RM1.7 billion. With the reduction in price, the proposal is to be transacted in cash as opposed to shares previously.
  
  Irrespective of whether the deal is done in cash or shares, there is every reason for minorities to scrutinise the proposal.
  
  In the first place, does MMC need more land? Even if it does, why must the deal be done now, especially in cash? Is it necessary for MMC to undertake the deal at this juncture when asset prices are fast coming down?
  
  To be sure, YTL Corp splurged S$4.3 billion (RM10.33 billion) gobbling up assets in Singapore over the past one year. But then, MMC’s coffers are nowhere near YTL’s level. Also, the quality of assets that YTL has scooped up makes it likely that they will contribute to its earnings in the next one year or so.
  
  When will Senai Airport and the land around it contribute to the bottom line of MMC positively? Also, what is the true valuation of Senai Airport and land that comes together with it?
  
  Let’s take a look back. In 2003, Malaysia Airports Holdings Bhd (MAHB) sold the airport, which comprised a runway measuring 3.3km in length and one passenger terminal that is able to accommodate 2.5 million passengers per annum. The previous year, Senai handled 874,278 passengers, 28,759 aircraft movements and 3,849 tonnes of cargo.
  
  When MAHB sold the airport and its operations for RM80 million, the unaudited net book value of Senai Airport was RM76.8 million while the turnover and operational losses were RM8.8 million and RM300,000 respectively.
  
  According to MMC’s announcement, Senai Airport is situated on a 1,226-acre site, has a 3.5km runaway and nine aircraft parking bays, four of which are connected to the terminal.
  
  The unaudited net tangible asset (NTA) of the SATS Group and loss after tax as of June 30, 2008 are RM295.5 million and RM24.8 million. SATS has commenced the construction of an aero mall which will include a hotel, restaurants and entertainment facilities.
  
  The airport and its operations are now valued at RM580 million. On what basis has the value increased to RM580 million? Even if the work in progress on the aero mall is worth that much, does MMC need such assets?
  
  The proposed purchase of the 2,718 acres for RM9.45 per square foot (sq ft) is also questionable.
  
  Based on previous reports, the land was acquired from Lee Rubber at less than RM3 per sq ft. Now it is sold for three times the amount transacted less than two years ago. The status of the land has probably been converted from agriculture to industrial.
  
  But MMC does not need that piece of land, especially now. It is a long term development and MMC already has enough long term projects in its hands now. It has its hands full with the Port of Tanjong Pelepas and the Jizan Economic City in Saudi Arabia.
  
  Why does it need more long term assets?
  
  MMC used to be majority owned by Permodalan Nasional Bhd. It was an asset rich company and concentrated mainly on natural resources. Today it is majority controlled by Syed Mokhtar and its cash flow is mainly from Malakoff Bhd, an independent power producer (IPP).
  
  Both the port and Malakoff are operating in regulated environment where things can change and affect cash flow. The Senai Airport and the land around it is something that requires a lot of capital before it pays off. Without strong cash flow, MMC will be sitting with a lot of assets but no cash to develop them. Worse still, there will be no dividend pay-outs.
  
  If PNB and other institutional shareholders do not stop the deal, they only have themselves to blame.
  

Source: here


Oh, PNB do you see what the market is seeing?

Do you?

MMC And Its Senai Airport Terminal Purchase!

Published on Star Business: MMC shares fall on weak sentiment

• Wednesday December 10, 2008
  MMC shares fall on weak sentiment
  By LOONG TSE MIN
  
  PETALING JAYA: Shares in MMC Corp Bhd fell yesterday on weak sentiment, after the company announced revised terms for its proposed acquisition of Senai Airport Terminal Services Sdn Bhd (SATS).
  
  MMC shares fell 8%, or 10 sen, to RM1.15.
  
  AmResearch said in a report yesterday that it expected sentiment on the stock to remain weak due to concerns over corporate governance risks and a likely contraction in future earnings if the deal were to materialise.
  
  MMC announced on Friday that the price for its proposed acquisition of SATS and the surrounding 2,718 acres had been lowered to RM1.7bil, a discount of 12.8%.
  
  However, the purchase would now be paid for entirely in cash.
  
  AmResearch analyst Alex Goh said in the report: “This is a negative development as this involves the sale of MMC’s assets to fund the acquisition.
  
  “MMC may end up swapping a profitable business with a currently loss-making airport operation on top of a huge undeveloped land, which will take years to mature.”
  
  MMC is a related party to SATS through Tan Sri Syed Mokhtar Al-Bukhary, who is a major shareholder of both companies and also a substantial owner of the surrounding land.
  
  AmResearch is lowering its fair value on MMC to RM1 per share, pegged to financial year 2009 price/earnings ratio of six times compared with its earlier fair value of RM2.22 per share based on a sum-of-parts valuation of RM4.40 a share.
  
  The research house is also uncertain when the group can turn SATS’ operations around given the global economic downturn. However, it added that this could be mitigated if MMC managed to dispose of part of the Tanjung Bin land for cash.
  
  A local head of research, who maintains a “buy” call on the counter, disagreed with AmResearch’s view.
  
  “Why downgrade now when the price is lower? The acquisition is only a small part of MMC’s overall business and may have synergy with MMC’s (other logistics businesses) Port of Tanjung Pelepas and Johor Port assets.
  
  MMC owns 70% of the Port of Tanjung Pelepas and 100% of Johor Port.

I FULLY AGREE 108% with AmResearch views. **Yeah I agree more than 100%**

Nice to see Star Business publishing those comments, however...

I do not understand the reporting by Star biz on the last few passages.

• A local head of research, who maintains a “buy” call on the counter, disagreed with AmResearch’s view.
  
  “Why downgrade now when the price is lower? The acquisition is only a small part of MMC’s overall business and may have synergy with MMC’s (other logistics businesses) Port of Tanjung Pelepas and Johor Port assets.

So who is this LOCAL HEAD OF RESEARCH?

Why un-named? So shy?

Comeon, if those comments come from a HEAD OF RESEARCH why afraid to be quoted?

Comments like those makes NO SENSE when the source is not quoted!

So is the acquisition small? Can one compare with MMC's overall business and calls the Senai Airport purchase small? Can this HEAD OF RESEARCH justify the purchase in terms of returns? Yeah, what kind of return of investment are we even talking about? And can this HEAD OF RESEARCH justify the RPT in this deal? Yeah, RPT! It's like left hand selling to the right hand. Where is the justification to MMC's minority shareholders?

And on Business Times, the article was even better!

So firstly we have MMC shares being punished yesterday due to the RPT nature of a rather unjustifiable purchase of Senai Airport Terminal.

Look at what Business Times has to offer below. (Comments in Green is mine)

• Strong interest in PTP stake
  
  By Shahriman JohariPublished: 2008/12/10
  
  MMC Corp Bhd (2194), an operator of ports and power plants, may sell part of Malaysia's second largest container port to fund expansion plans, sources said. (Sources again?)
  
  The group, controlled by Tan Sri Syed Mokhtar Albukhary, has received strong interest from local and foreign parties to buy a stake in the Port of Tanjung Pelepas (PTP).
  
  "It is understood that one foreign party has even offered to take control of the port. That shows how much they value the business," one of the sources told Business Times. (one of the sources ah? Only one? )
  
  MMC needs to raise at least RM1.7 billion to buy airport operator Senai Airport Terminal Services Sdn Bhd (SATS), that also owns a big piece of land in Johor.
  
  MMC now holds 70 per cent of PTP, with the rest held by Danish shipping giant Maersk Line.
  
  Another source said an independent valuer has priced the port at around RM9 billion. (Full of sources!!!)
  
  Assuming MMC sells a fifth of PTP at this value, it could raise about RM1.8 billion. It would also still have control of the port, which is the 17th busiest container port in the world.
  
  Sources said that several large shipping lines including Taiwan's Evergreen Marine Corp have made their interest known, while some local institutional investors are also in the running.
  
  MMC's ports business, which also includes Johor Port Bhd, is the group's second biggest profit contributor after its power plants.
  
  In the year to December 31 2007, the ports division posted an operating profit of some RM418 million, its annual report showed. It did not give a breakdown of how much PTP earned for that year.
  
  MMC officials declined comment when contacted.
  
  Last week, MMC said that talks on the disposal were at an advanced stage.
  
  MMC has now proposed to buy SATS from Syed Mokhtar at a lower price and will pay in cash instead of shares.
  
  It had wanted to buy SATS for RM1.95 billion in an all-share deal when the stock was trading around RM2.80 apiece.
  
  However, it now has more than halved, which means that if the deal was done at a lower share price it would dilute MMC's shareholders (other than the main shareholders).
  
  MMC's earnings per share would also fall due to the bigger number of shares.
  
  "The current share price is not reflective of MMC's inherent value which now trades at a multiple of approximately only 0.7 times book value per share of RM1.94.
  
  "The cash consideration will eliminate earnings dilution resulting from issuing a sizeable number of shares at the current depressed price," it said in a statement last week.
  
  The new price includes RM580 million for airport operations and RM1.1 billion for SATS' 1,099ha of freehold land slated for development as a logistics city.
  
  However, the revised deal has been criticised by analysts who said the sale could be "value destroying" as it reduces profit from its core business. They also pointed out to governance risks as the deal is a related party deal while SATS has yet to make money.
  
  Shares of MMC fell eight per cent to close at RM1.15 yesterday. (my article source is here )

So many un-quoted sources in just one article. How? Where's the credibility in such reporting?