Magnum Wants Relisting? Why Can't Delisted Companies Stay Delisted?

Please do excuse while I make my rant!

DAMN! DAMN! TRIPLE DAMN!

I just hate to see a listing company list, then delist and then relist again.

It's pure nonsense!

Comeon Bursa... don't make our stock exchange so cheapskate by accepting all these nonsensical corporate exercises.

If they want to list, list. If they want to delist. stay delisted! Just don't come back asking for a relisting!

Yes or not?

It was their OWN choice that they want to delist.

It was their OWN choice that they choose they delist at a price that was unfavourable to long term minority shareholders.

Now they want to relist?

Where got meaning?

And what's the point for any minority shareholder be a long term investor when companies act anyhow and anyway they want?

It's sickening to read public statements like MPHB making statements like this: MPHB foresees relisting Magnum

• Multi-Purpose Holdings Bhd (MPHB) foresees the potential relisting of numbers forecast operator, Magnum group, depending on the exit strategy of its partner CVC Asia Pacific Ltd, a private equity firm.
  
  “We (MPHB) are in Magnum for the long term. They (our partner) have their own exit strategy to release funds for their investors, and one of the main avenues when that happens is to list Magnum,” MPHB director T Vijeyaratnam said after MPHB’s AGM here yesterday.
  
  MPHB and CVC had privatised Magnum group in June 2008, with the former holding a 51% stake.
  
  Magnum Corporation Sdn Bhd CEO Lawrence Lim Swee Lin added that the public was ready for another gaming company to be listed.
  
  “We look at it as a main core business and would like to maintain our percentage in Magnum. In the event of a listing exercise, we will ensure MPHB shareholders get first priority (when it happens),” he said.
  
  Lim added the IPO might be conducted on its own or via a merger and consolidation exercise to create an even bigger entity.
  
  “The IPO would not be so much to raise funds but to ensure our MPHB shareholders gets first priority,” he said, adding that the group had a strong cash flow with low gearing....

The Magnum story as a stock was so so sad.

More stories on Magnum Again?

My Dearest Moo Moo Cow,

This is simply getting disgusting.

I am well aware that you had blogged on Magnum before. Magnum Mulls Capital Repayment? and Update On Magnum

In short, the article posted on Business Times back on Saturday 14th 2007, Magnum mulls capital repayment exercise had been DENIED by Magnum before.

• Having made due and diligent enquiry with the directors of Magnum Corporation Berhad ("Magnum" or "Company"), Magnum wishes to inform Bursa Securities that the Board of Directors of Magnum has not considered any plan or proposal to return capital to Magnum's shareholders. Nevertheless, the Board of Directors of Magnum is constantly committed to increasing returns to shareholders and, in the event the Magnum Board decides on any relevant proposal, Magnum will make the necessary announcement in accordance with Bursa Securities' Listing Requirements.
  
  As for the second underlined sentence in the said article which makes reference to a "proposal to distribute in specie scripts of its parent Multi-Purpose Holdings Bhd (MPHB)", Magnum wishes to place on record that Magnum has already announced on 8 February 2007 that Magnum had on that day disposed of all its holdings of securities in MPHB, comprising 94,379,261 MPHB shares 94,902,966 MPHB warrants, via off-market transactions.

And again as shown in your Chart Update on Magnum went from 3.46 to close on Monday morning session at 3.76!!!!!

And the following chart showed how Magnum DIVED when Magnum denied the story.

Today, May 12th, the same writer writes the same thing on Business Times yet again!

Yup, he strikes again!

Magnum may dish out special 'ang pow'

See my dearest Moo Moo Cow, I wonder why the corporate always has to answer what's written in the press when the press bases their story on sources! I wonder do they QUESTION the press where these SOURCES came from?

Here's the article posted today.

• Magnum may dish out special 'ang pow'
  By Francis Fernandez
  bt@nstp.com.my
  
  May 12 2007
  
  THE directors of Magnum Corp Bhd, a gaming firm, are scheduled to meet on Tuesday to discuss a plan to reward shareholders, bankers familiar with the matter said yesterday.
  
  Business Times was told that the country's second biggest number-betting operator by market value, will consider a proposal to return between 70 sen a share and 80 sen a share to shareholders via a special dividend.
  
  About a month ago, Magnum denied a Business Times article on the plan, but did not discount considering such a proposal in the future.
  
  Speculation of a possible payout has intensified of late, fuelled by the massive open market buying of Magnum shares by its parent Multi-Purpose Holdings Bhd (MPHB).
  
  MPHB, in which tycoon Tan Sri Quek Leng Chan bought a 19.4 per cent stake in February, had bought slightly more than 50 million Magnum shares in a span of one month, filings to the stock exchange show.
  
  Bursa filings show that Multi-Purpose has 730.96 million Magnum shares or about 51.15 per cent as at April 4. This has risen to 54.64 per cent on May 8.
  
  The special dividend is a plan that aims to improve the attractiveness of Magnum as an investment stock.
  
  In February, Malayan Banking Bhd's (Maybank) research unit said in a report that the country's oldest four-digit gaming company was working on a plan to distribute up to 98 sen per Magnum share to minority shareholders.
  
  For the year ended December 31 2006, Magnum posted a net profit of RM252.90 million.
  
  The company is also proposing to pay a dividend of 14 sen a share or RM83.5 million for 2006.
  This is the first time since 2001, when it doubled dividend per share to 10 sen, that the company has increased the payout ratio to stakeholders.

How?

Would you trust this same story again?

And if this story is DENIED, don't you think that these 'bankers familiar with the matter said' should answer to the investing public?

Personally I believe it's simply DISGUSTING based on what happened before and especially the stock moves substantially higher based on a story which proved to be nothing but baseless speculation! But hey, that's just my opinion, yes?

3.24 pm 12 May 2007

I was just imformed that Star Business carried the same speculation. Magnum may unveil big special dividend

• Magnum Corp Bhd is finally set to proceed with its long-expected capital management plan as it may soon announce a bumper payment to shareholders.
  
  A source said the company, subject to board approval at a meeting on Tuesday, could announce a special dividend of between 60 and 70 sen a share.
  
  The board may give the go-ahead for the numbers forecast operator (NFO) to distribute its vast cash pile of more than RM700mil.
  
  Last year, Magnum raised its dividend to 14 sen a share from 10 sen. The return of cash will benefit shareholders and none more greatly than Multi-Purpose Holdings Bhd (MPHB), which owns 51% of Magnum.
  
  The cash from Magnum may help MPHB pare down debt but the source said MPHB also had a good story to tell.
  
  MPHB, the source said, was set to announce a record profit for its first quarter ended March 31, thanks to Magnum's strong NFO business and a robust stockbroking business owing to the bull run on Bursa Malaysia.
  
  MPHB announced a pre-tax profit of RM86.4mil and a net profit of RM60.5mil, or 6.3 sen a share, for its fourth quarter.

So said the source!

Magnum once more.

Saw this article posted on the Star.

• More corporate deals expected at MPHB
  Magnum could make a capital repayment, and a stake in Sarawak Enterprise could be sold. These would more than clear the debts taken in the general offer for Magnum.

Here is a snippet of what it is saying.

• More corporate deals expected at MPHB
  
  BETWEEN THE LINES BY C.S.TAN
  
  Multi-Purpose Holdings Bhd (MPHB) launched one of the merger and acquisition (M&A) deals last year when it proposed a general offer (GO) for Magnum Corp Bhd at RM2.30 cash a share.

That Go was blogged before here: General Offer on Magnum!! Yup, that general offer was simply disgusting in my opinion. And RHB even asked the minority shareholders not to accept the offer. ( see Advice Given For Magnum Shareholders )

And my opinion, based from an investing perspective remains:

• One should really LEARN the lesson of never investing in a company whose management are questionable.

Anyway CS Tan from Star wrote the following:

• The offer for Magnum closes on Jan 19 but few acceptances are expected as the stock rose to a two-year high of RM2.58 on Friday, higher than the GO price.
  Meantime, MPHB bought more Magnum shares, amounting to a 10.1% stake, which raised its interest in the latter from about 40% to 50.1% on Dec 14.
  Hence, Magnum has become a subsidiary of MPHB which would be able take into its own accounts half of Magnum's earnings.

Ah yes. Now that Magnum is trading at a much, much higher price than the GO price, needless to say, the GO price would most likely not to be accepted by many.

Oh, I feel sorry for those who had sold much earlier because of the GO offer.

Now what i find utmost incredible in this whole mess, as pointed out, is that Magnum has now become a subsidiary of MPHB. LOL!! What a horrible joke.

Great to see it being pointed out.

But...

the writer than starts insinuating and speculating on certain issues.

• That, of course, came at a cost, and MPHB is believed to have taken on bank borrowings of about RM340mil to raise that stake. That would weigh on its balance sheet and give rise to additional interest costs. That bank debt, however, could easily to be cleared so that MPHB would be able to secure a larger portion of Magnum's earnings, without an increase in interest costs.
  
  There are two courses of action which MPHB is likely take to clear that debt. Firstly, Magnum could make a capital repayment of about RM680mil, of which MPHB would be entitled to RM340mil.
  
  Secondly, MPHB could sell its 15.1% stake in power producer Sarawak Enterprise Corp Bhd (SECB), which would raise about RM400mil cash.
  
  Analysts expect Magnum's cash reserves to rise to about RM1.0bil this year. It would be a logical policy for cash to flow up to strengthen MPHB's balance sheet.
  
  It would be welcome by all of Magnum's shareholders as they would also be entitled to a capital repayment.
  
  MPHB had wanted to sell its stake in SECB for many years but the price was not right. SECB's share price had even dropped below RM1 in 2003, but a steady climb since November took it to a six-year high of RM1.78 on Friday.
  
  At this level, it has become a low-hanging fruit. It could be sold to raise a lot of cash without any reduction of earnings in MPHB as SECB is not even an associated company. SECB is a non-core asset that can be sold to lighten up MPHB's bank debts that were as high as RM2bil in 2000.
  
  Through disposals of various other assets, the group's debts were reduced to a manageable level of RM640mil at the end of last year.
  
  If both events occur – Magnum makes a capital repayment and SECB is sold – MPHB could even get into a net cash position.

See how the writer speculates on the possible events?

It is believed!

Don't you just love our financial news?

Advice Given For Magnum Shareholders

Yes, one should NEVER had invested in Magnum given all the questionable issues and perhaps one should really LEARN the lesson of never investing in a company whose management are questionable.

Anyway, let me NOT rub it in anymore for you Magnum shareholders.

Here is an investment advice given by RHB Reserach.

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

27 November 2006 - RHB RESEARCH INSTITUTE SDN. BHD.

Magnum Corporation

Offer Not Attractive For Minorities

Share Price : RM2.26 Fair Value : RM2.30 Recom : Market Perform (Upgraded).

Analyst : Low Yee Huap, CFA Tel : (603) 9280 2175 E-mail : low.yee.huap@rhb.com.my

. MPHB make offer for Magnum. Multi-Purpose Holdings Bhd (MPHB), the parent of Magnum, has served a notice of offer to acquire the remaining 60% stake in Magnum that MPHB does not own. The offer price is RM2.30 per Magnum share amounting to RM1.976bn. It is the intention of MPHB to increase its stake in Magnum from 40% to 60% and maintain the latter’s listing status. The offer is expected to complete in 1Q07.

. Magnum to take Magnum 4D private. In another separate announcement, Magnum said that it has served a notice of offer to acquire the remaining 23.89% in Magnum 4D (M4D) that Magnum does not own. The offer price is RM3.00 per M4D share amounting to RM119.5m. Magnum does not intend to maintain the listing status of M4D. The offer is expected to complete in 1Q07.

. A faster avenue for MPHB to reach its target. MPHB has stated previously that it is the group’s intention to make Magnum a subsidiary (from the current associate stake). However, to prevent a GO, it is limited to an incremental increase of 2% per annum. With the current stake of 40%, it will take MPHB another five years to achieve its goal. This offer would be a faster avenue to achieve its target.

. Don’t take the MPHB offer. Although the offer price is higher than our previous fair value of RM1.90, we are recommending that shareholders DO NOT take the offer for the following reasons:

1. Offer price is below our conservative SOP of RM2.53. Note that we have assigned zero value for its investments and properties as well as a 50% discount to its loan debtors. If we add back these assets at cost (as at Sep 06), it will boost our SOP by circa 70 sen.

2. Our conservative SOP and previous 25% discount to SOP were premised on concerns about its non-operating risks and higher luck factor risk as well as inability to unlock low yielding assets (properties). Although there is value in the stock, we believe that without a massive clean up (loan debtors and investments), clear cash management policy and return of excess cash, it will be hard to crystalise the values.

3. Despite that, investors should not opt out of the stock cheaply and reduce their rights to have a more effective "check and balance".

. Earnings enhancement to privatise M4D. With elimination of minority interests, Magnum’s earnings are expected to rise by about 4-5% per annum.

. M4D shareholders should take the offer, in our view. This is due to the following reasons:

1. The structure between the two companies, M4D’s earnings are very volatile as it has to fund the prize payout. Prize payout is eratic given that it has relatively higher luck factor risk (arising from bigger bet size).

2. The above has contributed to M4D’s lacklustre share price performance.

Average transacted price of M4D over the last one year was only RM2.48, way below the offer price of RM3.00. Moreover, over the last 20 months, M4D’s share price only briefly crossed the RM3.00 mark three times.

3. M4D lacks liquidity as Magnum already own 76.1% of the stock.

. Upgrade to Market Perform. We remain wary about its opaque cash management policy as well as other non-operational risks. However, in view of the offer, we believe share price is likely to be sticky at around the offer price level. Thus, we have raised our fair value for the stock to RM2.30 and upgrade our recommendation to Market Perform..

Magnum and Its Cash

Blogged on this stock a couple of times. Past blog postings: magnum fall out of favour! , magnum again. , reminiscences of a stock mumbler: iv and About Magnum Again.

Today I noted an interesting comment from RHB Research, which commented that Magnum's subsidiary, "Magnum 4D had acquired 13.4m shares or 0.88% of Sarawak Enterprise Corporation (SEC - from 2 Jun 06 to 20 Nov 06) for RM16.6m or at an average price of RM1.235 per share."

As rightly pointed out by RHB, this investment "is a small investment outlay in view of Magnum’s net cash position of RM710m and Magnum 4D’s cash reserve of RM440m (no debt) as at Sep 06."

But...

Consider this issue. If you were an investor purchasing Magnum because of its net cash position in hope that you benefit from this cash factor, surely you would have been disappointed.

And the following are the concerns mentioned by RHB in their writeup.

• . However, this move further raises concerns about its cash management policy and may undermine the recent positive developments (cancelling of treasury shares, higher dividend and sale of land in Sepang). Moreover, SEC is considered a related company given that Magnum’s parent, MPHB, has a 18% stake in the East Malaysia utility company.
  
  . Maintain Underperform. We remain wary about its opaque cash management policy as well as other non-operational risks and the higher luck factor risk. Fair value is pegged at RM1.90 or a 25% discount to SOP of RM2.53.

See the concerns raised?

Yes, the piggy bank cash is extremely healthy but one really does not know what the management will do with the cash.

OPAQUE CASH MANAGEMENT POLICY!!!!

Buying shares in another listed company is like dabling into the stock market. Do the management reckon that they are a Warren Buffett? Or a Bill Miller?

And worse of all... and in fact it really stinks that the fact Magnum’s parent, MPHB, has a 18% stake in SEC!!

Sigh!

About Magnum Again

Magnum announced their earnings last night.

Again, I felt extremely bewildered to read that Magnum announced their payouts were higher yet once more.

Here is a snippet of some comments from Mayban Securities.

• Unfortunately, Magnum’s gaming profits were again hit by higher prize payout which rose to 71% from 68% in 3QFY05 and 64% in 2QFY06. As a result, gaming division operating profit declined by 20.4%yoy to RM67.2m. However, the overall positive growth in group operating profit can be mainly attributed to profit generated by the investment holding division arising from the disposal of investments and a much lower provision for impairment losses in long term quoted investments in the current quarter.

Really just how bad is one's bad luck? (see this blog posting : here )

I actually first blogged on Magnum back in January 2006 ( See Magnum fall out of favour ) and I blogged on it again back in Feb 2006. ( see magnum again. )

I find it so very strange about these high payouts.

Why is it constantly increasing?

Striking these 4D numbers so easy, meh?

Magnum Fall Out of Favour!

Number forecasting operators (NFOs), Magnum, was reported to be falling out of favour with investors.

Ahem!

This means no longer LAKU , isn't it? :P

In that Singapore Business Times article, some of the issues were rather worth saying out loud once more.

Magnum's luck, or lack of it, is one of the reasons the NFO has fallen out of favour with investors.

Hmmm.... this one I really, really, really do not understand lor.

Tell me...

How come and how cannnnnnnnnn it be that their numbers are so easy to be 'kena' by other punters?

Strike Ze Number so easy one, ah?

How cannnnnnnnnnnnnnnn??

Why not mine?

Why my 0001 no come out one?

And when the punters strikes, they strikes it soooooo much that Magnum loses money!

Take a look at what is mentioned..

0101. It was a number many 4-D punters were banking on for a happy start to 2006. Although the number apparently was sold out at some number forecasting operators (NFOs), Magnum, however, drew the short straw when the number landed the second prize in its draw.

0101!!!!

Fiyoooooh!

And mine was 0001!!!!

And even if i want to buy 0101... olso sold out mah.... so how come???? (Sky oh Skyyyyy..... why? Why you so like dat one?)

So anywayyyyyy because of 'so easy to win' (Ahem!), according to the article "exceptionally high prize payout ratio in 2004 which dragged earnings down.."

Wahhh... see onot?

Strike until Magnum lose money wor!!!

:P:P:P

Anywayyyy... on a more serious note.... here are some of more pressing issues mentioned:

Magnum needs to greatly improve its corporate governance. Its cross holding structure with its parent Multi-Purpose Holdings which owns 34 per cent of the company and in which Magnum has some 10 per cent stake, is viewed negatively.

'There's no clear reporting line when it comes to inter-company transactions,'

Magnum's lack of earnings transparency is another concern... the company made big provisions in the past three years which did not relate to its core business, but to overseas investments which had not paid off.

...has received permission to launch MMatch, a new game, but any impact on earnings is still uncertain.



ps.

Me got a tip for all lah...

MMatch.... doesn't sound too happening for punters isn't it?

Don't get it?

Say it in Cantonese.... MMMMMMMMM Match!!

Doesn't it sound like NO Match?

Like dis.... how this new game going to be laku?

Cheers!