How 'Analysts' Made 100 Million Out Of Nothing At All!

I just flipped to my morning copy of the Star Biz. The main article was Window for TM to exit Measat

The first line under the header said "Telekom Malaysia Bhd (TM) stands to book a one-off profit of around RM100mil if it chooses to part with its 15% stake in satellite service provider Measat Global Bhd, analysts said"

I fell of my chair laughing my ass off!

Let's see, what's the fact again? Hmm... the fact is Telekom Malaysia cost of investment in Measat Global was 250 million in 2003. Measat Global's privatisation offer is a stinking 252 million!

I wonder what spin this so called analysts have to create this rm100 million profit from?!!!

I started whistling to the tune of "Making money out of nothing at all"

:P

• Telco stands to gain RM100mil from 15% stake sale
  
  KUALA LUMPUR: Telekom Malaysia Bhd (TM) stands to book a one-off profit of around RM100mil if it chooses to part with its 15% stake in satellite service provider Measat Global Bhd, analysts said.
  
  This was based on estimates that TM had written down its investment in Measat to around RM2.50 per share since 2003. TM owns about 60 million shares in Measat.
  
  Measat’s major shareholders have announced plans to take the company private at a price of RM4.20 per share. If TM sells its Measat stake, it would gain a gross figure of RM252mil. Compared with the written-down price of RM2.50 per share, or RM150mil, this gives a gain of over RM100mil....

Huhu!

ROFLMAO!!!!!!!!!!!!!!!!!!!!

So apparently TM wrote off their investment. From rm 250 million to just rm 150 million!!!!!!!

LOL!!

LOL!!!!

LOL!!! LOL!!! LOL!!!!

What a wonderful world this is!!!

Now my friends, this is how the analysts made 100 Million out of nothing at all!!

Huhu!

So TM paid 250 million for their investment. If they sell their investment for 252 million, they will make 100 million!!!!!!!!

World champion la!

LOL!

I guess this gives Telekom Malaysia the special 'pass' to sell their investment in Measat Global!

And my friends... life is simply good or what!

ps: the last time Business Time said "Telekom Malaysia Bhd, which held a 15.4 per cent stake as at April 26 this year, stands to reap a tidy RM252 million if it accepts the offer". ( See posting How Telekom Malaysia Stands To Reap A Tidy RM252 million If It Accepts Measat Global Offer? )

ps: don't you get the feeling that our financial press are trying very hard to get Telekom Malaysia to sell its stake in Measat? Poor TM!

How Telekom Malaysia Stands To Reap A Tidy RM252 million If It Accepts Measat Global Offer?

What a bloody insult to one's intelligence!

From today's Business Times:

• Measat Global said it did not plan to maintain MGB's listed status on the stock exchange.MGB's second largest shareholder, Telekom Malaysia Bhd, which held a 15.4 per cent stake as at April 26 this year, stands to reap a tidy RM252 million if it accepts the offer.... ( Read more: Measat gets RM4.20 a share buyout offer )

What does the 'stands to reap a tidy rm 252 million' means?

Seriously!

How difficult is it to search for Telekom Malaysia's cost of investment in Measat Global?

How many clicks?

Let me count for you...

1. Bursa website to search for companies announcements
2. Click on Archives
3. Click on BY COMPANY
4. Click T for Telekom
5. Click On TELEKOM MALAYSIA
6. Search for Measat.

6 Clicks of the Mouse. How difficult can it be? I dunno but apparently it sure is difficult!

And from this 6 clicks, we have....

TELEKOM MALAYSIA BERHAD ("TM") :- PROPOSED ACQUISITION OF 60,024,010 ORDINARY SHARES OF RM0.78 EACH REPRESENTING APPROXIMATELY 15% OF THE EQUITY INTEREST IN MEASAT GLOBAL BERHAD ("MGB") FOR A TOTAL PURCHASE PRICE OF RM250,000,000.

Yup Telekom Malaysia cost of investment in Measat Global in December 2003 was 250 Million.

• The Proposed Acquisition involves 60,024,010 ordinary shares of RM0.78 each at a price of RM4.165 per share representing approximately 15% of the equity interests in MGB for a total purchase price of RM250,000,000.

Price? rm 4.165 sen.

If Telekom Malaysia decides to cash in this insane offer of 4.20 per share, Telekom Malaysia would get back 252 million.

A profit of 2 million.

And during this period... Measat Global paid ZERO dividends.

So tell me... what exactly does the financial reporter means by Telekom Malaysia 'stands to reap a tidy RM252 million if it accepts the offer'????

Glee!

I would be seriously offended and pissed if I was a Telekom Malaysia minority shareholder!

Seriously!

Postings on Measat Global's privatisation:

1. The Delisting Of Measat Global at RM 4.20
2. The Delisting Of Measat Global at RM 4.20: Part II

The Delisting Of Measat Global at RM 4.20: Part II

Posted last night: The Delisting Of Measat Global at RM 4.20

Let's compare Measat Global in 2003 and now. :D

Here's a copy of Measat Global when it was relisted back in December 2003.

Measat Global Relisting Notes 2003: Surf88
Surf 88 (a local investment advisory company back then - which no longer exist) gave a forecast earnings of 12.9 million for Measat's fy 2003 and a earnings of 39.4 million for its fy 2004. ( See page 3)

Remember it's just a forecast. It could be wrong. :D

Here'e the forecast numbers again for easier reference.

Look at the two arrows at the bottom of the table.

Measat at a price of 4.65 was trading at 140x earnings multiple (PE) and if Measat's earnings triples from 12.9 to 39.4 million, Measat at 4.65 would be trading with an earnings multiple (PE) of 46x!!!

Yeah... holy cow!

Life is good.

Wasn't it nice that during the relisting process, as stated in the news article attach to the posting The Delisting Of Measat Global at RM 4.20

• Controlling shareholder Measat Global Network Systems Sdn Bhd (MGNS), which in turn is controlled by tycoon T. Ananda Krishnan, had placed out the shares. The buyers were fund managers who forked out RM4.25 per share.

And how did Measat fared: Quarterly rpt on consolidated results for the financial period ended 31/12/2003: Loss 1.806 million. (hmmm.. no wonder shares literally died after relisting - see chart here )

A year later: Quarterly rpt on consolidated results for the financial period ended 31/12/2004 - Measat made only 14 million! ( No wonder the share continued to plunge yes!!! ) (LOL! Looks like Surf 88 numbers were way off the mark!)

Now I wouldn't use that earnings as a point of reference because Measat just was relisted., hence I think the following year's Q4 earnings would be a much better point of reference.

Here's Measat Global's balance sheet as at 31/12/2004.

Well, I would use this as my point of reference - Measat Global was sold to fund managers back in 2003 at a price of 4.25.

April 2005.

• New satellite to boost Measat profit
  By HO SIEW YEE
  
  April 14 2005
  
  MEASAT Global Bhd’s third satellite, Measat-3, is expected to provide major earnings growth to the company from financial year 2006 onwards.
  
  K and N Kenanga in its research note said the new satellite, set to be launched in the third quarter of 2005, will bring different dimensions to Measat’s earnings profile by covering about 110 countries and 70 per cent of the world population.
  
  The research house maintains its “hold” call on the company.
  
  It forecasts Measat’s revenue for the period ending December 31 this year to be RM186.1 million and net profit to be RM25.1 million. The company recorded a revenue of RM129.6 and profit of RM14 million in 2004.
  
  The satellite will expand Measat’s current market from East Asia to include South Asia, West Asia, East Africa and the Asia-Pacific region.
  
  Measat-3 is said to double the current transponder capacities of both Measat-1 and Measat-2.
  
  This enables the company to extend its customer base to key international broadcasters such as BBC and to meet the clients’ increasing requirements for DTH (direct-to-home), broadband, remote connectivity and multimedia services.
  
  The research house believed one of the reasons for the underperformance of Measat’s share price in the past one year was due to the delay in the launch of Measat-3.
  
  The satellite was supposed to start operating by the second quarter of this year.
  
  K and N Kenanga, however, expects the share price to be re-rated in the longer term given the successful launching of the new satellite.
  
  Measat is also currently working towards securing more broadcasting customers with the launch of its Teleport and Broadcast Centre in Cyberjaya this month.
  
  The research house valued Measat based on a discounted cash flow (DCF) basis to factor in the long-term nature of its business.
  
  “Based on DCF, we peg current value of Measat at RM4.42,” it said.
  
  Measat is also currently finalising the negotiations for Measat-4 and is expected to conclude the agreement by 2005. This satellite will be co-located with Measat-3 to provide additional capacity and in-orbit satellite redundancy, required by key customers.

K&N Kenanga Research then forecast a net earnings of 25 million for Measat for its fiscal 2005.

LOL!

Ooops! I laughed. I guess you can also guess that Measat did shitty that year too!

Sure it did.

It made only 14.799 million. Quarterly rpt on consolidated results for the financial period ended 31/12/2005

Let's think about it..... :P

Let's say we think about what's happening from Telekom's Malaysia perspective.

From the article posted on yesterdays blog posting: The Delisting Of Measat Global at RM 4.20 ...

• Then, on Thursday, Telekom Malaysia Bhd said it had paid MGNS RM250 million cash (RM4.165 per share) for a 15 per cent strategic stake in Measat Global.

The past two fiscal years, Measat Global was only making an eps of 3.60-3.80.

And Telekom Malaysia was sold Measat Global shares during its relisting at a price of 4.165!

LOL!

I am so sorry but how could I really not laugh?

From an PE earnings valuation, that meant Telekom Malaysia bought Measat shares at an earnings multiple (PE) of 109x!!!

And here is the chart of Measat again...

Yup... Measat even hit a low of 0.905 on 16 March 2009.

Now if one had bought after then.. naturally Measat Global is the best stock ever in the whole orbit. Even no Moo Moo Cow's can jump into the orbit like how Measat did.

And Measat's earnings... it did recover very nicely.

No wonder the share price flew also.

Here's Measat last reported earnings in May 2010: Quarterly rpt on consolidated results for the financial period ended 31/3/2010

Measat only made some 49.792 million for the current quarter!!!!!!!

aaahhhhh....

Now we can do some simple comparison.

When Measat was listed... at best it ONLY made some 14 million. Measat this quarter alone (YES ONE QUARTER) already made some 49.792 million million.

How?

Back in December 2003, in its relisting, Measat Global was sold at 4.25.

Measat today? It wants to delisted at 4.20!!!

Make any sense at all?

In 2003... hardly any earnings. EPS for fy 2004 was only 3.6 sen. Sold at PE multiples of over 100.

Now? Measat Global's fiscal 2010 Q1 eps is already 12.7 sen!!!!

Now it would be a terrible insult to me and my fingers if I have to answer if this privatisation is fair or an insane rip off!

I did not know they had pirates in the orbit!!!!!

Apparently I am so wrong!

The Delisting Of Measat Global at RM 4.20

It was a long time ago.

6 December 2003. On Star Business.

• Saturday December 6, 2003
  Back in Orbit
  
  BY ERROL OH
  
  Measat Global has given the market quite a bit to digest just before it resumes trading on Monday. Will investors warm up to the counter and do they understand enough about the business to accord its shares a fair value?
  
  AFTER more than 16 months of suspension, the shares of Measat Global Bhd will resume trading this Monday. All eyes, of course, will be on the price performance. Things are made more interesting because a couple of developments last week have handed the market quite a bit to digest over the weekend.
  
  Question is, once the investors have mulled things over, will they warmly welcome back the counter, or will they give it the cold shoulder?
  
  First came the announcement last Tuesday that a private placement involving 80 million shares had enabled Measat Global to meet the Kuala Lumpur Stock Exchange's listing requirements on 25 per cent public shareholding spread. It was this matter that had necessitated the counter's suspension in July last year.
  
  Controlling shareholder Measat Global Network Systems Sdn Bhd (MGNS), which in turn is controlled by tycoon T. Ananda Krishnan, had placed out the shares. The buyers were fund managers who forked out RM4.25 per share.
  
  (Following a mandatory general offer of Measat Global, MGNS ended up with more than 90 per cent equity in the former, which was formerly known as Malaysian Tobacco Company Bhd.)
  
  Then, on Thursday, Telekom Malaysia Bhd said it had paid MGNS RM250 million cash (RM4.165 per share) for a 15 per cent strategic stake in Measat Global.
  
  Observers point out that the fact that portfolio investors have paid only a 2 per cent premium to Telekom's price suggests that Measat Global shares are well-supported at that level.
  
  Prior to suspension, the counter was last done at RM3.84, on a day when the Kuala Lumpur Stock Exchange closed at 731 points. A lot has happened since. The global economic outlook has brightened considerably and the KLCI is now hovering at 790 points.
  The key perhaps is whether the market understands enough about the company's business to accord its shares a fair value.
  
  Through wholly-owned subsidiary Binariang Satellite Systems Sdn Bhd, Measat Global owns and operates commercial satellites. It has launched two satellites – Measat-1 and Measat-2 – in 1996, and plans to launch Measat-3 in the second quarter of 2005.
  
  Like most satellite companies, it gets the bulk of its revenue from the lease of transponders, that is, equipment on board the satellites that receives and transmits signals. As such, Measat Global's earnings are largely dependent on the utilisation of its satellites and the transponder lease rates.
  
  “It's complicated in terms of technology but it has a very simple business model,” says Binariang vice-president, sales and marketing, Paul Brown-Kenyon.
  
  It is undoubtedly a business that demands massive capital outlay – the company will eventually have spent about US$460 million to buy and launch its first three satellites – but it is also a business that promises strong cash flow and healthy growth.
  
  Riding the boom
  
  The satellite services business rides on the expansion in the telecommunications and broadcasting industries. Typically, customers sign transponder leases for three to four years, and the payments are made quarterly and in advance.
  
  Binariang sees itself as a regional player currently and its satellites enjoy a utilisation rate of 80 per cent. It has over 40 customers, of which 60 per cent are outside Malaysia.
  
  Its marketing strategy is to go for the No.1 or No.2 telco or TV company in every market and build its business from there.
  
  Nevertheless, its major customers are closer to home and these include Measat Broadcast Network Systems Sdn Bhd (which operates the Astro direct-to-home (DTH) service) and telecommunication companies such as Telekom Malaysia and Maxis Communications Bhd.
  
  Because Ananda Krishnan also controls Astro and Maxis, Binariang is perceived to be overly reliant on “in-house business”.
  
  Brown-Kenyon dismisses this. “Yes, Astro and Maxis are important customers, but so are Telekom Malaysia, GMA Network and Globe Telecom (both of the Philippines). We are an independent company and we sell to the regional market.”
  
  Rating Agency Malaysia Bhd (RAM), in a June rating review on Binariang, says the dependence on Astro and Maxis is not necessarily a bad thing. “In fact, we have a favourable view of the synergistic benefits which the company can derive from their relationship,” it wrote.
  
  For one thing, the two customers have their own plans for expansion and this will lead to demand for additional transponder capacity. Astro, for example, wants to add more channels and services to its offering.
  
  RAM also argues that Maxis and Astro are likely to remain within Ananda Krishnan's stable of companies, thus ensuring that the two companies will continue to support Binariang in the future.
  
  Enter Measat-3
  
  In any case, the perception that Binaring leans too much on Astro and Maxis may well become moot. The satellite company is banking on Measat-3 to launch it to the global stage. “With Measat-3, we're looking to extend our geographic reach and the breadth of our offering,” say Brown-Kenyon.
  
  Larger, more powerful and more flexible, the third satellite will have wider coverage and has deeper capacity to give customers what they want.
  
  Another reflection of Binariang's global ambitions is that it has secured rights to operate satellites from 16 slots around the world. It now uses only two.
  
  But it is not just a matter of launching one bird after another. Brown-Kenyon says Binariang wants to go beyond simple transport to provide value-added services to customers.
  
  At the same time, the company is looking to leverage its strength in the DTH segment. “We are today the largest DTH platform in Asia, excluding Japan. That gives us a great experience in terms of differentiating ourselves in the region,” he says.
  
  This is a wise move when you consider that DTH customers tend to be “sticky”. Once a DTH company signs up with a satellite operator, it tends to keep to the arrangement. A switch means having to take the expensive step of changing the direction of dishes of the TV customers to the new satellite.
  
  Judging from the results of the share placement, there is no shortage of believers in the Measat Global story. According to sources familiar with the exercise, the demand for the shares was strong. “People see the potential. It's a high-growth business and the pricing was attractive,' he adds.
  
  But the situation was different about a year ago. A similar attempt to place shares was aborted and the sagging stock market was blamed. In addition, it was felt that at that point, Measat-3 was too distant in the horizon to convince investors of its potential.
  
  But observers also point out that the initial public offering (IPO) of Astro All Asia Network plc may have been another factor in changing the fund managers' perceptions about Measat Global.
  
  Says one analyst, “The Astro IPO might have made it easier to understand how Ananda Krishnan's information and communications technology (ICT) businesses would converge. Before, people were not sure that Astro was viable. Now, many believe that Measat Global too will fare well.”
  
  That will be incentive enough to watch the skies. But on Monday at least, the attention will be on the trading of Measat Global shares on the KLSE
  

Measat opened trading at 4.60. Fell to a low of 4.12. Closed at 4.14.

That was the highest it ever traded.



To bad for the buyers who bought the placement shares at rm 4.25 per share.

Today Measat Global Networks launches takeover of Measat at RM4.20 a share

Which of course is nice for those who bought recently.





See Part II here: The Delisting Of Measat Global at RM 4.20: Part II

Measat Challenging Bursa's Query Exercise By Soaring Yet Again!

On Business Times: Queries not meant to be reprimands: Zarinah

• QUERIES from Bursa Malaysia are not meant to be reprimands but rather a chance for listed companies to give investors more information, the Securities Commission (SC) said yesterday.
  
  Companies must also be quick to deny any speculation or rumours.
  
  "The Listing Requirements require PLCs (public-listed companies) to make accurate disclosure," SC chairman Tan Sri Zarinah Anwar said during a briefing with editors.
  
  Yesterday, Bursa Malaysia warned investors to be careful when trading in shares of satellite operator Measat Global Bhd and Transmile, an air cargo company.
  
  Measat jumped to a 22-month high on speculation its owners will combine the business with a phone company or buy out the unit.

So a Bursa Query is for a chance for listed companies to give investors more information?

Oh!

Looks like Bursa Query would be a waste of time because if you look at Measat stock trading NOW, the stock is acting such a query does not exist!

The stock is now up another 10 sen!

On another article Bursa cautions investors on Measat, Transmile

• BURSA Malaysia yesterday cautioned investors on the trading of Measat Global Bhd and Transmile Group Bhd shares, after both companies could not explain the unusual market activity queries dated June 4 and 5 respectively.
  
  "Given the lack of material development based on the response from the respective companies, Bursa Malaysia would like to advise investors to exercise caution and due diligence on the trading of Measat and Transmile securities," the exchange said in a statement.
  
  "The exchange would also like to draw investors' attention to the high trading interest on some counters of late, which were not supported by new or material corporate developments.
  
  " Investors are also advised to be aware of the possible risks involved when making investment decisions based solely on market rumours and are reminded to exercise due care and diligence," it added.
  
  Bursa Malaysia said it has in place market surveillance tools and systems to monitor real-time trading activities and price movements, and will not hesitate to take appropriate regulatory action where necessary.