Thursday, 28 February 2013

Retail Malls Trade Sector Analysis

Extracted this from Pavilion REIT annual report 2012. Make one conclusion out of the chart...

Tenants in retail malls that are selling products targeting the ladies market have to pay higher rental rate... Of course the additional cost is passed on... :p

Tuesday, 12 February 2013

Cinema Business

Golden Screen Cinemas Sdn Bhd (GSC) is Malaysia's largest film exhibitor.

Cinemas are unique in the sense that the growth is tied to the growth of shopping malls

Rent is a big part of GSC's cost, the biggest of which is still content

Relationships with mall owners are very important because leases are entered into with a long-term view as every cinema screen can cost RM2.5m to put up. Therefore, there is an element of profit sharing with mall operators to keep costs low during downturns while sharing out the profits when times are good.

With the advent of high speed mobile-internet, it is forcing pay-TV operators like Astro to innovate to stay relevant.

Netflix Inc, which offers online video streaming service, for example, had struck deals with movie producers like Walt Disney Co and actress Queen Latifah's Flavor Unit Entertainment to give Netflix preference over traditional pay-TV channels like Time Warners Inc's HBO as a medium for film distribution in the US.

Deals signed between the likes of Netflix Inc and Walt Disney Co show times are changing with high-speed Internet on-the-go. Netflix runs the world's leading internet television network with more than 33m members in 40 countries, but is however, not available in Malaysia.

GSC has also invested millions to swap 40% of its more than 220 cinema screens from the 35mm reel films to the full-digital format, something it targets to complete by year-end.

At least RM150m have been earmarked to refurbish and add new cinemas over the next 2 years.

GSC receives about 40% of Malaysia's total box office receipts, which stood at RM530m for the whole industry in 2012. Industry-wide box office receipt had over the past 8 years quadrupled from RM145m in mid-2004. The number of cinema screens in Malaysia has also increased over the same 8-year period from 221 screens in mid-2004 to 758 screens by end-2012. GSC grew from 86 screens to over 220 screens today.

It is ahead of 4 other players:
i) billionaire Ananda Krishnan's TGV Cinemas Sdn Bhd;
ii) Singapore's Cathay Organisation Holdings Ltd that owns the 16-screen Cineplex at @Curve mall in PJ
iii) MCAT Box Office Sdn Bhd (MBO) which has Ekuiti Nasional Bhd (Ekuinas) among its investors; and
iv) Lotus Five Star cinemas, the mostly screens Indian films and is controlled by the Lotus Group with businesses in restaurants and hotels.
Tycoon Robert Kuok's PPB Group owns 100% of GSC

There are still pockets of growth in Malaysia. If you compare the number of screens, we are still under-screened compared with Australia and Singapore. We are at 40,000 persons per screen. In Singapore, it is about 30,000 persons per screen. In the US, it is less than 10,000 per screen. Australia is also about 10,000 per screen.

Malaysians currently watch only 2 movies on average a year, low compared with Singapore's 6 times and Australia's 4 times.

For the 9MFY12, GSC cinema business saw revenue rise 2% y-o-y to RM212.2m but earnings fells 7% to RM28.4m due to investments made in new cinemas and the upgrading of cinema equipment to the digital format.

Summarised from the Edge Malaysia dated 11 February 2013

Saturday, 2 February 2013

Country Heights Grower Scheme, why the inconsistency?

I don't know the reason for the inconsistency but I really don't like this.

In the Country Heights Grower Scheme prospectus dated 8 June 2012, they include the financial statement of the management company, which showed the company has been profitable since 2007 (see page 38 of the prospectus)

However, when it comes to the proposed voluntary termination of the scheme, Gua Musang plantation account, which is less impressive was used instead.

Why the inconsistency? One is to attract investors and the other is for the termination the scheme. But for the same scheme, why different accounts were used? Good if Tan Sri can explain this to the growers.


Besides, there is flaw in the scheme. The production cost now is probably about RM1300-RM1500/ tonne. According to the payment schedule, Country Heights Grower Scheme will pay investors at least 4% annual return if the CPO price is RM1301-1500/tonne. If CPO comes to this price, it merely breakeven. How is the company going to pay investors? Investors may not be savvy enough to see this, but did the boss of the scheme fail to consider the inflation factor when introducing the scheme? Either way, it reflects badly on the boss and the company.

I am just wondering if the CPO price stays high at over RM4000/tonne, will the company convene an EGM to pass a resolution to share the extra profit with minority growers?