Friday 28 December 2012

Some Key Figures from KLK 2012 Annual Report

Market cap: RM23.5b (end of September 2012)
Revenue: RM10.57b
Net profit: RM1.21b

Total planted area: 212,300ha
Plantable reserves: 23,390ha
Conservation areas: 8,936ha
Building sites, etc: 6,697ha
Group's plantation land bank: 251,325ha

Oil palm age in years:
4 - 9: 55,145ha (28%)
10 - 18: 76,831ha (40%)
19 and above: 22,989ha (12%)
Mature: 154,965ha (80%)
Immature: 38,265ha (20%)
Total: 193,230 (100%)

Rubber age in years:
6 - 10: 2,051 (11%)
11 - 15: 3,677 (19%)
16 - 20: 2,264 (12%)
21 and above: 7,737 (40%)
Mature: 15,729ha (82%)
Immature: 3,341 (18%)
Total: 19,070 (100%)

FFB production: 3,259,342mt
Yield per mature hectare: 21.33mt FFB
Profit per mature hectare: RM7,218 (before replanting expenditure)
Refined palm products: RM3,220/mt ex-refinery
Crude palm oil: RM2,829/mt ex-mill
Palm kernel oil: RM3,295/mt ex-mill
Palm kernel cake: RM286/mt ex-mill
Palm kernels: RM1,580/mt ex-mill
FFB: RM506/mt
Planted area (mature): 152,829ha
Planted area (immature): 39,595ha
Palm products revenue: RM4,487,975,000
Palm products gross profit: RM1,069,504,000
Oil extraction rate: 21.7%

Ex-estate cost of FFB: RM238/mt
Ex-mill CPO cost: RM1,303/mt

Indonesian CPO was traded at a severe discount, ranging from RM400/mt to RM700/mt depending on the location and the rate of export duty for the month.

Trading range for palm kernels during the financial year was approximately between RM1,350/mt to RM2,100/mt

Rubber production:18,997,000kg
Yield per mature hectare: 1,191kg
Profit per mature hectare: RM7,210 (before replanting expenditure)
Average selling price: 1,220 sen/kg (net of cess)

Planted area (mature): 15,957ha
Planted area (immature): 3,623ha

Rubber revenue: RM258,484,000
Rubber gross profit: RM109,340,000

Ex-estate cost RM4.34/kg.

Monday 24 December 2012

Kseng - expecting bumpy dividend in 2013?

Read Hwangdbs research daily focus on Kseng,
Major re-rating catalyst from potential bumper dividend by FY13. Potential M&A target with 83% of market cap in liquid asset (RM1.90/share net cash, RM1.32/share investment). Deep value from Johor land bank with significant upside potential. Fair value of RM6.00, based on 30% discount to RM8.50 SOPderived valuation
Based on the amount stated in 2011 annual report whereby the company has RM358.506m to pay as franked dividend, and after deducting the 4% interim dividend declared in Aug 2012, the company has about RM344m balance to pay as franked dividend out of its retained earnings. The transitional period of 6 years to allow companies to pay franked dividends to their shareholders expires in 31 December 2013.

IF Kseng chooses to clear all its 108 balance of the Income Tax Act, 1967, and outstanding shares of 361.5m, investors could expect a hefty dividend payout in 2013.

Friday 21 December 2012

Naim, a good value play?

Naim has 33.63% stake in Dayang.

At noon break, Dayang closed at RM2.43
Dayang total shares outstanding: 550m
Dayang market cap: RM1.3365b (RM2.43 x 550m)
Worth of Naim's investment in Dayang: RM449.46m (1.3365b x 0.3363)
Naim total shares outstanding: 250m
Worth of investment in Dayang per Naim share: RM1.798 (RM449.46/ 250m)
Naim's share price at mid-day closing: RM1.78

This means that investors are getting the construction and property development businesses in Naim, which currently contribute about 2/3 of its total earnings for FREE!

In its book, Naim still has about 2,620 acres of land for development. On top of that, it has 5.2% of treasury shares which could be distributed to reward the shareholders.

Tuesday 4 December 2012

Rubber glove

Total % of healthcare expenditure of country’s GDP
US: 16.2%
UK and major European countries: 10.1%
Brazil: 9.0%
China: 4.6%
India: 4.2%

Powdered latex gloves being the most popular among developing countries whose end-users are more cost-conscious. Powder-free latex and nitrile gloves were preferred by developed countries namely the US and Europe

Top Glove – By August 2013, the factory expansions and new facilities will have increased the Group’s capacity to around 44.8b pieces of gloves

Latex inventory 2 weeks

On average, manpower and energy each makes up about 10% of the cost structure while rubber, the primary raw material for glove production, accounts for the largest portion of some 60% of total cost.

Monday 19 November 2012

Selected Key Players in the Men's Casual Apparel Industry (Malaysia) 2012

Key Brands
Apparel International Sdn Bhd
·   Crocodile
British India (Asia) Sdn Bhd
·   British India
Camel Active (M) Sdn Bhd
·   Camel Active
Cheetah Holdings Bhd
·   Cheetah
Esprit De Corp (M) Sdn Bhd
·   Esprit
F J Benjamin (M) Sdn Bhd
·   Gap
·   Guess
Giordano (M) Sdn Bhd
·   Giordano
Hang Ten Enterprises (M) Sdn Bhd
·   Hang Ten
Hing Yap Group Bhd
·   Bontton
·   B.U.M Equipment
·   Diesel
·   Union Bay
Hytex Integrated Bhd
·   American Athletics
Jerasia Capital Bhd
·   Calvin Klein Jeans
·   Nike
·   Milani
·   Charlie
Jordone Group Berhad
·   Chargers Outfitters
·   Jeep
·   Snails Original
·   Budweiser
·   BIEM
·   Feraud
Levi Strauss (M) Sdn Bhd
·   Dockers
·   Levi’s
Metrojaya Bhd
·   Cape Cod
·   East India Company
Padini Holdings Bhd
·   Padini Authentics
·   PDI
·   Seed
Target Fashion Sdn Bhd
·   Forest
Tropicana Life (M) Sdn Bhd
·   Tropicana
Timberland Lifestyle Brand (M) Sdn Bhd
·   Timberland
Wing Tai Malaysia Bhd
·   Topman
·   Uniqlo
Yen Global Bhd
·   Edwin
·   Mustang Jeans
·   G A Blue
·   Underground Products
Extracted from the Independent Market Research report prepared by Frost and Sullivan

Saturday 17 November 2012


Westports Malaysia Sdn Bhd, operator of the country's busiest port.

Westports is jointly owned by companies linked to Malaysian tycoon Tan Sri G. Gnanalingam, who is also executive chairman of Westports, and Asia's richest man, Li Ka Shing, head of the Huchison Whampoa Group in Hong Kong. Hutchison Port Holdings Trust has a 31.5% stake in Westports.

Westports is a multicargo port which handles containers, bulk, vehicles and other conventional cargoes.

Westports' cargo volume was still increasing due to the rising demand especially in India and African and West Asian countries.

Westports' core business is container operations and its major clients are CMA CGM group, China Shipping and United Arab Shipping Corp.

Westport was confident of handling 7m TEUs of container cargo in 2012. In 2011, Westports handled 6.4m TEUs and 5.5m TEUs in 2010.

Westports hope to achieve 8-10m TEUs once its additional 300m berth and 600m berth were completed by 2014.

Currently the ports handles about 70% of the overall container volume at Port Klang.

Westports' business are divided into 2 parts namely, local cargo, handling Malaysian import and export and transhipment cargo on international business.

Currently the transhipment cargo contributed about 70% to its revenue.

Westports is one of the two ports in Port Klang with over 4,000 employees and expects to increase to 4,400 employees by 2014.

Monday 12 November 2012

Getting Risk Free Rate and Market Return in Malaysia

To calculate the required rate of return for an asset using capital asset pricing model (CAPM), one needs risk free rate, market return and beta.

These inputs can be obtained from Bloomberg Terminal.

Type "CRP" and the following screen will appear. Risk free rate and market return can be obtained here.

The risk free rate and market return fluctuate daily.

In the case of Malaysia, the Malaysia Govt Bonds 10 Year Yield (Bloomberg ticker: MAGY10YR) is used as risk free rate

Market return is the capital weighted average of the internal rate of return for all major index numbers.

To get beta of a stock, select the stock, then enter "beta" at the command line and the beta will appear.

Sunday 11 November 2012

Power Industry in Malaysia

In 2009, energy contributed approximately RM16bn to GDP.

Power in Malaysia is mainly fuelled by natural gas and coal, which accounted for 92% of power production in 2009. Hydroelectricity or hydropower accounted for only 6.5% of power generation in 2009.

The total power generation capacity connected to the Malaysian national grid is 24gigawatts, with a maximum demand of about 17 gigawatts recorded in 2010.

6 gigawatts of new generation capacity is expected to be needed by 2020 to provide energy for business and the growing population, representing an increase of about 25% over installed capacity in 2009.

Currently, 58% of power generation in Peninsular Malaysia is based on natural gas, with the remainder coming from coal (37%), and hydro (5%).

CAPM: Risk free rate and market return in Malaysia

In the Independent Advice Letter for the proposed Disposal of Hicom Power Sdn Bhd dated 9 November 2012
As a proxy of the risk free rate, we used 3.87%, the yield of 20-year Malaysian Government Securities as extracted from the Bank Negara Malaysia website. The 20-year tenure is in line with the concession period as per the O&M Agreement.
Expected market return of 10.61% was extracted from Bloomberg.
In the Independent Advice Letter for the proposed privatisation of KFC dated 12 October 2012
Risk free rate of 3.71% based on the 10-year Malaysian Government Bond yields
expected market return of 11.55% from Bloomberg

Friday 9 November 2012

Icap 8th AGM - Better not to have bad blood

Just my 2 cents on the board bid by Laxey Partners.

About share buy back...

Those who had attended the previous AGM would probably understand better why share buy back does not work for close end fund after listening to the elaborated presentation by the representative.

Share buy back may reduce the NAV discount in short run as it is NAV accretive.

But what is the fund going to do  when the share buy back hits the 10% limit? As the market becomes aware that the share buy back has hit the limit and no further share buy back is expected, the discount may start to widen again.

What can a close end fund do with its treasury shares?

Sell back in the market will exert down pressure on the share price. NAV discount will widen.

Canceling the treasury share will reduce the fund size and make the trading of the fund more illiquid. Market will price in a discount on the lack of liquidity and the discount is expected to stay long term.

Can the short-sighted Laxey partner really help? The share price of one of their funds has dropped more than 50% since inception and the NAV discount is even wider than that of Icap's! More worrying is that two of their funds are being wound up and those invested since the fund was launched are suffering huge loss!

It is sometimes good to have new blood in and organisation but definitely not bad blood.

Click here to listen to BFM interview with Tan Teng Boo on 9 Nov 2012

Friday 2 November 2012

The LCC Business Model

LCCs are defined by their ability to achieve drastically reduced unit operating costs. As a result, the average airfares they offer can be substantially lower than those of other carriers. In their pursuit of keeping costs low, LCCs typically have most, but not necessarily all, of the following operating and financial characteristics:

Operating Characteristic

Primarily point-to-point services. Limited number of stops or transfers, avoiding costs associated with passenger transfers

Use of secondary airports, which are often less congested than primary airports, leading to higher levels of dispatch reliability and lower costs of delays and rescheduling of flights

Fast aircraft turnaround time, to maximize aircraft utilization and employee efficiency

Flight lengths of 600km to 2,500km (under four hours), operating ranges that are particularly efficient for short-haul LCC

Single fleet types, which reduce maintenance and training costs

Young fleets, leading to reduced aircraft maintenance costs when compared to fleets of older aircraft.

Medium capacity, jet aircraft (approximately 100 to 180 seats)

Single-class service, with higher seat densities than most similarly sized economy class cabins, resulting in the spreading of costs across a greater number of available seats to be sold, lowering overall average costs per passenger

Limited complimentary offerings. Catering (food/beverages) and checked baggage may be available only on a paid basis.

Limited cargo services, as they can add time to aircraft turnaround times

Flexible, entrepreneurial corporate cultures that may not exist at larger, entrenched carriers, that can result in more efficient operations and lower employee costs

Financial Characteristics

Lower-than-average airport costs. Secondary airport charges in many countries are often lower than those of larger, primary or hub airports. In addition, minimal congestion at secondary airports optimizes aircraft turnaround times

Lower-than-average airfares. Average airfares are usually lower at LCCs than at full-service carriers, enabled by their lower costs structures. Low passenger airfares at LCCs are also partially offset by their higher-than-average aircraft occupancy levels. Some LCC tickets are fully non-refundable and non-rebookable if the passenger cannot travel as originally planned

Ancillary revenues. LCCs usually charge for drinks and meals and some have only limited free checked baggage allowances. Some LCCs add surcharges to their airfares for items that would normally be covered as a normal operating expense (such as ticketing and administration fees). LCCs are often aggressive in the sale of ancillary travel products

Lower-than-average salary and benefits costs. New and fast-growing LCCs will have a high share of new employees, while long-standing carriers will have a high share of senior employees and associated salaries and benefits. Additionally, LCCs have shown higher productivity rates and therefore lower employee cost structures overall.

Low cost ticket distribution methods. A reliance on internal reservations systems, electronic tickets, and the internet, instead of privately owned reservations systems, paper tickets and travel agents or city ticket offices, significantly lowers LCC ticket sales costs.

Source: Strategic Airport Planning Ltd (The S-A-P Group)

Thursday 1 November 2012

Entitlement to Attend General Meeting

From notice of AGM:
For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting the Bursa Malaysia Depository Sdn Bhd to make available to the Company, a Record of Depositors as at 6 November 2012. Only a Member whose name appears on this Record of Depositors shall be entitled to attend this meeting or appoint a proxy to attend and vote on his/her behalf 
Letter from
For non-shareowners, on the other hand, the opportunity to join us in this highly anticipated AGM is still possible. We look forward to calling you a shareowner. The last date to purchase the shares of Berhad (Stock code: ICAP 5108) is Thursday, 1 November 2012, from 9.00am to 5.00pm through your broker or remisier. 

From the above example, for one's name to be appeared on the record of depositors on the date which determine one's entitlement to attend general meetings, one should buy the stock T-3 or 3 trading days before the date.

Wednesday 31 October 2012

Guinness Anchor Berhad

Statistics that may help in analysing alcohol stocks

Source: GAB 2012 Annual Report

Reading vs Arsenal 5-7

This is neither about stock nor investment but somehow there are some similarities between stock investment and football such as excitement, upset, winner & loser, trend analysis, strategy, defensiveness :p

The match between Reading and Arsenal was too incredible not to blog...

1) A total of 12 goals in a match. 8 goals in 90 minutes
2) Arsenal, being one of the top teams gave away 4 goals in less than 40 minutes
3) Even it was 4 goals behind, Arsenal managed to level the score and overturned it into a win
4) Arsenal managed to level the score when the team was 2 goals down in the 89th minute.
5) Scored 2 winning goals in injury time in the extra time
6) 4 goals in injury time
7) Arsenal scored 7 goals in a game of 120 minutes
8) Arsenal scored in added time at the end of the first half, the second half and of extra time

Watch the video here

SCORE - Samalaju

The RM4b 944MW Murum hydroelectric dam in the upper Rajang basin is expected to begin producing power for energy-intensive industries in early September. Installation of the turbines is currently underway and the wet commissioning of the first unit of the four turbines has been set on Aug 1. The Murum dam will have 4 turbines with a capacity of 236MW each as compared with Bakun dam’s 8 turbines. 6 turbines of the Bakun dam are in operations, with the final two turbines expected to be commissioned by the middle of 2014. The Murum and Bakun dam, which is owned by the Federal Government, are expected to generate firm outputs of 635MW and 1,771MW respectively (combined 2,406MW) when fully operational.

SEB has also inked a PPA with Indonesian power company PT PLN (Persero) to export 230MW to west Kalimantan from Jan 1, 2015.

Currently there are 5 companies started operations in Samalaju Industrial Park with total investment of RM29.1b and 15,000 employment opportunities.

They are:
1) Tokuyama LTD of Japan (polycrystalline silicon) - 140MW
2) Asia Mineral Ltd of Hong Kong (silicon manganese) -270MW
3) OM Holdings Ltd of Singapore (fero manganese) - 500MW
4) Press Metal Bhd of Malaysia (aluminium ingots and billets) - 700MW for smelters in Samalaju and Mukah
5) Asia Advanced Material of Korea (metallic silicon)

16 companies including one Malaysian-owned company have been approved to invest in SIP

30 October 2012

Samalaju Industrial Port Sdn Bhd expects construction of phase one of the RM1.8b Samalaju Port to be completed by the 1Q2016.

It will have an annual handling capacity of 18m tonnes of cargo for SIP.

In the interim, the port plans to provide facilities for industries at SIP starting in the 2Q2013 with an annual handling capacity of 4m tonnes of cargo.

For future expansion, if the need arises, the port can handle a total of 30m tonnes annually.

Bintulu Port Holdings Bhd has been given the task to build, own and operate the Samalaju Port on some 450ha of land set aside by the state government.

Monday 22 October 2012

Sunday 14 October 2012

Genneva Gold Investment Scheme - Isn't it obvious?

When the news of Bank Negara Malaysia raided Genneva Gold surfaced in the newspapers, I expected the investors to swarm Genneva 's office. They did. But to my surprise, they were not hostile against the company but the consultants and investors united to show support for the company and demanded BNM to unfreeze the investors' gold assets. Facebook page was even set-up by the Genneva's supporters.

Did the investors ask, "why don't the banks or funds like EPF, PNB which are run by the professionals and have better access to investment opportunities invest in Genneva gold? Wouldn't the bankers be happier to receive 24-36% of return per annum than the mid single digit interest rate from lending out the money for housing loans, and yet when the investment capital is so called guaranteed? Furthermore, housing loans may turn into non-performing loan. Wouldn't EPF and PNB love this kind of return? What's more without having the trouble of scouting for investment opportunities and getting experts to manage the investments?

Wouldn't Genneva be happier to manage one single big investor instead of handling thousands of retail investors?

It is obvious, isn't it?

Friday 12 October 2012

Kassets Reference Price Post Distribution-in-Specie

Kassets had a distribution-in-specie of Igbreit to the shareholders of Kassets on the basis of 524 units in Igbreit for every 100 shares in Kassets held on 5 October 2012.

To arrive at the share reference price of Kassets on the ex-date (3 Oct 2012):

Kassets's share closing price immediate before ex-date - 5.24 (Igbreit's unit closing price before Kassets' ex-date for the distribution)

= 9.51 - 5.24 (1.38) = RM2.27/ share (rounded down)

More examples of calculation of theoretical ex-price for various corporate exercises here.

Thursday 11 October 2012

Reference Price Post Transfer of Listing Status

Mithril underwent restructuring and its listing status was transferred to Pesona.

Consolidation of every 5 Mithril shares of RM0.05 each into 1 Pesona share of RM0.25 each.
Mithril last traded at RM0.10/ share before the transfer of listing status.

The reference price of Pesona was RM0.25/share, based on the face value of RM0.25 each instead of RM0.50/share, multiplying the last closing price of Mithril by 5. (Consolidation of 5 shares into 1)

More examples of calculation of theoretical ex-price for various corporate exercises here.

Wednesday 10 October 2012

Malaysia Steel Stocks

What to look at?

1. Price-to-book value (PBV)
Analysts say the PBV measurement is a more indicative of the performance of the steel sector, although the common measurement of the performance of a stock is the P/E ratio. This is because the earnings of steel players can be very volatile. The current down-cycle in the steel industry has shown that players are experiencing PBVs similar to those seen in 2008 and 2009, during last global financial crisis. Most analysts say a good way of evaluating a stock is to compare the company's current PBV with that seen in the last global financial crisis. If it is much lower, it means the stock might be undervalued. The PBV of steel players is between 0.2 and 0.8 times currently.

2. Gearing level
As the steel sector is considered capital-intensive, steel companies tend to have higher borrowings compared to their counterparts in other industries. The gearing levels are averaging about 1 time here. The levels are quite manageable, although they are still higher compared with Chinese steel companies listed in countries such as Hong Kong, which are currently about 0.4 times and 0.5 times. One reason why a company's gearing levels could be higher than usual is that it may be looking to expand. However, the returns made on the expansion should be reflected as soon as possible. For instance, Ann Joo Resources completed a new electric arc furnace last October - the first in the Asean region. "We always had levels below 1 time, but it is now slightly higher at about 1.4 times because of the furnace. Things should stabilise by 4Q2012. If there is no fresh expansion, a gearing of above 2 times for steel companies should be examined closely by the investors," says Datuk Lim Hong Thye, its group managing director. The rule of thumb is to be on the alert when gearing levels exceed 1.5 times.

3. Inventory management
Inventory management is just as important because this is a cyclical industry. Companies have to tread a fine balance between holding enough just before demand picks up and not holding too much. "If a company holds too much inventory and prices come down, they will make losses. It is considered prudent if a company keeps within two to three months' worth of inventory. If they keep stock of up to five or six months, they could be taking on a risky directional bet.

4. Strategic tie-ups
Other non-valuation indicators would be news of tie-ups and collaborations with strategic foreign investors, which are increasing in popularity among companies. Such tie-ups are expected to be positive for steel companies. "For example, Ann Joo Resources tied up with Tangshan Iron and Steel Company Ltd of China to build their blast furnace. Hiap Teck Resources Bhd has teamed up with Jinan Iron and Steel Group Corp to construct a new slab plant while Lion Industries has been trying to get suitors to invest in its blast furnace project."

Steel Industry in Malaysia
The steel industry in Malaysia can be divided into two segments - the long steel products and the flat steel products.

Long products are commonly used in the construction industry and include items such as rods, tubes, bars, wires and rails. The flat steel products are cold-rolled coils, hot-rolled plates and sheets, and boiler and pressure vessels. They are commonly used in the automotive, aviation, manufacturing, construction, appliances and oil and gas businesses.

In the long steel segment, the major integrated players are Lion Industries, Ann Joo, Southern Steel Bhd, Kinsteel Bhd, Perwaja Holdings Bhd and Malaysia Steel Works (KL) Bhd. The only flat steel integrated player is Megasteel Sdn Bhd, which is a subsidiary of Lion Industries. Integrated players produce steel products right from the raw material stage, mainly for local consumption.

In flat steel segment, Megasteel is the only producer of hot-rolled coils (HRC) and plates in the country. Its monopoly is further strengthened by the 20% import duty imposed by the government on high-grade iron and steel products in 2002. Those in industries such as automotive, electrical and electronics, oil and gas, shipping, iron and steel furniture are exempted from this tariff.Companies that still want to import these steel products are required to apply for special import licenses or approved permits (AP). Secondary steel producers that are listed on Bursa Malaysia include Mycron Steel, CSC Steel Holdings Bhd and Yung Kong Galvanising Industries Bhd.

Abstracted from: Investing in local steel stocks, Personal Money, October 2012

Sunday 7 October 2012


Gadang Holdings Bhd has won a contract for an undisclosed sum from Petroliam Nasional Bhd. (See announcement)

How investors assess the impact of the award if crucial information such as the contract sum was not disclosed? This is against the spirit of continuing disclosure to ensure a credible and responsible market in which participants conduct themselves with the highest standards of due diligence and investors have access to timely and accurate information to facilitate the evaluation of securities.

Shouldn't the company at least explain why the contract sum was not disclosed in the announcement?

Monday 1 October 2012

When the exam passing rates and number of students getting Straight A's are so high in Malaysia

Should Malaysians feel proud of high passing rates and high number of students getting straight A's in STPM, SPM exams?

Below are some points highlighted in The Edge dated 1 October 2012.

In spite of being among the highest spenders on education in East Asia, Malaysia's performance in international assessments of student performance between 1999 and 2007 slipped below the global average in both science and maths.

In the Trends in International Mathematics and Science Study, 18% and 20% of Malaysian students failed  to meet the minimum proficiency levels in math and science respectively in 2007, a two to fourfold increase from 7% and 5% in 2003. In the Programme for International Student Assessment for 2009, Malaysia was in the bottom third of 74 participating countries, below the international average.

The scores showed that 15-year-old Malaysian students were performing as if they had three years of less schooling than students in Singapore, South Korea, Hong Kong and Shanghai..

Monday 24 September 2012

IGB Reit - Arbitrage Opportunity

If you have IGBREIT and plan to hold the shares not less than 6 months do not plan to sell before 10 October 2012 (see announcement dated 21 Sept 12), at current share prices of RM1.40 and RM9.25 for IGBREIT and KASSETS respectively, there is an arbitrage opportunity.


For every 1 KASSETS share, one will get 5.24 shares of IGBREIT and cash of about RM2.75/share.

After deducting transaction fee, one will still get more than 5% of arbitrage gain.

Buy KASSETS in multiple of 5,000 to avoid odd lots.

Menara Warisan Merdeka

7.6ha land located within the Stadium Merdeka and Stadium Negara heritage area.

Gross floor space of 3m sqf and 2.2m sqf of net floor space.

30% of the space is being reserved for its developer, Permodalan Nasional Bhd (PNB) and several government-linked companies under PNB's stable.

Will cost RM2.5b to RM3b

It will be followed by 2 subsequent phases comprising a shopping complex and condominiums.

The whole development to be undertaken over a 10-year period, will cost RM5b.

Will be over 600m tall compared with Petronas Twin Towers at 453m, Burj Khalifa at 829m and Taipei 101 at 509m.

Tuesday 18 September 2012

UAC - Too good to be true for those with zero/ low income tax bracket

Anyone with 0% or low income tax bracket will be able to benefit from the proposed RM1.33 less 25% dividend from UAC, provided the proposed SCR is approved by the shareholders in an EGM to be convened in October.

How much an investor with 0% income tax bracket will get from the SCR?

Say purchasing 1,000 shares of UAC at current price of RM4.20/share, investment RM 4200 + 1% (brokerage + other fees) = RM4242

Cash flow from the investment

RM 1000 (RM1.33 less 25% tax, within 4 months)
RM 3300 (Capital reduction and repayment, about 4 months' time)
RM 330 (Refund from IRB under Section 108)

Total cash inflow RM 4630

Investment RM4242

Assume total brokerage + other fees 2%

Return = 9.1%-2% = 7.1% in about 4 months.

Annualised return 21.3%

Thursday 13 September 2012

Sign of Delay in the Opening of KLIA2?

In the recent spat between Malaysia Airports and Tony Fernandes over the opening date of KLIA2, Malaysia Airport has affirmed that KLIA2 will be open in April 2013. (Source)

However, is the statement made by the CFO merely less than 2 month later "Once the airport is operational in May 2013, MAHB will have almost 10 low-cost carriers flying from there..." a sign of delay in the completion of the airport? (Source)

Monday 10 September 2012


Total GDV RM5bil

72-acre development in Shah Alam consists of theme park, mall, hotel, residence, office and concert venue.

Of i-City's total 13 million sq ft, 8 million for residential-type dwellings, 2 million for the mall and three hotels, and the rest for offices.

3 flyover interchanges will link i-City to the Federal Highway, making it only the second development to have exclusive access to the bustling expressway after Mid Valley.

The Shah Alam City Council has written to the Land Public Transport Commission requesting that one of the stations along the proposed Kelana Jaya-Klang line of the My Rapid Transit service i-City.

When everything is complete, recurring income will come from the investment properties namely the mall, hotels and carparks.

In 2011, I-Bhd entered into a 30:70 JV with Everbright International China to co-develop 30 acres in i-City. Phase one involves 14 acres with a GDV of RM1.5bil, will comprise a giant shopping mall and 2 million sq ft of mixed residential, Multimedia Super Corridor (MSC) offices and educational institute. The second phase has a GDV of RM2bil involving 16 acres.

The story of i-City stretches as far back as 1993, when Lim bought a parcel of land in Section 7 of the then sleepy Shah Alam at RM4 per sq ft.

The freehold development is the brainchild of Lim, who has throughout his life been a trailblazer on many fronts despite adverse circumstances.

With only 20% of the construction in place, large tracts of bare land still dominate the landscape of i-City, although if everything goes on schedule, this will not be the case for much longer.

I-Bhd will spend the next 10 years realising the masterplan designed by Jon A. Jerde, whose portfolio includes the ritzy Roppongi Hills neighbourhood in Japan and SP Setia Bhd's KL Eco City.

Lim and his team are working to create an “international business hub by day and lifestyle haven by night”, the likes of which has no comparison in Shah Alam, and which many thought preposterous to do in a place better known for its sedate suburbia and factories than as a thriving nightspot.

Because of this, i-City was a tough sell. Lim, for example, had to contend with an initially miniscule plot ratio of 1:3 and approved built up of five million sq ft, which would not allow the company to maximise its potential.

After much wrangling, Lim got the green light to raise i-City's plot ratio to 1:5, giving it a total gross floor area (GFA) of 13 million sq ft and RM5bil in gross development value (GDV).

i-City was the first and still the only private sector-led MSC status zone in the state.

It also signed a management and development agreement with the Selangor government to make i-City a “technopreneur campus”, which comes with a host of incentives such as a temporary occupation licence for some 30 acres of neighbouring land, 24-hour operation for approved outlets, lower bumiputra sales quota of 30%, and the expanded plot ratio.

“If you look at all the successful urban centres in the world, there is always a business as well as entertainment component. Look at Roppongi or Canary Wharf (in London). When you have both day and night activities, the place becomes vibrant,” Eu explains.

When completed, the RM5b development will include residential property, 18 office towers and a one million sq ft mall.

It has been reported that I-Bhd plans to begin construction on the SoHo and SoVo units at i-City as well as a 3 star hotel in the next 6 months.

City of Digital Lights
Opened in 2009.

On average, it receives 90,000 visitors a week or about five million visitors per annum.

When first opened and parking was free, traffic jam at the entrance to i-City stretched some 10km.

Subsequently, I-Bhd charged RM3 per entry into the car park and the jam had eased to about 5km
Now it costs RM10 per entry.

The traffic buildup is now mainly during weekends, public and school holidays.

I-Bhd will be announcing its JV with a shopping mall manager in two weeks which will help manage its CityMall.

A “regional mall”

Estimated GDV RM500mil

Scheduled to complete end of 2015

Will be built on 14 acres in i-City.

Gross floor area of about 1.7m sq ft

Lettable area of one million sq ft.

Everbright will be the contractor and builder of the mall.

They will fund the construction and act as a financier cum contractor.

Some food and beverage outlets fronting Sungai Rasau as the Selangor government plans to upgrade the river.

Once completed, there will be a 1km river frontage beside i-City.

I-Bhd and Thailand's Central Group are setting up a special purpose vehicle (SPV) to build and operate i-City Mall

The i-City Mall development will combine 2 plots of land measuring 18.8 acres and has a built-up of 4.3m sq ft, will also include non-mall components such as a hotel, residential units and offices

i-City's Thai partner will be responsible for the design and development as well as management of the mall while I-Bhd will be responsible for the development of non-mall portion, namely the offices, apartments, hotel and parking facilities, as well as provide the infrastructure to the boundary of the mall.

The SPV will acquire the "mall portion" of the land from I-Bhd and will own and develop the mall and its attached car park.

Water World@i-City
6 acre

Will premier to the public in November 2012

This 4ha water theme park is able to accommodate up to 5,000 visitors a day

A tornado ride, the first of its kind in South-East Asia, will be a major attraction for the water park.

Invested RM30mil in leisure and theme park attractions so far.

Investing RM25mil in the Water World in 2012. Plan to invest RM100mil in the theme park in 3 to 4 years

The RM25m WaterWorld@i-City targets a two-year capital payback

Leisure Business
Currently, Snowalk and the digital lights are the main attractions which draw people to i-City.

“Our track record so far is we have managed RM1 turnover for each RM1 of investment. We invested RM30mil this year in the theme park and expect RM30mil revenue. This is based on actual historical performance. We did not plan for it this way. For every RM1 of turnover we receive 30%-35% in terms of profit."

I-Bhd embarked on the leisure business several years ago to provide the company with a recurring income stream once the development of i-City is completed in about 10 years.

Since the launch of City of Digital Lights, revenue from the leisure segment has grown from RM2.8mil in 2010 to RM17mil last year.

As at June 30, I-Bhd's efforts at enhancing its tourist attractions at i-City are paying off as profits have more than tripled year-on-year to RM7.61mil from RM2.24mil previously.

As it realises its need for repeat visitors, Eu says, I-Bhd will add new attractions every year to draw in the numbers. Last December, it brought in seven theme park rides and so far this year it has launched the 10,000 sq ft children's gym.

“At the moment we are still about 90% night in terms of visitor arrivals. We hope that by next year when the Water World is open it will be two thirds night visit and one third day visit,” he says.

Moving on, three hotels from luxury four star to boutique hotels are in the pipeline as long-term investment.

At the moment there are 3 planned four-star, three-star and boutique hotels. The latter 2 we may manage ourselves although we haven't finalised this. However, for the high end one, we will probably get an international hotel operator

Launched in  May 2012

173 units of the West Wing of i-Residence has been fully sold.

RM500/sq ft

It unveiled in August a further 173 units of the East Wing in addition to 20 villas.

220 small office/versatile offices (Sovos) were sold out

Completion and handover is expected in 2014.

The quarter ended June 30 marked the first time I-Bhd recognised revenue from the residential portion of i-City in its books. Its turnover in the second quarter improved 63% to RM10.94mil from RM6.71mil in the same period last year, and net profit to RM2.97mil versus a loss of RM129,000, boosted by a three-fold increase in its leisure segment and a one-off gain of RM1.8mil from the divestment of its i-Home trademark.

For the first half of the year, revenue climbed 73.5% to RM19.59mil from RM11.29mil, while net profit stood at RM3.79mil compared to RM294,000 of losses a year earlier.

In the notes accompanying its financial results, the firm said it recorded a profit of RM7.6mil from its leisure operations during the six months to June, which was triple the RM2.2mil achieved in the previous corresponding period due to stronger revenue from its upgraded SnoWalk, more visitors to the LED Lightscapes and new theme park attractions installed in the final quarter of 2011.

Nonetheless, Eu explains that the contribution from its leisure division, which has so far been I-Bhd's main earnings engine, should balance out as the company progressively receives cash from the sales of its residences.

“We have only accounted for less than 5% of our unbilled sales in the second quarter,” he points out.

I-Bhd is targeting to roll out some RM500mil worth of launches with one million sq ft of GFA and hit RM500mil in sales per annum.

Eu calls i-City a “dual-track” project as the tourism and property development elements can operate independently of each other.

By the middle of the next decade, after i-City has come to fruition, it is envisaged to have 30,000 knowledge workers, 25,000 residents and 40 million to 50 million visitors from five million now.

And while the small office/home offices (Sohos) and Sovos make up a significant chunk of its residences at 5.2 million sq ft, or 40% of the total built up, Eu does not think there will be a crunch in demand, citing the growing number of technopreneurs who eschew traditional offices.

In the near term, I-Bhd aims to launch 950 units of its RM300mil GDV Sohos in November alongside its Water World@i-City that will feature the country's only tornado ride.

Also in the works are a luxury 43-storey condominium sited on 1.1 acres in Kuala Lumpur's Golden Triangle in Jalan Kia Peng, which is slated to be revealed in the first quarter of next year, and Clarke Quay @i-City, the working title for what will be its riverfront complex inspired by the Singaporean tourist haunt of the same name.

“The authorities here are learning from Singapore and have decided to do away with the cemented banks of Sungai Rasau, which snakes past i-City. The plan is to widen and deepen the river to give it a natural look,” Eu explains.

The river will be the focal point for its leisure district comprising its one million sq ft regional mall, hotels, an amphitheatre and an F&B hub.

He expects net profit to be double that of last year in the financial period ended Dec 31, 2012 (FY12) on the back of progressive recognition of unbilled sales from its apartments and better ticket sales from its rides and attractions with the looming year-end holidays.

In a May report, Kenanga Research estimates that I-Bhd could see solid earnings growth in FY12 and FY13 of over 100% to RM11.4mil and RM24.3mil respectively.

“For the past five years, the group has maintained its net cash position with a zero gearing balance sheet,” adds the research house, which has a target price of RM1.51 for the stock.

On dividends, Eu shares that there is potential for higher payouts in the future. It has been returning one sen to shareholders over the past two years for a yield of 1% to 3%.

“The challenge for us now,” Eu sums it up, “is to continue to increase the GDV of i-City. We have 10 years left under the current plan. Our job is not to complete it, but to enhance it further so we will have many more years to go.”

Tan Sri Lim Kim Hong
The youngest in a family of 10 children

Dropped out of school after standard six and worked in a furniture-making shop in his hometown of Muar, Johor, as an apprentice.

Lim later struck out on his own as a carpenter. At 21, he signed up as a mattress dealer with Dunlop and within a short time, he was the biggest dealer in the country. Soon after, Lim started Dreamland, Malaysia's first spring mattress brand, earning him the nickname “mattress king”.

Dreamland was subsequently listed in 1987 and Lim sold the business in 1993 for RM350mil. He invested the money in several regional ventures as well as in the land on which i-City sits.

I-Bhd, which is 61.2%-owned by Lim, used to be a white goods maker known as Sanyo Industries Malaysia Bhd before he acquired and renamed it in 1999.

But his technology-based township did not take off until 2005, hampered by the Asian financial crisis.

Thursday 6 September 2012

Calculating WCT theoretical ex-all price

WCT has proposed bonus issues of new ordinary shares on the basis of 3 for 20 and free warrants on the basis of 1 for 5. See Bursa announcement

The proposed bonus issue of shares and the proposed bonus issue of warrants will be implemented concurrently. As such, the bonus shares to be issued pursuant to the proposed bonus issue of shares will not be entitled for the warrants.

The theoretical ex-all price will be:

[Closing price immediate before ex-date + 0.2 (warrant exercise price)]/ (1 + 0.2 + 0.15)

Wednesday 29 August 2012


What is the shortest interval you have seen for two consecutive dividend payments? Quarterly?

The ex-dates for final dividend and the 1st interim dividend of the following is only a day apart but both will be paid on the same day...

Tuesday 28 August 2012


Currently the cost of rubber production is between RM4 and RM5 per kg

If the price of rubber is RM7.47 per kg, that translates into around RM6 per kg for dry rubber and RM3 per kg for wet rubber

At RM10 per kg, the farmgate price would increase to RM8 per kg for dry rubber and RM4 per kg for wet rubber.

Source: New Straits Times 28 August 2012

rubber plantation land transactions in Malaysia and Thailand have been priced at between RM20,000 and RM25,000 per ha

Source: The Star 30 January 2012

Monday 27 August 2012

If Malaysia is safe, why... ?

If Malaysia is safe, why...

1. MCA has called on shoppers to boycott shopping malls that failed to provide adequate safety features to protect its customers? (Source)

2. The Home Minister Datuk Seri Hishammuddin Hussein made the shocking admission that the focus on crime-busting was “not seen as a need” for the government, until only recently, and.then claimed that the government has “now got the political will right to the top” to fight crime?

3. Tinting manufacturers and distributors report a boom in sales for the polyester films that prevent the car windows from shattering? (Source)

4. More house buyers are "willing" to pay premium and monthly fee for gated and guarded community?

5. Shops and offices lock the doors during operating hours even though this may lead to fewer customers walking into their premises

6. Residents have taken steps to restrict access to their housing estates by setting up guard posts and putting up some form of physical barrier surrounds the boundaries of the housing estates and employing private security services.

7. Are we seeing more vendors selling pepper sprays?

8. More CCTV are installed on the streets?

9. Shops in a housing estate all have metal grilles, which were always closed and that customers had to ask for items from outside and were not allowed to enter the shop? (Source)

10. Robbery of whole ATM machine happens frequently?

11. Developers install 3 point access system to attract buyers?

You may want to read this: Crime statistics: Let the truth be told ― Anonymous Policeman

Thursday 23 August 2012

Sam - Theoretical Ex-Price

Sam Engineering & Equipment - Calculation of theoretical ex-price

Mother share cum price: RM3.44

Issuance of ICULS on the basis of 2,588 of RM1.00 nominal value each for every 1,000 existing ordinary shares.

Purchase consideration RM1.00/ ICULS (at 100% of ICULS nominal value)

Conversion price: Conversion price of the ICULS is at RM2.10 nominal amount of the ICULS for every one SAM Malaysia Share

A way to work out the ex-theoretical price
= Total investment / total number of shares owned after conversion

= (3.34 + 2.588)/ (1 + 2.588/2.1)
= 2.655
= 2.655 (rounded off)

See also theoretical ex-all price for MBM Resources Berhad

Wednesday 22 August 2012

First Generation IPPs

First Generation IPPs
Existing Facility
Existing Capacity (MW)
YTL Power Generation Bhd
Paka, Terengganu
Pasir Gudang, Johor
Genting Sanyen Power Sdn Bhd
Kuala Langat, Selangor
Segari Energy Ventures Sdn Bhd (Malakoff Corp Bhd's unit)
Lumut, Perak
Port Dickson Power Bhd (Sime Darby Bhd's unit)
Tanjung Gemuk, Port Dickson
Powertek Bhd
Teluk Gong, Melaka
Tenaga Nasional Bhd
Connaught Bridge
Pasir Gudang (Combined Cycle)
Pasir Gudang (Open Cycle)
Serdang (Unit 1, 2, 3)
Source: The Edge 20 August 2012

Total combined capacity 6320MW