Monday 30 January 2012


If you are looking for alternative as fixed deposit is giving a pathetic return of 3%+ and if factor in inflation, fixed deposit appears to give negative real return, then you may consider Malton-LA.

Malton-LA is a redeemable convertible secured loan stocks (RCSLS)

At 91sen, it gives at least double the return that of fixed deposit and it is a secured loan stock. (Refer "security" for more information).

It is a bonus if Malton goes above RM1 as the RCSLS can be converted into Malton anytime.

Part of the indicative principal terms of the RCSLS are as follows

Issue size: RM156,570,347 RCSLS at nominal value of RM1.00 per RCSLS

Tenure: 7 years

Coupon rate: 6% per annum, payable quarterly in arrears

Security: First legal charge over properties/land owned by Malton Group to be identified and whose aggregate market value shall be no less than RM186.0 million

Conversion period: Anytime

Conversion price: 1 RCSLS for 1 Malton share

Redemption schedule:

Sunday 29 January 2012


There is a share exchange offer made to YTLCMT and YTLCMT ICULS holders. For YTLCMT ICULS, the exchange ratio is 1.56 YTL Corp shares for each YTLCMT ICULS.

From the date of issue to the 4th anniversary, the conversion price from YTLCMT ICULS to YTLCMT was RM2.72.

After the 4th anniversary up to the 7th anniversary, the conversion price was adjusted to RM2.04

After the 7th anniversary which falls on 10 November 2012 up to the maturity date, the conversion price will be adjusted further to RM1.82

In the share exchange offer document dated 9 January 2012, it was stated that the ICULS offer price of RM2.21 and or exchange ratio for the ICULS offer of approximately 1.56 consideration shares for each offer ICULS are determined based on the following:

(ii) conversion price of RM2.04 for each ICULS based on its Trust Deed dated 8 September 2005

Despite the offer made is close to the 7th anniversary of the ICULS (10 November 2012) whereby the conversion price of the ICULS to mother shares will be adjusted from RM2.04 to RM1.82, shouldn't the offeror and the independent adviser take the step down conversion price into consideration as the adjustment is just few months away?

Both the offer document dated 9 January 2012 and the independent advice circular appeared to be silent on this.

The Board of YTLCMT confirmed that to the best of their knowledge and belief, there are no materials facts, the omission of which would make any statement in this IAC misleading.

But is not the adjustment in conversion price with difference of 10.8% significant?

Thursday 26 January 2012

Greenyield finds its pot of gold

KAJANG: Greenyield Bhd has created its own pot of gold at the end of the rainbow. The ACE Market-listed company manufactures unique plant pots made from a secret formulation and production process. Its artstone pots are not as heavy as the traditional ceramic pots, nor are they as vulnerable as the plastic ones.

The pots are lighter, more durable and possess a unique homogeneous travertine appearance.

“A woman can now go to the supermarket and purchase one of our very big pots and carry it home all by herself. Those who live in an apartment can carry the pots up to their floor by themselves without having to pay extra for delivery,” Greenyield group managing director Don Tham Foo Keong told The Edge Financial Daily.

But making artstone plant pots is not Greenyield’s main business. The company primarily develops, manufactures and markets agricultural systems, products and services based on agro-technology.

Its systems include gaseous stimulation systems, liquid stimulation systems, agricultural chemicals such as GreenPlus and rubber tapping utensils.

Nevertheless, the artstone plant pot making business, under its non-plantation arm, is gaining prominence in Greenyield which was founded in 1937 and listed in 2007.  Tham expects revenue contribution from the non-plantation segment to overtake its core business in the future.

“We expect  [the non-plantation business] to overtake our plantation-related products and services earnings in 2013 or 2014. But it might not happen if the plantation business grows more than we expected though,” he said.

Tham said Greenyield is also putting put more effort into sustaining turnover for its core business in view of the current challenging global economic environment.

As Greenyield’s plantation division is mainly focused on the rubber sector, Tham said the business could be affected if rubber prices remain stagnant this year.

“We expect rubber prices to remain quite stagnant this year but we believe the price could possibly go up at year-end on the back of increasing demand. But again, demand is very sensitive to the economic situation in Europe and the US, despite China being the No 1 user of rubber in the world.

“Rubber goods produced in China are meant for the US and Europe. If their economies are down, exports of rubber products will go down, too. Apart from that, rubber prices are very sensitive to the prices of crude oil,” he said.

The price of rubber slumped some 29% last year, but has rallied strongly since the new year.

Rubber futures for June delivery traded in Tokyo closed at a three-month high of ¥320.7 (RM12.63) per kg yesterday, with traders turning bullish due to Thailand’s recent price stabilisation measures.

Besides the outlook on the rubber sector, Tham said Greenyield’s earnings are highly exposed to foreign exchange fluctuations due to its large global presence.

“We engage in effective hedging against the greenback and euro, but still, there is only so much we can do. We can’t do it all,” he said.

Since its debut on the then Mesdaq market over four years ago, the company has been consistently profitable, with annual net profit ranging between RM4 million and RM7.4 million. For FY11 ended July 31, it posted a net profit of RM7.38 million, or 4.4 sen per share, on RM48.24 million in revenue.

The company saw its non-plantation business revenue grow 129% to RM36.21 million in FY11 compared with RM15.8 million a year earlier.

This comprised RM12.96 million in external sales, some 6% higher than the year before, and RM23.25 million in inter-segment revenue, a 6½-fold jump from RM3.59 million in FY10.

Its plantation division saw revenue from external customers increase 34.3% to RM35.28 million in FY11 from RM26.27 million a year before.

Greenyield derives more than 75% of its total revenue from the export markets. The company’s artstone plant pots are mainly exported to the US, Australia and Europe.

“The market [for artstone plant pots] is so small in Malaysia. Our buying power is not there and not many people have the money to spend on these things.

A big artstone plant pot is sold at some RM1,000 [a piece] by retailers here. But they are selling like mad in the US and Europe despite the financial troubles there,” said Tham.

Greenyield does not plan to patent its secret formula and production process for artstone material, he said.

“We talked to our patent lawyers and suddenly they started asking too much on both the process and ingredients. We are not going to apply [for patents], just like Coca-Cola, they don’t have a patent either,” Tham said.

The company’s net profit for 1QFY12 ended Oct 31 jumped significantly to RM2.19 million from RM786,000 a year earlier, due mainly to strong demand for plantation-related products and services from the overseas markets. Its revenue for the quarter rose to RM13.58 million from RM8.02 million a year ago, while earnings per share expanded to RM1.32 from 48 sen previously.

Greenyield is relatively cash rich. As at Oct 31, 2011, the company had RM16.2 million net cash, equivalent to 10 sen per share and comprises one-third of its shareholders’ funds of RM48.68 million.

“We will continue to invest despite the current challenging economic situation. We believe the best opportunities come when the economic environment is bad. On the whole, we are now trying to concentrate on expanding our plantations and plant pot businesses,” Tham said.

Greenyield’s share price closed at 21 sen yesterday, below its net assets per share of 29.2 sen as at Oct 31, 2011. At that price, the company has a market capitalisation of RM35 million.

Sunday 8 January 2012

Gardenia, Massimo, High 5

Silver Bird Group Bhd, the manufacturer of white loaf bread High 5

Silver Bird is the only listed packaged white bread manufacturer on Bursa Malaysia, while Gardenia Bakeries' parent company, QAF Ltd, is listed on the Singapore Exchange. Massimo is owned by Federal Flour Mills Bhd (FFM). FFM is owned by PPB Group Bhd.

QAF owns 70% of Garden Bakeries while the other 30% belongs to Padiberas Nasional Bhd (Bernas), which is owned by Tan Sri Syed Mokhtar Al Bukhary.

Gardenia Bakeries operates the largest bakery operation in Southeast Asia with eight fully automated production lines with a production capacity of more than 700 million loaves of bread, snack cakes, buns and rolls per annum.

In 2010, its Malaysian operations contributed S$268.7 million (RM654.6 million) in revenue to QAF, an increase of 12.4% from 2009.

In 3QFY2011 ended Spt 30, QAF recorded a 14% increase in revenue to S$248.4 million (RM605.14) million), after seeing an increase in revenue across its business segments.

In 2010, Silver Bird's revenue stood at RM593.5 million, an increase of 0.8% from 2009.

Profit before tax (PBT) in 3QFY11 was RM4.45 million, which meant that Silver Bird's gross profit margin was only 1%. In the previous corresponding period, the group made RM2.8 million in PBT on the back of RM439.6 million in revenue.

Smaller brands in Malaysian white loaf bread market include Kunci Emas by Kilang Roti Kunci Emas Sdn Bhd and Federal Bakery.

The Edge Malaysia 9 January 2012

Saturday 7 January 2012

MKH Berhad

Sizeable landbank of 600 acres, mostly in the Kajang-Semenyih area and these parcels were acquired at about RM7 to RM8... or below RM10 per sq ft. Total estimated GDV is about RM5.4 billion over seven years.

16,000ha of oil palm estates in East Kalimantan, Indonesia. 15,000ha have already been planted. Some 3,200ha will mature and be ready for harvesting this year, with another 4,000ha next year and so on. Expected yield 25tonnes of fresh fruit bunches (FFB) per year per hectare. In five years, the plantations could make up 50% of group earnings.

Datuk  Eddy Chen Lok Loi together with his brothers and other family members own over 45% of MKH

Institutional investors include:
Public Bank Group Officers' Retirement Benefits Fund (9.04% as at end of 2010)
Public Smallcap Fund (0.81%)
PCB Asset Management Sdn Bhd (holding for MUI Continental Insurance Bhd, with 0.42% stake as at end 2010)

There are always efforts to make MKH more rewarding to investors. For instance, a bonus issue is underway, following the 1-for-10 bonus exercise completed in March 2011. The Group is also looking at bettering its dividend track record of five sen per share which it has maintained for at least the past seven years.

At RM1.68, it was traded below its net asset per share of RM2.77 as at Sept 30 and about 11.6 times FY2011 ended Sept 30 net profit of 14.5 sen per share or RM38.36 million.

The Group held about RM65.8 million cash with shareholders' funds at RM734.21 million as at Sept 30, 2011.

Sales target for RM500 million, new sales with launches of almost RM700 million worth of projects planned for 2012.

Unbilled sales of RM405 million as at Nov 30, 2011

The Edge Malaysia 9 January 2012

Selected Stock Pick for 2012

Some stocks that I think could be quite potential

Sarawak Oil Palm (RM 5.85 6 Jan 2012)
Chris Eng - Director of Research
OSK Research

When commodity prices are on the uptrend, all plantation stocks will benefit from higher crude palm oil prices. But Engs says Sarawak Oil Palms Bhd (SOP) is one company that could beat its peers in 2012 because 77% of its trees are still below 10 years of age.

Hence, Eng says there is still plenty of room for growth for the company.

Meanwhile, CPO prices have been also been estimated by OSK Research to be at RM3,000 per tonne this year and this could mean higher profits for SOP, whose production costs are lower than its peers in Sarawak.

SOP's production cost is about RM1,300 per tonne, according to Eng, which is lower than that of it Sarawakian peers, which is RM1,400 per tonne.

Another catalyst which could help SOP become a dark-house stock of 2012 is the building of its refinery in Sarawak.

This, says Eng, will help SOP ease any bottlenecks it might have in terms of demand for its CPO.

KLCC Property Holdings (RM 3.32 6 Jan 2012)
Gan Eng Peng - Head of Equities
HwangDBS Investment Management

Gan chose KLCC Property Holdings because of several potential catalysts. The first would be if the group decides to form a REIT structure. With the group's valuable assets - including 60% in Suria KLCC, 50% in Petronas Twin Towers and 100% in Menara ExxonMobil - a REIT structure could help "flush out values" imbedded in the company, says Gan.

Also, the group recently expanded its Suria KLCC mall by 15% and fully owns the extension, which could contribute a 20% to 30% earnings boost for the group.

KLCCP's net asset value is between RM6 billion and RM7 billion, says Gan, but the stock currently trades at about a 50% discount to book value.

While KLCCP's stock price has not seen much growth over the last five years, the group could benefit as it turns into a net rental collector from a net builder, with the possibility that it may declare a higher dividend rate going forward.

This could be poosible, says Gan as both the Suria KLCC mall and the Petronas Twin Towers offices are now fully tenanted.

"These catalysts could overcome market perception towards the stock," he concludes.

Jaya Tiasa Holdings Bhd (RM 7.02 6 Jan 2012)
Yeoh Keat Seng - Fund Manager
Kumpulan Sentiasa Cemerlang

The timber-turned-plantation stock darling went up by 46.4% last year, but has further upside potential, according to Yeoh Keat Seng of Kumpulan Sentiasa Cemerlang, with its oil palm trees having the "best growth profile" among plantation companies.

"I am projecting a 2.7 times increase in its three-year fresh fruit bunches (FFB) production growth towards financial year ending April 2014," says Yeoh, adding that the stock's current valuation of about 10 times forward earnings (consensus 12.2 times FY2012 ending April 30 earnings; 10.5 times FY2013 ending April 30) looks cheap.

By comparison, major plantation stocks such as IOI Corp Bhd and Kuala Lumpur Kepong Bhd are trading at over 16 times and 17 times forward earnings, respectively.

"I would prefer looking at those with strong FFB growth rather those that rely on higher CPO prices," says Yeoh.

With growing contribution from the plantation segment, Jaya Tiasa's six months net profit ended Oct 31, 2011, rose 84.8% to RM97.1 million. During the period, plantations contributed 59% to group's pre-tax profit of RM142.4 million.

Besides the strong growth profile of its existing oil palm trees, which are all in Sarawak, Yeoh says Jaya Tiasa's management is looking at expanding its plantation landbank in the state, and thus, potential for bigger growth pipeline. The company's total plantable area for oil palm is now 70,900ha.

Monday 2 January 2012

Stocks that I like for 2012

The 2011 year end closing for FBMKLCI and closing prices for the 8 stocks I like for year 2012.

FBMKLCI 1530.73

Cresndo RM1.57
Harison RM3.47
Icap RM2.05
Keinhin RM0.44
Padini RM1.09
Parkson RM5.66
Suria RM1.58

The 3 that I like most are Padini, MBSB and Keinhin

Happy investing : )