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.