Wednesday 27 November 2013

Guesstimate Canone's EPS post sale of Kianjoo

Value of Kianjoo at RM3.30/share = RM1,465,753,693.8

Value of 32.9% stake in Kianjoo held by Canone = RM482,232,965.26

Canone's debt as of 30 September 2013 = RM467,818

Canone will be in net cash post disposal of Kianjoo

Assume the sale proceeds to be utilised to fully settle the debt => zero finance cost

Annualise the 9M results, operating profit= RM78.384m

Ignore interest income and apply zero financial expenses assuming all the debts are fully settled, PBT is RM78.384

Assuming 25% tax rate, net profit = RM58.788m

Assuming minority interest 10%, PATAMI = RM52.9092m

Canone total number of oustanding shares = 152.4m

EPS = 34.7sen

Tuesday 26 November 2013

Low profile Keck Seng gains momentum

Tuesday, 26 November 2013 10:03

KECK SENG (M) BHD is a plantation company that has been off investors’ radar screen due to its low profile.

Those who have invested in the company would have been rewarded by its recent share price surge last year.

The share price reached its peak in May this year on rumours of a corporate exercise and special dividend which bumped up the share price to RM7.76.

The counter closed at RM7.53 yesterday, translating into a gain of 97% from RM3.82 a year ago, with an average trading volume of over 220,000 shares.

Investors who invested in the company before the 2008/09 crisis would have seen their investments multiplying by 290%.

Keck Seng’s market capitalisation has also grown exponentially within a five-year period.

Based on the closing price of RM7.53 yesterday, its market capitalisation reached  RM2.71 billion from just RM694.4 million in 2008.

Market watchers attributed the rally in the share price earlier this year to the renewed interest in the group’s assets spinning off into real estate investment trusts (REITs).

Keck Seng has a diverse portfolio of businesses in property development, share investment, oil palm estates, hotel and resorts.

The plantation firm is a unit of the Keck Seng group. Its other vehicles include Hong Kong-listed Keck Seng Investments Ltd and Keck Seng (Singapore) Pte Ltd.

It is not clear how much of the group’s properties which carry a total book value of RM530 million will go to REITs.

The company’s 2012 annual report reveals that the company has agriculture and housing development land in Johor worth a net book value (NBV) of RM227.53 million.
Keck Seng has a golf course, several residential and commercial developments as well as oil palm estates — all of which have not been revalued since 1980.

Keck Seng also owns several properties around the globe. It owns hotel buildings in the US and Canada worth a NBV of RM137.36 million.

In Singapore, it owns an office building with a NBV of RM4.14 million. Its properties in Malaysia, consisting of office blocks, a condominium, villas and a shopping complex, are worth RM161.09 million.

Keck Seng is sitting on a huge cash pile of RM761 million or RM2.11 per share, according to the 2012 annual report. The cash pile doubled in 2010 financial year (FY10) after it accepted a takeover offer from Khazanah Nasional Bhd for Parkway Holdings Ltd shares.

The company’s palm oil division has been the main revenue earner in the last five years, contributing more than 70% of total revenue. Earnings have been affected by the volatility in commodity prices and weather conditions.

In FY12, Keck Seng saw a decline in revenue from its palm oil and manufacturing divisions. Revenue from its main income earner dipped 25.1% to RM759.47 million from RM1.01 billion a year ago.

The company attributed the decline in earnings to the lower production of fresh fruit bunch (FFB), declining selling prices and higher cost of production.

Its refineries suffered a setback when the Indonesian government implemented  export duties which benefited its own processed palm oil exports last year.

“This development had negatively affected the margins of refineries in Malaysia. On Jan 1, 2013, the country responded with a new export duty structure but the impact  on our refinery is yet to be seen,” the company said in its annual report.

For the six months ended June 30, FY13, Keck Seng’s revenue from its palm oil division dropped 19% to RM311.64 million from RM384.57 million a year ago due to the lower selling price of refined oil.

The company foresees stiff competition in its export of refined oil.

“The performance of the refinery will be very much dependent on the price of other substitute oils and exchange rates of the US dollar against the ringgit while the FFB processed by the mill in 2013 is expected to be marginally higher than that in 2012,” the company said in a statement.  

Keck Seng posted a higher net profit of RM68.55 million in the first half of FY13  compared with RM40.61 million a year ago despite the lower contribution from Keck Seng’s main revenue generator. Earnings were lifted by higher foreign exchange gains.

Keck Seng has delivered consistent dividends at 10 sen per share since 2009. They make up about 30% of the company’s annual net profit.

For FY12 ended Dec 31, the plantation player posted a net profit of RM95.57 million versus a net loss of RM29.83 million a year ago.

The company is 30% owned by the Ho family, with a large portion of it under private vehicle Ho Yeow Hoon & Sons Pte Ltd.

Managing director Datuk Ho Kian Hock has a 6.91% direct interest and another 24.25% deemed interest in Keck Seng.
This article first appeared in The Edge Financial Daily, on November 26, 2013.

Sunday 24 November 2013

RTD beverage consumption per capita per year

President and CEO of Permanis Sdm Bhd, Erwin Selvarajah says there is great potential of the ready-to-drink beverage market in the country. “Malaysia, unlike other countries, has a low per capita beverage consumption per year of about 100 cans. In Singapore and Thailand, it is between 300 and 400 cans compared with the US and Europe where the figure is higher at between 800 and 1,000 cans.

Monday 11 November 2013

Yoong Onn expands to meet peak demand

KUALA LUMPUR: Little known Yoong Onn Corp Bhd is on an expansion trail to meet the growing demand for home linen and bedding accessories.

Yoong Onn expects to increase its production capacity by 50% from its planned expansion on the newly acquired piece of land adjacent to its factory. The new capacity will come in handy during the seasonal peak period when demand tends to spike.

“With the new factory in place, we will be able to increase our production capacity to an additional 50% by 2015,” said Yoong Onn head of production Eric Chew, adding that it currently produces 3,000 bedsheets a day.

The 2.22-acre (0.88ha) piece of land in Nilai, Negeri Sembilan, was purchased at RM5.7 million for expanding Yoong Onn’s manufacturing and warehousing operations.

While the family-owned Yoong Onn is a familiar name in the investing community, its homegrown brands — Jean Perry, Novelle and Louis Casa — are well-known premium household brands in the local home linen and bedding accessories market.

“We have diligently cultivated our homegrown brands over the decades and they are our key assets,” managing director Roland Chew told The Edge Financial Daily.

From its humble beginnings as a store in Petaling Street, Kuala Lumpur, Yoong Onn now owns 14 homegrown brands, 16 fully owned retail outlets and 120 counters in department stores and hypermarkets. It exports to more than 10 countries worldwide.

“According to an independent report, we are a leading player in this market with a share of more than 30%,” said Chew.

Yoong Onn is the first company listed on Bursa Malaysia dealing in the home linen and bedding accessories business.

Kenanga Research in its note dated Oct 29 described the company as a hidden gem waiting to be discovered. Based on its share price of 78 sen, Kenanga said the stock is deeply undervalued with a price-earnings ratio (PER) of 6.2 times, which is at a 40% discount to its peers’ average of 10.4 times.

“Yoong Onn is trading at only 0.9 times its book value of 87 sen [at share price of 78 sen]. We believe the discounts are not justified due to its good earnings growth prospect and superior dividend yield,” the research house said in the report.

The company has achieved a good five-year net profit compound annual growth rate of 14%, according to Kenanga Research. “We reckon that its strong earnings growth track record reflects the growing demand for its products as Malaysia’s household income rises.”

Kenanga noted that Yoong Onn has given out regular dividends, thanks to its strong balance sheet. The company is in a net cash position of RM7.24 million after taking into account borrowings of RM24.12 million.

Its share price has been on a steady climb since last month from 70 sen to a historical high of 90.5 sen on Nov 4. It closed at 88 sen last Friday.

Sales to premium department stores make up half of the total revenue. Projected sales to hotels and hospitals generate 10% and overseas exports contribute 20%.

According to Chew, Yoong Onn is well-known locally in department stores such as Parkson, Aeon, The Store and Robinsons.

“We grow faster when we partner with department stores as they are expanding rapidly.

“In smaller towns where the population is not big enough for us to set up a boutique, we rely on department stores to which we supply our products where growth is very consistent,” he said.

Chew acknowledges that competition from low-cost manufacturers in China and Vietnam has always been a concern. Hence, Yoong Onn targets more sophisticated, middle- to high-end customers who value quality and comfort rather than mere functionality.

“As we invest a lot in innovation, quality and design, it is pointless to compete with any player who only competes on prices by compromising on quality. We don’t want to lose our focus and head into the wrong game,” said Chew, adding that Yoong Onn is a trendsetter producing about 50 new designs every month.

He said compared with overseas manufacturers, Yoong Onn has a superior understanding of the local culture and markets, which enables it to deliver designs popular with the locals.

“Chinese manufacturers are not well-versed with fusing Malaysian culture into their designs and they mainly sell to price-sensitive customers. This is not our target group,” said Chew.

Yoong Onn purchases raw materials from 10 factories in India, Pakistan and China with which it has established strong working relationships for many years.

“We don’t operate our printing and dyeing here in Malaysia. We provide the factories with the specifications, designs and colours and they print and dye for us,” said Chew, adding that manufacturing products that are less-labour intensive has been effective in helping to reduce labour costs.

Yoong Onn is a licensed manufacturing warehouse under the Royal Customs and Excise Department, which enables its goods produced for export to be exempted from customs duties.

Friday 8 November 2013

Process of lease extension for leasehold properties

The applicant (homeowner) will have to submit the following to the state land office:

a) Application form to surrender and re-alienate land to extend lease duration (Borang 12A Permohonan Untuk Menyerahkan Balik Tanah – mengenai kesemua tanah itu)
b) Personal land lease rights (of the applicant) form (Borang Perihal Tanah Peribadi Pemohon)
c) Table 1 – Rule 2 – Land Rights of Malaysian Government (Jadual 1 – Peraturan 2 Kanun Tanah Negara Perintah Tanah Kerajaan)
d) Personal details of the applicant (Borang Butir-Butir Permohonan Tanah Oleh Individu)
e) The original title of the property (Surat Ikatan Hak Milik Asal)
f) Copy of quit rent and assessment receipts for the current year (Salinan cukai tanah and resit cukai taksiran untuk tahun ini)
g) Two copies of NRIC (Dua salinan kad pengenalan)

If the lease has already expired, the applicant needs to submit the Application for Land Re-alienation form (Permohonan Permerimilikan Tanah). The land will then be checked by a settlement officer, who will submit a report to EXCO for approval. Upon approval, the land will need to go through a re-alienation process by the land administrator. If the re-alienation is approved, the Land Office will issue a Notice (Form 5A) to the property owner, that Land Revenue is Due. The owner will then need to pay a premium.

Source: The Sun 08 November 2013

Monday 4 November 2013

Tourism appeal for i-City

THE tourism component for i-City is shaping up nicely and the recent tie-up with Best Western International to develop and manage the first hotel there will give the park an added boost as i-City may look forward to retaining longer-staying visitors.

The three-star Best Western i-City has a gross development value (GDV) of RM50mil and is the first of two hotels planned for i-City. The 216-room boutique hotel is currently under construction and is slated for opening late next year.

“The hotel will enhance the number of visitors to i-City’s leisure park and attractions, given visitors can now opt to stay within the vicinity of i-City’s theme park,” said Datuk Eu Hong Chew, deputy chairman of I-Berhad, the developer of i-City.

In addition, Best Western will also be managing the serviced suites by providing hospitality and building management services.

The serviced suites, which comprise 826 units of serviced residences, will be launched at the end of 2013 and are poised to be the first hotel-branded residential development in Shah Alam.

Eu noted that owners of this residential development should be able to enjoy premium capital value and rental yield due to the nature of the residences and its location in the heart of an integrated development such as i-City.

However, I-Berhad has not given any indication of the pricing for its serviced suites.

Last year, I-Bhd launched its first residential project, i-Residence, at RM500psf, which was a benchmark price for the area at that time.

Shah Alam has been described as among the top five property hotspots in the Klang Valley. But no doubt, these suites would cater to a different crowd compared to the average property investor.

“The fact that it is located within a MSC Cybercentre environment means that tech-savvy urbanites can be a part of i-City’s plug-and-play environment, thanks to the Cisco Connected Real Estate connectivity.

“All in, the serviced suites will be managed at high quality levels and at the same time, the owners of these units will be able to avail themselves to hotel services and amenities such as the concierge, housekeeping and catering provided by Best Western International,” Eu said.

I-Berhad is confident that the development taking place in i-City would indeed create demand for its leisure properties as Eu expects the hotel to have one of the shortest gestation periods thanks to the attractions based in the park.

i-City has established itself as a pioneer of the niche “urban leisure development” which integrates leisure with residential and office development in an urban setting. The first phase of the 30ha development was completed in 2008 with 500,000sq ft of cybercentre offices.

Eu added that the hotel was the third building block in the development of i-City as a tourism destination after the establishment of its first two components, its various theme parks as well as CentralPlaza@i-City, a retail mall.

i-City has, to-date, invested RM70mil in various rides and attractions to develop its main tourism component.

Sprawled over 10ha, i-City has four notable theme parks — City of Digital Lights, SnoWalk, WaterWorld and FunWorld.

It also houses Malaysia’s first interactive wax museum with the House of Horror as the main feature.

Eu said I-Berhad is looking at pumping in another RM30mil over the next few years to boost i-City’s theme parks.

He estimates 30% growth in its visitor count in the near future, which currently averages about 90,000 visitors every week.

“With the allure of Red Carpet, the House of Horror and our constant upgrading as well as introduction of new attractions — all of which fulfill the criteria as Visit Malaysia Year 2014 tourism products — our ultimate hope is to make i-City an enchanting tourism product that will appeal to both local and international visitors,” he said.

Earlier this year, I-Berhad also signed a joint venture agreement with CPN Global Company Limited, a wholly-owned subsidiary of Central Pattana Plc Ltd (CPN), to jointly develop the CentralPlaza @ i-City regional retail mall. CPN is Thailand’s largest retail developer.

Currently in the design stage, the project will be developed on a freehold plot of land measuring 4.5ha with gross floor area of around 1.5mil sq ft and net leasable area of around 1mil sq ft.

Upon completion by end-2016, the RM580mil CentralPlaza will be the biggest shopping mall project in Shah Alam.

“We envisage the mega mall to further expedite the maturity of i-City as a wholesome township that boasts corporate, leisure and residential components encompassing office towers, Cyber office suites, a theme park, hotels, serviced apartments and data centers,” said Eu.

Another notable development that would add to i-City’s tourism appeal is its upcoming Clark Quay-type riverfront food and beverage project.

“Facing the picturesque Sungai Rasau, the 1km-long development will feature a slew of al fresco F&B outlets alongside water-based rides and specialty retail shops, all of which are targeted at our international visitors,” he added.

Clearly, i-City has a lot on its plate for its tourism component alone and Eu is optimistic about the future of the park as a tourism destination.