Wednesday, June 30, 2010

TRIUMPL ... July10

It plans to venture into the original equipment manufacturing (OEM) activities in 2012 to produce automotive spare parts and components. The company would target both local and international automotive makers.

Securing businesses from automotive makers would be important as they provided a steady inflow of revenue as they normally had long-term contracts with the OEM suppliers.

Under the OEM venture, all Triumphal local activities under wholly-owned subsidiary USG Products Sdn Bhd, would be shifted to China. USG Products manufactures and sells heavy machinery and spare parts and its activities would be taken over by TAS’s wholly-owned subsidiary China-based Triumphal Precision Engineering (Zheijiang) Ltd.

The company would consolidate its operations in Malaysia and Singapore with
subsidiaries in the two countries to focus in trading and distributing of spare parts for heavy machinery, equipment and wire ropes.

Despite the new development, the company would continue to focus on its niche area – the after-market for spare parts and components for automotive and heavy machinery and equipment.

The company’s wholly-owned subsidiary M.T.T.S. Pte Ltd’s subsidiary companies – Beijing USG Machinery Co Ltd, Wuhan Shengchang Machinery Co Lt and USG Far East International Trading (Shanghai) Ltd are involved in development, manufacturing and trading of spare parts, earth moving equipment, engineering tools, machinery components and floating seals.

For the financial year ended Dec 31, 2009, Triumphal recorded RM5.36mil net profit on RM139.46mil revenue against RM9.48mil net profit and RM156.16mil revenue registered in FY2008 respectively.

Kencana ... Jun10

Kencana Petroleum Bhd is buying out its partner Mermaid Drilling (Singapore) Pte Ltd

with proposed acquisitions of the latter’s 75% stake in Mermaid Kencana Rig 1 Pte Ltd (MKR1), 40% of Kencana Mermaid Drilling Sdn Bhd (KMD) and 75% of Mermaid Kencana Rigs (Labuan) Pte Ltd (MKR Labuan) for a total of US$66.6 million (RM212.5 million) cash.

Under the inter-conditional proposals, the three companies will then become wholly owned units of Kencana, held under Kencana Petroleum Ventures Sdn Bhd.

The total price tag included the settlement of inter-company loans and other debts amounting to US$22.95 million.

Mokhzani controls 39.19% of Kencana’s equity.

MKR1 owns and operates a self-erected rig and derrick equipment which is likely to be commissioned in the second half of 2010. The rig in turn is chartered out to MKR Labuan, which in turn has leased the rig to KMD.

KMD has been awarded a US$235 million contract by Petronas Carigali Sdn Bhd for a five-year contract, with an option for an additional five years’ charter. MKR1 has taken a loan of US$68 million, out of which some US$15.95 million is drawn down, which will be fully settled pursuant to the acquisition.

The acquisition would be funded via a mix of cash and bank borrowings. As at end-January 2010, Kencana had cash and cash equivalents amounting to RM577.83 million and receivables, deposits and prepayments amounting to RM262.74 million.

For the first half of its fiscal year ending July 31, 2010 (FY10), Kencana posted a net profit of RM63.12 million on the back of RM531.14 million in revenue, with an earnings per share (EPS) of 6.97 sen. For the corresponding period a year earlier, it posted a net profit of RM60.31 million on RM592.58 million in sales, with an EPS of 6.69 sen.

As at end-May 2010, Kencana had an order book of RM1.9 billion.

Its proposed acquisition of O&G assets is a sign of things to come in the sector. Smaller players in the industry are accumulating assets across the value chain to improve their chances of winning jobs from Petronas.

Petronas has rolled out its domestic capital expenditure, with more than RM10 billion worth of jobs to be awarded to O&G players, so competition is stiff.

The exercise will transform Kencana from being a solely a fabricator to owning downstream assets such as the offshore drilling company. Kenanca has said the acquisitions will increase the group’s involvement in the drilling rig operations by Petronas.

Industry observers say Kencana’s corporate exercise will put the group in a strategic position to secure some of the larger O&G jobs to be awarded by Petronas. An industry observers says given that jobs are more likely to be awarded to bigger O&G players, a large asset size is key to securing contracts.

In the past Petronas would break up portions of the contracts to be awarded to several O&G players. But now, the new Petronas management is likely to favour companies with assets that have the ability to provide end to end services.

This stems from the government’s call to have fewer but larger and more efficient O&G players under the 10MP. Minister in the PM’s Dept Datuk Seri Idris is leading a group of comprising representatives from the private and public sectors to come out with a master plan to develop a cluster of large O&G players.

Kencana has an order book of rm2 billion currently. Fabrication is Kencana’s mainstay, with some 80% of its revenue coming from this area of business. Hence, it is not surprising the group is aggressively acquiring assets to step up its competitiveness.

Industry players expect the competition to heat up among O&G players, especially with the impending listing of Malaysia marine & Heavy Engineering Sdn Bhd (MMHE) – a unit of Petronas – in Oct 2010.

The listing of MMHE and higher contract flows to O&G players should stir up the sector.

Tuesday, June 29, 2010

KNM ... Jun10

Lee Swee Eng, managing director and acting chairman of KNM Group Bhd (KNM), said he would not rule out the possibility of a future privatisation exercise. The stumbling block was the funding issue. If the opportunity arises, it will look into it.
The oil and gas fabricator came into the spotlight in February 2010, when a trio of suitors acting in concert, offered to acquire KNM’s entire business and undertakings for 90 sen a share or an estimated RM3.5 billion. The bidding companies included a vehicle of Lee’s, BlueFire Capital Group Ltd, as well as GS Capital Partners and Mettiz Capital. Mettiz Capital is owned by Michael Tang Vee Mun, while GS Capital Partners is a unit of Goldman Sachs.

Lee is the major shareholder of KNM, holding an indirect stake of 22%.

Despite the setback, KNM was looking to replace the current low to mid-end process equipment with higher-end products and services. The products would be offered at a “significant” reduction similar to European equipment.

This move comes in line with the company’s RM1.42 billion tax incentive, which arose from the acquisition of Borsig GmbH by KNM’s wholly owned subsidiary KNM Process Systems Sdn Bhd in 2008. The tax incentive represents 83% of Borsig’s purchase price of €350 million (RM1.7 billion).

Borsig is a German company whose subsidiaries are in the development, manufacture, installation and maintenance of plant and processing equipment in the chemical, petrochemical, oil and gas, power and industrial service industries.

KNM would leverage on the technology from Borsig to move up value chain. Borsig is a German company whose subsidiaries are in the development, manufacture, installation and maintenance of plant and processing equipment in the chemical, petrochemical, oil and gas, power and industrial service industries.

KNM had on Feb 29, 2008 signed a sale and purchase agreement to acquire 100% of Borsig for cash consideration of Euros 350 million. The cash consideration was then equivalent to about RM1.669 billion based on an exchange rate of RM4.77:Euro1.00.

Low and mid-end products tend to come under pressure in a downturn such as this. KNM has tough competition from Korean and regional firms. It will duplicate the manufacturing process of the European factories in its Malaysian factories to substitute the lower product line in Asia Pacific.

KNM’s plant in Gebeng, Kuantan would manufacture Borsig process equipment and implementation would be completed by the end of 2010. The new products would be realised in 2011.

The improvement over 2009 will be reflected in 2Q of 2010 rather than 1Q2010.
KNM increased its order book to RM2.1 billion from RM1.5 billion a year ago. The order book, which consists mainly of Middle Eastern and Australian orders, is expected to last 18 months.

The commissioning date of KNM’s plant in Saudi Arabia is estimated to be a further two months later than the original target of mid-2010, as the company has yet to obtain full approvals.

For its first three months of FY2010, KNM posted a net profit of RM40.33 million on the back of RM373.30 million in revenue. Earnings per share stood at 1.02 sen. In contrast to the corresponding quarter a year ago, KNM’s net profits tumbled 59% while revenue fell almost 29%.

The fall in net profits and revenue was mostly due to the dull market and the collapse in the price of oil in 2009.

The company also repurchased 21.4 million shares during the financial year ended Dec 31, 2009. This was due to KNM’s strong cash position and its perception that the stock was undervalued at the time.

As at end-March 2010, KNM had cash and cash equivalents amounting to RM496.67 million.

It has increased its order book to RM2.1 billion as for now from RM1.5 billion a year ago. The book order was enough to last 18 months.

Faber ... Jun10

Sources say UEM group Bhd has stepped up its asset disposal programme by putting its 34% stake in Faber group Bhd respectively on the seller’s block.

It is believed that buyers have been hard to come by for Faber.

UEM Group wants to focus on its core businesses of property, construction and expressways.

UEM Group’s 34% holding in Faber, represented by 124.47 million shares, is worth some RM352 million based on rm2.83 a share.

Faber is involved in the integrated property management business. Speculations in the past that the Pantai Group of Hospitals was interested in buying Faber.

Faber has also the similar problem of getting buyers but for different reasons due to its valuation.

Faber’s NTA is RM1.11 per share and it had cash hoard of RM82 million in bank balances and RM254 million in short term deposits as at end of its 1QFY2010 ended march 31. Its borrowings totaled RM164 million in the same period while its trade and payables came up to RM257 million.

A catalyst for a re-rating of the stock is the impending renewal of its medical services concession sometime in 3Q2010. If the concession is renewed, it will further boost Faber’s valuation.

Monday, June 28, 2010

IPO ... Sunway REIT

传每单位发行价90仙 双威产托参阅价98仙

(吉隆坡25日讯)知情人士透露,双威产业投资信托(Sunway REIT)每单位的发行价为0.90令吉,相比参阅价介于0.90令吉至0.98令吉。








拟7月8日马股上市 双威产托超额认购1倍

计划在7月8日上市的双威产业投资信托(Sunway REIT,简称双威产托),首次公开发售(IPO)予大马公众认购的1亿3400万5600单位,取得1.01倍的超额认购。






Time ... Jun10

Sources say UEM group Bhd has stepped up its asset disposal programme by putting its 45% stake in Time Engineering Bhd on the seller’s block.

It is believed that UEM Group will invite tenders for Time Engineering.

UEM Group wants to focus on its core businesses of property, construction and expressways.

Its stake in time Engineering is worth RM125 million.

Sources say that finding a buyer for Time Engineering was proving to be difficult. Time Engineering is an IT concern. Sources say finding a buyer for Time Engineering was proving to be difficult. The company’s main business is providing solutions for e-commerce, cyber security and integrated intelligent infra.

However, it is believed that any bid for Time Engineering will have to be made at around 50 sen per share mark before UEM Group will consider the offer.

It has a NTA of 19 sen per share. It had cash of rm92 million and debts of some RM305 million in the form of loan stocks as at the end of its 1QFY2010 ended March 31, 2010.

Sunday, June 27, 2010

Liability for a lost or stolen credit

The limit of your liability for a lost or stolen credit card is RM250.00 only under Rule 13.2 of the Bank Negara rules on credit card if it has been fraudulently used.

Please note this limit and ensure that your bank does not overcharge you should your card have been used illegally.

Most are unaware of RM250 limited liability – PLEASE READ AND BE INFORMED! CARDHOLDERS need not pay more than RM250 whenever their lost or stolen credit cards are used by others. Yet, often times, they end up paying much more.

This is because Bank Negara has not informed cardholders that they do not have to pay more than RM250 for fraudulent transactions carried out using their lost or stolen cards, when they had not acted fraudulently and had informed the banks about the lost or stolen cards as soon as possible.

This protection is given under Clause 13.2 of Bank Negara's Credit Card Guideline:

"The cardholder's maximum liability for unauthorised transactions as a consequence of a lost or stolen credit card shall be confined to a limit specified by the issuer of credit cards, which shall not exceed RM250 provided the cardholder has not acted fraudulently or has not failed to inform the issuer of credit cards as soon as
reasonably practicable after having found that his credit card is lost or stolen."

Banks know about Clause 13.2 but have chosen to ignore it. Instead they pursue cardholders for the fraudulent transactions.

They will tell cardholders that a clause in the credit card contracts states that all transactions carried out before the loss of the cards are reported to the banks, are deemed to be carried out by the cardholders.

Many cardholders then pay up because they are unaware of the RM250 limited liability.

Bank Negara should rule that:

*THE RM250 maximum liability on fraudulent transactions is highlighted to cardholders in the card agreements as well as in the monthly card statements.

*BANKS are not allowed to insert any clause in the card agreement which is contrary to Clause 13.2.

*BANKS should refund all money in excess of the RM250 collected from cardholders whose cases clearly come under Clause 13.2.

Saturday, June 26, 2010







Friday, June 25, 2010

KPS ... Jun10

State-controlled Kumpulan Hartanah Selangor Bhd (KHSB) is planning a high-end mixed development at a prime location in Section 14, Petaling Jaya with a potential gross development value (GDV) of nearly RM1 billion.

The company was finalising the purchase of a 9.3-acre plot there for the proposed development. The GDV is close to RM1 billion, but this depends on the (development) proposal.

KPSB owns a 56.57% stake in KHSB. KPSB in turn is a 60.7%-unit of state-owned Kumpulan Darul Ehsan Bhd.

It is understood that the land is located near the Asia Jaya LRT station and opposite the Armada Hotel in Section 14. Officials did not confirm this.

As at Dec 31, 2009, KHSB’s gearing ratio stood at 0.44 time, with short and long term debts totalling RM216 million and shareholders equity of RM484.03 million.

It posted a net profit of RM27.11 million in the fiscal year ended Dec 31, 2009 on the back of RM125 million revenue.

For the current fiscal year, income would be derived from its Pulau Indah project and possibly the mining extraction activity in Dengkil.

KHSB had tendered out jobs for mineral extraction in the area spanning 100-acres of idle land to unlock value of the tract. However, property development remained its core business.

It planned to launch its RM30 million mixed residential project in Salak Tinggi by early next year (2011).

On a separate matter, there had not been any update on the Selangor water industry-consolidation exercise which is led by federal government’s vehicle Pengurusan Aset Air Bhd (PAAB).

Thursday, June 24, 2010

KSL ... Jun10

It is proposing to acquire a 3,384 square metre (about 0.8 acre) plot of land in Jalan Madge here from the Secretary of State for Foreign and Commonwealth Affairs of the United Kingdom for RM25.4 million cash.

The plot is currently the site of the residence of the UK High Commissioner to Malaysia.

The objective of the acquisition was to replenish the group’s landbank. It was in line with the group’s objective of increasing its landbank in strategic locations, especially in the fast-growing Klang Valley, for its future property development activities.

The company is likely to build condominiums on the land. They are paying about RM700 per sq ft which is still reasonable.

Goodpark Development Sdn Bhd, the wholly owned unit of KSL, which will acquire the land, intends to finance the acquisition through internal funds and/or bank borrowings. As at March 31 2010, KSL had cash and bank balances of RM64.19 million while its trade and other receivables stood at about RM65.66 million.

For its first three months of FY2010, ended March 31, KSL posted a net profit of RM16.07 million on the back of RM53.54 million in revenue. Compared to the corresponding period a year earlier, net profit dipped by about 5% despite revenue gaining by about 17%.

As at Dec 31, 2009, KSL’s landbank stood at 2,100 acres. For FY2009, the bulk of its landbank was located in Johor, with one large plot of 446.4 acres forming part of the Blackwater Estate in Klang, Selangor.

The Ku family, via its vehicle Premier Sector Sdn Bhd, is the largest shareholder of KSL with 37.47% equity interest. Other substantial shareholders of KSL include pilgrim fund Lembaga Tabung Haji which has 8.83%.

Wednesday, June 23, 2010

MTD Capital Bhd ... Jun10

Infrastructure developer MTD Capital Bhd expects its South Luzon Expressway (SLEX) to emerge as a major contributor to group revenue in the second-half of this year.

MTD Capital's 80-per cent subsidiary, South Luzon Tollway Corporation (SLTC), has completed Toll Road 1 and 2 of SLEX, spanning 28km from the end of the South Metro Manila Skyway at Alabang in Muntinglupa City to Calamba in Laguna. Meanwhile, work on the 8km SLEX extension or Toll Road 3 from Calamba to the start of the STAR Tollway at Sto Thomas in Batangas, is expected to be completed by month-end (June 2010).

The entire project would cost 11.8 billion Philippine pesos while the expected pay-back period was six years.

SLTC holds a 30-year concession to operate SLEX and its extensions, under a Supplemental Toll Operation Agreement, signed in 2006. Toll Road 1 and 2 were built on an old alignment operated by Philippine National Construction Corporation (PNCC) under a franchise that expired in April 2007.

Cnstruction of Toll Road 1 finished in December 2008 while Toll Road 2 in June 2009 but SLTC was not able to collect toll then because the toll plazas and systems had not been completed.

Money started to flow in only after SLTC took over the operation and maintenance of the rehabilitated and upgraded tollway from PNCC on May 2, 2010 but the collection was still based on the old rates. New rates are expected to take effect on June 30 2010.

Toll Road 3 was a new portion of SLEX and SLTC would collect toll on that stretch after it had been issued the certificate of completion by the government.

On Toll Road 4, he said the project would not start anytime soon. The government will have to make the decision once we submit the relevant documentation.

Tuesday, June 22, 2010

BSTEAD ... Jun10

S&P Recommendation: Buy

Recent Developments
• Boustead has entered into a conditional agreement with UEM Group Berhad to acquire the latter’s entire 86.8% equity interest in Pharmaniaga (PHRM MK, MYR5.10, Hold) for MYR534 mln (MYR5.75 per share) in cash. Upon completion of the acquisition, Boustead will make an MGO for the remaining shares in Pharmaniaga but intends to
maintain Pharmaniaga’s listing status.

• Pharmaniaga holds the concession for the distribution of medical products to government hospitals. The concession was recently extended by another 10 years to December 2019. The group also manufactures generic pharmaceuticals and supplies medical products and equipment in Malaysia and Indonesia.

• Boustead has been involved in the pharmaceutical business since 2005 via 51%-owned Idaman Pharma Manufacturing Sdn Bhd (IPM), which has been working together with Pharmaniaga. IPM manufactures and distributes pharmaceuticals but its contributions to Boustead group earnings are still small. IPM is one of Pharmaniaga’s medical suppliers and was awarded Pharmaniaga Best Supplier on Adoption Scheme program for three consecutive years (2007-2009) due to timely delivery and quality services. IPM, which acquired Pharmaniaga’s penicillin plant in Perak in 2009, is the only penicillin manufacturer in Malaysia. Thus, there is synergistic potential from the
integration of IPM and Pharmaniaga operations.

• We view the acquisition price, which is at 9.8x our projected 2010 earnings for Pharmaniaga, and is a 4.5% premium to our 12-month target price, as fair. The acquisition is targeted for completion in 4Q10.

Recommendation & Investment Risks
• We upgrade our recommendation to Buy (from Hold) with a revised 12-month target price of MYR4.00 (from MYR3.60). The acquisition will expand the group’s exposure to the growing pharmaceutical industry, is earnings accretive and will provide a decent dividend income (yield of 5.2%, based on our dividend projection of 30 sen for Pharmaniaga and the acquisition price of MYR5.75).

• We continue to use a PER-based sum-of-parts method but raise our assigned PER for the manufacturing & services division to 9x (from 6x) to factor in the potential earnings accretion from the acquisition. We assign a PER of between 6x and 9x (unchanged) to its other business segments. The assigned PERs are at a discount to forward multiples of listed peers (in the plantation and property segments) and its own listed companies (for the finance and heavy industries divisions) to reflect Boustead’s holding company status.

• Risks to our recommendation and target price include a delay or failure for the proposed acquisition to be completed.

Earnings Outlook
• Consolidation of Pharmaniaga’s profit will make up for the loss of income from BH Insurance, which was sold in April 2010 for MYR360 mln. Boustead will use the sale proceeds plus bank borrowings to fund the acquisition. The addition of Pharmaniaga’s profit (net of higher interest costs) will lift our projected earnings for 2011 by 11.5%. Assuming zero take-up for the MGO, we estimate group net gearing will inch up to 0.69x from 0.67x at end-2009. We maintain our forecast pending completion of the acquisition.

Tenaga ... Jun10

It will bid for a RM7 billion (US$2.1 billion) government project to upgrade power plants as the economic recovery boosts electricity demand.

Construction of a new coal-fired plant at the utility’s existing station in Manjung would start in early 2011 and be completed by the end of 2014.

Malaysia’s Energy Commission will soon call for bids to upgrade power plants by 2015 as the electricity reserve margin could fall below 20 per cent if capacity isn’t increased.

Power demand may rise by as much as five per cent a year in the next five years, in step with the government’s target of six per cent annual growth through 2015.

Tenaga may have to compete for the project with MMC Corp, Malaysia’s second-biggest electricity producer, and Jimah Energy Ventures, an independent power producer with a 25-year licence to operate a 1,400-megawatt coal-fired plant near Port Dickson in the southern state of Negri Sembilan.

If Tenaga wins the bid, it may sell bonds in the middle of 2011 to help finance the project. The usual funding structure will be 20 per cent equity and 80 per cent debt, so probably around RM4 billion to RM5 billion kind of debt-raising” would be needed.

The government is planning 52 infrastructure and development projects worth RM63 billion over the next five years (2010-2015), including two coal-fired power plants. The contracts will be put up for open tender.

Monday, June 21, 2010

IPO...Sunway REIT

Sunway REIT Management Sdn Bhd (SunREIT) has told institutional investors that its dividend yield range would be between 6.8% and 7.5%.

A source familiar with the matter said the dividend yield was not fixed as yet, but the REIT manager was able to provide the institutional investors a range that it was confident of achieving, based on the track record and forecast net profits of the properties injected into the REIT.

SunREIT had also earmarked a dividend yield of 6.86% for its cornerstone investors. SunREIT’s cornerstone investors are the Government of Singapore Investment Corp Pte Ltd (GIC), the Employees Provident Fund (EPF), Permodalan Nasional Bhd (PNB) and Great Eastern Assurance (Malaysia) Bhd, which have a collective 14% stake in the REIT.

SunREIT’s dividend yield for the financial year ending June 30, 2011 would be 6.9%. At 7.5% dividend yield, this would put SunREIT as among the higher yield-REITs listed on Bursa Malaysia Securities.

There are several Malaysian REITs that have dividend yield of more than 8%, but interest among foreign and institutional investors was low as these REITs were small in size and liquidity.

Although REITs were known as defensive stocks, the 10% withholding tax had also dampened interest in REITs. Singapore does not impose a withholding tax on REITs.

If SunREIT’s listing could stir strong foreign interest, it would spearhead some of the efforts to look at ways in making the sector more attractive.

Inestors would also be looking for growth stories and liquidity when it came to investing in REITs, and hence, the withholding tax should not be too much of a concern.

Upon listing, SunREIT would be the largest initial public offering (IPO) to date for 2010, with about RM1.65 billion expected to be raised from the flotation exercise. It would also be the largest and most liquid REIT listed on Bursa Securities.

However, industry observers said SunREIT was expected to face heated competition with another REIT — CapitaMalls Malaysia Trust (CMMT) — that had recently received regulatory approval to float its three mature Malaysian assets on Bursa Securities. The REIT is expected to list on July 16 2010.

SunREIT had more and better assets compared to CMMT. SunREIT’s jewel in the crown, the Sunway Pyramid Shopping Mall, would enjoy higher rental pricing power, given that it was the prime shopping mall in the Sunway/Subang Jaya area.

Sunway Pyramid’s average monthly rental per square foot had increased to RM8.99 for the eight months ended Feb 28, 2010 from RM7.93 for the year ended June 30, 2007. Sunway Pyramid also boasts an average occupancy rate of 99.3%.

In contrast, CMMT’s jewel in the crown, Sungei Wang Plaza in Kuala Lumpur, was 62.8%-owned by CapitalMalls Asia Ltd (CMA) and thus, it would be more challenging for CMA to dictate rental pricing.

However, CMMT should not be underestimated as it had a strong parent in CMA, which is one of Asia’s largest mall owners and managers, with more than 70 malls in Singapore, China, India, Japan and Malaysia. CapitaMalls Asia may have only three properties injected into its Malaysian REIT currently. But given its track record and aggressiveness in acquiring and running retail malls across Asia, it is possible that more properties would be injected into the REIT in the future.

Up to 1.35 billion units would be listed, while a total of 786.52 million units would be offered for sale under the IPO.

CMA would retain a 41.7% stake in CMMT, but there is an over-allotment option of up to 15% of the total units amounting to 117.98 million units, which would mean CMA could retain only a 33% stake in CMMT.

POS ... Jun10

As if end May 2010, 11 parties including foreign courier groups DHL Express and TNT NV, have expressed interest in buying the block of shares.

Sources say among the local companies that are eyeing the stake in the postal group are Nationwide Express Courier Services Bhd and Konsortium Logistik Bhd. EPF which is holding 5.76% stake in POS is also interested in raising its shareholding in POS Malaysia.

Other substantial shareholders in POS include PNB with 8.45% and Aberdeen Asset Management with 7.09%.

According to sources, the interested parties have received a request from Khazanah to submit their individual profiles for consideration. It is believed the request is to kick start the divestment process.

It is unlikely that such a large block of shares would be sold to a sole foreign partner because POS Malaysia is a GLCs with a monopoly on Malaysia’s postal service. Therefore interested parties may team up to bid for the stake in POS Malaysia.

Industry observers believe that participation of foreign players such as DHL and TNT will benefit POS Malaysia in terms of enhancing operating efficiency and transforming the business model.

The company is currently sitting on a cash pile of RM187 million.

Sunday, June 20, 2010




隨著我們年齡越來越大,大腦中神經細胞(神經元)的數量逐步減少。我們降臨人世時神經細胞的數量達到1000億個左右,但從20歲起開始逐年下降。到了40歲,神經細胞的數量? 英國倫敦帝國學院健康照護健保信托機構顧問、神經學家沃基特克•拉克威茨(Wojtek Rakowicz)表示,儘管神經細胞的作用至關重要,但事實上大腦細胞之間縫隙的功能退化對人體造成的衝擊最大。我們無一例外會認為,白髮和皺紋是衰老的早期跡象,實際上,人體一些部位在我們外表變老之前功能就開始退化。大腦細胞末端之間的這些微小縫隙被稱為突觸。突觸的職責是在細胞數量隨我們年齡變得越來越少的情況下,保證信息在細胞之間正常流動。
健康的腸可以在有害和有益細菌之間起到良好的平衡作用。巴茲和倫敦醫學院(Barts And The Londonmedical school)免疫學教授湯姆•麥克唐納(TomMacDonald)表示,腸內友好細菌的數量在我們步入55歲後開始大幅減少,這一幕尤其是會在大腸內上演。
結果人體消化功能下降,腸道疾病風險增大。隨著我們年齡增大,胃、肝、胰腺、小腸 的消化液流動開始下降,發生便秘的幾率便會增大。

女人到了35歲,乳房的組織和脂肪開始喪失,大小和豐滿度因此下降。從40歲起,女人乳房開始下垂,乳暈(乳頭周圍區域)急劇收縮。盡管隨著年齡增長,乳腺癌發生的幾率增大,但是同乳房的物理變化毫無關聯。曼徹斯特聖瑪麗醫院乳腺癌專家加雷斯•埃文斯(Gareth Evans)

肺活量從20歲起開始緩慢下降,到了40歲,一些人就出現氣喘吁吁的的狀況。部分原因是控制呼吸的肌肉和胸腔變得僵硬起來,使得肺的運轉更困難,同時還意味著呼氣之後一些空氣會殘留在肺裡—導致氣喘吁吁。30歲時,普通男性每次呼吸會吸入 2品脫(<


隨著視力下降,眼鏡成了眾多年過四旬中年人的標誌性特徵--遠視,影響我們近看物體的能力。英國南安普頓大學眼科學教授安德魯•羅特(Andrew Lotery)表示,隨著年齡的增長,眼部肌肉變得越來越無力,眼睛的聚焦能力開始下降。


肝臟似乎是體內唯一能挑戰老化進程的器官。英國萊斯特皇家醫院的肝外科顧問大衛‧勞埃德解釋說:「肝細胞的再生能力非常強大。」他稱手術切除一塊肝後, 3個月之內它就會長成一個完整的肝。如果捐贈人不飲酒不吸毒,或者沒有患過傳染病,那麼一個70歲老人的肝也可以移植給20歲的年輕人。

倫敦前列腺中心主任羅傑• 吉比 教授稱,前列腺常隨年齡而增大,引發的問題包括小便次數的增加。這就是良性前列腺增生,困擾著50歲以上的半數男子,但是,40歲以下男子很少患前列腺增生。前列腺吸收大量睪丸激素會加快前列腺細胞的生長,引起前列腺增生。正常的前列腺大小有如一粒胡桃,但是,增生的前列腺有一個桔子那麼大。

英國利物浦安特學醫院風濕病學教授羅伯特•穆茲解釋說:「在我們的一生中,老化骨骼總是被破骨細胞破壞,由造骨細胞代替,這個過程叫骨轉換。」兒童骨骼生長速度很快,只消 2年就可完全再生。成年人的骨骼完全再生需要10年。25歲前,骨密度一直在增加。但是,


肌肉一直在生長,衰竭;再生長,再衰竭。年輕人這一過程的平衡性保持很好。但是,30歲以後,肌肉衰竭速度大於生長速度。過了40歲,人們的肌肉開始以每年0.5% 到2% 的速度減少。經常鍛煉可能有助於預防肌肉老化。


據英國布拉德福國民保健信托(Bradford NHSTrust)的皮膚科顧問醫生安德魯•萊特博士介紹,隨著生成膠原蛋白(充當構建皮膚的支柱)的速度減緩,加上能夠讓皮膚迅速彈回去的彈性蛋白彈性減小,甚至發生斷裂,皮膚在你25歲左右開始自然衰老。死皮



男性通常到30多歲開始脫發。頭髮從頭皮表層下面的小囊,也就是毛囊。一根頭發通常從一個毛囊 3年左右,然後脫落,再長出一根新的頭發來。不過,由於男性型掉髮,從32歲左右睪丸激素水平的改變影響了這一周期,導致毛囊收縮。每一根新頭髮都比先前的那根細。最後,剩下的全是小得多的毛囊和細細的短樁,沒有從表皮長出來。多數人到35

Friday, June 18, 2010

MBSB ... Jun10

A provider of property financing is in talks with the central bank about a plan to become a full-fledged bank. They have been talking with Bank Negara Malaysia” about the matter.

The Employees Provident Fund and Permodalan Nasional Bhd are its biggest shareholders. EPF owns 67 per cent of Malaysia Building while Permodalan Nasional holds a 15 per cent stake.

Its net profit soared to rm43 million in FY2010 ended March 31.

While it continues to give loans to house buyer, it has quickly built a loan book in personal financing for civil servants.

Its booked rm1 billion in personal financing for the whole of 2009, but it has only taken the company the first four months of 2010 to booked Rm1 billion.

On deposit side, the company managed to increase its deposit base to match the expansion of its loan base. Its deposits rose 11.9% to rm8.5 billion in the first three months of 2010, from RM7.6 billion at end 2009.

That complements the growth of 7.6% in its net loans, advances and financing to rm8.7 billion from Rm8.1 billion during same period. To support this, the company also has cash of RM940 million and equity of RM435 million.

It is preparing to join its peers in the banking system, which would subject to similar capital requirements and regulatory supervision. The home could be in Dafia or Bafia.

Thursday, June 17, 2010

DRB-Hicom ... Jun10

In April 2010, DRB-Hicom announced that its wholly owned unit Defence Technologies Sdn Bhd has received a letter of intent from the government to develop, manufacture, supply and deliver 12 variants of the Malaysian AV-8 armored wheeled vehicles.

Although a contract value was not given some news reported that the job could be worth as much as Rm8 billion while others placed the value as low as RM5 billion, depending on the specifies.

Sources say that Naza group is looking at wrest a government defence contract from DRB-Hicom and is looking to break DRB-Hicom hold on defence related contracts..

Naza and Bumar have a JV company which deals in an armored modular vehicle in Polish. DRB-Hicom meanwhile has a tie up with Turkish defence company to bag the job.

Wednesday, June 16, 2010

Gamuda/MMC Corp ... Jun10

The city’s infrastructure, a subject of increasing criticism, is likely to be boosted by a new mass rapid transit (MRT) system that could be put into place soon to complement the role of the monorail and LRT systems.

Sources said the government was in the final stage of considering the MRT project, believed to be planned for within the confines of the city which was experiencing growing traffic congestion.

The names of at least two industry players have been bandied about for the MRT project — Gamuda Bhd and MMC Corporation Bhd.

Sources said the two were being considered to jointly undertake the MRT job, or a section of it, due to their expertise and track record for the design and construction of the multiple awards-winning SMART Tunnel.

Lending credence to the possibility of a new MRT system for KL is that at least one developer in KL city, sources said, had been told to redesign its upcoming billion ringgit mixed-development project to incorporate an MRT station.

Meanwhile, it is not immediately known if the earlier proposed extensions to the LRT lines would unfold as intended.

The KL monorail has been designed to complement and interface with KL’s existing and planned urban transportation systems. The LRT, meanwhile, radiates into the suburbs.

Introducing an MRT would not only alleviate KL’s traffic congestion, rendering the city attractive to work and live in, but also enhances real estate values in areas that will stand to benefit, both directly and indirectly.

Under the 10MP, MRT system, estimated to cost RM36 billion, could be built in KL over 10 years. A JV between Gamuda and MMC Corp is the proponent of the project and it stands a good chance of landing the contract because it has the expertise.

However, various parties said that the project is very much in the preliminary stage and no firm decisions have been made. It is understood that the proposal by Gamuda and MMC was unsolicited, and that the government has decided to put it out to tender in a Swiss Challenge.
Meanwhile, the project will be good for the construction sector. Industry observers are confident that Gamuda-MMC Corp will get the nod for the project, citing the JV’s tunneling experience. The JV was responsible for the construction of SMART.

If the government approves this project, it will very likely go to Gamuda-MMC, which is also did the double tracking project and SMART. If the MRT project comes to fruition, it will be a milestone for Gamuda. It will yield about RM900 million for Gamuda based on forecasts.

Based on 2010 prices, the MRT project will cost about RM36 billion and involve tunneling and the construction of rail lines and stations. Of the amount, 30% is budgeted for tunneling works.

Gamuda-MMC Corp will be bidding for only that portion of the project, even though it had mooted the idea, because of conflict of interest in the portions. It is believed that this is because the JV had proposed the project. In other words, the JV is eyeing only about RM10.8 billion worth of work.

About 70% of the project’s cost will be competitive bidding, in which the JV cannot bid because of conflict of interest. Only foreign contractors will qualify to bid for the remaining 30% which comprises tunneling work, as there is no other Malaysian contractor with tunneling experience. Thus, to have Malaysian participation, the government will enable the JV to bid.

Tuesday, June 15, 2010

Olympia ... Jun10

As more details on the proposed disposal of Menara Oympia Industries Bhd surface, it appears that the company will end up with only RM11.37 million in net cash proceeds out of the total disposal price of RM200 million.

The actual amount OIB will eventually receive could turn out to be even much lower as a clause in the sale and purchase agreement allows the selling price to be adjusted for NAV changes before the sale is fully completed.

The buyer of property is Jelita Timur Sdn Bhd, which will also assume debts of RM172 million that are currently charged under Menara Olympia.

After ‘expenses’, OIB could end up with less than RM3 million and minority shareholders may be the biggest losers.

So why do the valuation, the selling price of the property as well as terms of the sale and purchase agreement appear unfavaourable to OIB?

Menera Olympia owns and manage by OIB’s subsidiary company Diary Maid Resort & Recreations Sdn Bhd (DMRR)

The valuation was derived from, among others the remaining tenure of 72 years for the leasehold building, the unexpired term of 15 years remaining for the leased car park, which belongs to the federal government, the location condition and etc … But the valuation in Jan 2010 is the same as that done at the height of the global financial crisis in August 2008. The company only engaged with one valuer and no open competitive bidding.

Of the total liabilities, of around RM172 million being charged to MEnara Olympia, only the redeemable term loans of RM52 million are direct debts held by DMRR. The balance of RM119 million are debt under OIB group that are charged under a third party.

Rental collection from the property seems rather low, going by the stated net monthly income of RM1.26 million. OIB and its sister company, Dutaland Bhd are the main tenants of the building.

Former executive director of Ayer Hitam Tin Dredging Malaysia Bhd, Oh Beng Wah, is the largest shareholder of Jelita Timur with a 49% stake. He has a link to Duta Yap, having worked for the Duta group of the Melaka Raya project back in 1979.

OIB’s original cost of investment in DMRR was rm88.64 million in 1996. Getting a mere return of just RM3 million for 16 years investment.

Genting Malaysia ... Jun10

Genting New York LLC, which is believed to be linked to Genting group or its chairman and chief executive Tan Sri Lim Kok Thay and his family, has emerged as one of the six bidders for a project at the Aqueduct Racetrack in New York City.

According to US press reports, the six bidders had each paid an entry fee of US$1 million (RM3.32 million) refundable deposit on June 1 towards securing the project that involves the construction as well as operation of a “racino” at an up to 90,000-seat racetrack.

A racino is a combined racetrack and casino gaming operation, with the Aqueduct Racetrack racino expected to hold 4,500 video slot machines. The existing 192-acre Aqueduct is the only racetrack within New York’s city limits.

It had made a submission via indirect wholly-owned subsidiary, Genting New York LLC (Genting NY) costing US$1mil for the rights to participate in the bidding process to develop and operate the video lottery facility. The submission entry fee was placed on June 1 2010 and Genting NY has until June 29 to 2010 evaluate the project and formally submit a bid.

Genting New York is linked to both the Genting group of companies and the private vehicle of the group’s controlling Lim family, Kien Huat Realty Sdn Bhd. Kien Huat Realty holds a 32.28% direct and 7.32% indirect stake in Genting group holding company, Genting Bhd. However, Genting Bhd’s latest annual report does not list Genting New York as a subsidiary or associate of the company.

Kien Huat Realty III Ltd (Kien Huat III), which is owned by a Lim family trust, had already acquired a large stake in another racino in New York state in August 2009. Kien Huat III had bought a stake of 50% less one share for US$55 million in Nasdaq-listed Empire Resorts Inc that runs the 230-acre Monticello Gaming and Raceway, located in Monticello, New York, some 145km from Manhattan. According to a stock exchange filing by Empire on March 8, 2010, Kien Huat III had upped its stake to a controlling 50.28%.

It had been reported that the private vehicle was used to buy into Empire rather than the listed Genting group because the latter’s minority shareholders would have been unlikely to stomach the acquisition of a distressed and loss-making casino.
Kien Huat had agreed to provide fresh cash injection with a US$10 million credit facility, and was to settle any remaining debts arising from Empire’s US$4.4 million senior credit facility with The Park Avenue Bank of New York.

The winning bid is to be announced in early August 2010.
Due to issues that caused a breakdown in an earlier round of bidding that saw the winning consortium Aqueduct Entertainment Group (AEG) losing its selection in March 2009, the current requests for proposals have included provisions that prohibit comment on the bidding, as well as lobbying, according to a US publication.

The current bidders for the project include three from the previous round — Delaware North Cos, Penn National and SL Green Corp. The three new bidders entering the fray are Genting New ork, Toronto-based Clairvest Group and Empire City Casino-Yonkers Raceway that is tied to the Rooney family who are the long-time owners of sports team Pittsburgh Steelers. Clairvest had been part of the failed AEG consortium bid but is now bidding separately.

Going forward …

Industry observers say Genting New York LLC's reported bid to construct and operate a slot machine-only casino at New York Aqueduct Racetrack as positive.

The bid would act as a platform for Genting Group to expand further in the US. Also, it should be earnings enhancing in the long-term although any profit contribution could be small in the early stages.

The issue was whether the project would be injected into the subsidiaries of Genting Group as Genting New York is believed to be owned by Tan Sri Lim Kok Thay. The only subsidiary with financial muscle to acquire the racino project should Genting New York win, was Genting Malaysia Bhd (GenM). GenM's cash reserves stood at RM5.3 billion (US$1.6 billion) as at end-March 2010.

Meanwhile there are some who are skeptical about Genting Malaysia Bhd’s latest interest to develop and operate a video lottery facility at Aqueduct Racetrack in New York, the United States.

While Genting’s strategy to diversify its casino business abroad was generally seen as positive by retail and institutional investors to reduce its dependency on its local operations for growth, the move to develop and operate the video lottery facility was also perceived to be costly and risky.

It is learnt that the project involves billions of dollars. Genting NY was not a frontrunner in the bid because it did not have a strong track record in the lottery business compared with other rivals. The returns may not justify the capital expenditure for the project.

It was reported that six bidders, including Genting NY, had placed US$1mil to obtain the rights to participate in the bidding process for the video lottery facility at the Aqueduct Racetrack.

GTECH Corp, a wholly-owned subsidiary of Italian gaming company Lottomatica SpA, was likely the preffered bidder to negotiate for a seven-year contract with the New York Lottery to provide new online lottery solutions and services, and an option to be extended for three more years. GTECH had been a lottery technology and services provider to the New York Lottery since 1986.

The New York video lottery business is estimated to be worth over US$550mil over the contract period.

Genting NY chance of winning is at best hopeful” due to the video lottery facility required a different skill set and proven track record in running it.

Genting Malaysia already had a lot on its plate, such as ensuring its recently constructed Singapore casino operations, via 51.8%-stake in subsidiary Genting Singapore Plc, was profitable.

Monday, June 14, 2010

HSL ... Jun10

According to Hock Seng Lee’s(HSL) announcement with Bursa Malaysia, HSL in consortium with Matrik Bestari Sdn Bhd (“the Consortium”) has received a
Letter of Acceptance from Jabatan Kerja Raya, Sarawak for the project known as “Construction and Completion of an access road linking technology park
Samarahan to Tanjong Bako, Kuching” at a contract sum of Ringgit Malaysia Seventy Two Million and Five Hundred Thousand only (RM72,500,000).

Road and Bridges project - Hock Seng Lee in consortium with Matrik Bestari Sdn Bhd has won a road and bridges construction contract worth RM72.5 million for the
construction and completion of an access road linking technology park Samarahan to Tanjong Bako, Kuching. The project is scheduled to be completed by December
2012(with a contract period of 30 months).

The scope of works - According to Hock Seng Lee’s filing with Bursa Malaysia, the consortium will undertake the works of :
- Design and supervision
- Earthworks
- Drainage and pavement
- Bridges and other related works

Joint venture structure - The consortium will carry out the works of the project as an unincorporated joint venture with HSL having Ninety Percent (90%) share in the project.

Impact on HSL Group’s bottomline – The payment for the project will be made partly in kind and partly in cash in the ratio of 50:50. This arrangement is expected to expand its existing land bank of some 600 acres for future development. Meanwhile, the contract is expected to contribute positively to the earnings and net assets of Hock Seng Lee Group for the financial years ending 2010 to 2012.

Investment Risks
Major risk factors include:
- Delay, review or cancellation of projects;
- Rising material prices that will put additional strain on margins

Valuation and recommendation
This new job has increased its order book to RM1.8 billion, of which RM1.15 billion is still outstanding. To recap, the total value of projects procured so far in FY2010is RM189 million vs our annual order book replenishment assumption of RM400-500 million. In our opinion, the project will contribute positively to Hock Seng Lee’s future revenue growth and we expect more jobs in the pipeline following the implementation of the SCORE programme and the economic stimulus packages as the group is one of the major construction groups in the state, its potential to
secure more jobs is greatly enhanced.

Maintain Buy with a higher TP of RM 1.70 from RM1.64 previously
We have increased our FY 2011 net profit forecasts by 3.5% to incorporate the project. We value the stock at RM1.70 per share, which is based on forecasted FY11 EPS of 15.5 sen and a PER of 11x. We favour HSL due to its healthy order book, strong balance sheet, leading presence in the state and steady earnings performance.

Integrax ... Jun10

The boardroom changes at port operator could be a preclude to something bigger as the tussle between its shareholders becomes known. Sources say the growing dispute between brothers Harun and Amin Halim Rasip, who are co-chief executive of the company, could result in the latter buying out the former in a move to end their long standing feud.

Their falling out is due to different management styles and future plans for Integrax as they are said to be disagree on how the company is run.

It is learnt Amin has roped in the support of Perak government which holds an 8.29% stake in the company, to buy Harun’s shares. Amin and Harun hold a joint 37.8% stake in Integrax via a few private companies. However, Amin’s effective stake stands at 39.25%, slightly higher than Harun’s 39.19%.

Its other substantial shareholders are JP Morgan and Credit Suisse, which holds 8.51% and 8.1% respectively. It is uncertain if these blocks of shares are held for any another party affiliated to either of the brothers.

Harun’s is unwilling to part with his shares as the offer price is below the company’s NAV per share of RM1.70 as at Dec 31, 2009.

The company’s upcoming AGM, scheduled for June 23, 2010 will be in spotlight as both Harun and Amin will be up for re election as directors. Speculation is rife that there may be plans to remove Harun from the board. Also up for re election is chairman Syed Tamim.

Another point of contention between Harun and Amin is the setting up of a single asset REIT. However the plan is opposed by Amin.

Should Amin and parties acting in concert with him succeed in buying out Harun’s shares, it is unclear whether a mandatory offer will be triggered as the changes will be made at the brothers’ private companies.

Financial Results …

The company’s profit took a nosedive to a mere RM2.6 million in FY2008 from RM42 million in FY2007. For FY2009, PAT recovered to RMN42.9 million.

Sunday, June 13, 2010



那天遇到幾位朋友,大讚這則 e-mail很有原創性,熱烈笑談起「信生活」,且都意猶未盡,特集思廣益,博君一笑。:

1. 你對「信生活」滿意嗎?
以轉發或收取 e-mail 消磨時間的可稱為有「信生活」。

2. 因此 靠 e-mail 交往的叫「信交」。
互相分享 e-mail 笑話的叫「信伴侶」。
! 發錯對象是「信騷擾」。
看著 e-mail 傻笑的,基本上已達到了「信高潮」。

3. 當然,你如果連 e-mail 都不會操作,就鐵定是「信無能」!

4. 再說: 能感動人心的 ! e-mail 叫 「 信感 」。
向人家要 e-mail 地址就是想建立「信關係 」。
用 e-mail 購物或買賣股票叫 「信交易」。
在 e-mail 傳送的資訊叫 「信知識 」。

5. 有教導作用的信叫 「 信教育 」。
Junk mail 一大堆叫 「信氾濫 」。
內容讓人想入非非的叫 「 信挑逗 )」。
有些莫名其妙的 e-mail 可稱 「信變態 」。

6. 若受病毒入侵就是得了 「 信病 」。
如因而使得收發 e-mail 困難遲緩叫 「 信功能衰退」。

7. 那就要請教高人指點叫 「信諮詢 」。
熟悉 e-mail 運作之高人就是 「信問題專家」。

8. 須要加裝軟硬體以加強病毒防衛就叫 「信治療」。
有些 e-mail 圖文並茂,又有動畫,又有配音,這叫「信技巧」。


Saturday, June 12, 2010

Joke of the day - great!!!

A tourist walked into a Brighton curio/antique shop in the UK

After looking around for a while, he noticed a very life-like bronze statue of a rat.
It had no price tag, but it was so striking that he decided to buy it anyway.
He took it to the owner and said: 'How much is this bronze rat?'

The owner replied: 'It's £12 for the rat, and £100 for the story.'

The tourist gave the owner his £12 and said: 'I'll just take the rat, you can keep the story.'

As he walked off down the street, he noticed that a few real rats had crawled out of the sewers and begun following him.

This was a little disconcerting, so he started to walk a little faster, but within a couple of blocks the swarm of rats had grown to hundreds, and they were all squealing and screeching in a very menacing way.

He increased his speed & ran on towards the beach, and as he ran, he looked behind him and saw the rats now numbered in their MILLIONS, and they were running faster & faster.

By now very concerned, he ran down to the pier and threw the bronze rat far out into the water.

Amazingly, the millions of real rats jumped into the water after it and were all drowned.

The man walked back to relate all this to the shop owner, who said: 'Ah, you've come back for the story then?'

'No,' said the tourist,
'I came back to see if you've got a bronze Malaysian UMNO Politician....

Wednesday, June 9, 2010

AVENTUR ... Jun10

S & P Results Review & Earnings Outlook

 AVV’s 1Q10 results were ahead of expectations. Net profit for the quarter of MYR3.5 mln was sharply improved on the 1Q09 net loss of MYR0.4 mln but flat QoQ.

 The stronger earnings YoY was due to the launch of the Proton Exora MPV in April 2009 for which AVV is a key component supplier. Proton saw registrations of 7,330 units of the Exora during the quarter. Consequently, revenue for the quarter was up 93.8% YoY and 3.1% QoQ.

 AVV’s EBIT margin improved to 13.8% I 1Q10 from 12% in 4Q09. Management reports that raw material costs have been relatively stable in recent months and expects margins to be sustainable going forward. But this will depend on the rate of component deliveries for the Exora that is now facing stiffer competition from existing and new models in the market, e.g. the new Perodua Alza MPV. Initial hopes
for the Exora in regional export markets of Indonesia and Thailand have not yet translated into increased orders for AVV. This suggests challenges in penetrating new markets with entrenched market players. AVV continues to enjoy a low effective tax rate -- attributed to unabsorbed tax losses and capital allowances. We expect AVV’s tax rate to normalize in 2011.

 We lift our 2010 and 2011 net profit estimate to MYR13.1 mln and MYR10.4 mln (from MYR7.3 mln and MYR8.0 mln) respectively after factoring in stronger margins and higher effective tax rate in 2011.

Recommendation & Investment Risks
 We raise our call to Buy (from Hold) lift our 12-month target price to MYR0.91 (from MYR0.83).

 Our new target price is derived after rolling over the reference year to 2011 (from 2010) and applying a target PER of 5x (down from 6.5x). The target PER multiple is below the target range of between 6.5x-11x for autoparts companies within our coverage to reflect AVV’s smaller market capitalization, smaller product range, smaller business scale, a shorter track record, low traded volume and the high level of dependence on Proton. It has also not yet demonstrated an ability to
consistently secure new component supply contracts.

 Nonetheless our Buy recommendation is made on valuation grounds. AVV trades at low 2011 PER multiples of 4.5x – which are at a significant discount to the sector average.

 Risks to our forecasts include: (i) lower-than-expected auto sales, (ii) a sustained rise in raw material prices that could squeeze operating margins and (iii) a quicker-than-expected fall-off in the demand for the Exora MPV as competition heats up. In addition, the thinly traded volumes expose the stock to share price volatility, in our opinion.

Steel market not ready for high selling prices

KUALA LUMPUR: The move by two of the world's largest iron ore producers Vale SA and BHP Billiton Ltd in March to end the decades-old annual benchmark pricing system and raise iron ore and coking coal contract prices by 90% and 55% respectively in the second quarter (2Q) has lifted average selling prices (ASPs) of steel.

In a report on Tuesday, June 8, OSK Research said the move had put the market to another test as steel demand was seen falling in the past two months.

"Unlike the habitual reaction to price escalation, where traders normally rush to buy more in hopes of selling later at much higher prices, most traders have been adopting a wait-and-see attitude since April 2010," the research house said.

It added that the market may enter a more difficult phase in 3Q during which iron ore and coking coal prices were likely to go up by at least 15% based on the average spot price from March to May 2010.

The research house said although the ASPs of steel products were expected to dive after peaking in April 2010, the timing was "a bit earlier than anticipated".

It noted the combined factors of sovereign debt crisis in Europe, fears of war in Korea and continuing fiscal tightening in China had contributed to the acceleration of the drop in steel prices especially in the international market.

"While local players are trying hard to hold prices firm with steel bars quoted at above RM2,400 per tonne, we hear of rampant discounts being offered," OSK Research noted.

However, the research house said it remained upbeat on 2Q results of the local steel players although their actual performance might be capped by weakening ASPs.

It said the conclusion of the quarterly benchmarks had led to scrap metal price topping US$500 (RM1,660) per tonne although it had weakened to around US$400 level currently.

"We see material costs progressively averaging up as steel mills take delivery of more expensive scrap, mostly in 3Q, on incorporating a two- to three-month delivery time lag," added OSK Research.

With expectation of the steel prices upside being capped in the coming months since the market was not ready for too high a selling price, the "mismatch" between high material costs and lower ASPs looked set to narrow steel millers margin in the second half (2H).

With the recent developments reflecting its earlier concerns on 2H, OSK Research said it was increasingly becoming a believer in "bell-shaped earnings" for 2010.

"The murky outlook in the next two quarters also suggests that investors should avoid cyclical stock," said OSK Research while downgrading the steel sector to neutral.

Meanwhile, an analyst with a local broking firm said the outlook for the sector could still be bullish if there was a huge amount of funds pumped into the CONSTRUCTION [] and infrastructure sectors under the 10th Malaysian Plan (10MP) which would also incorporate the New Economic Model (NEM).

"The demand for steel may pick up in 4Q if the government have decisive efforts to stimulate the economy especially with projects that are still ongoing under the stimulus package announced in 2009," he said.

The analyst said the steel industry was adjusting production according to market forces and that steel millers were still very much in control of their earnings margin although some had cut production output due to direct exposure in China's market.

Tuesday, June 8, 2010

NPC ... Jun10

- 1QFY10 net profit of RM10.1m was above with our FY10 profit forecast of RM33.3m. This was achieved on a higher than expected CPo price of RM2,505/MT.

- Q, 1Q10 revenue increased a marginal 4.5% to RM90.3m. Flattish revenue was mainly due to the combine effects of higher CPO price realised (1Q10: RM2,505/MT vs 4Q09: RM2,285/MT) and lower production. 1Q production, CPO volumes production was down by 5.2% to 31.0 k MT and FFB of -19% to 39k MT.

- YoY, 1QFY10 turnover and EBIT increase 49.9% and 33.1% respectively mainl y due to higher FFB production from own estates and CPO price realised. This is inline with the sector’s performance.

- Reiterate BUY and maintain target price at RM2.96 based on our 12x PER to FY10. Note that our forecast and valuation for NPC are conservative compared to other big cap planters which are already trading at CY10 PER of c.18x based on CPO price of RM2,400/MT.

Monday, June 7, 2010

Ireka ... Jun10

S & P Results Review & Earnings Outlook

 Although Ireka’s FY10 (Mar.) revenue of MYR393.1 mln (+21.4%YoY) was 8.0% ahead of our forecast, its net profit of MYR8.7 mln (+45.0% YoY) was below expectations as it only reached 84.5% of our 2010 estimate.

 The better-than-expected FY10 revenue stems from higher progress billings (+27.7% YoY) on its ongoing projects, that helped to offset lower contributions from its trading (-21.4% YoY) and property (-92.7% YoY) divisions.

 The weaker FY10 earnings, meanwhile, were due to a 43.6% YoY increase in interest cost and a MYR2.9 mln loss recorded by its associate, Aseana Properties Ltd (ASPL LN, USD0.41, Not Ranked). FY10’s construction EBIT margin, however, was stable at 2.6%, but trading margins fell to 3.9% (vs. 5.2% in FY09).

 Ireka’s unbilled construction orderbook of MYR440 mln will underpin FY11 earnings, with margins likely to remain stable with few cost pressures. Most of its ongoing projects will be completed in FY11, but the construction start of a MYR272 mln high-end condominium at the KLCC precinct in mid-2011 will anchor construction earnings in FY12.

 After imputing a later start on its KLCC project, we trim our FY11 net profit estimate to MYR11.8 mln (from MYR17.9 mln). We also introduce our FY12 net profit estimate of MYR11.1 mln.

Recommendation & Investment Risks
 We lift Ireka’s recommendation to Buy (from Hold), but leave our 12-month target price of MYR0.88 unchanged.

 We continue to arrive at our 12-month target price on a blend of historical and relative price ratios. We ascribe unchanged P/B of 0.8x, P/Sales of 0.3x, relative PER target multiple of 9x on its FY11 earnings (unchanged) and by discounting expected dividend payments using the dividend discount model (unchanged WACC of 10.5and terminal growth rate of 3%). Our target price also includes an unchanged net
DPS estimate of 4.0 sen.

 Given Ireka’s recent share price fall, we lift our recommendation to Buy to reflect Ireka’s lagging performance against the Malaysia construction sector. While Ireka is not a major beneficiary of government projects, we believe that the worst is over and the recovery in property market sentiment will help to sustain a flow of new building contracts. In addition, Ireka’s prospective FY11 and FY12 PERs of 6.8x and 7.1x remains undemanding, being below the 8x-11x range of small-and medium-sized contractors in our coverage.

 Risks to our recommendation and target price include: (i) failure to replenish its orderbook that will hurt its outlook, (ii) unexpected rises in building materials cost affecting its margins, and (iii) prolonged delays in Aseana’s property projects that form part of its project management business.

Alam ... Jun10

CIMB Research Report Investment highlights

• Maintain BUY.
Setia Ulung, a vessel belonging to Alam, has been served a warrant of arrest and a writ of summon by Singapore-based MLC Barging (MLCB) which claims that it is the sole owner of the vessel. We spoke to Alam’s management who maintains that MLCB’s claim has no merit as the Alam-CIMB Private Equity JV is the lawful registered owner of the vessel and the vessel is fully paid for. As the vessel is without a contract, we maintain our earnings forecasts and target price of RM2.38, pegged to a P/E of 10x. This is in line with our target P/E for Petra Perdana’s (PETR MK, Outperform) marine support business. Alam remains a BUY, with the potential re-rating catalysts being 1) fleet expansion, and 2) a successful pipe installation venture.

• Fallout between sister companies?
To recap, in FY07, Alam worked with MLCB on the purchase of ten vessels. For the purchase of Setia Ulung, management said that it dealt with MLCB’s sister company MLC Shipping Sdn Bhd. While all parties involved are still in talks, it appears the legal action may stem from an internal disagreement between MLCB and MLC Shipping.

• Management has a reasonably good case.
Management is of the opinion that there is no merit in MLCB’s claim. Also, it is confident that the JV has a reasonably good case and defence against MLCB based on these facts 1) The JV is the lawful registered owner of the vessel under the Malaysian Registry and documentation has been completed, and 2) Payment for the vessel, which costs about US$20m, has been fully settled. Delivered two weeks ago, the 5,220HP vessel has yet to be awarded a contract.

Recent developments
In addition to Setia Ulung, Alam has accepted delivery of two other vessels, namely
Setia Aman and Setia Qaseh, this quarter. The new assets take Alam’s fleet to 36
vessels (Figure 3) of which around 70% are on long-term charters lasting more than a
year. Between now and 1Q11, the company will accept delivery of four new vessels
(Figure 4) which will expand Alam’s fleet capacity by 21% to 201,104HP.

Earnings outlook
Gunning for RM1.5bn contracts. Armed with its growing fleet, Alam plans to enter
the race for 5-year, RM1.5bn offshore maintenance contracts, of which 60% will involve marine spread and the remaining will entail maintenance services for various
offshore structures. Bids are expected to be submitted in 2Q-3Q10. We understand
that they will be umbrella contracts offered by Petronas and its partners.

Venture with Swiber. In Dec 09, Alam and Singapore’s Swiber (SWIB SP, Outperform) teamed up to form a JV company, Alam Swiber Offshore, to venture into offshore installation and construction in the region. The JV is expected to accept delivery of an installation barge by this month. We understand that the JV has yet to secure a contract. SapuraCrest (SCRES MK, Outperform) is the leader in the pipe installation segment and a tough one to beat. We have yet to impute any contribution
from Alam’s pipe installation venture.

Sunday, June 6, 2010

AH BENG the Crazy Singaporean ... Part2

Ah Beng always smiles during lightning storms because he thinks his picture is being taken.


Why can't Ah Beng dial 911?
Because he can't find the number 11 (eleven) on the phone.


Ah Beng had just bought a new computer and was using it.
When he encountered some problems. He decide to use the 'Help'
command after some tries.
Soon after, he became very irritated and called the computer
retailer for support.
Ah Beng : "I press the 'F1' key for help lah, but it's been
over half an hour and still nobody come and help me Lah ?!"


Ah Beng with two red ears went to his doctor.
The doctor asked him what had happened to his ears and he
answered, "I was ironing a shirt and the phone ring, lah - but
instead of picking up the phone, I accidentally picked up the iron and stuck it
to my ear, lah" "Oh dear !" the doctor exclaimed in disbelief. "But ..
what happened to the other ear ?"
Ah Beng answered : "That stupid dumbo called back, lah !!!!"


Ah Beng talk to a long-distance telephone operator.
Operator: "JUST A MINUTE..."


After completing a jigsaw puzzle he'd been working on for
quite some time, Ah Beng proudly shows off the finished puzzle to a
"It took me ONLY 5 MONTHS TO DO IT", Ah Beng brags.
"FIVE MONTHS ? THAT'S TOO LONG", the friend exclaims.
FOR 4-7 YRS".


At a bar in New York , the man to Ah Beng's left tells the bartender,
and his companion says, "JACK DANIELS, SINGLE".
The bartender approaches Ah Beng and asks, "AND YOU, SIR ?"
Ah Beng replies : "Tan Ah Beng, MARRIED lah"

Saturday, June 5, 2010

AH BENG the Crazy Singaporean ... Part1

AH BENG the Crazy Singaporean.
Why did Ah Beng go to a movie with his 18 friends?
Because below 18 not allowed Lah !


Ah Beng wants to buy a TV set. He goes to a shop.
Ah Beng : "Do you have color TV ?"
Salesgirl : "Yes !"
Ah Beng : "Give me a green one, please "


Ah Beng is filling up an application form for a job.
He supplied the information for the columns on Name, Age, Address etc.
Then he comes to column on "Salary Expected", but he is not sure of the question.
After much thought, he writes " Yes "


Ah Beng goes to a store and sees a shiny object.
Ah Beng : "What is that shiny object ?"
Salesgirl : "That is a thermos flask."
Ah Beng : "What does it do ?"
Salesgirl : "It keeps hot things hot and cold things cold"
Ah Be ng : "I'll buy it"
The next day, Ah Beng goes to work with his thermo flask
Boss : "What is that shiny object ?"
Ah Beng : "It's a thermos flask."
Boss : "What does it do ?"
Ah Beng : "It keeps hot things hot and cold things cold"
Boss : "What do you have in it !?"
Ah Beng : "Two cups of coffee and one cup of ice cream"


After taking photocopies of documents, Ah Beng always compares it with the original for spelling mistakes.

Friday, June 4, 2010

Mamee ... Jun10

It will invest RM20 million to plant oil palms in Central Kalimantan at the end of the year. It is part of the company's strategies to diversify its revenue base and produce enough palm oil for its own use in the future.

Mamee achieved a revenue of RM411.6 million last year, up 3.7 per cent from 2008. After-tax profit surged 88.1 per cent to RM44.4 million.

Mamee has added two more products to its range: Mister Rice Crisps and Indonesia Instant Fried Noodle. The former is free of monosodium glutamate. The latter, made in Indonesia through contract manufacturing, is aimed at meeting growing demand, especially from the younger generation and Indonesians.

Thursday, June 3, 2010

Pelikan ... Jun10

Pelikan International Corporation Bhd posted a net profit RM111.41 million for the first quarter ended March 31, 2010 compared to RM8.02 million a year ago.

Its revenue for the quarter dipped to RM272.8 million from RM285.4 million a year earlier.

The overall sales for the current quarter were softer as a result of the uncertain market conditions in major markets where the group trades in, particularly in Europe.

In addition, the weakened euro currency against ringgit Malaysia in the current quarter had contributed to the lower revenue when translated into the reporting currency.

In the current quarter, as a result of the acquisitions of Herlitz, Molkari and Ganymed, it recognised negative goodwill resulting from the said acquisitions of RM143.1 million.

The group has plans for merger and reorganisation of its business operations with that of Herlitz and has identified and provided for related expenses amounted to RM41.9 million in the current quarter.

Operationally, without taking into account the negative goodwill and provision for expenses mentioned above, the group's results in the current quarter was slightly higher than the corresponding quarter last year with profit after tax of RM10.8 million.

The profit in the current quarter was also partly affected by exchange loss recognized in the profit and loss of RM2.7 million (corresponding quarter in 2009: RM0.4 million exchange loss). The reduction in finance costs and improvement in the profit of associate contributed positively to the results of the current quarter.

Turnover in the first four months this year, especially in April, was lower than in 2009 mainly due to the lower demand and uncertain economic condition in Europe (our largest market) particularly in Italy, Spain and Eastern Europe. However, margin was not significantly affected because the loss in turnover was mainly contributed by lower private label, non-branded sales of hardcopy products with low margin.

Its markets in Latin America and Middle East are also expanding and indicated good progress to date, despite global economic slowdown. However, their contributions are smaller as compared to from Europe and therefore, the overall sales and results have not been significantly influenced by the positive development in these markets.

The acquisition of Herlitz had been completed and the group was actively coordinating merger plan to deliver the desired synergies, common cost savings and cross-selling opportunities.

Wednesday, June 2, 2010

IPO ... GW Plastics Holdings Bhd

GW Plastics Holdings Bhd will list on the Main Market of Bursa Malaysia again after six years of absence when it was taken private following a management buyout.

The manufacturer of plastic film packaging products — Great Wall Plastic Industries Bhd — was listed on the local bourse in 1995 and taken private in 2004.

The listing exercise will see it offering 61.42 million shares of 50 sen each.

This involves selling 45.42 million existing shares and a public issuance of 16 million new shares. Of the 45.42 million shares, GW Plastics is placing out 23.6 million shares to bumiputera investors approved by the Ministry of International Trade and Industry while 17.82 million shares would be placed out to identified investors. Of the 16 million new shares, the company is selling 11.8 million shares to the public and the remaining shares offered to eligible directors and employees of the group and its subsidiaries.

The major shareholders who are selling off a portion of their shares are Lim Kok Boon (selling 1.62 million shares), Yeoh Soo Ann (5.67 million shares) and Keybumi Sdn Bhd (38.13 million shares).

The funds raised from the issuance of new shares would be used to expand its range of products — by value adding and product differentiation; buying new facilities to add to its capacity; and to expand into new markets like China, the United States, Russia and Africa.

GW Plastics Holdings has over 350 customers from domestic and overseas markets. Main customers which have been with them for more than 20 years include companies like Nippon Kompo Shizai Co Ltd, Gardenia Bakeries (KL) Sdn Bhd, Malayan Sugar Manufacturing Co Bhd, Malaysian Packaging Industry Bhd, Exxonmobil Chemical Asia Pacific and ABC Tissue Products Pte Ltd.

Exports sales increased to 52% in 2009 from 32% in 2004, it said.

Of its export market revenue contribution, Japan is the largest contributor of 16.6% to sales, Singapore 10.4% followed by South Korea at 6.6%.
Its other overseas markets include Australia, New Zealand, Europe, Mexico, Hong Kong, and other Southeast Asian countries.

AIC ... Jun10

Semiconductor manufacturer, AIC Corp Bhd, has lined up several initiatives to ensure it remains profitable this year. The company returned to the black last year.

For the financial year ended Dec 31, 2009, its pre-tax profit rose to RM10.681 million from RM649,000 in the same period of 2008.

AIC's turnover rose to RM133.38 million from RM126.472 million previously. Last year's result was one which saw the company returning to full-year profit since 2002.

AIC planned to expand the existing semiconductor capacity as well as precision tooling and automation machines, a move which will boost capacity by nearly 20 to 30 per cent in the near future.
The company which is currently running at a high utilisation rate, is finalising all related investment for gradual expansion, to be implemented in the next two quarters. It will add a more high-value production line-up and produce products needed by customers to remain competitive.

AIC would increase the mix of its products consisting the quad flat no lead (QFN) packages, radio frequency identification (RFID) modules and chip-on-board. QFN packages physically and electrically connect integrated circuits to printed circuit boards, while RFID is an electronic device that consists of a small chip and an antenna.

AIC posted a pre-tax profit of RM3.696 million for the first quarter ended March 31, 2010 from a pre-tax loss of RM1.924 in the same quarter last year. Its revenue rose to RM41.03 million from RM23.074 million previously due to an overall improvement in demand as a consequence of the improving global economy.

Tuesday, June 1, 2010


Stainless steel tubes and pipes maker K Seng Seng Corporation Bhd (KSSC), which is undertaking a listing exercise, will use the funds to acquire new machinery as it seeks to expand its range of products and find new markets.

Its listing exercise will involve the sale of 42.324 million 50 sen shares, comprising 20.124 million new shares while the shareholders will offer 22.2 million existing shares for sale.

Under the listing exercise, six million of the 20.124 million new shares, will be set aside for the public while 5.124 million shares would be offered to the eligible directors and employees.

Nine million shares would be placed out to bumiputera investors identified by the Ministry of International Trade and Industry.

The company’s major shareholders will offer 22.2 million shares of 50 sen each to selected identified investors. Its major shareholders who will sell their shares are the chairman and managing director Koh Seng Kar @ Koh Hai Sew who is selling 15.54 million shares. His brother Koh Seng Lee, the deputy managing director, is selling 6.66 million shares.

KSSC will use the funds from the sale of new shares under the initial public offering (IPO) to acquire new machinery and equipment as it plans to produce a new range of secondary stainless steel products.

Part of the funds would be used to expand the market and working capital to purchase raw materials and industrial hardware.

KSSC exports products to Singapore, Indonesia, Papua New Guinea, the United Kingdom and Brunei.

Sales to these markets are transacted in US dollars, Singapore dollars and Brunei dollars, constituting 13.7%, 9.9% and 0.1% of its total revenue for the financial year ending Dec 31, 2009.

In its FY09, the domestic market contributed 72.8% to its total revenue. Singapore represented 15.7% of its revenue from overseas markets, Indonesia 8.4%, Papua New Guinea 1.6%, UK 1.4% and Brunei 0.1%.

KSSC plans to export to Thailand, Vietnam and the Philippines via an indirect distribution strategy using the countries’ local industrial hardware wholesalers and retailers.
The top 10 customers are mainly industrial hardware wholesalers, shipbuilders and one manufacturer. They are Sinhonly Fish Nets Pte Ltd, PT Wisisco Adijaya, Motor Jaya, JS Three (S) Pte Ltd, Perniagaan Baja Keras Sdn Bhd, EIE Industrial Products Sdn Bhd, Sapor Shipbuilding Sdn Bhd, Pipeco Sdn Bhd, Sum Hup Aluminium Hardware Trading Sdn Bhd and Stainless Steel World LLP.

Its last financial year, its top 10 customers accounted for 29.2% of its total revenue, with its largest customer contributing about 6.9% to its revenue.

N2N ... Jun10

N2N Connect Bhd, which develops capital market trading and technical charting system, expects its cross-border business to contribute at least 30 per cent to revenue this year from about 15 per cent currently.

They are now working closely with local partners and hope a few brokers will sign up to achieve the target.
N2N recorded a pre-tax loss of RM485,000 in its first quarter of 2010, versus a loss of RM4.2 million in same quarter last year.

Revenue rose to RM3.9 million from RM3.8 million previously with e-broking trading business as the main contributor.
The company was currently in talks with five parties and hoped to secure at least 10 new clients for 2010. These possible overseas clients are from Singapore, Vietnam, Indonesia as well as Europe.

The company was also planning to widen its current markets in Singapore, Vietnam and Indonesia.

It will also continue its focus on research and development (R&D) actitivities in order to maintain its competitiveness and to develop fresh, innovative services.

It will spend at least 10 per cent of its revenue for R&D and we also plan to increase the number of our R&D team from about 50-60 people currently.

Having been in the ICT industry for more than 25 years, the company has developed a suite of solutions and services through multi-channels such as personal computer (PC), personal digital assistant (PDA) and mobile phones.

Its trading solutions, Global Connect, which allows cross-border trading, and the Tc Pro-Professional Trading System are major contributors to its revenue.