Friday, September 28, 2012
RCECAP ... Sep12
Its acquisition of a company called Urusan Ihsan Sdn Bhd has its own auto deduction mechanism linked to the salaries of government employees.
RCE's core business has been to lend money to government-linked cooperatives such as Koperasi Wawasan Pekerja-Pekerja Bhd (Kowaja), which in turn provide loans to their members. These cooperatives are members of Angkasa (Angkatan Koperasi Kebangsaan Malaysia), and are allowed to automatically deduct the salaries of its members, primarily civil servants, for repayment of loans.
Loan repayments are collected via government-initiated monthly salary deductions and the deductions are administered by Angkasa.
On Aug 14 2012, RCE said it would pay RM18mil for Urusan Ihsan, which is involved in the processing and administration of civil servants' payroll collection system.
Incorporated on July 29, 2012, Urusan Ihsan has a paid-up share capital of RM1.8mil comprising 1.8 million shares.
RCE had acquired the entire equity interest of the former for RM18mil cash from four vendors namely Mohd Jafni Mohd Alias (52.78%), Sim Chee Kiong (30.56%) Datuk Amran Mat Nor (8.33%) and Datuk Rozzanamoon Rahmat (8.33%).
RCE's core business has been to lend money to government-linked cooperatives such as Koperasi Wawasan Pekerja-Pekerja Bhd (Kowaja), which in turn provide loans to their members. These cooperatives are members of Angkasa (Angkatan Koperasi Kebangsaan Malaysia), and are allowed to automatically deduct the salaries of its members, primarily civil servants, for repayment of loans.
Loan repayments are collected via government-initiated monthly salary deductions and the deductions are administered by Angkasa.
On Aug 14 2012, RCE said it would pay RM18mil for Urusan Ihsan, which is involved in the processing and administration of civil servants' payroll collection system.
Incorporated on July 29, 2012, Urusan Ihsan has a paid-up share capital of RM1.8mil comprising 1.8 million shares.
RCE had acquired the entire equity interest of the former for RM18mil cash from four vendors namely Mohd Jafni Mohd Alias (52.78%), Sim Chee Kiong (30.56%) Datuk Amran Mat Nor (8.33%) and Datuk Rozzanamoon Rahmat (8.33%).
Thursday, September 27, 2012
DIGI ... Sep12
Though earnings prospects look appealing for financial year 2013 onwards, current (Sept 2012) valuations have fully factored in the positive earnings growth. Downside risks would however be offset by the attractive dividend yield of 5.6%. (1.3% capital distribution and 4.3% pure dividend yield).
Expect incremental dividend yields over the longer term due to improved earnings along (and corresponding cashflows) with stagnant capital expenditure given the saturated growth in Malaysian telco industry. Apart from that, its net cash postion would also allow the group to declare further special dividends.
Though DiGi's stated long-term dividend policy has been to “pay out a minimum 80% of net income”, its actual ordinary payout has been in excess of 100%. The company has also either carried out a capital repayment or offered a special dividend in the past.
The company is in the process of finalising a capital repayment totaling RM495mil or 6.4 per share and is expected to be completed by first half of FY13. This comes just after its first capital management exercise, totaling RM509mil, which was distributed in the first half 2012.
Given that the company is still in a net cash position after two rounds of capital repayment, do not rule out the likelihood of special dividend or further capital repayments in the near term.
The group is embarking on network collaboration with Celcom, which includes sharing of sites and backhauls transmission to ensure both parties are able to carry higher traffic volumes. The entire exercise is slated for completion by end-2013. As indicated previously, the collaboration is expected to result in incremental cost savings in the future, totaling RM2.2bil over 10 years, starting from 2015 with an average of RM150mil to RM250mil per year. In addition, both parties have also commenced joint fibre aggregation and trunk rollout.
Besides that, a network modernisation initiative that involves replacing its entire radio access network for a brand new long-term evolution (LTE)-ready platform is on target and is slated for completion by end-2012. The new network is expected to deliver highspeed broadband and next generation services with the introduction of a portfolio of bandwidths. The LTE-ready network will ensure faster roll-out of broadband services through wider coverage and enable to deliver substantially faster speed at affordable prices.
DiGi became the fourth operator to enter the Malaysia 's 3G arena with the launch of 3G broadband in the fourth quarter of 2008. The delayed entry places it behind the competition as its population coverage is still low, standing at 60% compared with Celcom 81.7% and Maxis 81%. The company intends to pick up momentum in expanding its 3G population coverage this year to 70% and over 80% by 2015.
Downside risks arising mainly from price competition amongst its peers. This could revole primarily in the mobile-internet and wireless broadband segments due to the arrival of several new players namely, U-mobile and YTL Communications as well as Wimax players like Green Packet's P1.
Expect incremental dividend yields over the longer term due to improved earnings along (and corresponding cashflows) with stagnant capital expenditure given the saturated growth in Malaysian telco industry. Apart from that, its net cash postion would also allow the group to declare further special dividends.
Though DiGi's stated long-term dividend policy has been to “pay out a minimum 80% of net income”, its actual ordinary payout has been in excess of 100%. The company has also either carried out a capital repayment or offered a special dividend in the past.
The company is in the process of finalising a capital repayment totaling RM495mil or 6.4 per share and is expected to be completed by first half of FY13. This comes just after its first capital management exercise, totaling RM509mil, which was distributed in the first half 2012.
Given that the company is still in a net cash position after two rounds of capital repayment, do not rule out the likelihood of special dividend or further capital repayments in the near term.
The group is embarking on network collaboration with Celcom, which includes sharing of sites and backhauls transmission to ensure both parties are able to carry higher traffic volumes. The entire exercise is slated for completion by end-2013. As indicated previously, the collaboration is expected to result in incremental cost savings in the future, totaling RM2.2bil over 10 years, starting from 2015 with an average of RM150mil to RM250mil per year. In addition, both parties have also commenced joint fibre aggregation and trunk rollout.
Besides that, a network modernisation initiative that involves replacing its entire radio access network for a brand new long-term evolution (LTE)-ready platform is on target and is slated for completion by end-2012. The new network is expected to deliver highspeed broadband and next generation services with the introduction of a portfolio of bandwidths. The LTE-ready network will ensure faster roll-out of broadband services through wider coverage and enable to deliver substantially faster speed at affordable prices.
DiGi became the fourth operator to enter the Malaysia 's 3G arena with the launch of 3G broadband in the fourth quarter of 2008. The delayed entry places it behind the competition as its population coverage is still low, standing at 60% compared with Celcom 81.7% and Maxis 81%. The company intends to pick up momentum in expanding its 3G population coverage this year to 70% and over 80% by 2015.
Downside risks arising mainly from price competition amongst its peers. This could revole primarily in the mobile-internet and wireless broadband segments due to the arrival of several new players namely, U-mobile and YTL Communications as well as Wimax players like Green Packet's P1.
Wednesday, September 26, 2012
Redtone ...Sep12
Its poor financial performances were partially contributed by its non-core and loss-making subsidiaries. Followed the completion of the divestment of a number of its non-core and loss-making subsidiaries, Redtone's total selling, general and administrative (SG&A) expenses are expected to be lower by 10% year-on-year to RM36mil in financial year ending May 31, 2013 (FY13).
Going forward, the group's FY13 bottom line however, is still expected to underperform due to persisting high operating costs and stiff competitions. Expect Redtone to narrow its net loss to RM3.2mil in FY13 from RM8.7mil core net loss (ex-deconsolidation gain of RM10.9mil) a year ago, based on the existing businesses.
The infra and spectrum sharing agreement (NSA agreement) signed by Redtone and Maxis Bhd is expected to benefit both parties. The combined spectrum will allow both companies to offer the fastest 4G broadband speed across the country of up to 150Mbps. While Maxis is expected to benefit from the enlarged spectrum capacity, Redtone on the other hand is expected to have significant cost-savings on capex of about RM390mil.
The NSA agreement will allow both parties to maximise the usage of the scarce combined 2.6GHz spectrum, albeit the respective apparatus assignment for the 4G spectrum have yet to be assigned by Malaysian Communications and Multi-media Comission. In return, Maxis will pay Redtone an upfront payment in FY13 followed by a series of payments over the next 10 years.
Redtone is expecting the recurring income (from Maxis) to boost its financial performance significantly.
In view of the company's bottom line still expected to post a loss in FY13, Redtone is likely to be fairly valued at its net asset per share of 18 sen. Nevertheless, should the “Maxis factor” into the financial model; Redtone's FY13 is expected to record a net profit turnaround of RM21.1mil. This will provide a strong rerating catalyst for the stock.
Going forward, the group's FY13 bottom line however, is still expected to underperform due to persisting high operating costs and stiff competitions. Expect Redtone to narrow its net loss to RM3.2mil in FY13 from RM8.7mil core net loss (ex-deconsolidation gain of RM10.9mil) a year ago, based on the existing businesses.
The infra and spectrum sharing agreement (NSA agreement) signed by Redtone and Maxis Bhd is expected to benefit both parties. The combined spectrum will allow both companies to offer the fastest 4G broadband speed across the country of up to 150Mbps. While Maxis is expected to benefit from the enlarged spectrum capacity, Redtone on the other hand is expected to have significant cost-savings on capex of about RM390mil.
The NSA agreement will allow both parties to maximise the usage of the scarce combined 2.6GHz spectrum, albeit the respective apparatus assignment for the 4G spectrum have yet to be assigned by Malaysian Communications and Multi-media Comission. In return, Maxis will pay Redtone an upfront payment in FY13 followed by a series of payments over the next 10 years.
Redtone is expecting the recurring income (from Maxis) to boost its financial performance significantly.
In view of the company's bottom line still expected to post a loss in FY13, Redtone is likely to be fairly valued at its net asset per share of 18 sen. Nevertheless, should the “Maxis factor” into the financial model; Redtone's FY13 is expected to record a net profit turnaround of RM21.1mil. This will provide a strong rerating catalyst for the stock.
Tuesday, September 25, 2012
Perisai ... Sep12
Perisai Petroleum Teknologi Bhd's subsidiary Intan Offshore Group has secured a three-year charter to supply eight vessels for US$40mil.
Its 51%-owned Intan Offshore would provide supply eight offshore support vessels to Emas Offshore (M) Sdn Bhd and Emas Offshore Pte Ltd
The aggregated daily charter hire for the charter agreements payable to the Intan Group is US$36,630 per day. The expected value of the charter agreements for the fixed charter period amounts to approximately US$40mil.
There was also an option for Emas Offshore to extend the fixed charter period for two additional extensions of one year each at the same terms.
The Intan Group's eight offshore support vessels comprise of anchor handling tugs, fast crew boats and anchor handling tug and supply vessels.
Its 51%-owned Intan Offshore would provide supply eight offshore support vessels to Emas Offshore (M) Sdn Bhd and Emas Offshore Pte Ltd
The aggregated daily charter hire for the charter agreements payable to the Intan Group is US$36,630 per day. The expected value of the charter agreements for the fixed charter period amounts to approximately US$40mil.
There was also an option for Emas Offshore to extend the fixed charter period for two additional extensions of one year each at the same terms.
The Intan Group's eight offshore support vessels comprise of anchor handling tugs, fast crew boats and anchor handling tug and supply vessels.
Monday, September 24, 2012
IPO ... Astro
Astro Malaysia Holdings Bhd is raising RM1.42bil from the sale of 474.30 million new shares at an indicative RM3 per share for the retail portion.
The new shares are part of its initial public offering (IPO) of 1.518 billion ordinary shares of 10 sen each, comprising of a public issue of 474.30 million new shares and an offer for sale of up to 1.044 billion existing shares. This will see it raising a total of RM4.55bil.
Of the RM1.42bil from the IPO of which RM750mil or 52.7% of the proceeds would be used as capital expenditures with 36 months and RM500mil or 35.2% to repay bank borrowings.
The company had allocated RM112.90mil as working capital while listing expenses would be RM60mil.
Of the 1.518 billion shares, 1.258 billion shares would be offered to the foreign institutional and selected investors including Bumiputera investors while 259.86 million shares would be offered to the public, directors and eligible employees.
It intended to adopt an active capital management. It proposes to pay dividends out of cash generated from its operations after setting aside the necessary funding for capital expenditure and working capital needs.
Of the proceeds from its public issue of RM1.42bil, it intends to use RM750mil for capital expenditure within 36 months, RM500mil to repay bank borrowings within a year, and RM112.90mil as working capital. Its listing expenses amounted to RM60mil.
Upon completion of the exercise Astro Networks will own 70.8% equity stake in Astro and the investing public will hold the remaining 29.2% stake. As part of this policy, target a payout ratio of not less than 75% of its consolidated profit for the year under MFRS, in each financial year beginning Feb 1, 2013.
Astro's profit for the period ended April 30, 2012 was RM123.36mil while profit before tax was RM171.90mil. Its EBITDA was RM341.93mil.
Ananda, who owns telecom and energy companies, is relisting Astro after it was privatised in 2010 in a deal that valued it at around US$2.8 billion.
Meanwhile Japanese bank Nomura Holdings Inc and Singapore’s Great Eastern Holdings Ltd are among the 16 cornerstone investors for the US$1.5 billion listing of pay-TV firm Astro Malaysia Holdings Bhd.
Other cornerstone investors include California’s Standard Pacific Corp and Malaysian state-owned fund management firm Permodalan Nasional Bhd, the sources added, speaking on condition of anonymity because they were not authorised to talk publicly on the matter.
PNB is said to be one of the biggest cornerstone investors out of the 22 that the country's largest pay-TV operator Astro Malaysia Holdings Bhd has secured for its US$1.5bil (RM4.5bil) initial public offering (IPO).
A total of 430 million shares were offered to cornerstone investors, which included tycoon Chua Ma Yu, Kencana Capital Libra Investment Sdn Bhd, Great Eastern Life Assurance, Myriad Opportunities Masterfund, Nomura Asset Management, Antell Holdings Ltd, hedge-fund Azentus Global Opportunities Masterfund Ltd, Caprice Capital International Ltd, Cornstone Smith Asset Management, Gordel Capital, five units of Ochis-Ziff, TPG-Axon International, TPG Axon Partners and pension fund Universities Superannuation Scheme.
The lock-up period for the cornerstone investors is said to be three months.
Astro's rationale for returning to Bursa was to provide it access to the capital markets to source funding for its expansion.
From its inception, this pay-TV operator has grown by leaps and bounds and its offering is now available on multiple platform that allows it to access new target markets.
Its growth was about “servicing its existing customers by providing the right value propositions and content. Astro is also moving out of living rooms to provide Astro-On-The-Go and will bundle TV and radio services on broadband and provide existing and new channels on high definition.” With that Astro can now tap into a “100% addressable market” which is about 7.5 million households.
Capex would be 11% of revenue by 2014 and maintenance capex will be 4% to 5%.
Astro reported net profit of RM629mil for financial year ended Jan 31, 2012 on the back of RM3.8bil revenue. For first quarter-February to April for FY13, Astro reported net profit of RM123mil.
Astro has borrowings to the tune of RM3.7bil and although it intends to pare debts down with the proceeds from the IPO, its debts would still be high but “the company is correctly leveraged and it has an acceptable gearing level.”
Its Valuations …
While industry observers said the new RM3 retail price for the comeback listing of Malaysia’s largest pay-TV operator is “fairer” compared to the indicative RM3.60 set for bumiputra investors, the investment community is still largely divided on the stock.
Despite Astro’s historical price-to-earnings ratio (PER) shrinking slightly to 24 times based on the retail price and net earnings of RM629.6mil for the financial year (FY) ended Jan 31, 2012 some remained unconvinced and would not be subscribing for the shares.
The cornerstone investors have their own agenda. There could be other reasons. Maybe they think there is a possibility of someone coming in to buy them out later at a higher price or the funds who showed interest might be doing so for indexing purposes. This is especially true for funds who track the benchmark KL Composite Index. They are buying into Astro for that and not so much for the growth of the company.
Astro’s management has guided for lower earnings and margins for FY13 and FY14 as the company converts the current (Sept 2012) batch decoders to high-definition, the cost of which is borne by Astro. This earnings erosion is, however, expected to recover by FY15.
Based on the listing price of rm3.00 per share, Astro is valued at rm15 billion. However some say its value could even higher at between rm15 billion and rm22 billion.
Astro has already achieved critical mass and its push into more value added products will boost its average revenue per user.
Astro currently (Sept 2012) dominates the local pay TV scene with over three million subscribers and is poised to continue adding subscribers at a healthy pace.
Post IPO, Astro’s net debt to Ebitda ratio will be reduced to 2.2 times from 2.4 times and be maintained at 1.5 to 2 times in the long run.
Ananda, the country’s second-richest man, took the satellite TV operator private in 2009 in a deal worth RM8.5bil. The company is being relisted at RM18.7bil without its Indian and Indonesian operations, or 125% higher than when it was delisted three years ago at RM4.30.
Astro has a longer-term growth story and shareholders will have to wait it out.
Margins were likely to see compression for the time being (Sept 2012 & Beyond) as Astro worked to switch some 1.5 million of its subscribers to high-definition. However, Astro’s management was confident it could bundle both TV as well as broadband offerings once the conversions were complete.
The new shares are part of its initial public offering (IPO) of 1.518 billion ordinary shares of 10 sen each, comprising of a public issue of 474.30 million new shares and an offer for sale of up to 1.044 billion existing shares. This will see it raising a total of RM4.55bil.
Of the RM1.42bil from the IPO of which RM750mil or 52.7% of the proceeds would be used as capital expenditures with 36 months and RM500mil or 35.2% to repay bank borrowings.
The company had allocated RM112.90mil as working capital while listing expenses would be RM60mil.
Of the 1.518 billion shares, 1.258 billion shares would be offered to the foreign institutional and selected investors including Bumiputera investors while 259.86 million shares would be offered to the public, directors and eligible employees.
It intended to adopt an active capital management. It proposes to pay dividends out of cash generated from its operations after setting aside the necessary funding for capital expenditure and working capital needs.
Of the proceeds from its public issue of RM1.42bil, it intends to use RM750mil for capital expenditure within 36 months, RM500mil to repay bank borrowings within a year, and RM112.90mil as working capital. Its listing expenses amounted to RM60mil.
Upon completion of the exercise Astro Networks will own 70.8% equity stake in Astro and the investing public will hold the remaining 29.2% stake. As part of this policy, target a payout ratio of not less than 75% of its consolidated profit for the year under MFRS, in each financial year beginning Feb 1, 2013.
Astro's profit for the period ended April 30, 2012 was RM123.36mil while profit before tax was RM171.90mil. Its EBITDA was RM341.93mil.
Ananda, who owns telecom and energy companies, is relisting Astro after it was privatised in 2010 in a deal that valued it at around US$2.8 billion.
Meanwhile Japanese bank Nomura Holdings Inc and Singapore’s Great Eastern Holdings Ltd are among the 16 cornerstone investors for the US$1.5 billion listing of pay-TV firm Astro Malaysia Holdings Bhd.
Other cornerstone investors include California’s Standard Pacific Corp and Malaysian state-owned fund management firm Permodalan Nasional Bhd, the sources added, speaking on condition of anonymity because they were not authorised to talk publicly on the matter.
PNB is said to be one of the biggest cornerstone investors out of the 22 that the country's largest pay-TV operator Astro Malaysia Holdings Bhd has secured for its US$1.5bil (RM4.5bil) initial public offering (IPO).
A total of 430 million shares were offered to cornerstone investors, which included tycoon Chua Ma Yu, Kencana Capital Libra Investment Sdn Bhd, Great Eastern Life Assurance, Myriad Opportunities Masterfund, Nomura Asset Management, Antell Holdings Ltd, hedge-fund Azentus Global Opportunities Masterfund Ltd, Caprice Capital International Ltd, Cornstone Smith Asset Management, Gordel Capital, five units of Ochis-Ziff, TPG-Axon International, TPG Axon Partners and pension fund Universities Superannuation Scheme.
The lock-up period for the cornerstone investors is said to be three months.
Astro's rationale for returning to Bursa was to provide it access to the capital markets to source funding for its expansion.
From its inception, this pay-TV operator has grown by leaps and bounds and its offering is now available on multiple platform that allows it to access new target markets.
Its growth was about “servicing its existing customers by providing the right value propositions and content. Astro is also moving out of living rooms to provide Astro-On-The-Go and will bundle TV and radio services on broadband and provide existing and new channels on high definition.” With that Astro can now tap into a “100% addressable market” which is about 7.5 million households.
Capex would be 11% of revenue by 2014 and maintenance capex will be 4% to 5%.
Astro reported net profit of RM629mil for financial year ended Jan 31, 2012 on the back of RM3.8bil revenue. For first quarter-February to April for FY13, Astro reported net profit of RM123mil.
Astro has borrowings to the tune of RM3.7bil and although it intends to pare debts down with the proceeds from the IPO, its debts would still be high but “the company is correctly leveraged and it has an acceptable gearing level.”
Its Valuations …
While industry observers said the new RM3 retail price for the comeback listing of Malaysia’s largest pay-TV operator is “fairer” compared to the indicative RM3.60 set for bumiputra investors, the investment community is still largely divided on the stock.
Despite Astro’s historical price-to-earnings ratio (PER) shrinking slightly to 24 times based on the retail price and net earnings of RM629.6mil for the financial year (FY) ended Jan 31, 2012 some remained unconvinced and would not be subscribing for the shares.
The cornerstone investors have their own agenda. There could be other reasons. Maybe they think there is a possibility of someone coming in to buy them out later at a higher price or the funds who showed interest might be doing so for indexing purposes. This is especially true for funds who track the benchmark KL Composite Index. They are buying into Astro for that and not so much for the growth of the company.
Astro’s management has guided for lower earnings and margins for FY13 and FY14 as the company converts the current (Sept 2012) batch decoders to high-definition, the cost of which is borne by Astro. This earnings erosion is, however, expected to recover by FY15.
Based on the listing price of rm3.00 per share, Astro is valued at rm15 billion. However some say its value could even higher at between rm15 billion and rm22 billion.
Astro has already achieved critical mass and its push into more value added products will boost its average revenue per user.
Astro currently (Sept 2012) dominates the local pay TV scene with over three million subscribers and is poised to continue adding subscribers at a healthy pace.
Post IPO, Astro’s net debt to Ebitda ratio will be reduced to 2.2 times from 2.4 times and be maintained at 1.5 to 2 times in the long run.
Ananda, the country’s second-richest man, took the satellite TV operator private in 2009 in a deal worth RM8.5bil. The company is being relisted at RM18.7bil without its Indian and Indonesian operations, or 125% higher than when it was delisted three years ago at RM4.30.
Astro has a longer-term growth story and shareholders will have to wait it out.
Margins were likely to see compression for the time being (Sept 2012 & Beyond) as Astro worked to switch some 1.5 million of its subscribers to high-definition. However, Astro’s management was confident it could bundle both TV as well as broadband offerings once the conversions were complete.
F&N ... Sep12
Charoen has shown support for F&N Ltd selling its 40% stake in APB to Heineken NV Heineken, meanwhile will not make any offer for Singapore based F&N, in which Charoen made an offer to raise his equity interest to 50%. The latest developments could indicate the end of the tussle for APB, which is known for its Tiger Beer.
This move adds clarity to Charoen's recent offer for F&N shares at S$8.88 per share. The offer is condition upon on TCC Assets and parties acting in concert gaining more than 50% of F&N. Currently (Sept 2012), Charoen and parties acting in concert hold just over 30%.
With the latest developments, it seems that Chareon's focus is on the other assets of F&N, namely its property business and the non-beer business, its main contributor is Malaysia listed F&N Holdings, in which F&N has a direct stake of 56.43% stake. The question now is what would be Charoen's plans for the rest of F&N. Given that ThaiBev is best known for its beers and liquor, it was initially thought that synergistic benefits were the main reason for it to buy into APB. However, it should also be noted that Charoen's portfolio includes property, hence … the continued interest in F&N even without the beer business.
Market observers reported that if the sale of APB goes through, it could see the break up of F&N and Thai billionaire bid for Singapore listed F&N is also unlikely to automatically rsult in a general offer for its Malaysian listed subsidiary F&N Bhd as the upstream entity F&N is not deemed to have a significant degree of control over the downstream entity (F&N Holdings). It is because the value of the Malaysian unit does not exceed more than 50% of the assets, net tangible assets, market cap, shareholders' funds, sales or earnings of SGX listed F&N.
F&N owns 56.3% of F&N Holdings while PNB owns 17.7% of F&N Holdings.
A point to note, F&N's other substantial shareholder Kirin Holdings has yet to make an announcement on its stand in the tussle. It holds 14.7% stake.
Industry observers noted that Thai billionaire bid for Singapore listed F&N is unlikely to automatically result in a general offer for its Malaysian listed subsidiary F&N Bhd as the upstream entity F&N is not deemed to have a significant degree of control over the downstream entity (F&N Holdings).
It is because the value of the Malaysian unit does not exceed more than 50% of the assets, net tangible assets, market cap, shareholders' funds, sales or earnings of SGX listed F&N.
This move adds clarity to Charoen's recent offer for F&N shares at S$8.88 per share. The offer is condition upon on TCC Assets and parties acting in concert gaining more than 50% of F&N. Currently (Sept 2012), Charoen and parties acting in concert hold just over 30%.
With the latest developments, it seems that Chareon's focus is on the other assets of F&N, namely its property business and the non-beer business, its main contributor is Malaysia listed F&N Holdings, in which F&N has a direct stake of 56.43% stake. The question now is what would be Charoen's plans for the rest of F&N. Given that ThaiBev is best known for its beers and liquor, it was initially thought that synergistic benefits were the main reason for it to buy into APB. However, it should also be noted that Charoen's portfolio includes property, hence … the continued interest in F&N even without the beer business.
Market observers reported that if the sale of APB goes through, it could see the break up of F&N and Thai billionaire bid for Singapore listed F&N is also unlikely to automatically rsult in a general offer for its Malaysian listed subsidiary F&N Bhd as the upstream entity F&N is not deemed to have a significant degree of control over the downstream entity (F&N Holdings). It is because the value of the Malaysian unit does not exceed more than 50% of the assets, net tangible assets, market cap, shareholders' funds, sales or earnings of SGX listed F&N.
F&N owns 56.3% of F&N Holdings while PNB owns 17.7% of F&N Holdings.
A point to note, F&N's other substantial shareholder Kirin Holdings has yet to make an announcement on its stand in the tussle. It holds 14.7% stake.
Industry observers noted that Thai billionaire bid for Singapore listed F&N is unlikely to automatically result in a general offer for its Malaysian listed subsidiary F&N Bhd as the upstream entity F&N is not deemed to have a significant degree of control over the downstream entity (F&N Holdings).
It is because the value of the Malaysian unit does not exceed more than 50% of the assets, net tangible assets, market cap, shareholders' funds, sales or earnings of SGX listed F&N.
Saturday, September 22, 2012
Where to Install New Pairs of Tires?
In the past, replacement of new tires, shop always recommend install front....But this is wrong and extremely dangerous.
See this:-
See this:-
Thursday, September 20, 2012
Cresbld ... Sep12
It is targeting to sscure between rm200
million and rm400 million in new contracts by end of 2012.
The company is currently bidding for
several contracts which are mainly building jobs and infra jobs mostly in Klang Valley.
Its construction order book currently
stands at around rm1 billion.
Its key activity is in construction but it
is hoping its property development division will grow in future.
Its main driver for its property
development division will be the redevelopment of the Dang Wangi LRT station
and the development of the 2.2ha owned by MRB along Jalan Ampang.
The Dang Wangi and Jln Ampang developments
have an estimated GDV of rm1.04 billion and rm1.3 billion respectively.
Expects the two projects to start
contributing to Crest Builder’s earnings by 2014.
Wednesday, September 19, 2012
TSH ... Sep12
It may need to sweeten its offer for the takeover of Pontian United Plantations Bhd, having only received 8.2% acceptance so far (Till Sept 10 Sept 2012) and extended the offer the deadline three times until 07 Sept 2012. Only 8.2% stake in PUBB or 710567 shares were taken up for the rm90.00 per share offer from TSH and the Lee family. The rm90 is to be settled in cash and TSH shares.
Including those who have accepted so far, the offerors currently (10 Sept 2012) control 27.92% of PUBB. This includes 19.72% held by TSH and the Lee family before making the offer in June 2012. On June 2012 26, 2012, TSH and the Lee family proposed to buy the remaining 80.28% stake in PUBB for rm624 million or rm90 per share.
The offer is conditional upon TSH and the Lee family securing at least 50% plus one share in PUBB. TSH will pay and get all the acceptance shares while the Lee family will continue to hold its 11.76% stake. Apart from the offerors, there are 197 shareholders of PUBB who are open to the offer.
As TSH continues to get the cold shoulder from the remaining PUBB shareholders, there is speculation that it may increase the offer price. Under the offer, the consideration will be satisfied by rm45.06 million cash per TSH share and rm44.94 via the issuance of 21 new TSH shares at an issue price of rm2.14. At rm45.06, TSH needs to fork out rm312.7 million cash to purchase the remaining 6.94 million shares it does not own. The cash portion will be funded entirely by bank borrowings and TSH has obtained sufficient credit facilities.
Assuming TSH increases its offer by another rm10 cash per share, it will need to fork out rm382 million in cash. However, the offer will increase TSH’s gearing. AS at June 2012, TSH has rm38.2 million in cash and rm813 million in borrowings of which rm444.3 million are long term in nature.
Some market observers do not foresee TSH Resources and the Lee family getting the 50% acceptance level and will not raise the offer price and may seek another way to acquire the shares. Or they might just call off the whole offer. This is not entirely bad news as PUBB’s trees are old and the acquisition will out some pressure on TSH Res’ books.
Tuesday, September 18, 2012
Benalac ... Sep12
Benalec, which the rights to reclaim land at the southern tip of Johor is negotiating with several foreign tank farm operators to sell it the first reclaimed parcel of 250 acres.
The company is confident of closing a deal within the next few months and expects to commence reclamation works at Tanjung Piai, Johor as early as the second half of 2013.
The tank farm operators are from the Middle East, Europe and China. Some of them are already operating at the Jurong Industrial Park in Singapore, but they are looking for more land to expand their capacity.
The company expects earnings from the reclamation works to be reflected in its earnings for the financial year ending June 30, 2014.
The 250 acre parcel is just a small portion of the thousands of acres of reclaimable land Benalec is entitled to in Johor, but being the first, its success is crucial for the company to market the entire project on the international stage.
It had signed two development agreements with the Johor government to reclaim 3485 acres in Tanjung Piai and another 1760 acres along the shoreline of Pengerang, also in Johor.
The DAs essentially allow Benalec’s 70% owned Spektrum Kukuh Sdn Bhd and Spektrum Kukuh Sdn Bhd, to reclaim land in the two areas and obtain a lease of 99 years. In return, the Johor government would get an undisclosed amount of upfrom premium plus 3% of the gross sales of the net saleable area of the reclaimed land. This is to ensure that the state government rides the upside potential of the valuation of the land.
Johor has several property projects catering for the oil and gas industry. In the face of competition, Benalec’s strategy is to sell the plots of Tanjung Piai to international tank farm operators, not only for storage of crude oil but also edible oil. As for the plots in Pengerang, it hopes to sell them to fabricators.
The company could carve out a niche amid the ongoing developments in the 22000 acre Refinery and Petrochemical Integrated Development (RAPID) complex, which is also in Pengerang. RAPID is an initiative led by Petronas, there is a possibility of Benalec’s Pengerang project being included in the RAPID master plan.
There is interest in the Benalec plots because both the entitlement areas (Tanjung Piai and Pengerang) have good sea frontage and will be accessible to sea transport. The company plans to build a jetty at Tanjung Piai and a port at Pengerang upon completion of the reclamation works.
In terms of the funding the reclamation works, the company has raised rm100 million from a placement exercise and is looking to borrow another rm100 million. Benalex is presently net cash.
Benalec plans to sell some reclaimed parcels in Klebang, Melaka to raise funds. The company still has 300 acres of reclaimed land there that is available for sale. It also has the rights to reclaim another 500 acres along the Klebang shore, where the Boon Siew group is planning a lifestyle and medical city development.
Benalec had been holding back the sale of its reclaimed land in Melaka while approving for a new highway to be built there.
Benalec’s major shareholder and MD Datuk Vincent Leaw has been acquiring shares in the open market, raising his family’s stake to 54.41% as at Sept 12, 2012. The company has been buying back its own shares.
Monday, September 17, 2012
F&N ... Sep12
If Charoen is successful in gaining control of F&N, the question is whether he will also need to make a general offer at the subsidiary level. F&N holds a direct 56.43% stake in F&N Malaysia, the latter of which is the main contributor to the former’s non beer business.
If Charoen manages to acquire a majority stake in F&N, he will not be automatically have to make an offer for all the subsidiaries. While there is a downstream ruling under the Malaysian code of take-overs and Mergers, this case is not a clear cut.
It depends on several factors. The first is whether it is the intention of the new shareholder to take over the company in order to gain control of its subsidiaries. If the parent company is a shell company and that all the assets are in the subsidiaries, the aim is clear in that instance, the new shareholder has to make an offer to the minority shareholders of the subsidiaries.
In this instance, it can be argued that Charoen’s target is the beer business, rather than F&N’s Malaysia. In addition, F&N has other assets apart from Malaysian operations, including the aforementioned beer segment and property, the latter of which is its main earnings contributions. In this case, Charoen as a new shareholder could get a waiver from making an offer for F&N Malaysia.
It was reported that Charoen’s move could be to block the sale of F&N’s beer assets, which is held under Asia Pacific Breweries Ltd (APB).
Another possibility is that since F&N’s business seems to mirror Charoen’s own portfolio of beer assets and property, a break up of the Singapore company may not be necessary. However if Heineken managed to acquire APB, the breakup of F&N to unlock the value of its individual assets would prove inevitable.
The EGM for shareholders to decide on the sale of APB to Heineken is due to take place on Sept 28, 2012. It should also be noted that throughout this entire process, the one wildcard that remains is F&N’s other major shareholders. Japanese brewer Kirin Holdings.
Kirin, which holds a 14.7% stake in F&N has not made as stand on the matter since Charoen first emerged in July 2012. Given how tightly held F&N’s shares are, Kirin’s decision could be the deciding factor.
To recap, Charoen Sirivadhanabhakdi launched a $7.2 billion offer to buy out other shareholders of Fraser and Neave Ltd (F&N), potentially derailing Heineken NV's bid to take full control of F&N's prized beer business.
Charoen's bid for the Singapore conglomerate a fortnight before a key F&N shareholders vote has raised doubts on whether the sale of the group's 40 percent stake in Asia Pacific Breweries Ltd (APB) to Heineken is a done deal as predicted by industry watchers just a week ago.
TCC Assets Ltd, a firm controlled by Charoen, offered to pay S$8.88 for the F&N shares that the billionaire did not already own. But industry watchers say the Thais need to pay more if they are serious about gaining full control of F&N.
Since the offer restricts the Thais to buying F&N shares on the open market at prices not exceeding S$8.88, they will now need to raise their offer if they want to build their interest in F&N.
Charoen, Thailand's third-richest man, controls 30.36 percent of F&N, the bulk of it through Thai Beverage PCL. He needs a simple majority of votes at the meeting on September 28 2012 to overturn the deal that F&N's board and the Dutch brewer reached on August 18 2012.
That means Heineken needs to rally shareholders with a collective interest exceeding Charoen's stake to push through its $6.3 billion purchase of all the shares in APB, including F&N's stake in the maker of Tiger beer.
Under Singapore law, a bidder must make a mandatory offer for a company if its stake reaches 30 percent.
It would appear that TCC is likely to thwart the sale of APB to Heineken. One possible outcome is that if TCC is successful in gaining control of F&N, it would want to renegotiate the sale of APB to Heineken.
F&N's other large shareholders include Japan's Kirin Holdings Co Ltd <2503 .t=".t">, which owns nearly 15 percent. Kirin said previously it was interested in F&N's food and non-alcoholic drinks business.
The TCC offer, which is backed by loans from Singapore banks DBS Group Holdings Ltd and United Overseas Bank Ltd will not be formally presented to shareholders for another two to three weeks. Besides the two Singapore lenders, Morgan Stanley is also advising the Thais.
One risk of the scenario is that the sale (of APB) falls through and further strains the relationship with Heineken, with implications for marketing rights for Heineken by APB in Asia. Heineken beer accounts for about 30 percent of APB's sales by volume.
ThaiBev has not said how it will vote at the September 28 2012 meeting, and banking sources say TCC may be prepared to let go of APB and focus on F&N's remaining food-and-drinks and property businesses.
The Thais bought out Pepsi's bottling business in Thailand, and Charoen already has substantial investments in Singapore property.
F&N's property portfolio, worth more than S$8 billion ($6.51 billion), has also attracted the interest of Blackstone Group LP and other global property companies while the beverage business could appeal to potential suitors including Coca-Cola Co.
An acquirer may pay as much as S$7.7 billion for the Frasers Centrepoint Ltd property unit, 71 percent more than is reflected in F&N’s share price. That would be Southeast Asia’s largest real-estate deal.
Rent in Singapore has remained high as the population surged 18 percent in five years and the city attracts a million visitors a month.
F&N’s 332,261-square foot mall on Orchard Road, the city’s biggest tourist attraction, and over 7,000 furnished apartments from Europe to Australia may lure foreign buyers, including billionaire Li Ka-Shing’s Cheung Kong Holdings Ltd. With similar assets and S$5.1 billion of cash, Singapore’s CapitaLand Ltd is a natural buyer.
Breweries contributed 41.1 percent of F&N's total revenue of S$4.02 billion for the nine months to June 30 2012. Soft drinks and dairy products made up 29.2 percent, property was 21.3 percent and printing and publishing was 7.1 percent.
F&N is the leader in the soft drinks markets in Singapore and Malaysia, with a 24.5 percent and 26.9 percent market share, respectively. But F&N's reach in the rest of the region is weak and its Asia-Pacific market share is only 0.3 percent.
F&N's other soft drinks assets include distribution networks in emerging markets such as Vietnam and Myanmar.
F&N’s board recommended Heineken's offer partly because of the attractive valuation and limited options for the stake held by their joint venture in APB. Heineken had first right of refusal to the 65 percent of APB shares held by the joint venture between F&N and Heineken.
Friday, September 14, 2012
WCT ... Sep12
It had proposed a bonus issue on the basis of three bonus shares for every 20 existing 50-sen shares, and one warrant D for every five shares held on the entitlement date. This is not an exercise to raise capital but more to increase trading liquidity and reward shareholders. The corporate proposal is a move that may boost trading sentiment on WCT's shares over the immediate term.
Market observers do not expect any significant earnings dilution given the long tenure of the warrants but based on an extreme scenario of full conversion of the warrants, there may be a 20% dilution to financial year 2013 forecast earnings.
WCT has a order book of RM3.7bil with more contracts likely to be awarded before year-end (2012). There are potential growth catalysts from the KLIA2 Integrated Complex, which is scheduled to commence operations by March 2013.
Thursday, September 13, 2012
IHH ... Sep12
Its foreign exchange exposure risk remains a concern although it could be mitigated if and when the debts are pared down from its initial public offering (IPO) proceeds.
It was reported that IHH's Turkish arm Acibadem Holdings had reported losses due to foreign exchange losses on an unhedged loan amounting to US$460.7mil (RM). The loan, which is serviced in Turkish lira, has a US$257.1mil payment due in 2015. The remaining RM203.6mil is an amortised loan that will be repaid in semi-annual payments until 2018.
Over 90% of the IPO proceeds was proposed to be utilised for the repayment of bank borrowings. It is notable that the group's total long-term borrowings stand at RM7.18bil as at June 30 2012.
There are no concrete plans as yet, but management is looking into it. Although the risk is real, the extraordinary gain from the sale of the medical suites at Mount Elizabeth Novena Hospital will help. The best solution for the company would be to hedge against the debt. The debt was inherited when IHH bought Acibadem.
Meanwhile, the US$500mil forex risk should not be a big problem for the company. For a company as big as IHH, they can afford it. Every company which ventures overseas will be faced with forex risk. It should not haunt IHH unless the exchange rate between the dollar and the lira fluctuates drastically. The forex risk is not a huge concern as IHH's management has been quite clear on managing the exposure to specific currencies in the countries it operates in.
Expect the US$500mil debt to be refinanced, most likely in the Singaporean or Malaysian market to take advantage of the interest rate savings.
Although IHH is Acibadem's major shareholder with a 60% stake, the decision on how the forex risk exposure is managed will be a collective decision with remaining shareholders Khazanah Nasional Bhd and Acibadem chairman Mehmet Ali Aydinlar. Khazanah holds 15% in Acibadem while Mehmet Ali holds 23.3%.
The unrealised forex could also swing the other way. The exchange rates are increasingly trending in favour of the lira.
Although its Turkish operations have been growing in number of inpatient and outpatient admissions, Acibadem's earnings are largely dependent on the year-end US$ to Turkish lira exchange rate and its impact on the unhedged borrowings.
Wednesday, September 12, 2012
TSH ... Sep12
It may need to
sweeten its offer for the takeover of Pontian United Plantations Bhd, having
only received 8.2% acceptance so far (Till Sept 10 Sept 2012) and extended the
offer the deadline three times until 07 Sept 2012. Only 8.2% stake in PUBB or
710567 shares were taken up for the rm90.00 per share offer from TSH and the
Lee family. The rm90 is to be settled in cash and TSH shares.
Including those who have accepted so far, the offerors currently (10
Sept 2012) control 27.92% of PUBB. This includes 19.72% held by TSH and the Lee
family before making the offer in June 2012. On June 2012 26, 2012, TSH
and the Lee family proposed to buy the remaining 80.28% stake in PUBB for rm624
million or rm90 per share.
The offer is conditional upon TSH and the Lee family securing at least
50% plus one share in PUBB. TSH will pay and get all the acceptance shares
while the Lee family will continue to hold its 11.76% stake. Apart from the
offerors, there are 197 shareholders of PUBB who are open to the offer.
As TSH continues to get the cold shoulder from the remaining PUBB
shareholders, there is speculation that it may increase the offer price. Under
the offer, the consideration will be satisfied by rm45.06 million cash per TSH share
and rm44.94 via the issuance of 21 new TSH shares at an issue price of rm2.14.
At rm45.06, TSH needs to fork out rm312.7 million cash to purchase the
remaining 6.94 million shares it does not own. The cash portion will be funded
entirely by bank borrowings and TSH has obtained sufficient credit facilities.
Assuming TSH increases its offer by another rm10 cash per share, it
will need to fork out rm382 million in cash. However, the offer will increase
TSH’s gearing. AS at June 2012, TSH has rm38.2 million in cash and rm813
million in borrowings of which rm444.3 million are long term in nature.
Some market observers do not foresee TSH Resources and the Lee family
getting the 50% acceptance level and will not raise the offer price and may
seek another way to acquire the shares. Or they might just call off the whole
offer. This is not entirely bad news as PUBB’s trees are old and the acquisition
will out some pressure on TSH Res’ books.
Gadang ... Sep12
The company has a RM863.39 million contract for the My Rapid Transit (MRT) project and a RM410.87 million job to build the 300-bed Shah Alam Hospital . It is also bidding for construction jobs worth more than RM2 billion, mostly government projects, to grow its future earnings. Gadang has RM1.5 billion worth of jobs in hand to keep it busy for the next three to four years.
Gadang has an oil palm plantation in Ranau, Sabah, where it has teamed up with oil palm plantation owners for the cultivation of some 6,000ha of oil palm over two phases. The group wants its plantation business to make up 10 per cent of its revenue and net profit by 2015.
For the financial year ended May 31 2012, Gadang reported a pre-tax profit of RM17.91 million, compared with a pre-tax loss of RM1.2 million in the same period of last year.
In 2010, Gadang won a RM291.2 million contract from Malaysia Airports Holdings Bhd (MAHB) to build a runway and taxiways for KLIA2 in Sepang, Selangor. The contract included site preparation, earthworks and main drainage for the 4km Runway 3. Gadang is expected to hand over the job to MAHB in Sept 2012.
Gadang has an oil palm plantation in Ranau, Sabah, where it has teamed up with oil palm plantation owners for the cultivation of some 6,000ha of oil palm over two phases. The group wants its plantation business to make up 10 per cent of its revenue and net profit by 2015.
For the financial year ended May 31 2012, Gadang reported a pre-tax profit of RM17.91 million, compared with a pre-tax loss of RM1.2 million in the same period of last year.
In 2010, Gadang won a RM291.2 million contract from Malaysia Airports Holdings Bhd (MAHB) to build a runway and taxiways for KLIA2 in Sepang, Selangor. The contract included site preparation, earthworks and main drainage for the 4km Runway 3. Gadang is expected to hand over the job to MAHB in Sept 2012.
Tuesday, September 11, 2012
Muhibbah ... Sep12
The High Court dismissed with costs an
application by CIMB and PWC to set aside a wining up petition brought by ZAQ
Construction against APH. The court announced that it would hear ZAQ’s suit to
wind up APH and appoint a liquidator, a move that will further complicate
matters in the bank’s bid to savage the project.
If ZAQ is successful in its petition, it
will add to the already complicated ownership issues related to APH, which has
the mandate to build and operate a petroleum hub and bunkering facility on an
island off Johor.
ZAQ obtained judgement against APH for
rm419.7 million in 2011 and on Dec 23 2011 sent notice to wind up the company
after it had defaulted on payment.
CIMB, a secured creditor of APH that is
owed rm1.01 billion, together with the appointed receiver of the project, PWC
is opposed to the petition brought by ZAQ. CIMB had appointed PWC as receiver
on Dec 30, 2011.
CIMB’s plan for PWC to sell the conditional
rights came about after CIMB withdrew its backing for an earlier restructuring
plan by PWC which entailed a debt to equity swap. The plan was to transfer the
conditional rights to develop and operate the petroleum storage, blending and
distribution terminal to a SPV and later draw investors into the SPV and
complete the project, which would give the project some value and enable all
creditors to recover at least a portion of their money. Swiss group Mercuria
Energy Group Ltd and Petrolax Ltd were said to be among the groups interested
in APH.
However CIMB and PWC need to obtain the
consent of the EPU to facilitate a change in the shareholding of APH.
Meanwhile Tan Sri Syed Mokhtar is also
blocking a plan by CIMB to sell the financially troubled APH in Johor. PTP
which is 70% owned by Syed Mokhtar’s MMC Corp is opposed to CIMB’s proposal to
sell APH, and has made its objections known to the bank appointed receivers for
the failed petroleum venture. CIMB advertised on July 4, 2012 that it was
looking to sell the conditional rights to develop the petroleum storage,
blending and distribution terminal located in Tanjung Bin, Johor and had given
PWC the mandate to seek proposals for APH. It is now still uncertain if PWC is
deterred by PTP’s objection.
Now (Sept 2012), APH requires an additional
rm2.6 billion to refinance CIMB’s bridging loan and to restart the unsuccessful
project. Other than CIMB, Muhibbah is owed rm400 million and other creditors
about rm100 million.
In another development, Muhibbah is being sued
by ZAQ. ZAQ Construction Sdn Bhd, the managing contractor in the Asia Petroleum
Hub (APH) project in Johor, has filed a suit against several parties including
CIMB and Muhibbah Engineering (M) Bhd over a restructuring scheme.
ZAQ had filed the suit against CIMB, APH,
Lim San Peen (the receiver & manager appointed by CIMB over APH) and
Muhibbah.
ZAQ is alleging Muhibbah's involvement in
the restructuring scheme proposed by the receiver & manager in January 2012
vis-vis the APH project, and thereby indicating its support for such proposed
scheme.
APH managing contractor ZAQ Construction Sdn Bhd is suing CIMB and Muhibbah
Engineering for potential damages. That Muhibbah is dragged into the
picture, despite being part of those claiming against APH, is negative and
reaffirms our expectation that the APH saga will be long drawn-out.
There seems to be
no solution in sight for APH. This new legal action is likely to prolong the
saga.
Muhibbah
announced that ZAQ has filed a suit against CIMB, Lim San Pen, the receiver
manager appointed by CIMB, and Muhibbah. ZAQ alleged Muhibbah's involvement in
the APH restructuring scheme. To recap on the latest development on the APH
saga on June 12 2012 the restructuring scheme was called off, as per Muhibbah's
announcement that CIMB, the sole lender for the project, was withdrawing its
support for the scheme. Management is of the view that the claim brought by ZAQ
is frivolous” and it will defend the case.
The amount
claimed against each of the defendants is unknown at this juncture.
Following CIMB's
withdrawal of its support for the APH restructuring, the receivers have put
into tender the development rights to APH. Though details of the bidders are
unknown, valuations for APH are likely to be at a discount. This will further
reduce the chances of all contractors recovering the amount owed to them from
APH for work done.
Progress on APH
appears to be even more protracted.
A bumper
provision for Muhibbah in the current financial year is still likely. If the
legal action favours ZAQ, there could be further downside to RNAV