Tanjong Plc, Measat, Ananda Krishnan and Valuations

Tanjong and Measat - The cynical ones would be harping on the fact that another two listings being taken off the board, thus eroding the already decimating foreign interest in Bursa listed stocks. But you cannot just judge things by looking at the surface.

Tanjong has a lot of capital to raise to move into power plants in a big way, plus it has to sweep some rubbish under the carpet (the German resort venture). Tanjong as it is also holds other assets that probably will need to be shed and restrategised.

Obviously its a valuation thing as well. Its listed and available to foreign investors for the longest time, so, foreign investors will need to shut up if they wished to criticise that important counters are taken off the board - they obviously did not "invest enough" when these companies were still listed for the longest time. So don't come bitching if its taken private, and at a decent premium too.

The offers are very good, no shafting of minority shareholders, unlike the more questionable case when Maxis was privatised. I still expect Tanjong to come back to the board but probably in a more focused way, mainly in power plants. I think most will appreciate that investors are more willing to accord a higher valuation if its focused.

Measat is better off taken down as it promises so much but has under delivered, privatise it and make things happen, then relist again. Ananda could very well have taken Measat private at a much lower level, so minority shareholders should be happy.

On the question of valuations, is it that listed companies in Malaysia do not get a proper valuation? If you take the market average PER, nobody will say that Malaysia is grossly undervalued. Obviously its only in the top 30 stocks. That being the case, it also means that the broader market might be overvalued as well.

Let's concentrate on the top 30, free float is a major consideration, we need to keep releasing shares, GLCs and owners need really to own less than 40%. Its the mindset that crushes us, look at the biggest companies in the world, nobody cares about the 33% controlling interest. Look at Citigroup, Procter Gamble, even Microsoft - the largest shareholders hold less than 10%. If you can get away from "control issues", then you will use your company new shares issuance to grow more aggressively via M&A when share price is not cheap ... among other things.

Corporate strategy and governance - while we may have qualified people at the top, many lacked the vision and execution ability (CIMB, YTL Power and IOI are exceptions). Investors do not believe that those at the top have the proper leadership, "control", insightful growth strategy to move ahead. Many investors still question how many of the CEOs are still beholden to "vested interests" - how to be convinced??? Hence the question is not whether we "hire really good professionals" but whether we are liberal and professional enough to allow them to do their jobs - mindset, mindset ...