What a CNY for this Seremban lass. Many might now know that she won the unbelievably popular and harsh singing competition in Taiwan, One Million Star. She is just 22, but many would not know her history and tenacious climb to be a recording artiste.
She entered Malaysian Idol's first season in 2004, fumbled badly at auditions, but was still invited back to perform at the finals with a reverberating Kaulah Segala Nya. That was 7 years ago. She did improve when she entered Astro Star Quest in 2008.
The never say die, but keep learning attitude kept her going, and she made it after 7 years .... and she is still just 22. Now she has a recording contract with Warner Music Group.
Oh, btw, she also went and got her chemistry degree from UKM in between all that.
Whatever you do, I know there are a lot of videos below, you must listen to her rendition of Coming Home, the very last video.
her powerful yet controlled rendition of Shunza's classic:
the first song during the finals, near perfect, imagine Shunza/Tanya singing A-Mei:
a spine tingling duet What's Up:
tackling Beyonce's Listen with aplomb:
if you need convincing, have a listen of her rendition of Coming Home, its about 5 minutes into the video:
Why Japan's Debt Is A Non-Issue
On January 27, 2011, S&P lowered Japan's long-term sovereign debt rating for the first time in nine years to AA- from AA. According to S&P, the government "lacks a coherent strategy" to tackle Japan's debt load, which could lead government debt ratios to peak only in the mid-2020s. Japan's gross-public-debt-to-GDP ratio, which was 189.3% in 2009, is the highest among developed economies.
Though a sovereign debt crisis like that of Greece is not imminent, without increasing the national tax burden—which is relatively low compared to other major economies—Japan will not be able to sustain public spending without incurring more debt. Japan's aging population and underfunded pensions exacerbate this burden. Issuing more debt to finance public expenditures is easier for Japan compared to other European countries with high debt because Japan benefits from low debt-servicing costs in part due to chronic deflation. Unlike Greece, Japan maintains a current account surplus and a net foreign asset position. Locals hold around 95% of Japan's debt, whereas foreigners hold more than three-quarters of Greece's debt.
Unless proposed expenditures are minimized, Prime Minister Naoto Kan’s administration will struggle to fund its 2011 budget without reneging on its JPY44-trillion cap on new bond issuance. Tax revenue will fall alongside corporate profits and personal income. Since Kan’s aggressive advocacy of a consumption tax hike cost his party the Upper House, plans for the hike are likely to be shelved. A corporate tax cut remains under consideration, but budget deficits will be hard to shake off without a corresponding increase in revenue elsewhere.
S&P estimated (according to its January 27, 2011, note "Ratings On Japan Lowered To 'AA-'; Outlook Stable") that Japan's government fiscal deficits will decline from an estimated 9.1% of GDP in FY2011 (ending March 31, 2011) to 8.0% in FY2013. Unless the government undertakes a fiscal consolidation program, S&P does not foresee Japan achieving a primary external balance before 2020.
Japan's Cabinet Office estimated that the primary fiscal deficit, which excludes debt-servicing costs, will total JPY21.7 trillion in FY2015, 4.2% of GDP. In FY2020, Japan is estimated to post a primary budget deficit of JPY23.2 trillion, or 4.2% of nominal GDP. If real GDP grows more than 2% each year, Japan's primary balance deficit would be 3.2% of nominal GDP in FY2015 and 2.5% in FY2020.
The OECD forecasts that Japan's gross public debt will exceed 200% of GDP in 2011. In order to halve the primary budget deficit by 2015, the OECD maintains that additional tax revenue need to be generated and that the BoJ should "should implement more ambitious quantitative easing measures to relax monetary conditions in the face of entrenched deflation and maintain such policies until underlying inflation is significantly positive."
Japan’s long-term public debt has risen to JPY862 trillion (US$9.26 trillion), nearly 200% of the nation’s 2009 gross domestic product. Japan’s debt was 189.3% of GDP in 2009 and is projected to grow to 204.3 % in 2011.On January 18, 2011, credit-default swaps (CDS) used to protect payment of Japanese government debt, hit a six-month high and climbed to 86.49 bps. This means that it costs $86,490 to insure $10 million in Japanese debt. CDS for U.S. debt were 49.85 bp.
Why The Debt Is "Manageable"
The financing of Japan’s public sector debt is currently enjoying an extremely virtuous confluence of events—the strong home bias of domestic investors, ample domestic savings, and modest deflation. As long as these persist, financing the public sector debt should not be problematic...In the near term, it seems likely that the three conditions that have eased the financing of Japan’s public debt will persist.
While JGB market participants believe Japan occupies the worst fiscal position in the world, the nation's fiscal problems can still be rectified with tax hikes. The basis for this optimism appears to lie in Japan's low social contribution rate, one of the lowest in the world at 39%. A social contribution rate of 52.3%, a rate on par with European nations, would be sufficient to cover recent fiscal deficits.
In addition, the JGB market seems to have concluded that the Japanese government can fiscally consolidate because the there is room to raise the consumption tax rate, currently the lowest in the world at 5%.
Despite the high level of government indebtedness, the budgetary burden of servicing debt interest is not especially high as a share of GDP and revenue, especially once account is taken of the relatively low tax/GDP ratio. This reflects the fact that interest rates on government borrowing remain low in nominal and real terms.
Currency and deposits make up over 55% of assets for Japanese households. Compared to just 14.3% in America. This represents about US$8.9 trillion in savings that could potentially be mobilized to support the Japanese government debt. Americans by contrast, hold a far greater amount of their wealth in the stock market. U.S. households have over 30% of their assets in shares and equities. As opposed to just 6.6% in Japan. Japanese household savings are over 100% of outstanding government debt. With the American government now sitting $12.7 trillion in the red, household savings are only at 50% of debt.
Japan is better placed than either the U.S. or the UK. This is partly because the debt problem is frequently overstated, as net debt is only about half the gross level, but also because the switch from investment, financed by untaxed depreciation, into incomes and spending which are taxed twice, will mean that tax revenue should rise rapidly with recovery.
The Japanese private sector remains in a position of net creditor, offsetting the government's position as a borrower, not to mention that more than 95% of Japanese debt is still held by Japanese investors. Unless the private Japanese investors switches out of the deposits, or dumps the yen in favour of other currencies, or start selling bonds in droves - I do not see this being a grave issue. Its not good but its not catastrophic.
Thats the sad part, Japan sorely needs a huge whack on the head for them to reform their economy and finances, but that is not likely to happen. So the Japanese economy will meander like a an old man but not showing any signs of dying anytime soon.
Though a sovereign debt crisis like that of Greece is not imminent, without increasing the national tax burden—which is relatively low compared to other major economies—Japan will not be able to sustain public spending without incurring more debt. Japan's aging population and underfunded pensions exacerbate this burden. Issuing more debt to finance public expenditures is easier for Japan compared to other European countries with high debt because Japan benefits from low debt-servicing costs in part due to chronic deflation. Unlike Greece, Japan maintains a current account surplus and a net foreign asset position. Locals hold around 95% of Japan's debt, whereas foreigners hold more than three-quarters of Greece's debt.
Unless proposed expenditures are minimized, Prime Minister Naoto Kan’s administration will struggle to fund its 2011 budget without reneging on its JPY44-trillion cap on new bond issuance. Tax revenue will fall alongside corporate profits and personal income. Since Kan’s aggressive advocacy of a consumption tax hike cost his party the Upper House, plans for the hike are likely to be shelved. A corporate tax cut remains under consideration, but budget deficits will be hard to shake off without a corresponding increase in revenue elsewhere.
S&P estimated (according to its January 27, 2011, note "Ratings On Japan Lowered To 'AA-'; Outlook Stable") that Japan's government fiscal deficits will decline from an estimated 9.1% of GDP in FY2011 (ending March 31, 2011) to 8.0% in FY2013. Unless the government undertakes a fiscal consolidation program, S&P does not foresee Japan achieving a primary external balance before 2020.
Japan's Cabinet Office estimated that the primary fiscal deficit, which excludes debt-servicing costs, will total JPY21.7 trillion in FY2015, 4.2% of GDP. In FY2020, Japan is estimated to post a primary budget deficit of JPY23.2 trillion, or 4.2% of nominal GDP. If real GDP grows more than 2% each year, Japan's primary balance deficit would be 3.2% of nominal GDP in FY2015 and 2.5% in FY2020.
The OECD forecasts that Japan's gross public debt will exceed 200% of GDP in 2011. In order to halve the primary budget deficit by 2015, the OECD maintains that additional tax revenue need to be generated and that the BoJ should "should implement more ambitious quantitative easing measures to relax monetary conditions in the face of entrenched deflation and maintain such policies until underlying inflation is significantly positive."
Japan’s long-term public debt has risen to JPY862 trillion (US$9.26 trillion), nearly 200% of the nation’s 2009 gross domestic product. Japan’s debt was 189.3% of GDP in 2009 and is projected to grow to 204.3 % in 2011.On January 18, 2011, credit-default swaps (CDS) used to protect payment of Japanese government debt, hit a six-month high and climbed to 86.49 bps. This means that it costs $86,490 to insure $10 million in Japanese debt. CDS for U.S. debt were 49.85 bp.
Why The Debt Is "Manageable"
The financing of Japan’s public sector debt is currently enjoying an extremely virtuous confluence of events—the strong home bias of domestic investors, ample domestic savings, and modest deflation. As long as these persist, financing the public sector debt should not be problematic...In the near term, it seems likely that the three conditions that have eased the financing of Japan’s public debt will persist.
While JGB market participants believe Japan occupies the worst fiscal position in the world, the nation's fiscal problems can still be rectified with tax hikes. The basis for this optimism appears to lie in Japan's low social contribution rate, one of the lowest in the world at 39%. A social contribution rate of 52.3%, a rate on par with European nations, would be sufficient to cover recent fiscal deficits.
In addition, the JGB market seems to have concluded that the Japanese government can fiscally consolidate because the there is room to raise the consumption tax rate, currently the lowest in the world at 5%.
Despite the high level of government indebtedness, the budgetary burden of servicing debt interest is not especially high as a share of GDP and revenue, especially once account is taken of the relatively low tax/GDP ratio. This reflects the fact that interest rates on government borrowing remain low in nominal and real terms.
Currency and deposits make up over 55% of assets for Japanese households. Compared to just 14.3% in America. This represents about US$8.9 trillion in savings that could potentially be mobilized to support the Japanese government debt. Americans by contrast, hold a far greater amount of their wealth in the stock market. U.S. households have over 30% of their assets in shares and equities. As opposed to just 6.6% in Japan. Japanese household savings are over 100% of outstanding government debt. With the American government now sitting $12.7 trillion in the red, household savings are only at 50% of debt.
Japan is better placed than either the U.S. or the UK. This is partly because the debt problem is frequently overstated, as net debt is only about half the gross level, but also because the switch from investment, financed by untaxed depreciation, into incomes and spending which are taxed twice, will mean that tax revenue should rise rapidly with recovery.
The Japanese private sector remains in a position of net creditor, offsetting the government's position as a borrower, not to mention that more than 95% of Japanese debt is still held by Japanese investors. Unless the private Japanese investors switches out of the deposits, or dumps the yen in favour of other currencies, or start selling bonds in droves - I do not see this being a grave issue. Its not good but its not catastrophic.
Thats the sad part, Japan sorely needs a huge whack on the head for them to reform their economy and finances, but that is not likely to happen. So the Japanese economy will meander like a an old man but not showing any signs of dying anytime soon.
What happens when TMCs become GDS?
It must happen to a greater or lesser extent if American Airlines create a model that succeeds and then gets rolled out across the industry. The only way that TMCs will be able to give their customers what they want will be to direct connect with every key supplier and, as such, become mini specialist GDS in their own right. It will cost them a lot in time, resource and money despite what some AA loyalists say and you can bet your bottom dollar they will want it back with interest.
So how will such an event impact the balance of power in the travel supply chain? I think it will affect it significantly. Obviously the GDS will not simply sit back and let it happen and I am sure there is intense discussion and negotiation going on as I write.
However let us just pause for a minute and reflect on the following statements:
1) Despite airlines best efforts the TMC world still has considerable value to their corporate clients and will be hard to dislodge unless they do all the things TMCs do.
2) TMCs have been preparing their own strategies by building their own booking platforms that can be directed to be very specific on what choices they offer.
3) If airlines direct connect to these platforms they may be stepping out of the frying pan and into the fire as far as power balance is concerned.
The GDS are too darn expensive and working with a defunct, unjustifiable pricing model. I think many of us believe that and I can see why airlines are getting sick of paying sector fees even for cancellations and suchlike. The only thing is that GDS have a value to them and this value may be provided by TMCs in future. If you receive a value you can expect it to cost you as the TMCs will not give such distribution capability away for nothing. On top of that they will have their own platforms overlaying it which will allow dynamic pricing and availability control.
My message to airlines is to look at the broader implications of their actions. Remember how some thought GDS were great to own once. And how ownership, encouragement and support of OTAs were expected to reduce not increase cost. Not a great track record so far so look at your next step very carefully!
So how will such an event impact the balance of power in the travel supply chain? I think it will affect it significantly. Obviously the GDS will not simply sit back and let it happen and I am sure there is intense discussion and negotiation going on as I write.
However let us just pause for a minute and reflect on the following statements:
1) Despite airlines best efforts the TMC world still has considerable value to their corporate clients and will be hard to dislodge unless they do all the things TMCs do.
2) TMCs have been preparing their own strategies by building their own booking platforms that can be directed to be very specific on what choices they offer.
3) If airlines direct connect to these platforms they may be stepping out of the frying pan and into the fire as far as power balance is concerned.
The GDS are too darn expensive and working with a defunct, unjustifiable pricing model. I think many of us believe that and I can see why airlines are getting sick of paying sector fees even for cancellations and suchlike. The only thing is that GDS have a value to them and this value may be provided by TMCs in future. If you receive a value you can expect it to cost you as the TMCs will not give such distribution capability away for nothing. On top of that they will have their own platforms overlaying it which will allow dynamic pricing and availability control.
My message to airlines is to look at the broader implications of their actions. Remember how some thought GDS were great to own once. And how ownership, encouragement and support of OTAs were expected to reduce not increase cost. Not a great track record so far so look at your next step very carefully!
My Life in Bars – Part 2
Picture this. You are a young single guy and you have been sent abroad. Your job is to spend anywhere between 2 and 4 weeks in somebody else’s house and look after their office whilst they are back in the UK on annual leave. Money is not too much of a problem because you inherit their food and entertainment budget for the month in question as well as temporary membership to various sporting and social clubs.
Your usual lifestyle is built around the local pub, your shared flat or bed-sit and any party you can con your way into. You are not the tidiest person in the world and your culinary skills extend to spaghetti on toast. All in all not much use to man nor beast except you get transported to far off places where you have cooks, cleaners and lots of spending money. It was rather like sending a voracious fox into a large hen house full of chickens and saying ‘Behave yourself’. A warning that all too often fell on deaf ears.
I went on quite a few of these assignments and they took a bit of getting used to. Instead of wondering where your next takeaway was coming from you would be sitting in some comparably palatial lounge with a large drink and the smell of cooking food wafting from the kitchen every time the servant came through with a refill. Everything you dropped got picked up and your ashtray was emptied about every 20 minutes. I used to feel quite disorientated. And ultimately bored to tears.
There was only so much splendid isolation one could stand. At least if you were staying in a hotel there were other like minded people about and you might even get lucky and pick up an air hostess. If that failed you could maybe take in a club or hit the residents bar. In your house somewhere in the outskirts all you had was your own company and the nagging thought you could be ruining someone else’s house.
I was in this kind of dilemma on my first relief posting to Nairobi. Fortunately this place came with a car and chauffeur so I decided to spend most of my evenings out.
Nairobi in the early 70s was a pretty wild and potentially dangerous place to be and for all I know it maybe still is. I decided to make a tour of the hotels and see what was going on.
Most airline crews stayed at the Panafric Hotel and that was my first port of call. Sure enough a group of cabin staff were propping up the bar and I attached myself to them.
Terry was their chief and, clearly smelling an expense account, he became my new best pal. I am not sure how it happened but the bar eventually closed and I found me, Terry and another guy called Ken being ushered out the door. Strangely all the hostesses had disappeared and my thoughts of skinny-dipping back at the house pool went with them.
Terry said he knew of a ‘night spot’ across the road which would be lively and we decided to go there. It was called the Starlight Club and I quiver as I remind myself of it even now. The place was frankly sordid and little more than a bordello with a large patio and a frantic band playing insanely in the background. It was a place full of furtive foreigners and friendly girls. A place you would definitely not take your granny to.
Like most Nairobi bars of that kind you had to run the gauntlet to get in. This comprised of a group of ‘dusky maidens’ who would stand either side of the entrance corridor and grab at you vital areas as you walked past. This could be some kind of local ethnic greeting but, as once they grabbed you they wouldn’t let go, I doubted it. Terry, Kevin and I were forewarned so we had already pushed some ’borrowed’ hotel menus down the front of our trousers. By the time we got inside they were like origami.
Once inside it went further downhill. It was a wall of sweat, smell and sound. Full of svelte gyrating women and balding clumsy men in loud shirts and louder voices. Maybe a quiet night in was not such a bad thing I thought as I paid a small fortune for three Tusker beers while fending off two of the door-keepers who had followed us to our table. One of them disappeared under it and Ken started shifting guiltily and uncomfortably in his seat. “What is going on under there” I demanded? Can’t say” said Ken “But I’m frightened to move”.
That was it for me and I got up to leave. Another girl threw herself at me but got intercepted by door keeper number two who said she was my girl. An enormous fight started between the two of them with wigs and bits of clothing flying everywhere. I fled while everyone watched them, except for Ken who was still sitting bolt upright with a bemused look on his face. I need to find new friends and a new bar I thought.
I eventually found a new bar to spend my evenings in. It was called The Sombrero club and the only difference to The Starlight was once they knew you and you got chummy with the owner/barman they would leave you alone. Many the evening I sat talking to Moses (the barman) and watching these incredible events going on around me.
I came unstuck at the end of my stay. Our regional director came to Nairobi to do a spot check on our operation. He was staying at the Norfolk Hotel just a short distance from The Sombrero. When evening came he said he wanted to go out for a drink and suggested trying “that bar down the road”. I said that although I had never ever been there I had heard it was a really dangerous and rude place. He could not be dissuaded so off we went.
Needless to say he got the ethnic Nairobi handshake at the door…at least four times. “Ah Mikey” one of the girls said but I ignored her. By the time we got to the bar I had two more “Hi Mikeys”, two hugs and a kiss. I shielded my boss as best I could so he could get a bar stool and before I could order Moses leaned over and said “Hi Mikey. You are late tonight. You want your usual”?
“Never been here before Michael” my new boss probed? Maybe once or twice I admitted. “We expect our relief staff to be perfect ambassadors for the company so we will need to talk more of this tomorrow” he said. He kept me waiting all the next day.
“We will go back there tonight” he said as we closed the office. “OK “I replied “but may I suggest you pick up a hotel menu before you come?”
Your usual lifestyle is built around the local pub, your shared flat or bed-sit and any party you can con your way into. You are not the tidiest person in the world and your culinary skills extend to spaghetti on toast. All in all not much use to man nor beast except you get transported to far off places where you have cooks, cleaners and lots of spending money. It was rather like sending a voracious fox into a large hen house full of chickens and saying ‘Behave yourself’. A warning that all too often fell on deaf ears.
I went on quite a few of these assignments and they took a bit of getting used to. Instead of wondering where your next takeaway was coming from you would be sitting in some comparably palatial lounge with a large drink and the smell of cooking food wafting from the kitchen every time the servant came through with a refill. Everything you dropped got picked up and your ashtray was emptied about every 20 minutes. I used to feel quite disorientated. And ultimately bored to tears.
There was only so much splendid isolation one could stand. At least if you were staying in a hotel there were other like minded people about and you might even get lucky and pick up an air hostess. If that failed you could maybe take in a club or hit the residents bar. In your house somewhere in the outskirts all you had was your own company and the nagging thought you could be ruining someone else’s house.
I was in this kind of dilemma on my first relief posting to Nairobi. Fortunately this place came with a car and chauffeur so I decided to spend most of my evenings out.
Nairobi in the early 70s was a pretty wild and potentially dangerous place to be and for all I know it maybe still is. I decided to make a tour of the hotels and see what was going on.
Most airline crews stayed at the Panafric Hotel and that was my first port of call. Sure enough a group of cabin staff were propping up the bar and I attached myself to them.
Terry was their chief and, clearly smelling an expense account, he became my new best pal. I am not sure how it happened but the bar eventually closed and I found me, Terry and another guy called Ken being ushered out the door. Strangely all the hostesses had disappeared and my thoughts of skinny-dipping back at the house pool went with them.
Terry said he knew of a ‘night spot’ across the road which would be lively and we decided to go there. It was called the Starlight Club and I quiver as I remind myself of it even now. The place was frankly sordid and little more than a bordello with a large patio and a frantic band playing insanely in the background. It was a place full of furtive foreigners and friendly girls. A place you would definitely not take your granny to.
Like most Nairobi bars of that kind you had to run the gauntlet to get in. This comprised of a group of ‘dusky maidens’ who would stand either side of the entrance corridor and grab at you vital areas as you walked past. This could be some kind of local ethnic greeting but, as once they grabbed you they wouldn’t let go, I doubted it. Terry, Kevin and I were forewarned so we had already pushed some ’borrowed’ hotel menus down the front of our trousers. By the time we got inside they were like origami.
Once inside it went further downhill. It was a wall of sweat, smell and sound. Full of svelte gyrating women and balding clumsy men in loud shirts and louder voices. Maybe a quiet night in was not such a bad thing I thought as I paid a small fortune for three Tusker beers while fending off two of the door-keepers who had followed us to our table. One of them disappeared under it and Ken started shifting guiltily and uncomfortably in his seat. “What is going on under there” I demanded? Can’t say” said Ken “But I’m frightened to move”.
That was it for me and I got up to leave. Another girl threw herself at me but got intercepted by door keeper number two who said she was my girl. An enormous fight started between the two of them with wigs and bits of clothing flying everywhere. I fled while everyone watched them, except for Ken who was still sitting bolt upright with a bemused look on his face. I need to find new friends and a new bar I thought.
I eventually found a new bar to spend my evenings in. It was called The Sombrero club and the only difference to The Starlight was once they knew you and you got chummy with the owner/barman they would leave you alone. Many the evening I sat talking to Moses (the barman) and watching these incredible events going on around me.
I came unstuck at the end of my stay. Our regional director came to Nairobi to do a spot check on our operation. He was staying at the Norfolk Hotel just a short distance from The Sombrero. When evening came he said he wanted to go out for a drink and suggested trying “that bar down the road”. I said that although I had never ever been there I had heard it was a really dangerous and rude place. He could not be dissuaded so off we went.
Needless to say he got the ethnic Nairobi handshake at the door…at least four times. “Ah Mikey” one of the girls said but I ignored her. By the time we got to the bar I had two more “Hi Mikeys”, two hugs and a kiss. I shielded my boss as best I could so he could get a bar stool and before I could order Moses leaned over and said “Hi Mikey. You are late tonight. You want your usual”?
“Never been here before Michael” my new boss probed? Maybe once or twice I admitted. “We expect our relief staff to be perfect ambassadors for the company so we will need to talk more of this tomorrow” he said. He kept me waiting all the next day.
“We will go back there tonight” he said as we closed the office. “OK “I replied “but may I suggest you pick up a hotel menu before you come?”
Comments For Moderation
I have to apologise as I only realised there were plenty of comments waiting for me in the moderation mode. I thought (wrongly) that those comments were spams in general. I thought with 6,000 over daily readers, surely cannot have so few comments, right, or my readers are the silent type, lol.
So sorry, I will visit the comments moderation page daily from now on. It was silly because I still get comments coming through to my malaysiafinance gmail inbox, so I thought that was it. The reality is, a small percentage crept through and the rest are left in the moderation box... I was shocked and embaressed that there were 640 awaiting my moderation, of course most were indeed spams.
Those who requests a blog link exchange - I would have linked you guys up without you asking. If you have to ask, most of the time the answer is "thanks but no thanks". I cannot have 200 or 500 blog links on my page, can I? But I will still visit your blog first to see if it fits both parties. I will generally not reply to links requests. Thanks anyway. Btw, I often check my links and if you do not have at least a weekly posting, I will delete the link, heads up.
I will publish the genuine ones even the ones requesting me to look into certain stocks, but I really have no time to answer all. I will answer the ones I feel like answering, and if it does not involve much work. If I don't reply directly to your queries even after publishing yours, please do not take offence. Its a blog not a an enterprise, one person doing the things he love. If I try to answer all genuine queries, I will not be a happy person, and the blog will take over my life and career.
Cheers .........
So sorry, I will visit the comments moderation page daily from now on. It was silly because I still get comments coming through to my malaysiafinance gmail inbox, so I thought that was it. The reality is, a small percentage crept through and the rest are left in the moderation box... I was shocked and embaressed that there were 640 awaiting my moderation, of course most were indeed spams.
Those who requests a blog link exchange - I would have linked you guys up without you asking. If you have to ask, most of the time the answer is "thanks but no thanks". I cannot have 200 or 500 blog links on my page, can I? But I will still visit your blog first to see if it fits both parties. I will generally not reply to links requests. Thanks anyway. Btw, I often check my links and if you do not have at least a weekly posting, I will delete the link, heads up.
I will publish the genuine ones even the ones requesting me to look into certain stocks, but I really have no time to answer all. I will answer the ones I feel like answering, and if it does not involve much work. If I don't reply directly to your queries even after publishing yours, please do not take offence. Its a blog not a an enterprise, one person doing the things he love. If I try to answer all genuine queries, I will not be a happy person, and the blog will take over my life and career.
Cheers .........
Better to never have something than see it taken away?
I wrote a few comments in my blog not that long ago about corporate entertaining. I tried to both entertain and inform but there was one particular argument I tried to put across. It was ‘never give someone something and then take it away’ i.e. once you invite someone somewhere regularly and then stop the reaction is worse than the initial benefit. This is exactly what is going on in travel at the moment but in a much broader sense.
Have you wondered why ‘low cost’ airlines like Ryanair manage to sell tickets much cheaper than say British Airways? Simple you might say, Ryanair is much more restrictive in timetable, booking conditions, departure airports etc. Plus they do not have the enormous cost infrastructure the big global giants have. Of course you would be right but it is far more than that, which brings me back to my entertaining analogy.
Nobody gets anything from a low cost carrier unless they pay for it. They never have and never will. What you get is a low cost and a menu of add on prices for everything from bags to card payment to seat reservations. That is the key reason for the low lead price and they absolutely depend on income from ancillary costs.
The big airlines are the complete opposite to this. Their prices are historically all inclusive but now they have to change rapidly to stem the flow of lost revenue to their new ‘low cost’ competition. So what do they do? They start looking at every distribution cost they incur and try to eradicate them. Things like free card usage, credit periods, use of agents and access to special fares. They will in fact ultimately end up pretty close to becoming low cost carriers themselves which is, to me, as worrying as it is welcome, in fact more so.
So the national airlines are starting to take away things they used to give away. Well actually they never gave them away. Instead they built the costs into those high prices they cannot compete with these days. As I implied in my heading, taking away something people are used to breeds discontent and intransigents. Pity the poor big airline, they are getting attacked for taking things away that their low cost competition never gave in the first place and get kudos for not doing so!
The travel world can be a cruel place sometimes. You only have to have a look at what is going on between all the supply chain intermediaries as the pain of this particular change is going on. Have a quick look at the rest of this blog if you want to see what I mean.
Have you wondered why ‘low cost’ airlines like Ryanair manage to sell tickets much cheaper than say British Airways? Simple you might say, Ryanair is much more restrictive in timetable, booking conditions, departure airports etc. Plus they do not have the enormous cost infrastructure the big global giants have. Of course you would be right but it is far more than that, which brings me back to my entertaining analogy.
Nobody gets anything from a low cost carrier unless they pay for it. They never have and never will. What you get is a low cost and a menu of add on prices for everything from bags to card payment to seat reservations. That is the key reason for the low lead price and they absolutely depend on income from ancillary costs.
The big airlines are the complete opposite to this. Their prices are historically all inclusive but now they have to change rapidly to stem the flow of lost revenue to their new ‘low cost’ competition. So what do they do? They start looking at every distribution cost they incur and try to eradicate them. Things like free card usage, credit periods, use of agents and access to special fares. They will in fact ultimately end up pretty close to becoming low cost carriers themselves which is, to me, as worrying as it is welcome, in fact more so.
So the national airlines are starting to take away things they used to give away. Well actually they never gave them away. Instead they built the costs into those high prices they cannot compete with these days. As I implied in my heading, taking away something people are used to breeds discontent and intransigents. Pity the poor big airline, they are getting attacked for taking things away that their low cost competition never gave in the first place and get kudos for not doing so!
The travel world can be a cruel place sometimes. You only have to have a look at what is going on between all the supply chain intermediaries as the pain of this particular change is going on. Have a quick look at the rest of this blog if you want to see what I mean.
Another TVB Drama In The Making
By Shai Oster and Kate O'Keeffe, Wall Street Journal
HONG KONG—A behind-the-scenes power struggle for control of one of the world's greatest casino empires has burst into the open, revealing deep fissures in the family of ailing 89-year-old billionaire Stanley Ho.
Opposing members of Mr. Ho's sprawling family publicly accused each other of trying to seize Mr. Ho's controlling 18% stake in SJM Holdings Ltd., the Hong Kong-listed operator of his flagship Macau casinos. The stake is estimated to be worth $1.7 billion.
Lawyers who said they represent SJM Chairman Stanley Ho challenged the announcement of his succession plans, saying family members "hijacked" his assets. WSJ's Andrew LaVallee and Peter Stein discuss the latest development in the saga.
On Tuesday, rival family representatives released personal communications from Mr. Ho and his four families to prove their cases in the fight to gain a controlling stake in Lanceford Co., a vehicle that holds nearly one-third of the company that controls SJM. The stake stands to benefit from a gambling boom in Macau, where revenue is expected to rise some 30% this year to about $35 billion, compared with $7 billion on the Las Vegas Strip.
The most recent chapter of the Ho saga began Monday, with the release of regulatory filings showing that Mr. Ho split his stake, roughly in two, with slightly less than half going to the children of the woman he considers his second wife and the rest to the woman known as his third wife, leaving Mr. Ho with nearly nothing.
Ho's lawyers said he "discovered much to his horror" that his 100 percent ownership of Lanceford Co. — which holds the 32 percent stake in SJM's parent company — had been diluted after new shares were issued, reducing his share to 1 percent, the South China Morning Post reported Tuesday.
Half of the shares in Lanceford were then transferred to a company owned by Ho's third wife and the other half to another company owned equally by the five children by his second wife.
But Mr. Ho, through lawyers claiming to represent him, later denied he approved the share distribution and accused his third wife and the children of his second wife of stealing his shares without his knowledge, according to a letter provided by these lawyers.
A regulatory filing by SJM on Tuesday confirmed that Mr. Ho is contesting the restructuring.
"It would appear the assets at Lanceford have been hijacked by members of the second and third family insofar as shares were issued to the effect to dilute Stanley to nothing," said Gordon Oldham, a senior partner at Oldham, Li & Nie, Mr. Ho's lawyers. Mr. Oldham said in an interview Tuesday morning that Mr. Ho had always made it clear he wanted his assets to be held in a trust for the four families in equal share and would file a lawsuit unless the shares were returned.
![[SB10001424052748703398504576101164286948574]](http://s.wsj.net/public/resources/images/OB-LZ955_0124ho_D_20110124030733.jpg)
"This has always been my intention and wish," Mr. Ho wrote in a letter dated Jan. 5 that was provided by his lawyers at the time and addressed to Daisy Ho, a daughter from his second wife.
Early on Wednesday morning in Hong Kong, representatives of Mr. Ho's second and third wives released two Chinese-language statements, one of them handwritten purportedly by Mr. Ho, saying that the tycoon was no longer represented by his lawyer and that the share transfer hadn't been made under any undue influence and that the splitting of his empire was final.
Trading in SJM shares was suspended Tuesday. Royal Bank of Scotland Group PLC gambling analyst Philip Tulk said shares in SJM, which have more than tripled in the past year, could fall when trading resumes. "Ever since I've been covering this company, the concern has been about Stanley's succession plan. Those worries seemed to be going away, but now they look like they could come back with a bang," Mr. Tulk said.
The verbal back and forth could develop into a protracted legal battle among members of the tycoon's family, said Billy Ma, a lawyer specializing in probate and succession cases and a member on the Hong Kong Law Society's Probate Committee. "Any move at this stage can potentially unleash a chain of lawsuits. This is about a huge amount of money," he said.
A domestic dispute could distract SJM's management just as it faces tough competition and important decisions about expansion into Cotai, a newly developed part of Macau. "Without consensus among the major shareholders, it will be difficult for management to make decisions. If they can't make quick decisions on investment opportunities on Cotai, the company could lose market share to competitors," said Davis Fong, director of the Institute for the Study of Commercial Gaming at the University of Macau.
The company said in a regulatory filing the quarrel wouldn't affect company management or strategy.
SJM controls about one-third of Macau's gambling market. The company's properties include 17 casinos, four slot-machine lounges and two hotels.
At the center of the fracas are two of the most prominent and powerful businesswomen in Asia, part of one of the most complicated family dynasties in business. Mr. Ho's relatives include three women whom he and others refer to as his wives, plus their children and the children of an earlier companion, who died in 2004.
On one side of the battle is Angela Leong, Mr. Ho's fourth wife, a former dancer and member of the Macau legislature who holds a top management position in casino operator SJM.
On the other side is Pansy Ho, one of Mr. Ho's five children from his second wife. She has launched her own gambling franchise and is managing director of Shun Tak Holdings Ltd., the listed property and real-estate company founded by her father. Pansy's siblings Daisy and Maisy hold executive positions at Shun Tak as well. Pansy's brother, Lawrence Ho, has set up a rival Macau casino.
Depending on which side wins, Ms. Leong could emerge with an even bigger stake and the upper hand in the casino. Or, the second wife's children, led by Pansy Ho, could have a larger and possibly controlling block in SJM.
Stanley Ho couldn't be reached for comment. Ms. Leong during an interview with a local radio station declined to comment on the latest power struggle but added that Stanley Ho was in good health and clear-minded. Other family members either couldn't be reached or declined to comment.
Questions over Mr. Ho's legacy began when he fell ill in August 2009 and underwent brain surgery. He retreated from day-to-day management and began slowly doling out portions of his Byzantine holdings to his large family.
Pansy and the fourth wife, Ms. Leong, didn't get along, according to a person close to the Ho family. When Mr. Ho cemented his fourth wife's position at SJM by handing her a 7% stake late in 2010, Pansy aligned with the third wife to counter Angela's rising power, according to the person familiar with the family. Together, the two asked Stanley Ho for a greater share of Sociedade de Turismo e Diversoes de Macau SA, the privately held company that owns more than half of casino operator SJM.
The dynastic troubles seem to have been conducted via formal letters, mobile-phone text messages and sporadic family meetings.
In a Jan. 5 letter provided by Mr. Ho's lawyers at the time and addressed to Daisy Ho, one of his second wife's children, Mr. Ho complains that he tried to talk about distributing his estate many times, but "without my consent and knowledge" his shares were nearly liquidated. "I have tried to call you and contact you through [text messages] and your secretary in order to come personally to explain to me what is going on. However, you have not responded so I have no other way but through this letter to command you come to my house," he wrote.
In a letter dated Jan. 7, Daisy Ho responded, addressing him as "Dear Dad." "Firstly, I want to apologise for not being able to see you on Wednesday afternoon as I was very tied up," she wrote, adding that her sister and wife No. 3 did meet him later that evening, "and I am glad that any misunderstanding there might have been has been cleared up."
Latest Update, The Standard HK:
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The tycoon issued a statement through his third wife, Ina Chan Un- chan, saying: "This is a family matter. We don't need any lawyer to be involved in it. We can resolve it on our own."
With her daughter Florinda Ho Chiu- wan by her side, Chan read out a brief statement from her husband after inviting the media into her opulent home on The Peak at 8pm before issuing a more detailed version at 11pm.
The move was aimed at ending media speculation about a falling out between the tycoon's second and third wives on one side, and his fourth wife on the other over Monday's announcement of a restructuring in the shareholding of his stakes in SJM Holdings (0880) and its parent Sociedade de Turismo e Diversoes de Macau.
"I heard on TV that the distribution of shares was done against my will and that fraudulent documents were made by my family members. There was even talk of robbery," Ho said. "I am very unhappy and frustrated about this. I made the decision to distribute my stakes of SJM and STDM with 100 percent sincerity. Nobody forced me to make such a decision.
"I voluntarily distributed my stakes in the companies to my family members, hoping that all of them will work hard and make contributions to charities and society."
He added: "All of you have to treat your brothers and sisters nice and value harmony. You cannot
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"I reaffirm my decision on the distribution of the shares, and this will not be changed. I have given thorough consideration to making this reasonable and with goodwill."
And he warned: "If anybody uses memos carrying my signatures to change or amend the distribution of shares then these documents are not true and, therefore, cannot be used as legal documents."
The tycoon also sacked his lawyer - Gordon Oldham of Oldham, Li & Nie. "He no longer represents me. I have delegated [third wife] Ina to be in charge of the matter and I hope everyone will value harmony, which brings wealth. I feel great today and am in a stable mood. I hope my family members will accept my arrangement."
Ho spent the night at his third wife's home. Earlier, he went to the home of second wife Lucina Ho King-ying in Jardine's Lookout.
The dispute arose after Oldham reportedly said Ho accused his second and third family members of "robbery" and that they "hijacked" him in a dispute over his distribution of his fortune. The two met at lunchtime yesterday.
Oldman said Ho has always made clear that when he dies, he wants his assets split equally among his four families. "The two families were trying to run away with the crown of jewels," he claimed.
Ho's visits to his wives were sparked by a letter the tycoon signed acknowledging his gift of the shares of STDM to his third and second families in the presence of lawyers and doctors on January 7, which was in reply to a Stanley Ho letter dated January 5.
The letter, written by daughter Daisy Ho Chiu-fung, was made public yesterday. She wrote: "Following your distribution of SJMH shares to Angela Leong [the fourth wife], Ina [the third wife], Mom and all of us children are grateful that you reaffirmed your instructions to gift the STDM shares to Mom and Ina, so as to preserve harmony within the family and aggregate control over STDM. Further, the share allocation at Lanceford was done in accordance with your instructions."
SJM is suspended from trading. The company announced on Monday that Stanley Ho will offload his 31.7 percent stake in STDM to Lanceford, which third wife Chan owns 50.55 percent, and second wife Lucina's children have 49.95 percent.
In December, he transfered 7.7 percent of SJM shares to Leong and appointed her managing director.
Lanceford issued a statement saying: "It is regrettable that Oldham, Li & Nie rushed to publicise these matters without checking the underlying facts in connection with the relevant transactions and we reserve our rights against that firm."
Leong said as a director of SJM, she could not comment. Chan said she was not qualified to comment.
Mah Sing Looks Ripe For A Charge
We have had a tremendous run in SP Setia-WB, as mentioned before, the upside might be as good now as the bulk of news is out there. Although Mah Sing has had a good run up over the past 6 months as well, one should not overlook the further upside on the stock. I like it because of the recent strategies they have employed and is poised for a charge judging from the developments, volume and price movements.
They have sealed two landbank deals in November 2010 spending RM323.8m which would yield a combined GDV of RM2bn. The land include 61 acres of freehold land in Batu Ferringhi and 4.7 acres in Jalan Ampang (MCity project). Mah Sing had also earlier bought 34 acres in Cyberjaya. The Cyberjaya deal was a decent one considering the size and location - the flow on benefits of similar developments surrounding Cyberjaya bodes well for the purchase. One can see that they are not shy about their intentions - build fast, build well in prime areas. Their quick turnaround model reduces the risk and yet lock in the sales in an opportunistic manner. Current remaining unbilled GDV stands at close to RM10bn.
RNAV stands at anywhere between RM2.30-RM2.70 depending on how you value them.
CIMB came out with a target price of RM3.30 and was catapulted as their top property pick in 2011. Well, everyone knows how well they are doing, so whats more for the upside?
Revenue and net profit for 2009 were RM701.6m and RM94.3m respectively. For 2010 those figures probably jumped to RM990m and RM120m. For 2011 those figures are likely to hit RM1.5bn and RM170m respectively. While doing all that it can still maintain a dividend yield of 3%-4% inspite of the uptrending share price.
Mah Sing as a company is highly attractive to top tier HK and Singapore property players. Herein lies my strongest catalyst: a significant player should be getting into Mah Sing in a substantial way. There have been plenty of cold calls and hot calls to Leong Hoy Kum for such a deal and I believe the time is ripe to play the partner tie-up card.
If a top HK or Singapore player is in, it speaks volume for its already top tier branding. Its regional customers would be more willing to follow Mah Sing's projects in a sustained way. Mah Sing's landbanking strategy, quick turnaround, undemanding valuations, great dividends amidst an appreciating share price, great execution and delivery, and a meticulous focus on financials and internal KPIs - makes the stock a natural property play into Malaysia.
The focus of Mah Sing is in the right sector, the mid-to-luxury strata, which the other regional top property players are hoping for. For Mah Sing, as their revenue grows 30% year on year, to just rely solely on Malaysian investors would not be wise as their larger sales volume would require a more sustained growth in demand from regional investors as well.
A corporate exercise could come two ways, one involving solidifying PNB's other property companies under Mah Sing or the issuance of new shares to a top HK/Singapore property company. PNB holds about 22% in Mah Sing. Both possibilities would see Mah Sing treading new grounds. I see little resistance to RM2.50 over the next 3 months. If a corporate exercise eventuate, we are looking at RM3.00 for sure.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
Roubini On Malaysia
Malaysia's policy makers have been forced to confront the factors blocking the country’s rise to high-income status. Facing higher labor costs, the economy has been unable to maintain a growth model based on low-value-added manufacturing that was largely successful for the 30 years prior to the 1997 Asian financial crisis.
One of the most noticeable manifestations of this so-called middle-income trap has been the secular decline of Malaysia’s once-dominant electronics and electrical products (E&E) sector, examined in “Still Not a Tiger: The Decline of Malaysia’s Electronics Sector,” available exclusively to clients. At the sector’s height in 2000, E&E accounted for more than one-third of the country’s total value added in manufacturing, over 70% of revenue from manufacturing exports and almost 4% of world E&E exports.
Since then, Malaysia’s E&E sector has witnessed dramatic deceleration in productivity, stagnation in exports and deterioration in its global market share. The sector remains dominated by downstream industries that increasingly face competition from lower-cost producers in the region, including the Philippines and China. Confronting similar challenges, the Asian Tigers (South Korea, Singapore, Taiwan, HK) were largely successful in transitioning to higher-value-added E&E production.
Beginning in the 1960s, Malaysia and Singapore (and, to a lesser extent, Taiwan and South Korea) industrialized by encouraging multinational corporations to take advantage of their relatively cheap labor forces and establish downstream E&E production facilities. In Singapore in particular, the presence of multinationals spurred local entrepreneurs to begin “clustering” around downstream enterprises, acting as suppliers and logistics managers.
Over time, this led to the development of a robust, indigenous E&E sector that increasingly produced further upstream, which typically included the stages in the supply chain in which labor adds more value—i.e., the stages with higher levels of labor productivity. By the time labor cost increases forced downstream production facilities to lower-cost markets, local firms were experienced and competitive enough to continue operating in the E&E supply chain at higher levels of value added. In this way, Singapore has managed to increase its global market share of E&E since 2000.
In contrast, Malaysia’s E&E sector has been unable to adjust to shifts in the country’s comparative advantage. One important barrier has been ethnicity-based affirmative action policies, which have stifled the evolutionary process that other export-driven economies in the region were able to ride to higher-value-added production on their way to high-income status. Established under the New Economic Policy of 1971, affirmative action in Malaysia seeks to rectify socioeconomic disparities within the local population by expanding opportunities for ethnic Malays (bumiputra or bumiputera) in areas like education, housing and investment, often at the expense of other ethnic groups (namely ethnic Chinese).
These policies have not only exacerbated the country’s brain drain of talented non-bumiputra; they also have created a strategic disadvantage for local firms by limiting both human and Financial capital and perpetuating an unlevel playing field for entrepreneurs. All domestic companies incorporated in Malaysia must reserve at least 30% of new shares for bumiputra to purchase at discounted prices. This essentially taxes local start-ups that wish to go public and makes expansion more difficult, which helps explain why initial public offering growth was relatively flat through the 2000s and why equity remains a minor source of manufacturing investment financing. Meanwhile, the continued presence of the government in the economy—via procurement policies and access to joint ventures with the nearly 500 government-linked corporations—has provided ample opportunity for rent-seeking by well-connected bumiputra who can take advantage of favorable policies.
The New Economic Model—presented in 2010 as a 10-year vision for Malaysia’s ascension to high-income status—proposes “revamping” affirmative action “to remove the rent seeking and market distorting features” and shifting the basis for eligibility to socioeconomic status, rather than ethnicity.
Yet given the governing party’s reliance on bumiputra support, major changes are unlikely until new elections are held and the government has the political confidence to confront popular resistance to reform. The underperformance of the E&E sector over the past 10 years should serve as a warning to the country’s policy makers that the continuation of distortionary policies may limit Malaysia's future growth prospects.
How Is The Patient
The global economy, time to take its temperature. It has been a difficult patient, let's see if his troubled parts are getting any better:
US - Beige Book report for 4Q 2010, US economic activity expanding moderately
FOMC - Meeting indicates no premature unwinding of QE2
US Housing - November figures showed sales rose but recovery is still muted
India - Stocks there are likely to be volatile as inflationary fears will trigger an aggressive response in rate hikes 1H2011
France - Consumer confidence declines and unemployment stays stubborn at 9.7%, still industrial output grew 2.3% in November
Germany - Retail sales fell 2.4% but outlook is OK, factory orders grew 5.2% in November, business confidence reached record highs in December
UK - GDP for Q1, Q2 and Q3 all revised downwards, still very sluggish, while inflation rose 3.7% yoy, looking like stagflation to me - reclining or no growth and depreciating currency
Singapore - Inflation jumped 3.8% in November, worrying signs of overheating in certain sectors
China's tightening moves recently caused markets to take the opportunity for a bit of correction but underlying strength is still very firm. There are sparks of optimism in Europe, in particular Germany but the rest of EU and UK are still struggling. US has indicated no withdrawal of QE2 signifying still dormant interest rates.
In Malaysia and Indonesia, foreign funds are parked there to reflect their optimistic outlook for 1Q 2011. Both currencies are among those favoured for strength in 1Q, can expect hectic bullish activity in 1Q.
US - Beige Book report for 4Q 2010, US economic activity expanding moderately
FOMC - Meeting indicates no premature unwinding of QE2
US Housing - November figures showed sales rose but recovery is still muted
India - Stocks there are likely to be volatile as inflationary fears will trigger an aggressive response in rate hikes 1H2011
France - Consumer confidence declines and unemployment stays stubborn at 9.7%, still industrial output grew 2.3% in November
Germany - Retail sales fell 2.4% but outlook is OK, factory orders grew 5.2% in November, business confidence reached record highs in December
UK - GDP for Q1, Q2 and Q3 all revised downwards, still very sluggish, while inflation rose 3.7% yoy, looking like stagflation to me - reclining or no growth and depreciating currency
Singapore - Inflation jumped 3.8% in November, worrying signs of overheating in certain sectors
China's tightening moves recently caused markets to take the opportunity for a bit of correction but underlying strength is still very firm. There are sparks of optimism in Europe, in particular Germany but the rest of EU and UK are still struggling. US has indicated no withdrawal of QE2 signifying still dormant interest rates.
In Malaysia and Indonesia, foreign funds are parked there to reflect their optimistic outlook for 1Q 2011. Both currencies are among those favoured for strength in 1Q, can expect hectic bullish activity in 1Q.
The Evolution of Air Distribution – The Story so Far
Now you are going to need to bear with me on this. Blogs are supposed to be brief and incisive but this one won’t. I just think that perhaps too many people assume that everyone knows about air distribution history and, by extension, fully understands the dynamics in play. I am not sure this is the case (why should they) so here is my understanding of how we got to where we are now.
It would take a book not a blog to go into the full detail and rationale so I will content myself and your patience by picking out the key players and change milestones in what will be a summary of what has happened and who are the movers and shakers. I think the customer needs to know the basics especially as they are ultimately paying unless they can do without at least one of the current cogs in the distribution mechanism.
Initially there was not much of an issue. The airlines worked in concert with each other and their supply chain and basically paid for everything required to distribute their product. They paid merchant fees to card companies, commission to agents (no such things as TMCs then) and fees to the GDS. Having picked up all these tabs they then sold their tickets with these costs built in to their fares. All of them did it so there was no problem Simple and reasonably effective in a well regulated, stable and growing travel market where little true competition existed.
As an example (and it varies hugely by area) airlines paid agents 10% commision and between 3 to 30% override, 1.5-3% card fees and 4% to 6% GDS charges.All of that bundled into the end ticket price.
Then things changed. Airlines expanded their route structures and became far more competitive with each other. The first sign of change was when ticket prices started to diversifyfrom airline to airline. In order to attract increasingly fickle travellers a fare differentiation was required. Carriers moved away from simply discounting their standardised global gross fare pricing and introduced corporate nets, yield managed specials and additional one-off deals.In one class alone you could end up with over a dozen fares each with their own restrictions and availability allocations.
The result was twofold. Firstly the ability to interchange tickets between airlines disappeared and secondly the need to mitigate pricing concessions made them look harder at their costs. Their distribution costs to be precise.
They found themselves in a real dilemma. The need to compete and discount was obviously threatening their profits (what there were) and simultaneously two other things happened. Low cost carriers with a totally different price model arrived who had to worry far less about convenience, timetables, airport locations and service which in turn encouraged corporations to view travel in a far more commoditised way. So, on one side they had to compete with carriers with a considerably lower cost base/tariff and on the other, a customer with a much harder stance towards price.
What became clear was that they could not continue paying the full cost of distributing their products whilst competing with new entrant pricing combined with more savvy buyers.Something had to give and what ‘gave’ was the air distribution model. After all, if you cannot beat the no frills airlines and professional buyers then the only option was to join them and challenge elsewhere in the travel merry-go- round.
I think their objectives were a mixture between the sound and the inevitable. The markets had clearly changed and if the end customer really wanted transparency and a lower cost model then give it to them. Whether they really wanted or needed it in the first place is a discussion for another day. Many of the arguments today are revolving around the desire for commoditisation coming head to head with the necessity for flexibility and uniformity of information and access.
There is another key influencing factor which is technology. Part of the reason why the main airlines feel both desirous and capable of change is that, for the first time there are other potential technology solutions out there. That is to say they are there if, and only if, the end users really do expect them to act individually rather than collectively with other provider’s inventory. Hence the current pressures on the GDS who provide all encompassing booking services and charge a high price for doing so. There is no way any individual airline can provide the diversity and product span that a GDS does.
The airlines (individually and at varying speeds) have called time on paying full distribution costs for all services to all customers. Unfortunately I do not see their goal as eradicating such costs. Their objective is to find what they see is the right home for these costs and then try to ensure the savings are not taken away by having to reduce prices to compensate the travellers, who will undoubtedly have to pay. Unless as I mentioned earlier a cog taken out of the distribution wheel. but which one?
So are there any expendable cogs? In some sectors of the market then probably yes. However, only if people recognise what they want and are prepared to accept the consequences and constraints of such. I think the line will be drawn between those corporations that want a controlled, managed and reported programme and others that choose a more deregulated approach where cheapest flights and few management ‘frills’ are acceptable.
If you want travel management you need knowledge and control. In order to do this you need someone to consolidate travel in all forms and package it into controllable chunks from as few sources as possible. At present this is best done through a GDS booking system, a travel management company and a mandated card programme. You take overall control of your travel, accept the price of doing so and form the right balance between value and all the other broader elements that complement your company ethos. Does anybody with a travel programme really want to run around numerous individual online airline sites and compare them when a GDS already does that in a one-stop environment?
On the other side if you want to maximise trip by trip savings there is no reason why approaching the cheapest distribution source and exploiting it until another one comes along is not the right way. To be frank the cheapest booking cost would be by going to an airline direct either independantly or through a TMC which is why carriers like American Airlines, Lufthansa etc are differentiating pricing and availability dependant on where the booking comes from. It does not by any means guarantee that overall trip price will be lower but the reservations element may be.
What I am begining to see happening is that airlines are finally differentiating between varying corporate needs and handling them individually. This part I applaud even though it has taken a long time and has a way to go. They are beginning to see the contrast between travel management and the very different service provided through Online Booking Agencies (OTAs) which, despite all the hype, focus on a different and smaller market that has a different list of demmands. It is this SME market and the OTAs that service them that are taking the brunt of current airline initiatives. The rest will follow.
Before I conclude let me set out the distribution milestones again as I see them:
1) Airlines have mainly eradicated standard agency commission payments but have failed to stop override and incentive payments. Whilst not totally successful it has enabled them to target better those they want to reward to a greater and more productive effect.
2) Agents responded by passing their new costs to the corporations by changing their contracts to management/transaction fees. End result? Most agencies protected their income and some grew it by ensuring remaining income from the airlines stayed with them and not passed on within their client deals. Airlines were forced to reduce prices to compensate customers.
3) GDS/Airline negotiations became far more aggressive. When you look at what airlines have to pay them, even for passenger cancellations and suchlike it is hardly surprising. Some airlines started charging TMCs for certain bookings to gain compensation. TMCs passed these costs on to the corporations but are still incentivised by GDSs which make airlines pretty mad as it is their fees that are funding them.
4) Various airlines changed some of the remaining IATA regulations regarding payment to shorten credit terms with TMCs and escalate penalties for perceived non compliance. A very much hidden cost that again the customer ended up collecting.I find it quite alarming how much cost comes into the chain via IATA and its interpretation of their own rules.
5) Credit/charge card usage has increased because of 4) as individual countries cut agency credit by 50% or more meaning TMC passed on the casflow deterioration to customers resulting in this migration to plastic . Ironic really as this area is very much a top target for airline cost reduction. Cards, like GDS charge wide and varying merchant fees to suppliers and these will be attacked robustly and very soon.
Where will this evolution take us? Airlines will continue fighting distribution costs. Instead of taking them all and then charging travellers through price they will try to dump them and leave the customer to pay separately. Meanwhile they will compensate by offering lower cost alternatives to those prepared to book direct. The battlefronts will be GDS fees, credit card merchant fees, cost of credit, TMC incentives and service deliverables. The customer will get what they say they want which is transparency and a unit price for everything. Currently I do not believe actual cost will go down. It will simply be realigned and will probably go up. If prices go down any further then there will be less suppliers, less choice and devolution not evolution.
It does not make sense that suppliers should pay for everything and then charge a correspondingly high price. Equally it does not make sense that the traveller gets all the bills and tries to negotiate their way out of them. I expect it is the way of the world and will provide yet newer business opportunities but regrettably the same old regurgitating costs.
It would take a book not a blog to go into the full detail and rationale so I will content myself and your patience by picking out the key players and change milestones in what will be a summary of what has happened and who are the movers and shakers. I think the customer needs to know the basics especially as they are ultimately paying unless they can do without at least one of the current cogs in the distribution mechanism.
Initially there was not much of an issue. The airlines worked in concert with each other and their supply chain and basically paid for everything required to distribute their product. They paid merchant fees to card companies, commission to agents (no such things as TMCs then) and fees to the GDS. Having picked up all these tabs they then sold their tickets with these costs built in to their fares. All of them did it so there was no problem Simple and reasonably effective in a well regulated, stable and growing travel market where little true competition existed.
As an example (and it varies hugely by area) airlines paid agents 10% commision and between 3 to 30% override, 1.5-3% card fees and 4% to 6% GDS charges.All of that bundled into the end ticket price.
Then things changed. Airlines expanded their route structures and became far more competitive with each other. The first sign of change was when ticket prices started to diversifyfrom airline to airline. In order to attract increasingly fickle travellers a fare differentiation was required. Carriers moved away from simply discounting their standardised global gross fare pricing and introduced corporate nets, yield managed specials and additional one-off deals.In one class alone you could end up with over a dozen fares each with their own restrictions and availability allocations.
The result was twofold. Firstly the ability to interchange tickets between airlines disappeared and secondly the need to mitigate pricing concessions made them look harder at their costs. Their distribution costs to be precise.
They found themselves in a real dilemma. The need to compete and discount was obviously threatening their profits (what there were) and simultaneously two other things happened. Low cost carriers with a totally different price model arrived who had to worry far less about convenience, timetables, airport locations and service which in turn encouraged corporations to view travel in a far more commoditised way. So, on one side they had to compete with carriers with a considerably lower cost base/tariff and on the other, a customer with a much harder stance towards price.
What became clear was that they could not continue paying the full cost of distributing their products whilst competing with new entrant pricing combined with more savvy buyers.Something had to give and what ‘gave’ was the air distribution model. After all, if you cannot beat the no frills airlines and professional buyers then the only option was to join them and challenge elsewhere in the travel merry-go- round.
I think their objectives were a mixture between the sound and the inevitable. The markets had clearly changed and if the end customer really wanted transparency and a lower cost model then give it to them. Whether they really wanted or needed it in the first place is a discussion for another day. Many of the arguments today are revolving around the desire for commoditisation coming head to head with the necessity for flexibility and uniformity of information and access.
There is another key influencing factor which is technology. Part of the reason why the main airlines feel both desirous and capable of change is that, for the first time there are other potential technology solutions out there. That is to say they are there if, and only if, the end users really do expect them to act individually rather than collectively with other provider’s inventory. Hence the current pressures on the GDS who provide all encompassing booking services and charge a high price for doing so. There is no way any individual airline can provide the diversity and product span that a GDS does.
The airlines (individually and at varying speeds) have called time on paying full distribution costs for all services to all customers. Unfortunately I do not see their goal as eradicating such costs. Their objective is to find what they see is the right home for these costs and then try to ensure the savings are not taken away by having to reduce prices to compensate the travellers, who will undoubtedly have to pay. Unless as I mentioned earlier a cog taken out of the distribution wheel. but which one?
So are there any expendable cogs? In some sectors of the market then probably yes. However, only if people recognise what they want and are prepared to accept the consequences and constraints of such. I think the line will be drawn between those corporations that want a controlled, managed and reported programme and others that choose a more deregulated approach where cheapest flights and few management ‘frills’ are acceptable.
If you want travel management you need knowledge and control. In order to do this you need someone to consolidate travel in all forms and package it into controllable chunks from as few sources as possible. At present this is best done through a GDS booking system, a travel management company and a mandated card programme. You take overall control of your travel, accept the price of doing so and form the right balance between value and all the other broader elements that complement your company ethos. Does anybody with a travel programme really want to run around numerous individual online airline sites and compare them when a GDS already does that in a one-stop environment?
On the other side if you want to maximise trip by trip savings there is no reason why approaching the cheapest distribution source and exploiting it until another one comes along is not the right way. To be frank the cheapest booking cost would be by going to an airline direct either independantly or through a TMC which is why carriers like American Airlines, Lufthansa etc are differentiating pricing and availability dependant on where the booking comes from. It does not by any means guarantee that overall trip price will be lower but the reservations element may be.
What I am begining to see happening is that airlines are finally differentiating between varying corporate needs and handling them individually. This part I applaud even though it has taken a long time and has a way to go. They are beginning to see the contrast between travel management and the very different service provided through Online Booking Agencies (OTAs) which, despite all the hype, focus on a different and smaller market that has a different list of demmands. It is this SME market and the OTAs that service them that are taking the brunt of current airline initiatives. The rest will follow.
Before I conclude let me set out the distribution milestones again as I see them:
1) Airlines have mainly eradicated standard agency commission payments but have failed to stop override and incentive payments. Whilst not totally successful it has enabled them to target better those they want to reward to a greater and more productive effect.
2) Agents responded by passing their new costs to the corporations by changing their contracts to management/transaction fees. End result? Most agencies protected their income and some grew it by ensuring remaining income from the airlines stayed with them and not passed on within their client deals. Airlines were forced to reduce prices to compensate customers.
3) GDS/Airline negotiations became far more aggressive. When you look at what airlines have to pay them, even for passenger cancellations and suchlike it is hardly surprising. Some airlines started charging TMCs for certain bookings to gain compensation. TMCs passed these costs on to the corporations but are still incentivised by GDSs which make airlines pretty mad as it is their fees that are funding them.
4) Various airlines changed some of the remaining IATA regulations regarding payment to shorten credit terms with TMCs and escalate penalties for perceived non compliance. A very much hidden cost that again the customer ended up collecting.I find it quite alarming how much cost comes into the chain via IATA and its interpretation of their own rules.
5) Credit/charge card usage has increased because of 4) as individual countries cut agency credit by 50% or more meaning TMC passed on the casflow deterioration to customers resulting in this migration to plastic . Ironic really as this area is very much a top target for airline cost reduction. Cards, like GDS charge wide and varying merchant fees to suppliers and these will be attacked robustly and very soon.
Where will this evolution take us? Airlines will continue fighting distribution costs. Instead of taking them all and then charging travellers through price they will try to dump them and leave the customer to pay separately. Meanwhile they will compensate by offering lower cost alternatives to those prepared to book direct. The battlefronts will be GDS fees, credit card merchant fees, cost of credit, TMC incentives and service deliverables. The customer will get what they say they want which is transparency and a unit price for everything. Currently I do not believe actual cost will go down. It will simply be realigned and will probably go up. If prices go down any further then there will be less suppliers, less choice and devolution not evolution.
It does not make sense that suppliers should pay for everything and then charge a correspondingly high price. Equally it does not make sense that the traveller gets all the bills and tries to negotiate their way out of them. I expect it is the way of the world and will provide yet newer business opportunities but regrettably the same old regurgitating costs.
Early CNY For The Market?
The question on everyone is asking is what the hell happened to the market over the last three days? Suddenly, it went to sleep, its like all the syndicates went to play golf. OK, that is not a fair comment but the market momentum kinda got sucked out for no apparent reason. There is no bad market news, nothing politically negative. Ask a remisier or dealer they will dig deep to give you an answer, and that answer will be "Aiyah, investors pulling out money from the market la for CNY".
What kind of b.s. reasoning is that? Is this the first year we are having CNY?? It seems to me that its a healthy correction but nobody seems to think it is one. We see popular stocks dropping 2-3% a day, nothing major, we see volume on popular stocks dropping by 50% or more, but nothing major. If you check back to volume traded last week, it was quite substantive. The fact that we are seeing only mild pullback now is a great bullish sign.
If one still has fresh funds, getting back in now is a good idea. Recent new listings are very interesting, but was thwarted somewhat by the slowish market. There was Tambun, Benelac and KSS. Herein lies the key, look at Benelac, the stock has very good fundamentals, the first day saw a good day but not spectacular. The sluggish market overall caused many shares to come out. However, it rebounded very well on second day and I think its a RM1.60 stock anyway.
Tambun I am not so keen. I am very keen on KSS. I see it having the same trend as Benelac, first day was mainly collection. Watch KSS for its second and third day, I see the stock at 75 sen minimum as fair value.
What kind of b.s. reasoning is that? Is this the first year we are having CNY?? It seems to me that its a healthy correction but nobody seems to think it is one. We see popular stocks dropping 2-3% a day, nothing major, we see volume on popular stocks dropping by 50% or more, but nothing major. If you check back to volume traded last week, it was quite substantive. The fact that we are seeing only mild pullback now is a great bullish sign.
If one still has fresh funds, getting back in now is a good idea. Recent new listings are very interesting, but was thwarted somewhat by the slowish market. There was Tambun, Benelac and KSS. Herein lies the key, look at Benelac, the stock has very good fundamentals, the first day saw a good day but not spectacular. The sluggish market overall caused many shares to come out. However, it rebounded very well on second day and I think its a RM1.60 stock anyway.
Tambun I am not so keen. I am very keen on KSS. I see it having the same trend as Benelac, first day was mainly collection. Watch KSS for its second and third day, I see the stock at 75 sen minimum as fair value.
My life in bars – Part 1
I sat in the bath last Saturday night trying to soak away the pain and bruising caused by my latest stroke of bad luck in a bar when it suddenly dawned on me how many times I have ad unfortunate experiences in such places. Obviously none of these ‘experiences’ had been my fault. I just seem to have the knack of being in the wrong bar at the wrong time and getting into bizarre circumstances.
Take last weekend for example. I was in a hotel bar with a few friends enjoying some old memories when one of them reminded me of my favourite Superman joke from years gone by. Now the whole point of this joke is that you have to tell it whilst doing impressions of the super-hero and, after alarmingly little encouragement I said I would tell it again for old time’s sake.
The first thing I had to do was dress the part so off I went to the toilet and came back wearing my underpants outside my trousers, a borrowed tablecloth stuffed out my collar to make a cape and the letter S drawn on my shirt with lipstick. By this time I had drawn the attention of the rest of the residents and particularly the bar manager who looked on with growing concern. To the encouragement of my friends I literally threw myself into the role.
The joke explains how Superman and Batman were in a similar bar having a drink after a hard day’s crime fighting. Superman was telling how he had saved a child from a giant shark, the world from annihilation and finally had an incredible experience with Cat Woman. I told the joke in words and movement and somehow managed to stay upright despite leaping and lunging all over the place. Did I tell you it helps to be drunk to enjoy this joke?
Anyway, the end of the ‘joke’ is when he was on the way to the bar and saw Cat Woman. She was lying naked on the roof of a building making mewling noises and swaying her hips in a provocative fashion. Poor old Superman could not resist so he flew down and engaged her in frantic and passionate love-making. All was going well and I think I was simulating it all quite adequately until it came to the punch line.
Batman turns to Superman and says “Gee Superman, I bet she was surprised”. To which Superman replies “Not half as surprised as the Invisible Man”
At that point I jumped in the air…and went through the coffee table I had been standing on. This brought this sorry tale to a sudden and bloody end. Actually it took a while to separate my leg from the table but straight after that I was escorted to my room. At least they laughed at my joke I thought, but, if truth were known it was me crashing through the table that people thought both funny and just!
Take last weekend for example. I was in a hotel bar with a few friends enjoying some old memories when one of them reminded me of my favourite Superman joke from years gone by. Now the whole point of this joke is that you have to tell it whilst doing impressions of the super-hero and, after alarmingly little encouragement I said I would tell it again for old time’s sake.
The first thing I had to do was dress the part so off I went to the toilet and came back wearing my underpants outside my trousers, a borrowed tablecloth stuffed out my collar to make a cape and the letter S drawn on my shirt with lipstick. By this time I had drawn the attention of the rest of the residents and particularly the bar manager who looked on with growing concern. To the encouragement of my friends I literally threw myself into the role.
The joke explains how Superman and Batman were in a similar bar having a drink after a hard day’s crime fighting. Superman was telling how he had saved a child from a giant shark, the world from annihilation and finally had an incredible experience with Cat Woman. I told the joke in words and movement and somehow managed to stay upright despite leaping and lunging all over the place. Did I tell you it helps to be drunk to enjoy this joke?
Anyway, the end of the ‘joke’ is when he was on the way to the bar and saw Cat Woman. She was lying naked on the roof of a building making mewling noises and swaying her hips in a provocative fashion. Poor old Superman could not resist so he flew down and engaged her in frantic and passionate love-making. All was going well and I think I was simulating it all quite adequately until it came to the punch line.
Batman turns to Superman and says “Gee Superman, I bet she was surprised”. To which Superman replies “Not half as surprised as the Invisible Man”
At that point I jumped in the air…and went through the coffee table I had been standing on. This brought this sorry tale to a sudden and bloody end. Actually it took a while to separate my leg from the table but straight after that I was escorted to my room. At least they laughed at my joke I thought, but, if truth were known it was me crashing through the table that people thought both funny and just!
A Blogger in Paradise - Maldives
I went on holiday in The Maldives last month and such a great time that I thought I would report on how to get there from the UK. and what to expect. I have now stayed at Cocoa Island, Mirihi, Conrad Rangali and Lily Beach so if anyone wants the lowdown on any of these places let me know.
I usually try to inject some humour in these blogs and I did have a few moments of amusement while out there. The last island I stayed at was Lily Beach which is an all inclusive resort and hence it could be a bit lively in the evening. I was minding my own business in the bar one night when this very large gentleman from Frankfurt sat down next to me. Actually he plunged more than sat and the contents of his scotch glass flew over his shoulder into a plant pot.
Not to be outdone he lurched off the seat, went to the bar for another, staggered back, aimed his bottom at the seat and plunged down again. Another double scotch shot over his shoulder into the pot. I think he lost about four out of five of his whiskies until, on his final plunge he too shot back into the plant pot. The next morning on the way to breakfast I stopped at the plant pot. The palm growing out of it had snapped and the leaves had turned yellow.
The only other excitement of note was when a Korean couple ran their pedalo aground on the island reef. They did not seem too worried as they started taking pictures of each other being rescued. And of course there was a lady from London who threatened to report me because I killed an ant that was walking up the side of my Tiger beer!
Anyway, back to my report:
So what is your idea of a holiday paradise and more importantly, does it exist outside your imagination in this modern well travelled world? You may want somewhere sunny and warm. A desert island, but not too deserted and not so primitive you cannot enjoy your creature comforts. You will want to be safe, relaxed and be lazy or active as and when the mood takes you. To enjoy nature at its most spectacular but still sleep in clean white sheets listening to the water lapping around and wondering if should have eaten so much lobster at the moonlit barbecue.
Well this year I lived my dream. I found the Maldives. Obviously I had heard of them before but I never once thought they could possibly be as good as the hype. 40 years in travel had taught me that you can never totally believe the brochures, websites and superlatives from other people each with their individual ideas on perfection. Besides, I thought, the Maldives were hard to get to and so very far from civilisation. So let me tell you how an old travel hand got it wrong.
Firstly I discovered that British Airways had started flying non stop to Male, the capital. You can also go direct on a Thomson charter or using a through flight via Colombo on Srilankan. If you are willing to change aircraft there are excellent connections via Dubai or Doha on Emirates or Qatar Airways respectively. These connections are very slick and usually quite painless. Some people even split their holidays with a week in Dubai and then again in the Maldives. I chose direct with BA as I got a good price and a non stop flight is more likely to get you there quickly and with your baggage.
The next obstacle in my mind was getting to my chosen island. You see the international flight lands at an airport island next to the capital Male and you still need to go either by air or speedboat to your resort. Trouble and stress I immediately thought. Wrong. They operate like a well oiled machine. As soon as you pass through customs the resort team is waiting. You either walk across the road to a waiting speed launch or onto an air-conditioned bus to whisk you and your bags to the seaplane terminal 5 minutes away.
This final short transit transforms from a chore to a plus point of the holiday. Your sea plane is usually waiting there for you. If there is any delay then most of the resorts have lounges that look over the lagoon where you can watch the coming and going. The planes are loads of fun. Yes, they are a bit noisy and yes they can sometimes get a bit hot but this is more than made up for by the thrill of take off and landing and the breathtaking views of the coral atolls you fly over. A magical experience and one to be anticipated not dreaded.
One thing to remember though is that the weight allowance on these planes is 20 kilos regardless of what you may have been allowed on your incoming international flight. Excess baggage charges are quite reasonable but bear in mind there are aircraft weight constraints which might mean they could hold a bag back for the next flight. It is always a good thing to have one bag which you keep close containing immediate essentials just in case.
The longest flight is usually around 40 minutes but more often under the half hour. You land on the sheltered side of the resort and the seaplane taxis up to a floating pontoon. From there you board the resort launch for the very short hop to the reception pier. Usually by this time you would have been given iced towels and bottled water and an enthusiastic greeting from the local staff. And yes, they really do seem to mean it as these are small islands and I think they genuinely look forward to seeing new faces.
There are numerous resorts with all types of accommodation and meal plans. You can stay in beach villas or my favourite which are built over water on stilts. Some are basic but clean and others have their own spa, pool and decking. The food and drink has to be imported (as do the chefs) and is of the highest quality and range. Most ingredients are from Australia except for the fish which is mainly locally caught using traditional methods.
So there you are, sitting on your decking and gazing out at your very own picture postcard Desert Island and aquarium but with everything you need available if you want it. Everywhere I went my mobile, blackberry and computer worked if I wanted them. I once phoned into a company conference call when sitting on a lounger under a sun umbrella with a cold beer and a staff member next to me cleaning my sun glasses! By now you have ditched your shoes and probably not wear any again until you leave.
The Maldives is a wonderful place and it did not disappoint me once. It is safe, welcoming scenically stunning and full of warm spirited friendly people. My only regret was going home. If you ever want a once in a lifetime trip go to the Maldives…except I suspect you will try to go again and again afterwards. Once you have swum with whale sharks and manta rays you become hooked!
I usually try to inject some humour in these blogs and I did have a few moments of amusement while out there. The last island I stayed at was Lily Beach which is an all inclusive resort and hence it could be a bit lively in the evening. I was minding my own business in the bar one night when this very large gentleman from Frankfurt sat down next to me. Actually he plunged more than sat and the contents of his scotch glass flew over his shoulder into a plant pot.
Not to be outdone he lurched off the seat, went to the bar for another, staggered back, aimed his bottom at the seat and plunged down again. Another double scotch shot over his shoulder into the pot. I think he lost about four out of five of his whiskies until, on his final plunge he too shot back into the plant pot. The next morning on the way to breakfast I stopped at the plant pot. The palm growing out of it had snapped and the leaves had turned yellow.
The only other excitement of note was when a Korean couple ran their pedalo aground on the island reef. They did not seem too worried as they started taking pictures of each other being rescued. And of course there was a lady from London who threatened to report me because I killed an ant that was walking up the side of my Tiger beer!
Anyway, back to my report:
So what is your idea of a holiday paradise and more importantly, does it exist outside your imagination in this modern well travelled world? You may want somewhere sunny and warm. A desert island, but not too deserted and not so primitive you cannot enjoy your creature comforts. You will want to be safe, relaxed and be lazy or active as and when the mood takes you. To enjoy nature at its most spectacular but still sleep in clean white sheets listening to the water lapping around and wondering if should have eaten so much lobster at the moonlit barbecue.
Well this year I lived my dream. I found the Maldives. Obviously I had heard of them before but I never once thought they could possibly be as good as the hype. 40 years in travel had taught me that you can never totally believe the brochures, websites and superlatives from other people each with their individual ideas on perfection. Besides, I thought, the Maldives were hard to get to and so very far from civilisation. So let me tell you how an old travel hand got it wrong.
Firstly I discovered that British Airways had started flying non stop to Male, the capital. You can also go direct on a Thomson charter or using a through flight via Colombo on Srilankan. If you are willing to change aircraft there are excellent connections via Dubai or Doha on Emirates or Qatar Airways respectively. These connections are very slick and usually quite painless. Some people even split their holidays with a week in Dubai and then again in the Maldives. I chose direct with BA as I got a good price and a non stop flight is more likely to get you there quickly and with your baggage.
The next obstacle in my mind was getting to my chosen island. You see the international flight lands at an airport island next to the capital Male and you still need to go either by air or speedboat to your resort. Trouble and stress I immediately thought. Wrong. They operate like a well oiled machine. As soon as you pass through customs the resort team is waiting. You either walk across the road to a waiting speed launch or onto an air-conditioned bus to whisk you and your bags to the seaplane terminal 5 minutes away.
This final short transit transforms from a chore to a plus point of the holiday. Your sea plane is usually waiting there for you. If there is any delay then most of the resorts have lounges that look over the lagoon where you can watch the coming and going. The planes are loads of fun. Yes, they are a bit noisy and yes they can sometimes get a bit hot but this is more than made up for by the thrill of take off and landing and the breathtaking views of the coral atolls you fly over. A magical experience and one to be anticipated not dreaded.
One thing to remember though is that the weight allowance on these planes is 20 kilos regardless of what you may have been allowed on your incoming international flight. Excess baggage charges are quite reasonable but bear in mind there are aircraft weight constraints which might mean they could hold a bag back for the next flight. It is always a good thing to have one bag which you keep close containing immediate essentials just in case.
The longest flight is usually around 40 minutes but more often under the half hour. You land on the sheltered side of the resort and the seaplane taxis up to a floating pontoon. From there you board the resort launch for the very short hop to the reception pier. Usually by this time you would have been given iced towels and bottled water and an enthusiastic greeting from the local staff. And yes, they really do seem to mean it as these are small islands and I think they genuinely look forward to seeing new faces.
There are numerous resorts with all types of accommodation and meal plans. You can stay in beach villas or my favourite which are built over water on stilts. Some are basic but clean and others have their own spa, pool and decking. The food and drink has to be imported (as do the chefs) and is of the highest quality and range. Most ingredients are from Australia except for the fish which is mainly locally caught using traditional methods.
So there you are, sitting on your decking and gazing out at your very own picture postcard Desert Island and aquarium but with everything you need available if you want it. Everywhere I went my mobile, blackberry and computer worked if I wanted them. I once phoned into a company conference call when sitting on a lounger under a sun umbrella with a cold beer and a staff member next to me cleaning my sun glasses! By now you have ditched your shoes and probably not wear any again until you leave.
The Maldives is a wonderful place and it did not disappoint me once. It is safe, welcoming scenically stunning and full of warm spirited friendly people. My only regret was going home. If you ever want a once in a lifetime trip go to the Maldives…except I suspect you will try to go again and again afterwards. Once you have swum with whale sharks and manta rays you become hooked!
Market Outlook 2011 / DB
Let's see which research house is most bullish. Got my hands on Deutsche Bank's prognosis for 2011. My comments in colour.
Off to a strong start (3.9% YTD); transformation underway
In an ASEAN context, Deutsche Bank is positive on the Malaysian market in 2011. Confounding the skeptics, Malaysia is (finally) delivering on its ambitious transformation plans and this is increasingly being recognised by the market. Food and fuel subsidies are gradually being abolished (kerosene +4.2% since November, diesel +8.6%). This is a bold political move given decades of hefty subsidies. (Yes, they are bold moves, and necessary as well. Will that hit their political hopes to get a bigger majority? Probably not as the overall economy is still chugging along, property is still up, stocks are up, when there is +++ in the wallets, not many will complain. Will there be harsher moves on subsidies after the election? Maybe, a GST is likely, which is good really for the longer term. To be fair to the government, they have not shied away from reducing subsidies for fear of losing political support. That in itself is a significant measure to foreign investors as Malaysia certainly can no longer afford that same level of subsidy for the past few years. The sooner we change tack the better. The subsidy mentality also affects the same sense of entitlement, and is actually a poor way of managing resources - naturally the lowest strata will be badly affected, but as long as we make sure they are properly counter balanced, the subsidy removal actually causes all businesses to be more proactive and take steps to have a more competitive business model. Ever wonder why so many local companies cannot go regional, its the subsidy mentality, many can no longer see the required margins once they leave the kampung - hence the removal of subsidy is in effect a much needed change of mindset).
Local contractors are busy again with projects (e.g. RM36bn MRT project just approved by the cabinet) essential for keeping pace with economic growth. Malaysians are confident again, evident in the strong rebound in retail sales (projected at 10-12% YoY in 2011), M&A activity accelerating (Malaysia posted the biggest YoY jump in M&A in Asia in 2010) and property sales lifting.
This is not a defensive market; Malaysia to deliver 26% growth in 2011
Collectively, the structural initiatives over the last five years have started to pay off. These include:
a) the aggressive restructuring of most GLCs,
b) rapid offshore expansion by Malaysia companies,
c) market liberalisation measures,
d) abolishment of the Foreign Investment Committee (FIC) guidelines in selected sectors, and
e) the listings of companies such as Petronas Chemicals, MMHE and Maxis.
These initiatives have raised earnings volatility but, in turn, earnings growth has strengthened materially. Earnings from offshore entities (largely ASEAN based) now account for 32% of total earnings (based on our universe of stocks) versus just 10% in 2005. By 2012E, we forecast this number to climb to 36%. This is a significant change that we believe the market has yet to fully appreciate. And it is why Malaysia’s earnings growth of 26% in 2011E is just slightly behind that of Indonesia at 27%. The Malaysian market offers a strong growth proposition combined with a dividend yield of 3.5%, above the regional average. (Important point which I agree totally, though the Indonesian market has been the blue eyed boy for foreign funds over the last 2 years, the gap between Malaysia and Indonesia should start to narrow. In fact, we are seeing some of the same funds, parlaying similar bets into Malaysia just as they did in Indonesia two years back).
14% upside to our FBM KLCI index target of 1,790
We see further upside risk to earnings in 2011 as commodity prices stay lofty, M&A activity accelerates further, and earnings from offshore entities have an impact. Our index target of 1,790 suggests 14% upside to the market over the next 12 months, pegging the market at 15.5x PER 2012, which is one standard deviation above post-2002 earnings. We do not think this is demanding for a market that is delivering on positive structural changes, offering superior growth in 2011 and greater exposure to the ASEAN growth footprint.Malaysia is enjoying strong inflows into the equity market (ADTV YTD at US$830m vs. US$480m in 2H2010), foreign shareholding is climbing (22% as of December 2010) and by June, FTSE should upgrade Malaysia from “Secondary Emerging” to “Advanced Emerging”, which should drive passive inflows (c. US$392m) and positive sentiment. For exposure to Malaysia’s growth themes, we like CIMB, Petronas Chemicals, KLK, AMMB, IJM Corp, AirAsia and SP Setia. (My target for this year is not as high as 1,790. I think the exuberance would propel the local index to 1,700-1,730 as the high range. I would start to reduce leverage and maintain at least 50% cash as the markets move beyond 1,700).
Why I Like Century Logistics
In the midst of a bull run, it is hard to stick to your principles of investing. You get dragged to punting stocks left right and center. Stocks you would never consider suddenly looked attractive. Still, one must shift their investing strategy slightly depending on the markets, without sacrificing the basic tenets of investing. As prices run, even so-so counters will rise. It just takes that much harder to locate gems about to start a run up - my type of strategic investing.
Well, Century Logistics fits the bill as the long striving business nurturer. Following the difficult global trading conditions in 2008 and 2009, the company has maintained good discipline and continued to invest logically and expand their revenue streams assiduously. Century Logistics is one of Asia’s leading providers of integrated logistic services. Century provides integrated logistic solutions to clients covering land logistics, warehousing, management of the supply chain, international freight forwarding and so forth.
Century is in a good position to cross sell its various services to customers while gradually offering integrated services to the clients. Century Logistics is currently expanding its warehousing capacity and is looking to attract large companies while providing cross-selling opportunities. Century Logistics is continuing its climb further up the value chain with its strong branding and reputation. The strong branding and reputation is enabling Century to expand even further by enabling Century to bid and participate in larger international deals.
Diversification into favourable segments. Century Logistics is a very vibrant group which has constantly strived to improve itself. It has over the years diversified into a few other activities. Some of these diversifications had been grown very successfully and now contributes to the success and growth of the group. Successful diversifications includes operating Ship-to-Ship transfer of bunker fuels. Century operates in Tanjung Pelepas and Pasir Gudang. Another diversification which has become a staple to Century includes assembling and managing the logistics of electronic appliances for domestic and export markets. This is highly synergistic to Century’s existing operations.
Catalyst #1: Century Logistics has successfully secured a contract with F&N Dairies to provide all transport logistics for the latter’s inbound movement of finished dairy products. The 3-year contract will kick start sometime in June-July this year.This marks Century’s second largest MNC client after Nestle, from which it secured a contract 3-4 years ago. With this big client coming on board, there is good potential of Century securing more sizeable long term contracts. This contract’s contribution to revenue is estimated at RM20m-RM30m a year, especially for Century’s warehousing and land transportation segment, and fetch a net margin of 5%.
Catalyst #2: Management is targeting for the group’s revenue to grow by more than 20% y-o-y. If you consider their EPS and PER you will know that this is a pretty undervalued stocks, still off the radar of most funds. New clients in South America for shipments of microwave ovens and LCDs are also due to come in this year, from which revenue would be earned in EUR, which would in turn enhance the division’s overall margins. For the ship transfer division, management has guided for volume turnover to continue to be encouraging on orders from oil traders.
Catalyst #3: Proxy to improving global trade. Their three core businesses -- third party logistics, oil and gas logistics and procurement and assembly -- should grow further as global trade picks up in tandem with economic growth. To meet the growing demand, he said the company has aggressively expanded its warehouse and storage capacity in Pelabuhan Tanjung Pelepas (PTP) by another 103,000 square feet. The additional capacity was completed by third quarter of 2010. It also intends to have at least 200 units of trucks from 170 units a year ago, a great indication of underlying business demand.
Catalyst #4: Regional expansion underway. Century is also planning to build its headquarters and distribution hub on a 30-acre piece of land it bought last year in Bukit Raja, Klang. Indonesia and Vietnam are their targets this year. The company has already ventured successfully into Thailand, India, China, Syria and Argentina.
The company should record revenue and net profits of RM280m and RM29m respectively for 2010. That translates to an EPS of 32 sen on 89.3m shares (inclusive of weighted warrants dilution). Even if you take in the full dilution of 40m warrants, you are still looking at 23 sen net EPS for 2010, and at RM2.00 its a PER of 8.7x.
Judging from the new MNC client, added capacity at PTP and other positives, for 2011 we can assume revenue running to RM325m and a net profit projection of RM33.5m, or a net EPS of 37 sen or 27 sen fully diluted. Even at RM2.00, you are looking at pretty ridiculous PER, its too embarrassing to write it down even.
Plus it has entered into a new growth phase as EPS is projected to grow by 15%-20% yoy for 2011 and 2012 at least. The brand is good, the business rewards longevity and good reputation. Its high time investors take a serious look at this stock. I see it at RM2.80 within the next 6 months. Even then, you are looking at a 2011 PER of just 7.56x or 10.3x fully diluted. Judging by its fundamentals, with just 89m shares, its ripe for a generous bonus and/or split.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
Well, Century Logistics fits the bill as the long striving business nurturer. Following the difficult global trading conditions in 2008 and 2009, the company has maintained good discipline and continued to invest logically and expand their revenue streams assiduously. Century Logistics is one of Asia’s leading providers of integrated logistic services. Century provides integrated logistic solutions to clients covering land logistics, warehousing, management of the supply chain, international freight forwarding and so forth.
Century is in a good position to cross sell its various services to customers while gradually offering integrated services to the clients. Century Logistics is currently expanding its warehousing capacity and is looking to attract large companies while providing cross-selling opportunities. Century Logistics is continuing its climb further up the value chain with its strong branding and reputation. The strong branding and reputation is enabling Century to expand even further by enabling Century to bid and participate in larger international deals.
Diversification into favourable segments. Century Logistics is a very vibrant group which has constantly strived to improve itself. It has over the years diversified into a few other activities. Some of these diversifications had been grown very successfully and now contributes to the success and growth of the group. Successful diversifications includes operating Ship-to-Ship transfer of bunker fuels. Century operates in Tanjung Pelepas and Pasir Gudang. Another diversification which has become a staple to Century includes assembling and managing the logistics of electronic appliances for domestic and export markets. This is highly synergistic to Century’s existing operations.
Catalyst #1: Century Logistics has successfully secured a contract with F&N Dairies to provide all transport logistics for the latter’s inbound movement of finished dairy products. The 3-year contract will kick start sometime in June-July this year.This marks Century’s second largest MNC client after Nestle, from which it secured a contract 3-4 years ago. With this big client coming on board, there is good potential of Century securing more sizeable long term contracts. This contract’s contribution to revenue is estimated at RM20m-RM30m a year, especially for Century’s warehousing and land transportation segment, and fetch a net margin of 5%.
Catalyst #2: Management is targeting for the group’s revenue to grow by more than 20% y-o-y. If you consider their EPS and PER you will know that this is a pretty undervalued stocks, still off the radar of most funds. New clients in South America for shipments of microwave ovens and LCDs are also due to come in this year, from which revenue would be earned in EUR, which would in turn enhance the division’s overall margins. For the ship transfer division, management has guided for volume turnover to continue to be encouraging on orders from oil traders.
Catalyst #3: Proxy to improving global trade. Their three core businesses -- third party logistics, oil and gas logistics and procurement and assembly -- should grow further as global trade picks up in tandem with economic growth. To meet the growing demand, he said the company has aggressively expanded its warehouse and storage capacity in Pelabuhan Tanjung Pelepas (PTP) by another 103,000 square feet. The additional capacity was completed by third quarter of 2010. It also intends to have at least 200 units of trucks from 170 units a year ago, a great indication of underlying business demand.
Catalyst #4: Regional expansion underway. Century is also planning to build its headquarters and distribution hub on a 30-acre piece of land it bought last year in Bukit Raja, Klang. Indonesia and Vietnam are their targets this year. The company has already ventured successfully into Thailand, India, China, Syria and Argentina.
The company should record revenue and net profits of RM280m and RM29m respectively for 2010. That translates to an EPS of 32 sen on 89.3m shares (inclusive of weighted warrants dilution). Even if you take in the full dilution of 40m warrants, you are still looking at 23 sen net EPS for 2010, and at RM2.00 its a PER of 8.7x.
Judging from the new MNC client, added capacity at PTP and other positives, for 2011 we can assume revenue running to RM325m and a net profit projection of RM33.5m, or a net EPS of 37 sen or 27 sen fully diluted. Even at RM2.00, you are looking at pretty ridiculous PER, its too embarrassing to write it down even.
Plus it has entered into a new growth phase as EPS is projected to grow by 15%-20% yoy for 2011 and 2012 at least. The brand is good, the business rewards longevity and good reputation. Its high time investors take a serious look at this stock. I see it at RM2.80 within the next 6 months. Even then, you are looking at a 2011 PER of just 7.56x or 10.3x fully diluted. Judging by its fundamentals, with just 89m shares, its ripe for a generous bonus and/or split.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
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