Astro - correction

I don't know where I got the impression that the G.O. price was 4.20, when its actually 4.30 ... that being the case, the posting takes a different tack altogether. That meant that the price traded for the past 2 days resembled a normal G.O. and there does not appear to be any competing bidder, or some substantial shareholder accumulating shares to do something else.

That said, we cannot rule out that AK may have another buyer lined up. If AK sells a substantial stake within a few months after the G.O. at a higher price, that will leave another dose of bitter aftertaste (again). Of course we all can argue that he may have found the buyer AFTER the G.O. ... I do hope he does not do that again, as it is more important to appear "not to have shafted" minority shareholders again, than just monetary gains.

If indeed there is another buyer at a higher price, a "good CEO/owner" would do the deal now alongside with the G.O. as minority shareholders have bought and held Astro because of its undervaluation, and hence should be part of the fruits at the end. But thats usually spoken by poor analysts (poor as in monetary wise), maybe thats why some people are very rich and some are not.

If You Are Bullish Long Enough .......

As the saying goes, if one is bullish or bearish long enough, both will eventually be right. I couldn't be bothered anymore over the hoopla over Astro when it was suspended a couple of days back. Not again, I say, sometimes its the "boy-who-cried-wolf" syndrome ... Astro went through the same pattern a 9 months back, I spotted the surge in volume just a couple of days before being suspended, wahlah .... nothing. Why suspend a stock and announce nothing? Now the actual thing came through, not involved this time though, got me pissed off royally before. At least my anticipated buyout of RM4.20 came close enough.

Malaysian satellite broadcaster Astro All Asia Networks plc said today it would go private after its holding company made a US$758 million buyout offer. Astro, controlled by Malaysian tycoon Ananda Krishnan and state investment firm Khazanah Nasional Bhd, said the move was aimed at “re-energising the company’s growth, both locally and internationally.”

It said the purchase of the 27.1 per cent of the broadcaster that Astro Holdings does not currently own would enable it to pursue expansion of its ventures in China and India, and its new Internet Protocol TV projects.

Astro All Asia Networks (AAAN) chairman Badri Masri said its board received a formal offer today at a price of RM4.30, a 24 per cent premium over the closing price on March 12 before trade was suspended.

The RM2.5 billion (US$758 million) purchase offer values Astro at RM8.5 billion.

“AAAN do not foresee any changes with the ongoing operations of the company and that the company will continue to be managed by the current board and management,” Badri said.

“As a publicly listed entity substantial capital requirements needed for its growth plans may potentially strain the cash flow position and may impair AAAN’s dividend payment capability,” the company said in a statement.

If you have the time, browse through the following postings on Astro and you will understand why so many have given up on the stock:

http://malaysiafinance.blogspot.com/2008/08/astro-we-have-our-own-bp-russia-debacle.html

http://malaysiafinance.blogspot.com/2009/07/why-i-would-buy-astro-now.html

http://malaysiafinance.blogspot.com/2009/07/astro-whoops-there-it-is.html

http://malaysiafinance.blogspot.com/2009/07/lessons-from-astro-exercise.html




Again, as in the usual Malaysian markets, somebody somewhere got the news ahead of everybody. Look at the huge jump in volume prior to suspension. Surprisingly EPF reduced their stakes from 8.65% to 8.61% on the same day. They accounted for 50% of the trading volume prior to suspension in the afternoon. Looks like it wasn't just me who gave up on the Astro privatisation theory - even EPF took the opportunity to sell down a bit. Ooopss ... this time really got privatisation.

Can't win em` all ...





p/s photos: Gu Chen

Looking Back On Returns

For the first quarter of 2009 I don't think I recommended to look at any one stock as I was not convinced of a rally or a substantive run. The good thing about blogging is that your views are all there to be examined, scrutinsed and criticised ... but it also allows you to reflect and note how your views evolve. Like a diary, the most notable postings started around April 24 this year (can go and check). Its fun to look at how things have turned out, bearing in mind that my assertion that stocks I like should have at least a 30% upside within 6 months, so far so good. If I can get a batting average of 65%, I am happy. There are not many runs in a year for a market like Malaysia, once its there, you have to seize the day and then exit when things are looking dowdy. Usually you can count on 2 runs a year lasting anywhere from 4 -15 weeks each time. Bull markets do not make us smarter, it makes picking winners easier.

FBM 100 Gainers and Losers In August 2009
Top 20 Gainers TR
IJM LAND BHD 23.13%
MULTI-PURPOSE 20.93%
SARAWAK OIL PALMS 18.57%
PROTON HOLDINGS BHD 12.13%
SUNWAY CITY BHD 11.51%
TITAN CHEMICALS CORP BHD 11.32%
MAH SING GROUP BHD 9.78%
BOUSTEAD HEAVY INDUSTRIES CO 9.66%
LINGKARAN TRANS KOTA HLDGS 7.57%
AXIATA GROUP BERHAD 7.14%
SELANGOR PROPERTIES BERHAD 7.14%
AEON CO (M) BHD 6.67% UBG BHD -4.94%
KUALA LUMPUR KEPONG BHD 6.40%
TAN CHONG MOTOR HOLDINGS BHD 5.95%
EON CAPITAL BHD 5.60%
AFFIN HOLDINGS BERHAD 5.56%
GUINNESS ANCHOR BHD 5.48%
AMMB HOLDINGS BHD 4.78%
PETRONAS DAGANGAN BHD 4.78%
PPB GROUP BERHAD 4.63%

Source: Bloomberg Note: TRs (total returns), CG (capital gain) & DY (div yield)

Looking Back

April 24 - Confirmation of A Bull Run For Bursa
April 24 - Stocks & Sectors I Like As CI Breaches 1,000 (Property: SP Setia, UEM Land, even Talam, Sunway City, even MK Land. Financials: AMMB, EON Cap). ... safe to say that these property and financial picks outperformed the market substantially ... so far
April 27 - Talam Coming Out Of PN17 0.08 ... had a good run for a while even at 0.14 or 0.15 at some point I believe, still the run should come when its officially out of PN17
April 28 - MK Land Is Pretty Oversold 0.28 ... now at 0.40 but went as high as 0.47, we got our 30% or more
May 1 - Sell In May & Go Away " History repeats itself for a reason, because they do, people never learn and they keep repeating their actions and decisions time in time out. This is the same posting I did 4 years back in May 2006, and repeated this in May 2008, so for all intents and purposes, I should also repost this for May 2009. Personally, I don't think this May-August will be a down period."
May 5 - Stock Picks For A Nice Trade ... these were ok performers, not spectacular, its for a quick trade, if it works good, if not, get out...
SAAG long up to 0.29
Sapuracrest long up to 1.24
IOI Corp long up to 4.50
Kulim-WB long up to 3.32
Kulim long up to 6.00
May 7 - Go Long On The Brokers .. these were good runs, TA went to 1.27 (now 1.20), Affin went to 2.04 (now 1.88), ECM went to 0.78 (now 0.63), HDBS went to 1.75 (now 1.58), Kenanga went to 0.75 (now 0.65), OSK went to 1.58 (now 1.39)
TA long up to 1.03
TA-WB long up to 0.06
Affin long up to 1.77
Affin-WC up to 0.14
ECM long up to 0.66
HDBS long up to 1.45
Kenanga up to 0.68
OSK long up to 1.38
May 29 - Why I Like Pelikan 0.98 ... possibly the best call so far, now still at 1.52, we got our 30% here
June 4 - A Timely Look At B-Land & B-Toto 3.26 / 4.74 .. both did well, especially B-Land
June 11 - Tanjong, This One Can Buy & Hold 13.00 ... now at 15.82, up 21% so far, a bit more to go to get our 30%
June 11 - Whoops! There It Is (GenM) 2.90 ... now at 2.79, not good, I would cut now ..
June 23 - I Like Green Packet At Current Levels 0.70 ... very good entry levels at 0.70, now share price still at 0.705 but I get 1 right and 1 warrant basically FREE for every 2 shares, great return, easily way past 30%
July 13 - Market Commentary - "I don't like many stocks now as I think markets do look tired, but if you point a gun to my head to force me to buy one stock to hold till rest of they year, I would probably say E&O" 1.04 ...if anybody read this closely, they would have made a bundle, went ballistic today to a high of 1.52
July 17 - Why I Would Buy Astro Now 3.62 .. 3.43 now, news did not filter out as I had hoped, wishy washy developments, sell
July 24 - Why I Am Keen On MPHB Now 1.58 ... 2.11 now, we got 33%, enough
August 4 - Why I Like DRB Hicom 1.13 ... went towards 1.30 but fizzled out, still very keen on this, can hold on
August 12 - Why I Like IJM Land 1.81 ... went to 2.05, now at 1.98, will wait for my 30%
August 21 - Why I Like Bumi-Commerce Bank 10.30 ...recent call...
August 27 - Why I Like QL Resources 3.34 ...recent call ...

The above were views on stocks and sectors that I like, 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 (donations are welcomed though). 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.

p/s photo: Fiona Xie

Lessons From The Astro Exercise

Even when you predict correctly that a corporate exercise is forthcoming, you still risk not making money and even losing money because you do not have all the details of the exercise. Unless I am the actual CFO handling the deal or the bankers advising the deal, the risk in not knowing everything is there. If I do know everything, then I would be dealing on insider information, which is illegal.

a) Its likely to be a sale of foreign operations to Usaha Tegas, which is not a buyout offer for Astro shares. A buyout would set a minimum price to be offered to shareholders, thus raising the bar and transaction platform towards that level. Say the buyout is RM4.00 or RM4.20, the share price would gravitate towards that level. Since this is not a buyout of Astro shares, there may be some disappointment, hence some who were holding trading positions got out.

b) Silly to suspend the shares for one session and then to announce NOTHING. This is very poor form by Astro. Why suspend for one session and say nothing??? You could have made the same announcement that the company is considering some alternatives, without needing to suspend the shares. You suspend then NOTHINg concrete comes out, people will be disappointed.

c) The Straits Times seems to have a scoop on the coming deal. It cited a RM1 special dividend, which is very good. Getting rid of the cumbersome foreign operations to Usaha Tegas will bring cash to Astro without the accompanying risk and uncertainty and gestation period needed to bring forth positive cash flow from the overseas operations. But Astro made no such announcement??!!

d) How should one regard the shares at this juncture? I would still hold it till a proper announcement is made.


p/s photo: Ema Fujisawa

Astro - Whoops!!! There It Is!!!

Well, you didn't have to wait 2-3 weeks after all. The restructuring plan is even better than I had anticipated because it takes out the troublesome international operations. Good luck to those who got in.

KUALA LUMPUR, July 18 — Malaysian tycoon Ananda Krishnan is set to restructure his premier satellite television operator, Astro All Asia Networks, in a RM9 billion transaction that will rank as the region's largest corporate exercise so far this year.

Under the proposed corporate deal, Astro's two main shareholders — the Ananda-controlled private investment company Usaha Tegas and Malaysia's state-owned Khazanah Holdings — will acquire the satellite television company's fledgling and still unprofitable international business interests.

The planned hive-off of its international business will turn the Malaysian-listed Astro into a clean entity that will house its profitable domestic operations, bankers close to the transaction told The Straits Times.

The corporate restructuring exercise, which could be announced as early day after tomorrow, will also feature a major sweetener for the company' shareholders.

The company is set to announce a one-off dividend payment of about RM1 per share, the bankers said, adding that the whole deal will value Astro at around RM9 billion.

The planned transaction is set to remove the drag on Astro's share performance, which has been bogged down by problems in its international operations.

Speculation that a restructuring is imminent has re-ignited interest in the stock in recent weeks.

Astro shares, which have been hovering at just under RM2.80 apiece for much of the year, currently trade at around RM3.50 apiece.

A windfall for shareholders is emerging as a hallmark of Ananda's large corporate manoeuvres.

When he launched his buyout of his listed mobile telecommunications company, Maxis Communications, in May 2007, he paid sharp premium for the shares held by the public in a deal valued at over RM16 billion.

According to bankers involved in the Maxis transaction, government-controlled entities such as Khazanah, Permodalan Nasional, the Muslim pilgrimage fund Tabung Haji and the two national pension funds collectively received just over RM7.5 billion for their holdings in the mobile telco.

Under the soon-to-be-announced Astro transaction, Khazanah, the state investment agency modelled along the lines of Singapore's Temasek Holdings, will receive close to RM340 million from the dividend payout, bankers with knowledge of the deal said.

Khazanah will also retain its 22 per cent interest in the listed Malaysian entity and control a roughly 33 per cent stake in the private vehicle that will house Astro international business.

Ananda's Usaha Tegas and its other affiliates will control the remainder in the yet-to-be-named private entity, the bankers said.

Over the past decade, the 71-year-old Ananda — who is ranked as one of South-east Asia's wealthiest tycoons — has emerged as a powerful force in the region's multimedia sector, with Astro and Maxis forming the cornerstones of his new-media empire.

Astro, which has invested over RM1 billion to develop its own content for the region's large Malay-language speaking population, beams its services to more than three million households currently. Bankers say the company's customer base could hit 3.5 million in the next three years.

But results from its overseas investments have been mixed.

Its foray into Indonesia, under a joint venture project with the powerful Lippo Group controlled by the Riady family, has been a disaster.

Astro is now caught in a messy legal wrangle with Lippo and has been forced to make provision for losses of just over RM1 billion for its investment in the Indonesian venture.

The company has moved into the entertainment and media markets in India, China and other parts of South-east Asia, and bankers estimate that Astro will require investment of over RM1 billion in the next three years to develop these markets. — ST

p/s photos: Reon Kadena

Why I Would Buy Astro Now

We all know the story, you can be buying because of the story 3 months ago or even 6 months ago. Why now for me? My views:

1) Ananda will take the bloody thing private because markets never value Astro properly.

2) The disparity in valuation looks at Astro as just a normal business, and not sufficient merit is given to it as a near monopoly, and its library of assets.

3) The lawsuits in Indonesia basically will hamper any investor interest for some time, might as well take it private.

4) Taking it private, then cleaning up the legalities, and reinjecting into a bigger media concern would be the way to go.

5) But why now... its because I like the volume traded, I like the price movements, and I like the timing (not like 6 months ago when bank lending is tight and there were a lot more uncertainty then)

I would buy up to RM3.70 for a 2-3 week hold. A buyout if it eventuates, should be in the vicinity of RM4.20. I doubt I would lose money even if Ananda stays on the sidelines.


p/s photo: Karen Mok