Showing posts with label Luna Maya. Show all posts
Showing posts with label Luna Maya. Show all posts

Ethnic Issues, Nazir Razak, Amy Chua


Found a great blog in Eddy Daud's Just My Thoughts. His posting captured below encapsulates the various angles on ethnic issues, economic and political elite issues and how that mirror things in our country very well.



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Free speech is a wonderful thing isn't it;

Multimillionaire and CIMB head honcho Nazir Razak has this to say..excerpt from MI

NEP punishes talented Malays too, says Nazir Razak
June 20, 2010

KUALA LUMPUR, June 20 — CIMB chief Datuk Seri Nazir Razak today repeated his call for a review of the New Economic Policy (NEP), adding that the policy has been unfair to the majority of Malays.

Nazir, who is also a younger brother to Prime Minister Datuk Seri Najib Razak, said the time has come for the government to protect the interest of the majority of the Malays and not just selected few.

“I have met a Malay professional overseas who refused to return to Malaysia because he is of the view that successful Malays are not welcomed in the country. This is because the Malays’ success is always linked to NEP,” said Nazir in an interview with Mingguan Malaysia published today.

“In fact some of them refused to return thinking that the NEP is not for them but only to selected Malay groups, so they are better off working overseas,” he said when asked if the new generation of Malays are more open to reviewing the policy.

read the rest
here.






This is what Ibrahim Ali MP and Perkasa Chief have to say..excerpt from MI:

Nazir is NEP product too, says Ibrahim Ali
By Adib Zalkapli June 21, 2010

KUALA LUMPUR, June 21 — Perkasa chief Datuk Ibrahim Ali rebuffed today Datuk Seri Nazir Razak’s criticisms of the New Economic Policy (NEP) by pointing out that the CIMB chief was also a product of affirmative action policies.

Speaking to The Malaysian Insider, the de facto leader of right-wing Malay groups fighting to maintain affirmative action policies as Bumiputera rights urged the prime minister’s brother to be fair in assessing pro-Bumiputera policies in Malaysia.

Yesterday, Nazir repeated his call for a review of the NEP, saying that the policy has been unfair to the majority of Malays.

Nazir, a younger brother to Prime Minister Datuk Seri Najib Razak, said the time had come for the government to protect the interest of the majority of the Malays and not just a selected few.

But the controversial Ibrahim said today that the CIMB chief too had benefited from the NEP.
“That was his personal opinion and I believe he is a product of the New Economic Policy,” said Ibrahim. “Bank Bumiputra, now known as CIMB, was a product of affirmative action policy,” he added.

“Everyone should look at what they have received so that they can be fair to others,” said Ibrahim.

read the rest
here.



Ibrahim Ali also mentioned about a book written by Amy Chua - World On Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, so I decided to google a bit and came up with these review by the Guardian's Martin Jacques .

Excerpts of the said book review:

There is a plethora of books about globalisation, many saying roughly the same thing. This one is different. It is rare, indeed, to read a book about globalisation where ethnicity is at the core of the argument. That must have something to do with the fact that the great majority of authors of such books are white and from the west. The author of this book is a Chinese-Filipina. That is also surprising because, alas, there is little Chinese writing on ethnicity either. But this book is a gem. It is not that everything Amy Chua argues is correct - it is not - but her theme is different, rich and compelling.

Her starting point is that in many developing countries a small - often very small - ethnic minority enjoys hugely disproportionate economic power. As she points out, this is not true in the west: on the contrary, we are accustomed to small ethnic minorities occupying exactly the opposite situation, a very disadvantaged economic position. The classic case is southeast Asia, where the Chinese, usually a tiny proportion of the population, enjoy an overwhelmingly dominant economic position. In the Philippines, the Chinese account for 1% of the population and well over half the wealth. The same is true in varying degrees in Indonesia, Burma, Thailand, Laos, Malaysia and Vietnam.

As Chua argues, rich and powerful minorities attract resentment everywhere: but when those minorities are ethnically different - and highly visible - then that resentment can carry a dangerous charge. "In the Philippines, millions of Filipinos work for Chinese: almost no Chinese work for Filipinos. The Chinese dominate industry and commerce at every level ... all of the Philippines' billionaires are of Chinese descent. By contrast, all menial jobs ... are filled by Filipinos." There is very little social intermixing and virtually no intermarriage. And the disparities, Chua argues, have grown more acute with globalisation and western-inspired market reforms.

Southeast Asia is an acute but by no means isolated example. Throughout Latin America, a small white elite has traditionally enjoyed both economic and political power, as well as cultural and racial pre-eminence. However, while in east Asia anti-Chinese sentiment has long been a powerful political force, in Latin America, at least until recently, there has been little ethnic - as opposed to class - resentment against the white elite. The dominance of a small white elite has long existed in southern Africa. Although the black majority now enjoys - as do their counterparts in countries such as Indonesia and Malaysia - political power in South Africa, economic power remains firmly in the hands of a tiny white elite. In east Africa, that economic elite is largely Indian; in west Africa, it is often, though in a less extreme form, the Ibos. The picture that emerges is that in much (though not all) of the developing world, economic power is largely concentrated in the hands of - to use Chua's phrase - a "market-dominant" ethnic minority.

This disparity between the economic power of a small ethnic minority and the disadvantaged position of the majority ethnic group is a source of great political instability. Ethnicity, as we know, is potentially a highly combustible issue. "That ethnicity can be at once an artifact of human imagination and rooted in the dark recesses of history - fluid and manipulable yet important enough to kill for [Chua's aunt, who came from an extremely rich Chinese family in Manila, was murdered by her Filipino chauffeur with the complicity of her Filipina maids] - is what makes ethnic conflict so terrifyingly difficult to understand and contain." As Chua rightly argues, the mass killing of Tutsis by the Hutus in Rwanda in 1994 and the grievance felt by the Serbs towards the Croats in the Balkans were partly related to the economic advantage enjoyed by the Tutsis and Croats respectively, and the deep rifts that this engendered.....




Interesting how the debate on the NEP will finally end when the PM finally put his foot down and decide what is best for everybody in this country based on our ideals not based on western perception which does not recognise nor understand the complexities of Malaysia's history and the people here who will have to live through the policies set by the Government of the day.

I will try to get a copy of Amy Chua's book of course.


http://eddydaud.blogspot.com/



Understanding "Value Trap"

Those who have been in the markets long enough will understand the term "value trap". It is when you buy and hold something for the longest time because there is great inherent value. However the investor does not know when will the hidden values be unlock by management and/or owners.



Hence investors who are wiser will always bear in mind the "value trap", being locked into something for the longest time, sometimes years. I will present two examples:

Kuchai Development


Its basically a holding company. Its got a substantial stake of 26% in palm oil Sg Bagan and a highly attractive 3m shares of Great Eastern (traded now btw S$15-16). All in the total net asset value for Kuchai Development is around RM260m. It has 120.7m shares (50 sen), which makes for a NAV of RM2.15. Guess what's the share price??? Its just 80 sen. How to go wrong?

Technically you have to outlive the owners or wait till they finally decide to do something with their shares.
When looking at a value company, the first thing to check is the shareholdings level. For Kuchai:
Kluang Rubber 41.9%

Sg Bagan 9.38%

Lee Foundation 4.18%

Kota Trading 1.77%


The top 3 are basically the same group of people and they made doubly sure they have more than 50% as that will stop anyone thinking of raiding the company. So if someone comes along and collect shares and then make a G.O. at RM1.60, he/she will not succeed as long as the controlling shareholders do not sell. They will probably sell if someone comes along and offer a substantive premium to NAV, say RM2.60-2.80 or thereabouts.
The value is in the NAV and then the listing vehicle as a value add.

Once the owner controls more than 50%, there's very little you can do. If you can locate a value company and there is ample free float, plus the controlling shreholder holds less than 40%, then I bet you that many vultures will be cirlcling to take over the company, thus narrowing the gap between NAV and the share price.

It might be OK to hold on forever if the company pays a decent dividend, but in Kuchai's case it paid 0.8 sen in 2008 and 0.45 sen in 2009. If you take the share price of 80 sen, that works out to be a paltry dividend yield of 1% and 0.56%. Really no incentive to own this stock.

http://ima.dada.net/image/9512024.jpg

I really think that there is a strong case for the SC to come down hard on Kuchai because it does not resemble a normal company with on-going businesses. Its strictly a holding company. It does NOT allow shareholders to participate in the growth of the company, it just holds the stakes forever. It does NOTHINg to extract value from their inherent value. Some may say so is Berkshire Hathaway - in Buffett's case, he actively manages his positions, positions will be sold once they reach above fair value and vice versa. Kuchai's position makes a mockery of being a listed counter - anyone in their right mind would be 100x better off to invest directly into Great Eastern or Sg Bagan - there is absolutely no value to its existence.

Pintaras Jaya

The company recorded revenues of RM165.4m in the fiscal year ended June 2008. Its net profit was MYR23.8m in fiscal 2008, or a net EPS of 29.8 sen. For the year ended June 2009, the company recorded revenue of RM130.3m, a slight drop owing to depressed economic conditions, but still managed to eke out a net profit figure of RM11.4m or a net EPS of 14.3 sen. What was key was that the final quarter, or the period Apr-June 09, saw net profit contribution of RM6.238m, which was more than half of the entire 12 month period. The excellent results carried on in the first quarter of the new fiscal period. For the quarter ended Sep 2009, net profit was RM6.288m. It appears that the company has regained traction. If we were to annualise the results, we should be looking at a net EPS of 24 sen for the year ending June 2010.

Pintaras Jaya is a unique company in a dog-eat-dog industry. Its very conservatively managed, and extremely cash rich, you'd think they are in the 4D gaming business. Just their cash balance on hand, if you add their liquid short term investments, comes to RM93.6m, or a net cash per share backing of RM1.17, unbelievable isn't it. Why no one is covering the stock anymore??? At a share price of RM1.60, it literally meant that 73% of the value is in cash already (how big a font can I make this!!!).

Paid Up: 80m shares
NTA: RM2.19

Distributable retained earnings stood at RM96.76m. A share split and/or a lucrative bonus should be in the offing because the company has always been criticised as very good and prudent, but lacks liquidity.

Pintaras Jaya made the coveted list of Forbes Asia's fourth annual 'Best Under A Billion' companies in 2008. Their revenue dipped in 2009 and the company did not make it on the list but as things look, I am pretty sure they will back on the list in 2010.

Dr Chiu Hong Keong, a Malaysian, aged 54 is the founder member of Pintaras Jaya Berhad and was appointed as the Managing Director of the Company since 23 November 1989 and elected as the Chairman of the Board on 18 October 1994. He is a member of the Risk Management Committee. He graduated with a Bachelor of Civil Engineering degree (1st Class Honours) from the University of Auckland, New Zealand in 1977 and obtained his Doctorate of Philosophy degree in Engineering from Monash University, Australia in 1982. He worked as a Geotechnical Engineer with the Victorian Country Roads Board of Australia for a brief stint before returning to Malaysia to join Pilecon Engineering Bhd in 1982 as a Geotechnical Engineer. In 1983, he joined Ho Hup Construction Company Sdn Bhd from 1984 until 1989. He holds a total of 45,636,898 shares (direct and indirect) in Pintaras Jaya.

Name of Shareholders Shares
1 Pintaras Bina Sdn Bhd 29,016,158 36.24%
2 Chiu Hong Keong 11,407,860 14.25%
3 Khoo Yok Kee 5,212,880 6.51%
4 Khoo Keow Pin 5,041,652 6.30%
5 Alliancegroup Nominees (Tempatan) Sdn Bhd
(Pheim Asset Management Sdn Bhd for Employees Provident Fund) 3,000,000 3.75%
6 Chua Hock Chin 1,724,000 2.15%
7 HSBC Nominees (Tempatan) Sdn Bhd
(HSBC (M) Trustee Bhd for Singular Asia Flexible Fund) 1,063,600 1.33%

http://ima.dada.net/image/2546597.jpg

How do you value such a gem? RM1.17 of the share is in cash, which mean at RM1.60, the company is costing 43 sen only. Let's look at the net EPS again in 2010, its going to be 24 sen, less than 2x PER going forward? I am willing to ride this one for a long time because something is bound to happen very soon:
- the controlling shareholders should just take this company private, I mean you can literally put out a G.O. up to RM2.40 and still be way ahead with nearly RM100m in cash
- the company should be looking for acquisitions to expand its platform as it is being way too conservative, there should be no reason to keep more than 20% of your market cap in cash
- at current valuations, the owners would be very silly to even want to sell any shares, hence it is timely to try and improve liquidity and reward all shareholders, i.e. do a split and a 1-for-1 bonus, which the company can easily afford and should do

Well, the company has a lot going for it but the main owner couldn't really care about the share price. I do think the company will unlock some values but we will not know when as we have the same situation that the owner owns 56% of the company. What sets Pintaras apart from Kuchai was that it paid dividends of 9 sen and 6.4 sen in 2008 and 2009 respectively. At 1.60, that works out to be a dividend yield of 5.6% and 4%. At least investors will be happy to hold onto Pintaras while waiting for values to be unlocked.

The former is really a bad value trap but the latter is not.


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 (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.

Luxchem, Another Gem In The Making


The principal activities of Luxchem are manufacturing and trading of unsaturated polyester resin and related products, import and distribution of chemical and pertochemical products. It is principally an investment holding company
with two subsidiaries - Luxchem Polymer Industries Sdn Bhd and Luxchem Trading Sdn Bhd. Three of Luxchem’s subsidiaries are ISO9001:2000 certified. This provides quality assurance to Luxchem’s customers.

http://ima.dada.net/image/2546611.jpg

The industrial chemical supplier and unsaturated polyester resin (UPR) manufacturer currently it has seven distribution and marketing centers, of which six are in Peninsular Malaysia and one in Singapore. Luxchem supplies over 400 types of industrial chemicals (basic industrial chemicals, plastic in primary forms and synthetic rubber including UPR) to some 800 customers from industries that use rubber and plastics in the production process. The large client base limits Luxchem’s customer & industry specific risks and provides Luxchem strong bargaining power. Luxchem’s customers are spread out into 10 different manufacturing industries. The diversity enables Luxchem to mitigate risks arising from a particular industry while still exposing itself to any of the industries’ growth.

The Group produces Malaysia's most comprehensive portfolio of unsaturated polyester resins under the brand name POLYMAL. Luxchem is a convenient one stop supply centre that supplies 400 types of chemicals and 100 different grades and types of UPR. Luxchem is currently focusing on its UPR segment. It has a wide number of applications and is a potential growth area. Moreover, this segment has a high barrier to entry due to the high capital investment and level of technology required.Today, LCB exports to Thailand, Singapore, Indonesia, Vietnam, Philippines, China, Australia and the Middle East.




SUMMARY OF KEY FINANCIAL INFORMATION
31/12/2009

INDIVIDUAL PERIOD
CUMULATIVE PERIOD
CURRENT YEAR QUARTER
PRECEDING YEAR
CORRESPONDING
QUARTER
CURRENT YEAR TO DATE
PRECEDING YEAR
CORRESPONDING
PERIOD
31/12/2009
31/12/2008
31/12/2009
31/12/2008
$'000$'000$'000$'000
1Revenue 83,66073,000305,308331,615
2Profit/(loss) before tax 6,9293,49025,52123,580
3Profit/(loss) for the period5,1012,73218,97117,973
4Profit/(loss) attributable to ordinary equity holders of the parent5,1012,73218,97117,973
5Basic earnings/(loss) per share (Subunit) 3.903.3014.6015.00
6Proposed/Declared dividend per share (Subunit)5.005.007.005.00








AS AT END OF CURRENT QUARTER
AS AT PRECEDING FINANCIAL YEAR END
7
Net assets per share attributable to ordinary equity holders of the parent ($$)0.79000.7100


The company registered excellent results for 2009 with a net profit of RM18.9m or a net EPS of 14.6 sen. Luxchem has also declared a total of 7 sen dividend for 2009. At RM1.03, the stock trades at a ridiculous 7x 2009. It pays very good dividends, what more you want.

http://ima.dada.net/image/9511739.jpg

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 (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.

SGX Cracks The Whip



One may think that there are plenty of shenanigans in Malaysia, but they are just as rampant even in Singapore stock market. There are many small penny stocks that are being played like there is no tomorrow. Controlling share blocks change hands frequently causing many to speculate on "new order of business" or causes investors to bet on personalities, or mavericks as we like to all them. There are also problems with some foreign listings. The new rules by SGX are necessary.

One of the more important development would be the need to disclose on shares being collateralised by the controlling shareholder - we all know what that will mean. It may also hit some Malaysian company owners who have pledged their shares in Singapore in exchange for lines of credit - they certainly will not want that information to be in the public. Can you guess which Malaysian companies will be affected? I know a few but to put them up would be unethical, so do your own research and be careful. In fact some may already be "affected".

Business Times Singapore: Errant directors of listed companies may come under greater scrutiny from the Singapore Exchange (SGX), which could object to their appointment and rap them publicly.

Proposed new rules also have more safeguards against poor governance for listings with large overseas operations. They demand more disclosure over possible changes in control of companies due to share pledges for loans. In a consultation paper issued yesterday, SGX said that when companies become the subject of an investigation of “irregularities or other wrongdoing”, they may require approval to appoint directors, chief executives (CEOs) and chief financial officers (CFOs).

Controlling shareholders under investigation may be prevented from installing a proxy after being booted out from the company.

SGX also seeks to cement its right to censure publicly or object to the appointment of key executive officers or directors if they have breached regulations or have “refused to cooperate with the regulators”.

The moves will make directors and executives of public listed companies more conscious of their duties, said Lee Suet Fern, managing partner of Stamford Law Corporation. “There was otherwise a lacuna where errant directors and executives who had caused breaches of our rules but had not actually committed a crime, could continue unscathed.”

An outgoing CFO must also confirm with SGX that there are no irregularities or material differences in opinion with the board or management. This could act as a whistle-blowing mechanism. The regulator also wants companies to ensure that an independent director (ID) is sitting on the board at all times. In 2006, now-delisted retailer Robinson saw all its IDs quit after a board tussle.

For foreign listings, or companies with “offshore principal subsidiaries”, at least one ID who is staying in Singapore should be on the board. One market watcher cautioned that this might put too much burden on IDs and deter some from sitting on the board. If foreign listings are being audited by overseas auditors, new rules may require such companies to have a joint sign-off with a Singapore accounting firm for the accounts, as mentioned by then-CEO Hsieh Fu Hua in August.

Hsieh added then that controlling shareholders may soon need to disclosure their share pledges to the public, an issue that had been magnified by the recent slew of S-Chips’ CEOs losing their controlling stake to debtors after they defaulted on loans.

Under the proposal, shareholders must publicise their pledged shares when the total stake is at least 30 per cent, when an enforcement may cause a breach of loan covenants by the company, or when the controlling shareholder is the single-largest one and has pledged at least half of his stake.

“It becomes a company matter and not a personal matter in such cases and I believe the shareholders’ right to know far outweigh the privacy concerns,” said Mak Yuen Teen, co-director of the Corporate Governance and Financial Reporting Centre at NUS.

In addition, SGX proposes to ban the transfer of shares in a company that is under trading suspension. It wants controlling shareholders and their associates to have their shares custodised with the Central Depository or a depository agent who has made arrangements with SGX to restrict transfers of shares during suspension.

Newly listed companies have also been asked by SGX to consider engaging a governance adviser for two years after their initial public offering. In some instances, SGX may ask the company to appoint an adviser. The consultation paper will be available for feedback until Jan 15.

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In a bid to increase market transparency, the Singapore Exchange (SGX) has said that it is making it compulsory for brokers to mark all short-sell orders. A short-sell order is defined as any sell order where the seller does not own the quantity of shares sold at the time of placing the order. SGX said it will institute this policy of marking short-sell orders in the first half of 2010 in consultation with the Monetary Authority of Singapore (MAS). In addition, statistics of aggregate short-selling activity for each individual security will be published daily.


p/s photos: Luna Maya