The Song Remains The Same (NOT)

The internet has changed the playing field of many industries, in the way we produce, network and reach our audience. The internet is a great equaliser, it brings prices down, it makes almost everything cheaper. We get to cut out a lot of the middlemen in transactions.



However, there is one industry that stands out for being most maligned by it, causing the entire business model to shift dramatically. Its like talking pictures being invented and accepted by the masses, have a heart and see how those whose livelihood was connected to silent pictures - what a mind blowing change for them. Then we have the invention and acceptance of television, which totally displaces much of the "influence and attraction" of the radio.


However, even those two scenarios added up cannot be compared to the tumultuous upheaval of the music industry by the internet. Now music is almost a commodity. You'd be hard pressed to find anyone paying anything for music. $1.00 seems to be the norm set by Apple.


Can anyone turn this around? I think not because we now listen to music from our phones and pods and pads, not so much from the hi-fi systems at home. There is Spotify now, a morphed Napster, offering an enormous library most for free.


How does this affect you and me? Well, it will and have affected the livelihood of musicians. Record labels will not try to promote new acts, how to when even Jay Chou sells less than 10,000 for his latest album in Malaysia? Now albums are there not to make money but to promote the artistes for live performances. Don't you ever wonder why suddenly over the last 5 years, we see more and more international artistes at our shores - I mean, last time, they would probably skip Malaysia, now we are an important destination.



It affects the kind of artiste that will get recorded or promoted - American Idols, the established players, no one will go for an untried and untested artiste. It used to be that bands in pubs are great breeding ground for great bands, now even the biggest record labels and producers will stay away from them - so we all lose out as that channel gets crushed.


Ever wonder why there have been so many more of the Il Divos, the 5 Tenors, the 20 Chinese lady classical musicians, the 2Cellos - all are marketed hype of beautiful people that can play well to an audience. If you are below average looking as a musician, fat hopes baby. We will never get our Jose Felicianos, our Stevie Wonders .... 


The Idols, X-Factors, The Voice (and I am sure we will get the future Lung Busters, The Throat, etc.) are ok on their own but if they are the main source of future global musicians, then we are pandering to the lowest common denominator. We will exclude the Lou Reeds, the 10ccs, the Norah Jones, etc.. of the world.


I dread about the kind of musical talent that will come to the fore in the future, all we have will be the Underwoods, the Susan Boyles ... not that these are bad things, these are just interpreters of things - where will we find the new sound (Adele and Rumer are exceptions), where will we discover our Bebel Gilbertos, our Joanna Wang (if not for her father) or Blur?


As musicians, they will always bring this up as fucking up their industry, yes... stomach it or leave it. Know that you might not make tons of money from it, and you better be damn good as a performing live artiste. Its not the same anymore, no point bitching about it, the tide has shifted. You can still make it but the path is very different and you have to play a lot more gigs, grow your audience bit by bit, play larger and larger venue until the record labels deem it as sufficiently "safe" to pick you up.

Kids These Days: Spotify, Radiohead, and the Devaluation of Music

CAL STAMP

The other day I had an epiphany: To the average music consumer, a song is 

worth less than a candy bar. It might last longer, sound sweeter, and offer a 

more meaningful experience, but don't ask us to spend more than $1 on it. In 

fact, we'd prefer you didn't ask us to spend any money at all. That's why we 

loved Napster, that's why we loved Pandora, and that's why we love Spotify.

Early last summer the popular European digital music service Spotify came to 

the United States with much blog buzz and fanfare. Boasting a catalog of over 

15 million songs, Spotify offers free streaming access to its entire library 

through any laptop or mobile device. It's ad supported, but subscribers willing 

to shell out $10 a month can enjoy their playlists without the interruption of 
advertisements. Not a bad deal for music fans. And at first glance, it's not a 

bad deal for musicians either. The artist is paid royalties on a per play basis.
 Everybody wins, right? Not really.

Will Baker

Spotify doesn't pay pennies on the dollar, it pays pennies on the penny. Recently, indie label Projekt Records pulled out of its deal with Spotify, citing a minuscule $0.0013-per-play payout as one reason for bailing. In 2010, The Guardian published an article in which author Sam Leith revealed a rather shocking piece of information: In the space of a few months, Lady Gaga's smash hit "Poker Face" received over 1 million streams. She was compensated to the tune of $167.

Spotify has since countered that claim, saying that the number is misleading and refers to the performance and publishing royalties paid to the collecting agency of the song's Swedish co-writer. But $167 sounds absurdly low no matter how you slice it. Of course, one could argue that Lady Gaga and her team don't need the money. Fans argued the same thing after Metallica sued Napster in 2000. When the conflict is framed as a David-and-

Goliath showdown between mega-rich rock stars and broke college students, 

there's little question who will win the fight for the public's sympathy.

But that's not the battle that's being fought. The real victims here are so 

powerless no one even remembers they exist. When an established band like 
 Radiohead gives away a record for free (as it did with "In Rainbows") it 

increases exposure, which in turn boosts touring and merchandising revenue. 

But the vast majority of bands out there aren't Radiohead. They're small, 

unknown groups with no money or support structure. Sure, they can give away 

their record. But will anyone notice or care? Probably not. Meanwhile, 

Radiohead and Spotify are busy teaching us that, as consumers, we aren't 

responsible for compensating our artists. In fact, we're being conditioned to 

feel inherently entitled to the fruits of their labor. The amount of time and 

money the artist has invested is of little concern. If we listen to something, 

then it is ours. It's a perspective similar to that of a small child who sees a 

new toy and shouts, "MINE!" He's always been given everything he wants. 

Why should this be any different?

 

Many of us like to celebrate the apparent demise of the big, bad record 

companies as a justification for this behavior. We like to say that their 

business model is outdated and now they're paying the price. Good riddance, 

we say. Greedy bastards! But guess what? We've been singing that tune for 

over a decade, and those greedy record companies are still here. Sure, they're 
wounded. So they consolidate. They drop artists from their roster. 
They stop developing young acts. They stop signing new bands. They stop 
taking risks on anything different or exciting. They dump all their money into 
the tiny handful of top-grossing acts that keep the label afloat, like Lady Gaga
 and Metallica. When they do sign anyone, they sign safe bets like 
American Idol contestants and YouTube child sensations.

The unknown bands are left floundering in cyberspace, hoping in vain that they 

can amass enough Facebook fans to entice industry folk and get noticed. If 

they're smart, they tour. But touring is expensive, and since their records aren't
 selling well at gigs, they have trouble keeping the van gassed up. Unless 
they've been blessed with an angel investor or rich parents, life on the road 
isn't financially sustainable. So they figure the Internet is the way to go. Them 
and about 15 million others. They try to get some blog attention. Maybe
 Pitchfork will pick them up as the flavor of the month. But then what? 
I still don't have any  friends who listen to The Weeknd. Bands don't break
 through blogs.

Point is, it's hard out there for the little guys, the unknowns. And let's be 

honest, the trickle-down devaluation of music hasn't been much better for 

audiences than it has for bands. Sure we save a couple dollars, but the culture 

of one-hit-wonders, reality star divas, and the general cycle of crap that gets 

churned out by the pop culture machine has only worsened, thanks to musical 
Reaganomics. They say the customer is always right, but when the customer 

stops valuing the product, why bother investing in its production? Innovation 

dies in favor of the fast, the cheap and the guaranteed.

So pay for your music, boys and girls. Support the good stuff that's out there, 

and skip services like Spotify. We can't afford to live off candy bars forever.

MAA Clarified

I was going through some comments in some forums, most were negative on the news of selling 100% of MAAB for RM344m. Do not mistake MAAB for MAAH, the listed vehicle. The listed vehicle is MAAH.

MAA Holdings Bhd owns:

100% MAA Berhad
75% MAA Takaful
100% MAA Corp Sdn Bhd
49% MAA Bancwell Trustee



The deal does not include MAAH's Islamic insurance unit, MAA Takaful Bhd and the rest, which are quite attractive on its own. However, it is learnt that both parties may talk about the takaful business once the latest deal is concluded.

Zurich FS' acquisition of MAAB may spell the end of its alliance with Koperasi MCIS Bhd through their joint venture, MCIS Zurich Insurance Bhd. Koperasi MCIS holds a 43.69 per cent stake in the joint venture, while Zurich FS owns 40 per cent. In 2009, Business Times reported that Zurich FS, Switzerland's biggest insurer, may sell its shares in MCIS Zurich after a failed plan to expand the business had strained relationship between the major shareholders.



"It is well known that Zurich FS has been planning to reposition its operation here since early 2009. It has considered several options, including acquiring an alternative licence and gaining control of another insurer such as MAA," said the source.

Nevertheless, Zurich FS could also merge MAAB with MCIS Zurich and retain management control of the enlarged entity, or sell MCIS Zurich and transfer its business and expertise to MAAB.

Zurich Insurance's 70 per cent stake in MAAB is the maximum allowed under Bank Negara Malaysia's (BNM) relaxed foreign ownership rules. BNM does not allow insurers to own two insurance companies in Malaysia. This means that Zurich FS must sell its MCIS Zurich's insurance business or merge the insurers.

Though MAA Holdings got the approval to sell 100% of MAAB to Zurich, that would contravene the 70% rule, unless Zurich gets an exemption, or a time frame to sell down the 30%.

It is also understood that Zurich FS may have had prior engagement with BNM to explain its intention and address its concerns.

As at end of 2010, MAA Holdings has a net asset per share of RM0.94. Its paid up is 304.3m shares. There are no major liabilities that is not covered by its net assets.



Verdict: The deal is very good for MAA Holdings, with their remaining Takaful business and cash, they could go into takaful in a big way, possible merging or buying a listed/unlisted takaful business ... I would think RM1.50-1.60 is the fair value as the game plan unfolds.

Finally, Grey Clouds Dissipating

Two things happened which should boost equities locally. Commodities correction, and more importantly, the rate hike by Bank Negara. The uncertainty has been weighing on the market for sure. Against market expectations, Bank Negara yesterday raised the overnight policy rate (OPR) by 25 basis points (bps), citing concerns on inflation. BNM also increased the statutory reserve requirement (SRR) ratio by 100bps to 3%. Though the interest rate hike was widely unexpected, it may be an indication that the economy – as well as inflation – is gathering strength.



Most economists had expected the first hike to take place later in the year, as the OPR is gradually returned to its pre-crisis level. Meanwhile, the SRR hike is seen as a pre-emptive effort to curtail the build-up of excess liquidity, which BNM said could result in financial imbalances and create risks to financial stability.

OPR raised to 3% and SRR by another 100bp - Bank Negara raised the overnight policy rate (OPR) from 2.75% to 3%. This is the first hike since July and is in line with our view of a total increase of 50-75bp for 2011. The statutory reserve requirement (SRR), which was reduced from 4% to 1% at the end of 2008/early 2009, was raised a further 100bp to 3% following the similar hike at its March meeting. The SRR increase is also not a surprise and the fact that Bank Negara is willing to raise rates amidst a stronger ringgit indicates that Bank Negara is willing to let the ringgit strengthen further, and that liquidity is still ample in the system.

Non-bank earnings impact appears limited, if any - The impact on non-bank profits from higher rates, which should also drive a further rise in the local currency, should be largely neutral. This is due to the low gearing of the market and the fact that there are more importers than exporters within the listed market and our coverage universe. In the two years following the last tightening period, earnings expanded by a cumulative 84% (ie, 2005-07). This is not necessarily due to the rate hikes, but does show that the rate increases did not dampen economic activity and earnings potential.



Bank margins should benefit - In addition to assets tend repricing faster than liabilities, banks would also benefit as the proportion of fixed-rate loans is relatively low and liquidity conditions are healthy. The banking sector net profit could be enhanced by around RM555m from 50bp OPR and 300bp SRR hikes, which equates to 2.2% of our forecasts. The key beneficiary is AFG while the benefit to HLBK, RHBC, Maybank and CIMB are also relatively high.

Reasons & Rhymes

So what caused yesterday's slump in most markets? I love it when everyone is asking the same question, and nobody seems to have answer. Its like debating how we know if there is a God for sure. The usual market weakness reasons would not be sufficient to explain the shareper than usual daily losses.

Bloomberg has this to say: "Asian stocks fell, dragging a benchmark regional index lower for a third day this week, on concern U.S. unemployment and efforts by emerging countries to tame inflation will hamper a global economic recovery."

Hmmm, ok Bloomberg, you need to do better than that.The FBM KLCI fell 2.09% or 32.08 points to 1,503.99, the steepest fall since it lost 2.11% on Nov 6, 2008. YTD, the FBM KLCI lost 0.98%. Losers thumped gainers by 750 to 160, while 223 counters traded unchanged. Volume was 2.23 billion shares valued at RM3.13 billion.

Hong Kong’s Hang Seng Index fell 1.97% to 22,708.62, Taiwan’s Taiex lost 1.89% to 8,836.56, South Korea’s Kospi fell 1.81% to 2,008.50 and Singapore’s Straits Times Index lost 1.5% to 3,103.39. However, the Shanghai Composite Index rose 1.59% to 2,818.16 and Australia’s S&P/ASX 200 Index added 0.20% to 4,914.40

Then we go searching for reasons to attach to the picture, some said its the Javanese burning of 3 churches. Hmmm, read closer, no one died, it was an orchestrated thing by a small minority extremist group. Not sufficient reason.

Then there are those who cited China's recent rate raises. Old story man, even Chiuna was the sore thumb yesterday gaining substantially. Fears of other Asian central bankers doing likewise, well, its a maybe but WE ARE COMING from such a low base rate, surely any rate hikes are not sufficient to turn people off - sounds logical but underwhelming.



Then there are the experts who say foreign funds are moving out in droves. Pleeassee la people, institutions do not act as one. Its not like they collude at a monthly meeting and say lets get the hell out on these 3 days. We tend to blame foreign funds when markets are down, in reality, there are always buyers and sellers both local and foreign. There are good and bad fund managers, good and bad investors, local or foreign - its too simplistic to attribute the day's weakness or strength to just one group of people. Its bigger than all of us.

We try to make it "small" by being able to explain things away, but we are belittling the market's predictability and in many ways, the market has a mind of its own which is difficult to fathom if you look at it on a day to day basis.

The OZ markets closed higher albeit slightly, hence the markets really started to turn late. China was not affected and that tells a tale. Its program selling, especially weakness seen in indexed stocks as they were sufficient liquidity, index related.

Why trigger the program selling, well if you receive some bad news during Asian time zone but the bad news is for US companies, which you think is sufficiently bad to turn sentiment southwards, the easiest is to sell futures of any markets stock indices. That in turn triggers sell programs further in selling down stocks as the disparity in futures would cause these programs to buy futures and sell stocks to cover.

So, what's the bad news? Cisco’s shares declined 10%-12% in premarket trading after the network-equipment maker late Wednesday warned of declining public spending and posted weaker quarterly margins. Cisco is a big enough barometer to pull down other big techies for sure. So, it was a bet, which I think is pretty shallow. It may not just be Cisco but an aggregation of factors, but once program sells hit the markets, they tend to exaggerate the downside as "no one seems to know the real reasons, so they sell first ask questions later".

Believe you me, I think the US markets will be able to hold onto its sensibilities and we should see a steadier market tomorrow.

One can easily concoct a bad scenario for the same event or paint a good one, its just shifting the reasoning to suit where the markets are headed. For example, US jobs figure is still bad which is bad if you are looking from a recovery angle, but good as it will maintain low rates there much longer, thus making stocks more attractive.

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.

Fiscal Deficits, Current Account Surplus & Asset Class Returns As At May 31, 2010

Wow, May was THE month alright. Look at the returns for May. Everything were red except for US bonds. May was the worst month for the major asset classes since the dark days of February 2009. Virtually everything suffered with more than trivial losses. Treasuries were the exception, thanks to the revived rush to safety.

Stocks around the world led the decline, with foreign developed markets posting the biggest loss among the major asset classes. What changed the sentiment so sharply in May? A renewed fear of deflation was one catalyst. Investors are increasingly focusing on the growing burden of debt that weighs on the global economy, particularly in the mature countries of Europe, Japan and the U.S.

It was inevitable that the surge in asset prices across the board would come to an end. That doesn’t mean that expected risk premiums are nil or negative. But the investment landscape ahead is set to become more complicated. In the spring of 2009, as it became clear that the global economy wasn't going to implode after all, the markets repriced assets accordingly. Markets are no longer trading in anticipation of another Great Depression.



We may have avoided another Great Depression but we now have the The Winter of Euro-Discontent. To a large extent, we can say that this is more localised than the subprime mess. In another angle, the Eurozone crisis is a different version of the US/UK subprime mess as well.

The US and UK governments acted swiftly to contain the mess, by rescuing dubious companies that cannot be allowed to fail. The US government can print money liberally and even with an enlarged debt, the US is still the US. Not so for many of the governments in the Eurozone. If Greece was the US, Greece would not have been under such a spotlight. It would have been able to print its way out of its troubles.

What is real is we are going to see a long period of deflation within Eurozone, with equally weighty weights on the Euro currency, and other independent European currencies. Public debt or sovereign debt inhibits movements in or grandiose monetary policies. While they have to placate foreign buyers of the attractiveness of their bonds, they are hamstrung by not being able to do deficit-stimulus. Unemployment and social unrest will only climb.



All this will mean that other countries may be wanting to delay tightening, such as the US, China and a host of more vibrant emerging markets. When investors compare the EU with the rest of the world, its obvious. Then you STILL have a low interest rate regime everywhere, in fact a prolonged low interest rate environment - that will cause funds (now on the sidelines) to pour into the US and other emerging markets. The more EU plays out the cards they were dealt with, the more optimistic I am of a strong equity market for the US and emerging markets in 3Q and 4Q.

Technically, Japan is in a more difficult position with a huge fiscal deficit but they still have a current account surplus, and that should be the key in estimating the probable recovery by EU countries in crisis. Watch their current account movements and signs of improvement will mean they are on the mend. Well, we all know that that is not going to happen till 4Q2010 if not later.

As a side note, Malaysia looks impressive with its strong current account surplus, and owing to our deficit-stimulus funding, our fiscal deficit is a bit high but not exceedingly so. Being an emerging market economy, it would be wise to bring the fiscal deficit down gradually over the next 3 years.

Country Default Risk

The Dubai debacle has prompted Bespoke Research to put up the various country risk of default. There are CDS being traded that measures the cost of insuring $10,000 of country debt for 5 years. If you look at the table, Dubai's cost is $541, which is comparatively a lot better off than say, Argentina $985, Venezuela $1,170. However, $541 is a very very high figure. You can get a sense of just how global traders view Dubai's risk of default by looking at countries that are a bit cheaper to insure: even the hellish Iceland is at just $398, however that has dropped from a highly precarious $976 at the end of 2008; the problematic Russia cost only $218.

Surprisingly, Indonesia's risk to insure is very high at $231. Malaysia looks like a hero among these countries, costing only $117. The risk traders are not stupid, they do look at everything, they have China at just $87.

The USA still have its reserve status firmly intact, despite the recent rumblings over the dollar and the furiously overworked money printing press by the Fed, it only cost $32 to insure. Australia is at a highly enviable $34.

I should really start to trade these country default CDS. I think on a 12 month view, my likely preferred trades in my order of attractiveness would be:

1) Buy Japan at $81 (buy as in hoping that the cost to insure would go much higher over a 12 month period).

2) Buy US at $32.

3) Buy Australia at $34.

4) Sell Indonesia at $231.

5) Buy Egypt at $241.

6) Buy Mexico at $159.

7) Sell the Philippines at $208.

Funnily enough, I cannot really place a bet on Malaysia, don't really have a strong clue up or down ..lol. Even curiouser was that I have a better sense of countries where their risk is seeming rising, but not as strong a conviction for countries on the improve.

Oh, to explain my top 3 bets: Japan's public debt is actually quite insurmountable and is reaching a climax - they keep having to change the Prime Minister because no one has the political will to effect the changes, something's gotta give soon; the USA reserve status is overstated, and while I think the status will remain, it won't be as strong as before and a gradual realignment is necessary (i.e. weaker dollar) to get the country on a proper debt reduction diet; Australia's euphoria is largely centered on China's state funds voracious appetite for resources, I do not expect that to go unabated, a lot more downside than upside from here, I expect the OZ government to be a bit more restrictive in "selling natural resources" to China in the months ahead.

p/s photo: Olivia Ong

Keep An Eye On Magna Prima

Well, I cannot really put this under "Why I Like..." category, but I would say that Magna Prima bears watching. Things seem to be 'happening' in the near future for this counter. Magna’s earnings in the near-term will continue to be underpinned by its Magna Ville, Dataran Otomobil and U1 Shah Alam projects, which have a combined unbilled sales and outstanding construction orderbook of more than RM200m.

Things which have piqued my interest in the counter:

a) Two catalysts for future earnings growth would be the successful launch of its Magna City
project and the impending mixed development project along Jalan Ampang in KLCC.

b) Magna Prima is earmarking its recently acquired 6.95-acre site in Petaling Jaya's Section 5 for the development of "lifestyle-themed" projects. The acquisition is in line with the group's corporate move to enlarge its landbank and develop in strategic locations with high population, easy accessibility and potential for projects with significant gross development values. Situated in the Petaling Garden neighbourhood, the land is close to the high-traffic thoroughfare of Jalan Gasing and PJ-Kuala Lumpur border with a nearby link to Jalan Klang Lama. It also has the advantage of the lush green backdrop of Bukit Gasing. The site is made up of two contiguous parcels of 180,736sq ft and 122,260sq ft purchased from Petaling Garden Sdn Bhd last month for RM48.8 million or RM160psf. It also includes a row of 15 tenanted single-storey lock-up shops along Jalan 5/44.

c) On 16 July 2009, Magna Prima entered into a conditional agreement with Seri Dinar Project Development Sdn Bhd to buy from the latter 5.56ha of freehold land and parcels of leasehold land totalling 6.79ha in Gombak, Selangor, for RM40.5mil cash. Magna Prima said in a filing with Bursa Malaysia that the group’s development plans, for which Seri Dinar has obtained a development order, comprise shoplots, apartments, houses and a clubhouse. The estimated gross development value is RM130mil, of which the gross profit margin is expected to be about 20%.

d) Magna Prima has recently appointed former minister of national unity and social development Tan Sri Zaleha Ismail as its executive deputy chairman.

e)Developer Ho Hup Construction Company Bhd has appointed former Magna Prima executive director Lim Ching Choy as its group managing director. Lim has also served as Mah Sing Group Bhd's executive director before. The direction for Magna has turned uncertain with the departure of its CEO, Lim Ching Choy. Lim, an ex-banker with experience in turning around Mah Sing previously, was in fact one of the prime catalysts which some thought would turn Magna around and nurture it into a successful major developer in the long run.

f) I am not sure losing Lim is really losing Lim. It could very well be things looking up for Ho Hup and Magna Prima. A couple of months back Ho Hup said it will be launching a RM1.75 billion commercial cum residential development called Jalil City in the area in the next six to nine months. The 60-acre "jewel in the crown" of the 153-acre freehold Bandar Bukit Jalil is planned to be developed in two portions. One facing the Bukit Jalil Highway will have a 9.15-acre hypermarket (to be taken up by Giant, Carrefour or Tesco when Ho Hup decides which is offering the best proposal) and 175 units of four- to eight-storey shop-offices with lifts (priced from RM2.5 million, resulting in a gross development value of RM600 million). On the other portion facing the Bukit Jalil Golf and Country Club, there will be an eclectic blend of a lifestyle piazza with food and beverage outlets and entertainment venues, an office tower, condo hotel and 1,800 serviced apartments.

g) The trouble is Ho Hup is in pretty distressed level. Its paid up is 102m shares and its current market cap is just RM60m. While Magna Prima has 53.5m shares and a market cap of RM112m. Why would Lim leave for a company half the size of Magna Prima? Plus Ho Hup has lost RM46m and lost RM57m in 2007 and 2008 respectively. While Magna Prima made a net profit of RM23m and RM24m in 2007 and 2008 respectively. I am guessing here, but could Magna Prima be a prime beneficiary of Ho Hup's RM1.75bn venture?

I have been looking at Magna for the past few days and the share price has been having some action but too erratic for my and thin for my liking. Sometimes you just have to NOT swing the bat at every pitch ... know what I mean.

NTA/Share (RM) 2.30
Book Value/Share (RM) 2.30
Issued Share Capital (m) 53.5
52-week Share Price Range 3.30 - 1.77

p/s photo: Olivia Ong