Stranger than fiction

On the lighter side here are a few facts/urban legends about some of our favourite suppliers which I have picked up over the years. Some are quite old but worth another airing. I cannot vouch that any of them are actually true……but!

RYANAIR are continuing their approach that “all publicity” is good. Residents of Barcelona were promised “free tickets” if they turned up with placards praising the carrier or disparaging Iberia, the national carrier. The 500 vouchers disappeared in 20 minutes and a riot ensued with staff taken to a local police station for protection.

AMSTERDAM recently hosted the Paralympics World Championships. Unfortunately the former 100 metres record holder in the ladies event was unable to take part …………….. British Airways lost her artificial leg at Heathrow.

KOREAN AIR hails itself as one of the most popular airlines in the Far East. Service was not mentioned but their lightweight pure wool overnight blankets, supplied on all long haul flights, were. It seems passengers regard them as being part of the ticket price and remove them at will. In the last 12 month period they have lost over 300,000.

IRISH FERRIES apologies to passengers who “took the hump” following a 45 hour delay to one of its Holyhead to Dublin services. The Captain somehow failed to negotiate the only whale in the Irish Sea, which caused extensive damage to the bow of the ship

VIRGIN has come under criticism following the behaviour of one of its flight attendants on a recent Gatwick to Las Vegas service. During severe turbulence one of the flight crew is reported to have “thrown”, hopefully unused, sick bags to the passengers and then started screaming “We are crashing”. Wholesale panic ensued before the Captain restored order. An investigation is under way but those of a nervous disposition should consider their options.

ALASKA AIRLINES already facing a half million dollar fine for not having emergency lighting in their cabin for a two month period, faced more media criticism when a passenger, travelling with her dog, witnessed the poor creature, in a crate, being thrown head height and headlong into the cargo hold. The airline said they were preparing the dog for turbulence.

RYANAIR have a clause in their terms and conditions that say they reserve the right to charge you for two seats if they consider you overweight. However, they cannot guarantee they will be next to each other.

Cartoon For Our Era

There's Something About Kenmark

Kenmark Tumbles After Audit Meeting Was Scrapped (BT): Kenmark Industrial Bhd, a Malaysian furniture maker, fell to a record low after an audit committee meeting was scrapped, its Port Klang premises were closed and the company was told a receiver would be appointed at its paper unit. Kenmark’s stock tumbled 58 per cent on May 27 and a further 68 per cent this morning to 10.5 sen, before being suspended while the stock exchange asked the company to explain the dive. Independent directors Zainab Abu Bakar and Yeunh Wee Tiong scrapped a May 27 audit committee meeting when no management turned up or could be contacted, the company said in a statement in response to the stock exchange’s query. They were supposed to discuss Kenmark’s fourth-quarter earnings, but these were not made available, it said.

“The managing director James Hwang and deputy general manager Goh Kim Chon, who were the usual management representatives to the audit committee meetings, did not turn up for the meeting,” Kenmark said. “It was then found out that the deputy general manager and the finance and administration manager of the company had already resigned and the managing director was uncontactable.”

The independent directors tried to contact other executive directors at Kenmark’s Taiwan office via phone and fax, but failed, the statement said. Hwang and Goh were not immediately available when telephoned by Bloomberg today.

SC Steps In (StarBiz): The Securities Commission has started investigations into the spectacular collapse of furniture maker Kenmark Industrial Co (M) Bhd as its chief continues to be missing. Kenmark has lost some RM140 million in stock market value in a matter of days while more than 400 of its workers could be out jobs.

The SC also warned listed company directors and auditors to be responsible and to follow the rules and corporate governance code.

"Where they fail to do so, appropriate action will be taken," an SC spokesperson said.

Bursa Malaysia has also told Kenmark to appoint a special auditor to probe its finances.
On Monday, Kenmark shares tumbled 68 per cent, leading to a query from Bursa Malaysia. The group said that its two independent directors could not contact managing director Hwang Ding Kuo@James Hwang while key executives have quit.

It also cannot issue the fourth-quarter results for the period to March 31 2010. The independent directors were told by former executives that all of its operations have stopped while two banks also demanded some RM73 million of their money back. To make matters worse, it immediately became a PN17 company, a label of financially troubled firms on Bursa Malaysia.

Meanwhile, Kenmark's external company secretary Leong Oi Wah when met in Petaling Jaya said independent directors Zainab Abu Bakar and Yeunh Wee Tiong will meet with Kenmark's receiver, PricewaterhouseCoopers (PwC), on Friday to determine the actual debt of the company.

› Home › Corporate profile › Board of Director (Company website)

Puan Zainabon @ Zainab Binti Abu Bakar, aged 67, a Malaysian, was appointed as an Independent Non-Executive Director of the Company on 28 April 2000 and subsequently appointed as the Chairman of the Company on 27 November 2008. She is also the Chairman of the Company’s Audit Committee, Nomination Committee and Remuneration Committee. She is a member of the Malaysian Association of Certified Public Accountants as well as the Malaysian Institute of Accountants. She has extensive experience in the accounting line, having held such positions as Chief Accountant and Auditor. She was previously the Finance Manager of Bank Pertanian Malaysia from 1973 to 1986. She served as a of Member of Parliament in the Malaysian Parliament from 1986 to 1999 and held various positions in the Government sector. She was the Chairperson of the Urban Development Authority from 1988 to 1992 and the Deputy Minister of the Ministry of Primary Industries from 1995 to 1997. She is currently the President of Persatuan Anak Melayu Johor, Wilayah Persatuan and Selangor.

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Mr Hwang Ding Kuo @ James Hwang, aged 58, a Taiwanese, was appointed as the Chairman/Managing Director of the Company since 26 October 1988, when the Company was first established in Malaysia. He was re-designated as Managing Director on 27 November 2008. He is also a member of the Company’s Option Committee. Mr Hwang is the President and a Director of Kenmark Industrial Co Ltd., Taiwan, a position he held since 1978. He obtained his Bachelor Degree in Business Administration (International trade) from Tamkiang University, Taiwan in 1974. For his achievements in business and industry, Mr Hwang has been awarded the Gold Merchant Award by the General Chamber of Commerce of Taiwan in 1991, the Outstanding Achievement in Commerce and Industry and Outstanding Business Man of 1991 awards by the Government of Taiwan, as well as the 10 Outstanding Young People of Republic of China award in 1992. In addition, he received from K-Mart Corporation USA (“K-Mart”), an award for Excellent Vendor in 1996.

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Mr Huang Ching Hsiang, aged 69, a Taiwanese, was appointed as Non-Executive Director of the Company on 20 December 1989. He is a member of the Nomination Committee and Remuneration Committee. Mr Huang is the Executive Director in Kenmark Industrial Co. Ltd., Taiwan, a position he held since 1985, He obtained his Diploma in Mechanical Engineering from Drou Lau Industrial School, Taiwan 1963.

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Mr Chang Chin Chuan, aged 56, a Taiwanese, was appointed as Executive Director of the Company since 1989 overseeing production planning of the Company. He is a member of the Company’s Option Committee. He obtained his Diploma in Merchanical Engineering from Taipei Industrial Engineering College, Taiwan in 1975 and has extensive experience in the manufacture of wood-based products and furniture. Prior to joining in the Company, he was attached to Kenmark Industrial Co. Ltd., Taiwan from 1980 to 1989.

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Ms Chen Wen-Ling, aged 48, a Taiwanese, was appointed as Executive Director of the Company on 6 June 1997 and was re-designated as Non-Executive Director on 28 February 2008. She is also a member of the Audit Committee. She obtained her diploma in Accounting from the Taiwan Municipal College in 1979. She joined Kenmark Industrial Co. (M) Berhad as a Financial Controller in 1989 before her appointment as an Executive Director of the Company.

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Mr Yeunh Wee Tiong, aged 56, a Malaysian, was appointed as an Independent Non-Executive Director of the Company on 18 June 2004. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He graduated from University of Melbourne, Australia with a Bachelor of Architecture degree in 1978. He is a member of the Malaysian Institute of Architects, Royal Australian Institute of Architects and the Malaysian Institute of Interior Designers. He started his working career in Melbourne, Australia and returned to Malaysia in 1983 and worked as a Senior Architect in a local Architectural Firm. In 1998, he ventured out to set up his own Architectural Practice as well as getting involved with the furniture and food & beverage businesses. He is currently the Managing Director of DMP Architects Sdn Bhd, a position he held since 1999 and manages projects throughout Malaysia as well as overseas in India, Vietnam and Australia, He is also a Council Member of the University Tunku Abdul Rahman (UTAR) and oversees the development of UTAR’s main campus in Kampar, Perak in the Planning & Development Committee of the University. This is a voluntary position.

The Shocking News Today (BT): The group's boss and major shareholder, Hwang Ding Kuo@James Hwang, says he will only return to Malaysia once he is healthy. Kenmark Industrial Co (M) Bhd said its boss and major shareholder, who was missing as the group's fortunes took a rapid turn for the worse, is sick in China.

In a statement sent to Bursa Malaysia through the company's secretary yesterday, Hwang Ding Kuo@James Hwang said he was taken ill in China on May 24 and was in a delirious state.

"It was only yesterday (Tuesday) I regained full consciousness but am still weak to travel," he said. He did not identify the nature of the sickness nor did he say when he expects to be well.

Hwang will only return to Malaysia once he is healthy. Hwang also said he could not be reached by telephone as all calls had been barred by family members. However, he said a friendly party has bought a substantial stake in the company and new appointment of directors will be made, including two executive directors to manage the current situation. Hwang did not give details of the deal.

"I wish to state I am still the managing director of Kenmark and will work together with the new shareholder to try and resolve all outstanding issues caused by my sudden absence," Hwang said.

He also did not state the current whereabouts of two other Taiwanese executive directors Chang Chin-Chuan and Chen Wen-Ling who were also said to be missing. The new directors to be appointed are Ho Soo Woon, Ahmed Azhar Abdullah, Woon Wai En and Abdul Gani Yusof. They will also review the company's situation in Vietnam.

"I have spoken to Ho to have him discuss with Bursa Securities for a time extension to announce the fourth quarter results and appoint a special auditor," Hwang said.

Over on the stock market, Kenmark's shares were suspended at 4.43pm yesterday and they will remain so indefinitely, according to Bursa Malaysia. Before the suspension, its shares were among the most active when it almost doubled to 11.5 sen from 6 sen previously. Since news broke that Hwang went missing, Kenmark lost as much as RM140 million in stock market value in a matter of days while more than 400 of its workers were uncertain about their future.

Even the Securities Commission will investigate the furniture maker, while Bursa Malaysia directed Kenmark to appoint a special auditor to probe its finances.

My Views:

a) Good that SC has acted speedily.

b) If the MD is really just sick, why the hell then did ALL the Taiwanese directors leave the country?

c) I pity the two remaining independent directors for having to bear all the attacks and insinuations.

d) The ridiculous thing was that the MD said the company has been sold to a new party and even the new directors have been mentioned. This is very critical: if that is true, why not go through the proper logical announcement and handover?

e) If there were new buyers (really), the SC has to make sure that the whole shebang is not a scam by the MD and/or the new owners to COLLECT Kenmark shares very cheaply (i.e. under 10 sen), only to announce to the market later that everything is FINE.

f) All the Taiwanese directors and the purported new owners will need to have all their trading records, nominee accounts (if any), trading history, etc... thoroughly investigated to ensure that this is not a SCAM within another SCAM.

g) I hope the SC and Bursa won't just penalise the independent directors heavily (if they were found to be guilty and culpable) as the entire scenario would have as the head, the strategist and engineer for the "fraud" (if there is a case of fraudulent behaviour) all pointing to the MD and his ring of Taiwanese cronies. Its enough already, we cannot simply fry the small fishes just because we cannot get the big ones - attribute blame, intention and scheming desire to willfully defraud properly to the "candidates" - don't just punish certain people because they were easy targets.

Have a nice day!

Wonderings

How do you view this? Goldman Sachs International now has a 11.5% stake in Berjaya Corp. No matter what your views are of Vincent Tan or his Berjaya group of companies, you have to salute him in getting GSI onboard. If you ask all the analysts covering Malaysian stocks to recommend 3 counters for GSI to take up substantial stakes in, I can safely say that Berjaya Corp would probably not make the list at all. Its a wonderment, its probably the only time you can shake your head in disbelief but had to clap at the same time.



Goldman Sachs International ("GSI")
Peterborough Court, 133 Fleet Street, London EC4A 2BB, United Kingdom

Indirect/deemed interest (%)	:	11.5
Total no of securities after change	:	464,685,800
Date of notice	:	28/05/2010

GSI is a subsidiary of Goldman Sachs Holdings (U.K.), which is a subsidiary of Goldman Sachs Group Holdings (U.K.), which is in turn a subsidiary of Goldman Sachs (UK) L.L.C. The Goldman Sachs Group, Inc. is the direct holding company of Goldman Sachs (UK) L.L.C. and the ultimate holding company of the other aforementioned entities.

As if thats not enough, he still managed to get Temasek to pour billions into U-Mobile ... another round of head shaking and you just had to clap some more.



Next, lets look at Sime Darby's Annual Report 2009, in the first few lines of the Chairman's Message: "I am pleased to announce that the Group has reported a net profit after tax and minority interests of RM2.3 billion and a Return on Average Shareholders’ Funds (ROA SF) of 10.6 percent, exceeding our Key Performance Indicators (KPI) for FY 2008/09 of RM1.9 billion and ROA SF of 8.8 percent."

This was the headline of Ahmad Zubir's message as CEO: "On behalf of the Board of Directors, I am pleased to report that the Sime Darby Group has exceeded our Key Performance Indicators (KPI) for FY 2008/2009 despite the challenging operating environment during the year. The Group recorded RM2.3 billion in profit after tax and minority interests and Return on Average Shareholders’ Funds (ROA SF) of 10.6 percent, exceeding our Key Performance Indicators (KPI) for the year, of RM1.9 billion and 8.8 percent."

Just wondering whether KPIs are the best management tool we have, or are KPIs really effective after all??!! Don't shoot the messenger ....

JZ8 Gets Solid Reviews

Taiwan's top hifi magazine Audio Art posted a wonderful review of JZ8's album:

Click on link for high resolution pdf version:

http://www.poppop-music.com/jz8review.pdf














Article in Oriental Daily:

http://www2.orientaldaily.com.my/read//2JS40bU418090D8l01i56lOd0nVd23M7

Article in Sin Chew:

http://ent.sinchew-i.com/node/20984

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.

Strategists Still Bullish On Year End Targets

Despite the volatility in the markets, most market strategists are still bullish. In fact a number of them have upped their forecasts for year end targets. My view is still the same, we will end the year near the highs, but I still see the best time to re-enter is after the World Cup season. Call it topical or market timing, I don't think anyone in their right mind would want to be holding stocks in May and June.

Bespoke: Bloomberg surveys sell-side Wall Street strategists on a weekly basis for their year-end S&P 500 price targets. At the start of 2010, the average year-end S&P 500 price target was 1,225, which would have been a gain of just about 10%. As markets moved higher in the first quarter, strategists upped their year-end targets, and the current average target stands at 1,268. (In the table below, green shaded price targets are ones that have been increased so far this year. No strategists have lowered their targets since the start of the year.) A target of 1,268 translates into a gain of 13.68% for the year and 16.48% from current S&P 500 levels.

There are no strategists with year-end targets that are lower than the index's current levels. Deutsche Bank currently has the most bullish year-end price target at 1,375, followed by UBS at 1,350, and JP Morgan, Oppenheimer, HSBC, and Bank of America. Citigroup is the least bullish at 1,175, which would still be a gain of 7.97% from here.