Grand Prix d'Horlogerie de Genève, 2009 edition

I am not exactly a huge fan of watches but I like them. The Zeitwerk looked extremely fetching. If you cannot match the watch images to the prize winners below, you are not a fan of watches.

The winners of the Grand Prix d'Horlogerie de Genève, 2009 edition.

Press release

The 9th annual editon of the "Grand Prix d'Horlogerie de Genève" rolled out the red carpet on Saturday, the 14th of November, 2009 at the "Grand Théâtre" the facade of which was specially illuminated for the event by the reknown Zurich artist, Gerry Hofstetter. This International Grand Prix rewards each year the best watchmaking creations. Its mission is to encourage creativity and to participate in the discovery of new talent. During the evening, eleven awards were attributed, with the prestigious “Aiguille d'Or” award going to the Lange Zeitwerk watch of A. Lange & Söhne.

Before an audience of more that 1500, Christian Lüscher et Natacha Wenger, the two masters of ceremony, made their entry and welcomed all the guests.

Mr. Manuel Tornare, Executive Counsellor of the City of Geneva and co-president of the Grand Prix d'Horlogerie of Geneva, first warmly thanked all those who contribute to the development of the Horology world. After this address, the ceremony was opened by of a charismatic watchmaking industry player, Laurent Picciotto, founder of the Chronopassion boutique in Paris. During this evening, he shared with us his passion when presenting the highlights of each timepiece being rewarded.

The most prestigious award of all, the Grand Prize of “L'Aiguille d'Or”, went to the Lange Zeitwerk watch of A. Lange & Söhne. Francois-Paul Journe, laureat of the 2008 edition, symbolically transmitted the precious trophy to Walter Lange and Jerzy Schaper. This watch is a clear sign of the reconquest of the fame of A. Lange & Söhne and illustrates the vision of Günther Blümlein who had given a boost to the brand with Walter Lange, 4th generation of the Lange dynasty.

The Special Jury Prize crowned this year a exceptional personality of the horology world, Dr Ludwig Oechslin, Director of the International Museum of Horology of La Chaux de Fond. Very surprised and honoured of this prize, Dr Ludwig Oechslin evoked the “miracle” of horology and the mechanical challenge represented by its continuous movements similar small enclaves of eternity.

The famous Public Prize, as for it, was attributed to Meccanico dG no 3 of de Grisogono. As mentioned by Laurent Picciotto, this watch with its double analogic and digital display “ is much more complex than it seems to be, what the public seems to fully understand”. Fawaz Gruosi warmly thanked his colleagues and retailers who have had the force to continue the adventure. This Prize of the Public was by internet voted on web site www.worldtempus.com and by the visitors to the traveling exhibition presenting the 62 pre-selected watches by the jury of the “Grand Prix d’Horlogerie de Genève”. As a reminder, this touring exposition started in Singapore in September as part of the "Living in Style" event. The exposition then made a stop in Zurich on the Bahnhofstrasse, then to Geneva at UBS ( Corraterie) where the watches are now on display until November 20.

Those persons who voted for their favorite watch automatically participated in the draw to win a prestigious timepiece. We were pleasantly surprised to see Vincent Perez on the "Grand Théâtre" stage to draw the winning entry for a magnificent Vulcain brand watch. Vincent Perez made an analogy between the world of cinema and that of horology in quoting that a successful film can be likened to the work of a goldsmith.

The Sports watch prize is awarded to the Richard Mille diver’s watch RM 025. The 25th reference of this brand, which knows how to surprise, gave new direction with a round case. Richard Mille did not hide his pleasure and declared “when you win, you feel really good”.

The Men’s watch prize is accorded to the Jules Audemars watch with Audemars Piguet escapement of Audemars Piguet. Philippe Merck, director general, expressed his thanks to the team of genius’ that created this watch, representing as it does, according to him, the spirit of all antique chronographs, and this particularly touched him.

The Ladies watch prize was awarded to the Limelight Twice watch of Piaget, a reversible bracelet wristwatch where the polishing of the setted parts is particularly remarkable. Philippe Leopold Metzger is very proud of this prize but his greatest pride, in these difficult times is to have maintained his full team “who is responsible for the beauty and grandeur of this brand”.

The Design watch prize is attributed to the Opus 9 of Harry Winston, a design watch but nevertheless complex with its two sliding diamond chains which indicate the hours and minutes. Tom O’Neill, CEO of the brand, invited two long-time partners, Eric Giroud, designer, and Jean-Marc Wiederrecht, watchmaker, to join him on stage to share this success together.

The Complicated watch prize was given to Double Tourbillon Technique of Greubel Forsey. Stephen Forsey, Co-founder of the brand, expressed all his gratitude to his team and underlined that all the Greubel Forsey codes have been expressed in this tourbillon.

The Jewellery watch prize was attributed to the One Million $ Black Caviar Bang of Hublot, a watch that symbolizes the fusion of jewellery and watchmaking. Jean-Claude Biver received the prize modestly in remembering that the success must be shared and communicated.

The Best Watchmaker prize this year is awarded to Anthony Randall, brilliant English watchmaker as acknowledgement of the totality of his work.

p/s the Zeitwerk is priced currently btw $54,000-$76,000;the Jules Audemars Chronometre $132,000; de Grisogono Meccanico dg3 priceless (very limited edition only 177 made); Gruebel Forsey double tourbillon technique $400,000.

Ess'kue Me, Mister Liu!!!

During the recent APEC meeting in Singapore, Liu Mingkang, China's chief banking regulator, took a cheap shot at the US and Obama when he remarked that the US Federal Reserve is fueling speculative investments and endangering global recovery through loose monetary policy. Why I think that was a cheap shot - even my blog has been saying that for the longest time. The policies Liu was refering to were the weak USD, massive liquidity and currency printing, and low interest rates by the US. Liu basically said some standard knowledge: "The US Fed is boosting speculative investments in stock and property markets and will pose new, real and insurmountable risks to the global economy."

Mr. Liu, what do you expect the Fed or Obama to do??? Raise interest rates in the US while property prices, corporate spending and empoyment are still pretty weak??? To criticise the US is so easy. Hallo... you want to talk about bubbles, just look at China's massive expansion in dubious loans over the last 10 months - now that's a bubble as well.

Everybody do not want the financial crisis to happen but it has. How you work together to revive the global economy is more important, rather than criticising one another's policies. Every government is most concerned about saving jobs as it could derail the broader economy for a long time if left unchecked. The underlying rationale is to prevent social unrest, which could spell the end of many governments during times of crisis. Everybody has their own turf to mend first, only then can they work together to bring the global economy out of the woods.

How can the US seriously have a firm or strong USD now??? It needs to be more competitive, it needs to adjust its purchasing power in light of the massive amount of USD being printed, it needs to attract investments into its businesses and assets by having a lower USD - is that wrong? How in the hell is Obama going to justify having a firm USD in current times - yea, make it more attractive for US companies to ship jobs abroad, make US products a lot more expensive. Come on Mr. Liu, think before you speak, or rather stand in the other person's shoes before speaking. What about the massive China's stimulus program, isn't that easy money as well?

As to whether the US monetary and fiscal policies will lead to another global asset bubble, that will take some guess work. As things go, yes, we are headed for one, but we have yet to see how the major central bankers act further down the road. If they behave responsibly and keep selling bonds (buying back liquidity or soaking up liquidity) at a gradual pace, the asset bubble scenario may be averted. The flip side of it is when they do soak up liquidity, you will see asset prices correcting - I guess the strategy is to do it gently and in step with market mood swings. Mr. Liu, you think only you understand that the USD carry trade result in speculation???..., I am sure all central bankers know that, even the central bankers of Mali know that - just work together with other central bankers and stop spewing unnecessary jibes to win brownie points. You can criticise, but offer solutions lah, let's see how and what you would propose to do if your were in Bernanke's shoes.

You can criticise the USD carry trade (borrowing in USD and speculating in foreign currencies, stocks and other assets) but that is beyond the scope of the Fed or Obama. Plus market movements or capital flows may not be long term, it may be shifting trends, you cannot simply manipulate short term monetary or fiscal policy for the sake of controlling what might reall be short term market trends. There will come a time when markets will think the USD has gone too low and the USD carry trade will unwind by itself. Do not jump around like a mad dog over normal course of events when currencies are realigning. Makes me think you not fit enough to be China's banking regulator.


p/s photos: Han Hyo Joo

Why I Like Supportive International Holdings

If you mention Supportive International Holdings, most investors would ask if they were listed or if they were recently listed ... or you'd think they were in the undergarments business. This used to be a counter called SDKM Fibers Wires & Cables which started in Mesdaq before moving to the Main Board in May 2008. However their usual business suffered and had to be resuscitated by realigning their business. This brought about the reverse takeover exercise by Supportive Technology Sdn Bhd (ST) in February 2008.

The company, which was founded by Lee Kuang Shing in 1994, started off as a plastic components manufacturer. The founder’s family (shareholders) comprises of Lee
Kuang Shing, Tan Siew Hong, and Khaw Hooi Huang. Since then, it has diversified into manufacturing and sale home theater systems and wooden/plastic consumer durables (kitchenware, toys, etc) or consumer ‘light’ durables (CLD). ST’s purchase consideration was RM197m, which SDKM settled with issuance of 178m new SDKM shares (issue price of RM1.00 per share) and RM19m cash to ST. This resulted in a reverse acquisition as ST emerged as the group’s major shareholder. Name of company was then changed from SDKM to Supportive International Holdings.

The group’s total product range includes manufacturing and sale of home theater systems, audio/video/telephony products and cords, intercoms, as well as, plastic and wooden CLD. Not terribly exciting products but steady business. They have a strong list of major customers that include SONY, KenWood, Pioneer, Onkyo, Yamaha , JVC, Panasonic, IKEA, etc. OEM customers tend to have demanding requirements ; like timing of delivery, ability to adapt to latest designs quickly and high quality control (QC) standards - so far so good. It has been supplying products to the Panasonic Group for the past 11 years because of ST’s strong execution capabilities.

Over the last 4 years, ST’s revenue from the Panasonic Group accounted for 88% to 92% of sales. On the flip side, this also illustrates ST’s ability to maintain strong ties; an asset for SIH. Thus, SIH has been actively reducing dependence on the Panasonic Group by securing new customers, like SONY and IKEA. The group can continue diversify its clientele by tapping into SDKM’s existing audio products’ clients, such as Kenwood and Pioneer.

Catalyst #1: Basically the new owners have never seen daylight for their shares as the price dwindled down almost immediately owing to the timing of the financial crisis and went as low as 0.595. Technically speaking the share has never been higher than its 52 week high of 0.96 except yesterday. I like the volume build up and the surge past its 52 week high a lot. An indication of some corporate action or acquisition is likely.

9-Nov-09	0.85	0.87	0.84	0.85	-0.005	1,800
10-Nov-09	0.88	0.88	0.84	0.84	-0.005	1,734
11-Nov-09	0.86	0.90	0.86	0.90	0.060	4,710
12-Nov-09	0.91	0.93	0.88	0.91	0.010	15,493
13-Nov-09	0.92	0.94	0.92	0.94	0.025	2,129
16-Nov-09	0.95	1.03	0.95	1.03	0.095	29,252

This is the kind of price / volume action that I like (open, high, low, close, change, volume).

Catalyst #2: SIH completed the SPA to acquire Welcome Properties Sdn Bhd (WP) for RM10m on 4/2/09. Consequently, the group will recognize RM9.5m negative goodwill. WP owns the 48.6ac mixed development project, called Aman Bayu, in Teluk Air Tawar, Butterworth, Penang. Normally I would frown on companies suddenly going into property but to me this counter needs another layer of business to parlay its bread and butter earnings. Typically, property developers can reap 10%-22% net margins compared to the E&E sector’s 1%-5%. The sea-fronting land fronts Penang Island is highly attractive, and is adjacent to Taman Air Molek (established mid to high end residential development) while being accessible via the new Butterworth Outer Ring Road. The land has an NBV of RM35m or c.RM16psf. The RM358m GDV gated and guarded community project will consist of mid to high end landed residential and condominium developments, as well as, some commercial content. The project is expected to yield a 30% gross development profit margin and is expected to be completed in mid 2012.

Lee Kuan Shing said its RM360mil Aman Bayu project in Butterworth would contribute about 30% to revenue this year. They have sold half of the 100 three-storey terraced houses priced about RM350,000, which were launched early this year. The second and third phases, comprising 250 semi-detached houses and bungalows, will be launched next year.

Catalyst #3: Copycat? - Mah Sing started off in the plastic injection molding business in 1965 with listing status in 1992. Since then, it ventured into its first property development project in Johor Bahru (Sri Pulai Perdana). As property earnings became Mah Sing's biggest contributor, the company was reclassified as “properties” in 2000. Its still a long way off but it looks increasingly likely that ST is adopting the Mah Sing's blueprint for longer term success. To be recognised as a property player, the company will need to grow its landbank to at least 1,000 ac. Look for possible land acquisitions in the near future.

The net profit for year ended Jan 2009 was a smart RM12.9m on revenue of RM90.8m, not bad considering the turmoil in broader markets over the past 16 months. Paid up: 218.5m shares. If it stayed as an OEM in E&E products, the margins are thin and it would take a quantum leap to get to the next level. Having said that, its business is steady and the clients long term support is evident, showing they are doing the right things operationally. For me, their property project is attractive and is the start of the next leg up. If you wait for their land bank acquisitions, the price would have flown by then. It is by no means and ultra exciting, or exceedingly well managed company - its a steady company, adding an attractive new layer to its earnings, and could win over institutional holders over the near term.

The attractive RM358m GDV property project may bring about a gross profit of RM107m, halve that to a net basis you still have RM53.5m. Take that over 3 years, that is still a healthy whack when you consider its existing net profits of RM12.9m a year.


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 photos: Rachel Kum

Big & Juicy (Or Is It Dicey) IPOs - Sands China & UC Rusal

Sands China, the Macau casino operations owned by Las Vegas Sands (LVS), yesterday kicked off the roadshow for its Hong Kong initial public offering with the aim of raising between HK$19.41 billion and HK$25.96 billion ($2.5 billion to $3.4 billion). The launch came on the same day that China Minsheng Banking also launched its $3.6bn IPO, which looks set to become the largest Hong Kong listing so far this year.

The institutional tranche for Sands Asia, accounting for 90 percent of the shares, has apparently been "multiple times" oversubscribed. The Macau unit of billionaire Sheldon Adelson's casino company will offer locally 10 percent of its 1.87 billion shares at between HK$10.38 and HK$13.88. It costs around HK$5,608 for a lot of 400 shares. Sands China will spend 42 percent of the net proceeds on repaying shareholder loans and inter-company payables, and one-fourth on the completion of Parcels 5 and 6 in Cotai.

Michael Leven, chief operating officer of Las Vegas Sands, said as a growth company, Sands China requires a certain amount of earnings to be retained to develop the Cotai project. Sands China will seriously consider more rapid growth or dividend issuance only after the monetization strategy kicks in. Chairman Sheldon Adelson said Sands China will sell the non-core assets such as shopping malls and serviced apartments. The capitalization rate on malls will increase as they take time to benefit from full hotel operations. He said net debt will drop from 2.86 times to around 2.3 times on the offering day while the full operation of Parcels 5 and 6 in 2012 will further bring its leverage to below one time.bankers argue that Sands China could be the ticket.

The casino operator, which is owned by Las Vegas gaming magnate Sheldon Adelson and holds one of six casino licences in Macau, already controls about 30% of the mass market and is raising money that will go partly towards the re-starting of a development project on the Cotai Strip that was halted last year as the parent company was running out of cash. According to syndicate analysts, the company is also in a prime position to capitalise on any growth in retail spending by Chinese visitors to Macau as it operates about 74% of all grade-A retail space available in the former Portuguese colony.

As I considered the Wynn Macau offering to be an avoid, and a purer gaming play, hence my view on Sands China is even bleaker - although I think their Marina Bay unit is more attractive if you can hive that out. Big offerings like this are market-timed vehicles, it can cause you to lose a lot of money (e.g. going 10%-20% below IPO) if you get caught in a wrong market mood when its actually listed. But at the same time can get you 10% (looks to be the topside considering the size of the offering) upside if the market mood stays good.

A more combustible and heady IPO, closely watched by all foreign media, is the listing of UC RUSAL, a vehicle owned by one of Russia's favoured sons, Oleg Deripaska. Well, they can't list in Russia for now owing to the market sentiment there. Surprisingly, they bypassed London as well, which was considered as a natural for a company like this.

Before a planned $2 billion Hong Kong IPO in December, the world's largest aluminum producer UC RUSAL is close to a deal to restructure $7.4 billion in debt to foreign banks, according to The Wall Street Journal. Controlled by Russian oligarch Oleg Deripaska, the aluminum producer is expected to announce the deal as early as next week, which will allow it seven years to repay $16 billion of debt. HK regulators are expected to give the green light to RUSAL's listing on November 19.

United Company RUSAL is the world leader in the aluminum industry sector, implementing the full production cycle from the extraction of bauxites to the manufacture of primary aluminum and alloys. The company has operations on five continents and in 19 countries around the world. The market share of the company encompasses approximately 12% of the entire global output of primary aluminum and 15% of the world’s alumina production, the necessary raw materials for manufacturing.

United Company RUSAL was founded in March 2007 by the merger and consolidation of RUSAL, SUAL, and the alumina assets of the Swiss company Glencore. Currently the company is comprised of 15 aluminum smelters, 12 alumina refineries, 7 bauxite mines, 3 foil rolling mills, and power-generating assets. UC RUSAL employs more than 100,000 persons at within its structure.

The Russian billionaire is in the final stages of agreeing a restructuring deal with foreign creditors on $7.3bn in debts, a vital precondition for the initial public offering valued at between $1bn and $2.5bn to go ahead. But even if the tycoon reaches agreement in time for a key November 19 hearing at the Hong Kong Stock Exchange, he must still race to win creditor committee approval from the more than 70 banks by the end of November and then market the sale to investors in the two weeks left before most leave for Christmas in mid-December.

It would be the first time a big Russian company has listed on the HK bourse, but they should perhaps first ask why Mr Deripaska is not going straight to London - long the natural harbour for large commodities groups seeking funds on the market. What is the attraction of HK, if not the lure of easy money and bucket loads of liquidity and enormous interest from China over resource plays? All adds up to a recipe for a big truckload of bad things waiting to happen - too eager, too much backslapping, too many wink-wink nods, ...

Could it have anything to do with his problems in the UK, where he is facing legal action, including a suit in the high court from a former partner in Rusal claiming massive compensation? Clearly, the uncertainty surrounding a case that could potentially cost Rusal up to $4bn is mathematical sum that is hard to put inside research reports. The last-minute withdrawal of Goldman Sachs as a lead adviser on the IPO underlines the risks surrounding what would be one of the biggest offerings of the year. Goldman Sachs withdrew as a lead adviser just one week before the company filed its initial application to the Hong Kong Stock Exchange on October 2, because it said it needed more time to familiarise itself with the deal, people close to the situation said. That should be the key already, where in the world would Goldman Sachs relinquish the right to lead a massive IPO if not for "graver concerns".

Mr Deripaska, once Russia’s richest man, has been dogged by issues surrounding his past partnerships in the Russian aluminium industry in the 1990s, a time when it was racked by crime. He is being sued by one former partner, Michael Cherney, in London’s High Court for a stake in his UC Rusal; Mr Deripaska contends he owes nothing to Mr Cherney, who he claims was not a partner but ran a protection racket to extort money out of his company. Mr Cherney denies any ties to organised crime.

IPOs being IPOs, in HK the IPO market is in full swing, issues are very huge, they suck up a lot of liquidity - anything untoward happening to just one could derail the overall markets for s sustained period, and will affect capital flows negatively for the rest of Asia. Enough said ....

p/s photo: Fiona Xie Wan Yu

Marketocracy Portfolio Updated - November 14, 2009

On a year to date basis, the S&P 500 recorded a 23.67% return, while the Nasdaq secured 37.47% and the Dow notched a 17.02% return. My Marketocracy portfolio obtained a 66.3% return.

Previous update:
http://malaysiafinance.blogspot.com/2009/10/marketocracy-portfolio-update-2-october.html

http://malaysiafinance.blogspot.com/2009/09/marketocracy-portfolio-update-10.html

As mentioned before, the objective of the portfolio was to beat the S&P 500 consistently over time. Modern finance subscribe to the theory that over time stocks offer superior returns - that being the case, as long as you outperform the benchmark index, you will register superior long term performance. Hence it is useful to look at the performance relative to the S&P 500. Over the last 12 months, the outperformance was by 50.96%.

The Salvador Fund (SMF) line in orange. The m100 line is the aggregate performance tracking the top 100 funds in Marketocracy. The comparison is stark but to be fair, this portfolio will need another 1.5 years before we can safely say its a superior long term performer.

Value: $1,198,431.95

Cash: $106,031.15

Stock Value: $1,092,400.80

NAV: $11.98

SMF m100 S&P 500 DJIA Nasdaq

recent returns vs. major indexes
		MTD QTD YTD SMF 4.39% -3.53% 66.30% S&P 500 5.66% 3.70% 23.67% DOW 5.74% 5.75% 17.02% Nasdaq 6.00% 2.14% 37.47%

recent returns
		RETURNS Last Week 3.61% Last Month -6.72% Last 3 Months 2.01% Last 6 Months 21.32% Last 12 Months 74.06% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception 19.84% (Annualized) 14.86% S&P500 RETURNS Last Week 2.33% Last Month 0.30% Last 3 Months 9.47% Last 6 Months 25.18% Last 12 Months 23.09% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception -10.08% (Annualized) -7.81% RETURNS VS S&P500 Last Week 1.28% Last Month -7.02% Last 3 Months -7.45% Last 6 Months -3.85% Last 12 Months 50.96% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception 29.93% (Annualized) 22.67%

alpha/beta vs. S&P500
		Alpha 32.05% Beta 1.16 R-Squared 0.79

		Symbol Price Shares Value Portion of Fund Inception Return BDD $13.74 5,000 $68,716.00 5.73% 43.95% MGM $10.75 9,500 $102,125.00 8.52% 43.85% Details STAR $34.03 3,500 $119,105.00 9.94% 42.41% Details F $8.41 10,000 $84,100.00 7.02% 31.03% Details PLD $13.60 8,118 $110,404.80 9.21% 23.28% Details QSII $62.66 1,500 $93,990.00 7.84% 21.29% Details MIDDLE GE $15.66 4,000 $62,640.00 5.23% 5.74% NYB $11.52 6,000 $69,120.00 5.77% 5.15% JEC $43.95 1,500 $65,925.00 5.50% 5.14% NVDA $13.56 5,000 $67,800.00 5.66% 1.53% LOW $21.85 3,500 $76,475.00 6.38% 0.46% Details JNPR $26.15 2,000 $52,300.00 4.36% -1.18% Details KBW $26.60 4,500 $119,700.00 9.99% -2.03% Details

p/s photos: Jessie Chiang Yu Chen

Why I Like Inch Kenneth

Ever since they gave out the 50 to 1 bonus issue, I have considered Inch Kenneth as a very under-managed company. I mean, seriously, nobody regards it as an out and out plantations company. I was waiting for some sort of indications that their land sale and property development plans were starting to take off. It was listless around 30-35 sen for the longest time, and it had to take the day I was flying back to KL to shoot up from 32 sen to 53 sen. By the time I landed, I thought I missed the boat, but the price has fallen back to decent levels to start a position. I think anything under 50 sen would be a lot of comfort on a 3-6 month view for my anticipated 30% return.

In the Annual Report dated Dec 2008, the Chairman stated: "Our planned sale of the Bangi land is still on track and we hope that it can be confirmed within the first half of 2009. Once this is concluded, we will then be able to focus on the expansion of our plantation sector either into Sabah, Sarawak, Indonesia or other ASEAN countries."

Catalyst #1: Inch Kenneth has converted its 600-acre piece of plantation land in Bangi in 2007. This marks the successful conversion of its entire plantation land bank for mixed development purpose and brings the company one step closer to realising its land bank unlocking strategy. Its 350 acres of plantation land in Kajang had received the conversion approval back in 2001. The group expects to sell the 600-acre Bangi land for an estimated RM250-300m, which is equivalent to RM11.50 psf on the high end. Based on this price, the company could realise a windfall gain of RM144m as the land is carried in the company’s books at just RM6 psf. With 420m shares, the market cap at the share price of 0.44 = RM184.8m. People, the windfall gain is nearly 80% of the existing market cap!!!!!!!!!

Catalyst #2: The 350-acre land in Kajang has been earmarked for the development of a township project and will be Inch Kenneth’s maiden property development foray. Although the company’s lack of experience in property development is a cause for caution, it will be doing this with joint-venture partners on this front. Herein lies the key, the full name of the company is Inch Kenneth Kajang Rubber. Kajang... 10 years ago, nobody would bat an eyelid, today, 350-acre in Kajang means a lot. The estimated gross development value of the township is slated to be between RM1.2bn-RM1.5bn.

The sharp jump was probably due to certain "sale being done" and the launching of the property project. Despite the sharp jump, its still very very cheap no matter how you look at it. If you sit on a high NAV and your share price is at a deep discount, it will stay that way if nothing is done to unlock the values. Inch Kenneth is selling the land and launching the property project - what more do you want, if this is not unlocking, I don't know what is. Last known NAV is RM1.15, and that is being conservative. There is no need to mention much about its diversion into tourism, its a safe and small business for now. How I wish there was a rich backer for me to take over this company, there is so much value to unlock - if its there to be taken over, a new owner would easily pay up to 80-85 sen per share for control.

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: Haruka Ayase

Dejavu 1993, Capital Inflow, Asian Currencies Uptrend

It looks increasingly likely that we have seen the start of an inflow of capital into Asia. The weakening USD will help prop up US shares, but may see more international investors migrating excess funds into Asia to obtain a better return over the next 6 months. This looked much like the 1993 bull run in Asia. No, before you get ahead of my views, this is not going to be the repeat of the extended 1993-1996 bull run. The last 2 months have seen what we shall refer to as the US$ carry trade - borrowing in USD to invest elsewhere in anticipation of a weaker USD down the road. This is a replication of the yen carry trade which fueled much of the liquidity sloshing around all markets in 2007.

An example is the recent upgrade by Macquarie on Malaysian markets, mainly in anticipation of a higher ringgit value over the next 24 months. They forecast the RM/US$ will hit 3.20 (+6%) by end 2010 and 3.00 (+14%) by end 2011. Gawd, I hope they are right as I can travel overseas with a fatter wallet then. In fact Macquarie said that currencies usually overshoot, so we could easily hit 20%. The two key cross-rates to watch are RM/US$ and RM/Rmb:
- Immediate 10% upside suggested by RM/Rmb cross-rate: Macquarie believe over the next two quarters, the ringgit will appreciate to its previous fixed level against the Rmb.
- Additional 5–10% upside suggested by RM/US$ cross-rate by end 2010: They expect the renminbi and Asian currencies to resume its upward appreciation against the US$ in late 2010.

Taking this tack, importers will gain the most, eg Astro and auto companies, who import from Europe and the US. Thats the view of Macquarie, my view is that auto, auto parts and protected industries should be largely ignored over the next few years. Exporters such as plantations would suffer from an effective price cut. Companies with a high proportion of offshore earnings such as Parkson (> 90% of EBITDA), MISC (> 90%), YTL Power (75%), and KNM (60%) would have lower translated earnings.

Back to the foreign capital inflow - YTD net foreign portfolio investment in equities as of November 4, 2009: Best-performers: South Korea: US$21.18 billion, India: US$14.21 billion, Taiwan: 10.87 billion; Others: Thailand: US$1.51 billion, Indonesia: US$0.77 billion, the Philippines: US$0.40 billion, Pakistan: US$0.19 billion, Vietnam: US$0.01 billion, Japan: -US$17.12 billion. Can't seem to get the Malaysian figure but it should be negative judging from the previous posting on net foreign investors holdings of Malaysian stocks. All major Asian currencies are an appreciation path thanks to improving export performance and liquidity condition. Unlike 1997-98 crisis, Asia has enough reserves to defend its currencies and dollar liquidity has improved considerably when compared to Fall 2008, although it remains tight in some countries.

Notable economist Joseph Stiglitz said, "The inflows of easy money" is posing a risk of asset bubble in Asia as "such funds are usually not long-term investments and won't be a foundation for robust growth for Asia." Yes, we are seeing these short term funds finding Asia as a nice playground, but unlike the 93-96 rally, these funds will not be here very long, so we need to watch the US$ carry trade when they start unwinding in a big way. Presently, the outlook for most Asian currencies are still good for the next 6 months, and as Macquarie pointed out, the ringgit is a great selling point, so we are "safe" for the time being.


p/s photo: Han Ga In