Thursday, 30 June 2011

Eversendai: Solid as Steel?

The next IPO in Bursa will be Eversendai, which will be listed tomorrow. It mainly involves in steel work and construction. Though it's a Malaysia company, more than half of its jobs are done overseas. Its founder or chairman or MD, Dato AK Nathan, is one of Malaysia's richest man and will still hold 70% of Eversendai's share after listing. 

Here are some facts:
  • Order book at RM1.5bil, 94% will be realized in 2011, the rest before 2013.
  • Strong presence in Qatar & UAE, with 76% of 2010 revenue is from the middle east.
  • Expanding to Oman, Saudi, India & South East Asia.
  • Completed over 100 projects in 11 countries with 0% delay.
  • Good track record and reputation internationally.
  • Malaysia projects: KLCC, KLIA, KL Sentral, KL Tower etc.
  • Middle East projects: Burj Al Arab, Dubai Mall, New Doha Airport, Emirates Tower etc.
  • A leader with market share of 26.5% in fabrication facility in UAE and Qatar.
  • To date secured RM350mil contract this year.
  • Just secured a RM139mil contract from Qatar Petroleum.
  • Qatar will massively improve their infrastructure for 2022 Fifa World Cup.
  • No dividend in the near future.
     Burj Al Arab

From Eversendai's involvement in some of the world-renowned projects, it should not be very difficult for it to secure future big projects, I guess.

     Emirates Towers

Financial results:

RM mil 2010 2009 2008
Revenue 760 833 784
Net Profit 127 85 61

Although the net profit registers an impressive growth, the revenue is falling. Is this something to worry about? Has the business reached its peak. Is there another strong competitor emerging? According to the founder, 94% of the RM1.5b order will be realized this year. Does he mean the revenue for 2011 will be RM1.4bil???

At end 2010 RM mil
Cash 142
Non-current debt 10
Current debt 378

Eversendai is in net debt and has lots of short term debt to pay. That may be why it decides to get "cheap" cash from IPO now. The IPO will raise RM273mil, which will improve the cash to RM415mil, resulting in a slightly net cash position.


The IPO price is fixed at RM1.62 for retail and RM1.70 for institution. Here are various analysts' fair value for Eversendai.

Alliance 1.98
RHB 2.27
OSK 2.31
ECM Libra 2.36
TA 2.46

The IPO is 7.3x over-subscribed. Is it worth to jump in tomorrow on its first listing day? I have a feeling that it may follow MSM's debut performance.

Wednesday, 29 June 2011

How Real is MAS Privatization?

Nothing is certain in this world.

While every reserach houses are desperately calling a "sell" on MAS, MAS is flying high instead.

MAS at historic low of RM1.40 seems a bit "inappropriate" for a "Best Airline" award winner. However, news are all against it: loss-making Q1 and a high probability of another loss in Q2. MAS happily announced the purchase of another 20 Airbus, but its rival Airasia announced a purchase of 200 Airbus at the same time! Who will have the youngest fleet then?

    MAS admits defeat to Airasia by delisting?

MAS share price started to surge since last friday with heavy volume. Many retail investors scratch their head. Is it due to announcement of new planes purchase? It's unlikely as this is not a fresh news.

Then the next Monday the reason is known. A report came out in The Star: "Privatise Malaysia Airlines (MAS) but list Firefly, MAS Engineering, MasKargo and even its terminal services, suggested Maybank IB in a recent research report."

It is a "suggestion" by Maybank investment bank. As MAS's price is now very low, I guess investors who buy at current price can get some good earning if MAS really goes private. This may be the main reason that push the share price up.

The next day, MAS came out to clarify things. Interestingly, the chairman didn't say "No, it's not in the plan". He said: “No options are off the table. It's the shareholders' call. We can put the option on the table but it is still the shareholders call”, and the share price continue its rise.

The reply is fair enough. Everything has a possibility. If I were him, probably I'll give the same remark even though there is 0% possibility of privatization. Why not? At least it can give a much needed boost to MAS share price.

Delisting and relisting may be good for the company, but is it fair to long term shareholders who bought and accumulated its share at a much higher price?

GPacket tied up with China Mobile

Green Packet's share price rises for the past 2 months since early May 2011, from RM0.62 to RM0.85, a gain of almost 37%. I'm not sure what is behind it, but this news today looks very positive for GPacket, as China Mobile is one of the largest telecommunication company in the world! Besides, GPacket again becomes a pioneer in new technology in Malaysia. However, if GPacket still does not deliver profit, everything here is just rubbish.

KUALA LUMPUR: Packet One Networks (M) Sdn Bhd (P1), a subsidiary of Green Packet Bhd, has sealed a technology cooperation agreement with China Mobile Ltd to spearhead the time division-long term evolution (TD-LTE) technology in Malaysia and South-East Asia.

TD-LTE technology is a 4G telecommunications evolutionary path for the future of mobile broadband.
P1 chief executive officer Michael Lai said both parties would be sharing expertise, with P1 in 4G WiMAX and China Mobile in TD-LTE technology deployment.

“For true mobile 4G and LD-LTE to be successful, technology needs mass adoption.

    Why using chinese traditional characters?

“The economies of scale brought by China Mobile, with its subscriber base of over 600 million will see rapid development of the entire TD-LTE ecosystem,” he said at the signing ceremony yesterday.

China Mobile is among the first operators to have adopted the TD-LTE technology and it is one of the founders of the global TD-LTE Initiative (GTI).

GTI was formed in February to drive the early adoption of TD-LTE technology and to propagate TD-LTE’s ecosystem.

Other GTI members are Softbank Mobile (Japan), Vodafone Group (Britain), Bharti Airtel (India) and Clearwire (US).

P1 is the latest operator to join the group.

On the investment involved in the partnership, Green Packet group managing director/group chief executive officer C.C Puan declined to reveal the figure but said the partnership would further expand products offered under P1.

P1 plans to transition its WiMAX network to a dual WiMAX/TD-LTE network in the first half of 2012. It currently has about 300,000 subscribers using its WiMAX service.

E&O expands to Johor

The share price of E&O open 6 sen higher today at RM1.62 but quickly succumbed to profit taking. Currently it is traded at RM1.58, up 2 sen. Here is the reason behind the early price rally - its first project in Johor, which is a big one.

KUALA LUMPUR: Eastern & Oriental Bhd (E&O) has entered into a shareholders' agreement with Pulau Indah Ventures Sdn Bhd to develop a wellness township Nusajaya.

Nusajaya is a flagship zone of Iskandar Malaysia.

E&O (via wholly-owned subsidiary Galaxy Prestige Sdn Bhd) and Pulau Indah have agreed to establish a 50:50 joint venture (JV) company named Nuri Merdu Sdn Bhd.

Pulau Indah is a 50:50 JV between Khazanah Nasional Bhd and Temasek Holdings.
This will be E&O's maiden foray into Johor.

The 210-acre freehold land for the proposed development is 15 minutes away from the Tuas Second Link to Singapore, and is owned by Iskandar Investment Bhd, a 60% subsidiary of Khazanah.

Tuesday, 28 June 2011

Tambun: Bright Future Ahead?

This is an extract from Tambun Indah's 2010 Annual Report. It clearly shows the group's future plan and prospect. Penang-based property stocks like Ivory, Hunza, Asas Dunia etc are not doing particularly well, and their property launch has been slow. Does Tambun Indah has the edge to prevail?

After the completion of the second bridge, travelling between mainland and island is easy and time-saving. With limited land in the island and the development of Penang Science Park and new industrial zone in Batu Kawan, property in the center and southern Penang mainland may see an increasing demand as the price is still much cheaper compared to the island.

In a news just came out last week, Stuttgart-based technology company Robert Bosch GmbH is investing RM2.2bil in a solar panel manufacturing plant in Batu Kawan, Penang, to mainly serve Asia's growing demand for solar energy. The production is expected to start by end of 2013. It is estimated to provide more than 2000 new jobs with over 1000 of them engineers.

Can Tambun Indah as one of the largest property developer in the mainland Penang benefit from it?

Managing Director’s Message

Over the years, Tambun Indah has carved a niche in introducing innovative properties in Mainland Penang. Tambun Indah has become renowned for pioneering a number of new property concepts in Mainland Penang, which include the first gated community of Taman Tambun Indah in 1995, and the first landed strata scheme property called Palm Villas in 2007.

In addition to our continuous innovation, we have always kept to our principle of providing luxurious and high quality properties at affordable prices.

Because of these values, our property projects have enjoyed high, if not full take-up rates – a glowing testament of our customers’ trust in us. Furthermore, our properties have historically enjoyed premium prices in the secondary market.


The year under review was indeed a busy year for Tambun Indah. We sold properties worth total gross value of RM137.1 million, versus RM98.8 million in FY2009. We also recognized property sales of RM128.1 million, with pipeline sales of RM196.3 million yet to be recognized.

The year under review saw Tambun Indah Group strengthening its track record with the completion of two more projects, namely Casa Permai and Seri Palma, bringing the Group’s portfolio to 9 completed projects since inception.

• Casa Permai

Our Casa Permai project spans 7.12 acres and consists of a total of 86 residence units, comprising 36 doublestorey terrace houses, 18 three-storey terrace houses, 26 double-storey semi-detached house and 6 bungalows.

Located in Simpang Ampat, Mainland Penang, Casa Permai is just a minute drive from the Bukit Tambun Toll and North-South Highway, and 10 minutes drive from the first Penang Bridge and Bukit Mertajam. Residents enjoy easy access to public amenities of schools, restaurants, banks and recreational facilities, including a golf course and Batu Kawan stadium.

The project commenced in 2008 and was completed in 2010 with a GDV of RM26.78 million. I’m pleased to note that the project sales have been fully taken-up to date.

• Seri Palma

The Seri Palma mixed development, encompassing a 0.96-acre land area, comprises 6 units of double storey semi-detached houses and 3 units of double storey shop offices in Butterworth, Penang.

The development commenced in 2009 and finished in 2010 with GDV of RM4.60 million. Like our past projects, sales of Seri Palma have been fully taken-up to date.


The property sector in Mainland Penang is anticipated to see favourable prospects. The expansion of the Penang Science Park near Simpang Ampat, and multi-billion-Ringgit investments on capacity development by corporations such as Ibiden Japan, Honeywell and Rubycon would attract a larger pool of workers, therefore stimulating demand for residential properties in the vicinity.

Moreover, the increased Government spending on infrastructure such as the Penang Second Bridge, and the provision of public convenience services such as Bridge Express Shuttle Transit (BEST Bus) - a park-and-ride free shuttle bus service between Seberang Perai and the Bayan Lepas Free Industrial Zone - would enable greater accessibility between Mainland Penang and the island, thus making it viable for residents to work on the island while enjoying favourable property prices on the Mainland.

In any case, the rising property prices on Penang island are anticipated to enhance the attractiveness of lifestyle properties in the Mainland due to their affordability.

These factors point toward a brighter future for Tambun Indah in the coming years.

Cognizant of the positive industry prospects ahead, the Group has outlined 3 strategies to reinforce our position as a leading property developer in Penang.

(i) Strengthen our track record with ongoing projects

FY2011 will see Tambun Indah steadily developing a number of projects that would bear fruit in the current financial year and beyond.

• Juru Heights

The development of Juru Heights represents the Group’s staunch commitment to build vibrant townships in Mainland Penang. Comprising gated and guarded residences next to Juru Auto City, Phase I was completed in 2009, while we are currently embarking on the development of double-storey bungalows under Phase 2, with GDV of RM79.53 million. Upon completion of Phase 2 in 2011, Juru Heights would span a total land area of 81.25 acres, with GDV of RM255.12 million.

Given the positive feedback from Phase I as well as the strategic location of Juru Heights – within close proximity from Prai Industrial Estate and easy accessibility via the North-South Highway, the first and second Penang bridge – we are optimistic that Juru Heights would be another showcase development for Tambun Indah. In fact, to date, Juru Heights has a 99.1% take-up rate with gross sales value of RM255.12 million.

    Juru Heights

• Pearl Garden & Pearl Villas

Our most ambitious project, which we commenced in 2009, is Pearl Garden in Simpang Ampat. A gated and guarded development, Pearl Garden is an eco-sanctuary with wide open spaces. In addition to an exclusive clubhouse with the gymnasium overlooking the swimming pool, we have also incorporated a jogging track that connects right to the residents’ homes.

The Group had previously launched Phases A1A, A1B and A2 in 4th quarter 2009 and 2010 respectively, which had witnessed overwhelming response from the public.

Encouraged by this, FY2011 will see the Group embarking on Pearl Villas Phases 1 and 2 with GDV of RM137.9 million. With its unique positioning as an eco-friendly luxury residences, we believe that Pearl Garden and Pearl Villas will meet the increasing demand for high-quality residences in Penang. Currently, Pearl Garden has a 91.3% take-up rate with gross sales value of RM139.12 million.

    Pearl Garden

    Pearl Villa

Other projects

Some of the Group’s other development projects going forward are:

Carissa Park – A 144 unit-apartment block in Bagan Lallang, Butterworth, which commenced in 2009 and is targeted for completion in end-2011 with GDV of RM25.93 million.

    Carissa Park

Impian Residence – 100 units of double-storey terraces and 32 units of double-storey semidetached houses in Alma, Bukit Mertajam. Impian Residences spans 10.09 acres and will have GDV of RM40.82 million upon completion in 2012.

    Impian Residence

Dahlia Park – A gated 134-unit condominium block and 12 units of double-storey shop houses on a 2.23 acre land. Dahlia Park offers residents luxury and exclusivity, with 10 units per floor, and residents on higher floors basking in the sea view. Residents can also enjoy its full facilities, including the gymnasium, outdoor swimming pool, multi-purpose hall, and security features. Dahlia Park is slated for completion in 2013, with GDV of RM45.14 million.

    Dahlia Park

Tanjung Heights – 148 units of condominiums and 17 units of shop offices in Butterworth. It has an estimated GDV of RM52.16 million upon completion in 2013.

    Tanjung Heights

BM Residence – Total of 148 residential housing units comprising condominiums, semi-detached houses, bungalows and three-storey terrace houses. BM Residence is scheduled to be completed in 2014 with GDV of RM39.25 million.

    BM Residence

Together with other pipeline projects slated for coming years, Tambun Indah has a GDV exceeding RM1.6 billion till 2016. We believe this places us in good stead to continue making a significant impact in Penang.

Not stated in the annual report, Tambun Indah has also launched Capri Park condominium in Butterworth, Pearl Square commercial shoplots & Pearl Indah landed houses in its new township of Pearl City at Simpang Ampat.

    Capri Park

(ii) Expand our land bank

We are constantly on the lookout to increase our land bank, and believe in purchasing quality land over quantity. It has always been our strategy to maintain an optimal land bank size that allows for quick turnaround. To this end, we ensure our land purchases are quickly followed up with development plans so as to achieve shorter time-to-market.

This strategy enables us to use our working capital efficiently as we enjoy savings in finance costs and maximise returns while maintaining a healthy cash flow.

At present, we have a land bank of 215 acres in Penang, and upon completion of proposed acquisition of Pridaman, Ikhtiar Bitara and proposed Iand acquisition by Palmington, the land bank of the Group will increase to 754 acres, which will last the Group till 2021.

Palmington to date has acquired 527 acres of land from Mutiara Goodyear at Bandar Tasek Mutiara Simpang Ampat to develop it into a new township called Pearl City, which includes Pearl Garden & Pearl Villa, Pearl Indah, Pearl Square, future Pearl Residence bungalows and future business center with a hypermarket..

Tambun Indah has acquired Premcourt in Feb 2011 for a mixed strata development in Jelutong with a GDV of RM180 million, expected to launch in Q4 2011.

At the same time, we are actively seeking opportunities to expand our landbank beyond Penang to broaden the scope of our operations for the long term.

    Pearl City - A new township

(iii) Continue creating high visibility for our projects

As has been the case in the past, we would continue to reach out to potential buyers through active participation of property fairs, promotional initiatives via billboards, newspaper advertisements and printed collateral.

This integrated marketing strategy would create top-of-mind awareness of our projects so as to reiterate our position as the developer of choice for high-quality yet affordable properties for our customers.


Backed by our excellent track record and strong financial position, we believe that Tambun Indah stands in good stead to tap into the tremendous potential in the Penang property market in FY2011.

We look forward to the continued support of our stakeholders as we strive towards reaching our vision of being a responsible regional developer.

Ir. Teh Kiak Seng
Managing Director

Saturday, 25 June 2011

Sozo: Please Keep to Promise

There is one stock that give impressive revenue & profit growth since its birth in 2005, and is currently trading at PE of 3.14!

Sozo, a china-based food company (Rizhao Hengbao), a Bursa IPO in 2010, was founded in China just in 2005, and incorporated in Singapore and Malaysia in 2006 & 2009 respectively.

Sozo's product can be divided into 4 categories: Ready-to-serve food, frozen vegetables, canned food and others. The main products are the meat and poultry (duck). It has exported some products to Japan, Korea and US.

    Sozo can food

With the cash raised from the IPO, Sozo plans to set up new poultry farming, breeding and processing facility, its third production plant in China and Halal food processing facility in Malaysia. It has inked the MoU for the Malaysia facility back in April this year.

Sozo's financial performance:
RM mil
Net Profit
Profit Margin %
Profit Growth %

Business growth since 2006 is impressive but becomes slower and slower where the net profit growth is just 13% in 2010. The profit margin is quite incredible! The IPO may come at the right time for Sozo to expand its business and geographical presence. However, the completion of new facility may take 2 more years.

2011Q1 result:

Q1 (RM mil)
Growth %
Net Profit

Sozo looks ready to achieve another record year in 2011. However, the share price performance is bad, like most other China-based stocks. Investors still don't like China stocks I guess. Recently the share price has dropped 10% in one week last week to close at RM0.63, which is 21% lower than the IPO price of RM0.80! Anyone knows the real reason?

     Because of lower than expected dividend? Do you see a danger or an opportunity here?

Sozo declares first & final dividend of 1.8sen for FY2010, which is about 2.8% yield for the current share price of RM0.63, which from my calculation, is just 9% payout from 2010's profit. The ex-date is 25/8/2011. Looking back at the prospectus, Sozo said it intends to payout approximately 3 sen as FY2010 dividend. So Sozo does not keep up to its promise, which I think could be the main reason why its share price plunged 16% since the annoucement of dividend on 2nd June 2011. China's style?

Sozo also plans for secondary listing in Singapore instead of Hong Kong as mentioned during the IPO. Is this good or bad or neutral?

Food industry should be a resilient and viable one, but subject to fierce competition too. Sozo is growing well, is cash-rich and China is a huge market. Is it the time to get Sozo?

Tambun Indah to ride on Penang property boom

KUALA LUMPUR: Tambun Indah Land Bhd expects to record strong revenue growth in the current financial year ending Dec 31, underpinned by the sustained property boom in Penang.

Its managing director Teh Kiak Seng said on Friday, June 24 there was strong interest in its ongoing projects due to the rapid industrial expansion in Seberang Perai. This was also due to the spillover effect from the high demand for residential PROPERTIES [ ] on Penang island.

“At present, Tambun Indah has several ongoing projects on mainland Penang with total gross development value (GDV) of RM1.6 billion until 2016, which has positioned the group as a leading property developer in mainland Penang,” he said after the shareholders meeting.

Teh said since the beginning of the year, the group has recorded an increase in sales, both in terms of units and value, from its various projects.

“To date, we have sold more units than what we had sold in the first half of 2010. At this rate, Tambun Indah is likely to sell more units this year than what we did in 2010. Therefore, we are optimistic of a higher revenue base for FY2011,” he said.

Tambun Indah’s ongoing projects include Pearl Garden, Pearl Villas, Juru Heights, Carissa Park, Impian Residence, Dahlia Park and Tanjung Heights.

Launched in 2009 and 2011 respectively, Pearl Garden together with Pearl Villas have a GDV of RM277 million.

“The RM277-million GDV projects are expected to contribute 45% to the group’s revenues in FY2011, compared to 35.1% in FY2010,” he said.

Thursday, 23 June 2011

Rights Issue: Good or Bad?

When a listed company declare rights issue, it means that the company wants to raise more money (cash!) by "selling" more new shares to its existing shareholders, not to the non-shareholders. Will it benefit  the existing shareholders?

Whether the rights issue benefit the shareholders depends on the purpose of the rights issue and how the company is going to spend the money raised. If the company is not making profit, has lots of bad debts, is difficult to get loan from banks and wants to get more money from the existing shareholders to pay debt or finance their operation, then this is not good.

If a financially sound company wants to get the money to expand its business or acquire other company's stake, then it should be good to shareholders.

Anyway, when the rights issue is exercised, total outstanding shares of the company will increase and the earning will be diluted.

The new shares issued usually will come at a "discount" price. Existing shareholders are given the option whether to buy it or not. Even if the shareholders buy the new shares at that "discount" price, it doesn't mean that they will gain anything, because the new share price after the rights issue will be adjusted.

For example:

Mr A has 1000 shares of company X at RM1.00. (total capital RM1000)

Company X declares rights issue of 1 new share for every 2 existing shares at RM0.50 each (50% discount!).

Since Mr A has 1000 shares, he is entitled to purchase 500 new shares at RM0.50 each.

If he decides to exercise his rights, then he needs to pay company X RM250 to buy this 500 shares at RM0.50.

So now Mr A has 1500 shares in company A that cost him RM1250 in total.

After the ex-date for the rights issue, the share price of the company will start at RM0.833, down from RM1.00 before ex-date.

As 1500 shares x RM0.833 = RM1250., Mr A does not gain or lose money from the rights issue. What has changed is that Mr A now has more shares in company X.

If Mr A decides not to buy the new shares, he can sell his rights of 500 new shares at RM0.334 per share and gain a net cash of RM167. After the ex-date when the share price falls to RM0.833, his existing 1000 shares will give him RM833, which is lower than his initial investment capital of RM1000. However, since he already gains RM167 from the sale of rights, in the end he also does not gain or lose money from the rights issue (RM833 + RM167 = RM1000).

Sometimes a company will give "free" warrants together with the rights issue. In the end, the final share price will also be adjusted and we can't earn any money from it. So the "free" and "discount" here are actually not really free and discount. There is no free lunch.

After the rights issue, the earning per share is diluted but it does not really affect the shareholders who buy the new shares under rights issue as their total shares also increase. For those who do not exercise their rights, their shareholding in the company will be diluted.

Wednesday, 22 June 2011

Charges in Share Trading

For any buy/sell transaction, there will be some charges & fees involved. Here are the 3 charges we need to pay for trading shares.

1. Brokerage fee: max 0.7%, min 0.6%, internet trading usually got discount, the rate depends on each brokerage firm. The rate may also be lower for higher contract value and intraday trade, eg PBB internet rate 0.42% (min RM12) for contract value =<RM100k, 0.21% for contract value >RM100k and 0.15% for intraday trade.

2. Stamp duty: RM1 for every RM1,000 gross value of shares (max RM200), rounded up to the next ringgit. Eg 1000 shares at RM1.00 - gross value RM1,000, stamp duty RM1.00. If the gross value is RM1,001, the stamp duty will be RM2.00 (next ringgit).

3. Clearing fee: 0.03% of gross share value (max RM1,000), no round up.

These charges are not important for mid-long term investors, but are very important for short term/contra speculators.

Eg. someone contra 10,000 shares of Airasia, buy at RM3.15 and sold at RM3.18, looks like he gains RM300 from the gross value, but the total fees here are: brokerage fee RM265.86, clearing fee RM18.99, stamp duty RM64, Total fees: RM348.85. So he still lose RM48.85. Similarly, if contra buy at RM3.15 and sold at loss at RM3.12, it is not a RM300 loss, but a whooping RM646.15 loss! Be careful.

Please correct me if the information above is outdated. Anyone knows which stock broker has the most attractive brokerage fee?

Tuesday, 21 June 2011

Oldtown debut on 11 July

PETALING JAYA: In an updated prospectus draft, Oldtown Bhd is pricing its issue/offer price at RM1.25 per share for its initial public offering (IPO) of 96.4 million shares of RM1 each, instead of offering 59.5 million shares as stated in its first draft posted in February.

The company, which owns and operates the Oldtown White Coffee chain, aims to list on Bursa Malaysia's Main Market on July 11.

According to its prospectus draft, the company is offering 63.4 million new ordinary shares for application by the Malaysian public, directors, eligible employees and business associates of Oldtown and its subsidiaries.

The new shares are also offered to identified investors and bumiputra institutions and investors approved by the International Trade and Industry Ministry. It has an offer for sale of 33 million ordinary shares by way of private placement to identified investors.

The IPO price is based on the historical price earnings ratio multiple for the financial year ended Dec 31, 2010 (FY10) of 13 times which is based on the historical net earnings per share of 9.6 sen and enlarged issued and paid-up share capital of 330 million shares upon listing.

AmInvestment Bank Bhd is its IPO principal adviser, managing underwriter, joint underwriter and joint placement agent. Meanwhile, CIMB Investment Bank Bhd is its joint underwriter and joint placement agent.

Oldtown said the listing exercise would enable the group to gain recognition and enhance its profile through listing status and further augment Oldtown's corporate reputation and assist the group in expanding its customer base locally and overseas.

“It will also provide funds for expansion of Oldtown's business and markets, as such increasing the overall capability of the Oldtown group,” it added.

According to its proforma consolidated statements, Oldtown registered a net profit of RM31.9mil with revenue of RM255.1mil for the financial year ended Dec 31, 2010.

The company plans to raise RM79.2mil gross proceed from its IPO, of which it will utilise RM38.1mil for capital expenditure, RM10.5mil for working capital and RM5.9mil for repayment of bank borrowings.

The company's market capitalisation upon listing amounts to RM412.5mil, based on the IPO price and the enlarged issued and paid-up share capital of 330 million shares

HaiO: Time still Tough

Once a darling stock for both institutional and retail investors for its attractive dividends, HaiO has since dramatically fallen out of favour. After reaching a high of above RM10 for its share price in early 2010, HaiO gave away 5:1 bonus issue and implement 2:1 share split to about RM4.3. However after this, the share price headed south, coincided with a series of poor financial results beginning from 2010Q4 (quarter end July 2010).

The poor financial performance is mainly caused by the network marketing arm, though I'm not sure what is actually the problems.

HaiO quarterly results:
Rev (Profit) RM milQ1Q2Q3Q4FY
2010148 (18)132 (20)131 (18)99 (14)511 (71)
201155 (8)53 (6)58 (6)

For the whole FY2011, the revenue and net profits are significantly lower than previous year. So when the quarterly results were announced in the media, it sounds like this: HaiO's Revenue & Net Profit drop 60-70% QoQ. So the consequences... please refer chart below.

       HaiO: a big mountain

Each time when HaiO announced the bad results, the share price will take a significant dive the day after, as shown in blue arrows. The price plunged from RM4.7 to RM2.15, down more than 50% like its financial performance in 15 months.

HaiO is going to announce its 2011Q4 results soon this month. What we are likely to see is: HaiO revenue & net profit slide 60% in FY2011 YoY. How will investors respond? Three months ago, the response was not that bad compared to previous ones, perhaps they are well-prepared for it.

Three months later in September when the 2012Q1 result is out, we are likely to see headlines like: HaiO net profit increases xx% QoQ. So will the share price bottom out after this?

Saturday, 18 June 2011

Stock Watch: Random Pick

MBSB at its support of RM1.40, refuses to go further down beyond this level for the 2nd time. RSI oversold. Can it rebound from here?

    MBSB: Can it restart its uptrend, or is it an unfavourable double top here?

Glomac is going to annouce its 2011Q4 result next week, and it is expected to be an impressive one. The company has been actively buying back its share lately and should annouce a final dividend as well.

    Glomac: Uptrend may not finish yet

E&O is one of the most heavily traded property stock recently. News about potential new investors is lingering. Its share price briefly breached through previous high of RM1.61 but fell back immediately to RM1.53. If it is able to crawl back towards RM1.60 next week, then I think it has a chance to go higher.

    E&O: can it form a cup with handle?

Friday, 17 June 2011

Can MAS take off on time?

MAS posted a net loss of RM242 in Q12011. High fuel price is largely blamed for the loss as its fuel expense increases RM321mil QoQ.

Since the appointment of new MD/CEO in 2009, MAS is determined to be the number one airline in Asia by 2015. It has a 5-year fleet renewal plan and aim to have the youngest fleet in the region by 2015. Younger fleet is good because it is more comfortable for passengers, more fuel-efficient and cost less in maintenance. To achieve this, MAS needs to buy a lot of new planes - about 50 planes ordered. Debts will surely increase and it needs a sustained profit to cover. It can't afford to make loss after loss. Can MAS do this?

Recent 2011Q1 result:
(in RM mil)2011Q12010Q1
Total Revenue31953302
Operation Revenue31422909
Net Profit-242311
Fuel expenses13311010
Total borrowings41513709
Short term borrowing577293

Total revenue falls but revenue from operation increases. Cash reduces and debt increases.

MAS financial result 2006-2010

Revenue (mil)1358811605155701523313407
Net Profit (mil)237523272853-134
Load factor (%)75.469.467.665.866.8

In 2009, MAS suffered an operational loss of RM600+mil. The reason it can still post a net profit of RM523mil in 2009 was due to the incredible fuel hedging gain of RM1.16bil!

In 2010, MAS received an one-off compensation of RM329mil from Airbus for plane delivery delay. If not due to this, MAS will also suffer net loss of RM92mil in 2010.

Thus, I regard 2009 & 2010 as loss-making years.

Latest 2011Q1 also registered loss. Now in 2011Q2, though the fuel price drops to slightly below UDS100, it is still above MAS's fuel hedging of USD88 in 2011 and 75% of fuel will be bought at market price. From its 2011Q1 presentation, MAS expects tough operating condition to continue in Q2, mainly due to: softening of demand, Japan impact, volatile fuel price, strengtening of MYR and traditionally weak Q2. When the CEO told the public that Q2 is "challenging", it usually means they will have a hard time. So, will 2011Q2 be another loss-making quarter? Will the ambitious re-fleeting project turn out to be a success or a burden?

Nevertheless, MAS recent tie up with Qantas and oneworld should be viewed as positive.

Aviation industry is extremely competitive and high risk. Global political unrest, volatile fuel price, natural disaster, terrorist attack, disease outbreak etc all have a significant impact on it, and on MAS share price as well. However, MAS will always get support from the government.

    MAS: supported at RM1.35

 MAS vs Airasia: Which company is better-managed?

FY2010(RM mil)2011Q1(RM mil)Market

Revenue Net ProfitRevenueNet ProfitCap
Airasia3993106710481728.58 bil
MAS135882343194-2424.85 bil

    New Airbus A330-300