Friday 25 November 2011

Singapore Buys CMMT

On 11-11-11, Government of Singapore Investment Corporation (GIC) which is chaired by Singapore's prime minister, has acquired 99,248,100 (5.64%) of CMMT's shares through private placement. This is the first time GIC holds CMMT's shares and becomes one of its substantial shareholder.

CMMT will issue 261,904,000 new shares at RM1.26 each as private placement to raise RM330 million for the acquisition of the East Coast Mall. The acquisition is said to be completed by the end of this year.

Some information regarding GIC:

GIC is one of the largest investment management organizations in the world, with over 1000 people, investing well over US$100 billion in multiple asset classes in more than 40 countries. 

We have almost 30 years of experience in publicly traded investments in more than 45 exchange traded and over–the-counter markets dealing with stocks, futures and options, fixed income, natural resources, foreign exchange, cash and derivatives.

GIC's real estate portfolio is one of the few that is truly global. We are ranked among the world's top 10 real estate investment firms in terms of assets under management.

Our private equity portfolio has placed us as one of the leading global private equity investors in the world with a network of over 100 active fund managers that are among the best in the world.

In keeping with our prudent approach to investing with a long-term horizon, we make identifying and managing risk a clear and integral part of management responsibility at all levels. We have established a framework that sets the accountability and responsibility for risk-taking to ensure we maximise our client's returns.

Our investment strategy is one of integrated diversity. There are new and unique investment opportunities which call for GIC to operate as one integrated organization while at the same time fully exploiting the range of asset class expertise and experience in-house for best investment results. We respond quickly to investment opportunities around the world with our specialists who are on the ground at our various offices, getting a good pulse of the markets.

Friday 18 November 2011

Pavilion Mall Up For Grab

Now it's a chance for you to be part of Bukit Bintang's prestigious Pavilion Shopping Mall.

Pavilion REIT, which consists of Pavilion Mall and a 20-storey Pavilion office tower, will have its IPO on 7th Dec 2011 on Bursa Malaysia. The IPO price is set at 88sen for retail investors and 90sen for institutions. It will offer 790 million units, where 755mil units are for local and foreign institutional investors, and the remaining 35mil units for the public. It will raise RM695.2mil for the IPO and its market cap is expected to be RM2.6bil upon listing.

     Pavilion Shopping Mall

As at June 30, the Pavilion mall and office tower is 98.5% and 64.5% occupied respectively. It is said that the mall has 200 retailer in waiting list. Upon listing, pavilion REIT will have RM730.6mil debt, which is only 20.1% of its estimated total asset value. It promise to distribute 100% of its income until end of FY2012 and at least 90% of its income from FY2013 onwards.

For the year ended Dec 31, 2010, Pavilion REIT posted a revenue of RM291 million and net property income of RM203 million. The management has forecast the REIT to register a revenue of RM314 million, net property income of RM220 million and distributable income of RM172 million for the FY ending Dec 31, 2012.

      Pavilion Office Tower

Pavilion REIT is expected to provide a distribution yield of 6.41% and 6.51% for the FY ended 31Dec 2011 and 2012 respectively. Compared to its peers in Bursa, it is just average as most REITs can give around 6-8% at the moment.

After listing, Malton's chairman and his wife collectively own 37.6% of the Pavilion REIT while Qatar Investment Authority will be the largest single owner with 36%. Other large unit holders PNB, EPF, KWP, Great Eastern, AIA and HwangDBS will hold 8.83% together.

Pavilion REIT has already planned to expand its property portfolio in 2014-2015, which include the refurbished Fahrenheit88 shopping mall just opposite the Pavilion mall, the 300,000 sq ft extension of Pavilion mall which should start in 1H2012 and an upcoming mall at USJ. Besides, the management is also seeking for potential investment especially niche-market malls throughout Asia.

      Fahrenheit88: former run-down KL Plaza

The future expansion plan is important to improve the REIT's income, rather than waiting just for the rental increase. Pavilion REIT should have no difficulty in acquiring bank loan for future acquisition since its gearing sits on a comfortable 20% level.

The REIT has a mixed retail and office component, like Sunway REIT. CMMT is purely retail and most other REITs in Bursa made up of office buildings.

With its properties situated at KL's golden triangle area and its plan for expansion, I think Pavilion REIT should be an attractive REIT to hold long term even though the estimated distribution yield is average. Anyway, it is a rather safe and conservative investment which can give a return better than a pathetic FD rate of 3%.

Monday 14 November 2011

Penang World City - Leasehold!

After Queensbay, The Light, Straits Quay & Southbay, there will be another luxury water-front project in the east coast of Penang island - Penang World City. This name does not create a "wow" compared to the others. "Ivory Coast" should be a good name but unfortunately, Didier Drogba's country has already claimed this name...

     Penang World City masterplan

The total 102.56 acres (41.5ha) of land in which 35 acres will be reclaimed land, is located at Bayan Mutiara, along the Tun Dato Lim Chong Eu Expressway just south of Penang bridge. It will be jointly developed by Ivory and Dijaya in a 51:49 joint venture.

The RM10 billion Penang World City is a mixed residential and commercial development. Construction is scheduled to commence in year 2012 and the overall project is estimated to be completed in 8 years.

      Luxury Villas - only for the rich

The existing land, which is also reclaimed land, was sold to Ivory in an open tender earlier this year (July 25) at a price of RM240 per square foot. This will generate RM1.07 billion for the Penang government. Ivory need to pay Penang government this sum of money within 5 years.

Ivory has proposed rights issue 1:1 with free warrant and later 1 bonus share for every 4 existing shares to raise fund for the projects. This means that Ivory's outstanding shares will balloon to 418.5 million from current 186 million after the execution.

The Penang World City site which is located between the 2 bridges, close to Bayan Lepas FTZ, Penang International Airport and Georgetown,  is considered a strategic super prime land. It will house luxury high-rise and medium rise condominiums, water villas, grade A office towers, retail spaces, shopping malls, hotels and perhaps a medical specialist center.

      Luxury condos & office blocks

Interestingly, Penang World City will directly compete with The Light and Queensbay which are located close to each other. The Light's progress looks promising while Queensbay seems to stop since the completion of BayStar condominium in 1H 2010. 

In May 2011, the original developer of the Queensbay, CP Land, has sold 40ha of land in Queensbay at RM420 psf to Asia Green Development. A year earlier, CP Land has sold Penang largest Queensbay Shopping Mall to CapitaMalls Asia. 

      Queensbay's previous plan is going into the drain

It seems like Ivory gets a good deal by acquiring the land at RM240psf at the same time, which is almost 50% cheaper than the Queensbay. However, the land in Bayan Mutiara is leasehold. Asia Green, who has a few small scale residential development in the island and Butterworth area, may not be a well-known developer in Penang to most Penangites. I wish they can come out with interesting projects to compete with the others.

      Location of Penang World City

     The Light (right) & Penang World City (left)

For Ivory, their recent projects and reputation are not that good. Can partnership with Dijaya help to increase the success rate of Penang World City?

The general election is approaching. If, if BN regain control in Penang, will Penang World City experience the same fate as Penang Global City Center? Anyway, both the names carry the same meaning.

Friday 11 November 2011

The BLR History

Malaysia's Base Lending Rate (BLR) since 1989

Date BLR
May 2011 6.60
July 2010 6.30
May 2010 6.05
Mac 2010 5.80
2009 5.55
2008 6.75
2007 6.75
2006 6.00
2005 6.00
2004 6.00
2003 6.50
2002 6.50
2001 6.75
2000 6.75
1999 8.00
1998 10.50
1997 9.25
1996 8.50
1995 6.60
1994 8.25
1993 9.50
1992 9.00
1991 7.50
1990 7.00
1989 7.00

Jit Sin Branch Finally Approved

On 9th November 2011, Deputy PM and Education Minister announced that the application for a new Jit Sin High School Seberang Perai Selatan branch has been approved.

In January 2010, property developer Asas Dunia has signed an MoU with Jit Sin board to donate an 8-acre land valued at Rm10million at Tasek to Jit Sin. This should be a win-win situation to both parties, as if Jit Sin is to be constructed there, the land value and property demand in that area will surely increase. Asas Dunia owns lots of land there. Part of the land beside Valdor and opposite the golf club has been cleared, probably for upcoming 2012 new projects.

      Proposed Jit Sin branch's location

The other property developer that will benefit from Jit Sin branch is Tambun Indah, who owns all the undeveloped land within Bandar Tasek Mutiara (BTM), which is previously being developed by Mutiara Goodyear (Nadayu). Tambun Indah already launched about 1000 residential units (Pearl Garden, Pearl Villa & Pearl Indah) successfully, as well as Pearl Square shoplots within the BTM. There are still a big chunk of land left, which include the planned commercial center in the rounded center of BTM.

       Jit Sin at Sg Rambai

Nevertheless, the exact location of new Jit Sin branch is not officially confirmed yet, and still could be subjected to change. Some people think that Nibong Tebal may be a more suitable location for the new school, as it is the biggest city in SPS with more population. To travel from Nibong Tebal to Tasek by car, it may take about 20 minutes time.

Updated on 11th Feb 2012: Jit Sin has finally received the official letter of approval from the Ministry of Education for Jit Sin SPS branch.

Tuesday 8 November 2011

New RPGT 2012

Latest Real property Gain Tax 2012.

If someone flip a new development project within one year, he still can gain 90% from the net profit, not bad really. Personally I think this is not going to stop property speculators from "frying" up the property price. Perhaps it should be 1st year tax 80%, 2nd year 60%, 3rd year 40%, 4th year 20% & 5th year 10%.

As for the 70% loan margin for the third residential property and onwards, IMO it does cool down the market a little bit. This measure will hinder the average-income or new property investor from being successful. However, for those big players, this should be a good news for them as less competition in buying properties. What they have are lots of money.

The rich will become richer.... the poor is hard to get a breakthrough. This is life.

Missed the Harvest Time!

If you dump in all your assets to buy Harvest shares at RM0.08 on 12 Oct 2011, you will be 1375% richer now, as its share closed at RM1.18 today. If you buy Harvest's warrant at the same period, it's even better, you will be 2900% richer by now!

Why does a low-volume, unpopular penny stock who was once a PN17 company and makes 17 quarter-losses in its most recent 20 quarters can jump in value more than 100x in less than a month? This is typically called "goreng".

Everything started when Raymond Chan bought 23.808 million Harvest shares at RM0.20 each (13.85%) on 18 Oct 2011. It seems like Chan is going to inject a company he owns, 1Green Enviro Sdn Bhd into Harvest.

1Green Enviro Sdn Bhd is involved in converting palm oil fruit bunches into paper. It is just established on 12 Nov 2010, exactly a year ago, with no track record of earning. Can it raise Harvest to such a level?

The other important factor is that our PM's son, Mohd Nazifuddin Najib, sits on the board of both Harvest and 1Green Enviro! This makes Harvest a strong politically-linked company.

Both Chan and Nazifuddin were just appointed into Harvest's board on Oct 28.

On Oct 27, Harvest announced that Mr Ng Swee Kiat (MD) has agreed to purchase and Affin Bank Berhad has agreed to dispose of the entire 31,410,664 shares together with 7,852,666 warrants held by Affin in HCIB at RM0.25 per share and warrant.

Can Affin say: "Sorry, wait a minute please, can I dispose at RM2.20 per share and warrant now???" Three weeks ago, Harvest's share is at RM0.08 and its warrant is at RM0.035. Now they are at RM1.18 and RM1.05 respectively.

On Nov 4, Raymond Chan purchased another 5.09 million of Harvest shares at RM0.849 to increase his stake to 16.81%. Nazifuddin also bought 1.19% of Harvest shares at RM0.845 for the first time on the same day.

In the meantime, Harvest also announced recently that it has clinched 2 contracts worth RM7mil and RM6mil respectively.

Nevertheless, Harvest made this announcement in Bursa today (Nov 8):

Harvest Court Industries Berhad (“HCIB” or “the Company”) refers to the article appearing in The Edge Financial Daily, Page 6 on Tuesday, 8 November 2011 and wishes to deny the following: -

i)   “Harvest Court Bhd is close to acquiring a new business which involves converting agricultural waste into paper”.

ii)   “The asset being injected into Harvest is believed to be a company called 1Green Enviro Sdn Bhd, which is linked to its substantial shareholder Datuk Raymond Chan”.

The Company wishes to announce that there was no discussion on asset injection as stated in The Edge Financial Daily on 8 November 2011.

The Company is subjected to rumours and reports that are misleading and the Board would like to remind the members of the public to trade precaution in regards to shares and warrants of the Company based on fundamental and formal announcements made by the Company.

There is no discussion on asset injection as of 8 Nov, and the discussion will start on 9 Nov? Haha.

Thursday 3 November 2011

Bursa REITs at A Glance

A lot of people may dream of being a property investor. Nevertheless, not many people can actually take their first step into property investment or even if they have started, failed to be successful.

There are a lot of obstacles in property investment: inadequate capital, inadequate personal income for loan repayment, fear of owing bank money, not willing to pay interest to bank, fear of interest rate hike, fear of buying into wrong property or location, fear of project being abandoned, fear of economy downturn, fear of property bubble, fear of trying new thing, fear of hassles and hidden cost in property transaction, fear of problematic tenants, fear of unknown etc.

I think that the ultimate goal of every property investors is to own a good commercial property which can give higher and more consistent return. As commercial property is relatively much more expensive than residential, most investors will not have the ability to own one. 

However, now everyone has an opportunity to "own" and "collect rental" for commercial properties without any hassles, through REIT (Real Estate Investment Trust). REIT is like unit trust, where you contribute any amount of money you wish to a REIT management, who will manage and maintain a few commercial properties that generate rental income. The profit will be distributed back to you according to how much money you have contributed.

REITs are considered a conservative investment vehicle which usually yield higher return compared to bond and fixed deposit. They are easy to buy and sell as they are listed in the stock market. Besides getting distribution (dividend) on a regular basis, the stock price may also rise when the REIT's income rise.

Below is the total distribution (in sen) of REITs listed in Bursa for the most recent 12 months, in 2010 and 2009. You can compare them to judge how well the REITs perform.

REIT Last 12mth 2010 2009
AHP 7.30 7.20 7.00
ALAQAR 8.47 7.73 8.10
AMFIRST 9.42 9.75 9.75
ARREIT 7.08 7.32 7.16
ATRIUM 8.60 8.60 6.95
AXREIT 18.25 16.00 15.80
BSDREIT 10.20 10.00 9.30
CMMT 7.30 8.43 n/a
HEKTAR 10.30 10.30 10.30
QCAPITA 8.18 8.03 7.68
STAREIT 6.49 6.49 6.49
SUNREIT 6.82 6.58 n/a
TWRREIT 10.65 10.00 10.00
UOAREIT 9.70 9.97 11.50

The total distribution does not tell how much the REIT's unit holder can get in return. We need to calculate the distribution per unit to know its yield.

Which of those REITs give the best yield? A property investor usually aim for a yield or return on investment (ROI) of at least 2x FD rate. Thus, property investment yield should be around 6-7% at the moment. Most REITs listed in Bursa Malaysia do give a yield of 6-8%.

Here is a list of ROI for REITs, base on their distribution in 2010 and price on 2nd Nov 2011.

REIT Price 2 Nov 2010 Return %
AHP 1.03 7.20 6.99
ALAQAR 1.11 7.73 6.96
AMFIRST 1.14 9.75 8.55
ARREIT 0.875 7.32 8.37
ATRIUM 1.07 8.60 8.04
AXREIT 2.52 16.00 6.35
BSDREIT 1.45 10.00 6.90
CMMT 1.32 8.43 6.39
HEKTAR 1.29 10.30 7.98
QCAPITA 1.06 8.03 7.58
STAREIT 0.86 6.49 7.55
SUNREIT 1.14 6.58 5.77
TWRREIT 1.24 10.00 8.06
UOAREIT 1.36 9.97 7.33

Of all the listed REITs above, CMMT (CapitaMalls Malaysia Trust) is the most recent addition with some interesting "activities" going on. Its yield does not seem to be attractive at the moment compared to the others.

CMMT which is the only REIT made up of purely shopping malls, is just listed in July last year. It has 3 very good shopping malls in its portfolio, which are Gurney Plaza Penang, Sungei Wang Plaza KL and The Mines Seri Kembangan. It has acquired the extension new wing of Gurney Plaza early this year and will probably add the East Coast Mall in Kuantan to its portfolio by the end of this year. The move will certainly increase CMMT's value, revenue and total distributable income.

      East Coast Mall Kuantan

However, the distribution per unit or the yield may or may not increase much as CMMT is using 100% private placement to fund the acquisition of East Coast Mall. A total of 261.9 million new units will be issued to raise RM330 million (the mall costs RM310 million). This represent 17.5% addition to its existing units which will certainly dilute its earning. The good thing is, CMMT is able to reduce its gearing and save some financial cost in the future.

CMMT mentions that East Coast Mall will contribute about RM20 million net income annually. Using the latest 2011Q3 distributable income of RM29.65 million and 1.98 sen per unit as reference, after the acquisition, CMMT will have a distributable income of RM29.65 + 5 = RM34.65 million every quarter. With its new 1497.7 + 261.9 = 1759.6 million units, its distribution per unit will be 34.65/1759.6 = 1.97 sen, which is almost the same as 1.98 sen before private placement. Please note that these are all rough calculation and assumption.

     Penang Gurney Plaza

CMMT's malls have 99% occupancy rate and are all stand-out malls in the region. Similar to all other REITs, its income can only increase when rental is raised if the market allow, or when it acquires new properties. If not, its income, yield as well as the unit price will stay stagnant, which is why many investors are not interested in REITs.

Tuesday 1 November 2011

Dijaya Prepares to Fly?

In the last 5-6 months, Dijaya has acquired 569 acres of land in Klang Valley and Johor to bring its total land bank to 708 acres, including an one-acre freehold land at Jalan Sultan Ismail! Overall, it is estimated to give a GDV of RM18 billion to the company in the next 8-10 years.

According to CEO Danny Tan, Dijaya is targeting sales of RM500mil for FY2011, RM820mil in FY2012 and RM1.24bil in FY2013. As at September 2011, the company has unbilled sales of RM472mil. However, its revenue in 1H2011 is only at RM128 million.

Dijaya plans to launch RM800mil worth of new projects this year, RM1bil next year and RM1.3bil in 2013.

DateProjectsLocationTypeGDV RM
Nov 2011Tropicana AvenuePetaling JayaCommoercial412 mil
Dec 2011Tropicana Danga BayJohorMixed3.8 bil
Early 2012Tropicana CherasSg LongResidential185 mil
1H 2012Tropicana Danga CoveJohorMixed2.8 bil
June 2012Tropicana HillsSubangMixed3.5 bil
June 2012Tropicana BayouBalakongResidential400 mil
2H 2012Tropicana GardensKota DamansaraMixed1.8 bil

     Tropicana Danga Bay - masterplan

These are just plans. We may have heard before that Dijaya plans to launch some of the above projects this year and now they have been postponed to next year. If the world economy is slow to recover, they may be postponed again.

RM milRevenueNet Profit

For the past 5 years, Dijaya makes decent profit but its revenue and profit are quite stagnant. There is no persistent growth like Mahsing & SP Setia. Nevertheless, the profit margin is quite good.

Now, after "consolidating" for so many years, Dijaya thinks it's time to take off and fly. With its ambition and land on hand, Dijaya might have a bright future if everything goes according to plan.

     Tropicana City Mall - PJ