Profile of QL Resources Bhd

Profile of QL

QL is principally involved in

• marine-based manufacturing, 
• integrated livestock and 
• oil palm related activities.

The marine-based manufacturing activities 
(2009: Turnover 324.8 m, PBT 45.0 m, PBT margin 13.85%)
(2008: Turnover 273.1 m, PBT 43.3 m, PBT margin 15.85%)
(2007: Turnover 245.4 m, PBT 37.3 m, PBT margin 15.20%)

• These consist of full upstream and downstream processes such as fishmeal, surimi, surimi-based products manufacturing & deep sea fishing.  
• QL is the largest fishmeal manufacturer in Malaysia.  
• QL is also the largest producer of surimi in Asia and a leading producer of surimi based products in Malaysia.  
• At present, QL has 19 deep sea fishing boats, and three surimi production facilities located in Hutan Melintang (Perak), Endau (Johor) and Kota Kinabalu (Sabah).  
• About 70% of QL's surimi is exported.  The remaining 30% is sold locally.  

Integrated livestock farming 
(2009:  Turnover 804.8 m, PBT 54.0 m, PBT margin 6.7%)
(2008: Turnover 734.5 m, PBT 61 m, PBT margin 8.3%)
(2007: Turnover 657.2 m, PBT 42.2 m, PBT margin 7.57%)

• The integrated livestock activities consist of the distribution of feed meal raw materials and animal health and feed supplements as well as layer farming and feedmilling activities.  
• The layer farming and feedmilling activities are situated in Kota Kinabalu and Tawau (Sabah), Kuching (Sarawak), Pajam (Negeri Sembilan) and Rawang (Selangor).  
• QL also owns an integrated broiler farm in Tawau, Sabah.  
• QL is a leading poultry egg producer in Malaysia with daily production of 2.1 m eggs.  

Palm oil activities 
(2009:  Turnover 268.3 m, PBT 10.9 m, PBT margin 4.06%)
(2008: Turnover 302.8 m, PBT 11.2 m, PBT margin 3.70%)
(2007: Turnover 216.0 m, PBT 9.7 m, PBT margin 4.49%)

• QL owns two independent crude palm oil (CPO) mills located near Tawau and Kunak, which service the oil palm estates in East Malaysia.  These two mills produce 120,000 MT of CPO per annum. 
• It owns 3,000 acres of mature oil palm plantation around Tawau.  
• Besides this, QL has 30,000 acres of oil palm development in Eastern Kalimantan, Indonesia with a planted area of 13,000 (as at 30.6.09).

QL Segmental Financial Data
http://spreadsheets.google.com/pub?key=trnyLVZ4ZzDlGSY-_cnk6fQ&output=html


Source:  SPG Dynaquest

Searching for good quality stocks in the Consumer Sector

Let us have a look at some consumer stocks.  I have selected these stocks based on their doubling in their earnings over the 10 year period of 1999 to 2009.

Here are these stocks:

Ajinomoto

BAT

Bonia

DLady

F&N
Mamee

Nestle

Padini

PPB

QL

UMW

Subjecting the above to a further screening criteria (that is, no decline of >5% in earnings in 2 out of these 10 years), the following stocks are discarded from this list:

Ajinomoto
Mamee

UMW

Also, BAT is also discarded as the earnings growth the last 5 years had been negligible or anaemic at best.

This leaves the following stocks, with history of durable competitive advantage, in this list for further analysis.

Ajinomoto

BAT

Bonia

DLady

F&N
Mamee

Nestle

Padini

PPB

QL

UMW

CONSUMER STOCKS 19.3.2010 (SCREENING)
http://spreadsheets.google.com/pub?key=tK8cE26-xL_RzQTlyraa4Hw&output=html


More data on these selected stocks:
http://spreadsheets.google.com/pub?key=t3NqvCaYIzbDefaasjB3ilQ&output=html

Which 1 or 2 of the above stocks would you wish to own for the long term?

Time for QVM analysis when time permits..

Is the Stock Market Cheap?

Is the Stock Market Cheap?
March 19, 2010  mid-month update 
Here's the latest update of my preferred market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly averages of daily closes through February 2010, with the latest numbers based on the current index price around 1165.

---

● TTM P/E ratio = 20.6
● P/E10 ratio = 21.5

---

Background
A standard way to investigate market valuation is to study the historic Price-to-Earnings (P/E) ratio using reported earnings for the trailing twelve months (TTM). Proponents of this approach ignore forward estimates because they are often based on wishful thinking, erroneous assumptions, and analyst bias.


The "price" part of the P/E calculation is available in real time on TV and the Internet. The "earnings" part, however, is more difficult to find. The authoritative source is the Standard & Poor's website, where the latest numbers are posted on the earnings page. Click on the Index Earnings link in the right hand column. Free registration is now required to access the data. Once you've downloaded the spreadsheet, see the data in column D.
The table here shows the TTM earnings based on "as reported" earnings and a combination of "as reported" earnings and Standard & Poor's estimates for "as reported" earnings for the next few quarters. The values for the months between are linear interpolations from the quarterly numbers.

The average P/E ratio since the 1870's has been about 15. But the disconnect between price and TTM earnings during much of 2009 was so extreme that the P/E ratio was in triple digits — as high as 122 — in the Spring of 2009. At the top of the Tech Bubble in 2000, the conventional P/E ratio was a mere 30. It peaked north of 47 two years after the market topped out.

As these examples illustrate, in times of critical importance, the conventional P/E ratio often lags the index to the point of being useless as a value indicator. "Why the lag?" you may wonder. "How can the P/E be at a record high after the price has fallen so far?" The explanation is simple. Earnings fell faster than price. In fact, the negative earnings of 2008 Q4 (-$23.25) is something that has never happened before in the history of the S&P 500.

The P/E10 Ratio
Legendary economist and value investor Benjamin Graham noticed the same bizarre P/E behavior during the Roaring Twenties and subsequent market crash. Graham collaborated with David Dodd to devise a more accurate way to calculate the market's value, which they discussed in their 1934 classic book, Security Analysis. They attributed the illogical P/E ratios to temporary and sometimes extreme fluctuations in the business cycle. Their solution was to divide the price by the 10-year average of earnings, which we'll call the P/E10. In recent years, Yale professor Robert Shiller, the author of Irrational Exuberance, has reintroduced the P/E10 to a wider audience of investors. As the accompanying chart illustrates, this ratio closely tracks the real (inflation-adjusted) price of the S&P Composite. The historic P/E10 average is 16.3.

The Current P/E10
After dropping to 13.4 in March 2009, the P/E10 rebounded above 20. The chart below gives us a historical context for these numbers. The ratio in this chart is doubly smoothed (10-year average of earnings and monthly averages of daily closing prices). Thus the fluctuations during the month aren't especially relevant (e.g., the difference between the monthly average and monthly close P/E10).

Of course, the historic P/E10 has never flat-lined on the average. On the contrary, over the long haul it swings dramatically between the over- and under-valued ranges. If we look at the major peaks and troughs in the P/E10, we see that the high during the Tech Bubble was the all-time high of 44 in December 1999. The 1929 high of 32 comes in at a distant second. The secular bottoms in 1921, 1932, 1942 and 1982 saw P/E10 ratios in the single digits.

Where does the current valuation put us?
For a more precise view of how today's P/E10 relates to the past, our chart includes horizontal bands to divide the monthly valuations into quintiles — five groups, each with 20% of the total. Ratios in the top 20% suggest a highly overvalued market, the bottom 20% a highly undervalued market. What can we learn from this analysis? Over the past several months, the decline from the all-time P/E10 high dramatically accelerated toward value territory, with the ratio dropping from the 1st to the upper 4th quintile in March 2009. The price rebound since the 2009 low has now pushed the ratio into the 1st quintile — quite expensive!

A more cautionary observation is that every time the P/E10 has fallen from the first to the fourth quintile, it has ultimately declined to the fifth quintile and bottomed in single digits. Based on the latest 10-year earnings average, to reach a P/E10 in the high single digits would require an S&P 500 price decline below 600. Of course, a happier alternative would be for corporate earnings to make a strong and prolonged surge. When might we see the P/E10 bottom? These secular declines have ranged in length from over 19 years to as few as three. The current decline is now in its tenth year.

Or was March 2009 the beginning of a secular bull market? Perhaps, but the history of market valuations doesn't encourage optimism. 

http://dshort.com/articles/SP-Composite-pe-ratios.html

Interesting chart showing the Index relative to Normal P/E Range

Here is the chart showing the historical P/E range. The recent earnings crash looks scary, but the range display should return to normal in a few weeks.




......concerned about the consistent overvalue condition that has been the norm since the early 1990s, but it has persisted through two bull markets and two bear markets, demonstrating that investors just don't care about value. And the value range analysis we do, while an interesting curiosity, is not of much use for decision-making in the current environment. Follow the trend.

Full report:  (very technical)
http://www.decisionpoint.com/ChartSpotliteFiles/100312_cspot.html
http://www.decisionpoint.com/TAC/SWENLIN.html

The Economy Is Not Always The Stock Market Driver

The Economy Is Not Always The Stock Market Driver

By Claus Vogt on March 17, 2010
In the long run, economic development and - especially - corporate earnings are the main drivers of stock market performance. But this relationship is very loose. It becomes tight only if your time horizon is measured in decades.

Shorter term, economic development and corporate earnings are often relatively inconsequential for the stock market. Why? Economic changes are superimposed by changes in the fundamental valuation of the stock market. That means investors’ perceptions and their willingness to pay for risk and income streams are unsteady. Over time, investors are paying very different prices for the same earnings or dividend streams.

Fundamental Valuations Are Fluctuating Wildly


Look at the following charts showing the S&P 500 since 1926, the Price-Earnings-Ratio (PER) and the Dividend Yield. As you can see, both fundamental ratios have been fluctuating wildly. The PER was as low as 7 and as high as 20-something.

During the stock market bubble of the late 1990s the PER even rose to more than 40. And during the past quarters the PER rose significantly higher. Obviously investors came to the conclusion that the dramatic slump in corporate earnings, especially in the financial sector, was an extreme outlier which should not be taken into account to value the stock market.

S&P 500 Index, Kurs-Gewinn-Verhältnis, Dividendenrendite, 1926 bis 2010

Source: www.decisionpoint.com

These severe fluctuations mean that dividends, earnings, and cash flows are fetching very different price tags in different times. A simple example may demonstrate my point: Suppose the PER is as low as 7 and the stock market index is at 100 points. Keep earnings constant, but let the PER rise to its upper range at 21. Now the index rises from 100 points to 300 points. Let’s go a step further to a bubble PER of 42. In this case, the index doubles to 600 points. Same index, same companies, same earnings, but very different Price-Earnings-Ratios lead to this bandwidth of 100 to 600 points. And this bandwidth has been a reality in the past 30 years!

This example makes clear how secondary the economic background and even corporate earnings are to analyze and evaluate the stock market. But there is one major exception to this rule: Recession.

You Better See Recessions Coming


Whenever a recession is in the offing, you have invaluable economic information at your hand. This information is extremely important for the stock market and for your investment strategy. Why? Every recession has been accompanied by a severe stock bear market. That’s why I constantly look at my leading economic indicators, which enabled me to predict the recessions of 2001 and 2007-2009.

Right now they do not yet forecast an imminent recession. Hence, in the current situation it is ideal to painstakingly analyze the latest economic data release du jour. It may be fun to do so for those inclined. But it doesn’t help you in forecasting the stock market. I rate this regular data release ballyhoo as noise you can easily ignore.

History tells us that the economy is vulnerable to a renewed and relatively swift turn for the worse.

That doesn’t mean I do not follow economic development. But I am only interested in deciding whether the incoming data is starting to point to the end of the current economic rebound or not. Everything else is inconsequential.

We are living in a post bubble world. And history tells us that the economy is vulnerable to a renewed and relatively swift turn for the worse in this environment. After all, this rebound is the result of massive governmental stimulus, bail outs and market manipulation by the Fed.

It follows that this rebound is dubious and fragile. But even in this scenario the leading economic indicators will pick up some deterioration before the next down wave gets started. Currently, they are doing nothing of the sort.

http://www.dailymarkets.com/stocks/2010/03/17/the-economy-is-not-always-the-stock-market-driver/

icap NAV 11.3.2010

9.7.2009:
NAV per share RM 1.87
Share price RM 1.80
Discount to its NAV 3.7%

3.3.2010:
NAV per share RM 2.08
Share price RM 1.72
Discount to its NAV 17.3%

18.3.2010:
NAV per share RM 2.13
Share price MR 1.84
Discount to NAV 13.6%

icapital.biz is 'unpopular' and 'unloved' during this bull run!

Since the above icap posting on 3.3.2010, its NAV has risen by 5 sen and its market price has risen by 12 sen, narrowing the discount of its market price to NAV by 3.7%, from 17.3% to 13.6%.

'China faces the 'greatest bubble' in history'

'China faces the 'greatest bubble' in history' 18 Mar 2010, 0300 hrs IST, Bloomberg

HONG KONG: China is in the midst of “the greatest bubble in history,” said James Rickards, former general counsel of hedge fund Long-Term More on Financial crisis Lighter side of recession Top 10 US bankruptcies Where has US bailout money gone? Capital Management. The Chinese central bank’s balance sheet resembles that of a hedge fund buying dollars and short-selling the yuan, said Rickards, now the senior managing director for market intelligence at consulting firm Omnis. “As I see it, it is the greatest bubble in history with the most massive misallocation of wealth,” Rickards said at the Asset Allocation Summit Asia 2010 organised by Terrapinn in Hong Kong on Tuesday. China “is a bubble waiting to burst.” Rickards joins hedge fund manager Jim Chanos, Gloom, Boom & Doom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China’s economy. The government has raised banks’ reserve requirements twice this year after economic growth accelerated and property prices rallied. China has pegged the yuan to the dollar since July 2008 to help exporters weather the global recession. The central bank buys dollars and sells its own currency to prevent the yuan strengthening, driving foreign-exchange reserves to a world-record $2.4 trillion as of December. The Shanghai Composite Index of stocks jumped 80% last year and property prices rose at the fastest pace in almost two years in February, helped by a record 9.59 trillion yuan ($1.4 trillion) of new loans in 2009. Also Read  → China unyielding on yuan as US raises pressure  → World Bank says China should grow 9.5 pc in 2010  → Yuan appreciation: Will China listen?  → World Bank urges China to let currency rise  → Time for China to revalue yuan: US Treasury official ‘MASSIVE STIMULUS’  The World Bank indicated on Wednesday that China should raise interest rates to help contain the risk of a property bubble and allow a stronger yuan to help damp inflation expectations. The nation’s “massive monetary stimulus” risks triggering large asset-price increases, a housing bubble, and bad debts from the financing of local-government projects, Washington-based World Bank said in a quarterly report on China released in Beijing. “People making comments about bubbles possibly don’t have all the facts,” HSBC Holdings chief executive officer Michael Geoghegan said in Shanghai on Tuesday. Regulators are in control of the banking industry, and have the ability to curb lending as needed, he said.  Rickards said leveraged speculation in the stock market, wasteful allocation of resources by state-owned enterprises, off-balance-sheet debt More on Financial crisis Lighter side of recession Top 10 US bankruptcies Where has US bailout money gone? through regional governments and the country’s human rights record are concerns. “Take Russia and China together, neither of them is really deserving any investment” except for short-term speculation, Rickards said. India and Brazil are two of the “real economies” among the developing countries, he said. HARD LANDING  China is poised to overtake Japan as the world’s second-largest economy this year, according to the International Monetary Fund , and Nomura Holdings forecasts it will contribute more than a third to global growth. The nation has surpassed the US as the world’s largest auto market and Germany as the No. 1 exporter. Harvard’s Rogoff said February 23 that a debt-fuelled bubble in China may trigger a regional recession within a decade, while Chanos, founder of New York-based Kynikos Associates, predicted a slump after excessive propertyinvestments. Investors Bob Doll and Antoine van Agtmael say China’s stock market isn’t a bubble. Equities will gain by the end of the year as the government takes measures to prevent the economy from overheating, Doll, BlackRock’s CIO for global equities, said. China is unlikely to face “chaos” or experience a hard landing, Van Agtmael, chairman and chief investment officer of Emerging Markets Management said . ‘VERY SOUND’  The banking industry has “very low impairment charges compared to what you’d expect this time in the cycle,” HSBC’s Geoghegan said. “I wouldn’t be surprised if there’s a gradual increase in impairments, but long term, I’m confident that the structure of the banking industry is very, very sound.” Rickards disputed an argument that China could hold US policies hostage through its Treasuries holdings. The nation remained the largest overseas owner of US debt after trimming its holdings by $5.8 billion in January to $889 billion. China will suffer massive losses if the debt was dumped, reducing the funds available in the US securities market and forcing the prices lower, he said. http://economictimes.indiatimes.com/news/international-business/China-faces-the-greatest-bubble-in-history/articleshow/5695593.cms

Is it better to have a degree and no job, or no university place?

March 17, 2010

Is it better to have a degree and no job, or no university place? It's not a good time to be a student - or to want to be one.....

It sometimes feels like only a wunderkind has a chance....

Eleanor Rushton, who has all the requisite As and A*s writes below about life as a graduate in these difficult times. It's a depressing, moving piece, and makes me glad that I'm no longer 22 (like her), or 17, 18, 19, 20, or 21 for that matter. Despite my advancing years (no zimmer frame as yet, thank goodness), and despite sometimes wishing to be younger, it can't be great to be leaving school or university now. The jobs aren't there, and neither, sadly, are the university places.

Over the next few years, universities are going to have to change. They're being forced to by the recession, and the huge demand for places. Too many talented students are not being offered a university place at all. Won't something have to give?

So what's it like to graduate now? It's not a good time to be a student, is it? And it's not a good time to want to be one, either....

Eleanor (whom you can see in the picture) graduated from New College, Oxford last year with a degree in English. Here's her personal view of the times we are in.

"The difficulty of finding new work in the recession is well documented.  ‘Finding new work’ implicates those who are already in the job market; the casualties of mass job-cuts and redundancy. The situation looks even bleaker for those without much on their CVs yet.  Graduates, fresh from university and raring to kick-start their careers, are finding that jobs are simply not there for them. 

I graduated in June ’09 and only a small handful of my friends have managed to secure employment, at least in their chosen fields. A huge number have opted for post-graduate study instead. This is not due to rejuvenated interest in academia so much as the desire to avoid the black hole of unemployment for as long as possible. The academic field is one where they have proven themselves, at least a bit, while few have much to distinguish them from the legions of other degree-holders flooding the job market.

The average student, who has moved straight from school to university, will not have much solid work experience and many who do ,have impressive weeks here and there will be lacking in employment experience. It sometimes feels like only a wunderkind, who managed to juggle their Oxbridge degree with running a successful internet company, interning at the UN and helping on the Obama campaign has a chance. 

Post-graduate study is not an option for everyone however. Quite apart from required academic credentials, the expense of courses means they are only feasible for those who gain funding, be it from public bodies or parents eager (and able) to help.  Many are having gap-years in order to raise the funds for a post-grad course and some of my highest-flying friends have applied to overseas universities. Given the free flights, holidays-cum-open-days and generous salaries on offer, I do not blame them!

There is also another bomb set to explode this year.  It now looks as though thousands of would-be students will not even have university, let alone post-graduate study, to help them ride out the recession. 

The Times reported today that ‘analysis shows that at least 50,000 more sixth-formers with good grades will fail to get on a course this autumn compared with last year’.  Since top-up fees came in, the benefits of going to university have had to be weighed against the massive debts it will incur: my own personal total is gaining on £21,000.

In 2010 this decision will be taken out of the hands of many. Forced cuts in numbers, and in whole courses, have erased thousands of potential places. I was tucked safely away at university for the first year of the recession and, even in this dire job market, at least I can blame any gaps in my CV on the fact that I graduated when I did. For the thousands of seventeen and eighteen year-olds who cannot hide out for a few years, ‘pre-packaged’ options are scarce. 

Overshadowing all this is the problem of degrees now being worth less anyway, due to sheer numbers, lower entrance requirements and ‘soft’ courses.Post-grad courses are becoming tools to help us stand out in the crowd, which could well result in a similar devaluation. This qualification inflation might actually mean that waiting to go to university, as UCAS chief executive Mary Curnock Cook has suggested, could start to mark you out again. 

University cannot be, this year at least, the go-to option that it certainly was for me. Is it better to have a degree, that still does not bag you a job, or no university place?  It is hard to say what the ideal situation is for anyone of my age but it is clear that we are all going to have to think of some weird and wonderful ways to set ourselves apart, degree or no degree."

Read School Gate:

Is it still worth going to university? Join the debate

Is there any point doing an arts degree? Join the debate

The nightmare of graduation in 2009

The story behind the rise in year's university applications

http://timesonline.typepad.com/schoolgate/2010/03/is-it-better-to-have-a-degree-and-no-job-or-no-university-place-its-not-a-good-time-to-be-a-student-.html

World stocks jump on low rate outlook

World stocks jump on low rate outlook

NEW YORK, March 18 — US and European stocks hit 17-month closing highs and commodity prices jumped yesterday after a drop in a gauge of US inflation added weight to a Federal Reserve pledge to keep interest rates low for a long time, boosting risk appetite.

The Dow industrials and S&P 500 surged for a seventh straight session, and along with a major pan-European stock index, closed at their highest levels since October 2008.

Commitments by both the Fed and the Bank of Japan to low rates instilled confidence in investors to lower their aversion to risk, leading the yen to weaken and the US dollar to fall against high-yield currencies such as the Australian dollar.

Investor enthusiasm mounted after the Fed on Tuesday reiterated plans to leave rates ultra-low for an extended period. Low rates should stimulate growth and boost demand.

“The general belief now is we are emerging from recession and that there are brighter days ahead,” said Michael Gross, futures analyst with Optionsellers.com in Tampa, Florida.

The Dow Jones industrial average closed up 47.69 points, or 0.45 per cent, at 10,733.67. The Standard & Poor’s 500 Index gained 6.75 points, or 0.58 per cent, at 1,166.21. The Nasdaq Composite Index climbed 11.08 points, or 0.47 per cent, at 2,389.09.

The Dow’s gains yesterday marked a seven-session winning streak that was the longest since an eight-day run in August 2009, when it rose 4.9 per cent. In the last seven sessions, the Dow has gained 1.7 per cent.

The US Labour Department said the index for prices paid at the farm and factory gate fell 0.6 per cent last month, the largest decline since July, after a 1.4 per cent increase in January. The drop, led by tumbling energy costs, reinforced views that inflation is benign and the Fed will not boost interest rates any time soon.

“Investors like knowing where rates are going to be for at least the next three months,” said Marc Pado, US market strategist at Cantor Fitzgerald & Co in San Francisco. “Knowing we have that stable environment to look forward to is what’s lifting stocks.”

The Chicago Board Options Exchange volatility index, a gauge of investor sentiment better known as the Vix, fell 4.4 per cent to lows last seen in May 2008. The Vix, a 30-day risk forecast, typically moves inversely to the S&P 500 stock index. A lower reading suggests there is a greater desire in the markets to take risk.

A similar European gauge, the VDAX-NEW volatility index, fell 2.2 per cent.

MSCI’s all-country world stock index rose almost 0.9 per cent. The pan-European FTSEurofirst 300 index of regional shares rose 0.9 per cent to end at 1,070.90 points.

Despite the new highs in a stock rally from decade lows a year ago, some investors remained cautious as the recovery from the deepest global recession since World War Two remains weak.

“Governments and central banks have put massive fiscal and monetary stimulus into the system. The big question for this year is what happens when they withdraw it,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

“This rally, which we still consider to be a bear market rally, has gone quite a bit further than we thought,” he said.

Oil rose 1.5 per cent towards US$83 (RM282) a barrel after a US government report showed increased oil product demand and as the Organisation of Petroleum Exporting Countries decided to leave output targets unchanged.

A weaker dollar also provided support for oil and other commodities.

US crude for April delivery gained US$1.23 to settle at US$82.93 a barrel. London Brent crude rose US$1.43 to settle at US$81.96.

The euro fell from five-week highs against the dollar as sentiment remained negative on the euro zone single currency despite pronouncements of support by European Union members for debt-strapped Greece.

The euro was down 0.22 per cent at US$1.3739. The dollar was down against major currencies, with the US Dollar Index off 0.04 per cent at 79.719.

Against the yen, the dollar was unchanged at 90.27.

Longer-dated US Treasuries rose as the drop in producer prices was taken by investors as further evidence the Fed will not raise rock-bottom interest rates any time soon.

Prices gains were limited, however, as higher stocks eroded the safe-haven appeal of lower-risk government debt.

Benchmark 10-year Treasury notes traded 4/32 higher in price to yield 3.64 per cent.

Gold prices retreated from earlier gains.

Spot gold prices fell US$5.10 at US$1,119.60 an ounce.

Earlier, Japan’s Nikkei closed up 1.17 per cent, boosted by the BoJ’s decision to loosen monetary policy. — Reuters

Resorts World buys US$18m of MGM’s secured notes (9% Coupon Rate & due in 2020)

Resorts World buys US$18m of MGM’s secured notes

Published: 2010/03/18

GENTING Malaysia Bhd’s wholly-owned unit Resorts World Ltd has subscribed to US$18 million (US$1 = RM3.30) of MGM Mirage Inc’s (MGM) 9 per cent senior secured notes that are due in 2020. 

In its filing to the stock exchange yesterday, Genting said the notes were part of MGM’s fund raising effort totalling US$845 million to repay debt.

The 9 per cent coupon rate generates better return than what is now attainable in the money markets or in other secured investments regionally.


http://www.btimes.com.my/Current_News/BTIMES/articles/20100318005103/Article/index_html

Astro to go private at RM4.30 a share

By Adeline Paul Raj

Published: 2010/03/18

Shareholders stand to get a 21 per cent premium to the stock's last traded price of RM3.56.

Tycoon T. Ananda Krishnan, Khazanah Nasional Bhd and partners have offered to buy out minority shareholders of Astro All Asia Networks plc in a cash deal that values the pay-television operator at RM8.5 billion.

Shareholders stand to get RM4.30 (5076) for each share held, which is a 21 per cent premium to the stock's last traded price of RM3.56.

The offer was made late yesterday by special purpose vehicle Astro Holdings Sdn Bhd, whose main shareholders are Ananda's Usaha Tegas Sdn Bhd and affiliates, Khazanah and Bumiputera foundations. Together, they own 72.9 per cent of Astro.

The company does not intend to keep Astro listed and, if all goes well, it will be delisted sometime in the middle of June, said CIMB Investment Bank, the adviser to Astro Holdings.
The move to take Astro private is to facilitate plans to make it a leading regional integrated media group.

Astro needs to spend substantially - between RM3 billion and RM3.5 billion over the next three years - to accelerate its domestic and international growth, inclu-ding in migrating to high-definition television, said Datuk Seri Nazir Razak, group chief executive of CIMB Group Holdings Bhd, which owns CIMB Investment.

The substantial investments would strain the company's gearing and limit its ability to pay dividends, he added.

"A private status would give us greater flexibility to achieve this goal of expansion. We believe the deal offers minority shareholders an attractive price while not subjecting them to the associated risks of the company's next growth phase," Nazir told reporters at a briefing late yesterday.

Taking it private will also let the owners have more freedom in making corporate decisions without having to seek shareholders' approval.

The reasons for the exercise were similar to that cited when another of Ananda's companies, Maxis Communications Bhd, was taken private in 2007.

Maxis, after being privatised, took on a foreign partner in the form of Saudi Telecom, and a revamped version of the company, comprising only the domestic operations, was listed just last year.

Nazir said a relisting of Astro would be considered once it achieved a more stable earnings profile.

The Astro privatisation will go through if there is acceptance of more than 90 per cent of the shares.

Astro Holdings will have to come up with some RM2.4 billion to buy the minority portion. CIMB is leading a consortium of banks to arrange the financing.

Nazir is confident the deal will go through as the offer price is "fair", coming in above analysts' average targets of about RM3.70 for the stock.

"It's a good price. I think they'll have no problems taking it private," said Yeonzon Yeow, head of research at Kenanga Research, which had a target price of RM3.65 for Astro.

RHB Investment Bank Bhd and UBS Securities Malaysia Sdn Bhd are the advisers to Astro in the deal, while the independent financial advisers are Public Investment Bank Bhd and JPMorgan Securities (Malaysia) Sdn Bhd.

Meanwhile, Astro chairman Datuk Badri Masri said the company would continue to be managed by the current board and management.

Astro owns 20 per cent of India's Sun Direct TV, a direct-to-home service which is still loss-making, as well as businesses in China (library and content development) and a new Internet Protocol television initiative in Australia, the Middle East and North Africa.

The Business Times


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Ananda leads buyout for Astro

KUALA LUMPUR, March 17 — Billionaire Ananda Krishnan is leading a US$2.57 billion (RM8.7 billion) buyout offer for pay-TV monopoly Astro All Asia Networks plc after loss-making overseas expansion bled the company.

Astro today said it has received an offer from Astro Holdings, a special purpose vehicle controlled by Ananda and state investment firm Khazanah Nasional, to buy out the remaining 28 per cent of shares in the company at RM4.30 a share.

The offer marks a 21 per cent premium to Astro’s market value of US$2.08 billion or its last price of RM3.56 a share before trading in the shares were suspended on Monday.

Ananda owns 42.4 per cent of Astro while Khazanah Nasional has a 21.4 per cent stake in Astro.

The Employees Provident Fund (EPF), the country’s biggest pension fund, has a 7.37 per cent stake in Astro. The EPF is not a shareholder of Astro Holdings, the offer.

The privatisation will allow Astro to focus on its overseas operations which still require heavy capital investment, Astro Holdings said.

“As a public listed entity, substantial capital requirements needed for its growth plans may potentially strain the cash flow position and may impair Astro,” it said in a statement.

“A relisting would certainly be considered when Astro achieves a more stable earnings profile,” Astro Holdings said.

Despite its hugely profitable Malaysian operations, Astro posted a net loss of RM529 million in fiscal 2009, dragged down by massive losses at its overseas operations in Indonesia and India.

Astro owns 20 per cent of India’s Sun Direct TV while its Indonesian pay-TV joint venture has fallen apart since 2008 due to a contract dispute.

The offer by Astro Holdings today is a replica of a 2007 deal by Ananda which involved the delisting of top telecoms company Maxis Communications Berhad following a series of expensive acquisitions in India and Indonesia.

Ananda, ranked by Forbes magazine as Asia’s 14th richest man with a net worth of US$7.6 billion, last year cheered investors when he relisted his prized Malaysian telecommunications assets on the local bourse in a US$3.3 billion offering.

The delisting of Astro shares from the stock exchange may benefit its closest rival Media Prima, a free-to-air broadcasting monopoly.

CIMB Investment Bank, the lead advisor for the deal, expects the privatisation of Astro to be completed by mid-June.

“By taking Astro private, (Ananda) would have more freedom in taking corporate actions without having to seek shareholders approval,” TA Securities said in a research note before the privatisation announcement. — Reuters

Topglove has revised its target dividend payout ratio to 40 per cent from its net profit, up from 30 per cent in previous years.

TOP Glove Corp Bhd (7113) , the world's largest glove manufacturer, saw its net profit for the second quarter to February 2010 double to RM72.3 million year-on-year.

This was attributed to the new sales secured especially from emerging countries and cost-saving measures implemented at all factories.

The quarterly net profit was also higher than the RM70.7 million net profit recorded in the first six months of 2009.

Its sales revenue rose 47 per cent to RM509.9 million during the quarter under review, Top Glove said in a statement.

Top Glove remains optimistic of its future outlook despite ongoing challenges such as the rise in raw material cost and weakening US dollar.

The company has revised its target dividend payout ratio to 40 per cent from its net profit, up from 30 per cent in previous years.

OSK Research Sdn Bhd said the interim results had been expected, given the continuous strong demand for natural rubber gloves.

The firm has maintained its "buy" call and target price at RM15.15.

It is valuing Top Glove at a premium to the industry average due to its leading market share of 22 per cent.

OSK Research also likes the company for having the right product mix (80 per cent natural rubber gloves which is the basic entry for examination gloves) and targeting the right market (developing countries).

"Traditionally, these countries such as Brazil have proven to give significant sales boost to the rubber glove companies once their government implemented the compulsory usage of gloves in their healthcare sector."

The firm said the main risk for Top Glove is when supply catches up with demand. 

When that happens, the rubber glove manufacturers will no longer be able to sell their gloves at a premium price as well as pass on the entire cost rise to their customers in a timely manner.

Top Glove's group net profit for the first six months of 2010 was RM138.8 million, up 96 per cent from the previous first half.

Total revenue for the six months increased 34 per cent to RM982.2 million from RM732.6 million a year ago.

Top Glove has a large customer base spread over more than 180 countries and with a diversified range of products.

What to Do in a Up (Bull) Market?

The stock market often falls under the conditions of the so called bull and bear markets. Intelligent investors are well familiar with the conditions of both and know exactly what to do.

A bull market may make your stock's price increase, from which you can benefit in one way or another.

However, the possibility of your stock becoming too costly always exists since after the up, a down in the price may follow, which may be of an extreme speed.

So, under bull market conditions you can do one of the following in order to counteract the potentially negative effects.

• First of all, you can sell a part of the shares and use the money to repurchase the stock when its price falls again.
• Secondly, you can leave the market work its way through the imbalance with no action from your side.
• Thirdly, you can take advantage of the high prices and sell the stocks for a profit.

Never forget that a market correction will follow that may push the price of your stock below its initial level.

A useful strategy to counteract the negative effects of a bull market is to sell a portion of your stocks at the current bull market price, which will be greatly higher than the one at which you have purchased the stock.

• After the market correction is at place you can use the money you have acquired from the bull market sale to purchase shares at the current lower price. As a result you will have more stocks than you used to have before the bull market.
• You have not only avoided losses but also have reduced your average cost per share.

****Bull and Bear Market Strategies - Damn Bloody Good Gems!

What to Do in a Down (Bear) Market?

The stock market often falls under the conditions of the so called bull and bear markets. Intelligent investors are well familiar with the conditions of both and know exactly what to do. 

Under a down market you have several options.

• One of them is to sell immediately in order to minimize your losses.
• Another option is to let the market work its way through the problem with no action from your side.
• A third option is to benefit from the stock decline and add some more to your portfolio. But, this should be done only if you don't perceive that there is something wrong with the company that has led to the stock decline.

****Bull and Bear Market Strategies - Damn Bloody Good Gems!