Price 2.10
latest eps 5.86
annualised eps 23.4
annualised PE = 8.9
Market cap 383.555 m
NAV 72 sen
Monday, 17 August 2009
Hartalega
Hartalega
Price 5.20
latest qtr eps 10.88
annualised eps 4x 10.88 = 43.5
annualised PE = 12
Market cap = 1.3 billion
NAV 1.12
Date Announced : 12/08/2009
Type : Announcement
Subject : HARTALEGA HOLDINGS BERHAD ("HARTA and/or Company")
-Director's dealing in shares in HARTA during closed period pursuant to paragraph 14.08(c) of the Listing Requirements of Bursa Malaysia Securities Berhad
Contents : Pursuant to paragraph 14.08(c) of the Bursa Securities Listing Requirements, Encik Sannusi Bin Ngah, a Non-Independent Non-Executive Director of the Company has given a notification that he has disposed a total of 3,000,000 ordinary shares of RM0.50 each in HARTA, details of which are set out in the table below.
Price 5.20
latest qtr eps 10.88
annualised eps 4x 10.88 = 43.5
annualised PE = 12
Market cap = 1.3 billion
NAV 1.12
Date Announced : 12/08/2009
Type : Announcement
Subject : HARTALEGA HOLDINGS BERHAD ("HARTA and/or Company")
-Director's dealing in shares in HARTA during closed period pursuant to paragraph 14.08(c) of the Listing Requirements of Bursa Malaysia Securities Berhad
Contents : Pursuant to paragraph 14.08(c) of the Bursa Securities Listing Requirements, Encik Sannusi Bin Ngah, a Non-Independent Non-Executive Director of the Company has given a notification that he has disposed a total of 3,000,000 ordinary shares of RM0.50 each in HARTA, details of which are set out in the table below.
Saturday, 15 August 2009
Glove makers to ride on strong demand growth
Glove makers to ride on strong demand growth
Tags: Hartalega | Kossan | Top Glove
Written by The Edge Financial Daily
Friday, 14 August 2009 12:07
KUALA LUMPUR: Maybank Investment Research remains overweight on Malaysia's glove manufacturing sector, which has the top manufacturers in the world.
The research house said on Aug 14 it had raised the target prices of Hartalega and Top Glove by 19%-23% to RM6.50 and RM8.30. It also retained the Buy calls on Hartalega, Top Glove and Kossan.
It said expectation is for demand to grow by a strong 10%-12% per annum over the next five years, above its 5%-8% forecast.
Maybank Investment Research said the drivers are improved hygiene standards and healthcare awareness in developing countries like Latin America and Asia; higher incidences of major infectious disease outbreaks, an ageing population and rising economic and social conditions, and more outsourcing by large medical companies in US.
The challenges for the sector is the government's stand on foreign labour, double levy and tax benefits; lack of R&D in the industry; volatile latex prices and currencies, and energy issues.
However, glove makers should be able to continue passing on additional costs over time to mitigate exposure.
"We shall see selling prices being adjusted upwards in 3Q09 to accommodate latex prices' current uptrend," it said.
All producers are expected to post above-par core second quarter 2009 earnings, riding on lower material costs and orders surge owing to the H1N1 outbreak. Demand growth should be stronger ahead.
"We have raised Top Glove and Hartalega's FY09-12 net profits by 7%-13% but lowered Kossan's FY09 by 10% due to losses in structured currency product. The combined net profits of the producers are still expected to record a three-year compounded annual growth rate (CAGR) of 14%. Capacity expansion should support demand growth.
"Considering their dominant global market share, the sector's 2009-10 price-to-earnings ratio (PER) of 11 times to 13 times is undemanding relative to the FBM-KLCI 30's 17 times. We raise Hartalega's and Top Glove's TP to RM6.50 (+19%) and RM8.30 (+23%) respectively. We maintain Kossan's TP at RM5.30," it said.
From the Edge
Tags: Hartalega | Kossan | Top Glove
Written by The Edge Financial Daily
Friday, 14 August 2009 12:07
KUALA LUMPUR: Maybank Investment Research remains overweight on Malaysia's glove manufacturing sector, which has the top manufacturers in the world.
The research house said on Aug 14 it had raised the target prices of Hartalega and Top Glove by 19%-23% to RM6.50 and RM8.30. It also retained the Buy calls on Hartalega, Top Glove and Kossan.
It said expectation is for demand to grow by a strong 10%-12% per annum over the next five years, above its 5%-8% forecast.
Maybank Investment Research said the drivers are improved hygiene standards and healthcare awareness in developing countries like Latin America and Asia; higher incidences of major infectious disease outbreaks, an ageing population and rising economic and social conditions, and more outsourcing by large medical companies in US.
The challenges for the sector is the government's stand on foreign labour, double levy and tax benefits; lack of R&D in the industry; volatile latex prices and currencies, and energy issues.
However, glove makers should be able to continue passing on additional costs over time to mitigate exposure.
"We shall see selling prices being adjusted upwards in 3Q09 to accommodate latex prices' current uptrend," it said.
All producers are expected to post above-par core second quarter 2009 earnings, riding on lower material costs and orders surge owing to the H1N1 outbreak. Demand growth should be stronger ahead.
"We have raised Top Glove and Hartalega's FY09-12 net profits by 7%-13% but lowered Kossan's FY09 by 10% due to losses in structured currency product. The combined net profits of the producers are still expected to record a three-year compounded annual growth rate (CAGR) of 14%. Capacity expansion should support demand growth.
"Considering their dominant global market share, the sector's 2009-10 price-to-earnings ratio (PER) of 11 times to 13 times is undemanding relative to the FBM-KLCI 30's 17 times. We raise Hartalega's and Top Glove's TP to RM6.50 (+19%) and RM8.30 (+23%) respectively. We maintain Kossan's TP at RM5.30," it said.
From the Edge
Warren Buffett Was Right
Warren Buffett Was Right
By: Zacks Investment Research
Friday, August 07, 2009 6:35 PM
Did you follow Warren Buffett's advice last year to buy American stocks? In that now famous October 17, 2008 Op-Ed piece in the New York Times, Buffet shared his simple rule for buying stocks: "Be fearful when others are greedy, and be greedy when others are fearful." Certainly at that time fear had gripped the markets and investors were fleeing equities into cash.
Well if you did buy at that time, then you are one of the few, the proud, and the bold value investors who made a prudent call that is now paying off handsomely. And if you didn’t buy then lets review the lessons that Warren was trying to share and how it will benefit you going forward.
1. The Markets Rebound Long Before the Economy
Buffett believed that equities would far outperform other asset classes, especially cash, over the next 5, 10 or 20 years as the stock market rises in anticipation of an economic recovery, even if we weren't in one yet.
A perfect example is the Dow's behavior during the Great Depression. Buffett wrote that it took several years for the Dow to hit its low of 41 on Jul 8, 1932. But you wouldn't have known that that was "the bottom" based on economic conditions. The economy continued to worsen until March 1933, when Franklin Roosevelt took office.
Meanwhile, from the market lows in July 1932 to March 1933, the Dow rebounded 30%.
We've seen a similar rebound in the last 5 months but no one knows how long the rally will last or if it's the start of a new bull market. Still, while your cash is getting virtually no interest in this zero-rate interest environment, equities are paying a dividend yield and have the possibility of more upside. In this kind of environment, cash is not king.
2. Long-Term Outlook For Equities Is Good
The stock markets have been around much longer than any of us. During that time, the world suffered through world wars, influenza outbreaks, terrorist attacks, recessions and one depression but still, businesses created new products and made profit. They will continue to do so in the future.
Consider Apple and the iPhone. Even in the midst of this recession, millions of people bought the iPhone around the world. Investors who understood that Apple was still selling its products at a fast clip were rewarded with a stock that jumped over 90% from the beginning of the year.
Apple won't be the last company to cash in on its powerful brand and host of good products. The key for investors is to find other companies that will be next to do the same.
3. Prepare for Inflation
Buffett wrote that greater inflation was a possibility as the government printing presses work overtime to alleviate the recession and liquidity enters the economic system. Cash is where you will NOT want to be. The value of your cash will actually decline under those conditions.
There are now exchange-traded funds (ETFs) and other instruments available to investors to prepare for inflation including owning TIPs, Treasury-Inflation Protected Securities, and the precious metals through the gold or silver ETFs or precious metal mining stocks.
4. Finding Great Stocks
The great thing about being an investor is that there are always hidden gems to be uncovered in any kind of market.
Despite the massive rally we've seen on the markets in the past few months, you can still hunt for undervalued stocks that will see a big upside when investors figure out that the fundamentals are great and the stock is cheap.
For example, in May, well after the rally began, the Value Trader portfolio, which buys a basket of stocks with a holding period of 3 months, bought shares of Western Digital and sold in late July for a 23.44% profit.
We try and find these kind of stocks every day.
5. It's Not Too Late to Invest
By March, it seemed that Buffett's advice to buy equities was very, very wrong. But that was his point. You can't time it. He said he had no idea what stocks would do in the short term. But it's not too late.
http://www.istockanalyst.com/article/viewarticle/articleid/3402145
By: Zacks Investment Research
Friday, August 07, 2009 6:35 PM
Did you follow Warren Buffett's advice last year to buy American stocks? In that now famous October 17, 2008 Op-Ed piece in the New York Times, Buffet shared his simple rule for buying stocks: "Be fearful when others are greedy, and be greedy when others are fearful." Certainly at that time fear had gripped the markets and investors were fleeing equities into cash.
Well if you did buy at that time, then you are one of the few, the proud, and the bold value investors who made a prudent call that is now paying off handsomely. And if you didn’t buy then lets review the lessons that Warren was trying to share and how it will benefit you going forward.
1. The Markets Rebound Long Before the Economy
Buffett believed that equities would far outperform other asset classes, especially cash, over the next 5, 10 or 20 years as the stock market rises in anticipation of an economic recovery, even if we weren't in one yet.
A perfect example is the Dow's behavior during the Great Depression. Buffett wrote that it took several years for the Dow to hit its low of 41 on Jul 8, 1932. But you wouldn't have known that that was "the bottom" based on economic conditions. The economy continued to worsen until March 1933, when Franklin Roosevelt took office.
Meanwhile, from the market lows in July 1932 to March 1933, the Dow rebounded 30%.
We've seen a similar rebound in the last 5 months but no one knows how long the rally will last or if it's the start of a new bull market. Still, while your cash is getting virtually no interest in this zero-rate interest environment, equities are paying a dividend yield and have the possibility of more upside. In this kind of environment, cash is not king.
2. Long-Term Outlook For Equities Is Good
The stock markets have been around much longer than any of us. During that time, the world suffered through world wars, influenza outbreaks, terrorist attacks, recessions and one depression but still, businesses created new products and made profit. They will continue to do so in the future.
Consider Apple and the iPhone. Even in the midst of this recession, millions of people bought the iPhone around the world. Investors who understood that Apple was still selling its products at a fast clip were rewarded with a stock that jumped over 90% from the beginning of the year.
Apple won't be the last company to cash in on its powerful brand and host of good products. The key for investors is to find other companies that will be next to do the same.
3. Prepare for Inflation
Buffett wrote that greater inflation was a possibility as the government printing presses work overtime to alleviate the recession and liquidity enters the economic system. Cash is where you will NOT want to be. The value of your cash will actually decline under those conditions.
There are now exchange-traded funds (ETFs) and other instruments available to investors to prepare for inflation including owning TIPs, Treasury-Inflation Protected Securities, and the precious metals through the gold or silver ETFs or precious metal mining stocks.
4. Finding Great Stocks
The great thing about being an investor is that there are always hidden gems to be uncovered in any kind of market.
Despite the massive rally we've seen on the markets in the past few months, you can still hunt for undervalued stocks that will see a big upside when investors figure out that the fundamentals are great and the stock is cheap.
For example, in May, well after the rally began, the Value Trader portfolio, which buys a basket of stocks with a holding period of 3 months, bought shares of Western Digital and sold in late July for a 23.44% profit.
We try and find these kind of stocks every day.
5. It's Not Too Late to Invest
By March, it seemed that Buffett's advice to buy equities was very, very wrong. But that was his point. You can't time it. He said he had no idea what stocks would do in the short term. But it's not too late.
http://www.istockanalyst.com/article/viewarticle/articleid/3402145
Friday, 14 August 2009
Reviewing my Sell Transactions
http://spreadsheets.google.com/pub?key=t0sOF20dGoiu6n90X-XiAfA&output=html
Reasons for selling:
1. When cash is needed urgently for emergencies. Hopefully you will have cash kept aside for such contingencies.
2. When the fundamentals of the company has deteriorated. The stock should be sold urgently.
3. When the share is deemed overpriced, reducing its upside potential and increasing its downside risk.
4. To switch a stock to another stock with better upside potential and lower downside risk.
Reasons for selling:
1. When cash is needed urgently for emergencies. Hopefully you will have cash kept aside for such contingencies.
2. When the fundamentals of the company has deteriorated. The stock should be sold urgently.
3. When the share is deemed overpriced, reducing its upside potential and increasing its downside risk.
4. To switch a stock to another stock with better upside potential and lower downside risk.
Thursday, 13 August 2009
Buffett: Principles of fundamental business analysis should guide investment practice.
Focussed investing: allocating capital by concentrating on businesses with outstanding economic characteristics and run by first-rate manager.
The central theme uniting Buffett's investing is that the principles of fundamental business analysis, first formulated by his teachers Ben Graham and David Dodd, should guide investment practice. Linked to that theme are investment pricniples that define the proper role of corporate managers as the stewards of invested capital, and the proper role of shareholders as the suppliers and owners of capital.
Buffett and Berkshire Vice Chairman Charlie Munger have built Berkshire Hathaway into a $70-plus billion enterprise by investing in business with excellent economic characteristics and run by outstanding managers. While they prefer negotiated acquisitions of 100% of such a business at a fair price, they take a "double-barreled approach" of buying on the open market less than 100% of such businesses when they can do so at a pro-rata price well below what it would take to buy 100%.
The double-barreled approach pays off handsomely. The value of marketable securities in Berkshire's portfolio, on a per share basis, increased from $4 in 1965 to nearly $50,000 in 2000, about a 25% annual increase. Per share operating earnings increased in the same period from just over $4 to around $500, an annual increase of about 18%. According to Buffett, these results follow not from any master plan but from focussed investing - allocating capital by concentrating on businesses with outstanding economic characteristics and run by first-rate manager.
Learning from Buffett
Buffett views Berkshire as a partnership among him, Munger and other shareholders, and virtually all his $20-plus billion net worth is in Berkshire stock. His economic goal is long-term - to maximize Berkshire's per share intrinsic value by owning all or part of a diversified group of businesses that generate cash and above-average returns. In achieving this goal, Buffett foregoes expansion for the sake of expansion and foregoes divestment of businesses so long as they generate some cash and have good management.
Berkshire retains and reinvests earnings when doing so delivers at least proportional increases in per share market value over time. It uses debt sparingly and sells equity only when it receives as much in value as it gives. Buffett penetrates acounting conventions, especially those that obscure real economic earnings.
It is true that investors should focus on fundamentals, be patient, and exercise good judgment based on common sense. Many people speculate on what Berkshire and Buffett are doing or plan to do. Their speculation is sometimes right and sometimes wrong, but always foolish. People would be far better off not attempting to ferret out what specific investments are being made at Berkshire, but thinking about how to make sound investment selections based on Berkshire's teaching. That means they should think about Buffett's writings and learn from them, rather than try to emulate Berkshire's porfolio.
Buffett modestly confesses that most of the ideas were taught to him by Ben Graham. He considers himself the conduit through which Graham's ideas have proven their value. Buffett recognizes the risk of popularizing his business and investment philosophy. But he notes that he benefited enormously from Graham's intellectual generosity and believes it is appropriate that he pass the wisdom on, even if that means creating investment competitors.
-----
Buffett has applied the traditional principles as CEO of Berkshire Hathaway, a company with roots in a group of textile operations begun in the early 1800s. Buffett took the helm of Berkshire in 1964, when its book value per share was $19.46 and its intrinsic value per share far lower. Today (2002), its book value per share is around $40,000 and its intrinsic vlaue far higher. The growth rate in book value per share during that period is about 24% compounded annually.
Berkshire is now a holding company engaged in a variety of businesses, not including textiles. Berkshire's most important business is insurance, carried on through various companies including its 100% owned subsidiary, GEICO Corporation, the sixth largest auto insurer in the United States, and General Re Corporation, one of the four largest reinsurers in the world. Berkshire publishes The Buffalo News and owns other businesses that manufacture or distribute products ranging from carpeting, briks, paint, encyclopedias, home furnishings, and cleaning systems, to chocolate candies, ice cream, jewelry, footwear, uniforms, and air compressors, as well as businesses that provide training to operators of aircrafts and ships worldwide, fractional ownership interests in general aviation aircraft, and electric and gas power generation. Berkshire also wons substantial equity interests in major corporations, including American Express, Coca-Cola, Gillette, The Washington Post, and Wells Fargo.
The central theme uniting Buffett's investing is that the principles of fundamental business analysis, first formulated by his teachers Ben Graham and David Dodd, should guide investment practice. Linked to that theme are investment pricniples that define the proper role of corporate managers as the stewards of invested capital, and the proper role of shareholders as the suppliers and owners of capital.
Buffett and Berkshire Vice Chairman Charlie Munger have built Berkshire Hathaway into a $70-plus billion enterprise by investing in business with excellent economic characteristics and run by outstanding managers. While they prefer negotiated acquisitions of 100% of such a business at a fair price, they take a "double-barreled approach" of buying on the open market less than 100% of such businesses when they can do so at a pro-rata price well below what it would take to buy 100%.
The double-barreled approach pays off handsomely. The value of marketable securities in Berkshire's portfolio, on a per share basis, increased from $4 in 1965 to nearly $50,000 in 2000, about a 25% annual increase. Per share operating earnings increased in the same period from just over $4 to around $500, an annual increase of about 18%. According to Buffett, these results follow not from any master plan but from focussed investing - allocating capital by concentrating on businesses with outstanding economic characteristics and run by first-rate manager.
Learning from Buffett
Buffett views Berkshire as a partnership among him, Munger and other shareholders, and virtually all his $20-plus billion net worth is in Berkshire stock. His economic goal is long-term - to maximize Berkshire's per share intrinsic value by owning all or part of a diversified group of businesses that generate cash and above-average returns. In achieving this goal, Buffett foregoes expansion for the sake of expansion and foregoes divestment of businesses so long as they generate some cash and have good management.
Berkshire retains and reinvests earnings when doing so delivers at least proportional increases in per share market value over time. It uses debt sparingly and sells equity only when it receives as much in value as it gives. Buffett penetrates acounting conventions, especially those that obscure real economic earnings.
It is true that investors should focus on fundamentals, be patient, and exercise good judgment based on common sense. Many people speculate on what Berkshire and Buffett are doing or plan to do. Their speculation is sometimes right and sometimes wrong, but always foolish. People would be far better off not attempting to ferret out what specific investments are being made at Berkshire, but thinking about how to make sound investment selections based on Berkshire's teaching. That means they should think about Buffett's writings and learn from them, rather than try to emulate Berkshire's porfolio.
Buffett modestly confesses that most of the ideas were taught to him by Ben Graham. He considers himself the conduit through which Graham's ideas have proven their value. Buffett recognizes the risk of popularizing his business and investment philosophy. But he notes that he benefited enormously from Graham's intellectual generosity and believes it is appropriate that he pass the wisdom on, even if that means creating investment competitors.
-----
Buffett has applied the traditional principles as CEO of Berkshire Hathaway, a company with roots in a group of textile operations begun in the early 1800s. Buffett took the helm of Berkshire in 1964, when its book value per share was $19.46 and its intrinsic value per share far lower. Today (2002), its book value per share is around $40,000 and its intrinsic vlaue far higher. The growth rate in book value per share during that period is about 24% compounded annually.
Berkshire is now a holding company engaged in a variety of businesses, not including textiles. Berkshire's most important business is insurance, carried on through various companies including its 100% owned subsidiary, GEICO Corporation, the sixth largest auto insurer in the United States, and General Re Corporation, one of the four largest reinsurers in the world. Berkshire publishes The Buffalo News and owns other businesses that manufacture or distribute products ranging from carpeting, briks, paint, encyclopedias, home furnishings, and cleaning systems, to chocolate candies, ice cream, jewelry, footwear, uniforms, and air compressors, as well as businesses that provide training to operators of aircrafts and ships worldwide, fractional ownership interests in general aviation aircraft, and electric and gas power generation. Berkshire also wons substantial equity interests in major corporations, including American Express, Coca-Cola, Gillette, The Washington Post, and Wells Fargo.
What guides your investing?
It is surprising to know of many remisiers who cannot give you a short account of their investment principles. In conversations, they talk about short term "hot stocks". So and so "smart" investor is buying. So and so "smart" investor is selling. This stock should go up higher soon because of this and that. This is not such a good stock. This is a good stock.
Such "guide" is of little use for a serious investor who seeks to "invest" significant amount into the market for good returns (either for dividend and/or capital gains) over a life-time.
It is surprising why so many investors do not have a "good" guide for their investing. Many understand the buy low and sell high approach (or for some, buy high and sell higher approach), but with little application of fundamental business analysis. They have little control over the controllables, therefore, their approach is very much dependent on the play of the market and chance.
However, by adopting certain investment philosophy and understanding their emotion and behaviour, their investment operations can be safer with a higher probability of a positive moderate return. And there is no need to have a superior IQ to do so.
Such "guide" is of little use for a serious investor who seeks to "invest" significant amount into the market for good returns (either for dividend and/or capital gains) over a life-time.
It is surprising why so many investors do not have a "good" guide for their investing. Many understand the buy low and sell high approach (or for some, buy high and sell higher approach), but with little application of fundamental business analysis. They have little control over the controllables, therefore, their approach is very much dependent on the play of the market and chance.
However, by adopting certain investment philosophy and understanding their emotion and behaviour, their investment operations can be safer with a higher probability of a positive moderate return. And there is no need to have a superior IQ to do so.
Wednesday, 12 August 2009
How to screen overseas stocks
Wednesday August 12, 2009
How to screen overseas stocks
Personal Investing - By ooi Kok Hwa
Four criteria to look at when choosing counters that are suitable for long-term investment
LATELY, interest has grown in overseas stock investment. Given the foreign markets’ relatively high volatility of returns compared with the local market, a lot of retail investors find it more exciting to invest in overseas stocks.
However, a common problem most investors face is how to filter, from among all the listed companies in the respective markets, the right stocks that are suitable for long-term investment.
Market capitalisation
One of the most important selection criteria is buying stocks with big market capitalisation. The market cap of a listed company can be computed by multiplying the number of its outstanding shares with the current share price.
In general, we should buy stocks with big market cap because they are normally well-established blue-chip stocks with higher turnover and widely-accepted products and services.
Even though some academic research shows that buying into small market cap stocks can provide higher returns compared with big market cap companies, unless we are quite familiar with the stocks available in those overseas markets, it is safer to put our money into bigger market cap stocks.
It is not difficult to find out which companies have the largest market cap in any stock exchange.
Such information is available in most major newspapers in that particular country or the stock exchanges themselves.
For example, if we intend to buy some Singapore stocks, we should pay attention to companies that are ranked in the top 30 in terms of market cap. One can get the rankings by market cap for the Singapore Exchange in StarBiz monthly.
Price/earnings ratio
Once we have filtered out the blue-chip stocks, the next selection criteria is the price/earnings ratio (PER), which should be lower than the overall market PER. This is computed by dividing the current stock price by the earnings per share (EPS) of the company. It represents the number of years that we need to get back our money, assuming the company maintains identical earnings throughout the period.
Even though some published PER may use historical audited EPS compared with forecast EPS, given that our key objective is to do stock screening, the PER testing will provide us with a quick check on the top 30 companies – whether they are profitable and selling at reasonable PER compared with the overall market PER.
If we cannot get access to the overall market PER, we may want to consider Benjamin Graham’s suggestion of buying stocks with PER of lower than 15 times.
Dividend yield
A good company should pay dividends. We strongly believe that this is one of the most important ways for the investors to get any returns from the companies that they invest in.
Our rule of thumb is that a good company should have a dividend yield that at least equals or is higher than the risk-free return, which is usually based on the fixed deposit rates.
The dividend yield is computed by dividing the dividend per share by the current share price. In general, most blue-chip stocks do have a fixed dividend payout policy and reward investors with a consistent and growing dividend returns.
Based on our observation, most smaller companies may not be able to pay good dividends as they may need the capital for future expansion programmes.
Price-to-book ratio
Most investors would like to invest at a market price lower than the owners’ costs in the company. The book value of a company represents the owners’ costs invested in it.
In a normal business environment, unless the company has some problems that the general public may not be aware of, it is quite difficult to find stocks selling at a price lower than the book value of the company.
As a result, we may need to purchase at a market price higher than the book value. According to Graham, the maximum price one should pay for any stock is the price which gives a price-to-book ratio no greater than 1.5 times. This means that we should not pay more than 1.5 times the owners’ costs invested in the company.
Lastly, the above four selection criteria are merely a preliminary quick stock screening process. Even though investors may be able to find stocks that fit the criteria, we suggest investors check further the fundamentals of the company, such as the balance sheet strength, its gearing, future business prospects and the quality of the management before deciding to invest.
● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.
From The Star newspaper
How to screen overseas stocks
Personal Investing - By ooi Kok Hwa
Four criteria to look at when choosing counters that are suitable for long-term investment
LATELY, interest has grown in overseas stock investment. Given the foreign markets’ relatively high volatility of returns compared with the local market, a lot of retail investors find it more exciting to invest in overseas stocks.
However, a common problem most investors face is how to filter, from among all the listed companies in the respective markets, the right stocks that are suitable for long-term investment.
Market capitalisation
One of the most important selection criteria is buying stocks with big market capitalisation. The market cap of a listed company can be computed by multiplying the number of its outstanding shares with the current share price.
In general, we should buy stocks with big market cap because they are normally well-established blue-chip stocks with higher turnover and widely-accepted products and services.
Even though some academic research shows that buying into small market cap stocks can provide higher returns compared with big market cap companies, unless we are quite familiar with the stocks available in those overseas markets, it is safer to put our money into bigger market cap stocks.
It is not difficult to find out which companies have the largest market cap in any stock exchange.
Such information is available in most major newspapers in that particular country or the stock exchanges themselves.
For example, if we intend to buy some Singapore stocks, we should pay attention to companies that are ranked in the top 30 in terms of market cap. One can get the rankings by market cap for the Singapore Exchange in StarBiz monthly.
Price/earnings ratio
Once we have filtered out the blue-chip stocks, the next selection criteria is the price/earnings ratio (PER), which should be lower than the overall market PER. This is computed by dividing the current stock price by the earnings per share (EPS) of the company. It represents the number of years that we need to get back our money, assuming the company maintains identical earnings throughout the period.
Even though some published PER may use historical audited EPS compared with forecast EPS, given that our key objective is to do stock screening, the PER testing will provide us with a quick check on the top 30 companies – whether they are profitable and selling at reasonable PER compared with the overall market PER.
If we cannot get access to the overall market PER, we may want to consider Benjamin Graham’s suggestion of buying stocks with PER of lower than 15 times.
Dividend yield
A good company should pay dividends. We strongly believe that this is one of the most important ways for the investors to get any returns from the companies that they invest in.
Our rule of thumb is that a good company should have a dividend yield that at least equals or is higher than the risk-free return, which is usually based on the fixed deposit rates.
The dividend yield is computed by dividing the dividend per share by the current share price. In general, most blue-chip stocks do have a fixed dividend payout policy and reward investors with a consistent and growing dividend returns.
Based on our observation, most smaller companies may not be able to pay good dividends as they may need the capital for future expansion programmes.
Price-to-book ratio
Most investors would like to invest at a market price lower than the owners’ costs in the company. The book value of a company represents the owners’ costs invested in it.
In a normal business environment, unless the company has some problems that the general public may not be aware of, it is quite difficult to find stocks selling at a price lower than the book value of the company.
As a result, we may need to purchase at a market price higher than the book value. According to Graham, the maximum price one should pay for any stock is the price which gives a price-to-book ratio no greater than 1.5 times. This means that we should not pay more than 1.5 times the owners’ costs invested in the company.
Lastly, the above four selection criteria are merely a preliminary quick stock screening process. Even though investors may be able to find stocks that fit the criteria, we suggest investors check further the fundamentals of the company, such as the balance sheet strength, its gearing, future business prospects and the quality of the management before deciding to invest.
● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.
From The Star newspaper
KFC Holdings (Malaysia) Bhd
*Wright Quality Rating: DAB1
Liquidity D (Fair)
Financial Strength A (Outstanding)
Profitability B (Excellent)
Growth 1 (Lowest)
Announcement
Date/ Fin.Yr. End/ Qtr/ Period End/ Rev RM '000/ Profit RM'000 /EPS Amended
21-May-09 31-Dec-09 1 31-Mar-09 526,639 29,433 14.47 -
26-Feb-09 31-Dec-08 4 31-Dec-08 601,907 28,717 14.32 -
20-Nov-08 31-Dec-08 3 30-Sep-08 552,440 31,824 15.86 -
20-Aug-08 31-Dec-08 2 30-Jun-08 529,843 31,002 15.34 -
(Based on above: ttm-eps was 60 sen)
Higher contribution from the KFC Restaurants segment: (1) from continuing network expansion (38 new restaurants added last year), and (2) from new sales channel such as breakfast and extension of operating hours of certain outlets to 24 hours. This is negated by increased cost of raw material.
Poultry Integrated segment: Higher turnover due to (1) improved sales to the KFC restaurants and (2) better sales of its Ayamas products both locally and in export sector. This is partially negated by the increasing cost of commodities which resulted in higher cost of internally produced poultry products.
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Historical data:
Last 5-Yr
DY Range 3.4% - 2.4%
PE Range 9.3 - 13.2 (Mean PE 11.25)
EPSGR 28.4%
Last 10-Yr
DY Range 2.9% - 2.0%
PE Range 12.7 - 18.6
EPSGR 47.1%
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What the management wrote in the last quarter release:
Current Year Prospects
The global economy deteriorated further during the first quarter. In Singapore, initial estimates indicated that the Singapore economy registered a negative growth of 11.5% in the first quarter and the Ministry of Trade and Industry announced that the Gross Domestic Product would contract by 6% to 9% in 2009. (Source : Ministry of Trade and Industry, Singapore). It was widely expected that the Malaysian economy will improve in the second half of 2009 supported by the stabilization in global economic conditions. These expectations were however dampened by the outbreak of Influenza A (H1N1) in late April 2009, which may slow down the economic recovery process.
With the prevalent economic uncertainties, consumer spending is expected to be negatively affected. Thus the Group will continue to focus on value to customers by offering value for money products to align with its customers spending ability.
Based on the foregoing, the Board is optimistic of sustaining the Group’s performance in the balance of the year. The Group has laid down plans to increase revenue and profitability by increasing the restaurants network, enhancing customer experience, developing new and improved products, expanding business activities, developing better cost efficiencies and improving productivity at all the restaurants and manufacturing facilities.
-----
Using ttm-eps 60 sen and expected estimated dividend (SPG) 16.5 sen
At today's price of 7.30:
DY is estimated 2.26% (Below the mean of the DY range)
PE is 12.2 (Just above the mean of the PE range)
PEG is 12.2/28.4 = 0.43 (Cheap)
At 7.30, one would be buying at slightly higher than the fair PE for KFC. However, valuation based on PEG is cheap.
The uncertainty as usual is in judging how the business will grow in the future. However, it is alright to acquire a good company at fair price. The question you should ask is: Will KFC be able to grow its business and earnings strongly in the next few years? The last 4 quarters revenues and earnings have been flat, probably due to the weak economic environment.
Anyway, KFC has done well the last 5 years and should continues to prosper, given the increasing numbers of Malaysians entering the middle income class group.
As usual, you will have to make your own decision in investing.
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*Wright Quality Ratings are based on numerous individual measures of quality, grouped into four principal components: (1) Investment Acceptance (i.e. stock liquidity), (2) Financial Strength, (3) Profitability & Stability, and (4) Growth. The ratings are based on established principles using 5-6 years of corporate record and other investment data.
The ratings consist of three letters and a number. Each letter reflects a composite qualitative measurement of numerous individual standards which may be summarized as follows:
A = Outstanding; B = Excellent; C = Good; D = Fair; L = Limited; N = Not Rated.
The number component of the Quality Rating is also a composite measurement of the annual corporate growth, based on earnings and modified by growth rates of equity, dividends, and sales per common share. The Growth rating may vary from 0 (lowest) to 20 (highest).
Nestle eyes ‘vital’ role in halal food industry via helping SMEs
Tuesday August 11, 2009
Nestle eyes ‘vital’ role in halal food industry via helping SMEs
PETALING JAYA: Nestle (M) Bhd wants to play a vital role to boost the halal food industry by helping local small and medium enterprises (SMEs) be competent suppliers to the company.
Managing director Sullivan O’Carroll said, at the same time, Nestle wanted to promote Malaysia as the global halal hub for its products.
“We have the expertise and experience to help local SMEs produce quality products that meet the international standard.
“At the same time SME players will have the opportunity to contribute through supplying of raw/semi-processed materials to us,” he said yesterday at the memorandum of agreement signing ceremony between Nestle, Small & Medium Industries Development Corp (Smidec) and Halal Industry Development Corp (HDC).
From left: SMIDEC chief executive officer Datuk Hafsah Hashim, SMIDEC chairman Datuk Ir. Mohamed Al Amin Abdul Majid, Nestle(M) Bhd technical and production executive director Detlef Krost, International Trade and Industry Minister Datuk Mustapa Mohamed, HDC chairman Tan Sri Datuk Dr Syed Jalaludin Syed Salim, HDC chief executive officer Datuk Seri Jamil Bidin and Nestle (M) Bhd managing director Sullivan O' Caroll after the signing of MOA on Monday.
The strategic collaboration between the three parties is to enhance the capacity and capability development of potential SMEs to become suppliers to Nestle.
O’Carroll said Nestle was currently importing most of its raw/semi-processed materials from Europe and the US for its products and wanted more contribution from the local SMEs.
“Europe and the US, for example, have a very high standard for any food players to be in their market and we need to fulfil their regulatory food standard. We believe Nestle can help the local SMEs reach the standard required by these international markets through our expertise and research and development technology,” he said.
HDC chief executive officer Datuk Seri Jamil Bidin said the collaboration confirmed the common desire of the three parties to cooperate for the purpose of promoting the development of business opportunities for SMEs involved in the halal food and beverages industry in Malaysia.
“Over time, the selected local SMEs suppliers will be able to benefit from the learning curve, compliance of standards, best practices and innovation to enhance their own capabilities and competencies,” he said.
Smidec chief executive officer Datuk Hafsah Hashim said the demand for halal food was increasing globally as more countries, such as Japan, were interested to be part of this industry.
“During our visit to Japan end of last month, five or six Japanese food companies had shown interest in this industry. They were also asking for assistance from HDC regarding halal certification,” she said, adding that one Japanese food company had already set up its facility in Johor Baru while another one was in the process of doing so in Malacca.
Smidec will identify and recommend potential SMEs in the halal ingredient industry to HDC and Nestle based on its evaluation system.
The selected SMEs will then be equipped with the requisite technology and financial assistance to ensure that they fulfil the requirement and meet the specifications set by Nestle to enable them to be considered as suppliers.
Currently, Nestle has about 150 suppliers, of which 40 are local companies and, in terms of value, these 40 companies supply only 10% of its required raw materials and ingredients.
Nestle eyes ‘vital’ role in halal food industry via helping SMEs
PETALING JAYA: Nestle (M) Bhd wants to play a vital role to boost the halal food industry by helping local small and medium enterprises (SMEs) be competent suppliers to the company.
Managing director Sullivan O’Carroll said, at the same time, Nestle wanted to promote Malaysia as the global halal hub for its products.
“We have the expertise and experience to help local SMEs produce quality products that meet the international standard.
“At the same time SME players will have the opportunity to contribute through supplying of raw/semi-processed materials to us,” he said yesterday at the memorandum of agreement signing ceremony between Nestle, Small & Medium Industries Development Corp (Smidec) and Halal Industry Development Corp (HDC).
From left: SMIDEC chief executive officer Datuk Hafsah Hashim, SMIDEC chairman Datuk Ir. Mohamed Al Amin Abdul Majid, Nestle(M) Bhd technical and production executive director Detlef Krost, International Trade and Industry Minister Datuk Mustapa Mohamed, HDC chairman Tan Sri Datuk Dr Syed Jalaludin Syed Salim, HDC chief executive officer Datuk Seri Jamil Bidin and Nestle (M) Bhd managing director Sullivan O' Caroll after the signing of MOA on Monday.
The strategic collaboration between the three parties is to enhance the capacity and capability development of potential SMEs to become suppliers to Nestle.
O’Carroll said Nestle was currently importing most of its raw/semi-processed materials from Europe and the US for its products and wanted more contribution from the local SMEs.
“Europe and the US, for example, have a very high standard for any food players to be in their market and we need to fulfil their regulatory food standard. We believe Nestle can help the local SMEs reach the standard required by these international markets through our expertise and research and development technology,” he said.
HDC chief executive officer Datuk Seri Jamil Bidin said the collaboration confirmed the common desire of the three parties to cooperate for the purpose of promoting the development of business opportunities for SMEs involved in the halal food and beverages industry in Malaysia.
“Over time, the selected local SMEs suppliers will be able to benefit from the learning curve, compliance of standards, best practices and innovation to enhance their own capabilities and competencies,” he said.
Smidec chief executive officer Datuk Hafsah Hashim said the demand for halal food was increasing globally as more countries, such as Japan, were interested to be part of this industry.
“During our visit to Japan end of last month, five or six Japanese food companies had shown interest in this industry. They were also asking for assistance from HDC regarding halal certification,” she said, adding that one Japanese food company had already set up its facility in Johor Baru while another one was in the process of doing so in Malacca.
Smidec will identify and recommend potential SMEs in the halal ingredient industry to HDC and Nestle based on its evaluation system.
The selected SMEs will then be equipped with the requisite technology and financial assistance to ensure that they fulfil the requirement and meet the specifications set by Nestle to enable them to be considered as suppliers.
Currently, Nestle has about 150 suppliers, of which 40 are local companies and, in terms of value, these 40 companies supply only 10% of its required raw materials and ingredients.
Tuesday, 11 August 2009
AmResearch sees exciting times ahead for Parkson
AmResearch sees exciting times ahead for Parkson
Tags: AmResearch | Brokers Call | Parkson
Written by Financial Daily
Tuesday, 28 July 2009 11:57
AMRESEARCH has initiated coverage on PARKSON HOLDINGS BHD [ PARKSON 5.400 -0.130 (-2.351%) ] (PHB) with a buy recommendation and a sum-of-parts (SOP) fair value of RM6.60 per share.
The valuation was derived by pegging the group’s core Hong Kong-listed Parkson Retail Group (PRG) at 22 times forecast earnings for CY10, Parkson Malaysia at nine times CY10 earnings and Parkson Vietnam at eight times CY10 earnings.
Being the retail gem of Lion Group, Parkson’s key driver of growth over the past few years had been its operations in Hong Kong and China, which contributed 69% to Parkson’s earnings, while Malaysia and Vietnam contributed 27% and 4%, respectively (FY08), said the research house.
It noted that Parkson was on firm ground post-restructuring and re-branding exercises, with FY09F earnings expected to grow 24% year-on-year (y-o-y) to RM250 million, on the back of a 3%-8% blended same-store sales (SSS) growth in FY09F.
“More importantly, we see better prospects going forward, with earnings growth of 30% and 34% y-o-y for FY10F-11F underpinned by increased spending on a consumer sentiment uptrend along with China’s economic recovery,” AmReserach said.
The research house added that there was tremendous scope for seven to 10 new stores per annum on average — two to three in Malaysia, four to five in China and one or two in Vietnam — potentially increasing Parkson’s total lettable area by 10%-12% to 750,000 sq m by end-2010.
Under management’s plans, the group planned to venture into other untapped markets, notably neighbouring Cambodia and Indochina at large.
“We expect a successful replication of its concessionaire model to power the group’s earnings in the future, with increased earnings from Vietnam to match that of Malaysia’s in three years.
“We see PHB as a cheaper proxy to PRG for exposure to China’s retail industry. We believe Parkson’s share price would continue to attract support given the current discount of 16%-18% to Parkson — due to the latter’s strong earnings composition in Parkson,” it noted.
AmResearch added that despite its expansion plans, the group was expected to remain on a net cash position on a growing cash pile going into FY09-11F, with cash flow per share increasing 31% to 77 sen/share for FY10F from 59 sen/share.
Parkson rose 15 sen to close at RM5.50 yesterday.
This article appeared in The Edge Financial Daily, July 28, 2009.
Unexciting earnings for Petronas Dagangan
Unexciting earnings for PDB
Tags: Brokers Call | HwangDBS | PDB | Petronas Dagangan Bhd
Written by Financial Daily
Tuesday, 28 July 2009 12:01
ANALYSTS remained subdued on PETRONAS DAGANGAN BHD [ PETDAG 8.600 0.020 (0.233%) ] (PDB) due to unexciting earnings prospects, with HwangDBS Vickers Research maintaining its fully valued call on the stock against a revised 12-month target price of RM7.20, up from RM6.40 previously.
It said PDB’s overall sales volume would further decline in FY10 (-1.7% to 12.3 billion litres based on its estimate) after dropping by 6.6% to 12.5 billion litres in FY09.
“This is likely to be due to weaker demand from the commercial segment, especially for diesel and jet fuel, which made up 70% of total commercial volume. This could more than offset an expected recovery in mogas/petrol demand, which has already surpassed its pre-June 2008 level, just before the demand plunge due to the steep pump price hike in Jan 2009,” it said.
Although PDB’s fundamentals remained resilient, HwangDBS said earnings prospects were unexciting at a two-year compound annual growth rate (CAGR) of 6.4% with competition intensifying. The company lost 1.6-percentage point market share to 42.5% in FY09, it added.
It said valuations were also unattractive with one-year forward price earnings ratio (PER) at 13.3 times at the upper end of its historical range of two times to 14 times.
“We tweaked our forecasts and bumped up our target price to RM7.20 based on 11 times CY10F earnings per share, to reflect a similar valuation discount vis-à-vis the broad market following the rally since mid-March,” it said.
HwangDBS also believed the introduction of RON95 petrol grade effective Sept 1 would not affect PDB’s earnings as it would continue to earn the same fixed margin under the automated pricing mechanism formula.
CIMB Research, meanwhile, maintained its underperform rating on PDB.
“We maintain our forecasts and target price of RM7.20, pegged to an unchanged 10 times PER, which is lower than the 15 times PER we attach to upstream players. Given its defensive qualities, we expect PDB to continue to underperform the benchmark KLCI and lag behind higher-beta stocks,” CIMB said.
PDB closed unchanged yesterday at RM8.45.
This article appeared in The Edge Financial Daily, July 28, 2009.
Tags: Brokers Call | HwangDBS | PDB | Petronas Dagangan Bhd
Written by Financial Daily
Tuesday, 28 July 2009 12:01
ANALYSTS remained subdued on PETRONAS DAGANGAN BHD [ PETDAG 8.600 0.020 (0.233%) ] (PDB) due to unexciting earnings prospects, with HwangDBS Vickers Research maintaining its fully valued call on the stock against a revised 12-month target price of RM7.20, up from RM6.40 previously.
It said PDB’s overall sales volume would further decline in FY10 (-1.7% to 12.3 billion litres based on its estimate) after dropping by 6.6% to 12.5 billion litres in FY09.
“This is likely to be due to weaker demand from the commercial segment, especially for diesel and jet fuel, which made up 70% of total commercial volume. This could more than offset an expected recovery in mogas/petrol demand, which has already surpassed its pre-June 2008 level, just before the demand plunge due to the steep pump price hike in Jan 2009,” it said.
Although PDB’s fundamentals remained resilient, HwangDBS said earnings prospects were unexciting at a two-year compound annual growth rate (CAGR) of 6.4% with competition intensifying. The company lost 1.6-percentage point market share to 42.5% in FY09, it added.
It said valuations were also unattractive with one-year forward price earnings ratio (PER) at 13.3 times at the upper end of its historical range of two times to 14 times.
“We tweaked our forecasts and bumped up our target price to RM7.20 based on 11 times CY10F earnings per share, to reflect a similar valuation discount vis-à-vis the broad market following the rally since mid-March,” it said.
HwangDBS also believed the introduction of RON95 petrol grade effective Sept 1 would not affect PDB’s earnings as it would continue to earn the same fixed margin under the automated pricing mechanism formula.
CIMB Research, meanwhile, maintained its underperform rating on PDB.
“We maintain our forecasts and target price of RM7.20, pegged to an unchanged 10 times PER, which is lower than the 15 times PER we attach to upstream players. Given its defensive qualities, we expect PDB to continue to underperform the benchmark KLCI and lag behind higher-beta stocks,” CIMB said.
PDB closed unchanged yesterday at RM8.45.
This article appeared in The Edge Financial Daily, July 28, 2009.
Boustead to raise RM1.3b from rights issue, asset sale
Boustead to raise RM1.3b from rights issue, asset sale
Tags: BH Insurance (M) Bhd | Boustead Holdings Bhd | Boustead Naval Shipyard | expansion | Plantation land | rights issue | Tan Sri Lodin Wok Kamarudin
Written by Joy Lee
Thursday, 30 July 2009 11:05
KUALA LUMPUR: BOUSTEAD HOLDINGS BHD [ BSTEAD 3.960 0.020 (0.508%) ] plans to divest its non-core businesses by year-end, which along with proceeds from its rights issue, will raise some RM1.3 billion to pare borrowings and to fund expansion.
The firm is in talks with several Indonesian parties to sell off its PLANTATION [ PLANTATION 5,793.760 27.410 (0.475%) ] land in Sumatra, Indonesia measuring 17,000ha, of which about 9,000ha are planted with mature trees.
“We want to rationalise our operations and focus on key areas. Indonesia presents some problems in terms of yield and logistics and we want to focus our plantation activities in Sarawak and Sabah. “We are also looking to sell our 80% stake in BH Insurance (M) Bhd,” managing director Tan Sri Lodin Wok Kamarudin said after the company’s EGM yesterday.
He added that the company hoped to conclude both disposals by year-end. The divestments would bring in some RM500 million to RM600 million.
Boustead yesterday received shareholders’ approval for the rights issue of 260.41 million shares at RM2.80 each to raise up to RM729 million. The issue is on the basis of two shares for every five existing shares held.
“Based on the feedback from shareholders, we are confident the exercise will do very well. This will provide us with fresh funds for new acquisitions when the opportunity comes,” he said.
The funds would be used to trim borrowings, which would result in about RM24 million in interest savings. According to its circular, RM300 million to RM400 million from the proceeds will be used to reduce borrowings, which stood at RM3.6 billion as at March 31, 2009.
Lodin said with the rights issue and the divestment, the company’s gearing would be reduced to between 0.6 and 0.7 times from 1.2 times currently.
The company would also be expanding its property development and shipbuilding businesses, he said, adding that it was going through several proposals for land acquisition, including one or two possible acquisitions in the Klang Valley.
Currently, its landbank consists of over 323.75ha in Johor, 16ha in Mutiara Damansara and about 1ha in Jalan Ampang, Kuala Lumpur.
As for its shipyard business, Lodin said it would deliver the remaining three offshore patrol vessels (OPVs) ordered by the government early next year. “We hope to get more contracts from the government as we have the capacity to take on new jobs once the current orders are completed.”
Its subsidiary, Boustead Naval Shipyard, has the rights to build a total of 27 OPVs for the government.
This article appeared in The Edge Financial Daily, July 30, 2009.
(Pg40of500)
Tags: BH Insurance (M) Bhd | Boustead Holdings Bhd | Boustead Naval Shipyard | expansion | Plantation land | rights issue | Tan Sri Lodin Wok Kamarudin
Written by Joy Lee
Thursday, 30 July 2009 11:05
KUALA LUMPUR: BOUSTEAD HOLDINGS BHD [ BSTEAD 3.960 0.020 (0.508%) ] plans to divest its non-core businesses by year-end, which along with proceeds from its rights issue, will raise some RM1.3 billion to pare borrowings and to fund expansion.
The firm is in talks with several Indonesian parties to sell off its PLANTATION [ PLANTATION 5,793.760 27.410 (0.475%) ] land in Sumatra, Indonesia measuring 17,000ha, of which about 9,000ha are planted with mature trees.
“We want to rationalise our operations and focus on key areas. Indonesia presents some problems in terms of yield and logistics and we want to focus our plantation activities in Sarawak and Sabah. “We are also looking to sell our 80% stake in BH Insurance (M) Bhd,” managing director Tan Sri Lodin Wok Kamarudin said after the company’s EGM yesterday.
He added that the company hoped to conclude both disposals by year-end. The divestments would bring in some RM500 million to RM600 million.
Boustead yesterday received shareholders’ approval for the rights issue of 260.41 million shares at RM2.80 each to raise up to RM729 million. The issue is on the basis of two shares for every five existing shares held.
“Based on the feedback from shareholders, we are confident the exercise will do very well. This will provide us with fresh funds for new acquisitions when the opportunity comes,” he said.
The funds would be used to trim borrowings, which would result in about RM24 million in interest savings. According to its circular, RM300 million to RM400 million from the proceeds will be used to reduce borrowings, which stood at RM3.6 billion as at March 31, 2009.
Lodin said with the rights issue and the divestment, the company’s gearing would be reduced to between 0.6 and 0.7 times from 1.2 times currently.
The company would also be expanding its property development and shipbuilding businesses, he said, adding that it was going through several proposals for land acquisition, including one or two possible acquisitions in the Klang Valley.
Currently, its landbank consists of over 323.75ha in Johor, 16ha in Mutiara Damansara and about 1ha in Jalan Ampang, Kuala Lumpur.
As for its shipyard business, Lodin said it would deliver the remaining three offshore patrol vessels (OPVs) ordered by the government early next year. “We hope to get more contracts from the government as we have the capacity to take on new jobs once the current orders are completed.”
Its subsidiary, Boustead Naval Shipyard, has the rights to build a total of 27 OPVs for the government.
This article appeared in The Edge Financial Daily, July 30, 2009.
(Pg40of500)
Carlsberg M’sia expects S’pore ops to contribute 30% to net profit in 2010
Carlsberg M’sia expects S’pore ops to contribute 30% to net profit in 2010
Tags: Carlsberg Malaysia | Carlsberg Singapore | CBMB
Written by Surin Murugiah
Thursday, 30 July 2009 11:16
SHAH ALAM: CARLSBERG BREWERY MALAYSIA BHD [ CARLSBG 4.410 -0.050 (-1.121%) ] (CBMB) expects Carlsberg Singapore Pte Ltd (CSPL) to contribute about 30% to its net profit in the financial year ending Dec 31, 2010 pursuant to its proposal to acquire the latter.
CBMB also expects to resume its dividend payout at previous levels after surprising the market with a lower dividend early this year.
It paid out a total of 12.5 sen in dividends last year, against 35 sen in each of its previous three financial years.
CBMB managing director Soren Holm Jensen said CSPL was already a successful and profitable entity, having posted a revenue of S$78 million and a net profit of S$10 million in 2008.
“A key binding factor is the significant sourcing and operational synergy that would create RM22 million cost savings. The total incremental net profit from the acquisition, excluding funding cost, is RM46 million,” he said.
“The main synergies are that it would shift sourcing back to Carlsberg Malaysia; advertising and promotions would enjoy double tax deduction, as well as the operational synergies,” he said at media briefing on its proposed acquisition of CSPL.
CBMB announced on Tuesday it had entered into a memorandum of understanding (MoU) with its Denmark-based parent company Carlsberg Breweries AS (Carlsberg) to acquire the latter’s Singapore operations held by CSPL for RM370 million cash.
Among the salient features of the MoU to be included in the sales and purchase agreement are 20 years of territorial rights; sourcing rights with significant synergies; profit guarantee for CSPL for the financial years 2009 and 2010; and Carlsberg to support any board proposal to declare a dividend of between 50% and 70% of CBMB’s distributable profit for a duration of five years.
Jensen said preliminary estimates showed CBMB’s net profit for 2010 to increase to RM113 million from RM76 million in 2008, on the assumption that the proposal to acquire CSPL was approved by minority shareholders.
“The estimates need further verification and is subject to a full due diligence and final evaluation by an independent adviser,” he said.
Jensen said CBMB would likely complete the acquisition without borrowing as it had RM260 million cash and would be able to accumulate sufficient cash by year-end.
“But we might require short-term borrowings for working capital. In any event, we will return to a net cash level in a short period,” he said,
On CSPL, Jensen said it held a 21% market share in Singapore and that the Carlsberg brand ranked second in the republic after the locally brewed Tiger beer.
“The brand is positioned in the upper mainstream segment and has been steadily gaining share in the segment since the 1990s. It also has a stronghold in coffee shops and hawker centres, supported by strong branding in both on- and off-trade,” he said.
He said Singapore was an attractive beer market, with a compound annual growth rate of 4% from 2000 to 2008, from 642,000 hectolitres (HL) to 858,000HL.
Jensen said CBMB also viewed its proposed acquisition of CSPL as an added advantage as it would give the brewer a better understanding of new Tiger beer products, which are generally launched in Singapore first before Malaysia.
For the three months ended March 31, CBMB posted a 19% year-on-year lower net profit of RM21.4 million on the back of a marginally higher revenue of RM289.8 million.
As at end-March, CBMB had cash and cash equivalents of RM231.7 million while its trade receivables stood at RM140.5 million. Total liabilities were RM123.6 million.
CBMB’s brands include Tuborg, SKOL Beer, Danish Royal Stout, Tetley’s English Ale, Jolly Shandy and Nutrimalt.
This article appeared in The Edge Financial Daily, July 30, 2009.
Tags: Carlsberg Malaysia | Carlsberg Singapore | CBMB
Written by Surin Murugiah
Thursday, 30 July 2009 11:16
SHAH ALAM: CARLSBERG BREWERY MALAYSIA BHD [ CARLSBG 4.410 -0.050 (-1.121%) ] (CBMB) expects Carlsberg Singapore Pte Ltd (CSPL) to contribute about 30% to its net profit in the financial year ending Dec 31, 2010 pursuant to its proposal to acquire the latter.
CBMB also expects to resume its dividend payout at previous levels after surprising the market with a lower dividend early this year.
It paid out a total of 12.5 sen in dividends last year, against 35 sen in each of its previous three financial years.
CBMB managing director Soren Holm Jensen said CSPL was already a successful and profitable entity, having posted a revenue of S$78 million and a net profit of S$10 million in 2008.
“A key binding factor is the significant sourcing and operational synergy that would create RM22 million cost savings. The total incremental net profit from the acquisition, excluding funding cost, is RM46 million,” he said.
“The main synergies are that it would shift sourcing back to Carlsberg Malaysia; advertising and promotions would enjoy double tax deduction, as well as the operational synergies,” he said at media briefing on its proposed acquisition of CSPL.
CBMB announced on Tuesday it had entered into a memorandum of understanding (MoU) with its Denmark-based parent company Carlsberg Breweries AS (Carlsberg) to acquire the latter’s Singapore operations held by CSPL for RM370 million cash.
Among the salient features of the MoU to be included in the sales and purchase agreement are 20 years of territorial rights; sourcing rights with significant synergies; profit guarantee for CSPL for the financial years 2009 and 2010; and Carlsberg to support any board proposal to declare a dividend of between 50% and 70% of CBMB’s distributable profit for a duration of five years.
Jensen said preliminary estimates showed CBMB’s net profit for 2010 to increase to RM113 million from RM76 million in 2008, on the assumption that the proposal to acquire CSPL was approved by minority shareholders.
“The estimates need further verification and is subject to a full due diligence and final evaluation by an independent adviser,” he said.
Jensen said CBMB would likely complete the acquisition without borrowing as it had RM260 million cash and would be able to accumulate sufficient cash by year-end.
“But we might require short-term borrowings for working capital. In any event, we will return to a net cash level in a short period,” he said,
On CSPL, Jensen said it held a 21% market share in Singapore and that the Carlsberg brand ranked second in the republic after the locally brewed Tiger beer.
“The brand is positioned in the upper mainstream segment and has been steadily gaining share in the segment since the 1990s. It also has a stronghold in coffee shops and hawker centres, supported by strong branding in both on- and off-trade,” he said.
He said Singapore was an attractive beer market, with a compound annual growth rate of 4% from 2000 to 2008, from 642,000 hectolitres (HL) to 858,000HL.
Jensen said CBMB also viewed its proposed acquisition of CSPL as an added advantage as it would give the brewer a better understanding of new Tiger beer products, which are generally launched in Singapore first before Malaysia.
For the three months ended March 31, CBMB posted a 19% year-on-year lower net profit of RM21.4 million on the back of a marginally higher revenue of RM289.8 million.
As at end-March, CBMB had cash and cash equivalents of RM231.7 million while its trade receivables stood at RM140.5 million. Total liabilities were RM123.6 million.
CBMB’s brands include Tuborg, SKOL Beer, Danish Royal Stout, Tetley’s English Ale, Jolly Shandy and Nutrimalt.
This article appeared in The Edge Financial Daily, July 30, 2009.
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