Guinness Anchor is in net-cash position

Monday October 10, 2011

Guinness Anchor is in net-cash position, is seeking ways to reward shareholders

By TEE LIN SAY
linsay@thestar.com.my

PETALING JAYA: Guinness Anchor Bhd (GAB) shareholders may be in for a reward as the company is in a net-cash position as of June 30, 2011, analysts said. The company has a net cash per share of 60 sen.

“There has been no firm sign of a capital repayment from the company. However, during their last briefing, there were indications that they were looking at ways to reward shareholders,” said one consumer analyst who attended the company's fourth-quarter results briefing.

A research head agreed that the company was considering such a payout. “We are not sure of the quantum but timing-wise, it will probably happen towards the end of its financial year.”

Ireland: ‘Our cash position varies depending on working capital and capex requirements.’

It is common for cash-rich brewers to surprise shareholders with capital repayments. Last year, Carlsberg Brewery Malaysia Bhd rewarded shareholders with a dividend payment of 58 sen after it acquired Carlsberg Singapore Pte Ltd for RM370mil in the fourth quarter 2009.

Carlsberg's special dividend of 58 sen was an improvement from 23 sen in 2009.

With the new contribution from Singapore, Carlsberg's revenue grew 30.9% to RM1.37bil in the financial year ended Dec 31, 2010 while profit after tax increased 74.8% to RM134.1mil.

“Guinness has for several years maintained an informal dividend policy of 85% to 90% of our net profit. We do not expect this policy to change in the near future. Our cash position varies depending on working capital and capex requirements at different times of the year,” GAB managing director Charles Ireland told StarBiz.

GAB has declared total dividends of 54 sen for the year ended June 30, 2011. In its fourth-quarter results briefing in August, it declared a final dividend of 44 sen, bringing total dividends to 54 sen per share for FY11. This is an increase of nine sen compared with FY10. The 54 sen net dividend represents about 90% dividend payout and net yield of 5%.

A spokesman for Carlsberg said that Carlsberg Breweries AS, as a majority shareholder of Carlsberg Malaysia, had supported the proposal to distribute net dividends of between 50% and 70% of annual profits, subject to funding requirements and cash availability for the current financial period to 2013.

“The final special dividend for 2010 was much higher than the undertaking given. This was due to the positive cashflow and after considering Carlsberg Malaysia's funding requirements.” the spokesman said.

Carlsberg declared a five sen gross dividend for the second quarter to June 30, 2011. This was lower than the 7.5 sen it had paid in the previous corresponding period. As of Dec 30, 2010, Carlsberg had net cash per share of 16 sen. Analysts estimated the company had a net cash per share of 11 sen for the financial year ending Dec 31, 2011.

Meanwhile, the consumer analyst maintains her forecasts on GAB on an unchanged dividend payout ratio of 90% per year, translating into attractive yields of 5% to 6%.

A CIMB analyst said GAB's capex this year was expected to double from the historical RM30mil to RM40mil range as it planned to install a new keg at its brewery and invest in new IT infrastructure.

“We have already projected RM60mil capex for this year. Despite the higher capital expenditure, GAB's dividend payout will remain in the range of 85% to 90%,” she said.

For the fourth quarter ended June 30, 2011, GAB's revenue increased 12.97% to RM348.76mil while net profit dropped 18.04% to RM29.08mil. For the entire year, revenue increased 9.57% to RM1.49bil while net profit increased 18.79% to RM181.38mil. GAB had cash and cash equivalents of RM179.78mil.

GAB continues to retain its top position in the malt liquor market (MLM) with a 59% market share.

An analyst said the MLM growth forecast was maintained at 5% to 6% per year, buoyed by more brewer organised events and the special UEFA European Cup 2012.

http://biz.thestar.com.my/news/story.asp?file=/2011/10/10/business/9640227&sec=business

Occupy Wall Street: Righteous anger fuels Wall Street uprising

Paul Krugman

October 10, 2011

Comments 2

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'Occupy Wall Street' growing more organised

The three-week-old campout in a lower Manhattan plaza is an increasingly well organised jumble of people, services and ideas.

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There's something happening here. What it is ain't exactly clear, but we may, at long last, be seeing the rise of a popular movement that, unlike the Tea Party, is angry at the right people.

When the Occupy Wall Street protests began three weeks ago, most news organisations were derisive if they deigned to mention the events at all. For example, nine days into the protests, National Public Radio had provided no coverage whatsoever.

It is, therefore, a testament to the passion of those involved that the protests not only continued but grew - eventually becoming too big to ignore. With unions and a growing number of Democrats now expressing at least qualified support for the protesters, Occupy Wall Street is starting to look like an important event that might even be seen as a turning point.

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"Occupy Wall Street is starting to look like an important event that might even be seen as a turning point." Photo: Reuters

What can we say about the protests? First things first - the protesters' indictment of Wall Street as a destructive force, economically and politically, is completely right.

A weary cynicism, a belief that justice will never get served, has taken over much of our political debate. In the process, it has been easy to forget just how outrageous the story of our economic woes really is. So, in case you've forgotten, it was a play in three acts.

- In the first act, bankers took advantage of deregulation to run wild, inflating huge bubbles through reckless lending. 

- In the second act, the bubbles burst - but bankers were bailed out by taxpayers, with remarkably few strings attached, even as ordinary workers continued to suffer the consequences of the bankers' sins. 

- And, in the third act, bankers showed their gratitude by turning on the people who had saved them, throwing their support behind politicians who promised to keep their taxes low and dismantle the mild regulations erected in the aftermath of the crisis.

Given this history, how can you not applaud the protesters for taking a stand? Now, it's true some of the protesters are oddly dressed or have silly-sounding slogans, which is inevitable given the open character of the events. But so what? I am a lot more offended by the sight of exquisitely tailored plutocrats, who owe their continued wealth to government guarantees, whining that the US President, Barack Obama, has said mean things about them.

Bear in mind, too, that experience has made it painfully clear that men in suits not only don't have any monopoly on wisdom but they also have very little wisdom to offer. When talking heads on, say, CNBC mock the protesters as unserious, remember how many serious people assured us that there was no housing bubble, that Alan Greenspan was an oracle and that budget deficits would send interest rates soaring.

A better critique of the protests is the absence of specific policy demands. But we shouldn't make too much of the lack of specifics. It's clear what kinds of things the Occupy Wall Street demonstrators want and it's really the job of policy intellectuals and politicians to fill in the details.

Rich Yeselson, a veteran organiser and historian of social movements, has suggested debt relief for working Americans become a central plank of the protests. I'll second that because such relief, in addition to serving economic justice, could do a lot to help the economy recover. I'd suggest that protesters also demand infrastructure investment - not more tax cuts - to help create jobs. Neither proposal is going to become law in the present political climate but the whole point of the protests is to change that political climate.

And there are real political opportunities here. Not, of course, for today's Republicans, who instinctively side with those Theodore Roosevelt-dubbed ''malefactors of great wealth''.

But Democrats are being given what amounts to a second chance. The Obama administration squandered a lot of potential goodwill early on by adopting banker-friendly policies that failed to deliver economic recovery even as bankers repaid the favour by turning on the President. Now, Mr Obama's party has a chance for a do-over. All it has to do is take these protests as seriously as they deserve to be taken.

And if the protests goad some politicians into doing what they should have been doing all along, Occupy Wall Street will have been a smashing success.

The New York Times

Read more: http://www.smh.com.au/business/righteous-anger-fuels-wall-street-uprising-20111009-1lfwl.html#ixzz1aLEOPqLM

Never mind the gyrations, see the opportunities.

Beware: massive gains are not a sign of good health

October 9, 2011

JUST when we were getting used to the ''$X billion wiped off shares'' stories, along came a week that wiped $90 billion back on, but neither headline is particularly healthy.

Of course, most investors will happily take the wipe-on over the wipe-off, let alone the occasional wipe-out, but such extreme volatility speaks more of continuing nervousness and uncertainty than investment-inducing stability.

For all the relief of the week's relief rally, nothing much has really changed with the markets. We remain captives of dubious European political resolve and prey to more wild swings over the months ahead as the continent stumbles from one precipice to another.

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The odds are that the Europeans will muddle through, that they won't be totally stupid given the knowledge of this crisis, but it's not going to be a quick process and it will be marked by more sharp falls and rallies along the way.

And then there's the US. While the Europeans stumble along, the Americans are bumbling from one economic indicator to the next with the focus on whether the country could be facing a double-dip recession. It matters less as it doesn't immediately threaten the global financial system, but it still chews up a lot of media coverage and Wall Street sentiment still holds disproportionate sway over the world's markets.

As it turned out, last week's American figures were mainly favourable, topped by Friday night's better-than-expected payroll numbers, but again the fundamentals haven't much changed. The US and Europe are facing an extended period of low or no growth as the world order changes and they collectively deal with their debt habits. Fortunately the developing world is picking up the slack, leaving the global growth rate about average.

The sooner that is generally accepted, the calmer markets will become, allowing investors to get back to trying to pick which companies will perform best. It is a less spectacular pastime than riding the roller-coaster of boom or doom, but considerably better for general health.

Within that general scenario, your columnist remains a rare fish as I'm happy for both the North Atlantic economies and our stockmarket to be flat.

The former because it helps make room for developing nations to live up to their name: to develop, to get their share.

Just as Australia's patchwork economy frees up resources in some industries and regions, encouraging them to travel to those industries and regions that need them more, the global two-speed economy prevents commodity prices going over the top.

And weaker developed nations encourage some developing nations to get over their tendency to depend on Western consumers' credit cards to pay for their growth. The world ends up stronger for the diversification.

As for our stockmarket staying down, that's fine by me as I'm still investing.

I hope to continue working, continue to put money into my superannuation, continue to add to a dividend-paying source of wealth.

Let the traders worry about stocks bouncing around, I'm happy for my super fund to keep accumulating shares in solid companies as cheaply as possible for as long as possible. Never mind the gyrations, see the opportunities.

Michael Pascoe is a BusinessDay contributing editor.

Read more: http://www.theage.com.au/business/beware-massive-gains-are-not-a-sign-of-good-health-20111008-1lew0.html#ixzz1aH13kv58

Walter Schloss's thinking on value investing

Walter Schloss’ Presentation at The Benjamin Graham Center for Value Investing

July 25th, 2010 · 

Walter Schloss conducted a recorded video / audio presentation at the Richard Ivey School of Business’ Benjamin Graham Center for Value Investing.  If you would like to see the audio / video, we have it on our value investing resource page.  In this post, I am going to take notes on Schloss’ speech and add some commentary later in the week.  Enjoy.

• Started fund in 1955 when Graham said he was going to retire
• Schloss was left handed (I never knew that)
• Started out with 19 partners, each with approximately $5,000
• Stayed in field until 2001 (or 2003…couldn’t recall).  Son couldn’t find any good value stocks.
• Started work when his father lost his job – the family had no money.  Started off making $15/week.  Wanted in the research department.  Was denied.  Was told to read “Security Analysis”
• Question: How do you choose stocks?  Answer: Stocks that are hitting new lows.  Schloss fines Value Line very helpful.  He doesn’t have a computer and likes to look at the numbers.  He doesn’t talk to management teams.
• Went to work for Graham in the beginning of 1946
• Question: What process did you follow to minimize mistakes?  Answer: I don’t like to lose money and therefore buy stocks that are protected on the downside and then the upside takes care of itself.  Look for companies that do not have a lot of debt.  By looking at the proxy statement and annual reports, can get a sense of how much stock the directors own, who owns a fair amount of stock, and the history of the company.
• Look at companies selling at new lows.  It means the company has problems. Debt exacerbates these problems.
• Love companies with simple capital structures.  Not a lot of debt.  The company has to have history.  Management needs to own stock.
• Schloss admits he was never good at evaluating management character.  Therefore he stuck to the numbers.
• Value Line is helpful because you get a good sense of history on the company because they have 10-15 years of performance data.
• Question: If stock falls, what do you do?  Answer: If I like a company, I’ll buy more on the way down.  Stock brokers do not like recommending stocks that are going down.  The stockbrokers don’t want to look like fools. People get nervous when stocks go lower.
• Likes to try to get 50% profit.  Only long-term profits (don’t want to pay short term taxes)
• Admits that he makes mistakes in sales.  He will buy at $30, sell at $50, and see it go to $200
• Likes stocks selling below book value. Reiterates how much he hates debt.
• Read annual report.  Figure out why the company is having problems.
• If you get a stock selling significantly below book value, has a good history over 20 years, and little debt with lots of management holdings, probably a good purchase.
• Margin of Safety to Schloss is if the company’s book value is substantially higher than the market price. Companies get bought out that are trading at significant discounts to book.
• Question: Emotional mistakes? How do you control? Answer: Schloss does not get emotional about stocks. One reason he doesn’t talk to management teams is because management presents the company the way you want to see them.  Schloss is not a good judge of people.  Warren Buffett is.  Schloss says you have to look at situations logically, not the way you WANT to look at it.
• He wants to buy things the way there are, not the way they may be in the future. He wouldn’t buy a company with a prospect of an electric car just because of that prospect.
• Seems to me that he uses Good to Cancel Orders
• Question: Outstanding company at a fair price or a fair company at an outstanding price? Answer: He doesn’t want to buy good companies at what they are worth – he wants to buy these companies at a discount. Sometimes people get VERY nervous and bargains arise, but that is not too often.  You want to buy stocks that you can make 50% over a couple of years.
• He doesn’t like to lose money.  So he buys companies that are having problems. He likes companies with no debt.
• Quite often the stock market reacts emotionally.  Bad news causes troubles.  If you are managing money for other people you should not tell your limited partners what you own – Why?  Don’t want competition.  Don’t want to deal with investors emotions and don’t want to hear their complaints. If LPs are worried, don’t take them as investors.
• Question: Three traits to be a successful value investor?  Answer: Be calm and not to be emotional.  Be intellectual and look at the facts.  Never get emotionally involved in a stock.
• Distinguish between temporary and permanent problems.
• He likes companies to be a success.  If you sell early, and the stock triples, who cares?  Move on.
• Question: Is the upcoming recession worse than previous ones?  Answer: Schloss tries to stay away from what is going on in the overall economy.  He has no idea what is going on in the economy.  He buys stocks on what they are worth – and not what is going on in the macro economy.
• Stop worrying about what is going on in the overall economy or where the market is going – buy cheap stocks – if you go into a recession, you’ll have to wait longer to make your money.  Just buy cheap stocks.
• Graham liked to compare stocks that started with the same letter of the alphabet.  Intellectual exercise. Compared the stocks.
• Compare stocks in the same field.  Two liquor companies for instance.  What are their trading levels?
• Question: Has market become more efficient?  Answer: As an analyst, your job is to determine why one stock is selling lower than another. If an industry is having a problem, take a look.  A lot more competition but that being said, “value analysts” are still not happy buying stocks that are going down.
• Harder to determine when to sell versus when to buy.
• Question: Personal view on diversification?  Answer: Stay away from industries that are outside of your circle of competence.  More comfortable with very old industries. More comfortable in stocks than bonds because inflation eats up return. Very few people become millionaires buying bonds.  Bonds are for old people.
• Seems to me this guy is incredibly humble.  Jives with what I have read in the past.
• Question: Raising capital in the 50s as a young fund manager?  Answer: Not an aggressive man in going around to raise capital.  Get your feet wet with family money.  Very difficult to start a fund. You don’t want to lose money. If you like math, if you like investing, you can do it as long as you control your emotions.
• Question: Biggest mistake? Answer:  ”I forget my mistakes.”  Awesome.Schloss didn’t lose money often.  Never put a great amount of money in any one stock.  Held over 100 stocks at any one time.
• Compared value of a company versus its working capital…i.e the company was trading at 2 dollars a share but had 7 dollars of working capital per share.
• Didn’t like getting involved in legal actions
• Never focused on mistakes – including selling too early
• Question: China?  Answer: Schloss does not buy foreign companies. It is not easy to judge foreign companies. Insiders have too much advantage overseas.
• Question: When to sell / mechanics of sales? “I don’t know when to sell”  Schloss will sell at 100% profit. At Graham Newman will scale their sales.  Will usually hold stocks for 3 years. Schloss likes profit, but he has no formula for when to sell.
• If a stock gets high enough, it becomes a lot more vulnerable.
• Schloss quotes from Ben Graham from the 3rd edition of Security Analysis: McDonald’s was selling at $14, down from $35.  Graham’s arbitrage formula for return per year.
• Question: Max you would allocate to a stock in a portfolio?  If you really like, individually, you might put 20% in one stock for yourself.  In a partnership, you may put only 10% in.
• Shorted stocks in the tech bubble.  Historically never did it before.  It made him feel uncomfortable.
• Question: Research – just Value Line and Annual?  Answer:  Less than book value, not much debt.  Then you look at company itself – company might suck, but it may have a lot of book value.
• Question: How do you become comfortable with an industry?  He likes simple manufacturing companies.  Companies might have lots of growth, but stockholders might do poorly.  Simply capitalized companies.  Look at the last 20 years.  And then get an annual report.
• Buys stocks where the outlook is not good.
• Value Line: Look where stock was ten years ago.
• The point is: You do not want to lose money.  Buy stocks that are depressed, that aren’t going broke.
• Warren Buffett – very brilliant guy – but some people were reluctant to invest because there was no income.
• Question: What is the most important thing in investing and in life that you have learned in the past 50 or so years?  Answer: Honesty is the best thing you could have.

http://www.schloss-value-investing.com/2010/07/walter-schloss-presentation-at-the-benjamin-graham-center-for-value-investing/