Enterprise Value

What It Is:

Enterprise value represents the entire economic value of a company. More specifically, it is a measure of the theoretical takeover price that an investor would have to pay in order to acquire a particular firm.

How It Works/Example:

Enterprise value is calculated as follows:

Market Capitalization + Total Debt - Cash = Enterprise Value

Some analysts adjust the debt portion of this formula to include preferred stock; they may also adjust the cash portion of the formula to include various cash equivalents such as current accounts receivableand liquid inventory.

For example, let's assume Company XYZ has the following characteristics:

Shares Outstanding: 1,000,000
Current Share Price:  $5
Total Debt:  $1,000,000
Total Cash:  $500,000

Based on the formula above, we can calculate Company XYZ's enterprise value as follows:

($1,000,000 x $5) + $1,000,000 - $500,000 = $5,500,000

[InvestingAnswers Feature: Financial Statement Analysis For Beginners]

Why It Matters:

When attempting to gauge the overall value Wall Street has assigned to a firm, investors often look exclusively at market capitalization (calculated by multiplying the number of outstanding shares by the current share price). However, in most cases this is not an accurate reflection of a company's true value.

Enterprise value considers much more than just the value of a company's outstanding equity. To buy a company outright, an acquirer would have to assume the acquired company's debt, though it would also receive all of the acquired company's cash. Acquiring the debt increases the cost to buy the company, but acquiring the cash reduces the cost of acquiring the company.

Debt and cash can have an enormous impact on a particular company's enterprise value. For this reason, two companies with the same market capitalizations may sport very different enterprise values. For example, a company with a $50 million market capitalization, no debt, and $10 million in cash would be cheaper to acquire than the same $50 million company with $30 million of debt and no cash.

The P/E ratio and other formulas commonly used to measure value don't typically take cash and debt into consideration. For this reason, it's sometimes called the "flawed P/E ratio." To get a better sense for a company's true valuation, many analysts and investors prefer to compare earnings, sales, and other measures to enterprise value.

To learn more about how enterprise value is used by investors, don't miss our two top articles on the subject: The Best Alternative to the Flawed P/E Ratio and With This Ratio, Cash Flows Are King.

http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/enterprise-value-806

Enterprise Multiple = EV / EBITDA

What It Is:

Enterprise multiple is a financial indicator used to determine the value of a company. It is equal to a company’s enterprise value divided by its EBITDA (Earnings Before Interest, Taxes, Depreciation andAmortization).

How It Works/Example:

The enterprise multiple has many uses. In addition to helping investors determine if a company is over- or undervalued, it is also used by analysts to examine companies during the due diligence process that precedes a potential acquisition.

To determine the enterprise multiple, you much first find the company's enterprise value (market capitalization + value of debt, minority interest, and preferred shares - value of cash and cash equivalents). Once you know the company's EV, simply divide by the company's EBITDA.

Enterprise Multiple = EV/EBITDA

A company with a low enterprise multiple is considered to be an attractive takeover candidate (and investment), because it reflects a low price for the value of the company (more company for your dollar).  Enterprise multiples are compared to other companies within the same industry and not across industries in order to obtain an insightful assessment.

Why It Matters:

The enterprise multiple ratio is considered a more accurate barometer of the firm's value than the price-to-earnings (P/E) ratio since it discounts various countries taxing policies and takes into account debt and cash on hand. The enterprise multiple provides a more accurate insight into the company as it provides the acquirer with better information about the company's prospects and will prevent the acquirer from overpaying as well as avoid a potentially inferior acquisition.

http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/enterprise-multiple-625

Free Cash Flow

• 
  What It Is:

Free cash flow (FCF) is a measure of how much cash a business generates after accounting for capital expenditures such as buildings or equipment. This cash can be used for expansion, dividends, reducing debt, or other purposes. 

How It Works/Example:

The formula for free cash flow is:

FCF = Operating Cash Flow - Capital Expenditures

The data needed to calculate a company's free cash flow is usually on its cash flow statement. For example, if Company XYZ's cash flow statement reported $15 million of cash from operations and $5 million of capital expenditures for the year, then Company XYZ's free cash flow was $15 million - $5 million = $10 million.

It is important to note that free cash flow relies heavily on the state of a company's cash from operations, which in turn is heavily influenced by the company's net income. Thus, when the company has recorded a significant amount of gains or expenses that are not directly related to the company's normal core business (a one-time gain on the sale of an asset, for example), the analyst or investor should carefully exclude those from the free cash flow calculation to get a better picture of the company's normal cash-generating ability.

Investors should also be aware that companies can influence their free cash flow by lengthening the time they take to pay the bills (thus preserving their cash), shortening the time it takes to collect what's owed to them (accelerating the receipt of cash), and putting off buying inventory (again, preserving cash). It is also important to note that companies have some leeway about what items are or are not considered capital expenditures, and the investor should be aware of this when comparing the free cash flow of different companies.

Why It Matters:

The presence of free cash flow indicates that a company has cash to expand, develop new products, buy back stock, pay dividends, or reduce its debt. High or rising free cash flow is often a sign of a healthy company that is thriving in its current environment. Furthermore, since FCF has a direct impact on the worth of a company, investors often hunt for companies that have high or improving free cash flow but undervalued share prices -- the disparity often means the share price will soon increase.

Free cash flow measures a company's ability to generate cash, which is a fundamental basis for stock pricing. This is why some people value free cash flow more than just about any other financial measure out there, including earnings per share.

http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/free-cash-flow-1000

A Primer On Inflation - Is Inflation always bad?

A Primer On Inflation

Inflation instantly brings to mind images of rising prices, shrinking paychecks and unhappy consumers, but is inflation all bad?

Inflation is defined as a "sustained increase in the general level of prices for goods and services." Many consumers fear inflation because it reduces the purchasing power of their money. The influence that inflation has on consumers in the United States and other developed nations can be seen in gasoline prices, to name one example. When the price of gasoline goes up, it costs you more money to fill up your vehicle at the gas pump. Although the amount of money allocated to fuel takes a bigger percentage of your paycheck, you get the same amount of gas. This hit to your bottom line leaves you with less money to spend on other items.

In less-developed countries, food price inflation is an ever-greater concern. When the price of basic food items increases significantly, low-income consumers experience severe hardships. In recent years, food price inflation has resulted in public demonstrations and rioting in numerous countries across the globe, including Chile, Morocco, Tunisia and Algeria.

Measuring Inflation
There are several ways to measure inflation. Headline inflation is the raw inflation figure as reported through the Consumer Price Index (CPI). The Bureau of Labor Statistics releases the CPI monthly. It calculates the cost to purchase a fixed basket of goods as a way of determining how much inflation is occurring in the broad economy as an annual percentage increase. For example, a headline inflation figure of 3% equates to a monthly rate that, if repeated for 12 months, would create 3% inflation for the year.

The headline inflation figure is not adjusted for seasonal changes in the economy or for the often-volatile elements of food and energy prices. Headline inflation is the measure that has the most meaning for consumers, as we have to eat food and fuel our cars.

Core inflation, which is the Federal Reserve's preferred yardstick, is a measure of inflation that excludes food and energy. Core inflation eliminates these items because they can have temporary price shocks that can diverge from the overall trend of inflation and give what the prognosticators at the Federal Reserve view as a false measure of inflation. Core inflation is most often calculated by taking the Consumer Price Index and excluding certain items (usually energy and food products). Other methods of calculation include the outliers method, which removes the products that have had the largest price changes. Core inflation is thought to be an indicator of underlying long-term inflation.

Several variations on inflation are also worth noting. Hyperinflation is unusually rapid inflation. In extreme cases, this can lead to the breakdown of a nation's monetary system. One of the most notable examples of hyperinflation occurred in Germany in 1923, when prices rose 2,500% in a single month.

Stagflation is the combination of high unemployment and economic stagnation with inflation. This happened in industrialized countries during the 1970s, when a bad economy was combined with OPEC raising oil prices.

At the other end of the spectrum is deflation, which occurs when the general level of prices is falling. This is the opposite of inflation.

The Good Side of Inflation
Inflation has such a negative connotation that many people fail to consider the good side of inflation. Yes, inflation means that it costs more money to purchase items that were previously available at a lower price. However, it can also mean that the prices of homes, precious metals, stocks, bonds and other assets are rising. For the owners of those assets, inflation can have a wealthbuilding effect. Inflation can also result in rising wages. If wages rise as quickly as the cost of goods and services, then the rising wages can offset the rising prices.

Monetary Policy
The United States, Great Britain and some other nations have set targets for the desired inflation rate. A January 2012 press release issued by the Federal Reserve's Federal Open Market Committee sums up the policy in the U.S. and highlights the reasons behind it.

"The inflation rate over the longer run is primarily determined by monetary policy, and hence, the Committee has the ability to specify a longer-run goal for inflation. The Committee judges that inflation at the rate of 2%, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates, and enhancing the Committee's ability to promotemaximum employment in the face of significant economic disturbances."

That short paragraph sum up a complex and controversial set of issues. It starts with the Federal Reserve (Fed), the central bank in the U.S. and its dual objectives of maintaining a modest level of inflation and a low rate of unemployment. In order to achieve these objectives, the Fed controls monetary policy. The term "monetary policy" refers to the actions that the Federal Reserve undertakes to influence the amount of money and credit in the U.S. economy.

Changes to the amount of money and credit affect interest rates (the cost of credit) and the performance of the U.S. economy. To state this concept simply, if the cost of credit is reduced, more people and firms will borrow money and spend it, and this spending will then foster economic growth. Similarly, if interest rates increase, it costs more to borrow money. When this happens, fewer people and firms borrow money, which results in decreased spending and slower economic growth.

The Bottom Line
Putting it all together, the Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth. This fuels inflation. Conversely, when inflation is threatening, the Fed reduces the risk by shrinking the supply. It all sounds simple enough until you view it in the context of the many other factors that influence the economy in the U.S. In this larger context, monetary policy, inflation and just about everything else associated with these topics become fodder for economists, politicians, academics and just about everyone else to discuss and debate.

http://www.investopedia.com/articles/economics/12/inflation-primer.asp#axzz2AmPnsMqp

Scientex proposes 8 sen dividend for FY ended July 2012

Published: Tuesday October 23, 2012 MYT 5:09:00 PM

KUALA LUMPUR: Industrial packaging manufacturer and property developer Scientex Bhd has proposed a final single-tier dividend of 8.0 sen per share for its financial year ended July 31, 2012 (FY12).

The company said on Tuesday the final dividend would be paid on Jan 31 next year, when approved by shareholders at its AGM. This was in addition to a single-tier interim dividend of 6 sen per share paid on July 27, 2012.

Scientex said the total dividends of FY12 amounted to 14 sen per share, or a payout of RM30.1mil, which was 36% of Scientex's net profit of RM83.9 million for the year.

Scientex's group net profit rose 8.6% to RM83.9mil while group revenues increased by 9.6%to RM881.0mil, boosted by strong Asia-Pacific export sales experienced by the Group's manufacturing division, and the continued high margins and favourable product mix enjoyed by its property division.

Apollo Food replacing machines

Saturday October 27, 2012

By ZAZALI MUSA
zaza@thestar.com.my

Liang: ‘We already export to several European countries and the US but in small quantities, and we’ll beef up our efforts to increase our market share there.’

JOHOR BARU: Apollo Food Holdings Bhd plans to replace old machinery with newer equipment as part of its strategy to further strengthen its position in the industry.

Executive chairman and managing director Liang Chiang Heng said that the company was in the midst of calculating how much it would need to spend on the exercise.

“We have yet to come out with the figure but I can tell you that the investment is quite substantial,'' he told StarBizWeek after the company's AGM on Thursday.

Liang said the exercise involved the replacement of production machinery that had been around for more than 10 years as they were no longer economical to run and required higher maintenance.

He said the company would be getting state-of-the-art and fully automated machinery that could improve production capacity and reduce dependency on workers.

“Like other manufacturers in Malaysia, we are also having problems hiring locals as production workers and the only way is to invest in technology,'' Liang said.

The last time Apollo Food had invested in new machines was during the fiscal year ended April 30, 2006, when it spent RM10mil to enhance production capacity.

He said apart from boosting the firm's production, the new investment would see more new products.

Liang said Apollo Food introduced 10 to 15 new products annually, mostly chocolate-coated confectionery items and layer cakes.

He said these included premium products with good growth potential and able to generate better income for the company in the long run.

Liang said Asean countries, China and Japan remained the main export markets for the company, while the African and the Middle Eastern countries offered good growth prospects.

“We already export to several European countries and the US but in small quantities, and we'll beef up our efforts to increase our market share there,'' he said.

Liang said the company currently marketed 50% of its 100 products locally and the balance overseas.

For the financial year ended April 30, 2012, Apollo recorded RM21.74mil in net profit on revenue of RM200.54mil against RM17.85mil and RM176.29mil respectively the previous year.

AmBank issues new structured warrants

Friday October 26, 2012

KUALA LUMPUR: AmBank (M) Bhd is issuing five new European style cash-settled structured call warrants (CW) over the ordinary shares ofAstro Malaysia Holdings Bhd, Lingkaran Trans Kota Holdings Bhd andTop Glove Corp Bhd.

It is also issuing one European style cash-settled structured put warrant (PW) over the ordinary shares of Astro to meet investors’ demand for trading and investment opportunities in the current market scenario,AmBank Group said in a statement.

The structured warrants will be listed for trading on Oct 29, via the market making method, with issue size of up to 100 million each.

Director/head, equity derivatives, AmInvestment Bank Ng Ee Fang said:“As Malaysia’s benchmark FBMKLCI Index inched higher to hit new record highs, investor optimism remains as the local stock market is buoyed by liquidity and strong demand for good quality, high-yielding equity names.

“The slew of high-profile, multi-billion dollar IPOs year-to-date also played a significant part in attracting global investors’ interest to the local bourse.”

Besides Felda Global Ventures and IHH Healthcare, Ng said Astro became the third multi-billion dollar IPO on Bursa Malaysia this year when it raised US$1.5bil from its IPO last Friday.

“Therefore, for AmBank’s upcoming tranche of warrants, AmBank will be offering three call warrants and one put warrant over Astro to provide investors opportunities to participate and trade on both the direction and volatility of Astro.

There will also be two call warrants over Top Glove and Litrak.

AmBank’s three CWs on Astro are priced at 15 sen each with gearings of 2.5 and 4 times.

AmBank’s PW on Astro is also priced at 15 sen each with gearing of 5 times.

AmBank’s CW on Top Glove is priced at 15 sen each with gearing of 2.96 times while the CW on Litrak is priced at 15 sen each with gearing of 2.7 times.

This offer is aimed at sophisticated traders who want to trade on the direction and volatility of Astro, Top Glove and Litrak. – Bernama

Who are those selling Astro shares?

Friday October 26, 2012

Friday Reflections - By B.K. Sidhu

ASTRO Malaysia Holdings Bhd's paltry performance since its debut on the market last Friday raises one very pertinent question Who is selling Astro shares in the market?

The question is pertinent because it boggles the mind as to why anyone would be dumping the stock so early. Many investors who buy into companies linked to tycoon Ananda Krishnan have tended to be long-term investors looking for the promised dividend yield and capital appreciation, which have generally been decent.

Since its listing, Astro shares have not gone above its IPO price, save for a few moments on the day it was listed.

The stock opened at RM3.03, shot to RM3.11 and for a while, that brought cheer to many people but that joy ended as soon as it started.

The shares succumbed to selling pressure and ended its first day flat at RM3.

Alhough it has recovered some ground from its rock bottom of RM2.70, it is still pretty much “underwater,” closing at RM2.86 yesterday.

So, who's selling, because anyone who bought the shares at the IPO price of RM3 per share, would be selling at a loss.

The market is rife with rumours about this.

Did the cornerstones, other institutional investors, Miti-approved bumiputra investors, Astro employees or the retail investors sell the shares?

Note that none of them got their shares at a discount all the 22 cornerstone and Miti investors paid RM3 per share, just like the retail investors.

One unsubstantiated theory was that the selling was being done by those who got the Astro shares at a discount or worse, for free! That theory is far-fetched, as it wasn't disclosed in the prospectus which parties were getting shares at a discount or for free. But this if this is true, then some explanation is needed.

Another rumour is that the selling is by some institutions who had bought the shares only with the interest of dumping them on listing day. In other words, they weren't interested in holding the stock.

There's also the theory that the selling is by those who used margin financing the buy the shares. After the price dipped below IPO, these investors weren't able or did not want to fork out the amount required to top up their margin accounts. So, they preferred to sell the shares and just take the one-time hit.

Yet another theory is that the major shareholders are selling, considering that their cost is below the IPO price, so they will still pocket the profits.

That possibility though is highly unlikely. Both Ananda and Khazanah Nasional Bhd had already sold a lot of their shares in the IPO exercise. So why jeopardise the performance of an IPO that they already made tons of money from? Khazanah has a lock-in period for the shares.

Despite the selling or maybe because of it, it is noteworthy that those driving Astro's business are taking the opportunity to buy some of the stock on the cheap. These include Astro's two top bosses including its CEO and COO - Datuk Datuk Rohana Rozhan and Henry Tan respectively.

Whatever the case, it is possible that the mystery of the sale will be revealed soon when shareholder changes are posted on Bursa Malaysia. Then again, there is no assurance of that because only substantial shareholder changes will be recorded.

The seller may be holding less than 5% and if that is the case, it will remain a mystery as to who sold the shares and whether the party will continue to do so.

Success is sweet for Cocoaland

Saturday October 27, 2012

By CHOONG EN HAN
han@thestar.com.my

Cocoaland Bhd sees its best bet of expanding the business onto the next plateau of growth through organic means as it is spurred by the growing consumer consumption for sugar confectionary candies.

In an interview with StarBizWeek, founder and executive director Liew Fook Meng says that the company's expansion plans for the next few years would open up new capacity for the company to fill and also to leverage on the strength of its substantial shareholder, F&N Holdings Bhd for its beverage business.

“The additional capacity would free up the bottleneck that we have currently as sometimes we are faced by supply constraints when demand picks up,” he says.

Besides planning to spend about RM30mil to set up its sixth factory in Rawang, the company would invest about RM44mil to increase production of its hard candy and fruit gummy confectionery.

This will more than double its total production capacity to 4.6 million kg of hard candy and 11.7 million kg of fruit gummy from the current capacity of one million kg and 4.5 million kg respectively.

In the meantime, Liew is setting his eyes on the bigger picture now and is following closely the developments of the takeover of Singapore-listed F&N by Thai Beverage Plc, one of the largest beverage producers in Asia.

Liew: ‘The additional capacity would free up the bottleneck that we have currently.’

With F&N as its penultimate strategic partner with a 27% stake via F&N Holdings, the developments would have an impact the direction of the company.

Plans are afoot for the group to set up its franchise business model which would see Cocoaland manufacturing and marketing its products under the franchisor's brand name.

“We are still in the negotiation stage with a few well-known international companies, and we expect to sign up a few franchise businesses to start in financial year 2013 after the new lines for gummy and hard candy have been fully-installed and commercialised,” he says.

While Cocoaland is now synonymous with its fruit gummy products under the Lot 100 brand, and its partnership with F&N, the company is looking out for partnerships and work with other food brands.

“Besides F&N, we currently have other clients like GlaxoSmithKline,Ribena, 21st Century, and Coffeebean. We intend to increase penetration in export markets like China, Vietnam and Indonesia with our fruit gummy and CocoPie products,” he says. A wide range of its products are carried by local retail stores, and besides the domestic market, the group has been supplying confectionery to overseas market such as the United States, Japan, Middle East, Hong Kong, Australia and Europe.

The export market's share to the group's overall revenue has increased progressively from 46.5% in financial year 2009 to 54.2% in the first half of 2012.

Cocoaland has a market capitalisation of about RM400mil, and its journey has been one that is synonymous with other success stories.Cocoaland story began when two brothers started out as small time vendors selling deep-fried snacks and banana fritters in the Klang Valley.They got their first break when an acquaintance decided to dispose of his chocolate coating operations.

“That time we don't even have a name yet. And with RM10,000 in hand, we bought his machines and decided to venture into that business,” he says.

The brothers finally got their first break in the mid-1980s when they carved a niche for themselves in the market to manufacture polytubed drinks, which opened doors to the overseas market, and for the first time exporting to the Middle East.

The first factory was set up in Kampar in the 1980s and the second success story came in the form of “Koko Jelly” with its second factory in Kepong to manufacture the chocolate coated jelly that was well-received by the public. Today, the group is managed by 10 siblings.

AmResearch recently reaafirmed its “buy” call on the company, with a higher fair value of RM3.05 per share as it says the group is poised to hit an earnings inflexion point.

It says the group's three-year compounded annual growth rate of 28% will be underpinned by additional production capacities and the deepening in distribution channels.

“We understand plans are afoot for the installation of a new line each for the production of hard candy and fruit gummy to alleviate current supply constraint. Upon commercialisation by first quarter 2013, the new lines are expected to lift installed capacities by 360% for hard candies and 160% for gummies. This potentially translates into an additional RM158mil of revenue per annum,” it says.

For its first half ended June, the company recorded a revenue of RM110.74mil, passing the halfway mark of what it achieved for the entire 2011 at RM173.9mil. Net profit stood at RM12.2mil for the period under review, more than half its net profit of RM19.19mil for year ended 2011.

Its net profit was halved in 2010 to RM9.8mil from RM19.6mil previously due to slower sales, and losses it incurred after terminating a joint-venture production facility in China's Fujian province to manufacture fruit gummy for the China market.

http://biz.thestar.com.my/news/story.asp?file=/2012/10/27/business/12223208&sec=business

Coastal plans to diversify

Saturday October 27, 2012

By PHILIP CHOO
pchoo@thestar.com.my

SANDAKAN: With Sabah set to become Malaysia's oil and gas hub, particularly in deep-water oilfield developments off the state's west coast, Coastal Contracts Bhd is actively pursuing strategic opportunities to diversify into other oil and gas-related business, such as offshore structure fabrication business, floating storage and offloading and floating production, storage and offloading.

Recently, one of the group's yards in Sandakan, measuring 52 acres, had been upgraded and it is now capable of erecting offshore structures and the group is looking forward to tap into this potential new phase of growth via collaboration with strategic partners that complement the group's technical capabilities in the fabrication business.

Executive chairman Ng Chin Heng said despite the global economic slowdown, the group managed to clinch its third major vessel sales order amounting to RM111mil in relatively quick succession, following its major deal of RM141mil in August.

“This is mainly attributable to the Coastal group's appropriate marketing strategy, as well as great effort contributed by its marketing team,” Ng told StarBizWeek.

The latest contract has brought the total of RM743mil worth of vessel orders awaiting delivery to customers up to 2013.

Ng said although earnings in the first half had been hampered by lower number of vessels delivered, he nevertheless added that shipbuilding revenue stream for the financial year ending Dec 31, 2012 (FY12) could be comparable with FY11.

However, Ng cautioned that that would happen barring any unforeseen factors which might result in late delivery of vessels or cancellation of sales

contract, and also any adverse changes in the US dollar-ringgit exchange rate.

The group posted a lower net profit of RM190.64mil in FY11 compared with RM200.79mil in FY10. However, revenue was up 6.5% at RM719.13mil from RM675.05mil in 2010.

“We are lucky that so far Coastal has not encountered any substantial cost over-runs since its public listing in August 2003,” he added.

In view of the continued uncertainty in the eurozone and an expected slowdown in global economic growth, the management hoped the group's revenue stream for FY13 would remain stable, Ng said, adding: “There should be no major breakthrough for the group's revenue for FY13 unless it

managed to secure big ticket oil and gas upstream projects.”

Coastal was established in 1976 by a local merchant in Sabah as a shipping company, operating merely a few used tugs and barges for commodities transportation within the Borneo region.

In 1982, when Ng, then a rubber trader, took over Coastal in the midst of the 1980s crisis and ran the business together with his wife and brothers with no knowledge of the business, little did they know that their fledging business would develop into one of the region's most prevalent marine and offshore support services provider.

Today, listed on the Main Market of Bursa Malaysia Securities Bhd, Coastal operates shipyards of over 90 acres and has built and delivered a diverse fleet of more than 330 units of conventional tugs, barges, landing crafts and offshore support vessels to worldwide customers.

Coastal has the prestigious honour of being featured in Forbes Asia's list of 200 Best Under a Billion for six years running (2006 to 2011). The annual list picked 200 top-performing publicly-traded corporations in Asia Pacific (with annual revenue between US$5mil and US$1bil) based on earnings growth, sales growth and return on equity over three years.

http://biz.thestar.com.my/news/story.asp?file=/2012/10/27/business/12233923&sec=business

Asian banks scramble for dollar bonds

Asian banks scramble for dollar bonds (The Philippine Star) Updated October 02, 2012

MANILA, Philippines -  Asian banks are in a mad scramble to raise US dollars to meet the stiff capital requirements under the Basel III framework.

Banks are sweeping as much dollars as can be found in the global market as European borrowers are holding on to their dollars “during these hard times.”

According to FinanceAsia, Asian borrowers want a steady and reliable source of dollars for their funding needs as well as capital needs for protection.

“Indeed, bank borrowers in China, India, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand have all tapped dollar markets during the past few weeks and there could be more to come as banks strive to avoid a repeat of the dollar funding crunch they experienced during the crisis,” the prestigious regional publication said.

In the recent weeks, Bangkok Bank raised $1.2 billion, Citic Bank $300 million, and RHB Bank $200 million.

The bonds offer a coupon of 3.875 percent and were priced at 99.824 to yield 3.9 percent, or 325 basis points over US Treasuries, after tightening guidance down from 350 bp during the course of the day. Citic is rated Baa2 by Moody’s and BBB by Fitch. HSBC and Royal Bank of Scotland were joint global coordinators and joint bookrunners alongside BBVA and Nomura.

“Asian investors bought 80 percent of the deal while the rest went to Europe. Fund managers took 63 percent, banks 18 percent, private banks 14 percent, insurers and others five percent. There was a $0.20 discount for private bank buyers,” FinanceAsia noted.

It added that Bangkok Bank became the fourth Thai borrower to tap the market in little more than a week, despite having been the first to launch a roadshow. Kasikornbank, PTT Global Chemical and Siam Commercial Bank (SCB) all beat it to market.

On the upside, Bangkok Bank was the only one of the banks raising 10-year money in the US, under Rule 144a, which meant that it enjoyed decent support and managed to perform better than its Thai peers – the $400 million five-and-a-half-year tranche came at 212.5bp over Treasuries, while the $800 million 10-year tranche came at 215bp.

FinanciaAsia further noted that demand of around $7 billion was skewed toward the 10-year tranche, which attracted $4.6 billion of orders from 250 accounts, with 49 percent placed with investors in Asia, 16 percent went to Europe and the remaining 35 percent to the US. By account type, 60 percent went to fund managers, 20 percent to insurers, 12 percent to banks, seven percent to private banks and one percent to others.

The five-and-a-half-year tranche attracted $2.8 billion of orders from 200 accounts and was distributed in a similar way to the 10-year, with the bulk of the deal going to fund managers in Asia and the US.


http://www.philstar.com/Article.aspx?articleId=854857&publicationSubCategoryId=74

Public Bank - Malaysia's strongest bank in 2012

Public Bank has leapfrogged both CIMB Group Holdings Bhd and Malayan Banking Bhd to the top spot in 2012 as Malaysia’s strongest bank, according to the Asian Banker 500 2012 (AB500) report.

“This was largely due to the cost and risk management as a result of the conservative approach of the bank,” the report said.

Further, the report also said that the Asia Pacific banking sector is expected to remain resilient as economies in the region continue to expand in 2011 albeit at a slower pace than last year.

Singapore-based financial services community strategic business intelligence provider Asian Banker said the Asia-Pacific regional banks saw a significant acceleration in asset growth in 2011 while the largest 500 banks from the US and the European Union did not grow as fast.

“If the momentum holds, Asia-Pacific regional banks are likely to overtake their Western peers by 2014.

“This is primarily due to a combination of resilient economic performance of the region’s economies, increasing private wealth and growth in the number of Asian highnet- worth individuals and continual retrenchment of some Western banks from Asia and growing regional expansion by Asia-based banks,” it said in a statement.

Asian Banker said key performance indicators of the banking sector in the Asia-Pacific region such as assets, loans, deposits and net profit grew over 15% last year.

“In particular, net profit growth remains staggering at 43% to US$315.9 billion (RM958.3 billion) albeit slower than 2010’s growth rate of 53%,” it said.

Asian Banker said 2011 has been a good year for banks in Malaysia, achieving weighted average asset growth of 21.7% year-on-year (YoY) which was among the top in the Asia-Pacific region.

“The growth was mainly fostered by the strong and resilient gross domestic product growth of the Malaysian economy and Islamic banking growth of 5.1% YoY and 33% YoY in 2011 respectively as Malaysian banks embark on a regional expansion strategy in an attempt to increase their regional presence and to diversify their geographical revenue sources,” it said.

Asia-Pacific regional banks have been shoring up their capital positions as implementation of the new Basel III requirements draws near, it said. “Asset-weighted average Tier 1 and total capital adequacy ratio (CAR) grew much stronger to 14% and 16.5% in 2011 from 9.1% and 12.3% in 2010 respectively.

“For this iteration, Singapore and Philippine banks rank among the highest for Tier 1 and total CAR respectively,” it said. Asian Banker said lack of sovereign debts deter Asia-Pacific regional banks’ compliance to Basel III liquidity requirements.

“Although banks are able to withstand long-term stress to their operations as reflected in their strong capital positions, short-term risks such as liquidity continue to be one of the top issues for Asia-Pacific regional banks,” it said.

AB500 research manager Doron Foo said some regional banks in countries such as Australia, Singapore and Hong Kong are still unable to satisfy Basel III liquidity requirements due to the lack of sovereign debt in their domestic countries.

http://themalaysianreserve.com/main/index.php?option=com_content&view=article&id=2338:public-bank-ranked-as-strongest-bank-in-msia&catid=36:corporate-malaysia&Itemid=120

Panic Buying

What It Is:
Panic buying refers to the purchase of a stock immediately after a sudden, substantial price increase.

How it works/Example:
Investors watching the market may jump to buy a stock immediately after a major move in the stock's price, hoping to take advantage of the surge in the price.

Why it matters:
Investors may buy stock for a number of reasons. Fear of being left out of the next big thing, however, is not the best reason. Panic buying usually is the result of the herd instinct among some investors. While there may be some gains on the residual increase in the price spike, it is often too little, too late.


https://mail.google.com/mail/?shva=1#inbox/13ab421d8b1c529a

Spotting Sharks Among Penny Stocks

October 30 2012

For every publicly traded corporations with market capitalization in the hundreds of millions and billions, there are thousands of smaller companies with much more modest market caps. Because these companies have smaller operations and more risks, they trade at only a fraction of the price of their much larger counterparts. These are, of course, the infamous penny stocks. This article will look at some of the dangers that lurk in penny stocks trading.

The Myth Of Evolution
One thing that keeps people dabbling in penny stocks is the belief that these corporations will evolve into firms that will become much like their larger counterparts. This has happened, but not as regularly as penny stock proponents would have you believe.

Many public firms simply defer going public until they have grown large enough for it to be worthwhile. Until that time, they will usually raise money through private investors or corporate loans along with their regular operations. Generally, these companies do not need an initial public offering (IPO) to fund an expansion. The larger a company becomes, the more practical it is to raise funds through a public offering, because although equity is seen as a relatively more expensive form of financing, it often becomes necessary for larger companies.

Good Intentions?
If a company is offering its stock at the penny level, it is usually for one of the following reasons. First, the company may be on the cusp of a large expenditure, and it believes that the money raised by an IPO will be enough to finance it. Second, the company may have reached the apex of its growth and it wants to change its tax structure or disperse the profits.

There are also less noble reasons for a company to go through an IPO process when it is still quite small. Sometimes a company is talked into an overpriced and overhyped IPO by penny stock brokerage firms that want to make a quick dollar from unwary investors. An IPO could also be an attempt by the company's owners to offload their ownership to investors because they see little promise in the company's future.

Oranges and Apples
It is important to remember that within penny stocks, there is a wide range of companies. You can find an oil prospecting company with a recognizable corporate structure right next to a family-run organic farm that specializes in cabbage. Some of those companies may allow investors to have a say in who is running the show, and some may be one-man operations that suffer terribly when the founder retires or dies. And while larger companies generally strive to please investors, penny stock companies may pay no mind to their investors at all.

The Bait
Not many value investors spend their time in penny stocks. Although a well-managed penny stock company may see good returns over the years, it is much more difficult to get full disclosure and the rules that apply to penny stocks are much looser. These companies do not face the same standards as large firms, are required to file with the Securities and Exchange Commission (SEC) less frequently and have limited requirements for listing.

What lures investors into the oceans of penny stocks is the dream of buying 1,000 shares for $0.50 and then later selling them for $5 or some similarly lucrative transaction. Unfortunately, that ocean is full of sharks that know exactly what you're looking for.

The Bite
Some people think that brokerage firms that specialize in penny stocks are often just a step up from a guy with a bat waiting to rob someone in a dark alley. Successful companies don't need people to cold call and talk up their stocks. Penny stockbrokers engage in a mixture of cold calling and targeted sells. They often have a collection of leads, people who have had a history of buying into poor investments over the phone or who have given their information to someone who turned around and sold it.

Using this list, the stockbrokers will call prospective marks and introduce themselves. Soon after, be it a day or a week, they will call again with a chance to get in on the ground floor of a stock that is set to rocket away. This will prove to be a stock that they have been pumping up in message boards, emails, newsletters, etc. Then, when investors buy in, the firm and its partners get out and leave a gaping wound in the investors' portfolios. These firms are also known to take their pound of flesh in the form of high commissions. 

These firms, and the brokers that support them, will often use techniques such as advertising in mass emails. You may see mailings in your account about the latest greatest stock that is set to return 1,000%. In all cases, without doubt, it is a penny stock, and one you probably should avoid. 

Multiple Victims
Sometimes the companies involved in these swindles are complicit, but even honest companies find their stocks targeted by unscrupulous penny stockbrokers. These sharks may take an innocent company that has had a few good years and make false publications or claims that "insiders" have said it is poised for a leap. When the brokers pull out, they have not only ripped off investors but also ruined the reputation of an otherwise stalwart company.

Blood in the Water
If an investor has the poor judgment to get involved with penny stockbrokers, he or she may find a permanent target painted on his or her back. Because of the profits and commissions involved, these brokers will persist with their calls until they get your check - after that the calls will dry up and the number may even change. Many of the sharks in penny stock brokerages have securities violations on their records, but it is their ability to sell that keeps other firms hiring them - and it is dishonest profits that keep penny stock brokerage firms in business.

The Bottom Line
By and large, attempts to regulate penny stocks have been thwarted. The low prices make them ideal for manipulation because a few false cents per share can mean thousands if you hold most of the shares. The internet has also offered a whole new medium by which to cheat investors. For every site that exposes penny stock fraud, there are hundreds of sites espousing one undiscovered treasure or another. The best way to avoid getting swindled in the penny stocks is just to stay out of the water - if you don't swim, you won't be bitten.

Read more: http://www.investopedia.com/articles/stocks/07/penny_stocks.asp#ixzz2AmZW70kj

Politicians should not assume that the Malaysian voters are not smart.

'Exodus at MCA dinner not sign of flaccid support'

Politicians should not assume that the voters are not smart.  In fact, the Malaysian voters are very intelligent in exercising their votes.  This was evident over the many elections over the years since Independence.  Let us bring forth a new political era whereby the government is a clean, efficient, responsible and responsive one.  Above all, everyone will benefit from having a good government in place.  For this, our institutions need to be respected and strengthened.  Due respect to the processes should be in placed and applied fairly and equally to all.  The checks and counter-checks to ensure an efficient, clean, and responsive government should be in placed.  

The focus should be on issues.  Addressing these issues adequately and pragmatically is the least demanded of the politicians by the voters.  Issues should be debated responsibly, carefully and intelligently in the context of our multi-ethnic, multi-cultural, multi-religious and multi-racial country.  The politicians with integrity, intelligence and who are willing to work hard, should be elected to serve.

Since the last election, there was enough time for parties to reform their political agenda and directions to accommodate the changing views and desires of the Malaysian.

This forthcoming election is above all allowing Malaysians to freely exercise their rights as citizens to pick the good government that they wish to have in place.  Hopefully, through our democratic processes and the high quality responsible leaderships provided by the leaders of all parties, Malaysians can be proud of the outcome of any elections carried out irrespective of whichever party wins.

DiGi Q3 net profit rises 7.84%

Wednesday October 24, 2012

PETALING JAYA: DiGi.com Bhd's third-quarter net profit for the period ended Sept 30 rose 7.84% to RM315.37mil on the back of revenues increasing as well to RM1.58bil from RM1.52bil.

The third largest mobile operator by subscribers in the country said revenue growth in the third quarter was moderate because of the impact of its ongoing network modernisation.

“We expect better revenue momentum in the fourth quarter from network improvement and seasonality,” DiGi said.

DiGi also declared a third interim tax-exempt dividend of 4 sen per share and a one-off special tax-exempt dividend of 8 sen for the financial year ending Dec 31, 2012.

Meanwhile, earnings before interest, taxes, depreciation and amortisation (EBITDA) margins for its third quarter stood at 45.2% from 47.6% in the second quarter.

“The quarter-on-quarter decline was on account of the lost revenue opportunities' explained earlier and IDD margin pressure.

“Nevertheless, overall EBITDA margins for 2012 should be on par with the 2011 EBITDA margin as guided,” DiGi stated.

Its chief executive officer Henrik Clausen said in a press release that the company had committed to invest between RM700mil to RM750mil this year to modernise its network to cater for the increased demand from data users and is at the halfway point of rolling out this network.

“Our ambition is to provide access to high-speed Internet and next-generation services for all our customers, and in the first nine months of 2012 we have pushed harder than ever to make data accessible and affordable to everyone on a mobile device, and meet our customers' demand for high quality mobile Internet experience,” Clausen said.