JCorp: Biting the Bullet?

Mohd Farhaan Shah and Risen Jayaseelan tell us about an impending debt at Johor Corp in the online STAR today. I have taken the liberty to abridge it accordingly to be brief.

Are there really viable options? Will Johor Corp bite the bullet?

New CEO of Johor Corp (JCorp), Kamaruzzaman Kassim said that the Corporation  will not be selling any of its assets to repay bondholders' RM3.6bil when the papers are due on July 31, 2012. That route is now out of the question,so it seems.

This is suppose to put a market dampener on speculation that key assets in the JCorp group, such as QSR Brands Bhd (that owns KFC Holdings (M) Bhd) and London-listed New Britain Palm Oil Ltd (NBPO), will be up for sale at any time soon.

Kamaruzzaman, named JCorp CEO last week confirmed that JCorp had appointed CIMB Bank and Maybank Investment Bhd as advisors.

Kamaruzzaman said that both these banks were the biggest lenders to JCorp. This means that both banks may own the bulk of the RM3.6bil bonds that are due in 2012. [Does it not remind you of the EPF-RHB thingy?]

The financial advisers apparently have suggested some ideas including the issuance of new bonds. [Expecting some form of haircut here?]

The CEO  has explained that the RM3.6bil debt was due to JCorp's aggressive investment since 2000, mainly in landed property and industrial areas.

JCorp has been in the news in recent weeks after it rejected two bids to take over QSR Brands Bhd. One was by a company linked to tycoon Tan Sri Halim Saad and another by the Carlyle Group.

While JCorp has a number of prized assets in the group, it doesn't own most of these assets directly. JCorp owns 53% of Kulim, which owns 50% of NBPO and 57.5% of QSR. QSR then owns 50.6% of KFC.

So if these assets were to be sold, the sale proceeds would be trapped at Kulim.

What that means is that if the money Kulim got from the sale of NBPO or QSR were to be paid out in dividends, JCorp would only get half of that, with Kulim's other shareholders enjoying the proceeds as well.

This is likely the main reason for JCorp opting not to divest its assets to repay the loan. When JCorp-controlled Kulim rejected the two bids, it said that it believed more value could be realised in QSR and KFC in the long run.

According to JCorp's 2009 annual report, it had RM705mil in cash but a whopping RM6.62bil in debt and with hardly any free cash flow.

It also paid around RM500mil in interest payments and RM1.7bil in loan repayments. Despite being perceived as asset rich, it only booked a paltry RM5mil in dividend receipts in financial year 2009.

So, it would be interesting for QSR and KFC shareholders what JCorp will do come 2012 when the bonds are due for payment. Will they be paying out bumper dividends  at QSR and KFC so that JCorp can survive a cash crunch? Good question.

JCorp is one of the country's largest state economic development authorities and has around 250 companies.

Rollover, Rover?

Bursar KL: Information for the Potential Retail Investor

Jagdev Singh Sidhu analyzed the buying and selling patterns of both local and foreign investors on Bursa KL throughout 2010 excluding December.

Here is his report from the online Star.

"Local retail investors have been net sellers of stock for all but one month up to November this year, but the pace of buying has slowly caught up with selling as the stock market rose towards its record high levels at the end of the year. [ So local investors are net sellers]

According to trade statistics from Bursa Malaysia, retailers bought RM8.93bil worth of stock in November and sold RM8.99bil worth of shares. In terms of purchases, the highest amount of shares bought or sold was in January when retailers bought shares worth RM9bil but sold RM9.1bil.

The pace of transactions declined thereafter but started to pick up in September when purchasers rose to RM5.58bil versus selling RM5.72bil worth of equity.

In October, buying and selling rose to RM7.57bil and RM7.73bil respectively and in November, when the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) hit a record 1,528 points, retailers bought RM8.93bil worth of shares and sold RM8.99bil worth.

The pace of purchases also reflected the monthly value of trade done on Bursa Malaysia. Data for December has not been released.

In terms of value, the highest month of transactions based on value was November when RM39bil worth of trade was conducted. The month also saw the entry of the largest IPO in the country, Petronas Chemicals Group Bhd, which attracted a great deal of interest among institutional investors.

The value of transactions has also mirrored the FBM KLCI’s ascendency to its new peak.

Total value of trade in October was RM36.5bil and RM31.6bil worth of share transactions were done in September.

Trade value has been consistently rising since July when total transactions were RM26.1bil. The value of transactions has somewhat tracked the rising amount of foreign investor interest in the stock market.

Foreign institutions have been net buyers of Malaysian shares since June but over the last couple of months, the amount of the net purchases by foreign institutions has been shrinking.

As foreign investors have been net buyers of Malaysian shares over the past 6 months, most of that extra liquidity or shares available for purchase has come from local institutions.

Local institutions have been net sellers of shares on Bursa Malaysia since June and only emerged as net buyers in November.[Sell low, buy high? Or have they bought into Petronas Chemical?]

One of the highest months of purchases by local institutions was in March when local funds bought RM12.8bil worth of stock and sold RM13.1bil in shares.

Total transactions by local institutions dipped thereafter but started to pick up once again in September when such funds bought RM9.7bil worth of shares and sold RM14bil worth.

The net selling gap then dropped as interest in Malaysian shares picked up again and in October, local institutions bought and sold RM12.8bil and RM14.2bil worth of shares.

In November, local funds reversed their selling trend of previous months when it bought RM12bil in stock and sold RM11.5bil in shares.

Foreign investors have also increased their buying of Malaysian shares in recent months and in August bought more shares than local institutions.

Foreign investors continued to buy more shares on Bursa Malaysia compared with local institutions in September but in October, as the market continued to charged towards its record high, local institutions poured more money into Malaysian shares compared with foreign institutions.

In November, local institutions’ purchase of stocks at RM12bil was higher than foreign institutional funds which snapped up RM11.5bil worth of shares."

So it looks like local buyers are net buyers for all months except in November. My guess is that the local buyers are just the same local funds particularly EPF, Pension Funds, SOCSO, Khazanah, ValueCap and so on and so forth. There is some action on some penny stocks that are dividend paying and  those affiliated with political interests.

That second liners are hardly moving is indicative that the common retail buyer is not in the market.

New Malaysian Code on Takeovers and Mergers 2010

Well, maybe in some small ways, investors may have the feeling of  getting better protection. with the enforcement of the new Malaysian Code on Takeovers and Mergers today.

The last major review of the code was in 1998.

Given the number of developments in the capital market in the last 10 years, the commission felt that it was time to reissue the code, industry observers said.

Its major changes also came from extensive consultations with various parties, they added.

"The 2010 Code replaces the Malaysian Code on Take-Overs and Mergers 1998," the SC announced yesterday.

"The 2010 Code, together with its Practice Notes (PNs), provides protection to a wider group of investors, enhances transparency and improves efficiency in line with capital market developments, locally and abroad," it added.

Key changes in the 2010 Code benefiting shareholders included protection for investors of foreign companies and real estate investment trusts (REITs) listed on the local bourse, shorter settlement periods and enhanced disclosures in offer documents and independent advice circulars.

Effective immediately, all companies, including foreign incorporated ones and REITs listed on Bursa Malaysia, are subjected to the code.

In the past, the code only regulated public companies incorporated under the Companies Act 1965, regardless whether they were listed or not.

The 2010 code now allows a voluntary takeover offer to be carried out with a higher acceptance threshold as a condition.

The new code has reduced the settlement period in a takeover offer to 10 days from 21 days for settlement via cash consideration, and 14 days for settlement via shares.

Schemes of arrangement, compromise, amalgamation and selective capital reductions now have the same effects as takeover offers.

The Securities Commission believes that there should be parity in the protection afforded to shareholders in the implementation of such schemes.

Another major change in the code relates to the announcement on potential takeover offers.

The 2010 Code requires a potential offeror or offeree to make an announcement on possible offers where there are unusual changes in the price of the potential offeree's shares.

If the offeror denies that he is making an offer for the offeree, he will be barred from making any takeover bid within six months.

The code now requires only one-stage application to be made, instead of two stages previously, for exemptions from mandatory offer obligations arising from the issuance of new securities and share buyback schemes.

It also waived the need for the Securities Commission's approval for the appointment of independent advisers by the board of an offeree.

Merril Lynch: Underweigh Malaysia!

I was reading Yow How Chieh's article in the Malaysian Insider today (16 December 2010). It makes sober reading and has foreboding implications for Malaysians in 2011 and much beyond.

Here is his article.

"The Najib administration’s New Economic Model (NEM) has failed to excite investors, with Bank of America Merrill Lynch maintaining this week its call to shed investments in Malaysia.

Despite the government’s high hopes on the NEM, the investment bank this month continued to rate Malaysia as a “big underweight” in emerging markets.

An underweight call is a recommendation to investors to reduce their investments in a particular security, asset class or, in this case, a country.

Malaysia managed to trim its underweight rating from over 50 per cent in November to 46 per cent this month but still only managed to come in second-last among the 15 countries studied by the investment bank.

This is despite the fact that emerging markets continue to be the equity region of choice for investors worldwide, with investments persisting at historically high levels.

Investors have so far greeted Prime Minister Datuk Seri Najib Razak’s highly anticipated NEM with disinterest, owing to lack of detailed policies, timelines and the apparent rollback of ambitious Bumiputera quota reforms detailed in the first half of the year.

The bold recommendations set out in the first part of the NEM to boost competitiveness by reducing quotas appear to have been sidelined in the second part launched recently.

Observers attribute this to stiff resistance from Malay rights groups concerned that such moves will erode the community’s interests.

Economists and political analysts have also criticised the NEM for its lack of innovative thinking and timidness, which they said does little to dispel lingering investor skepticism.

Malaysia also remains unattractive to Asia Pacific investors, with Merrill Lynch increasing its underweight rating four-fold for the country from November.

Topping the Asia Pacific list were strongly overweight Taiwan, Hong Kong, South Korea and China, with Singapore coming in fifth despite its downgrade to neutral.

Making up the rest of the underweight club were Southeast Asian nations Thailand, the Philippines and Indonesia, along with New Zealand, Australia and India.

Nonetheless, Malaysia looks set to end the year as the fourth fastest growing emerging market after China, India and Turkey, and is expected to remain number four in 2011.

Developed markets, which bore the brunt of the financial crisis, will continue to contract, with the possible exception of sluggish growth in Europe. Emerging markets, on the other hand, face the risk of overheating next year and increased likelihood of “policy mistakes” in the form of insufficient or excessive money tightening.

Merrill Lynch expects the ringgit’s outperformance this year to fade due to a likely 50 basis point interest rate hike over the next 12 months by Bank Negara Malaysia, in response to increasing private investment in the economy.

Slow implementation of the Economic Transformation Programme (ETP) due to political resistance and the low priority of fiscal consolidation were cited as possible risk factors to the national currency.

Also of concern were “some small risk” that Umno may lose more seats in the next general election — expected to take place next year — as well as higher inflation due to rising food and fuel prices.

The government embarked on a second wave of subsidy cuts earlier this month, which saw RON95, diesel and LPG prices go up by five sen per unit and sugar price increase by 20 sen per kg.

The price hikes are expected to put upward pressure on inflation, which Merrill Lynch predicts will rise from 1.8 per cent this year to 2.8 per cent next year, before dropping slightly to 2.5 per cent in 2012.

Malaysia’s real GDP growth is also expected to drop to 5.2 per cent in 2011 and 5.4 per cent in 2012 from the expected 7.2 per cent expansion this year, putting at risk the 6 per cent annual growth needed to propel the nation to high-income status by 2020.

KFC's Ayamas Expansion

For a change, let us hear about some new directions that KFC is taking.

KFC Holdings (Malaysia) Bhd (KFCH) currently has 50 Kedai Ayamas outlets in the country. It intends to open 25 new outlets in 2011.

Each outlet will cost RM350,000 and total investments will add up to RM9 million.

Kedai Ayamas will begin its new delivery service. It will be piloted at eight outlets in the Klang Valley, with an initial investment of RM200,000.

KFC believes that the delivery service is relatively untapped and a great potential avenue for revenue.

Thee spokesman also intimated that KFC opened 15 outlets this year and recorded a sales growth of 43 per cent in the first nine-months of this year when compared with the whole of  2009.

He added between 65 per cent and 70 per cent of the new outlets coming up next year would be located around the Klang Valley.

"With our roll-out plan, we expect to maintain a double-digit growth next year. Our customers prefer to go to our Kedai Ayamas outlets simply because we can guarantee the quality of our chicken," he said.

He also said the company had three processing plants in the country currently with a combined capacity to process about 140,000 chickens per day.

"Over 60 per cent of the chickens are distributed to our existing outlets while the remaining will be refined into further processed products to be sold under the brand name of Ayamas," he said.

KFCH is currently a unit of Johor Corporation via its subsidiary, Kulim (Malaysia) Bhd which holds a 57.5 per cent controlling stake in QSR Brands Bhd, which in turn controls KFCH.

The rise,fall and rise again of the shares of KFC for the year is most interesting within the intended corporate takeovers background.

KLK: Tighter Grip on Nitrile Latex Market

If you want to know of the latest corporate incursion of KL Kepong, you have to read Ooi Tee Ching's online article.in the Business times today.(16 December 2010)

Here is his article.

Kuala Lumpur Kepong's 19 per cent owned Yule Catto has bought PolymerLatex for RM1.85 billion

Kuala Lumpur Kepong Bhd (KLK) , which owns 19 per cent of Yule Catto & Co plc, is set to tighten its grip on the world’s supply of nitrile latex following the British firm’s 443 million pounds (RM1.85 billion) purchase of Germany’s PolymerLatex Group.

Chemical maker Yule Catto, listed on the London Stock Exchange, is already the owner of the Synthomer Group’s polymers business.

The PolymerLatex acquisition will bring together the world’s two biggest suppliers of butadiene or nitrile latex with a combined turnover of more than 1.2 billion pound and more than 2,000 employees.

Synthomer’s unit in Malaysia runs a 130,000-tonne per year nitrile plant in Kluang, Johor.

On the other hand, PolymerLatex operates a 100,000-tonne a year nitrile latex plant in Pasir Gudang, Johor.

Nitrile latex is used mainly to make synthetic rubber gloves.

KLK executive director Datuk Lee Hau Hian said the purchase will strengthen Yule Catto’s core business.

“It will allow Yule Catto to achieve cost synergy in research and product development,” Lee told Business Times yesterday.

Asked if a bigger sized Yule Catto could lead to price-fixing of nitrile latex, Lee said: “No, it will not because it takes two to make a deal. Both Yule Catto and nitrile glove makers must be happy in order for the industry to grow”.

Hartalega Holdings Bhd managing director Kuan Kam Hon said Yule Catto’s acquisition is a good thing for the former.

“I don’t think there’ll be any issue of price-fixing because there is no monopoly. The market is becoming bigger and we see new players from South Korea and Taiwan,” he said when contacted yesterday.

“When we source for nitrile latex, it’s not a decision based solely on price. Technical support is very important,” Kuan added.

Hartalega is the world’s largest nitrile glovemaker and is the biggest consumer of nitrile latex in Malaysia.

Yule Catto is issuing rights shares to fund the PolymerLatex purchase. Its investors are offered four new shares for each three they currently own at 116 pence.

KLK, in a filing to Bursa Malaysia on Tuesday, said it will take up all its rights.

This means the company will pay RM209.8 million for its portion.

Yule Catto chief executive Andrew Whitfield reportedly said the enlarged group could compete more effectively in a consolidating emulsion polymer market.

He expected the deal to allow it to achieve STG20 million (RM98.8 million) in cost savings.

So, if you are watching how KLK is performing in the medium term, this nitrile investment could be a net contributor of strategic significance.

KFC: Gobbling up Profits Like a Turkey

Imagine this!

For the first nine months of 2010,KFC Holdings (M) Bhd has amassed an income of more than RM1.83 billion.

Since January 2010, 34 KFC restaurants have been built.By the end of 2010, another 38 more new KFC restaurants will open its doors to Malaysians. The investment outlay for the new restaurants is RM45 million. Then in 2011, another 25 restaurants will open at a development cost of RM60 million. Of these 15 will be drive-ins.

It cost  about RM3 million to build a KFC drive-in restaurant compared to RM1 million for a normal one.

Currently, KFC has 511 restaurants in Malaysia and more than 69 in Singapure, Brunei and India .Some  18,000 workers are employed by KFC.

According to an KFC spokesperson, "Apart from operating the KFC restaurants, the company is involved in retail activities through the supply network of chicken-based products under the Ayamas brand, the Ayamas Shop and Restaurant RasaMas.

"We are also involved in the breeding, processing and hatching of chicken eggs, apart from additional business such as a bakery and sauce production," he explained.

With more KFC outlets to be opened in India and Cambodia, the fortunes of KFC looks better with each passing year.

Currently, KFC trades at RM3.80 per share. It should go back to its peak at RM4.50 very soon.

The Contrarian Winner

A year ago,in November 2009,two of the richest men indicated that the global economic panic was over and it was time to start going into quality stocks.

Despite lingering shocks from the  longest, deepest recession since the Great Depression, they vouched that capitalism is still alive and well.

Warren Buffet assured us that "The financial panic is behind us," and recently called for an "all-in wager" on the U.S. economy by acquiring railroad Burlington Northern Santa Fe.

He added that "The bottom has come in stocks. Don't pass on something that's attractive today."

Sitting facing each other in an auditorium filled with nearly 1,000 cheering people at Columbia University in New York, the CEO of Berkshire Hathaway Inc. and Microsoft founder Bill Gates fielded questions from Columbia Business School students on the recession, investing and what's the next Microsoft.

They were the two to provide the first reassurances that the U.S. economy had not collapsed since the last time the two sat in front of a student audience, in Nebraska in 2005.

"We proved that we can make mistakes," said Gates.

"But the fundamentals of the system, a marketplace-driven system where we invest in education and a great infrastructure for the long-term, that's continued."

Even in the country's "darkest hour," he said, American businesses were still innovating.

"Last fall was really blindsiding," Buffett said later.

Still, "I did not worry about the overall survival of our economy."

The worst recession since the 1930s may be over, but the recovery isn't expected to be strong enough to stem job losses and get businesses hiring again.

Employers shed a net total of 190,000 jobs in October, a government survey showed Thursday.

It was the 22nd straight month of losses.

And the unemployment rate jumped last month to 10.2 percent, a 26-year high.

Buffett also commended the Bush administration's actions last September, saying "only the government could have saved things" after the collapse of Lehman Brothers triggered the freeze-up in credit markets and panic on Wall Street.

In the future, however, Buffett said "there should be more downside to the head of any institution that has to go to the federal government to be saved for reasons of the greater society. And so far, we have been better at carrots and sticks in rewarding CEOs at the top. But I think some more sticks are called for."

The two endeared themselves to the audience with tips.

Buffett exhorted students to "marry the right person" and said, "The worst investment you can have is cash."

Gates, meanwhile, said he sees big opportunities in environmentally friendly energy and medicine.

"Capitalism is great," he said.

So,those who heard their advice have definitely made a pile despite the sovereign debt issue in Europe and the silly fracas between the two Koreas.


Did you?

KFC-Two Bidders Come Awooing

Fast on the heels of the Idaman bid for QSR, came Carlyle, a private equity fund is offering a whopping RM1.9b for QSR.

Kulim said this private equity firm had offered to acquire QSR Brands for about RM1.94 billion, topping a previous offer from a company linked to tycoon Tan Sri Halim Saad.

Carlyle Asia’s offer of RM6.70 a share for the majority owner of KFC and Pizza Hut in Malaysia is 20 per cent more than Idaman Saga’s offer of RM5.60 a share earlier this week and QSR’s current stock price.

Kulim, which gets about 60 per cent of its profits from its plantations business, holds a 55 per cent stake in QSR Brands.

The sale of QSR Brands will provide a quick injection of about RM1.07 billion for Kulim, which is owned by the debt-laden state investment arm, Johor Corp.

QSR’s sale will automatically trigger a general offer for KFC Holdings, the jewel in QSR’s stable of companies. KFC, the 51 per cent-owned subsidiary of QSR, is the present holder of the Kentucky Fried Chicken franchises in Malaysia and Singapore.

In a statement to the local bourse, Kulim said QSR and its subsidiaries will not raise capital or declare dividend, while  Carlyle conducts due diligence on the company.

Carlyle, a US buyout fund with US$90.9 billion (RM281 billion) in assets under management, has been eyeing deals in emerging markets of Asia and Africa.

Earlier this year, it had raised an additional US$2.55 billion for deals in Asia, taking the total of Carlyle capital committed to Asia outside of Japan to more than US$5 billion.

So, is the Colonel crowing for a better price offer apart from these two suitors?

YTL Corp, the Juggernaut

In an interesting corporate development,YTL Corp has divested all its assets and property projects in Malaysia and Singapore to its its 60.72%-owned unit, YTL Land. The disposal will bring in a substantial RM476.05mil to YTL Corp.

The disposal consideration and settlement of the outstanding intercompany balances of RM476.05mil is to be satisfied by the issuance by YTL Land of RM253.03mil nominal value of 10-year 3% stepping up to 6% irredeemable convertible unsecured loan stocks (Iculs) at 100% of nominal value of RM0.50 per Iculs and the remaining RM223.02 in cash.

In tandem, YTL Land would also undertake a renounceable rights issue of Iculs to raise funds to partly satisfy the cash portion. YTL Corp would subscribe in full for its entitlement under the proposed rights issue of Iculs.

The conversion price of the Iculs has not been fixed. The Iculs and the new YTL Land shares to be issued arising from the conversion of the Iculs would be listed and quoted on the Main Market of Bursa Securities.

Under the share sale agreements, YTL Corp would dispose of its 100% stakes in Arah Asas Sdn Bhd, Satria Sewira Sdn Bhd, Pinnacle Trend Sdn Bhd, Trend Acres Sdn Bhd and its entire 70% stake in Emerald Hectares Sdn Bhd to YTL Land.

Meanwhile, YTL Corp's wholly-owned units YTL Singapore Pte Ltd, Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd also entered into share sale agreements with YTL Land.

YTL Land had also entered into a land deal with YTL Land Sdn Bhd.This is in line possibly with YTL Corp's ongoing strategy for its principal business arms to own and operate the relevant assets within their business spheres in order to leverage on operational and developmental efficiencies and synergies.

Accordingly, the disposals are aimed at unlocking the value of YTL Corp's investments in its property units and projects.

YTL Corp would continue to participate in and benefit from the development, potential earnings and capital appreciation of the land owned by the disposed firms through its existing shareholding in YTL Land and its interest in the Iculs and/or the YTL Land shares arising from the conversion of the Iculs.

YTL Corp said the net cash proceeds from the proposed disposal and the settlement of outstanding intercompany balance would be utilised for general working capital purposes.

Until such time as the net cash proceeds are utilised, they will be held in interest-bearing bank deposits, money market instruments, deposits and/or other realisable short-term investments pending further evaluation of the strategic options and opportunities of YTL Corp and its subsidiaries, it said.

So, it looks like the biggest non-GLC on Bursar just got bigger.......and this elephant may just fly soon.

MRCB's Anti-climax Merger

Just when you thought that MRCB has finally came out on its own to be a branded corporate entity,  a merger is now on the card  to create a mega property company by fusing it with IJMLand.

The market did not like it and shunned the so-called corporate development. Instead prices of both IJMLand and MRCB fell when they resume trading.

Investbank Bank OSK has reduced MRCB to a 'neutral' recommendation on the basis that the details of the proposed merger with IJM Land Bhd have yet to be finalised. If so, I think OSK is merely jumping the gun with this silly pre-judgment.

The new MRCB and IJM Land proposed merger will make it the second largest property player with revalued asset of  RM6.5 billion.

According to OSK, there has yet to be a decision on whether the proposed merger will be satisfied via a purely share swap for shares in the newly incorporated company (newco) or a combination of both shares in newco and cash,

According to the OSK report,"The RM2.30 offer price for MRCB offers only seven per cent and 12.2 per cent upside from the last closing price and our previous fair value respectively.As such, it is viewed that the  offer price as somewhat fair and yet not that attractive, owing to the rather limited premium or upside."

Nevertheless, it did not rule out the possibility of MRCB's share price overshooting the offer price over the short term, driven by the excitement over the proposed merger.

Both parties are expected to enter into a definitive merger agreement within three weeks from the date of the MoU.

On the longer perspective, I think the EPF strategists  are gunning for a large hoard of cash before they embark on the Sungai Buluh mixed development property land development scheme and this could be one of its proposed pipeline..

Fund Inflows to Bursar to come from the US?

I append an online news item by Lee Wei Lian of Malaysia Insider. I think this is important for those who still wants to dabble in the stock market.

"Bank Negara said it is not currently considering implementing capital controls to deal with inflows of funds due to massive liquidity in western economies that are seeking higher returns in faster growing emerging markets.

Bank Negara Governor Tan Sri Zeti Akhtar Aziz noted today that large and volatile capital flows into regional economies could pose risks to macroeconomic policies and financial stability but said that Malaysia was in the position to intermediate the flows and had also gained experience from the 1997 Asian financial crisis.

“We are not considering any kinds of restrictive measures,” she said. “If the need arises, we will act collaboratively with other central banks in the region.”

The US government has announced plans to pump US$600 billion (RM1.86 trillion) in liquidity into its economy by June next year in a bid to boost its economy.

Critics of the plan contend that much of that money will find its way to emerging markets due to higher interest rates and better performing stock markets, potentially creating asset bubbles in those countries.

Gross inflows of foreign direct investment grew to RM8.9 billion in the third quarter from RM5.3 billion in the second quarter, reflecting larger inflows of equity capital and drawdown of intercompany loans, Bank Negara said today.

It added that portfolio investment in the third quarter registered a larger net inflow of RM9.3 billion compared with RM6.2 billion in the previous quarter due to foreign interest in the local capital market, particularly the equity market.

The Advent of Spoonerism

Have you ever notice that sometimes we say words wrongly by swapping initial consonants or syllables? For instance, instead of saying ‘slip of the tongue; we say instead, ‘tip of the slung’. Similarly, you may have heard friends saying ‘nix the muts’ when they actually wanted to say, ‘mix the nuts’

This kind of oral abberation is called spoonerism in English. Spoonerism was named after Reverend William Archibald Spooner who was prone to muddle up his words while giving sermons as he could not see properly. Some of his fumbles were extremely laughable. 

He was heard once to have said ‘It is kisstomary to cuss the bride.’ Then there was that time when he said 'Pardon me, padam, this pie is occupewed. Can I sew you to another sheet?’

Then there was this lecturer in college who was also into spoonerism. There was a time when he said to a student, "You have hissed all my mystery lectures!’ Having tasted two worms, you will have to leave by the next town drain".

Thent there was that school disciplinary teacher who chastised two boys ‘for fighting a liar’ when he actually meant ‘lighting a fire!’

And what about some people  who habitually said raining ‘dats and cogs’ when they could not attend classes at college or go out?

So, have you heard of any good spoonerisms lately?

Capital Market:A Better 2011

The outlook for fund raising activity in the capital market looks promising in the first-half of next year, so says Maybank Investment Bank . 

“Judging from the last two quarters and going forward, the next first-half of 2011 is promising. We have seen the success of the recent new listings or initial public offerings (IPOs),” its Chief Executive Officer Tengku Datuk Zafrul Tengku Abdul Aziz said.

The new listing are that of Malaysia Marine And Heavy Engineering Holdings Bhd on October 29, and Petronas Chemicals Group Bhd which is scheduled for listing on November 26.

Tengku Zafrul said the local stock market is active based on the market volume and value traded, and also the high level of investments from foreign investors, in terms in foreign shareholdings and participation.

“Fund raising activity would continue in the first-half of 2011 based on new IPOs in the pipeline. We expect positive growth as the pipeline is better than what we have done so far this year,” he said.

Tengku Zafrul also said there are several new listings in the pipeline and this is healthy, adding that the trend would likely to continue.

He said the market also saw placement activities taking place this year namely the Telekom Malaysia Bhd and Malaysia Airports Holdings Bhd, adding that placement exercises would boost trading activity.

“Hopefully, with the continuation of these placements by Khazanah or other bigger investment companies, will create a bigger free float for investors to come in and trade in the stock market.

“The liquidity is there but free float is not as big as other developed countries because our shares are tightly held by big institutions. So there are no opportunities for foreigners or private investors,” Tengku Zafrul said.

He said with these kind of placements in the market, it will not only offer an opportunity to foreigners and private investors, but will also boost the share price of the company.

Tengku Zafrul said the local stock market continued to be strong not only in volume but also the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) was at a healthy level. “Reaching 1,600 is not impossible,” he said.

The FBM KLCI closed 6.24 points higher at 1,506.05 yesterday compared with last week’s 1,499.81.

Tengku Zafrul said among the factors that would continue to support the local bourse are rising foreign liquidity inflow, particularly, from the United States, Europe as well as Asia, amid a higher return in this region.

On the Malaysian economy, Tengku Zafrul said the Gross Domestic Product (GDP) for this year would be around seven per cent and growth would moderate next year at six per cent. Bank Negara Malaysia is scheduled to release third-quarter GDP figures next Monday.

“Looking at that, the market will consolidate. But for the first six-months it still looks strong. I do not think there will be a double-dip recession as the economy is growing and the market is performing well,” he added.

Care to Invest in Careplus?

Careplus Group Bhd, a rubber glove maker,is enroute for a listing on the ACE market of Bursar.

At its prospectus launch yesterday, it stated its aim to double revenue by 2013 from the RM41.86 million registered for the year ended January 31 this year. This is indeed an aggressive expansion plan.


Over the next three years, it aims to almost quadruple its production capacity to more than 1.65 billion pieces of gloves, from 420 million pieces currently.

The expansion will be done in three phases namely , commissioning in first quarter 2011, third quarter 2010 as well as third quarter 2013.Along with its exponential jump in capacity,Careplus is confident that its output will  easily be absorbed by an expanding global market.

Its CEO,Lim Kwee Shyan explains it this way.

"First of all, we are a very small player, with less than 1 per cent market share. So, even if we double up (our capacity), it wouldn't even touch 2 per cent. So, I believe there will be a market that we could undertake to support our increasing capacity,"

Lim added that in terms of doubling or tripling the company's supply to the global market, it is still a very small portion in the total gloves requirement.

"The global gloves market is expected to grow at a 8 per cent to 10 per cent rate annually, so that 8 per cent to 10 per cent growth is a very huge quantity."So that itself will give a big room for a player like us," he said.

The company aims to raise about RM15 million from the initial public offering exercise, involving the public issue of 65.05 million new shares of 10 sen each at 23 sen a share.

Of the 65.05 million shares, 10.5 million will be available for public application and 15.65 million for application by directors, employees and business associates. The remaining 38.9 million will be reserved for placement to selected investors.The proceeds will be used to expand Careplus' production capacity, which includes buying machinery and equipment for production lines.

"In terms of having the economies of scale, we need to go into that expansion phase. We cannot get the cost efficiency if we work on one or two production lines," Lim added.

Currently, the firm produces only natural rubber gloves. The commissioning of the new production line next year will allow it to also produce nitrile gloves.

"We are focused more on latex gloves and will eventually start production of nitrile gloves, in line with our expansion. This new investment has given us an opportunity to grow, which we have not been able to do so over the past five to six years.

"With our strong customer base, I believe that it is possible for us to achieve growth and attract newer customers in future," non-executive chairman Peter Yew explained.

The firm is expected to be listed on the ACE Market on December 6.

So, what do you think its opening price will be like?. You know, the market is always right...

Time Dotcom Dumped on Restructuring

It was a prima donna of a share for sometime, being preferred to Time Engineering. While Time Engineering hovered around the middle 40 sen range, Time Dotcom (TdC) catapulted upwards by 54% into the 70 sen price range.

Then, whammo! Both counters were given short shrift and dumped summarily by investors who see the reorganisation and purchases as intrinsically bad!

While investors acted negatively, some analysts however felt TdC’s proposals were fair to the company.

TdC’ shares slumped a massive 14 sen to close at 63 sen yesterday. Trading in its shares resumed yesterday after being suspended since last Friday. TdC was the most heavily traded stock with 107.9 million shares done.

Time Engineering's price melted down 8.5 sen to 43.5 sen.

An analyst said the market may be viewing the company’s announcement unfavourably due to the dilution impact from the issuance of new shares to pay for the acqusitions.

“There is also lack of clarity on whether the acqusitions are earnings accretive,” he said.

Another concern was the related party nature of the transactions, as the companies being injected into TdC belong, in part, to TdC’s CEO Afzal Abdul Rahim.

However, it should be noted that Afzal as well as Khazanah Nasional Bhd (the latter also partly owns some of the assets being injected into TdC) will not be voting on the deal, leaving minorities the full power to decide on the matter.

While the deal will make Afzal the single largest shareholder of TdC, this has been a stated intention of Khazanah in its earlier announced divestment plan of TdC.

“Afzal is getting paid mostly in shares rather than cash. This suggests that is in this for the long haul,” said a dealer.

TdC announced on Monday that it proposed to buy three companies for RM339mil. The three companies were AIMS Group, which would be acquired for RM128mil, of which RM38.4mil would be in cash; Global Transit Communications Sdn Bhd (GTC) for RM106mil in stock and Global Transit Ltd (GTL) for RM105mil, of which RM52.5mil would be in cash and the balance in shares.

The acquisitions would be financed by RM90.9mil in cash and RM248.1mil in shares, and is expected to be completed in six months. The analyst viewed the acquisition price of the deals as fair, citing that these companies were in fast growing industries.

TdC is paying between 15 times and 23 times historical price earnings for GTC and AIMS, while it is taking over GTL (the owners of a 10% stake in the Trans-Pacific Unity Cable connecting Japan and the United States) for RM105mil.

“Its not exactly cheap, but these companies are growing fast. In the case of GTC, it recorded a loss of RM79,613 for the year ended Dec 31, 2008. For the nine months to Sept 30, 2010, it made RM5.11mil. AIMS is also growing. [ This is good if sustainable]. If these companies continues to grow at a 20% rate over the next few years, there may be no dilution impact at all,” the analyst said. [What a long haul!]

Under the capital restructuring, TdC announced a capital repayment of 2 sen per share, or a total of RM50.6mil.

On the proposed share consolidation, five shares of 10 sen each would be consolidated to one share of 50 sen each.

It means that if you currently have 5 lots of 1000 shares at RM1 par,then the conversion will firstly result in you having 5 lots of 1000 shares at 10 sen par. Next, you will have to undergo a conversion exercise where every 5 new shares you have will be consolidated into one 50 sen share,effectively rendering you to own 1 new lot of 1000 shares with 50 sen par. Is it worth it?

“The share consolidation is actually positive as it shows that management wants to institutionalize the shares,” said a fund manager.

With the consolidation, the issued and paid up capital of the company remains the same at RM253.08mil, while the total number of shares would be reduced five times lower to 506.16 million shares of 50 sen each.

The dealer said that with TdC consolidating its assets to create Malaysia’s and in future Asean’s prime wholesale data and backhaul network, TdC would be able to bundle together attractive packages at competitive prices for both domestic and regional telco companies and services providers.

The dealer added that with the onset of increased data traffic driven by new mobile devices and technology upgrades, demand for data would only grow stronger. He said the deals would position TdC on solid footing to benefit from the trend.

Looks like the people in the know are in this leverage buy-out and indicative that Khazanah is actually divesting to favourable parties.

Will the new owners be able to bring in potential business as it projected?

That I want to see.

CIMB-A Re-Rating Again

AmResearch Sdn Bhd has upgraded CIMB Group Holdings Bhd. on the expectations of improved non-interest income, particularly from overseas capital markets in Asia.

Case in point is its appointment as one of 11 book runners for AIA Group Ltd’s Hong Kong initial public offering which is sufficient testimony to its growing regional investment banking franchise.

As such, CIMB’s fair value was raised to a whopping RM9.60 from RM7.80, according to the report.

CIMB shares are treading water at RM8.30 currently.

Mulpha International-Hidden Assets

For those interested in this penny stock, this is a write-up from Risen Jayaseelan of the online STAR.

"Property developer and investment firm Mulpha International Bhd (MIB) has come to be better known in Australia than in Malaysia, says its executive chairman Lee Seng Huang.

"Due to the quality of our assets Down Under, we are better known in the financial and property circles there," he says in a recent interview with StarBiz.

"In Malaysia, MIB suffers from legacy issues and is still perceived by some as being a trading company. But we have moved on to be a regional player. MIB is the largest Malaysian property player in Australia today," he says.

MIB's Aussie property portfolio (owned by its wholly owned subsidiary Mulpha Australia Ltd) is today worth around A$1bil (RM3.1bil), says Lee. The prized assets include a few five-star hotels such as the InterContinental Sydney, a resort-styled property development called Sanctuary Cove in northern Gold Coast that has a gross development value of around A$2bil (RM6.2bil) and Hayman, a five-star private island destination in Australia's Great Barrier Reef.

An aerial view of Sanctuary Cove, a resort-styled property development by Mulpha.

 

Topping all that is MIB's 25% stake – making it the single largest shareholder – in FKP Property Group, Australia's leading property investment company. The Australian-listed FKP is also the largest private sector owner-operator of retirement villages in Australia and New Zealand.

All these assets were acquired by Mulpha Australia between 2002 and 2004. FKP and MIB were recently in the news in Australia over rumours that FKP's second-largest shareholder, Stockland, itself a leading Australian property developer, could be seeking to take over FKP.

Lee says MIB is not keen on selling its shares in FKP as there is still a lot of upside potential in the latter. Talk of the takeover is said to have led to the slight increase in FKP's share price in recent weeks, pushing it up to around 90 Australian cent a piece.

Interestingly, MIB's 25% stake in FKP alone has a market value of A$275mil (RM855mil). MIB's other significant strategic stake in a listed company is its 22% holding in Mudajaya Group Bhd. MIB's Mudajaya stake has a market value of some RM350mil.

Combined, these stakes are worth around RM1.2bil, which is close to the market capitalisation of MIB of RM1.27bil at today's prices.

"There is a lot of embedded value in MIB," says Lee.

UBS Malaysia, in a recent note to clients, commenting on the potential bid for FKP by Stockland, highlighted the fact the MIB seems to be undervalued. "MIB looks undervalued currently. Its market capitalisation is around RM1.27bil, which is almost equivalent to its stake within FKP and Mudajaya, hence everything else comes free," UBS said.

However, it should be noted that MIB has slightly over RM1bil in debt. Still, that debt level has not been a concern for MIB because of its huge asset base. In any case, those assets that are seemingly "free" to MIB investors, are looking rosier by the day. In Australia, MIB is poised to pocket over A$100mil (RM309mil) if the sale of its Hilton Airport Melbourne hotel goes through.

Lee has confirmed that the hotel had been put up for sale and that the compay is in advanced talks with potential buyers but he declined to comment on pricing. News reports in Australia had put the figure at about A$100mil.

MIB's Hayman resort is also enjoying a new income stream from the sale of a few plots of land on the island as exclusive holiday homes.

Lloyd Donaldson, head of hotel investment for Mulpha Australia, said the company had secured the necessary approvals to build 42 homes on Hayman Island. So far three have been sold at prices from A$15mil (RM46.4mil) to A$20mil (RM61.4mil), depending on the size of the house. These prices are believed to be a record high for holiday homes in Australia.

Then there's the Sanctuary Cove, which was acquired by Mulpha Australia in 2002 for A$208mil (RM644mil). According to Sanctuary Cove executive general manager, Alison Quinn, more than A$60mil (RM186mil) of property sales were achieved in the first half of 2010.

MIB also has Leisure Farm Resort, it's prized Malaysian asset, a vast award-winning resort-styled residential development in Johor. Leisure Farm is strategically located within Iskandar Malaysia and is only a 15-minute drive from Tuas in Singapore via the second link.

Leisure Farm reported a rise in profits in the first half of 2010 to reach RM8.6mil from RM2.2mil in the previous corresponding period.

According to MIB, sales of its Bayou Water Village (one of its seven themed residential precincts) increased after its completion in the last quarter of 2009, with 18 of such units having been sold in the first half of this year.

Analysts also say that Leisure Farm is likely to benefit from the fact that since early this year, Malaysia and Singapore have agreed to cooperate on the development of Johor.

MIB has another 600 acres of land in Leisure Farm to develop.

Back to Australia. To be noted is the fact that MIB has had to equity account for losses stemming from writedowns of its Australian assets, mainly FKP. This is because under all assets are required to be marked to market under Australian accounting rules. Hence when the global financial crisis hit, the values of MIB's and FKP's assets had to be written down.

"FKP has a huge retirement asset portfolio. During the better years, these assets were written up but when the crash came, they had to write it down. These are accounting losses stemming from FKP and does not mean that FKP is not doing well," Lee explains.

When asked if there was going to be any more writedowns of FKP's assets that would impact Mulpha's profits, Lee says that is unlikely. "We have indicated such to the market. The cycle has turned and all the asset values are slowly increasing. What we went through was a period of extreme conservatism by the valuers in Australia as a whole."

When asked about dividends, Lee says MIB's board is reviewing its policy regarding dividends. MIB has not been paying dividends but Lee says that by the year-end, the company should have a clear strategy on dividends.

"Previously, when we had no dividends, we were conducting massive share buybacks. As we are not doing share buybacks at the current price of MIB shares, we should be looking at using that money for dividends."
Dividends would tie in nicely if MIB is able to unlock the values of its assets and use the proceeds for rewarding shareholders.

However, MIB is also inclined to reinvest its profits. "MIB's investment philosophy is to maximise the value of its assets and recycle that money into other assets that can generate more value," says Lee.

Bursa: Moving Bullishly Upward

I have taken this article from the On-line STAR. It is written by Fintan Ng and Yvonne Tan.If you are closely monitoring the market or getting more involved in it, this is a good piece to read to get a broad feel of the possibilities of the Bursar sustaining its rise or otherwise.

" The local bourse’s benchmark FTSE Bursa Malaysia KL Composite Index (FBM KLCI) continued to chart highs that were last seen on the eve of the global financial crisis in early 2008 when it closed 0.44% higher at 1,526.53 yesterday, surpassing the 1,524.69 achieved on Jan 14, 2008.

Among the companies that helped boost the index were Malayan Banking Bhd, CIMB Group Bhd and telecommunications stocks such as Maxis Communications Bhd and DiGi.Com Bhd.

But can the market’s strong surge be sustained?

Analysts said that since the pace of economic growth had slowed in G3 economies – the United States, the European Union and Japan – with the outlook for the forseeable future continuing to look unexciting, investors were now looking to other markets and asset classes to place their money.

Tuesday's close

 

Year-to-date, several Asian markets including Indonesia and the Philippines have broken passed their record levels while the FBM KLCI has risen more than 20% since the beginning of the year.

Besides emerging-market equities, commodities have also seen their prices go up.

Spot gold surged to an all-time intra-day high of US$1,414.85 an ounce in London trade while crude oil has risen to near US$87 per barrel.

HwangDBS Investment Management Bhd chief investment officer David Ng said at a briefing yesterday that the local market could very well experience the bullrun of the early nineties when stocks were traded up to 30 times price-to-earnings ratio largely as a result of all the cheap money.

Monday's close

 

He said that Asian emerging markets’ fundamentals such as positive demographics, young population, urbanisation and rising middle class would continue to drive domestic demand.

Ng said the “sweetest place” to park money was in this region as the liquidity created by accommodative monetary policies in developed economies chased higher returns in this part of the world.

However, Morgan Stanley Research analyst Gerard Minack said in a Nov 5 report that there seemed to be a disconnect between the markets and the macroeconomic outlook.

He said what was not clear was whether the US Federal Reserve’s US$600bil plan to purchase government bonds over the next eight months to boost economic growth would work fast enough to significantly reduce recession risk.

Minack asked how long could markets run on the Fed’s latest stimulus without confirmation from macro data that things were improving.

“I’d characterise the macro data as mixed over the past month or so. More telling was the upside-down reaction to incoming news.

“For example, equity markets rallied after the weak September US non-farm payroll report because bad data meant more stimulus,” he said.

Minack pointed out that the S&P 500 finished lower after the stronger-than-expected Institute for Supply Management’s manufacturing index was revealed.

“It’ll be important when markets return to a good-news-is-good or bad-is-bad behaviour,” he said.

ECM Libra Investment Bank Bhd research head Bernard Ching told StarBiz that the Fed’s quantitative easing would merely stabilise developed economies and prevent them from spiralling into a double dip or deflation.

“The stimulus will not be able to change the outlook on US growth seeing as the jobs lost to-date will take six or seven years to replace,” he said.

As a consequence, Ching did not see demand picking up in the G3 economies as debt levels were high and consumption was “tepid”.

Meanwhile, UOB KayHian (M) Holdings Sdn Bhd research head Vincent Khoo said emerging markets,
including Malaysia, would continue to have a positive near-term market outlook until inflationary pressure brought on by the rise of commodity prices reversed the low-interest rate regime.

“The near-term market outlook will be positive, at least through the next few months, but if the threat of inflation is higher, central banks may be less accommodating,” he said.

Khoo cautioned that crude oil price reaching US$100 a barrel would cause some worries.
“Commodity prices just need to be carefully monitored to gauge for inflation,” he added.

KFC Off-Shore

For those following my earlier post on KFC, here are more tidbits of information.

For India, there are now 3 outlets in operation.

On the planning board, KFC expects to have 17 outlets in the subcontinent by the end of next year.

They opened the first at Pune and now they have two in Mumbai.

According to a KFC spokesperson, of the 17 outlets, five would be in Mumbai and these will all be acquired from master franchise holder Yum! Brands Inc. KFC will acquire two outlets in Pune from another Indian franchise holder, Kernel Food Pte Ltd.

Ali said KFC Holdings would open four more outlets of its own by year-end. Of the four, two would be in Mumbai, one in Pune and one in Aurangabad – all these cities are located in the state of Maharashtra, which is on the western part of India.

“We want to build a critical mass as soon as possible. By the end of this year, we will have a total of nine outlets which will involve an investment of about US$9mil,” he said.

He added that KFC Holdings would open eight outlets next year costing a total of US$10mil.

KFC expects a 15% yearly return to investment from the Indian operations. 

Maharashtra has a population of about 100 million, of which 21 million lives in its industrial and financial hub Mumbai and 5.7 million in its education-cum cultural centre Pune.

The Indian consumer market is also considered to be under-developed, having an estimated 1,200 brand restaurants in a country with over 1.13 billion, of which 50% is under 25 years old.

The spokesperson is impressed with the sales recorded in India, saying it should be faster here than in Cambodia.

On whether the company would venture into poultry and chicken-breeding business to support its operations in India, he said: “We’ll do things one step at a time. Maybe we’ll do it in the long run.”

He said KFC Holdings would focus on Maharashtra before looking at other states in India. At the moment, the company is only allowed by YUM! to operate in Maharashtra.

KFC Holdings also announce that it would open six outlets in Cambodia in 2011, with each outlet expected to cost RM1mil. It now has seven in that country.

He also said the company would open a Pizza Hut outlet in Phnom Penh soon.

YTL-Biggest Non-GLC?

Hear ye! Hear ye!

YTL Corp has a hefty cash reserves of  RM10.8bil!

With this chunky treasure trove, it is little wonder that YTL Corp Bhd has emerged to be the largest non-government-linked company in this year’s Malaysian Business Magazine Top 100 Companies survey of Malaysia’s largest listed companies.

YTL Corp said the group moved up to No. 5 from No. 20 previously in the list of Malaysia’s largest listed companies while its subsidiary, YTL Power International Bhd, soared 23 rungs to secure the eighth spot.

With its cash reserves amounting to about RM10.8bil, analysts said YTL Corp could easily acquire assets up to US$25bil-US$30bil without the need to raise more money.

It had been reported that the group was looking at acquisition opportunities in the water utilities, power generation and cement businesses, especially in China where it wanted to grow its presence in cement and power generation.

YTL Corp said that riding on its long history and impeccable track record, the group’s portfolio of businesses had grown tremendously over the last decade and now spanned across Asia-Pacific and Europe.

This strategy had generated excellent returns for shareholders, successfully contributing to an annual average compounded growth rate of 55% over the last 15 years.

YTL is here to stay,my friends...........

Kentucky Turns Indian Juggernaut!

If there is any stock that you want to pick in the Bursa Malaysia, do consider KFC Holdings. It is definitely going places!

Feeling the density,intensity and competitiveness of the operations at home, KFC has trained its sights on the Indian sub-continent.

In October,after opeining close to 500 outlets in Malaysia, KFC opened its third branch in India in Mumbai again-right in the the hub of both entertainment and hi-finance. This is its second branch in Mumbai . It opened the first in June.

Both these outlets were opened on the heels of the opening of an outlet in the educational-cum-cultural hub of Pune which opened in April.

KFCH’s vision is to become the largest integrated food services group in the Asia-Pacific.

India is KFCH’s first venture outside South-East Asia. The company now has 75 outlets in Singapore, eight in Brunei and nine in Cambodia.

KFCH views India with great optimism because the world’s second-most-populous country offers sustainable business growth.

A KFC spokesperson says the Indian consumer market is considered underdeveloped, as it now has about 1,200 brand restaurants in a country with a population of about 1.13 billion.

There is a large consumer base in India, with its emerging middle-class driving consumption for food and entertainment, while 50% of the population are under 25 years old.

“KFCH stands to reap growth prospects for strong organic growth in India, with Mumbai and Pune having a combined population of about 26 million,” he said.

“We can emulate KFCH’s success of a fully integrated operation, delivering consistent support services, reliable source of quality chicken at competitive prices and most importantly, its ability to supply the growing demand for halal chicken,” he adds.

In India, KFCH sources it halal chicken from a local processing plant, Venky’s India Ltd.

The KFC spokeperson said that the Indian venture would also allow KFCH to diversify its earnings base besides reducing its dependency on the Malaysian and Singapore markets.

KFCH’s inroad into India was made possible following an offer from Yum! Brands Inc, the master franchisor of the KFC brand, to develop the franchise in the state of Maharashtra, where both Mumbai and Pune are located.

KFCH will focus on developing its chain of outlets in Maharashtra before looking at other states in India, noting that Maharashtra, which is on the west side of the subcontinent, offers vast opportunity with a population of about 100 million.

KFCH sees exciting times ahead in India. The company plans to have a total of 17 outlets by the end of next year, including five in Mumbai that it would acquire from Yum! Brands.

KFC does not rule out the possibility of KFCH acquiring the remaining KFC franchisees in Mumbai. Apart from the five KFC outlets to be acquired from Yum!, there are now four stores owned by three other franchisees in Mumbai.

“Mumbai and Pune will be our launch pad into India. We’re here to stay for the noble and collective good of all,” he says.

Mumbai Chicken Pte Ltd chief executive officer Hezal Ahmad says KFCH’s outlets in India would be targeted mainly at the youth market. Mumbai Chicken is a member of KFCH.

He says it will also cater mainly to the high-income population which offers better profit margin.

KFCH has maintained its existing KFC image in its outlets in India. However, the interior of the restaurants has been designed to give the right ambience for the youth.

Hezal says total poultry consumption in India is growing by about 5.5% a year while consumption per person rose to 2.1kg in 2008 from 1.4kg in 2003.

However, the 2.1kg consumption per person is still much lower than Malaysia’s which stood at 38kg in 2008.

“The modern lifestyle, increasing number of fast-food outlets, higher number of youngsters and the availability of processed chicken products in the market are boosting chicken consumption in India,” he says.

According to Hezal, KFCH outlets in India will be located mostly in shopping malls with cinemas so as to get nearer to its target market and to capture a bigger traffic.

For example, its first and only outlet in Pune so far is within the Deccan Mall, which is a prime zone for eating and surrounded by 13 colleges.

Pune, a city about four hours drive from Mumbai, is home to about 90 colleges.

With a population of some 5.7 million, of which two million are students, it offered a huge youth market for KFCH to tap.

Hezal says KFCH outlets in India serve vegetarian and non-vegetarian food. The company is developing more non-vegetarian food to add to its menu.

Currently, non-vegetarian food contributes 95% of sales while vegetarian food 5%.

All KFCH outlets in India are run by Indians. Last year, the company sent 14 people from India to be trained as restaurant managers at its Malaysian outlets.


Expect KFC to bring home the Indian harvest soon!

Say Goodbye to Jill

Jill Clayburgh, that glowy beauty of the silver screen has passed on yesterday at the age of 66.

Jill specialised in roles as independent women emerging from the shadows of men.She was nominated for best-actress Oscars for her role in Paul Mazursky’s “An Unmarried Woman” in 1978 and for the comedy “Starting Over” opposite Burt Reynolds a year later.

In “An Unmarried Woman,” Clayburgh played Erica, a comfortable Manhattan wife and mother whose world comes apart when her husband, without warning, abandons her for a younger woman.

By the final reel, she embarks on a relationship with an artist, played by Alan Bates, but also finds her own inner strength, voice and independence.

Clayburgh won the best actress prize at the Cannes Film Festival for her performance.

Her roles during the late 1970s and early 1980s reflected the changes and challenges facing many women during that time.

“I guess people look at me and they think I’m a ladylike character,” she told the Times in 1982. “But it’s not what I do best. I do best with characters who are coming apart at the seams.”

Clayburgh also appeared frequently on Broadway and television. She received Emmy nominations for her performance as a prostitute in the 1975 TV movie “Hustling” and in 2005 for her role in “Nip/Tuck.” She also appeared as the mother of the title character in the hit series “Ally McBeal.”

“Her final film, “Bridesmaids,” has not yet been released.

We say au revoir to Jill.

ONOMATOPOEIA

Some words in the English Language imitate or suggest the source of the sound that it describes; especially animal sounds. For example a duck quacks, a dog barks, a lion roars and a cat meows.

Similarly, many words have been created from sounds created by objects.

So, we say

1.      the babble of a stream

2.      the beat of a drum

3.      the booming of a gun

4.      the ring of a telephone

5.      the clink of a coin

6.      the dripping of water

7.      the gurgle of a stream

8.      the hissing of steam

9.      the howling of the wind

10.  the jangling of chains

11.  the jingle of coins

12.  the lapping of water

13.  the patter of feet

14.  the screeching of brakes

15.  the slam of a door

16.  the toot of a horn

17.  the whack of a cane

18.  the singing of a kettle

19.  the bubbling of water

20.  the crackling of wood

21.  the creak of a hinge

22.  the lash of a whip

23.  the twang of a bow

24.  the wail of a siren