Decapitating GenM: Was It Systematic?

Yes, they have made mistakes before.

The latest foray into the UK may just be another bad deal given the more difficult gaming environment in Great Britain.

Yes, at the time of writing this blog, the Genting UK  suggested purchase has already been railroaded and approved at the EGM yesterday.

The purpose of this blog is just to find out just how much of the approximately RM6 billion reserve at GenM has been systematically whittled down.

Let us do our sums.

We will begin after the sell-off of a majority of shares in Star Cruises which originally cost the company USD442 million [RM1.42 billion].

The information I got was the coffers of GenM ex-Star Cruise sale of shares was slightly above RM5 billion. [If all the unnecessary purchases have not been executed, GenM would have close to RM6 billion by end of fiscal 2010.]

GenM then bought into 10% of Walker Digital Gaming for US$69 million (RM222 million)

Then last year, they arm-wrestled minority shareholders to acquire Wisma Genting and the Segambut property Oakland for RM284.1 million.

Now this takeover the UK operations using  more than one quarter of the GenM reserves.

And what about the USD50 million MGM notes. The money has to come from the reserves as well, right?

Then there is this gratis payment for the racino project at Queen's NY of USD380 million.

It looks like we have possibly burst all of the reserves given the feverish buy back of its shares recently as Treasury shares.

So, I do not see very much of the reserves of the RM5-6 billion left in GenM.

It has to start from square one, it seems.

What a whipping boy, GenM has turned out to be!

LTKM-A Counter to Watch?

From the answers given at its AGM today, it seems that LTKM  knows what it is doing besides being a low-cost egg farmer.

The highlights to consider will be the following.

The architecture glass factory will commence operations in early 2011. The market is huge for such glass as more green buildings come on stream. LTKM was fortunate to reduce costs on the project because of the weakening Euro in 2009. It shaved capex by 15%. It will take 3 years at least for LTKM to become a meaningful player  in this sector. For now, they are just expecting it to bring in a much needed diversified revenue stream.

The sand operations will possibly give a better performance. LTKM had some issues with the sand quality in Malacca but that is being overcome. Moreover the loss was because the housing industry in Malcca is not as vibrant as that of the Klang Valley.The second factory line will also be up and running soon and so sand supply will be another positive income source for LTKM.

In terms of dividend pay-out, there was some hoo-ha this morning at the AGM since only RM1 million was added to dividend pay-out. Dividend payout was 3% tax at 25% interim and  final at 7% single tiered.

Given the better prospects in 2010/2011, assuming the market is kind,expect LTKM  to perform.

Axiata's Dividend Policy Overture

Yes, Axiata has announced a string of impressive results for both its domestic operations as well as its foreign units.

As such, the company has also informed the shareholders to expect a 30% dividend payout of its earnings.

Alas, there was no pronouncement of any dividend payout at this juncture.

Registered net profit attributable to ordinary equity holders of the Axiata was up by 9.5% at RM576.82 million from RM526.84 million a year ago following improvements in all major operating companies.

Net profit was up 18.1%'' at RM675.51 million versus RM571.91 million a year ago. Revenue was RM3.85 billion compared with RM3.21 billion. Earnings per share was seven sen.

It said strong growth trends were seen across all major operating companies, again in almost all financial metrics. Revenue was up an impressive 20% year-on-year'' to RM3.9 billion from continuous overall performance from most operating companies (OpCos), particularly, Celcom, XL, Dialog'' and Robi.

'More substantially, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by an impressive 38% in the same period to RM1.8 billion, outpacing revenue, partly due to strategic cost initiative programmes implemented early last year,' it said.

Axiata said EBITDA margin improved 6.3 percentage points to 47% on-year. Profit after tax and minority interest was up by 9% on-year to RM577 million.

Regional mobile subscribers for the group saw strong growth up 39% on-year to 138 million.

Axiata also announced its dividend policy where it 'intends to pay dividends of at least 30% of its consolidated profits after taxation attributable to shareholders'.

It added that it would endeavour to progressively increase the payout ratio over a period of time, subject to a number of factors including business prospects, capital requirements and surplus, growth/expansion strategy, considerations for non-recurring items and other factors considered relevant by the board.

So, perhaps some dividends can be expected before year end.

CIMB: Malaysia's Most Valuable Asset

CIMB now has a market value of RM58 billion as at yesterday's closing price, compared with Maybank's RM57.5 billion

That means CIMB Group Holdings Bhd (1023) has overtaken Malayan Banking Bhd (Maybank) to become Malaysia's most valuable listed firm.

CIMB, the country's second biggest lender by assets, now has a market value of RM58 billion as at yesterday's closing price, compared with Maybank's RM57.5 billion, Bloomberg data shows.

CIMB's share price has been rising since last week on expectations that it will register a strong set of financial results for its second quarter. It is due to announce its results tomorrow.

"Banks, including Maybank, have recently posted strong financial results, so expectations are high that CIMB will also come out with a good set of numbers," said an analyst from a local bank-backed brokerage.

He expects the group to post a net profit of RM3.37 billion for the full year compared with RM2.8 billion earlier. Maybank last week posted a record net profit of RM3.82 billion for the year to June 30 2010.

CIMB is certainly looking forward to better times while Maybank may just have to contend itself to playing second fiddle.

KFC-The India Boost

 In an already congested consumer market in Malaysia, KFC will most probably bring in similar revenue sheets annually with the usual unimpressive incremental profit growth.

However, this year, it can be different.

OSK Research has revised upward KFC Holdings (Malaysia) Bhd's earnings for the financial year 2011 by three per cent to RM162.9 million from its earlier estimate of RM158.2 million based on expansion and potential contribution from India.

"We are positive over KFC's prospects on the back of its expansion to the under-penetrated India, coupled with continuous product innovation to drive demand," the firm said in a research note today.

KFC Holdings is targeting to open another 12 outlets in India by year-end to capture a further market share in the fast food business, after having opened its first two new stores in Pune and Mumbai in April and June respectively.

"We think India is the next growth catalyst for the group, given that the Malaysian market is rather saturated and could potentially only accommodate another 200 to 300 new restaurants," it explained.

KFC restaurants on a year-to-year comparison, saw a decent operating profit growth of 14.1 per cent, largely due to new innovative products launches as well as restaurants opened.

In addition, its Singapore operations also saw a quarter-over-quarter increase of 7.4 per cent in operating profit mainly attributed to value products and new products.

Despite the new forecast, the firm said it is maintaining its neutral recommendation for KFC.

Genting Bhd Re-rated to TP RM10.65

Credit Suisse which gave a conservative RM6 to Genting Bhd earlier, has now re-rated it.

Their analyst has forecast  it to move toward RM10.65 as its Singapore operations performed with better than expected good earnings.

Genting's rating has also been given the ticker label from 'underperform' to 'outperform'

Tomorrow, GenM will announce its 2nd Q 2010 earnings. I expect the profits to be maintained despite the potential cannibalistic effect of Resorts World Sentosa.

The New Miss Universe

Yes, we have a new Miss Universe. She is Jimena Navarette from Mexico.

Take my word for it. She is absolutely charming