Berjaya Group Shares-A Tsunami of Sellers

One look at the board and you would see Berjaya Group shares gravitating down in price every trading day. so what is happening?

Anyone care to tell?

Look at the doyen in the group-Sports Toto. In its history, it is always a range-bound share floating between RM4.50 to RM5.00. Now look at it. It is in the teens above RM4.00. Dividends paid is still okay but why it is looked at with so much disdain these days for it to break the RM4.50 mark?

BJ Land though priced at about the RM4.30 price level is a counter that is too tightly held or interest is just not there in spite of the share split and bonus. Is it because some of its so-called grand projects are not coming through.. The one of most concern is the project to shift the Selangor Turf Club facility from Sungai Besi to Salak Tinggi. That has gone down for sometime as the PR government is still looking at the plans. Until we receive a whisper on that, BJ Land has to seek other exciting games to play.

BJ Corp has seen the best of times when the Ascot Game licence was in the offing for sports betting. With the failure to secure that licence, prices spiral downwards. Then after off-loading BJ Retail, it has sunk below RM1.00. I think it may go down further at this rate if BJ Roosters gets listed. True it will be cash rich and could become the war-chest for Vincent to play his games in 2011. Or is the General elections around the corner?

BJ Retail, newly listed is facing a slew of sellers every day? I wonder who is selling. Is Vincent cashing out while Berjaya Sampo is picking it up for cheap, benefiting Vincent either way? Looks like it as a majority seller must be in the market. Until the bleeding stops, BJ Retail will be in this price stupor.

BJ Media is another poor thing. After giving dividend-in-specie to its shareholders with the sale of THE EDGE business paper, the price of this stock started going south from 65 sen. Today it is about 40 sen though it surprisingly showed new life picking up 6 sen in today's morning session.

BJ Asset is also suffering from the same malaise. From a sprightly move to the 70 sen level given the better returns on number forecast operations in Sarawak, the occupancy of Berjaya Times Square and sale of  some condominiums, it has succumbed to selling pressure and has moved back close to the 50 sen level. How sad!

So, Vincent-where is the beef?

Or are you cashing out just like Bob Kuok,Ananda, Francis and Kok Thay?

That Special School Without Students

By Debra Chong from Malaysia Insider has a telling story which will bring out the guffaws.

Let us read on.

KUALA LUMPUR, Sept 1 — The nation’s first school for pregnant teens — dreamt up by Melaka Chief Minister  Ali Rustam is slated to open its doors today. Sadly there is a ghost of a chance to find any students there.

Obviously there was interest when the idea was mooted so claimed certain quarters. However,  
Melaka State Islamic department (Jaim) director, Sulaiman Harmain Shah, has this to say now. “We’ve had a few people calling up to ask,”  he said as he is is in charge of the management of the state-run private school in Jasin named “Sekolah Harapan” (School of Hope).

“But no one has registered to be a student yet,” he admitted to The Malaysian Insider in a recent phone interview.

Sulaiman quickly added that enrolment into the school was not automatic and candidates were required to first attend an interview with the state Islamic department.

The interview was necessary to determine, among others, if the schoolgirl in question was a genuine case, whether she had the support of her parents or had been disowned and required housing, Sulaiman explained.

The religious head also disclosed that the school may not be fully ready for its first intake today, with the premises still undergoing a makeover from its previous incarnation as office suites.

“It’s still under renovation. The dormitory is complete. We have a dormitory that can accommodate 12 people,” Sulaiman said.

Apart from the physical aspects of the school, the Islamic department only has a few religious teachers on its faculty.

Other teachers will be hired “part-time” as and when needed, Sulaiman said.

“It will be like a tuition centre,” he added.

Mohd Ali had first announced his idea to set up a dedicated school for pregnant teens in July, with the thought that it could help cut down incidents of newborn babies being dumped, setting off a national debate on the need for such a school and on the reasons behind it.

The education ministry has refuted the need, pointing that its regulations allows all girls access to schooling regardless of whether they are pregnant or married.

But the Melaka CM disputes the ministry’s statement and claims some principals have sent home students after they were found to be pregnant and leaving the teens at a loss on what to do next, which he linked to the spate of baby-dumping cases.

Mohd Ali has also highlighted that the phenomenon affects the Malays, the largest racial group in Malaysia, and carries with it a whole slew of social-religious consequences as the community is constitutionally Muslim.

His controversial idea for a “sekolah hamil” was cemented after the state approved the conditional marriage for minors, with some groups questioning if the “husbands” would be enrolled into the same campus and what subjects would be taught there.

“It’s only for the pregnant girls. Men have no problem. They can still attend school,” Sulaiman replied when asked if the “husbands” would also be attending the school.

Much about the school continues to be wrapped in a veil of mystery. The exact whereabouts of the school in Jasin is also confidential.

“We are trying to protect the girls. They are malu (ashamed),” Sulaiman defended.

He was also reluctant to disclose details but has described the school to be more of a spiritual, moral and educational shelter facility.

 Priority will also be given for pregnant Malay-Muslim teens, especially those who have been disowned by their parents and have nowhere else to go, Sulaiman added.

All 13 reported cases of baby-dumping this year have so far only involved the Malay community, police statistics show.

“This is a symptom of social ills among the Muslims… From experience, those who are pregnant seldom are interested to continue their schooling,” Sulaiman said.

This CM certainly has superb conceptual vision.

Let's give him our cheers, won't we when he should succeed  to recruit his first pupil?

Will Banks Cap Housing Loan Quantum?

Bank Negara Malaysia is thinking seriously of imposing a  loan-to-value ratio (LVR) for mortgages at 80 per cent to avert the risk of a potential property bubble in the country.

It is seeking feedback from banks on the possibility of doing so.

Currently, there is no fixed LVR. Banks usually lend up to 90 per cent of a house value, or even up to 100 per cent in some cases.

A banking analyst at a local research house thinks this is unlikley thta bank is going to support BNM's move as it will affect their profitability.

Still, BNM is likely to be mindful of this and if it feels that such a move is necessary to curb property speculation and a potential rise in non-perfoming loans, it may reach a compromise in that it may not slap the 80 per cent cap across the board, he pointed out.


"We believe that it is unlikely that BNM will enforce a strict capping of LVR across all residential property classes, but rather impose a restriction only on higher-end properties where the speculative element could be more apparent," OSK Research said in a note to clients yesterday.

Kenanga Research said it wouldn't be surprised if BNM implemented the 80 per cent cap on, at least, properties valued at more than RM500,000.

The central bank's concerns about a potential bubble are warranted, interest rate hikes this year, loan growth has remained robust while deposit growth has lagged, due in part to the channeling of retail deposits into property purchases.

Residential properties currently account for 26.6 per cent of total industry loans.

Still, OSK felt that it was not feasible to set a blanket enforcement on the LVR, pointing out that residential properties were considered one of the safer asset classes for banks to lend to, with promising growth prospects underpinned by the country's relatively young population.

As it stands, it is understood that most banks already have an internal risk control policy, limiting the LVR to 85 per cent for higher-end residential properties valued at more than RM700,000. Most banks also have a LVR cap of 85 per cent for non-residential properties.

OSK noted also that LVR was just one of several criteria that banks use in their credit scoring process. They also tend to look at the debt servicing ratio, location of property and the borrower's other financial backing.

Meanwhile, any mortgage restriction is also seen to be negative for the property sector. Kenanga Research said it is likely to downgrade the sector from a "trading buy" now if the restrictions are implemented as property transactions will fall since deposit requirements will basically double.

"If the LVR is official at 80 per cent for all borrowers, we see a negative impact on the property sector, especially on the low- to medium-end market as housebuyers will need more equity under the new scheme," said Maybank Investment Bank research.

For example, a housebuyer would need RM80,000 instead of RM40,000 as equity for a RM400,000 house. "This could cause a delay in purchasing decisions," it noted.

RHB Research, meanwhile, felt that first-time home buyers should be exempted from a higher down-payment ratio since the government has been encouraging home ownership.

YTL-Resilient and Defensive?

This is B.K. Sidhu's write-up in the STAR online paper today. It makes fasacinating reading.

This is her article in toto.

It’s an oft-told story about how YTL Group managed to stay resilient during the Asian Financial Crisis even as many large corporations became casualties of the crisis buckling under debilitating debt. That story, more often than not, is narrated by no less than the group’s chief steward Tan Sri Francis Yeoh.

It’s about how the group, by sourcing funds locally and borrowing in ringgit (as opposed to US dollar, which most businesses had done), had managed to fend off the heat of the crisis. So, while so many companies fell off the corporate sidewalk; YTL, armed with an enviable war chest of cash, went trawling to buy up assets on the cheap. Lest we forget, that’s how he scooped up UK’s major sewerage and water specialist Wessex Water over a decade ago, which today is one of its prized assets.

He also frequently enthuses over the level of service provided by the leisure and hospitality group under his stable; how guests are pampered by first class services at third world prices.

But over the years, the lingo has shifted somewhat towards blue ocean strategy and technology.

Understandably, Yeoh is passionate about WiMAX 4G and how the offering will change the way consumers think, work and play. That is the group’s new playground. If executed to plan, it could just be the group’s next great feat.

“This is a new business and a very important business (telecoms),” says Yeoh, YTL Corp’s managing director.

YTL Corp Group is today largely an infrastructure player with 12 million customers with businesses spanning three continents. It has five listed companies, excluding the REITs, within its stable and for the first time in its corporate history, revenue reached a whopping RM16bil. Net profit was RM873mil for the full year ended June 30, 2010.

This is a blue chip group with a market value of some RM34bil. Combined, the group has assets worth RM45.4bil and a war chest of RM12bil cash.

Yet investors’ response to YTL Corp appears to be lukewarm at best.

“I don’t have a Buy call on YTL Corp and I think at the current price it is fairly valued. It is not as sexy a story as its power and water units. But it does have stable earnings and dividends given the layers of profit and cashflow from its units,’’ says an analyst.

On Friday YTL Corp shares closed one sen lower to RM7.44.

The New Frontier

The transformation is already in motion. The group prides itself for adopting the blue ocean strategy – which means going where none of their competitors have ever been. As a result, it has a lot on its plate going forward.

WiMAX, for now, appears very much on the priority list of the group’s next frontier.

“It is a very big thing, the public will gain and the nation will change when we take it to town in November. The other telcos will have no choice but to be fully immersed in 4G. 4G is coming, it is a challenge and it will be fantastic,’’ says Yeoh.

Shake the market and set new benchmarks, it definitely will. YTL is using Malaysia as the test bed for WiMAX 4G. If it gets it right, the model will be replicated elsewhere across the globe. That would make it the biggest player ever to deploy WiMAX extensively.

“Partners will come to us once we prove it’s successful. I am sure all of the Asean countries (will come) and we will also get invited to expand. Our global footprint will grow and that is the kind of growth targets (we are looking at),’’ he adds.

It is not just the voice, data, video and mobile business that the group has the potential to be involved in but the whole gamut.

The World Bank conducted a study last year on the impact of broadband on the economy and found that every 10% penetration growth in broadband creates a 1.38% corresponding GDP increase in developing countries.

“Every thing that we do from 1955 (since the group’s inception) has been based on the blue ocean strategy. This is our biggest initiative,’’ he says.

The involvement in WiMAX 4G presents a perfect picture of its involvement in the utilities sector.
Besides 4G, there are areas in the water and energy business that the group wants to expand into.

The Journey

The group’s history dates back to 1955. It started as a construction company, building low-cost apartments to pioneering high-rise construction. Back then, the group needed to arrange financing for these apartments.

It was the expertise and use of technology that thrust them to the forefront of construction and YTL became the first turnkey contractor in the country. Yeoh says they were the envy of the Japanese contractors, who took three weeks to complete a floor of a building while YTL only needed seven days.

“The secret was really in the continuous pouring of concrete to hasten the process,” he says.

The KL Tower which stands tall today in the city’s skyline is a product of continuous pouring of concrete, hence its early completion. YTL had the foresight to own a cement plant that helped them manage cost.

The going was extremely good for the construction business. Then the group got another break in the early 90s following the nationwide blackout. That marked their first step into the lucrative utility sector. YTL was the first independent power producer (IPP) and managed to build a plant in a record time of 14 months. But this happened in juxtaposition, with the vociferous criticism that the IPP awards were not given out on open tender basis and the rates were unseemingly high, placing the national utility Tenaga Nasional Bhd at a great disadvantage given its high payouts to the IPP for power generation.

To fund the plant, the group opted to issue ringgit-denominated bonds, which was frowned upon by some.

“Nobody then wanted to listen to us but we believed that Asian infrastructures should be funded by their own savings rate. Asians are savers, why should we borrow from outside?’’ he says.

Over the years, the group has managed to strengthen its portfolio in the utility segment, adding more power plants such as PT Jawa and Power Seraya Ltd. Its generation capacity has grown many-fold from 1,000MW to 4,315MW. It has also gone into the power transmission business with a 33.5% stake in Australia’s ElectraNet.

An opportunity to own water assets came with Wessex Water in 2002. It was a major coup to own a British company then. From then on, there was no stopping for this group which grew and spread its wings via acquisitions.

But as Yeoh puts it: “All that is history, let’s talk about the future.’’

IPPs a ‘Jurassic Model’

Abundant opportunities in the water and power sectors in Australia, Britain and Asia are currently beckoning.

“We want to play a bigger role where the future is brighter,’’ he says.

Regulatory frameworks are changing to open up markets for competition and allow more players to participate so that there are choices; with competition, the cost of services for end users generally come down.

“The chances of Asia going that way is better,’’ he adds.

An analyst says until and unless the group acquires more assets there is not going to be a big jump in earnings.

The talk is that they are eyeing water and energy assets in Asia and given the big war chest of cash it has it should stock up sooner than later.

“They are actively looking for power and water assets in the region, it would be the regulated ones,’’ says an analyst.

Yeoh feels the era of IPP is over. He calls it a “jurassic’’ model to create a power plant to serve only one customer.

“We trade energy, we produce and sell power. We are no longer an IPP and we believe the IPP business is over. We also think there should be no more IPPs,’’ he says.

His belief is that governments should do away with monopolies and introduce competition, allow the players to compete to supply power to the grid.

“Anyone can be a power producer and supply to the grid and that will create competition and allow consumers to chose the cheapest source of power,” he says. Whether this formula is workable remains to be seen but his rationale is that if Singapore can, why not Malaysia?

“If there can be competition in the water and telecoms sector, why not introduce it for the power sector (to make players more efficient)? It is better for the public as they will have choices,’’ he says.
“We want to cut a bit more in power business. We want to be a total energy power player.”

On High Speed

The mere mention of the proposed KL-Singapore high speed rail link excites him. He is not ready to give up on his proposed project although things have been pretty quiet at that end. If the project sees the light of day, he says, it would create value not just in property but also spur economic benefits at both ends – Malaysia and Singapore.

“I always believe that if people want it, it will happen,’’ Yeoh says.

The group’s hospitality business has grown with recent acquisitions and the creation of REITs.

And don’t rule out more assets coming into this stable. The group bought The Muse Hotel in Saint Tropez in France, which has become one of Europe’s 20 most popular hotels, the Niseko Village – a ski resort in Hokkaido, Japan that has become the Aspen of the East, and Pangkor Laut Resort in Pangkor is another internationally acclaimed resort.

“We have a global footprint on hotels and we are profitable,’’ he says.

Somehow, the visible success in most of these businesses has yet to reflect on the group’s massive property project in Sentul – Sentul East and West. Toss out all the hype and brouhaha and it would seem as if the project is not moving as fast as expected.
Yeoh puts the blame on real estate valuations, which is rather modest compared to Singapore and Hong Kong. He hopes prices will eventually appreciate but that appears a tough task for the time being
“I am waiting for KL to be a very attractive capital,’’ he says.

The True Value

With wings spread across several continents and several key businesses abroad, the company could well be a Malaysian multinational. But it faces its fair share of challenges – regulatory hurdles abroad plus geo-political and currency fluctuation issues. Having staunchly adopted the blue ocean strategy, Yeoh says, competition is by no means to be feared. In fact, it is very much ingrained in the group’s DNA.

As it stands now, succession planning is very much in place for the group. The next generation of Yeohs are already learning the ropes from the seniors. In fact, for this interview Yeoh’s son Joshua was present throughout to prep himself up for similar sessions in future. “That is part of the training,’’ says Yeoh.

The circle of family business, it appears, is very much intact. For YTL Group, it is on to being driven by the third generation. But there’s no doubt that till then, Yeoh still has a lot that he wants to do first.


There is so much money floating aorund especially today when overseas funds apparently are streaming in like the Gulf Stream.

So, Francis, when are you jazzing up YTL?

Can We Still Buy Banking Stocks?

The anlaysts are saying that the banking sector will furnish a slate of good H2 results.

So are the banking stocks fairly priced or can we still get in and make some good money?

As to be expected, Malaysian banks turned in solid report cards in the second quarter, pointing to full year that could possibly  see record earnings for the industry as loans continue growing and provisions fall.

Analysts believe earnings, which probably came in at the highest ever for the April-to-June period, will continue to grow on a quarter-to-quarter basis this year.

Earnings will continue to be on an uptrend in the next two quarters on the back of loan expansion, especially on the retail side, and better fee-based income, said banking analyst Wong Chew Hann of Maybank Investment Bank Research.

"It should be another year of record earnings," she remarked.


The bellwether top banker Nazir Razak of CIMB concurred.

"This is most likely to be a record year underpinned by continuing loan expansion and as capital markets continue to be active," he said. CIMB is the second largest lender.

The industry's loan growth has so far had been better than expected, coming in at 12.5 per cent as at end June from a year ago.


Some analysts are now looking to raise their loan growth forecasts for the year. Wong plans to raise hers to around 12 per cent compared to about 10 per cent before.

The industry seems to be in good health in terms of asset quality and banks also appear to have much better control over costs, analysts noted.

The only concern they had for the industry was the recent creeping in of much stiffer competition in the mortgage and hire-purchase loan segments, as well as in customer deposits, which could hurt margins.

Even foreign banks have been in the action, going all out to grab higher market shares in those areas by offering attractive rates and innovative packages.

"That puts pressure on margins but the OPR (overnight policy rate) hikes earlier may help cushion the pressure somewhat," said David Chong, an analyst at RHB Research Institute.

On the whole, banks' second quarter earnings were either in line with analysts' expectations, or slightly better than expected.

Analysts cited top lender Malayan Banking Bhd (Maybank) as having the best results as well as the best dividends of the nine local banking groups.

An analyst from a foreign research house felt that Alliance Financial Group Bhd, the smallest banking group, was the most disappointing in terms of loan and deposit growth.

Banks like Maybank and CIMB saw earnings from their overseas operations, especially Indonesia, come in strongly for the quarter.

TNB: Surprise Mini Bonus Issue

The surprise bonus issue announced by Tenaga Nasional Bhd (TNB) will likely drive short-term interest in the company’s shares given the presently buoyant market conditions, analysts say.

“Empirical evidence suggests that shareholders and investors tend to view bonus issues positively,” an analyst with a foreign research house told StarBizWeek.

“It is a sign that the management is confident in its ability to service a larger equity base or, in other words, in its capacity to generate more profits and give out dividends on all those shares in the future,” she explained.

TNB on Thursday announced a bonus issue of up to 1.12 billion shares on the basis of one for every four existing shares held at an entitlement date to be determined later. In its filing to Bursa Malaysia, TNB also said it planned to increase its authorised share capital to RM10bil comprising 10 billion shares from RM5bil currently to accommodate the bonus issue.

The bonus issue would not fundamentally change analysts’ earnings forecasts for TNB.

Nevertheless, earnings per share and the company’s share price would naturally be diluted by 20% based on the one-for-four bonus issue after the completion date, which is expected to be in the first quarter of 2011.
TNB yesterday closed at RM8.82, up from RM8.75 on Thursday. Of the 28 analysts polled by Bloomberg, 25 had a “buy” call on the stock, while two said “hold”.

The average target price for TNB as of yesterday was pegged at RM9.94.

“We think more retail participation will be encouraged once TNB’s share price gets diluted as a result of the bonus issue,” an analyst from a local bank-backed research house said. “So, it’s one way of boosting liquidity in that sense.”

TNB had earlier explained that the rationale behind its bonus issue was to reward its existing shareholders and enhance its counter’s liquidity.

OSK Research, while did not perceive there to be a real need for TNB to further boost its liquidity, maintained an encouraging view on TNB’s bonus issue.
“In view of the buoyant local market, we believe that the bonus issue will give TNB a shot in the arm,” it wrote in its report, noting the run-up of the share prices of companies that had recently announced bonus issues, such as LPI Capital Bhd and KFC Holdings Bhd.

Affin Research, on the other hand, said it expected TNB’s stock to be re-rated on the back of robust free cash flow, which stood at RM3bil for the nine months to May 2010. It was also positive on the company’s active capital management in terms of reducing debts and stepping up dividend payouts, as well as the impact of a fuel pass-through mechanism on the company in the longer term.

“TNB is a resilient play that is well poised to benefit from stronger economic growth and potential tariff hike,” Hwang-DBS Research noted.

TNB is presently trading at attractive 11 times its forward earnings for 2011 and 1.2 times book value, compared with its 10-year historical averages of 20 times and 1.5 times respectively, as well as against its peers’ averages of 14 times and 1.4 times.

Well, this is good for TNB minority shareholders.

CIMB-Best Quarterly Results Thus Far

CIMB has forecast that 2H results of 2010 will be as good as the first half.

CIMB -the country's second largest banking group,posted a record quarterly net profit in the April-June period and is positive on its prospects for the rest of the year.

Net profit in the second quarter was RM889 million, up 34 per cent from a year ago and 6.1 per cent higher than the first quarter's.

Its first half net profit rose 35 per cent to RM1.7 billion, driven by a strong rebound in corporate and investment banking, stronger contribution from its Indonesian unit and a drop in loan loss provision.

"This is our highest-ever three-month and six-month performance. We are positive on the outlook for the second half as there is a strong capital market deal pipeline and consumer growth momentum," group chief executive Nazir Razak told reporters at a results briefing late yesterday.

Analysts expect it to turn in a net profit of RM3.5 billion for the full year.

The group raised its return on equity target for the full year to 16.5 per cent from 16 per cent before. It kept the loan growth target at 12 per cent. Loans increased 11 per cent last year.

The group called off plans to sell a majority stake in its Southeast Asia Special Asset Management Bhd unit, in which it had lumped about RM8.4 billion worth of legacy bad loans.

It would not be "economically sensible" to divest the stake now under the new Basel II risk-based capital adequacy framework, Nazir said.

"With Basel II, that business is actually a lot more valuable to us from a capital and economic standpoint than we thought before," he remarked.

Nazir said CIMB Group will remain conservative in its capital position as it is still in the midst of migrating to the new framework.

Its Indonesian unit, PT Bank CIMB Niaga, was the largest contributor to the group's earnings. It accounted for 36 per cent of the group's profit before tax of RM2.3 billion for the half-year, compared with 18 per cent a year earlier.

CIMB Thai, which returned to profitability in that period, accounted for 1 per cent of the group's pre-tax profit. The Malaysian consumer bank's contribution to group pre-tax profit was slightly lower at 14 per cent, compared with 15 per cent before.

Corporate and investment banking's profit before tax rose about 73 per cent to RM498 million as regional capital markets in the first half were significantly better than a year earlier.

Well, there are many new price forecast. Many say it may breach RM8.30 if market is amenable.