CIMB-Another Booming Year for Property

Malaysia is likely to see another record year for property transactions says CIMB Investment Bank Bhd in a  report today (29 April 2011)adding that home price appreciation could accelerate,

The bank maintained its “overweight” rating on the industry and said Mah Sing Holdings Bhd was its top pick,

Meanwhile, CIMB Research is bullish on the performance of the properties sector for 2011 after hitting a record transaction of RM107.44 billion last year.

It said the potential re-rating catalysts for the sector are news-flow on land-banking, strong sales from most developers and accelerating earning growth.

"We remain bullish on the property sector, especially the residential properties, as house prices are likely to trend higher and volumes should scale new highs," it said in a research note today.

CIMB Research said the price direction was determined by major cycles and negative external events such as the Asian and global financial crisis.

It said the cycle was currently in the property sector's favour. - Bernama, Bloomberg

YTL Corp-Turning Point Friday?

Well, your sub-divided shares of 10 sen par are now officially in your CDS account. They were deposited yesterday night, so it seems.

Today is Friday and the Dow did not do well yesterday night.

In all likelihood, there may be market weakness all round and I think the new shares of YTL may again be easily available on a buyer bias.

My hunch is its collection time again for institutional shareholders.

Let us watch how the YTL Corp drama unfolds today.

When market ended,  the price slumped by 4 sen to RM1.66.

It was to be expected.

Social injustice main cause of Malaysia’s brain drain-World Bank

I am copying  Asrul Hadi Abdullah Sani's article in the Malaysian Insider verbatim here.

KUALA LUMPUR, April 28 — Social injustice is one of the top three reasons behind the country’s brain drain, the World Bank said today, adding that Malaysians are only willing to return if the government shifts from race-based to needs-based affirmative action policies.

The World Bank conducted an online survey in February of 200 Malaysians living abroad in conjunction with the Kennedy School of Government at Harvard University.

In its fourth issue of the Malaysia Economic Monitor, the report stated that 60 per cent of the respondents found that social injustice as their main concern to migrate or return-migrate, citing unequal access to scholarships and higher education especially among the younger generation within the non-Bumiputera community.

Of those surveyed, 66 per cent found that lack of career prospects was a major factor and 54 per cent agreed that unattractive salaries as underlying factors in the Malaysian diaspora.

The report also showed that a large number of the diaspora migrated to Singapore, resulting in Malaysian-born individuals contributing to a quarter of the island nation’s population in 2010.

According to a census conducted in Singapore last year, there are currently 385,979 Malaysians-born residents comprising 47 per cent of all skilled foreign labour in the country.

The number of ethnic Chinese among Malaysian migrants in Singapore has also jumped from 85 per cent in 2000 to 88 per cent in 2010.

The World Bank also said that a large number of Malaysians obtained their tertiary education overseas, pointing out that those emigrating are getting younger as more of those below 23 are leaving the country.

The report concluded that the “Malaysian diaspora is large and expanding, as well as geographically concentrated and ethnically skewed.”

In a Bloomberg news service report earlier today, World Bank senior economist Philip Schellekens was quoted as saying that foreign investment could be five times the current levels if the country had Singapore’s talent base.

“Migration is very much an ethnic phenomenon in Malaysia, mostly Chinese but also Indian,” Schellekens told Bloomberg in Kuala Lumpur on Tuesday ahead of the report’s release today.

Governance issues and lack of meritocracy are “fundamental constraints” to Malaysia’s expansion because “competition is what drives innovation,” he said.

Malaysia’s growth fell to an average 4.6 per cent a year in the past decade, from 7.2 per cent the previous period.

Singapore, which quit Malaysia in 1965, expanded 5.7 per cent in the past decade and has attracted more than half of its neighbour’s overseas citizens, according to the World Bank.

Malaysia has in recent years unveiled plans to improve skills and attract higher value-added industries.

Prime MinisterNajib Razak has pledged to roll back the country’s NEP-style policies but he also told the Umno assembly last year that the government’s social contract of providing benefits to Bumiputeras cannot be repealed.

According to the Bloomberg report, Najib has eased some rules to woo funds, including scrapping a requirement that foreign companies investing in Malaysia and locally-listed businesses set aside 30 per cent of their Malaysian equity for indigenous investors.

Last year, he unveiled an economic transformation programme under which the government identified US$444 billion (RM1.3 trillion) of projects from mass rail transit to nuclear power that it would promote in the current decade.

Malaysia’s Brain Drain getting worse, says World Bank

I have attached Lee Wei Lian' s report written in the Malaysian Insider in verbatim on this very serious problem.

KUALA LUMPUR, April 28 — World Bank senior economist Philip Schellekens painted a gloomy picture of the Malaysian brain drain situation today saying that it not only grew rapidly but is likely to intensify, further eroding the country’s already narrow skills base.

Schellekens said that the number of skilled Malaysians living abroad has tripled in the last two decades with two out of every 10 Malaysians with tertiary education opting to leave for either OECD (Organisation for Economic Cooperation and Development) countries or Singapore.

“Brain drain from Malaysia is likely to intensify in the absence of mitigating actions,” he said at the launch of the World Bank report titled “Malaysia Economic Monitor: Brain Drain”.

The report defined brain drain as the outflow of those with tertiary-level education.

The economist said Malaysian migration was increasingly becoming a skills migration with one-third of the one million-strong Malaysian diaspora now consisting of the tertiary educated.

“Expect the trend to continue,” he said.

He added that the outflow of talent was not being replaced with inflows, thus damaging the quality of Malaysia’s “narrow” skills base, noting that 60 per cent of immigration into Malaysia had only primary education or less, even as the number of skilled expatriates declined by 25 per cent since 2004.

The report also noted that there was a geographic and ethnic component to the brain drain, with about 88 per cent of the Malaysian diaspora in Singapore being of ethnic Chinese origin.

“The numbers for US and Australia are similar,” said Schellekens.

Report figures also show that 54 per cent of the Malaysian brain drain went to Singapore while 15 per cent went to Australia, 10 per cent to the US and 5 per cent to the UK.

The top three drivers for brain drain identified by the report were career prospects, compensation and social justice.

“(Lack of) Meritocracy and unequal access to scholarships are significant push factors and a deterrent to coming back,” said Schellekens. “Non-Bumiputeras are over-represented in the brain drain.”

He suggested that Malaysia implement important structural reforms in tandem with introducing targeted measures such as income tax incentives to reverse the brain drain.

“Once the highway is built, you must compete for traffic,” he said. “One suggestion is to hold a competition among members of the diaspora to get ideas on what can be done to attract them home.”

He added that while this report estimated the Malaysian diaspora at one million compared with about 1.4 million in a previous World Bank report, it was due to the lack of Singapore government information on the breakdown of its non-resident population.

“This is a conservative estimate and the diaspora could well be larger,” he said.

KFC-Another 25 New Outlets in the Offing

KFC's AGM yesterday saw the announcement of 25 new outlets-15 standard ones and the balance 10 drive-ins.

“Each standard outlet would cost RM1mil while the one with drive-through facility would be around RM3mil so it seems.

Currently, the company has a total of 515 outlets nationwide.

  

Internationally, another nine outlets will open in India by year-end from the existing eight outlets there.

Contribution from India is still be insignificant to the company's earnings this year as KFC have just started there about eight months ago.Currently positive contributions come from Singapore and Brunei.

KFC is currently not impacted by the rising poultry price as the group is involved in integrated poultry business where chickens were bought at a fixed margin.

KFCH is 50.6% owned by QSR which in turn is 57.5% controlled by plantation company, Kulim. Joho Corp holds 53% of Kulim.

JCorp is a public enterprise entity controlled by the Johor state with more than 280 companies under its stable and eight publicly-listed companies with businesses like oil palm plantation, healthcare, food and poultry in Malaysia and overseas.

JCorp, which was saddled with debts totalling more than RM6bil as at Dec 31, 2009, has been in the media limelight lately. Some RM3.6bil is due for repayment next year.JCorp had been reported as saying that it would not embark on any “fire-sale” involving the sale on any of its prize assets for its bond redemption.

It was said to be in the midst of evaluating ways to ensure the redemption of the bonds including the disposal of land it directly owned to settle the debts.

Do you think Johor Corp will dispose QSR and KFC and yet have indirect ownership?

That will be one finger-licking proposition,wouldn't it?

YTL-Will it Pay?

This is Day 3 of the ex-split. Not much magic has been spun.

That is good and that is also not so good.

Let us look at the not so good and see whether there exists a silver lining before we look at the good.

The price has only risen 11 sen since YTL Corp (YTL) went ex. For those who wanted to see a spike in price, it was downright disappointing. Many expected it to race to the moon. That did not happen. It did not come close even to touch RM1.80.

Right now it is languishing around RM1.70. Hopefully the fantastic Wall Street overnight performance can translate into something for YTL today. As always, expect sellers to come in drove if prices move up too rapidly. Then gestation will have to set in before price can really firm upwards.

So, where is the silver lining? Can anyone see it? I have not.

The good news. There is also none in the short term until something appears before YTL holds its AGM sometime in late November. That is another 7 months to go. By then, we should know what dividend will be paid up too as well as revenue generated.

As the market is buoyed or stymied by sentiments,I would say there is good sentiments for a blue chip such as YTL. Chances are there will be more investors than speculators in YTL and so I see more chance of a price rise in the offing in the medium term.I expect most fund managers to buy in and lock it for the long term. Not many such opportunity for a blue-chip counter such as YTL. This is the prime buying period and so I believe more buying is on which is seen by the incessant bargain hunting and the huge block transactions.

There was no magic today with YTL shares touching a low of RM1.68 before ending flat at RM1.70.

The shares goes split officially tomorrow.

YTL Corp-Gestation,Digestion and Indigestion

Today is the second day of the 5 for 1 share split for YTL Corp(YTL). The morning was great as it start off for a 3 sen gain. Pushing against the heavy selling gravity, it punched through at RM1.74 but could not hold its ground and slipped to a low of RM1.69.

At about closing time, volume hit  close to 1,300,000 shares and  gain a paltry 2 sen to RM1.70 {I thought it would hit RM1.74. Fat hopes!}

As expected, there is a time called the gestation period. YTL is at that stage. There is a deluge of sellers who have made their money and are looking to exit. These are the speculators who has made a fast buck. The buyers are most likely YTL buying back its shares into the Treasury because of its under value status and the long term institution funds ranging from EPF, Pensions Fund,SOSCO, Public Trustees and perhaps even PNB.

I also think that some foreign funds might be taking small bites.

Once gestation is over and digestion is complete, the share should go up. Before that, expect indigestion and selling pressure from weak holders one more round but at a higher level.

Until then, expect YTL to go for marginal price increases but no big push!

YTL Corp-More Pre-push than Post Push

Today the 26 th of April saw YTL Corp(YTL) go ex-share split. There was some numerological placing looking at the favoured heavenly number of RM1.68 before the start of trading. Pre-trading also saw it pushed down by weak sellers to RM1.62. Then buying pressure came in to push  the price to RM1.75. I think this is another marker that they wanted established.

With that  done, they let the market the free-play to trade. Many saw profits as there was a pre-push of 17 sen yesterday when the shares were cum. So they sold. Right now on heavy volume of 1,730,000 shares it is trading at RM1.66 for a 7 sen gain.

As today is the first day of its ex, I think YTL will conduct a mopping up operation to buy up all those weak buyers off the trading radar before the 'real' price of the market can be fathom.Also Treasury buying may come in sometime today or tomorrow.

My best guess is it will yoyo all day before settling down at possibly RM1.68.
(PS: How true! It settled at RM1.68 when the last purchase was 20,000 shares clinching a 9 sen gain for the day. Now let us watch the RM1.75 marker tomorrow.)

I think many who made money has left. After all tomorrow is another day....

Those who are holding will likely be long term investors and institutional buyers.

So what is in store?

This, we should ask Francis as he said his shares are undervalued. At the current price, it is still lower than the original 2010 peak price of RM8.60

Looking at the further horizons, I think cash rich YTL may be in for some strategic acquisition.

If not, I am sure a bonus issue may be somewhere in the pipeline or a capital repayment,perhaps?

YTL Corp-The Eleventh Hour

Before trading this morning, there was a hidden hand fixing the price upwards. Just when the bell rang for trading, YTL Corp (YTL)'s price went up 20 sen and before you knew it, YTL was trading up to RM8.05.

That was the marker price they wanted to show for the day. After that genuine traders came in. As it was the last day cum trading before YTL goes ex-share split tomorrow, not many sellers sold down except those that had already made profit the last week or so.

Buying during the last 30 minutes was mostly buy-ups, taking off the  sellers at RM7.99. The final count was 1,853,600 shares done and the counter ended with a 17 sen gain.

At an easy to calculate price of RM8.00, that would mean the theoretical ex-price is RM1.60 tomorrow.

Will we see handsome premiums tomorrow?

Let us watch YTL's new price trajectory tomorrow (26 April 2011)

YTL Corp Growth Prospects

 YTL Corp (YTL) envisions good growth for the company for the current challenging  year of 2011.

 YTL Singapore Pte Ltd executive director, Ruth Yeoh Pei Cheen in an interview with BERNAMA expresses that YTL  will continue to perform good business.

YTL recently announced a 13.3 per cent growth in revenue to RM8.905 billion for the six months ended Dec 31, 2010 compared with RM7.857 billion in the previous corresponding period ended Dec 31, 2009.

The group’s utilities comprise power generation and transmission in Malaysia, Singapore, Indonesia and Australia, water and sewerage services in the United Kingdom, merchant multi-utility businesses in Singapore and communications in Malaysia.

Yeoh said the company also took to ensuring that all its businesses strived to preserve the environment. The companies have to send the sustainability report every year, she added.

When asked on new projects, the Director of International Real Estate of YTL Singapore, Kemmy Tan said the group was looking to develop its projects in Malaysia.

"We also bought the 460-hectare Niseko Village in Hokaido last year."

YTL Group MD Tan Sri Dr Francis Yeoh Sock Ping had announced YTL's master plan to re-energise the development of Niseko Village in Hokaido.

Targeting affluent individuals, Niseko Village will be transformed into an all-season mountain resort offering exclusive hotels, luxury homes, ski-in ski-out estates and exclusive shopping and dining, all with spectacular views of Mount Yotei (Ezo Fuji, the Mount Fuji of northern Japan).

Tan said the project is being managed by  the Singapore office.

In time to come, Tan said two projects in Singapore namely Sentosa Cove and the land in Orchard Boulevard will be streamlined into YTL Land.

The Japanese assets were acquired for about US$66 million while the Singapore project cost S$575 million, she disclosed.

The project in Singapore is in the planning stage and the launch could be probably next year.

So besides YTL, watch out for YTL Cement and now YTL Land!

Tracking YTL Corp Before Ex-Share Split

The upward trajectory price of YTL Corp(YTL) reversed today in tandem with  overall market sentiments hitting a low of RM7.78 and hovering at the price piece de resistance of RM7.80.

There is still 5 days to go before it exes. Looking at the trading numbers, most lots done are below 100 block lots. There were many blocks of 100 to 400 lots done at the RM7.78-RM7.79 level . Possibly from institutional buyers  getting a good bargain from traders who made profit during the last three trading days. The stock ended at RM7.79 sen for an 11 sen loss.

Let us see what happens the next few days.

I am not super optimistic but I believe my hunch is correct that it will go up before it cum split this Monday 25th April or ex-split on Tuesday 26 April.

YTL had huge block buying interests up to 1000 lot I think the institutional investors have come in pre-share split. The share price closed at RM7.81 for a 4 sen loss.

Let us see what a dull Friday will do to YTL tomorrow (22April 2011).

Pumping Up YTL Corp

At the last AGM in late November 2010, MD Francis Yeoh advised shareholders not to sell off their YTL Corp (YTL) shares . The AGM attendees were told that the YTL shares were undervalued. Definite plans will definitely afoot to realise the real value of  YTL shares.

There was speculation galore in the street rumours as well as market punters on how Francis will shore up prices.Some thought YTL will be considering strategic M&As buy-ins. Yet, until the EGM on 14 April, there  not a squeak from Francis. So what gives?

Every one knew that YTL has one of the biggest cash horde on this side of the  non-GLC corporate world. At that time, its cash reserves was a whopping RM10 billion, far more than Genting Malaysia's RM 2 billion.

At the EGM, Francis informs the meeting that now their cash reserves have gone up to RM12 billion! He added that the last two years were not good years for M&As. And most offers were too expensive to consider. If none appears on the horizon soon, YTL may just consider buying up more shares in its own strategic subsidiary, YTL Cement which is moving very close to the RM5 market price.

After long month of dull and listless trading, YTL shares finally rested at the RM7.20 price level for the issue of the share-split documents to its shareholders.For every existing RM50 sen share, 5 sub-divided shares at RM0.10 will be issued. This puts the ex-price of YTL at RM1.42 per share.

On 26 April 2011, YTL shares will be traded ex-split offer. The last date of lodgement is 28 April 2011.

As such, all shareholders will have YTL new shares deposited in their CDS account on 29 April 2011. However, those who want can start selling their new shares beginning 26 April 2011.

Here is an example taken from its announcement to Bursa.

"For example, if Mr X purchases 100 YTL shares on cum basis on 25 April 2011, Mr X should receive 100
shares on 28 April 2011. As a result of the share split, 500 YTL shares will be credited into Mr X's CDS
account on the night of 28 April 2011 being the Book Closing Date. Therefore, Mr X can sell the share
split shares of 500 on or after the Ex-Date ie from 26 April 2011 onwards."

Last Thursday when it held its EGM, YTL shares moved up 20 sen to RM7.45. On Friday which is a dull listless days on most markets, YTL bucked the trend to settle down at RM7.72 for another 27 sen gain. Now that the date of the ex-split is out, there is buying pressure to grab the mother share. It went up as high as RM7.99 in the first hour of trading this morning and settled at RM7.94 for another 22 sen gain.

From the buying pattern, it looks like either big funds are not here or they are taking small bites before the shares go ex. I believe the current 2.263 million shares traded today are mostly from small retail players except for a few chunks of shares at 300 lots and one 500  possibly coming from institutional investors.

The counter closed at RM7.90 for an 18 sen gain.

My Take:

I believe that YTL shares are under valued. I believe it is tightly held. I do not know who is throwing out the shares just before its ex date.

But I can foresee one scenario. It the shares go beyond the psychological RM8.00 mark, many local fund managers will move in. I believe long term investors such as PNB, Khazanah, EPF, SOSCO, and the Pension Funds are getting in now. If foreign funds should come in, do not be surprised to see YTL shares shooting past RM2.00 ex.

It will certainly pump up the fever and the pressure when feeding frenzy starts. By then it may just be too late to get premium profits.

You know what I mean?

More Buy-backs into YTL Cement?

YTL Corp Bhd may choose to buy subsidiary YTL Cement Bhd if there are not many attractive merger and acquisition (M&A) opportunities in the market, says an analyst.

“The group might be eyeing YTL Cement because of the low liquidity,” she told StarBizWeek yesterday. YTL Corp has a 50.1% stake in YTL Cement.

YTL Corp’s  Francis Yeoh had said that if there is nothing attractive, they may buy more into their own subsidiaries with some of the war chest cash reserve of RM12 billion.

YTL Corp is focussing on purchasing businesses of the infrastructure-type like water, electricity and transport and expanding its cement footprint.

Other subsidiaries under the group include YTL Land & Development Bhd and YTL Power Power Int Bhd.
At the EGM, the group said it was eyeing “sizeable acquisitions” as subsidiaries under the YTL group had restructured their balance sheets and were now “strong enough” to pay out consistent and substantial dividends.

Yeoh said the amount would be as much as RM1bil in dividends from its subsidiaries for its current financial year ending June 30, 2011.

“YTL Corp will be able to get RM1bil per year from now from our subsidiaries. With the restructuring and dividends, we can easily look at sizeable M&A opportunities,” he said.

YTL Cement, commanding about 30% of market share, is the second largest cement manufacturer in Malaysia after Lafarge Malayan Cement Bhd.

YTL-The RM 12 Billion War Chest

If there is any share worth considering now on the Bursa, it must be YTL Corp.For one, it has a cash horde in reserve even bigger then Genting Malaysia! Imagine RM12 billion for M&A and focusing on strategic buys globally! MD Francis Yeoh termed these as 'sizeable acquisitions' in infrastructure-related business.

Francis added that subsidiaries under the YTL group had restructured their balance sheets and were now “strong enough” to pay out consistent and substantial dividends. In fact, it is waiting for a whopping RM1 billion just from dividends alone from its subsidiaries for the year ending June 30, 2011.

“YTL Corp will be able to get RM1bil per year from now from our subsidiaries. With the restructuring and dividends, we can easily look at sizeable M&A (mergers and acquisitions) opportunities,” he told reporters after the company EGM yesterday.

Yeoh said YTL Corp would be eyeing acquisitions primarily in water, electricity and transportation-related businesses.

“We will concentrate on those kinds of businesses that we’re familiar with. We will also be expanding our cement footprint,” he said, adding that YTL Corp had an (unencumbered) cash level of RM12bil that it could utilise for acquisition purposes.

According to Yeoh, the YTL group had intentionally backed off from M&As from 2008 to 2010.

“From 2008 to 2010, there was a lot of liquidity in the stock market and commodities but everything was overpriced and (it was) very difficult to put our money to work and get reasonable returns.

“To me, deals were not rightly priced in terms of returns of interests, so that explains the lack of big M&A opportunities from 2008 to 2010.” He added that the group had been seeing “very interesting deals that can be considered in every area of our business.”

“We expect (unit) YTL Construction to be very busy now with the ETP (Economic Transformation Programme),” said Yeoh.

So, I think YTL will fetch a very good price when it converts into 10 sen share comes 26 April 2011. Going by my estimation, at today's price of RM7.70, it should work out to RM1.54 per lot.

I can easily see the share moving past RM 2.00 in no time.

PS: On 29 April, YTL shares was just hovering about RM1.66, short of 34 sen to the possible target of RM2.00.

Different Perspectives

People can be mighty perceptive. Look at these two items. They have projected their own 'mind colour' to its meaning.

Biting Excitement at BJFoods!

It looks like this counter has suddenly catapulted out of its earlier doldrums.

From a high of 74.5 sen, it has backtracked and then somersaulted to new highs on heavy volumes of more than 30 to 60 million shares daily. No doubt day traders has helped. There seems to be genuine medium term investors buying into the counter. I suspect the main bulk could be Berjaya-led investing units chiefly BJCorp and Berjaya Sompo after relieving their stakes in BJRetail through market sales.

It has now touched 84 sen. Let us see what new price it will rest at before retracing or moving forward.

MRCB is currently tendering for RM2bil worth of projects including bidding for the Pudu Jail site
development.

A local business weekly has reported that Uda Holdings had shortlisted 10 companies including three
from overseas for the redevelopment of the former Pudu Jail site. The project's gross development value is
estimated at RM5bil.

MRCB's contracts include building projects and packages of the light rail transit extension for the greater
Klang Valley project and Penang Sentral. They have submitted their plans for hte latter to the state
government.

MRCB's current outstanding order book is RM1.6bil which will last the group over two to three years.

MRCB's projects in KL Sentral alone was worth RM4.2bil and it would be launching more projects next
month and in the fourth quarter.

For the year ending December 2011, MRCB aims to grow its pre-tax profit by 54.6% to RM150mil and
revenue to hit RM1.3bil.

For FY10, MRCB posted a pre-tax profit of RM97mil and revenue of RM1.06bil. Its net profit for the period stood at RM67.3mil.

“Our growth is mainly driven by the property and construction segment as well as our existing projects,”
said its CEO Razeek.

MRCB and Ekovest have recently formed a joint-venture company, KL Bund Sdn Bhd, in relation to the
River of Life project to rehabilitate the Klang and Gombak rivers.

Both companies received letters of intent for the river rehabilitation job from KL City Hall on Feb 22. The
value of the contract has not been revealed.

Razeek said it was still negotiating with the Government on the value.

At the AGM yesterday, The Chairman Azlan spoke on the Sungai Buloh land mixed development project which they intend to participate.

Currently, the land still belong to RRI. Of the 2,600 acres, RRI intends to keep 600 acres for its use. KTB
has also agreed to keep only 200 acres leaving 1,600 acres for use. The project which will be developed
in tendered out parcels will be open for bidding from potential developers. MRCB hopes to become the
project manager as well as bid for a few pieces for development.

To a question from the floor during the AGM, Chairman Azlan said priority for purchasing the houses to
be built by MRCB may be alloted to MRCB shareholders at current market prices.

MRCB's share prices should move up steadily over the medium term as more fund managers invest more into this semi-blue counter.

FELDA Global to IPO

Felda Global Ventures Holdings Sdn Bhd, the commercial arm of the Federal Land Development Authority, plans to list some of its businesses starting with its sugar operations in 2011.

The first, Malayan Sugar Manufacturing (MSM) will potentially raise RM1 billion  through its IPO. This could also make it one of the biggest IPOs for the year.

Apparently, Felda Global plans to list five companies and it is already in talks with a few investment banks namely CIMB and Maybank IBs.

The IPOs will help Felda Global to fund its expansion. 

Felda Holdings' pre-tax profits have more than doubled to RM804.3 million in 2009 from 2005 while revenue has jumped by almost two-thirds to RM11.8 billion in the same period. It is the  world's biggest plantation group by land, producing mainly palm oil, followed by rubber and cocoa. It is also the country's biggest palm oil refiner and controls some 70 per cent of Malaysia's sugar market.

Although Felda Global's oil palm operations cover some 850,000 hectares (ha) of land, it only manages them for the settlers and the Felda Authority.

It now wants to expand by buying land abroad in countries like Indonesia and probably as far as Africa, where oil palm trees originally came from.

Felda Global is believed to have a five-year plan and is even thinking about the next 50 years. Its most immediate concern is to improve productivity in its current operations and subsequently, raise funds for further expansion.

Felda Global bought MSM from Robert Kuok's PPB Group Bhd in 2009 for RM1.2 billion cash. It also bought half of Kilang Gula Felda Perlis Sdn Bhd for RM26 million and some 6,000ha of land in Chuping in Perlis for RM45 million.

For MSM, its IPO will help it grow its upstream business and eventually, its downstream business abroad. In Malaysia, the price of sugar is subsidised, which means it needs to look into other markets to grow.

Sugar is priced at RM2.40 per kg versus RM3.50 in Indonesia, RM3.80 in Singapore and RM2.80 in Thailand.

This is one good buy.