Digiman to Pole Position in 2013

I love my Digi-man!

Looks like it is an indicative buy. As Warren advised, you have to get in at the right price.


My advice, buy about half of what you can afford now and keep the rest for the 'averaging game' if Bursa drops like a clanger with the Eurozone continuing contagion and the possible government changeover if BN is forced to pack its bags after the impending 13th Election. A hung parliament with BN in the driver's seat will be most disturbing and may also send the bursa spinning down and thereby present you with a super opportunity to accumulate Digi shares.


As Spain brought a temporary reprieve from its win in the Euro-Cup, the financial crows are coming back to roost on both cows and matadors.


So, let us look at one of the darlings in the Malaysian telecommunication sector. Perceived as the best run telco, it has miles to go and would not sleep.


Despite many IBs telling us that Digi-com (Digi) is fully valued, surprisingly buyers are still lining up to buy this counter. Just today morning, Digi sprinted to the RM4.30 level. Will it hold? Will there be traction for more upper side gains? At last look, it drooped to RM4.29.

The Edge write-up of this counter in May 2012 provides some invaluable insight on this counter. Let us look at some of these.

Their statement,”Digi has paid out more dividends exceeding net annual profits for the last 5 years and yet is flush with cash” is just mind-boggling.

The Edge is of the opinion that the current capital structure is far from optimal in spite of the share subdivision to a one sen par. So, what does this mean. A lightly bonus since they do not need cash. I can forsee a 1:1 or even a 2:1 bonus if they are generous and we are stir crazy lucky!

As of 1Q2012, Digi has RM1.02 billion of gross cash and RM438.2 million net cash. For the foreseeable future expect Digi to give out more cash dividends. so, gimme, gimme until it hurts!

The pay-out is on track. Constrained by limited retained earnings on its balance sheet, Digi has put into motion the pay-out trajectory.

In April 2012, it proposed a second capital management initiative to return RM495 million of cash to its shareholders. The first exercise in September 2011 distributed RM509 million to shareholders.

Digi is currently in the process of implementing the first capital repayment and expect to disburse the second by 1Q2013.

Based on The Edge’s forecast at the then trading price of RM4.06, capital distribution will be more than 51 sen per share with an annual net yield of 6.3%.

Apart from trying to sell bundled goods of services to occasional mobile internet users, Digi wants to expand its 3G coverage. For the future data revenue will take the lead over voice.

The cooperation with Celcom has resulted in its initial site consolidation which will be fully completed by the end of 2013. Joint fiber aggregation and trunk roll has also begun.

Current profits are temporarily negatively impacted by accelerated depreciation. This will all ‘go away’ in 2013 when it is fully written down and profits will then spike. Watch out for this growth stock then!

Crystal-balling, The Edge envisaged Digi will earn RM1.32 billion in the current year; rising to RM1.77 billion in 2013.

This prices the stock at 24X of estimated 2012 earnings which should gradually go down to 17.9X in 2013-lower than the estimated valuations of both Maxis and TM.

So, it is very likely that Digi will take pole position in 2013 in the Telecommunications F1!

So, Digi is a prime candidate for medium term investment.

Mountains of Debts Ever After

When All Things Fail!

The Insolvency Department Deputy Director-General, Ms Haini reported that household debts is now at RM667 billion (1 July 2012). More bankruptcies can therefore be expected if the economy continues its southerly direction.

The top reasons for this malaise? Housing loans, personal loand and hire purchase loans. There is a direct correlation as the components of household debts constitute these three loans though not in the same order.

For household debts,[according to Bank Negara], housing loans make up the top cause, followed by car and personal loans, whereas in bankruptcies, car loans top the list, followed by personal and housing loans.

A total of 19,167 bankruptcy cases were registered by the department last year, up from 13,855 cases in 2008.

Bank Negara in its annual report for 2011 stated that household debts to gross domestic product (GDP) ratio was 75.8%, up from 69% in 2006. Based on the revised GDP figure of RM881 billion, this roughly amounts to RM667 billion.

Of that figure, 45% of all household debts, or around RM300 billion, were in residential property loans alone.

While acknowledging that high household debt level is a cause for concern, Malaysian Rating Corporation Bhd chief economist Nor Zahidi Alias told theSun that it will only really start to affect economic growth if the ratio reached a level of 85% of GDP.

That means we have less than 10% to go before disaster starts!

"It is not surprising to see that household debts correlate directly with consumer bankruptcy cases.

"The higher the debt level, the more likelihood of the debtor not being able to repay the debt," he said.

Nor Zahidi warned that Malaysia is at the level where it should be more cautious about the household debt problem.

"As we have seen from past experience, high household debt level can lead to a collapse in consumer sector as happened in South Korea in 2003.

"For that reason, Bank Negara has been cautious and introduced prudent guidelines for lending in January this year to ensure that the problem can be contained in the next few years," he said.

Among the measures put in place included tighter lending guidelines for banks,including using net income calculation method instead of gross income when computing the debt-service ratio for potential borrowers.

The number of bankruptcy cases in Malaysia has shown an increasing trend for the past few years.

Minister in the Prime Minister's Department Datuk Seri Mohd Nazri Abdul Aziz told Parliament on June 14 that between 2005 and April this year, the Insolvency Department saw 116,379 people being declared bankrupt.

Besides the three reasons for bankruptcy, social and corporate guarantors as well as business loans and credit card debts made up the other major causes of bankruptcy.

Haini said the reasons for the increase in bankruptcy cases were varied.

"Sometimes there is mismanagement of funds, but with the recession, there has been loss of employment or the effects of recession that weren't foreseen.

"The effects of recession only start to show after a year or so," she said, adding that it was the lower income group who would be most vulnerable.

Haini advised people to always spend within their means, and set aside savings before thinking about spending or taking out loans.

"The important thing is to work with your disposable income figure in mind, not your gross income, as that can be misleading because there are financial obligations," she said.

Haini also urged people who genuinely cannot service their loans to come forward as there is better protection for registered bankrupts under the law.

Once a bankrupt under the law, the Insolvency Department becomes the bankrupt's trustee and facilitates payment to the creditors, meaning the debtor cannot be harassed, she said.

Any student of economics can tell you about the formula;

Y=C+S+I

Where Y represents income; S for savings and I for investment.(CSI Strategy)

An astute mind will ensure that for the CSI strategy, after consumption which should not be more than 50%(including household utilities), 30% should be put into savings such as fixed deposits, sukuk funds and bonds ( For the rainy days as well as dog days of finance). The balance of 20% should be put into investment which must be diversified. If you already have an accumulated sum, go for property, then reits and finally good blue chips and high dividend paying companies.

Try to avoid buying new cars when the current one is still good and serviceable. Do not do unnecessary renovation until you have some spare cash. A bonanza of sorts!

Do not be a guarantor as this can really pull you down and cause an upset in your CSI. This misadventure will spring a leakage when your ward or beneficiary fails you. 


I was a guarantor for a KUBB personal loan in 1993 and had to coughed out RM4,000 when my name appeared for a bankruptcy proceeding in court. Three persons were guarantors but they selected only me because apparently, I was the only person with the relative "deep pockets". So, learn from my lesson and refuse to be a guarantor!

Obligations of a CO

There are certain minimum requirements when one operate as a CO.

Part VII deals with a register that a CO must maintained, his address of operation and his duties again.

This Part has 4 rules.

Let us look at Rule 14 which is titled 'Maintenance of register'. There are three sub-rules namely:

1) A CO must maintain a register in which he must record the particulars of the services rendered including affirmations, declarations, acknowledgments , affidavits  and other instruments which he has placed his seal. Let us look at the Register as shown in Form 7.

2)The register must be kept  at the place of business of the CO during his business hours.

3) A CO shall submit the register to the Lord President on or before the 1st day of February of each year and shall make it available to the Lord President anytime upon his request.

Rule 15 is very specific on the address of a CO. It stipulates that no CO shall change his place of business  without the prior approval in writing of the Lord President.

( This is very sensitive and must be adhered to.)

Rule 16 touches on the display of documents including the letter of appointment of the CO. It clearly states that a CO who is not a public officer, shall display, at his place of business , in a clear and visible manner-

(a) a photostat of the letter of appointment
(b)The text of Rule 11 or 12 ( whichever is applicable) and Rule 13;and
(c) a sign not exceeding 40 cm by 50 cm in size indicating that a CO is available at that location.

The Inspection Report

Lastly, we have Rule 17. this is the power of inspection by a court official.  Sub-rule(1) Rule says" The Registrar of the High Court, any Deputy Registrar  of the Supreme court or of the High Court, or any other officer of the court authorised by the Lord President may inspect the register kept by the CO during the business hours of the CO, and shall sign the register showing the date and time of such inspection.

Sub-rule (2) states that an officer conducting an investigation under Sub-rule (1) shall submit to the Chief Registrar of the Supreme Court a report in Form 8 within one week of conducting such investigation.

Register to be Maintained by a CO

The Duties of a CO

Let us now move on to Section 2 of Rule 13. This rule specifically mention the duties of a CO to a client seeking his services.

These seven duties are from (a) to (g).

Let us start.

a) verify the identity, the personal particulars in an I/C  card or passport and the address of the person making the declaration, affirmation,oath or statement before the CO

[ It means you have to look at all his I/C or Passport particulars and his address as well!]

b) read over and explain the contents of the documents and the exhibits  attached thereto to the deponent or maker of the document if he is blind, illiterate or does not not understand the language of the document before certifying that he has done so in the jurat.

[Explain the contents of documents and exhibits to a blind, illiterate customer or does not understand the language it is written in]

c) Initial any alteration made in the document to be sworn or affirmed.

d) not affix his seal to any document unless the deponent or maker of the document signs or affixes his thumbprint thereto before him.


e) refuses the services of his office when the CO has cause to suspect that any person before him  is engaged in deception,fraud, duress or any illegal conduct.


[A CO must refuse his services if he suspects illegality]

f) carry out the functions of his office in a prompt, reasonable and business-like manner; and

[Be efficient and reasonable]

g) make himself available  to conduct all functions of his office at regular and reasonable hours.

[ Make himself available to give service at specific and determined hours]

We will look at the jurat now. It is in Form 6.

The dimensions are 6 cm in breadth and 10 cm in length.

Besides using a chop, the CO may also type this onto the document.

The CO's Identification Tag

Titled, 'Conduct and Duties of Commissioners of Oaths', there is only Rule 13 here with two subsections with Subsection 2 enumerating 7 duties of a Commissioner of Oath  (CO).

Section 1 of Rule 13 stipulates that a CO must display an identification tag at the top left shirt pocket. Form 5 details the characteristics and dimension of this tag. The length and breadth dimensions are:

• 2 1/2 cm breadth and length not more than 10 1/2 cm. The section where the crest resides will be a 2 1/2 square size. 

•  It must have a black background with white letters.

The words that must be imprinted on the tag are as follows:

• Full name of the CO
• His Title as CO
• Identification Number

These information must be on the left side of the tag with the length not exceeding 8 cm.

Commissioner of Oath Examinations-No Standard Format

There were years when you need not remember the various sections of the law.

It was all in MCQs or multiple choice questions. Know your law and you will sail through.

Then last year they turned innovative. They went subjective and you have just that same time to scribble the answers hoping the examiner can read what you wrote. Such a  handicap!

Then, they also throw in a few questions about the Judiciary like who is the head honcho? It can stump you for sure.

So this year I have little choice but to 'hafal' or commit to memory the important sections so that it is worthy of my time to go all the way to Putrajaya.

In the next few postings I intend to dissect this law and squeeze out the essence as well as create an association game to facilitate memory.

A Fighter's Lines-Marzuki Ali

Hollow Sacrifice 

Patriotic melancholia; that is in a nutshell, the prose of a poem called A Fighter's Lines.


The persona is now old and wheel-chair bound.

He reflects.

He saw how he fought for independence. Was it against the Japanese or the communists?

He must be wounded because he is suffering in bitterness. His valour goes unrewarded.

Today, confronting a changing world, he knew there is no longer any fight  left in him.

He watches as deceit spreads all around to envelop the country that its independence he might have fought for.

He seeks the next generation to have the same kind of commitment and  bravery to rid the country of the 'deceit' be it corruption or racism. Will they do it patriotically as the world has changed when  global economics rule the world.

This is one dark tale of a soldier's patriotic melancholia. There will be no reprieve.

Leisure-If Only We All Could

Leisure

What is this life if, full of care,
We have no time to stand and stare.


No time to stand beneath the boughs
And stare as long as sheep or cows.


No time to see, when woods we pass,
Where squirrels hide their nuts in grass.


No time to see, in broad daylight,
Streams full of stars, like skies at night.


No time to turn at Beauty's glance,
And watch her feet, how they can dance.


No time to wait till her mouth can
Enrich that smile her eyes began.


A poor life this is if, full of care,
We have no time to stand and stare. 

This poem of 7 rhyming couplets is truly pastoral. 

William Henry Davies writes ever fluidly  as he focused on the need for leisure while not forgetting sustainable living.


If you should just work, work and work....


If Atlas-like you carry the world on your tired shoulders.... 


If you do not stop to smell the roses along the way....


Then yours if a life that is sad, sad, sad. You will become but a passenger of the world; all tired and tied to the burdens of the world; to your obligations.


Even  in the Bible, Jesus has advised that we let tomorrow take care of itself. After all even the birds find sustenance in the Lord's world; why not the Children of God?


I like the pastoral catchwords such as boughs, sheep and cows,the woods, the squirrels and their nuts and the glistening streams.


The lessons to be learnt. Know how to appreciate God and the wonders of this world.


Take time to appreciate beauty. 


Savour the moment of joy as a lady's mouth turned into a lovely smile. 


Looks at her eyes as she beckons you to come hither.


Look into her eyes and fell in love


Treasure the spring of life and the dance of joy.


True, a poor life, if you do not see the world and the beauty that it has to give.