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.

Is BNM Overeacting?

Quick on the heels of restricting credit card issuance and capping of credit lines, comes another Bank Negara measure to reign in bank's capacity to offer loans.

Yvonne Tan and Star online colleague, Sharidan Ali looks into the effects of such measures of bank the banking system and household debt..

Call it responsible lending or whatever, Bank Negara Malaysia (BNM)'s new measures to inculcate responsible lending by banks to retail customers is expected to impact the quantum of credit disbursement as weaker borrowers will be kept out of the lending radar.

Is BNM getting overcautious of household debt management?

From 3Q, 2011, new guidelines on lending would have to be followed. These would be used to stress-test loan applicants using a 100 to 200 basis points increase to evaluate loan repayment ability.

Malaysia's household debt rose at a rapid rate of 11.1% per annum from 2004 to 2009; and from RM516.6bil at end-2009, it climbed by 8.4% to RM560.1bil as at end-August 2010, according to data by CIMB Research.

The household debt to gross domestic product (GDP) ratio increased from 66.7% in 2004 to 76% in 2009 but is estimated to ease to 74.6% at end-2010.

Nevertheless, compared to the entire banking sector's NPL ratio of around 3.1%, the household sector's NPL ratio stood at 2.3% at end-2010.

Anecdotal evidence indicate that bankers are focusing more on the underlying collateral, especially for mortgages and auto loans.
Quick on the heels of restricting credit card issuance and capping of credit lines, comes another Bank Negara measure to reign in bank's capacity to offer loans.

Yvonne Tan and Star online colleague, Sharidan Ali looks into the effects of such curbs.

Call it responsible lending or whatever, Bank Negara Malaysia (BNM)'s new measures to inculcate responsible lending by banks to retail customers is expected to impact the quantum of credit disbursement as weaker borrowers will

be kept out of the lending radar.

Is BNM getting overcautious of household debt management?

From 3Q, 2011, new guidelines on lending would have to be followed. These would be used to stress-test loan applicants using a 100 to 200 basis points increase to evaluate loan repayment ability.

Malaysia's household debt rose at a rapid rate of 11.1% per annum from 2004 to 2009; and from RM516.6bil at end-2009, it climbed by 8.4% to RM560.1bil as at end-August 2010, according to data by CIMB Research.

The household debt to gross domestic product (GDP) ratio increased from 66.7% in 2004 to 76% in 2009 but is estimated to ease to 74.6% at end-2010.

Nevertheless, compared to the entire banking sector's NPL ratio of around 3.1%, the household sector's NPL ratio stood at 2.3% at end-2010.

Anecdotal evidence indicate that bankers are focusing more on the underlying collateral, especially for mortgages and auto loans.

Collaterals act as an eventual source of repayment during default and not an immediate source of repayment. As a result of this focus, the actual debt servicing ability of the household sector, as reflected by its disposable income,

has often not been looked at in detail during credit assessments.The proposed guidelines is proposed to fill this gap and thereby improve the quality of credit assessments done by banks.

Would this dampen property demand? The Real Estate and Housing Developers' Association Malaysia (Rehda) president Datuk Michael Yam said it was a signal for banks to be  “less exuberant” in their lending.

However, he believed banks are self-regulating and can curb defaults on its own.

He was confident that the “feel-good momentum” in the property market from last year would continue into this year.

Would the tightening of conditions for loans and cutting the groundswell of good returns from credit cards affect the bottom lines of banks?

 Apparently so.

Berjaya Food Berhad: A Wholesome Investment?

To buy or not to buy Berjaya Food Berhad (BFB)? Would that be the question?Not by any measure, a Hamlet moment.

This share which was offered at 51 sen on IPO opened at 53.3 sen on 8 March 2011,went to a low of 53 sen and ended the day at 63.5 sen on a commendable volume of 36 million shares. 

Pushed to a high of 74.5 sen on 9 March, it touched a low of 64.5 sen before ending at 67.5 sen. Volume decreased to 21.5 million shares. By 10 March, volume shrunk to only 3.7 million shares and the share price lost its upward direction to close down 4 sen at 63 sen. 

By 16 March, the price limboed down the price pole to 58.5 sen on a volume of 2.3 million shares. Volume shrunk to 1.5 million shares by 17 March when BFB share price leveled at 58.5 sen. Volume started going up again on 21 March to 3.3 million shares.  BFB’s share price then moved up strongly to close up 3.5 sen at 62.5 sen on 23 March on a buying wave of 3.5 million shares.

From a layman’s view- point, from the BJRetail fiasco, BFB is a stock that will also go nowhere soon. Contingent on only one product, Kenny Rogers Restaurants, has yet to grow its business the way KFC went.  It has only 49 restaurants and most of them are located in shopping complexes unlike KFCs that are literally every where. Moreover, the food industry has a low barrier to new entrants who can spoil the market for existing players.

To me, there is no hurry to buy this share. Every time there is a substantive price rise, sellers will come in like a mini tsunami and price will slide. 

I do not foresee it to beat the dismal share price performance of BJRetail but I also see little price upside. There will be little speculative buy and only parties close to Vincent Tan and know the going-ons in that group may be biting from time to time.

Watch for volume, if you intend to take a position on this counter. Remember- there is little likelihood of short term trading profits here. 

Postscript:

At the time of writing, volume has spiked to 60 million shares and BFB touched 71 sen before climbing down to trade at 69 sen for a 6 sen gain.

I think day traders are shoring up the price to profit take by the day's close. They could also be shorting the counter. If the price remains close to the 70 sen level, it only means that Vincent Tan and gang are playing the counter.

Let us see how the scenario pans out this evening at 5pm.

Bye-Bye Dame Elizabeth!

Elizabeth Taylor passed on today (24 March 2011) at Cedars-Sinai Hospital in Los Angeles.

A consummate actress, Taylor acted in her first film at the age of 10, three years after her American parents had returned to the United States from London, where she was born in Hampstead in 1932.

After just one film, she was hired by MGM, and became a child star with National Velvet, starring opposite Mickey Rooney.

One of the longest-surviving stars of the old studio system, she was widely acclaimed for her roles Cat on a Hot Tin Roof, Raintree Country and Cleopatra - as well as Butterfield 8, for which she won her first Oscar in 1960.

This blog says good-bye to another legend.

Axiata: Projecting a Ten Percenter for 2011

HwangDBS Vickers Research Sdn Bhd is projecting Axiata Group Bhd’s revenue for financial year 2011 to grow by 10 per cent while the earnings before interest, taxes, depreciation and amortisation (EBITDA) margin will remain stable at 49 per cent.

This is premised on Axiata’s 2011 plan to grow its revenue from Robi in Bangladesh, Dialog in Sri Lanka, XL in Indonesia and Celcom in Malaysia.

Except for Dialog,  the other subsidiaries are targeted to perform ahead of the industry.

While Celcom and XL will continue to grow mobile data services while remaining cost efficient,Robi will work to improve service quality and offerings.

Meanwhile, Dialog will focus on growing its data services revenue and managing cost efficiencies added HwangDBS.

As for dividend payout, it is projected that hte level would be 35 percent as  Axiata will be able to pay more dividends, given an expected more than sufficient free cash flows over the next two to three years.

Axiata has a dividend policy of a minimum 30 per cent payout ratio, translating to about a two per cent yield.

HwangDBS has maintained a “buy” call on Axiata with a sum-of-parts (SOP) derived target price of RM5.60. 

It's about 90 sen from that point.  I will buy now and leave at RM5.30