All for the Love of the Love Bug, Herbie!

Yes, I was walking home from town one day. It was sweltering hot and I took a shortcut through back lanes just to shorted my journey. There in one of the back lane I saw this white Volkswagen. It was painted with the number 53 on its front and back bonnet.It was Herbie! So, I took my hand-phone camera and took the photograph. The classic Love Bug starring Dean Jones and Michelle Lee premiered in the late 60s. Therefore the owner of the car must be a senior citizen by now.They must have love Herbie plenty to paint their car to be a such a look-alike.

Should Sime List its Plantation Sector?

After bluntly telling Maxis to return home to re-list in the Bursa, PM Najib has hinted in the clearest terms for Sime Darby to go fully plantation and to dispose its other loss making business.

In true Malaysian fashion of Malaysia Boleh, PM Najib is telling the GLCs such as Sime to shape up or ship out.

A good time for a company to shape up nowadays is when the PM chastised you.That seems to be the trend.

Sime Darby obviously needs a big overhaul. It should consider listing its prized plantations business and selling its underperforming motor unit to boost valuations and compete better with fast-growing rivals.

Competitors to Sime such as Singapore-listed Wilmar and Indonesian Astra Agro Lestari have emerged as key beneficiaries of recovering palm oil prices driven by better growth potential and a greater focus on commodity businesses.

Shackled by an unwieldy gamut of businesses from property in China to selling BMW cars in Malaysia, Sime risks losing its No. 1 slot unless it overhauls its sprawling empire to focus on boosting palm oil yields, the key determinant of profitability.

Plantations accounted for about 74 per cent of Sime Darby's 2008 profit with the rest coming from property, motor, heavy equipment and energy, according to company data.

Majority-owned by the state asset manager and the Employees Provident Fund, Sime Darby's business model bundles the cash-generating plantations operations with other less profitable divisions such as the motor unit.

Investors are already taking note. Wilmar's shares have surged 120 per cent and Indonesia's top planter, Astro Agro is up 86 per cent versus a 60 per cent rise in Sime Darby's stock. Wilmar is valued at US$27 billion (RM95 billion) while Sime has a valuation of US$14 billion.

While Wilmar's EPS is set to shrink 35 per cent in Jan-Dec 2009 and Astra Agro's EPS is e expected to drop 25 per cent, earnings per share at Sime Darby, whose financial year ends in June, is expected to fall 44 per cent in fiscal 2009.

Sime Darby, created through a merger between three plantation groups in 2007, holds 844,000 hectares of plantation land that spreads over Asia and Africa, making it the world's largest land bank.

Indonesian plantation firms, equipped with vast land resources, are growing fast and could overtake Sime.

Sime Darby is trading on a 2009 forecast price to earnings multiple of 25, the same as rival IOI Corp and lower than Wilmar's 28. It's return on equity at 9.2 per cent is lower than 14 for IOI and 13.6 for Wilmar and 33 for Astra Agro.

So, making an plantation IPO makes sense!

Many investors want Sime to list its crowned jewel division to enhance its appeal as a pure play plantations firm.

Sime should consider an IPO next year because valuations could be more attractive when equity and crude palm oil markets get on to a better footing.

Many suspect that this was what Wilmar is aiming for.

Apparently, Sime Darby is not ready to do this anytime soon, that was their official reply.

Some analysts say Sime Darby could follow in the footsteps of Indonesia'a finance-to-automobiles conglomerate PT Astra International Tbk, which separately listed its plantations business Astra Agro more than a decade ago.

Astra Agro stands as a pure oil palm estate owner, offering investors a direct exposure to its lucrative plantation cash-flows and into the global palm oil industry worth US$45 billion annually or even more.

"Something like Astra... would be positive for Sime in terms of a purer plantation play. Of course, investor interest would be more on the plantation one rather than its holding company," said an analyst of a foreign brokerage in Kuala Lumpur.

Despite its size, Sime benefits the least from a positive crude palm oil price trend according to Morgan Stanley.

A 10 per cent rise in CPO prices adds only 5 per cent in Sime earnings while such a swing would raise Astra Agro's earnings by 13 per cent, the investment bank said in a note.

But a spin-off of the plantations business, may not go down well with Sime Darby, which has said it wants the company to remain a conglomerate.

It has recently added to its diverse portfolio with new acquisitions in energy and health-care.

That may be so, but will they defy the PM and earn his wrath? Not those people at the helm of Sime who are so enamoured to the PM for the extension of their Chairmanship as well as Board membership They will only do so at their own behest!If they should screw up, there will be many such as the likes of Azman Mokhtar who will be waiting in the wing to take over this global giant of a company!

More Unemployment by Year end 2009

So, not all is well. As many expect some growth in the last quarter of 2009,today's projection of higher unemployment is definitely a dampener to high hopes. Mulling on the figure of 4.5% as the expected rate of unemployment by year-end, International Trade and Industry Deputy Minister Mukhriz Mahathir told reporters that this is higher than last year's rate of 3.7%.

"To us, the figure is high and we have never reached this high a figure before. At the same time, we are trying to reduce the jobless rate," he retorted after launching the Third National Internship Challenge here.

He said most factories that had laid off workers had begun to take back their former employees after demand had picked up.

As of July 7, Mukhriz said, statistics compiled by the Human Resources Ministry showed a cumulative figure of 38,732 workers retrenched due to the economic crisis.

Of the total, 29,712 were permanently terminated while 9,020 accepted voluntary separation offers. In addition, 40,662 workers had their pay reduced while 4,112 were temporarily laid off.

In his speech earlier, Mukhriz said that although downsizing in the current downturn was not as severe as during the 1997/98 Asian financial crisis when 84,000 Malaysians had lost their jobs, it was still a cause for concern.

"We need to do something by coming up with creative action to minimise the impact of this current crisis.

So, is his prediction going to come true?

The Giant Awakes at Sentosa

True to form,across the Causeway, Genting Singapore Plc, a unit of Malaysia’s Genting Bhd that operates casinos in the UK and is opening an integrated casino resort in Singapore next year, rose 6.1 per cent to 86.5 Singapore cents. So what is in the works? Is the company going to announce anything big tomorrow or this week-end?

I guess the two local units will start climbing tomorrow as speculators work overtime to spread sufficiently juicy rumours on both sides of the Causeway.

JP Morgan Chase & Co which covered Genting Singapore Plc, gives it a thumbs-up;an “overweight” rating with the share-price rising to S$1.20. So there is still more upside yet for this stock. Watch the prices of Genting M and Genting Berhad. They are surely due for a re-rating soon.

Postscript: Today(12 Aug), Genting Berhad tumbled 16 sen while Genting Malaysia dropped 7 sen. Let us see whether the price will jumped up in a V fashion the next two days.

Clearer picture on English for Teaching Science and Maths

The teaching and learning of Science and Mathematics in English will be scrapped in stages from 2012 starting with Year 1, Year 4, Form 1 and Form 4, Education Director-General Alimuddin Mohd Dom said.

Form Six and matriculation would not be involved in the scrapping of the policy, he added.

“As a ‘soft landing’ mechanism, the teaching and learning of both subjects will be carried out in two languages either in English and Bahasa Malaysia or Chinese or Tamil from 2010.

“The teaching and learning of Science and Mathematics for Year 4 in 2012, 2013 and 2014 and Year 5 in 2013, 2014 and 2015 and Year 6 in 2014, 2015 and 2016 will be conducted in two languages,” he told reporters after meeting Deputy Prime Minister Muhyiddin Yassin who is also Education Minister, here today.

In line with this, he said, Science and Mathematics examinations would be carried out in two languages until 2016.

Both subjects would be taught in two languages in Form 4 in 2012, 2013 and 2014 and Form 5 in 2013, 2014 and 2015, he said.

The Sijil Pelajaran Malaysia examinations for both subjects would be carried out in two languages until 2015, he said.

Good Fun Joke Here!

What a joke!

Enjoy!

Two men are out just fishing quietly and drinking beer.


Almost silently, so as not to scare the fish, Jim says, 'I think I'm gonna divorce my wife.She hasn't spoken to me in over 2 months.'

Earl continues slowly sipping his beer then thoughtfully says,'You better think it over, Jim. Women like that are hard to find.'

More Investment Banks Supports RCE

Analysts are positive on the prospects of RCE CAPITAL BHD [RCECAP 0.730 0.055 (8.148%)] which posted a net profit of RM18.5 million on the back of RM67 million in revenue for its first financial quarter of FY10 (1QFY10). Compared to the corresponding period a year ago, net profits soared by 36% while revenue increased by 42.2%.

According to Kenanga Research, the better showing was due to a growth in net loan receivables of 33%, lower finance costs, strong lending activities, as well as a 7.6 times increase in revenue contribution from the investment holding and management services division.

RCE Capital’s doubtful debt provision meanwhile was lowered by 26% to RM5.4 million due to improved recovery process, Kenanga added.

Quarter-on-quarter (q-o-q), 1QFY10 net profit remained stable, with marginal 0.1% growth, while revenue rose by 15.5% due to sustained demand for cooperative credit. However, this was offset by higher operating expenses and marketing costs (up 26%) resulting in pre-tax profit increasing by only 1.6%.

Nevertheless Kenanga added: “We believe the company’s loan repayment collection via direct salary deduction presents minimal default risk.”

Kenanga estimated a net profit growth of 15% for FY10 based on the assumption of 22% net loan growth.

“Prospects for the company remain positive as consumer demand for loan financing from cooperatives remains resilient,” said Kenanga which had a buy call on RCE Capital’s stock and a target price of 90 sen, a 39% premium to its close last Friday of 64.5 sen.

Meanwhile, Maybank Investment Bank (Maybank IB) said that RCE Capital’s net loan grew 5.1% q-o-q to touch RM1 billion, which is a remarkable 17.5% compound quarterly growth since 2QFY06.

However, it lowered its earnings per share (EPS) forecasts by 4%-8% to account for a dilutive impact of a private placement of 71.1 million new shares. The new shares, which started trading yesterday, increased RCE Capital’s share capital to 782.1 million shares. The private placement exercise raised RM39 million in cash (55 sen per share) for working capital purposes.

Maybank IB said that allowances for doubtful debts shrank 26% year-on-year, but was stable as a percentage of gross loans at an estimated 7%, adding that net non-performing loans ratio should remain below 3%.

“We maintain our 15% FY10 net loan growth assumption, suggesting RM1.09 billion in net loans by March 2010. However, this forecast now looks conservative given 1Q loan growth,” Maybank IB noted.

“We continue to favour RCE as a mid-cap exposure to a growing consumer loans segment at attractive PER (price-earnings ratio) valuations. Loan repayments are via compulsory salary deductions, implying low default risk,” Maybank IB said.

Maybank IB retained its buy call on RCE with an unchanged target price of 85 sen, based on eight times 2010 PER. “RCE continues to offer value, trading at 5.9 times 2010 PER and a high 22% ROE (return on equity).”