The Lord's Prayer: For the Office

This is the perfect prayer for the office. Use it and you will be blessed!

Singapore: The Tourist Magnets of 2010

This is a good article from Ronald Tan,a casino gaming consultant who has been associated with the industry since the 1970s.

This is his article as reported in the Singapore Business Times Online Edition today
(Nov 7).

A few weeks ago, Singaporeans watched in awe the hoisting of a 700-tonne beam linking the towers of Marina Bay Sands (MBS) to form the Skypark — a vast rooftop garden — while at Sentosa, Resorts World Sentosa (RWS) was working on the finishing touches to the rides for its Universal Studios Theme Park.

Just how awesome these two integrated resorts (IRs) are is becoming more visible by the day. Together, they will cost in excess of S$13 billion (RM31.2 billion) when they are complete. Not only will they be iconic attractions, but within five years they could bring in 17 million top quality tourists who will spend in excess of S$30 billion and help create over 100,000 jobs, directly and indirectly.

Some sceptics wonder how Singapore's IRs will be impacted by Macau. But there is unlikely to be much overlap; moreover, the market is big enough for both.

For the last 65 years, Macau has been basically a gambling colossus and will always be, even with top attractions such as The City of Dreams, Venetian and the MGM Grand. It is amazing that with a mere three licences issued to Stanley Ho's Sociedade de Jogos de Macau Holdings, Sheldon Adelson's Venetian and Steve Wynn's Wynn resorts, Macau's gambling scene has evolved into 32 casinos. Most visitors cannot tell which are the ones with the original licences and which are sub-licencees or concessions.

Even within new casinos, you will find junket rooms of up to 12 tables operating on a joint venture basis, such as Star Cruise's Crockford Room and Putra Sampoerna's Mansion House — both located at the MGM Grand. The Macanese, in conjunction with their Hong Kong associates, have reinvented the game of baccarat, which represents close to 70 per cent of each casino's wagering.

Singapore's IRs are setting their sights on total entertainment with great experiences in gaming, gourmet dining, shopping, meetings and exhibition activities, great accommodation and dazzling shows.

Junket operators who bring high-rollers into Macau have introduced “parallel betting”, under which the operators use the outcome of bets at the casino table, but accept side bets from their clients that are a multiple of the actual table bet.

This effectively reduces the 39 per cent gaming tax rate which the casino pays, while the bettor will be able to settle either way with the junket operator when they return to the mainland. Junket operators have also introduced insurance such as the blackjack game to baccarat, which ensures the bettor a guaranteed win if he has a high-point card before the house draws the third card.

Junket operators are critical to the survival of the gambling industry in Macau. They enable casino operators to pay less punitive taxes, assist the bulk of mainland Chinese to make settlements back home, thus overcoming currency restrictions and provide credit to players.

Notable junket operators such as Amax and Neptune, both listed Hong Kong entities, are supported by many casinos. They raked in close to S$10 billion in gaming revenue in 2008. However, they are also facing strains — many are saddled with uncollectable debts, the Chinese government has been coming down hard on embezzlement and abuse by both Chinese officials and people in the private sector.

The practices that are rampant in Macau will not be found in Singapore's two IRs. The Singapore authorities have carefully planned the entire operation and have anticipated many of the possible abuses. Most important of all, there will be no sub-licencees, which effectively reduces the policing area.

Singapore's IRs are setting their sights on total entertainment with great experiences in gaming, gourmet dining, shopping, meetings and exhibition activities, great accommodation and dazzling shows. However, gaming will still be an important revenue source — up to 60 per cent. Singapore authorities must be careful not to derail this. Already, there are concerns about the admission levy for locals, the restrictions on ATMs and exclusion orders. People come into the gaming rooms of the IRs to have a great time. So our regulators must be practical in their enforcement.

Singapore's superb infrastructure and security has already attracted many high net worth families to make this country their second home. MICE operators are also already taking bookings to hold meetings and exhibitions in Singapore.

London is a good example of how casinos helped attract many Arab families to relocate there when their second homes in Beirut were overrun by the civil war in the 1970s. Of course, casinos were not the only attraction: London, like Singapore, has some of the best private schools, medical facilities and shopping. But for high net worth individuals, its casinos were an important part of its entertainment value. More than 5,000 high net worth families from Beirut and elsewhere in the Middle East moved to London during the late 1970s, causing a mini boom in the markets for housing and top-end services.

Today, many wealthy foreigners are choosing to spend time in Singapore — as evidenced by the notable levels of purchases of property by foreigners in recent years. With the opening of the IRs, it is likely that demand for high-end accommodation will increase further.

While the initial novelty and stunning attractions of Singapore's IRs could bring in considerable tax revenues as well as tourist dollars, Singapore cannot afford to be complacent. Other governments in the region are also eyeing the benefits of the casino gaming industry. Taiwan will soon approve casinos in Penghu Island. Tokyo is about to announce an IR at Odaiba in Tokyo Bay.

The Philippines is in the midst of building a massive IR in Manila Bay and soon, we may witness the legalising of illegal casinos in Vietnam, Cambodia and Laos. It may not be long before Thailand and Indonesia (Bintan) too approve licences for gaming operations within their jurisdictions. There are already no less than five casino ships trawling international waters around Singapore, drawing large numbers of patrons.

In the face of such competition, it will be a constant challenge for Singapore's IRs to keep reinventing themselves to draw in high-rollers from around the world and keep their attractions compelling to tourists.

For those who wants to envision where Resorts World Sentosa of the Genting Group will fare in the face of this potential wave of change in favour of casino business and tourism, remmeber Genting has first mover advantage. Helmed by Lim Kok Thay, expect Resorts World Sentosa to match the best in the world anywhere!

MRCB:Knee-jerk Reaction to its Rights

The market reacted on hearing the proposed rights issue of Malaysian Resources Corporation Berhad (MRCB). By the day's close,it lost a staggering 7 sen, sliding from RM1.39 to RM1.32. This is a shaving of 5.04% of its market price!

Asking money in these times is such a No No. Perhaps,MRCB knows more than what the market does and it sees a market fund raising in this time window as most appropriate and the best way to move the company forward rather than resort to bank loans.According to MRCB, this rights issue will be utilized to fund future business expansion in property and infrastructure development.

MRCB proposes to sell RM566mil rights shares to its shareholders. Currently,the Employees Provident Fund (EPF), the company’s substantial shareholder, has provided a written irrevocable undertaking to subscribe in full the portion allocated to the fund. EPF holds about 30.6% equity stake in MRCB. This is good news as the new shares will be locked up by EPF as long term investment.
The basis for the proposed rights shares, as well as issue price had not been fixed at this juncture, as the “board wishes to have more flexibility in respect of pricing” in view of recent market condition, and the interest of MRCB and its shareholders, the company said.[What does it mean? They expect the price of MRCB to climb higher to ensure good returns to loyal shareholders? The bigger difference between the rights price and the market price must be the desire here.]
The maximum amount to be raised was based on an assumption that the rights shares would be sold at RM1.172 each on the basis of one rights share for every two MRCB shares held.[So, all these numbers are speculative at best!]

The actual amount to be raised would be determined upon finalisation of the proposed rights shares issue.

“Underwriting arrangements will be made by the company for the remaining portion of the rights shares for which no irrevocable undertaking to subscribe has been obtained from the other MRCB shareholders as of now.

The company said underwriting arrangements were expected to be in place prior to the implementation of the proposed rights shares issuance.

Of the amount to be raised, RM85mil would be allocated for equity investment in Nu Sentral Sdn Bhd (NSSB).

NSSB is a 51:49 joint-venture company between MRCB and Pelaburan Hartanah Bhd that was set up to manage a seven-storey retail mall, Nu Sentral, in the Kuala Lumpur Sentral development area.

The mall is currently under development and is targeted for completion in 2012.

To date, MRCB has invested RM38mil in Nu Sentral.

The bulk of the gross proceeds, RM380mil is earmarked for future business investments and expansion of MRCB’s principal activities.

MRCB said the proposed rights issue would allow the company to raise fresh funds without incurring interest expenses or having to service principal repayments.

It would also provide opportunity for entitled shareholders to buy new MRCB shares at a discount to market price. [ Ah Ha! Is this a catch?]

Numbers-wise, the RM558.1m net proceeds will reduce MRCB’s net debt and gearing of RM714.2m and 1.1x as at 30 Jun 09 to RM156.1m and 0.13x. However, the new shares will dilute MRCB’s FY12/10 EPS by 12% from 8sen to 7.1sen.

The fund raising exercise is targeted for completion in the first quarter of next year.

There are speculative elements in MRCB. One of these is that part of the rights issue will be to purchase some choice federal land for commercial development. The rumour mill has it that MRCB and its parent EPF have been given the green light by the Government to acquire and develop two prime federal land parcels in KL, namely: (1) 150 acres in Jalan Cochrane near the city centre; and (2)20-30 acres in Jalan Ampang Hilir near the Jalan U-Thant area. It has been suggested that this federal land deal could enhance MRCB’s valuation by RM624m or 69 sen per share based
on certain assumptions.

The indicative fair value is raised by 68% from RM1.02 to RM1.71, having reflected the potential massive 69sen/share enhancement from the prime federal land in KL. Many parties are recommending MRCB from under-performing to trading buy.

On a personal level, I have taken a tour of this extensive project. Believe me, when it is fully operational, it will have the biggest car park in the Klang Valley and will anytime rival the likes of Mid-Valley City and KLCC!

Banking on a Casino

Lim Kok Thay provided some comforting news during the signing of the RM1.6 billion Resorts World Ltd. public debt securities yeterday. He informed that Resorts world Sentosa Casino will be ready for launch in time for Chinese New Year 2010.

As such all traded units on the group moved higher today. Genting Berhad shares gained 0.98 per cent to RM7.22 ringgit a share on trading volume of 1.69 million shares while Genting Malaysia, which houses the group’s Malaysian casino and leisure business, added 1.5 per cent on volume of 3.47 million shares.

Meanwhile on the other side of the Causeway, Genting’s Singapore unit, Genting Singapore's share price edged up 2.86%

Said Kok Thay,"A January opening will ensure that “Resort World Sentosa can fully capture holiday-makers during next year’s Chinese New Year festivities”.

Resorts World Sentosa is expected to be one of the group’s key earnings drivers in the future.

Corporate Vision-The View from Below

Ever wonder why the personnel at the lower rungs of the pecking order do not subscribe to the vision of the bosses?

Here's why!

Malaysia: Slumpy September

Looks like the economic pain will last a little bit longer.

The Ministry of International Trade has just announced that Malaysia's exports, the mainstay of the economy, slumped 24.2 percent in September from a year ago.

It said in a statement that exports fell to RM47.24 billion (US$13.8 billion) year-on-year while imports fell 20.2 percent to RM37.97 billion, producing a trade surplus of RM9.27 billion.

So, aren't we over-dependent on the export model?

Is it TIME to Fly Again?

Having built a shoulder price at the 30 sen level for about close to 3 months, Time started moving. It overshot into the 40 sen territory last Friday (30 October 2009). On Monday it crossed the 50 sen mark before falling off back to 44 sen yesterday. Today it went up 7 sen again to 51 sen.

So what is this obsession and frenzy with TIME?

Could it be just this following announcement by TIME Engineering made at the end of trading today that it will merely exit (uplifted from) the Practice Note (PN)17 status tomorrow (5 November 2009) as its regularization plan has been completed?

But then, wasn't this obvious to the seasoned stock market player?

The huge volume of shares transacted must mean more than that.

What is it then? Speculative fever? If so, will it fly like a phoenix like SILK and LITYAN after their successful restructurings?

That is the RM64,000 question.

Only TIME will tell.