Watch The Camera!

Think you can get away with doing  silly things?

Not today-with camera technology.

Here, a World Cup player get caught in 'his action!"

And here we see Diego Maradona, the Argentinian coach, 'fiddling ,diddling and dribbling" too.

BNM's Last Rate Hike?

Come 8th July, we will know whether Bank Negara [BNM] will hike rates again once more or call for a momentary halt.

A Reuters report postulates that  BNM may raise rates for the third time in five months after strong economic growth in the first half, but it could be a close call, with many analysts believing it will keep rates on hold due to fears of a global slowdown.

Nine out of sixteen analysts polled by Reuters expect a rate hike of 25 basis points to 2.75 per cent at a policy review on Thursday, while the remaining seven expect a pause.

Most of the economists who expect a hike in two days time do not see any more tightening for the rest of the year.

Of those who see no changes in rates this week, two said the central bank was already finished for the year, while three predicted it would bump up rates in September.

Malaysia last month raised its full-year economic growth forecast to 6 per cent from 4.5 to 5.5 per cent after gross domestic product (GDP) expanded by 10.1 per cent in the first quarter from a year earlier, its fastest pace in 10 years.

Export growth in April and May, however, have moderated compared to first quarter numbers and this may impact second-quarter economic growth. The central bank has said that domestic factors would drive policy considerations.

Uncertainties over the euro zone recovery and fears the US economy may be losing steam may also influence Bank Negara’s decision, with some economists saying that weak US economic data recently has lessened the chance of a domestic rate rise.

Late last month, Malaysia’s central bank governor said inflation was not a concern.

JULY HIKE, LAST OF THE YEAR?

After two, 25 bps rate hikes in March and May, Bank Negara will decide if it should further nudge rates to a more “normal” setting.

Economists consider that 2.75 per cent would be the normal rate for Bank Negara, while remaining accommodative to further growth, giving policymakers the opportunity to pause for the rest of the year to review the impact of the earlier tightening.

It cut rates by a total of 150 bps during the global financial crisis, from 3.5 to 2 per cent.

Domestic demand may remain firm as imports of consumption goods have been strong. In contrast, export growth has moderated, but some easing had been expected going into the second half.

Bank Negara has also downplayed any fallout from the euro zone debt crisis, although investors will watch its references to the global economic situation for clues on whether rate rises have ended for now, or if they will continue.

Probability: More likely.

Market impact: Both the ringgit and bond markets stand to gain from another rate hike as foreign investors would continue buying into government bonds, betting on more ringgit gains.

In June alone, 5-year government bond yields dropped 7 basis points while the ringgit appreciated by 1.2 per cent. The ringgit has gained more than 6 per cent year-to-date, making it the best performing Asian currency.

RATE PAUSE IN JULY, BUT TO CONTINUE LATER?

Growing uncertainty about the global economic recovery may lead to more moderate economic growth, prompting the central bank to pause its tightening campaign at the current 2.5 per cent before hiking rates once more in the fourth quarter.

Bond and forex traders say the sharply divided outlook for Thursday’s decision is due to the markets’ inability to gauge what the central bank considers to be an acceptable level.

The Official Policy Rate (OPR) has a relatively short history, making it difficult to determine what is considered a normal level. It was only introduced in 2004, with an initial setting of 2.7 per cent.

Three-month KLIBOR was quoted at 2.73 per cent today. In the forward starting swaps space, the 3-month rates swap on a contract starting after 3 months was quoted at 2.80 per cent.

This implies the market is pricing in just 7 bps of rate tightening by October. The KLIBOR in recent weeks has increased 6 bps since the May rate hike, compared to a 37 bps gain before the May rate hike, implying that there is less anticipation for a hike on Thursday.

Probability: Less likely

Market impact: A pause would not be a big cause for concern as foreign investors are still buying ringgit and government bonds as Asian currencies track yuan gains after China abandoned its two-year currency peg to the dollar.

Genting: Load of Excuses for Another Daylight Robbery?

Genting Malaysia Bhd yesterday replied to Bursa Malaysia queries on the proposed acquisition of the casino businesses in Britain from sister company Genting Singapore plc for £340mil (RM1.66bil).

Genting Malaysia said that as at June 30, the total outstanding advances owed by the acquiree group (Britain casino business) to Genting Singapore plc was about £336,457.

Such outstanding advances owed by the acquiree group would be settled and/or waived prior to the completion of the proposed acquisition, it said.

It also said JPMorgan Securities (Malaysia) Sdn Bhd had based its valuation of the equity value of the acquiree group on a variety of intrinsic and public-market based methodologies, which included conducting a discounted cashflow valuation and an analysis on trading comparables.

The valuation of equity value was between £310mil and £370mil.

In arriving at the said valuation, JP Morgan had also, among others, reviewed certain publicly available business and financial information concerning the acquiree group and the industries in which they operate.

Bursa has asked Genting Malaysia to furnish it with the total amount of outstanding advances owed by the acquiree companies to Genting Singapore as at the latest date.

It also wanted to be informed of the salient features of the valuation of the equity value of the acquiree group as conducted by JPMorgan Securities (Malaysia) .

The plan, a third-party transaction, has drawn its fair share of criticism from analysts who said the investment was pricey for a risky market, provided little growth catalyst and may require more capital injection in the future

So are you on the jury for this value-bashing exercise of GenM  by cannibalistic Genting Berhad?

Wilmar Sugar plans in Papaua New Guinea

Wilmar International Ltd said it plans to develop sugar plantation and sugar mill in Papua with an estimated investment cost of around US$2 billion, a company official said at the weekend.

M.P. Tumanggor, commissioner of PT Wilmar Nabati, a subdiaary of Wilmar International, was quoted by kontan.co.id on Saturday, said the company will conduct a feasibility study for investing in sugar plantation in Papua within the next six months.

"We don’t know for certain yet when the plan could be realized as the infrastructure in Papua is not sufficient," he said, noting the high transportation and distribution costs would make sugar price to be expensive and less competitive.

Tumanggor said Wilmar's management had been in talks with M.S. Hidayat, Industry Minister, as the company is proposing to get incentives for building roads and ports.

The cost to develop infrastructure alone in Papua could reach Rp2 trillion, he said.

Wilmar International operates in four business segments: merchandising and processing, consumer products, plantation and palm oil mills, and others.

The other segment includes the business of manufacturing and distribution of fertiliser products and ship-catering services.

The company sells 40 percent of its crude palm oil to its customers in Europe, China and India.

Wilmar: Coup d' Grace

Yes, play on a level playing field such as that of the world Cup in South Africa where even giants like Brazil and Argentina can fall by the wayside.

Robert Kuok sold off his Malaysian sugar interest entirely. He did not want the nefarious 'Arab and Camel' strategy model to be used to boot him out unceremoniously out of his sugar monopoly. He knows about non-transparent rules, political pressure from the top and  changing of goal-posts.

When the Malaysian authorities created a  sugar duopoly, cutting off his sugar monopoly, Robert knew his days were numbered. So, he sold out the Malaysian sugar business, lock, stock and barrel. Great move, Bob Kuok!

Now he has brought into the Australian sugar business. Superb move.

Let us read the report from Reuters.

" SINGAPORE, July 5,2010 — Singapore’s Wilmar International Ltd on Monday struck a surprise deal to buy Australian conglomerate CSR Ltd’s sugar business for A$1.75 billion (RM4.75 billion), trumping China’s Bright Food Group.

Shares in CSR, the world’s fifth-largest sugar-refiner, climbed more than 4 per cent after CSR announced it had agreed to sell the sugar arm to Wilmar, the world’s largest listed palm oil producer.

Bright Food, which has been chasing CSR since January, was not expected to come back with a higher offer, according to two sources close to the transaction. CSR had also held talks with several other interested bidders, they said.

“The deal is done, there is no real opportunity for them (Bright Food) to come back to raise their offer,” one of the sources said.

Wilmar’s purchase price was A$1.347 billion for equity and A$403 million for debt, 6 per cent higher than a conditional A$1.65 billion offer Bright Food made to CSR’s board late last week.

The deal was a coup for conglomerate CSR which has spent more than a year working on plans to either spin-off the sugar business into a separately listed company, or sell the asset.

Until the Wilmar bid, the market was unaware of any other bidders looking at the asset.

WILMAR’S SUGAR PUSH

Wilmar said the deal was part of plans to expand its sugar business.

“This is positive news as it’ll help jump start their strategy to expand in the sugar business and (represents) the next growth driver for Wilmar,” said DBS Vickers analyst Ben Santoso.

He added that acquiring CSR’s sugar business would also give Wilmar expertise in cane-related research and development.

Santoso expected the new business to see synergies from capitalising on Wilmar’s extensive distribution to China and Asia.

In Singapore, Wilmar’s shares rose as much as 2.3 per cent.

CIMB analyst Ivy Ng said the deal was positive in the medium term because it gave Wilmar knowledge to expand to other parts of Asia.

“But in the short term, based on what they have so far it does not appear the acquisition will significantly increase their earnings,” said Ng.

“In the longer term, it would be good if they can replicate the business in other parts of Asia like China, India and Indonesia, but you won’t see that tomorrow.”

CSR said the deal was expected to be completed by the last quarter of 2010, and is conditional on approval by Australia’s Foreign Investment Review Board (FIRB).

In May, FIRB delayed its decision on the Bright Food bid for up to 90 days, which raised concerns the bid may be blocked.

CSR said net proceeds from the deal would be about A$1.6 billion, and it would consider a range of options for the funds. 

Great news for Wilmar and PPB shareholders after the Indonesian supposed fiasco.

GenM Minority Holders: Do not Chicken Out!

You will be given your chance to fight big business come the next GenM EGM to reject or endorse the UK casino buy-out from GenS soon. Do not squander this one-in-a -billion chance!

Tell Kok Thay and his comatose BOD that enough is enough! Reject the deal! Save your coffer!

Let us read this report from the Malaysian Business Times.

"Minority shareholders may stymie Genting Malaysia Bhd's plan to buy Genting Singapore plc's casino business in the UK for £340 million (RM1.66 billion), analysts said yesterday.

This is the second largest related party transaction (RPT) involving the Genting group in a decade, following subscription of US$442 million (RM1.42 billion) Star Cruises shares, the 10 per cent purchase of Walker Digital Gaming for US$69 million (RM222 million) and the acquisition of Wisma Genting and Segambut property for RM284.1 million.

Genting Singapore is the biggest gaming operator in the UK with 44 venues under the Circus, Maxims and Mint brands.

"The purchase is a bit pricey, and delinquent shareholders are bound to raise the matter at the forthcoming EGM (extraordinary general meeting)," Affin Securities gaming analyst Chong Len Len told Business Times.

Genting, the country's sole casino operator, told the stock exchange on Thursday it will soon hold a special meeting to seek shareholders' support for the plan.

Since it is an RPT for Genting, Kien Huat Realty Sdn Bhd and Parkview Management Sdn Bhd, which collectively own 48.67 per cent of Genting, will not be able to vote at the meeting.

Likewise, Genting's chairman Tan Sri Lim Kok Thay, who is also the executive chairman and shareholder of Genting Singapore, will not be able to vote.

A slew of foreign funds such as Vanguard Emerging Markets Stock Index Fund, the Government of Singapore Investment Corp and Comgest Growth Emerging Markets own small chunks of Genting.

News of the planned purchase brought downgrades from research firms such as HwangDBS Vickers, OSK Research and Deutsche Bank. This took its toll on Genting shares yesterday.

The stock fell 12 sen to RM2.62 sen a share on heavy volume, just 11 sen higher than its lowest closing price in 52 trading weeks.

Elsewhere, Samuel Yin Shao Yang, a senior associate at ECM Libra, described the deal as value-destroying without accreting earnings.

"The fact that more than a quarter of Genting's net cash will be spent on an RPT, which is barely earnings accretive, does not sit easy with us," Yin wrote in the report. He recommended that investors sell the stock.

He reasoned that the Genting Group's rationale that only Genting Malaysia within the group has the financial muscle does not hold water.

"We beg to differ because as at December 31 2009, Genting Singapore's cash balance stood at S$2.8 billion (RM6.4 billion) and its net gearing was comfortable at 24 per cent," wrote Yin in the report.

He estimates that if Genting did not buy the casino assets from its sister company, the Malaysian outlet will have a cash war chest of RM6 billion by the year-end."

So say your piece at the EGM or forever hold your peace and suck on your thumbs!

GenM: Rumble Tumble

So, when it stung, it stank!

Shares of Genting Malaysia Bhd fell as much as 10 per cent today [2 July 2010] over concerns that its proposed acquisition of casino operations in the UK from its Singapore affiliate was too risky.  

Genting shares dropped 28 sen, the most in nine years, to hit a low of RM2.46 before recovering to RM2.62 as at 12.15pm.

OSK Research has also cut its fair value for Genting shares from RM3.15 to RM2.55 and downgraded the stock from “Buy” to “Sell”.

Malaysia's sole casino operator had proposed to acquire the casino operations in UK (Genting UK) from its affiliate company Genting Singapore Plc for about RM1.7 billion. It had also separately proposed to develop a video lottery facility at the Aqueduct “racino” which combines racing with casinos.

OSK Research said in a report today that it felt the acquisition and development cost was not compensated by meaningful earnings growth prospects. It also said that there was inherent risk of future “value destructive related party transactions” and as a consequence is attaching no value to the group’s net cash balance.

“We view these developments negatively as the relatively high acquisition and development cost is not compensated by meaningful earnings accretion to the group despite Genting UK casinos’ long established operating track record,” said OSK Research.

It said that it was “cautious” on the medium-term viability of the US racino project pending more details on the development expenditure of the Genting bid.

It also noted that the winning bidder has to pay an upfront US$300 million (RM971 million) in non-refundable payment, which could be deemed a licensing fee.

“As such, we think that the cost of development could easily exceed RM1 billion,” said OSK.

Genting said in a statement yesterday that the proposed acquisition of Genting UK complemented its long-term international expansion plans.

The acquisition however will have to be approved by Bank Negara and the British Gambling Commission.