Virus Infested Stars on the Internet

According to computer security company McAfee, Inc,the 10 most popular on-line search on the Internet are of stars of the silver screen and models.

Visit any of these sites and you  could possibly infect your PC with unknown viruses.

Who are these?

The most popular celebrity is Cameron Diaz, hot after her success of  Knight and Day.

The others in ranking order are:

2. Julia Roberts
3.Jessica Biel
4.Gisele Bundchen
5.Brad Pitt
6.Adriana Lima
7.Jennifer Love-Hewitt /Nicole Kidman
8.Tom Cruise
9.Heidi Klum/Penelope Cruz
10.Anna Paquin


So browse at your own risk.

GenS: No Dividend Until 2011-2012

Yes, that is true.

Genting Singapore shareholders can only look forward to cash dividends in two to three years time, provided the company remains profitable and has paid off its whopping $4.2-billion debt.

The company  posted a hefty net profit of $397 million in the quarter ended June - overturning a $51 million loss in the previous year.

Be thta as it may, Genting remains unable to declare any cash dividends as it is tied to a loan structure which restricts the firm from paying any dividends until next year or after the loan has been fully paid off.

Some shareholders are quite happy about this as they perceived that by not paying dividends, the funds remain in the company and this can be used to repay loans or finance any capital expenditure, or used as loan repayment.

The $4.2-billion loan was secured in Feb 2008 and funded about 60 per cent of the development of Resorts World Sentosa.

Genting Singapore's share price rose three cents or two per cent yesterday to close at $1.55.

Many expect it to move beyond $2.00 in the medium term.

Beware of the Potential Property Bubble

I append an article from the STAR written by the property guru, Azizi Ali.

"The times have been good for property investors in the past couple of years. Prices in certain areas, particularly in selected areas of Kuala Lumpur and Petaling Jaya have risen significantly, some as high as 50 percent. And as a result of this rise, practically all property investors had made money. In fact, some people have seen their net worth jump up by 30 or 40 percent because of the price rise. For example, a young colleague who purchased their house two years ago saw the value of their house increase from RM950,000 to RM1.3 million today. Of course, the owner was all smiles when they told me the story.

I am happy for them. As an avid property investor, I have benefitted from the rise myself, so I am certainly not complaining. At the same time, I must admit that I have some reservation about the whole scenario. The price rise has distorted reality to many investors, including my colleague. Because the price climbed up as soon as he bought the property, and remained at a high level even today, his view on property investment is seriously distorted. He thinks that:

1. Prices will go up as soon you buy a property.
2. The gains will be in double digits per annum.
3. This is normal.
4. Prices always go up.
5. It is easy to make money in properties.
6. He is a super genius when it comes to property investment!

Long-term property investors will quickly point out that none of the above are true. That’s right – none! For starters, I can tell you the current situation is exceptional. It wasn’t like this five years ago, and certainly not ten years ago. I can also tell you that times are not going to remain this good forever. Prices do not rise to the sky, and interest rates do not stay low forever. In fact, interest rates has already climbed (or to use the toned down term of ‘normalised’) by 75 basis points already this year.

Why am I so sure of this? Simple; I have seen similar euphoria before (the first in the mid-1980s and then in year 1997 during the Asian Currency Crisis), and the story did not end well on both occasions. Like most bubbles, prices edged up slowly initially. The initial buyers made money and this attracted others to invest into properties as well. And as prices climbed higher and higher, the euphoria got to the levels that some people were rushing to buy because they were scared that the prices will spiral out of their reach if they do not act then. But when the market crashed, as all bubbles eventually do, a lot of people were seriously hit, a lot of money was lost, and that included seeing their properties being auctioned off by the banks.

I see the same story being repeated today. On top of the ever present dangers, there will be massive challenges in this new decade. There will be much turbulence in the coming days, and some of them will be unlike what you and I have seen or experienced before. This may include double-digit interest rates, multiple bank failures, currency crashes and explosion of the derivatives market.

As a result of the new challenges, the investors using the current success formula of buying five properties at one go (by paying the minimum down payment and borrowing to the hilt) will be seriously hammered. They will experience much pain, to put it mildly. Some people will lose their properties, some will lose more than money and yes, some will become ex-millionaires.

But of course, where there is danger, there are also opportunities. This will include a huge number of properties being auctioned and also getting huge discounts from distressed sellers.

Metronic Global- The Albatross RPT

Metronic is in poor health these days. The Anhui BOT project in China is gone and as such, expected losses will rise and NTA will go down. However, the silver lining is compensation which will help in operating expenses.

On 25th June 2010, Metronic Global Bhd has also informed Bursa that  a huge amount  is due to it from a related party via a transaction that took place more than three years ago. They have been trying to recover the debt.

The related party transactions (RPT) consist of  receivables amounted to RM46.85mil stemming from sub-contract work completed for a “related party that is a main contractor on certain public sector projects for the government.”

Of the total amount, the related party was supposed to pay RM36.3mil to the company more than three years ago.

To recover the dues, Metronic has obtained consent from the contractor to proceed with the certification and collection directly from the Health Ministry, Finance Ministry (MoF) and Public Works Department (JKR). “The claim is pending certification by JKR before submitting to the MoF for approval,” it said.

While the company will pursue the receivables directly from the Government, it also said it may commence legal action to ensure full payment.

The firm reported a turnover of RM60mil but made a loss of RM2mil for the year ended Dec 31, 2009. It made a loss of RM5.3mil on RM9.56mil revenue in the latest quarter ended March 31. That was the group’s biggest quarterly loss since it went public in 2004.

Once the receivables are realised either through statutory directives or through the courts, then Metronic will again have a war-chest to play with. That will reflect in the revision of the price of Metronic shares which has been in the doldrums of 5-6 sen currently.

So, for those who still think Metronic can change its fortune, just stand on the sideline and watch the counter.

Caveat Emptor: Please do not buy or sell shares of Metronic based on this article.

Maybank: The Return of Tiger Power

Malayan Banking Bhd (Maybank) reported a net profit of RM912.5mil for the fourth quarter ended June 30, 2010, rebounding from a loss of RM1.1bil on impairment charges in the same quarter last year.

In the last financial year, the group’s results were impacted by the RM1.7bil impairment charge especially on its “expensive” investment in Bank Internasional Indonesia (BII) and, to a certain extent, MCB Bank of Pakistan. That is now water under the bridge.

For the full financial year (FY10), Maybank achieved a record net profit after tax and minority interest of RM3.82bil from RM691.1mil in FY09 on the back of higher revenue across all key business segments.

“Under the Dividend Reinvestment Plan, the board has proposed a final dividend of 44 sen per share less 25% income tax. Of that amount, four sen per share will be paid in cash while the balance of 40 sen per share will be in the electable portion where a shareholder may choose to receive it entirely in cash or reinvest in Maybank shares,” chairman Tan Sri Megat Zaharuddin Megat Mohd Nor.

The net dividend payment for the financial year (including the earlier interim dividend of 8.25 sen per share after tax) costs RM2.9bil, representing a payout ratio of 76.5%.

The pricing of the shares for the reinvestment is expected to be announced next month.

The group benefitted from funds raised through the rights issue completed at the end of April last year while BII contributed higher profit before tax of RM217.3mil against RM49.3mil previously as a result of business growth and full-year contribution.

BII experienced robust increases in the consumer (+37%), small and medium enterprises (+36%), and corporate (+33%) segments.

Maybank Singapore’s pre-tax profit jumped to S$338mil from S$247.7mil previously.

Overseas operations such as in London and New York also staged a turnaround with less provisions and writebacks.

Net interest income for the year rose 14.4% to RM6.77bil supported by robust loans growth of 10.3%.

Net non-performing loans ratio declined to 1.22% in FY10 from 1.64% in FY09. Non-interest income rose 38% to RM4.67bil led by a surge of 281% in investment and trading income to RM219.7mil, service charges and fees, foreign exchange, net premium written and unrealised gain on cross currency swaps.

Loans growth exceeded expectations with domestic loans growing at 11%, driven by a 15% increase in consumer loans and 7.4% rise in business loans.

Deposit growth outpaced loans growth during the year at 11.5% to reach RM236.9bil. The loans-to-deposits ratio is at 86%.

In value terms, consumer banking was highest, rising by 9.5% to RM4.46bil. However, in percentage terms, global markets business topped with a 99.2% rise to RM1.43bil.

“Barring unforeseen circumstances, the group expects its financial performance for financial year ending June 30, 2011, to be better than the last financial year,” Maybank president and CEO Datuk Seri Abdul Wahid Omar said.

It has set two key performance indicators for the next financial year of 12% growth in loans and debt securities and 14% in return on equity.

Besides its record profit, Maybank also crossed the regional milestone of US$100bil in assets and US$1bil in after-tax profit.

“We aim to be a truly regional organisation with 40% of our revenue from international operations compared with 25% currently,” said Wahid, referring to the LEAP 30 transformation programme where Maybank targets to be the top financial services leader by 2015. “We will look out for further opportunities as we are still not present in some parts of the region.”

It will further strengthen its position to be the leading bank in Asean, with presence in the Middle East, China and India, backed by a strong corporate banking business in Malaysia and Singapore.

Towards this end, it has realigned its businesses into three pillars – community financial services, global/wholesale banking as well as insurance and takaful.

Megat Zaharuddin also noted that while Maybank had a strong consumer banking base, it should grow its non-interest income to balance its sources of income.

The branch expansion of BII is on track, growing to 450 branches in two-and-a-half years’ time from 295 currently. “BII is expanding at the rate of one branch per week,” said Wahid. “It needs adequate reach to service the main economic sectors and major towns. We will continue to support BII as we recently injected 1.5 trillion rupiah to boost its capital base and grow its business.”

On the plan for a dual listing in Indonesia, Wahid said that might materialise next year as there were a few issues to be sorted out with the Indonesian authorities.

He also expected to receive the licence for Maybank subsidiary PT Maybank Indocorp to become a syariah bank.

On the recent liberalisation of foreign exchange rules and the yuan being allowed to trade ringgit wthin a reference band, Wahid said the ability to price would be dictated by trade in the currencies of the respective countries.

That might reduce the interdependence of the US dollar and other currencies and the trend is expected to continue in Malaysia and other countries.

“Maybank has limited exposure in Shanghai but it intends to capitalise on trade flows between Malaysia and its other trading partners,” he said, adding that Maybank might expand beyond Shanghai. It currently has a representative office in Beijing which its plans to expand to a branch.

A third party conjectural opinion suggest that assuming that half of the dividend is converted into share in specie after the 33 sen payout,shareholder's equity may shrink to RM796 million (assuming 50% of such dividend is converted into shares). There is a possibility of a 10% discount on market price to lure shareholders to convert dividends into shares.This will bring about an increase of possibly 1.6% new shares.

With the current bullish stance of the bank's performance, fair value for Maybank shares is RM9.66 ((15x CY11 EPS). The call is OUTPERFORM.

Must You have YTL-Power in Your Portfolio?

Kenanga Research has raised its target price for YTL Power International Bhd stocks to RM2.48 from RM2.45 after updating Wessex regulatory capital value figures and earnings adjustments. That is only a mere 10-20 sen different at the current price.

So, is that a good reason to have the stock in your portfolio?

YTL Power is  a pretty good  defensive stock given current market condition with financial year 2011 expectation gross yield of 7.6 per cent,so said Kenanga  in a note.

"We continue to like the group for its steady cash-flow utilities business and strong cash pile of RM7.4 billion," Kenanga Research said.

"YTL Power's key catalyst lies with the appreciation in the British pound and Singapore dollar as well as new acquisitions," it said.

The research house expects the Singapore dollar rate to appreciate by one per cent year-on-year to S$1.00=RM2.35.

"The resulting rate will more than compensate impact of lower Wessex revenue from further depreciation in the British pound, which is expected to slide one per cent year-on-year to one pound=RM4.80," it said.

"Note that we are not expecting any significant rate hikes for Wessex," it added.

Kenanga Research also said that positive news flow from YTL Power's WiMAX venture could provide further excitement.

"Market talk indicates the group is working on a number of WiMAX devices, which will be used on Android (mobile phones); if so, this potentially means WiMAX-enabled handsets will be easily accessible," it said.

BJ Retail-Can it Go Up?

Well,  BJRetail (BJR) has been listed at long last.

In spite of the oversubscription, it failed to get good premium values on listing.

Right now, it is trading at 48 sen, 2 sen below par. So for those who wanted to buy excess rights issue, this is your chance. Do not expect this share to go up anytime in price soon because the market is full of sellers. Until such time when the dgestion has complete and the supply and demand forces are equally matched, then there is hope of a uptick in prices. If not, just wait it out.

BJR was listed on 16 August and the peak price was 53 sen. Then it gravitated to about 49 sen before ending at 50.5 sen. Subsequently, a tsunami of sellers came out on 17 August to drive to price down to 47 sen. Today it even went to a  low 46.5 sen. I think Vincent is cashing out some of his dividend in specie.

Let us look at some information on this counter.

Currently there are about 1150 7-Eleven stores nationwide, of which 615 stores are in the Klang Valley and 116 in Johor. Its target is to have 2000 stores within five years. So, an increase in the number of stores should mean an increase in sales revenue.

For FY2009,ending December 31st, 7-Eleven achieved a sales revenue of RM1.185 billion and profit after tax of  RM25.4 million.

Besides opening new stores, 7-Eleven is looking forward to providing charged services as well as another revenue stream.

The retail business is generally perceived to be highly competitive. However, 7-Eleven has the  lion’ share of the convenience store market in Malaysia as to the government’ has banned the entry of foreign convenience stores.

Apparently, about 60% of the sales in 7-Eleven stores is generated from 7pm-7am. This means that these stores do not  compete head-on with hypermarkets and traditional sundry shops.

In short, BJR’s convenience stores business is in the high growth market where competition is minimal, at least for now.

Nonetheless, 7-Eleven is no the only growth story in BJR, in which Tan Sri Vincent owns a 51.8% stake after its listing exercise. BJR also sells sewing machines, home appliances and furniture under Singer brand and distributes motorcycles.

Singer has been providing micro consumer credit to customers who purchase its home appliances for a long time. Barely 15% if its sales are in cash. The bulk of sales is on credit and paid off in installments.So, you can see a steady income flow from here.

The provision of credit facilities is yet another income stream for BJRetail.  In future consumer could become a major income avenue for BJRetail should the company manage to raise more working capital to expand such business.

The company’s non performing loans represent only 4% of Singer’s total sales revenue.

Let us look at the valuation.

BJR's IPO price is at 50 sen per share. This implies a PER of nearly 22 times based on proforma EPS of 2.3 sen for FY2009 ended Dec 31.Convenience stores contributed nearly 75% to BJR’s revenue and 64% gross profit of RM490 million.

Many think that this valuation is steep in terms of PER, which is close to that of Parkson Holdings. Also they feel, the profit margin that BJRetail is slim.

Based on such unimpressive figure, RHB has rated the share to be worth  51 sen; Kenanga: at  0.49 and TA at 53 sen.

Furthermore, there is the potential shareholding and earnings dilution as a result of the conversion of a chunk of ICPS. There are 962 million ICPS for BJRetail. Through Vincent Tan's investment vehicle Premier Merchandise Sdm Bhd, there is approximately 92% of the ICPS while Cosway owns 7.7% of it. The ICPS were issued when BJRetail acquired 7-Eleven and Singer from Tan and Cosway Corp respectively.

PS:

In a posting to Bursa KL, it was reported that Vincent Tan through Berjaya Sampo Insurance was in the market mopping up the BJR shares. The shares closed a sen up at the final bell.

This is a good sign as  the excess supply will eventually be kept as long term  investments by this insurance company.

With that, let us see now whether BJR share can do magic on the Bursa or will it be another dumdum.