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Tuesday, June 30, 2015

Opinion: 5 lessons from my $650,000 lunch with Warren Buffett

Published: Sept 12, 2014 5:01 a.m. ET
In 2008, my friend Mohnish Pabrai and I sat down with our families for a “power lunch” with Warren Buffett at Smith and Wollensky’s restaurant in New York. Even though I was by then a close follower of Buffett’s, what I learned at that lunch changed my life.
So much so that within a year of having the lunch, I had left New York and the United States to live in Zurich, Switzerland.
Here is some of what I learned:
1. Unconventional is often better
This lesson started for me before we even began bidding for the lunch, the proceeds of which went to charity. My conventional thinking was that it would be an awful lot to pay just for lunch — even it if was with the best investor in history, and the world’s richest man.
But Mohnish helped me to see that, in addition to saying thank you for everything Buffett had taught us, the lunch would really be a master class in investing and life. Moreover, many charitable donations only come with a plaque and a thank-you letter. This one came with the opportunity to meet with and learn from an extraordinary man.
During lunch, I told Buffett that I had used the prospect of meeting him to convince my advisers to allow me to reduce my fees: I did not want to show up as the participant who charged his clients the most. I explained to Buffett how difficult this was for me, despite knowing that it was the right thing to do.
So I asked him, “Does doing the right thing in business get any easier?”
He paused to think about this, then said that it did get a little easier. But he added, “People will always try to dissuade you from doing the right thing if it is unconventional.”
2. Remain a child
Mohnish had brought his daughters, Monsoon and Momachi to the lunch, and Buffett took great joy in bantering with them. He also delighted in confiding with them, when the menu came, that he does not eat anything as an adult that he did not also like when he was five years old. This playful approach to Mohnish’s children and even to the food he eats clearly carries over to other areas of Buffett’s life.
In our conversation, he showed an intense and youthful curiosity that most children lose by the time they reach their teens. Buffett was genuinely interested in us and wanted to learn as much as he could. Not because we were that special — but because of his extraordinary and inquisitive mind.
3. Learn to say ‘no’
During the lunch, Buffett showed us his diary, which was largely empty. He likes to leave his time unstructured, and to leave plenty of room for spontaneity. When I asked him if he had built Berkshire Hathaway BRK.A, -2.33% BRK.B, -2.34%  with a particular plan in mind, he made the effort to explain to me that Berkshire was the way it was because it suited him and his idiosyncrasies. It made me realize that Buffett was utterly unwilling to make compromises in his personal, moment-to-moment happiness for the sake of achieving some corporate goal.
Of course, once you have a modicum of success, marching to the beat of your own drummer means saying “no” to much of what crosses one’s desk. Observing Buffett, I could tell that even though he is a kind man at heart he also has absolutely no trouble enduring the momentary unpleasantness that comes from saying no. As I realized this, I resolved to get a lot better at my own ability to say no.
4. Discover and listen to your ‘inner scorecard’
Perhaps the most profound lesson was the distinction that Buffett made between one’s “inner” and “outer” scorecard — and how he drove home for us how important it is to make decisions according to our inner scorecards.
This is another way of answering the question of whether we are truly marching to the beat of our own drummer. Buffett taught it by asking us the following question: “Would you like, publicly, to be considered as the best lover in the world, but privately know that you are the worst? Or, would you rather be considered publicly to be the worst lover in the world, when privately you know that you are the best?”
Guy Spier
The answer was obvious the minute he said it, but I realized in the same moment how often I had done things because I was motivated by what others would think of me. Understanding that concept went right to the core of my own doubts and after that lunch, I was determined to listen more carefully to my inner scorecard. It was this distinction that made me realize that I needed to leave New York and helped me decide to move to Zurich.
5. Invest time and energy and take risks for the right relationships
My portion in the cost of the lunch was certainly the largest amount of money that I have shelled out for something, especially considering the uncertain outcome. But I learned an enormous amount and made some important and consequential changes as a result.
The lunch made me realize that I had previously undervalued the power of making sure that I am around people who are better than me, and around whom I can improve. These days I am lucky enough to think nothing of buying a transatlantic plane ticket and enduring the resulting jet-lag, if it means being able to spend quality time with someone whom I admire and from whom I can learn.
The cost of that lunch and the risk associated with it taught me that the value of relationships, and the time and energy it takes to sustain them, are in fact priceless.
Guy Spier manages the Aquamarine Fund and is the author of The Education of a Value Investor (Palgrave MacMillan).
http://www.marketwatch.com/story/5-lessons-from-my-650000-lunch-with-warren-buffett-2014-09-12?page=2

A man who spent $650,000 to have lunch with Warren Buffett says it changed his life in 2 big ways

Warren Buffett has been auctioning off a “power lunch” since 2000 at his charity event for GLIDE Foundation, an organization dedicated to reducing poverty and marginalization.
The highest bidder gets to bring up to seven people to dine with the steak-loving business magnate at Smith & Wollensky steakhouse in Manhattan.
In 2007, Mohnish Pabrai, managing partner of Pabrai Investments, and Guy Spier, author of “The Education of a Value Investor” and manager of Aquamarine Capital, forked out $650,000 amongst the two of them to dine with Buffett.
“Lunch with Buffett, we figured, would be a good way to give to charity, but it would also be the ultimate capitalist master class — a chance to see up close what makes the Sage of Omaha tick and to learn from his wisdom,” Spier reflected in an article published in Time.
It was worth every penny, Spier concluded, and not in the way that most people would think; rather than picking Buffett’s brain for investing tips, Spier used the lunch as an opportunity for personal growth and to learn how his mentor approaches life.
“Meeting with him one-on-one really enabled me to absorb and internalize some of the the ways in which he is in the world,” he said in interview with Opalesque TV.
After meeting Buffett, Spier changed his life in two big ways: First, his social circle, and then, his location.
“The lunch made me realize that I had previously undervalued the power of making sure that I am around people who are better than me, and around whom I can improve,” he wrote in an article for MarketWatch.
Since the lunch, he has focused on surrounding himself with “givers,” rather than “takers,” which he reflected on in episode 14 of “The Investors Podcast. He said:
As I distanced myself from some of these takers, I started noticing some of the givers that were around that I just wasn’t paying attention to. There were quiet wallflowers in the corner that I should have been paying attention to, because they’re actually wonderful people who weren’t trying to insinuate themselves in any way.
Another enlightening lunch lesson was learning the distinction between making decisions according to your “inner” and “outer” scorecard: Do you make decisions based on what you truly believe, or are you motivated by what others would think of you? 
“Understanding that concept went right to the core of my own doubts and after that lunch, I was determined to listen more carefully to my inner scorecard,” he reflected in his MarketWatch article. “It was this distinction that made me realize that I needed to leave New York and helped me decide to move to Zurich.”
Within a year, Spier left Wall Street for Zurich, Switzerland.
While $650,000 seems like an outrageous price for a lunch, Spier says it was a steal.
The price tag on Buffett’s “power lunch” has soared; a year after Spier dined with the legendary investor, lunch went for $2.1 million, and this year, it sold for a whopping $2.35 million to a Chinese businessman.
“We feel like we got an absolute bargain,” he told Opalesque. “Especially considering that Warren Buffett showed up at Smith and Wollensky in New York with a huge amount of energy, completely engaged, and spent 3.5 hours with us, answering any and all questions that we had.”

Read more at http://www.businessinsider.my/lessons-from-lunch-with-warren-buffett-2015-6/#IldPgyxdKVVWw5Gd.99

Teo Seng Capital - Sungai Linggui delay not a concern BUY

- We maintain our BUY call on Teo Seng Capital with an unchanged fair value of RM2.70/share, based on an unchanged fully-diluted FY15F PE of 13x.

- The Star today reported that the group has put on hold plans to expand its layer farm in Sungai Linggui, Kota Tinggi to focus on developing its five new farms in Yong Peng, Batu Pahat. The decision was made following its recent feasibility study which found that it was no longer cost-effective to develop the land there.

- To recap, the group had earlier said that it would be investing RM50mil to open a new 109.3ha farm in Sungai Linggui, which will be developed over four phases.

- TSC currently operates a total of 22 farms (categorised into brooding, pullet and layer farms), which are all located in Yong Peng. These farms are located in the same vicinity as its supporting facilities, namely its feedmill and paper tray machineries.

- We are not concerned with this delay as this was a longer term plan for the group and our earnings estimates have not yet factored in any contribution from its Sungai Linggui farm. The capex of RM50mil was also not included in management’s guidance of the total of RM200mil over the next five years.

- Our FY15F-FY17F earnings CAGR of 23% is underpinned by the production capacity expansion from its Yong Peng farms (+400,000 eggs/day p.a. to 5.1mil eggs/day in five years). We understand that the group has sufficient land available for the development.

- Looking ahead, we expect TSC to register sequentially softer earnings in 2QFY15 due to the seasonality effect and to a smaller extent, the impact of GST on overall consumer sentiment. That said, we are confident of its earnings picking up in 2HFY15 (as per its historical trend) in view of strong demand during the festive periods (e.g. Hari Raya and Deepavali) and the addition of a new farm.

- We also expect the group’s EBITDA margins to continue expanding, buoyed in part by the soft commodity prices. Additionally, the group is set to reap potential savings from its various cost management activities beginning FY15F. We understand that its biogas plant-ups are progressing well, with the first (of five) plant on schedule for completion this year (savings of up to RM2mil p.a.). The construction of its new feedmill plant and installation of new paper tray machine are also going on as planned.

Source: AmeSecurities Research - 30 Jun 2015

周顯 炒股密碼 如何做莊炒股

http://www.metrohk.com.hk/?cmd=detail&id=282481

有人問我,炒股票做莊,有甚麼竅門呢?

我想了一想,回答說,百貨養百客,每個股民都有不同的炒股習慣,有的人專門喜歡高追,買有Momentum的股票,有的人則喜歡等到股票回落十幾個巴仙先至落注,有的人則喜歡買發上發落,單日大波幅的股票。身為一個好的莊家,最好可以有幾種不同的炒法,滿足所有股民的願望。

他又問,那些單日大跌幾成的股票,又是甚麼原理呢?我回答說:「有的股民,看到單日大跌幾成,便興沖沖的去撈底了。所以,單日大跌幾成,是一種有效的Business model,永遠有一班捧場客。不過,以前股市不暢旺時,很流行這個炒作模式,但現在則不流行了。」

他說:「才不呢!日前不是很多單日大跌幾成的股票嗎?」

我說:「這是莊家在高位派夠了貨,所以不頂住股價了,任由它下滑,順便派一手,這是完全不同的Business model。這好比百貨公司賣衫,到季尾大減價,把貨尾賣掉,和有的店子,一年365日都是大減價,這兩者雖然同是減價,但卻是完全不同的Business model。」

周顯 (逢周二、五見報)
資深投資者,著名股評人,股壇教育家

森德2.19 亿柔佛购地

(吉隆坡29日讯)森德(SCIENTX,4731,主板工业产品组)以2亿1900万令吉,收购柔佛新山面积达326英亩的土地。
子公司ScientexQuatari私人有限公司,今日和Bukit Gambir私人有限公司和Jayaplus Bakti私人有限公司,签署有条件买卖合约,分别收购252英亩和74英亩的地皮。
上述2块土地,毗邻森德在柔佛古来的综合城镇发展计划Mutiara Mas花园和其他的住宅区。
董事经理林炳仁在文告中指出,尽管市场情绪低迷,但公司乐观看待柔州住宅产业的长期需求。
“收购这地段后,原有的870英亩地库,将扩大至1200英亩。”
他说,该永久地契地皮拥有便捷的交通网络,可衔接至新山市中心和新加坡,对未来的发展带来正面增长。
该公司将通过银行贷款和内部资金购地,因建议仍有待有关当局和来临的股东特大通过,预计末季才能完成交易。
第三季净赚4295万
另一方面,森德截至4月30日第3季,净利按年涨18.2%至4295万8000令吉,或每股盈利19.02仙。
同期营业额也按年走高6.7%,至4亿5525万令吉,比去年同期4亿2677万令吉佳。

CIMB Research keeps Wah Seong top oil and gas small cap pick

KUALA LUMPUR: CIMB Equities Research maintains its Add call for Wah Seong which is its top oil & gas small-cap pick, with a larger presence in Europe and North America being a potential re-rating catalyst.     
“Accumulate Wah Seong shares and ride on the company’s shift from project-based income to annuity-like earnings,” it said on Tuesday.  
CIMB Research continues to value the stock at a CY16 P/E of 10.5 times, a 30% discount to the oil & gas big-caps.
It has a target price of RM1.88, which is 42.1% above the last traded price of RM1.32.
It said Petronas’s steel-cutting ceremony for Rapid’s steam cracker complex on June 15 marked the start of construction works for the US$16bn Rapid project in Pengerang.
Another Pengerang highlight this month is Wah Seong’s first shipment of spiral-welded onshore steel pipes.
“While this is good news, we are more excited about the company’s further in-roads in Europe and North America that could give more stability to its bottomline, which is mostly project-based,” it said.
The first shipment of spiral-welded onshore steel pipes for the RM202mil Pengerang contract began earlier this month.
Production started at the company’s Sabah and Penang facilities last month following a letter of intent received in 1Q15. The last shipment is expected to take place in mid-2016. 
As at March 31, 2015, Wah Seong had RM1.2bil of orders, of which 59% came from oil & gas, 25% from renewable energy and 16% from industrial trading and services. Its tender book is worth RM5bil, of which 80% consists of oil & gas jobs. 
“We are encouraged by Wah Seong’s small presence in Pengerang. Nonetheless, the big prizes that management is eyeing are in Europe and North America,” it  said.
CIMB Research said Wah Seong was riding high on the success of the RM627mil pipe-coating contract for Statoil’s Polarled project in Norway.
“Management is looking forward to potentially securing a second contract – worth no less than US$100mil – with Statoil in Norway, where it already has an onsite, mobile plant that is handling the Polarled pipes and is aiming to further serve the North Sea market.
“Meanwhile, in North America, management is bidding for jobs that are potentially recurring, using 49%-owned Bayou Wasco’s deepwater plant in Louisiana as its key asset,” it said.

周顯 供應「遠水」 救不了樓市「近火」

供應「遠水」 救不了樓市「近火」
2015年6月30日

【明報專訊】昨天說到增加土地供應量和控制樓價的關係,這是人們常常犯的錯,亦是從董建華到曾蔭權兩代政府所用的錯誤方法,更加是香港房地產問題的中心錯誤。我懷疑,這是地產霸權所製造的陰謀,但當然也要其他人夠蠢、夠無知,才會聯手炮製出這種智障政策。

土地供應和樓價的關係,其實一說便明﹕土地供應是「遠水」,樓價則是「近火」,遠水不能救近火,這應該是常識吧!現時梁振英政府也是面對着這個問題,所以「調控樓市最佳的方法就是控制土地供應量,當樓價上升,政府有責任多推土地,務求令供應增加樓價下跌,反之就是收緊供應,令樓價保持平穩……」,以上的這種常見說法,是錯得不能再錯,皆因增加土地供應,是5年以上的行為,而樓價急升卻是現在進行式,但樓價的一個周期,卻往往是20年左右,升十多年,跌五年左右,但樓價初升時,不會有人關注,因此,當樓價急升時,往往已是中段以後,政府企圖在這時增加土地,當土地供應變成了現樓,推出市場時,恰好趕上了牛市的尾班車。

改善人均居住面積更重要

所以,董建華推出「八萬五」,恰好遇着樓價暴跌,曾蔭權減少供應了幾年,恰好遇上樓價暴升,這並非巧合,而是有着必然性,人們當然也是普遍地愚笨,才會上這個當。所以,土地供應量,是控制人民居住質素的最重要因素,與其掛鈎的,應該是人均居住面積,政府應該穩定地去改善人均居住面積,這是一個硬指標。至於樓價,是市場行為,應該用市場的方法去解決,因為,不管樓價怎升,怎跌,其實並不改變到人均居住面積,所以只牽涉到分配的問題、上車的問題,但卻沒有影響到人民的總居住水平。

那麼,樓價的升跌,應該用什麼方法去調控呢?明天再說。

[周顯 投資二三事]

http://www.mpfinance.com/htm/finance/20150630/columnist/en30_en30.htm

Monday, June 29, 2015

HOVID - HALF YEAR REVIEWS

After nearly half years past of my first post, or two quarter after my first post, I decided to write a reviews and follow up with HOVID, which also consider part 2 of HOVID.

Why? Because six sense tell me its the best time for me to share about this stock once again. Lets reviews on past performance of HOVID. 


I remember previously I shared on HOVID on 26 November 2014, which price around 0.385, as of today trading at 0.485. About 25%. If you able to sell at high 0.56 you will gain a 45% return. Is that enough for you? For me, I not satisfy with such profit yet. Why? Because its long term investment, and therefore I looking for 200% at least. 


Lets look at our Malaysia TOP 30 company or we call FBMKLCI index. Overall performance was 2 major deep down since November 2014 until now end of June 2015. What we can see is HOVID performance is much better than these 30 index stock performance and the price of HOVID did not drop way back to 0.325 although index drop almost close to past year level. Why?


By looking back financial result, quarter 2 and 3 is obviously better than last year. Is that the reason why price is did not go back to last year low? Or there is other reason to support it?

We also take their one of their major partner to see how is actually this sector doing in other country.

We take SANOFI as you can see SANOFI is a great France company. Refer Here <---


Even Europe is having crisis, we can see that SANOFI is very steady uptrend. If you check SANOFI listed at New York, it's also very steady uptrend. And have a look at our PHARMA, CCMBIO,YSPSAH, all are actually very steady ! This sector is very defensive and recession proved ! Its a long term stock for sure !
 

Let me elaborate how the new plant will benefit you and their company. Its say that their tablet and capsule account for roughly 60% of their revenue. 

We take average revenue for past 3 quarter = 48 Million

Tablet and capsule = 60% of Revenue = Total 48 Mil x 60% = 28.8 Mil

New plant increase 30% production = 28.8 Mil x 30% = 8.64 Mil

Which mean, new plant at least will increase revenue to about 48+8 = 56 Mil 

How much the net profit might increase?

We take 5 mil as average earning per quarter X existing plant 60% = 3 Mil

3 Mil come from existing tablet and capsule plant.

3 Mil X 30% new plant = 0.9 Mil. 

Which mean, the new plant will roughly contribute net profit of 1 Million, which they claims will have higher efficiency that might turn up roughly 1-2 Million.

How much it can affect EPS for only 1 Million? 1/774 million shares = 0.00129 EPS

Which by taking estimate coming quarter and futures, net profit about 7-8 Million at least which will get EPS around 0.0088 EPS

A quick calculation : 0.0088 X 4 quarter = 0.0352 EPS per year. 

0.0352 x 10 pe = 0.352
0.0352 x 15 pe = 0.528
0.0352 x 20 pe = 0.704

Currently HOVID is trading at about PE 20. In futures when the new plant fully contribute, we shall see stable cash income for HOVID. More to say, they still have second phase of plant that going to be ready in coming few month. 

So as a conclusion, HOVID is fairly cheap at this moment. Market drop will offer opportunity to collect HOVID for futures long term play. 

My target remain, 0.60 and 1.0. Long term I will hold until I die and pass to my family as retire fund for them and toy fun for children. 

Thank you HOVID, and think closely, how many chance we can grabs a stock at cheap price if market did not crash ? 

http://klse.i3investor.com/blogs/logictradinganalysis/79137.jsp

Matrix Concepts fixes warrants exercise price at RM2.40 apiece

PETALING JAYA (June 29): Matrix Concepts Holdings Bhd ( Financial Dashboard) has fixed the exercise price of its proposed free warrants at RM2.40 per warrant.

In a filing with Bursa Malaysia, Matric Concepts (fundamental: 2.15; valuation: 1.2) said the price represents a discount of approximately RM0.31 or 11.4% to the theoretical ex-all price of MCHB shares (after adjusting for the proposed bonus issue of shares) of RM2.71 per share.

This is based on the five volume weighted average market price (VWAMP) of Matrix Concepts shares of RM3.165 per share, up to and including June 26, 2015.

Matrix Concepts had proposed a bonus issue coupled with free new warrants on April 16 this year, on the basis of one bonus share and one free warrant for every six Matrix Concepts shares held on an entitlement date to be determined later.

The company had said the exercise would see an issuance of up to 77.8 million new shares of RM1 and up to 77.8 million five-year warrants.

The company had said the bonus shares would expand its share capital up to a maximum of RM544.8 million, which comprises 544.8 million shares of RM1 from 461.4 million shares.

The five-year warrants are projected to increase Matrix Concepts’s share capital by an additional RM77.8 million, assuming the warrants are fully exercised during the five-year tenure.

Separately, it said today that the bonus issue of the 77.8 million new shares will be credited as fully paid-up to entitled shareholders on July 16, together with the free warrants.

Matrix Concepts shares closed unchanged at RM3.05, with a market capitalisation of RM1.415 billion.


(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

[转贴] 斤经济较: 轻松读懂希腊银行挤兑事件 - 夜月

要明白以上的标题,

首先要先了解银行是怎样运作的。

银行的运作非常简单,

就是拿别人储蓄在银行的钱,

以更高的利息去借给别人。

当然不可以将全部储蓄的钱借出去,

要不然之前储蓄的人来拿钱时,

就拿不到钱。

到底要存多少在银行和可以借多少出去呢?

要看一个比率叫做銀行存款準備金比率 (Required Reserve Ratio)

 

假设銀行存款準備金比率 = 10%

1 A 10000 存在银行。银行就需要保留1000 1000*0.1),另外9000就可以借出去。

银行将9000借给BB将全部钱存回银行。银行需要保留900 9000*0.1),另外8100就可以借出去。

银行又将8100借给C,C又将全部钱存回银行。然后这个过程循环了10次。

现在民众的存款总数有65132,银行的准备金有6513,银行借出去的钱有58619

简单来说,如果不算利息,民众的存款银行的准备金+银行借出去的钱。
 

 

这个过程最大的危机出在

借出去的钱无法一次性讨回来,

多数为installment

而储蓄的钱却可以一次过拿到完。

假设现在国家有难,

全部民众去银行按钱,

那么银行就要付65132

但是银行里面的现金流只有6513

其他的钱都借出去了,

银行暂时没有现金流周转,

这个现象称为银行挤

 

银行挤并不代表银行没有能力还你钱,

而是代表银行暂时拿不出这么多现金,

这种现象的主因是恐慌,

越多民众害怕拿不到钱,

就导致越多民众去领钱,

就越导致银行没有钱。

 

如果大家都相信银行,

全部都没有去领钱,

那么什么事情都没有。

所以金融危机的发生,

多数不是经济崩溃了,

而是因为大家的信心崩溃了。
 
http://moonitez89.blogspot.com/2015/06/blog-post_28.html

Eversendai bags RM250m exhibition centre job in India

KUALA LUMPUR: Eversendai Corporation Bhd’s subsidiaries have secured new contracts worth RM250mil and pushed the total number of jobs this year beyond RM1bil in the first half of this year.

The provider of specialist engineering and construction services said on Monday the new jobs were secured by its subsidiary companies in Malaysia, India and UAE.

The latest contract is to instal the structural steel, metal deck and shear studs as well as connection design, detailing and temporary engineering for the Dhirumbai Ambani International Convention and Exhibition Centre in India. 

This is the second contract secured by Eversendai for this project, after it was awarded the fabrication contract worth RM184mil in January 2015. 

Eversendai was also awarded the contract for the construction of a high-end, luxury residential project located on a one-acre land in Worli, Mumbai. It is scheduled to be completed in February 2017. 

US Fed's Dudley says Sept rate hike 'very much in play'

NEW YORK: A September interest rate hike is "very much in play" if the U.S. economy continues to strengthen, though the Federal Reserve could also wait until December to start tightening policy, an influential Fed official said in a newspaper interview.

New York Fed President William Dudley, quoted in the Financial Times, said, "It would not shock me if we decided to lift off in September, or it wouldn't shock me if the data were a little softer and it caused us to wait."

Dudley, a dovish policymaker who is a close ally of Fed Chair Janet Yellen, was said to cite recent U.S. wage gains, income, and household spending as having improved his outlook for the economy.

Greece, which is in a tense standoff with its European creditors, remains a "huge wild card," he said.

"If we hit 2.5 percent growth in the second quarter and it looks like the third quarter is shaping up for something similar, then I think you are on a firm enough track that you would imagine you would have made sufficient progress" in the Fed's inflation and employment goals to raise rates "certainly by the end of the year," Dudley was quoted as saying.- Reuters

Greece imposes capital controls as crisis deepens

ATHENS (June 29): Greece moved to check the growing strains on its crippled financial system on Sunday, closing its banks and imposing capital controls that brought the prospect of being forced out of the euro into plain sight.

After bailout talks between the leftwing government and foreign lenders broke down at the weekend, the European Central Bank froze vital funding support to Greece's banks, leaving Athens with little choice but to shut down the system to keep the banks from collapsing.

Banks will be closed and the stock market shut all week, and there will be a daily 60 euro limit on cash withdrawals from cash machines, which will reopen on Tuesday. Capital controls are likely to last for many months at least.

"The more calmly we deal with difficulties, the sooner we can overcome them and the milder their consequences will be," a sombre-looking Prime Minister Alexis Tsipras said in a televised address. He promised bank deposits would be safe and salaries paid.

Even as Tsipras spoke late on Sunday, lines forming at petrol stations and in front of the dwindling number of bank machines that still contained cash highlighted the scale of the disaster facing Greeks, who have endured more than six years of economic decline.

The failure to reach a deal with creditors leaves Greece set to default on 1.6 billion euros of loans from the International Monetary Fund that fall due on Tuesday. Athens must also repay billions of euros to the European Central Bank in the coming months.

The impending default on the IMF loans leaves Greece sliding towards a euro exit with unforeseeable consequences for Europe's grand project to bind its nations into an unbreakable union by means of a common currency. It also carries broad implications for the global financial system.

After months of wrangling, Greece's exasperated European partners have put the blame for the crisis squarely on Tsipras' shoulders. The 40-year-old premier caught them by surprise in the early hours of Saturday by rejecting the demands of lenders and calling a referendum on the bailout.

The creditors wanted Greece to cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.

After announcing the referendum, Tsipras asked for an extension of Greece's existing bailout until after the July 5th vote. Euro zone officials refused, and in his televised address Tsipras bemoaned the refusal as an "unprecedented act".

Despite the hardening of positions, officials around Europe and the United States made a frantic round of calls and organised meetings to try to salvage the situation.

U.S. President Barack Obama called German Chancellor Angela Merkel, and senior U.S. officials including Treasury Secretary Jack Lew, who spoke to Tsipras, urged Europe and the IMF to come up with a plan to hold the single currency together and keep Greece in the euro zone. The German and French governments announced emergency political meetings.

French Prime Minister Manuel Valls urged the Greeks to come back to the negotiating table.

"I cannot resign myself to Greece leaving the euro zone ... We must find a solution," Valls told Europe 1, Le Monde and iTELE in a joint interview.

SAFE HAVENS SOUGHT

The euro fell sharply against the dollar and safe-haven U.S. government debt futures rallied as investors exhibited fears of a Greek default and exit from the euro zone.

"That is going to have a real big impact on markets and that will generate increased volatility," said Ian Stannard, European head of FX strategy at Morgan Stanley in London.

The euro fell nearly 2 U.S. cents to a one-month low in early Asia Pacific trade. The fear of contagion produced a sharp move into safe-haven government debt. U.S. 10-year Treasury futures rose 1 27/32 in active trading early.

The bank holiday announced by Tsipras will last at least until Monday, July 6, the day after the planned referendum, an official said after a late-night meeting of the cabinet. The Athens stock exchange will be closed as the government tries to manage the financial fallout.

It remains unclear how long capital controls will remain in force. In Cyprus, which imposed similar measures in 2013, they were not fully lifted until April this year.

Tsipras faces growing political pressure with some opinion polls suggesting a majority of Greeks could turn their back on his call to reject the bailout and instead decide to support the lenders' package in next Sunday's referendum.

If they do, he would face pressure to resign, leaving the way open for new elections.

Former conservative Prime Minister Antonis Samaras, who on Sunday met Greek head of state President Prokopis Pavlopoulos, said Tsipras should drop the referendum plans and return to the negotiations or make way for a government of national unity.

As speculation of capital controls have increased over the past two weeks, Greeks have pulled billions of euros out of their accounts. Long queues formed in supermarkets on Saturday as shoppers stocked up on essentials.

Greece's top refiner, Hellenic Petroleum, said it had enough fuel reserves on hand to last for many months, but there were reports of long queues forming at petrol stations as motorists rushed to fill up.

The broader consequences for Greece's economy, now back in recession, are likely to be severe, with the tourism sector, which accounts for almost a fifth of economic output, about to start its vital summer season. Anxious to reassure tourists, the government said the 60 euro cash withdrawal limit would not apply to people using foreign credit or debit cards.

Travel companies had been warning tourists for some weeks that they should be prepared to take extra cash, given the likelihood of problems with the system. But the sight of cash machines that had run dry was a visible shock to many tourists.

"I am trying to go over to the bigger banks," said Cassandra Preston, a Canadian tourist who was searching around in central Athens for a machine that had cash. "I am here for another month and I would like to make sure I have some cash on me."

Many leading economists have voiced sympathy with the Greek government's argument that further cuts in spending risk choking off the growth that would give Greece some prospect of servicing debts worth nearly twice its annual national income.

However, in economic powerhouse Germany, other southern states that have endured austerity in return for EU cash and poor eastern countries with living standards much lower than Greece's, many voters and politicians have run out of patience.

German Finance Minister Wolfgang Schaeuble openly questioned the solvency of Greek banks, a key condition to qualify to receive such finance.



"The ECB has always said that as long as Greek banks are solvent, then emergency loans, the ELA, can be granted," he said on Saturday. "And now there is naturally a new situation that because of the developments the liquidity and solvency of Greek banks, or some Greek banks, could be in doubt."

SMRT confident of 20% growth

KUALA LUMPUR: The rather sharp fall in first-quarter profits, which came after lower annual earnings achieved for the financial year ended Dec 31, 2014 (FY14), has exerted more selling pressure on SMRT Holdings Bhd ( Financial Dashboard)’s share price, which has tumbled 45% since the start of the year.

Prior to that, the education group’s share price took a beating last year, as its acquisition of a 23% equity stake in Masterskill Education Group Bhd (MEGB) ( Financial Dashboard) did not go down well with many shareholders.

Its chief executive officer Datuk Dr R Palan, however, is confident that SMRT will be able to chalk up a double-digit growth of 20% for this year.

“Without further expenditure incurred for corporate exercises, we expect our bottom line to grow in tandem with the top-line for this year,” Palan told The Edge Financial Daily in an interview.

Contributions from Cyberjaya University College of Medical Sciences (CUCMS), which the group acquired last year, is a key growth driver, he explained, adding that there is no acquisition plan this year. “It is a year of consolidation when we stabilise our businesses first.”

On top of that, the group has secured a contract to train English teachers for government schools.

SMRT’s (fundamental: 0.8; valuation: 1.5) net profit came in at barely RM789,000 for the first quarter ended March 31, 2015, down 39.5% from RM1.3 million for the previous corresponding quarter.

For FY14, SMRT’s net profit fell 14.85% to RM7.03 million from RM8.25 million a year ago, despite revenue having doubled to RM121.86 million from RM52.4 million for FY13.

Palan, who is also the executive director of MEGB, attributed the poor net profit to corporate exercises undertaken by the group, namely the acquisitions of CUCMS and MEGB. “We secured some borrowings to finance the acquisition of MEGB’s 23% stake,” Palan said.

The purchase consideration for the stake acquisition of MEGB (fundamental: 0.8; valuation: 0.3) was RM51.9 million, of which RM36.3 million was satisfied through external borrowings.

Because of the stake buy in MEGB, SMRT has to defer its plan to transfer to Bursa Malaysia’s Main Market, a move that would help to boost the valuation of its shares.

Palan is of the view that the recent downtrend in SMRT’s share price was mainly due to the general market sentiment. “The market sentiment has not been good lately, but I must say that SMRT’s fundamentals remain intact,” he said.

SMRT’s share price has been on a downhill since November, falling from 89.5 sen to 35 sen last Friday.

Palan acknowledges that SMRT is unlikely to pay any dividend for this year, as the group’s priority is to reduce its gearing by half this year. SMRT’s gearing ratio swelled to 0.28 times last year, after the purchase of a stake in MEGB, from 0.03 times in FY13. “Dividend policy is definitely in the pipeline. But we intend to lower the debt first before making dividend payouts,” he said.

On MEGB, Palan noted that the RM79.7 million received from the sale of two commercial buildings to its former substantial shareholder Siva Kumar M Jeyapalan will be more than enough to finance MEGB’s turnaround plan.

Out of the RM79.7 million proceeds obtained from the two property disposals, RM25.5 million will be used to repay borrowings, RM34.2 million for working capital, and the remaining RM20 million will be distributed as dividends to shareholders including SMRT.

“With these disposals, we can reduce MEGB’s current gearing of 0.2 times to 0.07 times,” said Palan.

In November, MEGB announced plans to dispose of some of the property assets of the education group, as part of its strategy to become an asset-light company and settle its debts.

However, Palan stressed that MEGB is in no hurry to dispose of the six remaining properties, which collectively have a fair value of close to RM200 million.

“Including the Petaling Jaya and Masai [properties], all eight properties belonging to MEGB have a collective fair value of RM274 million. We are now looking for buyers for the other [six]. They are now on open tender,” he said.

Moving forward, Palan said MEGB’s focus is to increase the student intake of its campuses, with the group allocating RM3.4 million to marketing expenses over the next 12 months.

Currently, MEGB operates two campuses in Cheras here and Johor Baru, which have been rebranded as Asia Metropolitan University. It houses 2,087 students, according to Palan.

MEGB’s share price closed 1.5 sen or 2.73% higher at 56.5 sen last Friday, with a market capitalisation of RM206.84 million.

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Financial Daily, on June 29, 2015.

Greece sets capital controls, 6-day bank shutdown

ATHENS: Greece imposed capital controls and ordered banks to close temporarily after the European Central Bank froze a vital financial lifeline following the breakdown of bailout talks between Athens and foreign creditors.
Here are the main measures adopted by the government:
* Banks will close until to July 6. All credit institutions in Greece, including branches of foreign banks, are affected.
* The finance minister may shorten or extend the bank holiday period.
* ATMs will open from Monday afternoon. Daily cash withdrawals will be limited to 60 euros. The limit can be changed by the finance minister.
* Payments via debit or credit cards to accounts within Greece and online banking transactions within Greece will be allowed but payments and transfers to accounts outside Greece are prohibited.
* Cash withdrawals at ATMs with bank cards that have been issued by foreign banks will be allowed. 
* Withdrawal limits may be set by the finance minister.
* All other transactions will not be permitted.
* A special committee will approve banking transactions deemed necessary to safeguard a public or social interest, including medical expenses or pharmaceutical imports.
* Pension payments will be exempt from capital controls.
* Interest surcharges on due payments will not be allowed during the bank holiday period.
* Banks breaching the rules face fines of up to 10 percent of the amount of any transaction violating the control measures. - Reuters

Sunday, June 28, 2015