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Monday, March 31, 2014

LEGALLY SPEAKING: Buying property in public auctions



Buying property in public auctions may be cheaper than buying property from an owner or a developer. Adequate investigation on your part will reduce risks associated with buying auctioned properties and ensure you are making a sound investment.
Make arrangements to obtain a copy of the Proclamation of Sale with its attached Conditions of Sale from the auctioneer. Scrutinize both; the Conditions of Sale will become the terms of the "sale and purchase agreement" if you successfully bid for the property during the auction.
You may ask the auctioneer to show you the property, but the auctioneer will not have access to its interior. You are strongly advised to make an official land search at the Land Office, as the onus is upon you to undertake your own due diligence to ensure that no mistakes have been made at this stage that will jeopardize the land transfer at a later date.
Viewing the property in person will reveal how much you may actually need to spend on the restoration process. Do not rely solely on the photographs provided by the auctioneer as there may be hidden features on the property that will cause you to incur costs later. For large properties, it is prudent to engage your own property valuer to ascertain if the reserve price is indeed lower than its market value.
Property sold in public auction is sold on an "as is where is" basis, which is literally "you buy what you see". If successfully auctioned, the property is deemed to be correctly described in the Proclamation of Sale and sold subject to all easements, caveats, tenancies, liabilities and encumbrances. You cannot later annul the sale because of an error in description, and you do not have recourse to compensation if the property is not as you expected it to be.
Common issues faced by successful bidders can be avoided if the bidders made proper inquiries before buying the property. There may be a tenant in occupation that you may want to evict, there may be a private caveat on the title that you will need to remove, or the property may have been abandoned requiring major renovation.
According to the Practice Direction of the Registrar of the High Court 1/2013, the Plaintiff in a judicial auction (the seller of the property, usually a bank) is not obliged to deliver to the successful bidder a vacant possession, and is not responsible for any bills payable on the property. The plaintiff will only pay quit rent and assessment up to date of auction, leaving the remaining bills and their penalties to be paid by the successful bidder. In many cases, these hidden costs are quite hefty.
On the day of the auction, you must register to be able to bid. Typically, registration closes at 9.30am for court auctions. Before the auction starts at 10.00am, stay alert for any announcements made by the auctioneer. Bring a bank draft or banker's cheque for exactly 10% of the reserved price in favour of the plaintiff, and extra cash to pay for the stamping of the Memorandum of Sale. Put the bank draft and your original IC (or a certified true copy of your IC) into the "Peti Lelongan". Ensure that your full name, IC number, address and the case number is written legibly at the back of the bank draft. This bank draft will be returned to you immediately after the auction if your bid fails.
If you are attending the auction to bid on behalf of a company, the name, registration number, registered address of the company and the case number must be written at the back of the bank draft. In addition to your IC, you are required to enclose together with the bank draft a letter of authorization from the company, the company's Form 49, Memorandum and Articles of Association and a director's resolution signed by all the directors authorizing you to bid on behalf of the company.
You would need to seek permission from the court or Land Office to register as a bidder after 9.30am or to withdraw yourself from the auction after registration. Do not sit in an auction if you decide that you are not going to bid for the property. If the auction is postponed due to you deciding not to bid (e.g. where you are the sole bidder present) you will be blacklisted from bidding in all judicial sales for one year.
If you succeed in bidding for the property, you will need to sign four copies of the Memorandum of Sale immediately after the auction. Your bank draft for the 10% of the reserved price will immediately go to the plaintiff's lawyer. You must pay the remaining successful bidding price within 120 days. There will be no extension of time to pay. You will forfeit the 10% bank draft to the plaintiff if you fail to pay in full, and the auction process will start over. It is only after you make full payment of the remaining purchase price that you will be granted access to the property. The legal process to transfer the title into your name may take an additional few months but, in the meantime, you are the legal owner of the property.
Contributed by Christina Ang Ee Lin of Christopher & Lee Ong (

OSK Property FY13 earnings up 75.9% to RM55.46m


Published: Tuesday February 18, 2014 MYT 7:23:00 PM
KUALA LUMPUR: OSK Property Holdings Bhd earnings jumped 75.9% to RM55.46mil in the financial year ended Dec 31, 2013 from RM31.52mil in FY12 due to good take-up rates for its properties and progress for its projects.

It said on Tuesday its revenue surged 111.3% to RM455.69mil from RM215.60mil.

For the fourth quarter ended Dec 31, 2014, its earnings rose 271% to RM17.79mil from RM4.79mil. Revenue increased by 167% to RM146.04mil from RM54.70mil. Earnings per share were 7.4 sen compared with 1.97 sen.

It rewarded shareholders with a final tax exempt (single-tier) dividend of 5.0 sen per share.

"The commendable increase in profit after-tax and minority interests for the quarter and year to date is attributable to good take-up rates for the group's properties and as well as more advanced construction progress achieved for all its on-going projects in the Klang Valley and in Sungai Petani, Kedah.

"Locked-in sales registered from all of the group's projects for FY13 were RM812.6mil as compared to RM592.8mil in 2012. Unbilled sales as at Dec 31, 2013 and Dec 31, 2012 stood at approximately RM 1.1bil and RM608mil respectively," it said.






































如果不生活在大馬,是理解不了大馬華人的苦處與難處的。他們在馬來西亞這個“生存國”,祖輩幾代人付出了很多艱辛與努力。他們用心經營與耕耘這片國 土。他們自己乃至自己的孩子都是在這片土地上出生的。可是,他們得到的“最公平的待遇”或許只是那本證明他們是大馬公民的身份證而已。



可當很多大馬華人無比激動地到中國生活或旅遊,回到了自己心靈中的“母體國”時,大馬華人,以為這個“母體國”會張開雙臂給他們一個溫暖的擁抱。可 是,沒想到,這個他們遙望已久的“母親”卻只是冷漠地看了他們一眼:你是誰家的孩子啊?你為何也和我家孩子說一樣的話呢?那種尷尬那種難堪那種傷心那種失 望……真非三言兩語足以道清。

此次馬航事故,中國大陸媒體和網友民眾劈頭蓋臉一通辱罵質問。很多言行其實並不合理。甚至是過份了。可善良的大馬華人,他們想到的不是反擊,反而是 耐心尋求溝通與理解。那種感覺,猶如一個孩子無意間闖了大禍。被“母親”一通劈頭蓋臉的大罵時,所表現出來的那種手足無措與小心翼翼,以及那一種被“母 親”原諒和理解的渴求,都讓我無法不動容——雖然,他們並沒有做錯了。

大馬人,他們不該承擔那麼多委屈與承受那麼多辱罵。看到《非誠勿擾》主持人孟非大放厥詞:沒去過馬來西亞,以後也不會去。我不得不說,無知源於這種 無知者的傳播:既然沒有到過大馬,你又如何瞭解大馬實情?大馬所犯何罪?證據又何在?身為一個公眾人物,明知一些民眾是沒有獨立思考能力的,卻還要公開煽 動甚至“指引”民眾輿論一邊倒。真的很無恥。看到很多娛樂明星抵馬,一開始我也以為他們僅僅是擔心得罪粉絲而言不由衷。後來,我想明白了,做為一個公眾人 物,他們不僅僅是沒有道德底線。他們其實就是卑鄙。因為,他們心裡明白:沒有甚麼秀比得上一場“愛國秀”更能快速地討好所有的粉絲了。

(星洲日報/言路‧ 作者:馮彬霞‧旅居大馬的法國華裔)

Mah Sing eyes bigger affordable housing stake


PETALING JAYA: Mah Sing Group Bhd’s landbanking strategy of locking in large tracts of township land is sharpening the developer’s competitive edge to carve a bigger market share in the affordable housing sector.
Following the Government’s market cooling measures that also involved the tightening of bank lending guidelines, the mid-end property market looks likely to make up the bulk of new house purchases going forward.
Mah Sing group managing director cum group chief executive Tan Sri Leong Hoy Kum (pic) said that for 2014, 81% of the company’s target residential launches would comprise mainly mass to mid-segment products priced at RM700,000 and below.
The company has a remaining landbank of 2,818 acres worth a gross development value (GDV) of RM26.82bil. It is targeting to improve sales by 20% from the 2013 level of RM3bil.
Mah Sing will be one of the biggest exhibitors at this year’s Starproperty Fair to be held at Setia City Convention Centre in Shah Alam from May 30- June 1, in Penang at Gurney Plaza from July 24-27, in Petaling Jaya at Tropicana City Mall from Oct 17-19, and also at the Kuala Lumpur Convention Centre from Nov 21-23.
“Our projects are targeted at buyers who buy for own use or for long-term rental income. Hence the take-up rate of our projects has not been much impacted,” Leong said.
Its 480 acres in Rawang will offer mostly link houses priced from RM400,000; phase one of Southville@KL South on 428 acres in Bangi will comprise mainly affordable apartments priced from RM338,000; and the 1,352 acres in Bandar Meridin East will have mostly affordably priced linked houses.
Leong said several research houses concurred that property demand might improve this year due to the impending implementation of the goods and service tax (GST) in April 2015.
“Buyers are expected to take advantage of the current accommodative interest rate regime given the experience in other countries where buyers purchased properties in anticipation of future cost-push inflation on asset prices,” he added.
Although Mah Sing has shifted its focus to mass-market products to cater to the average buyers, it is still maintaining some higher-end products in selected locations. These include One Legenda in Cheras comprising 3-storey bungalows, Aspen in Cyberjaya within a resort environment, M City in the heart of Kuala Lumpur, Icon City, and Icon Residence.
Leong said key projects by Mah Sing this year included The Meridin@Medini inIskandar Malaysia, Johor, an 8.19-acre integrated development comprising the Meridin Linx SoVo, Meridin Exchange Corporate Towers, Meridin Walk Lifestyle Retail and Office Tower and a Wellness Residential Enclave, with a total GDV of RM1.1bil.
In the second and final phase of the project, there will be affordable small sized commercial units, the Meridin Suites and Meridin Sovo.
Also in Johor, the RM5bil Bandar Meridin East is a proposed 1,352 acre-integrated township within the vicinity of Masai-Pasir Gudang-Tg Langsat eastern growth corridor.
In the Klang Valley, Southville City@KL South in Bangi is expected to see strong demand for its 2½-storey linked houses with built-up of 2,650 sq ft priced from RM860,000.
Meanwhile, Star Residence, an integrated project in Subang Bestari, is a purpose built development comprising serviced apartments and shops. In the first phase, serviced apartments from 682 sq ft, indicatively priced from RM307,800, will cater to buyers working in Subang Airport and the nearby business parks.
Lakeville Residence in Taman Wahyu, Kepong, offers serviced residences with indicative built-up from 950 sq ft, 1,200 sq ft and above. The residential units have indicative price from RM668,800.
The other projects include M Residence 3 in Rawang and D’Sara Sentral in Sungai Buloh.
In Penang, Ferringhi Residence in Batu Ferringhi is preparing to launch phase two to keep up with spill over demand from phase one resort condo villas and to benefit from the proposed Teluk Bahang-Tanjung Bungah new paired road.
In Southbay City, the largest phase on 34.5 acres of the massive Southbay township will feature integrated commercial and lifestyle developments made up of a mixture of residential suites, office suites, Grade A offices, retail outlets, hotel and resort, and other recreational attractions.
Another project in Penang is The Loft, located about 1km from the second Penang bridge, consisting of two towers housing 78 serviced residences on each block. The luxury residential suites have built-up of 1,378 sq ft to 1,680 sq ft.
In Sabah, KK Convention City along the coastal highway will comprise a luxury hotel, office towers, shop offices, lifestyle retail, a business hotel and serviced residences.

Saturday, March 29, 2014

申请失业金人数减 美国经济潜力不容小觑



Developers' focus shifts with the opening of the second Penang bridge


DESPITE a softening property market on Penang island and Seberang Prai, Kuala Lumpur and Penang-based developers will be undertaking projects to the tune of RM4.56bil this year, a check with various developers show.
The island, however, is seeing fewer residential property launches due to land shortage, higher land cost and a challenging property market environment. Nevertheless, Raine & Horne director Michael Geh says the gross development value (GDV) of the projects launched on the island this year will still be higher.
Of this RM4.56bil, about RM1.86bil will be residential and commercial projects planned in Seberang Prai, while the remaining RM2.7bil will be on the island.
Although in value terms the island will have a lion’s share, much of the focus is expected to be on Seberang Prai, located on Peninsular Malaysia.
To a large degree, the focus on Seberang Prai has been triggered by the announcement of the second bridge by Malaysia’s fifth prime minister and Penangite Tun Abdullah Ahmad Badawi in the Ninth Malaysia Plan in August 2006. Since then, property prices in Seberang Prai and on the island have risen significantly. One can consider 2006 as the watershed where Seberang Prai is concerned.
The opening of the RM4.5bil second Penang bridge on March 1 is also expected to spur a second wave of interest.
The connectivity is expected to boost retail, for a start. There are plans to develop a RM200mil premium retail outlet known as Penang Designer Village and an integrated shopping mall which will be anchored by an IKEA store in Seberang Prai.
PE Land Sdn Bhd will undertake the Penang Designer Village, while the integrated shopping mall with residential components will be developed by Aspen-Ikano.
Residential development is also expected to improve with the entry of big players into that area in terms of style and design.
Last December, Mah Sing Group Bhd acquired 30.9ha in Jawi, comprising 20 pieces of prime freehold contiguous land, for RM400mil. Its group managing director and chief executive Tan Sri Leong Hoy Kum says the group plans to introduce an integrated township called Southbay East.
Leong says the township is currently at the planning stage. He says the freehold township located just 6.6km from the Jawi toll plaza on the North-South Expressway is expected to attract those who work and live in Southbay East’s immediate surroundings. The property developer is proposing linked homes, semi-detached units and town houses. There will also be a club-house.
But land prices may become an issue. Henry Butcher Seberang Prai’s associate director Fook Tone Huat says vacant land prices in the area, especially those in south Seberang Prai where the second bridge is located, are now hovering between RM40 and 50 per sq ft, a huge jump from 2006’s RM8-RM9 per sq ft.
Land prices in Central and North Seberang Prai were then between RM20 to RM40 per sq ft, compared with today’s range of between RM50 and RM100 per sq ft. The increase in land prices has translated into higher property prices.
“New landed properties such as double-storey terraced units in South Seberang Praiare now priced between RM350,000 and RM400,000 compared with between RM150,000 and RM200,000 prior to 2006,” Fook says.
Double-storey terraces in prime locations in Central and Northern Seberang Praihave doubled from RM200,000-RM270,000 range to RM400,000-RM600,000.
“We are also seeing a lot of life-style condominium projects being planned in Bukit Mertajam this year with new units priced at at around RM300 per sq ft,” Fook says.
As for the secondary or sub-sales market, double-storey terraced houses have a wide price range of between RM250,000 and RM500,000, depending on location.
Landed properties in the sub-sales segment command the best pricing in Bukit Mertajam and Butterworth town.
Despite the interest in Seberang Prai, Fook expects the volume of property transactions to soften this year, due largely to the difficulty in obtaining housing loans.
“There will definitely be fewer transactions this year compared with about 12,000 registered for 2013.
“Since January, we have seen fewer enquiries for primary and secondary market properties as the rejection rate of housing loans is currently at about 60%. Property prices are expected to remain more or less the same as last year,” Fook adds.
Real Estate and Housing Developers’ Association (REHDA, Penang) chairman DatukJerry Chan says due to the tightening of bank loans, he expects the volume of property transactions to decline by about 30% this year.
“The overall transacted value will also fall by about 20%,” he says. Raine & Horne’sMichael Geh expects properties in the secondary segment to remain stable, while those in the primary market might soften slightly.
“There will definitely be a dip in the volume of transactions, due to the stringent loan conditions,” Geh says.
Despite issues about buyers getting the margin of financing they would like to have, this does not seem to have deterred developers from entering the Seberang Praimarket in a fairly big way.
DNP Land, which is part of Singapore’s Wing Tai group, will be developing a RM250mil condomonium project known as Bukit Mertajam Mahkota and the RM550mil Jesselton Hills landed property scheme in Bukit Mertajam, located in CentralSeberang PraiTambun Indah Land Bhd is also planning RM616mil worth of landed property launches for Bukit Mertajam and Pearl City in Simpang Ampat, southSeberang Prai.
DNP Land (North) general manager K.C. Tan says the Bukit Mertajam Mahkota project will be the town’s first high-end condominium development. As for Jesselton Hills in Alma, it will have 200 units of semi-detached and terraced houses.
“The projects are strategically located between the first and second bridges, and is close to Jalan Song Ban Kheng, a prime residential district. They are also surrounded by the Prai and Bukit Minyak Industrial Parks and Penang Science Park.
“We expect buyers from Kedah, especially from Kulim High Tech Park, as Bukit Mertajam is the main connecting point between Penang and Kedah,” Tan says.
IJM Land, known for its Penang island Light project, is also launching RM236.5mil worth of properties comprising double-storey houses in Jawi, south Seberang Prai, and double-storey linked bungalows in Bukit Mertajam, central Seberang Prai. One of Kuala Lumpur’s heavyweight, Sunway Bhd is also planning to launch some RM150mil worth of residential and commercial projects for the second phase of Sunway Wellesley in Seberang Prai, a mixed-development project in Bukit Mertajam, at the end of this month, while the RM60mil third phase, comprising resort condominiums, will kick off in October.
Sunway Bhd general manager Tan Hun Beng says the group will be launching more properties in Seberang Prai as the lower land prices there has allowed the group to price its properties affordably. In June this year, Sunway will launch the RM80mil Sunway Cassia third phase, double-storey semi-detached and three-storey terraced houses, in Batu Maung, in Seberang Prai.
The focus on Seberang Prai, by no means, mean that there is less interest on the island. In fact, property prices have grown by leaps and bounds the last several years. This year, however, will see less launches of landed units, due largely to land shortage and high prices.
Raine & Horne Malaysia director Michael Geh says the price of vacant land has increased to around RM250 to RM300 per sq ft in Batu Maung in the southern part of the island, where the second bridge is located, from about RM50 to RM60 per sq ft prior to 2006. This effectively means that in just eight years, land prices have increased by 400%.
However, Geh also says land prices depend on what the land is being zoned for, whether it is agriculture, commercial or residential usage. This increase in land prices coupled with other factors have resulted in higher property prices.
New two- and three-storey terraced houses on Penang island now cost about RM1.2mil in the south of the island, compared with about RM450,000 prior to 2006.
“New condominiums in similar locations are now priced at RM700,000-RM800,000, compared with RM250,000-RM300,000 prior to the second-bridge announcement in 2006. In the prime locations of the north-east districts such as Tanjung Bungah, Tanjung Tokong, and Pulau Tikus, new lifestyle high-rise units start from RM800,000 onwards, doubled what it used to be in 2006,” Geh says.
How sustainable are these prices? The reponse to launches will be an indication.
Eastern & Oriental Bhd will be launching its RM800mil Andaman Edition 18 East condominium scheme on the island in the first half of this year. IJM Land will introduce its RM125mil Trehaus@Bukit Jambul. This comprises condominium villas and semi-detached villas, and a yet-to-be-named medium and low-medium cost project, which has a RM177mil GDV, in the fourth quarter of this year.
S P Setia will launch in the second half the RM300mil Setia Sky Vista, a condominium project, in Relau.
These launches will be keenly watched.

Friday, March 28, 2014

Global Oriental Berhad - Beneficiary of Second Penang Bridge


As much as I hate to admit, all these years most of the money I made in stock market were from property stocks. For me, property companies are relatively easy to understand : buy land, launch projects, book in the profit. Everything auto-pilot. There is no need to worry about raw material price fluctuation, competitors undercutting, clients defection.
(Of course must watch the macro environment. I know you are going to say that.)

One stock that caught my attention is Global Oriental Berhad ("GOB"). (Previously known as Equine Capital Berhad)

The company was previously owned by Patrick Lim. However, since GE12, he sold down his interest and ceased to be a substantial shareholder. The company is now believed to be owned by people linked to Desmond Lim.

(1) Small market cap + tiny profit, is a plus point

With 227m shares and share price of 79 sen, GOB's market cap is RM180m only. For the 9 months ended Dec 2013, the group reported earnigns of RM19m (annualised RM25m) only, compared to Tambun's net profit of RM60m, Mah Sing's RM280m and SP Setia's RM400m.

When picking property counters, tiny profit and small market cap are actually plus points. As long as the owner / management is not the laid back type (who only wants to sit on the land bank to wait for it to appreicate over time), growing profit by 50 to 100% over two, three years is usually not a problem.

For example, Tambun reported RM23m net profit in 2011, its net profit grew to RM60m in 2013.

Hua Yang reported RM20m net profit in 2010, its net profit grew to RM65m in 2012 (reported RM61m net profit in 2013).

Big cap companies on the other hand, offer lower upside but carry higher risk. KSL has been reporting annual earnings of RM200m plus. However in the latest quarter it reported a small loss, and share price tumbled.

(2) Healthy balance sheet

GOB has shareholders' funds of RM252m, loans of RM180m and cash of RM60m. As such, net gearing is 0.48 times only. This is relatively low. Gearing will drop further as the company has recently proposed a rights issue, which will be implemented in few months time (further details below).

(3) Land bank

All of GOB's land bank are either located at District of Petaling (Selangor) or Seberang Prai Selatan (Penang).

Most of the Selangor land bank were acquired in 1990s. Based on low net book value ranging from RM145,000 per acre to RM1.3 million per acre, it is believed that these lanbank had not been revalued.

The Seberang Prai Selatan land bank also has low net book value of RM391,000 per acre and RM460,000 per acre respectively. These land bank will benefit from the opening of the Penang Second Bridge, just like Tambun Indah, Asas Dunia, etc.
GOB Land Bank
DistrictAcresUsageNet book value per acreYear of acqn
Petaling52      residential developmentRM145,0001994
Petaling1.2bungalow plotsRM915,0001994
Petaling3.4mixed development (with bldg)RM4,915,0001994
Petaling56.1mixed developmentRM755,9001994
Petaling11.4bungalow plotsRM1,094,0001994
Petaling 19.6mixed developmentRM1,308,0001994
Petaling5.4mixed developmentRM179,0001999
Ampang0.6residential developmentRM577,0001992
Seberang Prai  115mixed developmentRM391,0002004
Seberang Prai126mixed developmentRM460,0002011

(4) Development projects (source : FY2013 annual report)

(a) in May 2013, GOB entered into JV agreement with Lembaga Getah Malaysia for development of 5.75 acres freehold land near KLCC with GDV of RM860 mil

(b) Equator, Seri Kembangan - shop offices and shops. Launched in 2011. Construction expected to complete by early 2014.

(c) Villa Heights, Seri Kembangan - guarded and gated residential project. 35 acres semi detached and bungalows. Launched in 2012 and end of 2013.

(d) Springville, Seri Kembangan - low density 277 units of condos. Launched in 2012 (90% take up rate). Target completion by 2015.

(e) Suria Permai - 330 units medium cost apartments and 13 units shops. Target completion by end 2013.

(f) Callisia, Seberang Prai Selatan - doucble storey tarrace houses. Targted completion by end 2013

(g) new projects, Seberang Prai Selatan - for FY2014, the group targets to launch 271 units of double storey terrace houses and 64 units of semi detached houses

(h) Da:men, USJ, Subang Jaya - mixed development with GDV of RM1 billion. Located next to USJ Summit. Fourty one (41) units of shop offices achieved take up rate of 98%, with target completion by 2015. Four hundrfed eighty (480) units of service apartments achieved 95% take up rate, with target completion by 2015.

(5) Proposed rights issue

On 24 February 2014, the company proposed a rights issue on the basis of 1 right share and 0.5 free warrant for every share held. The rights issue targets to raise RM113m, out of which RM59m to be used to repay borrowings while RM52m to be used for working capital purpose.

Post rights issue, share base will double to 455m shares, net gearing will drop from existing 0.48 times to approximately 0.15 times. The rights issue will be implemented in the next few months.

Together with the rights issue, the company also proposed to cancel 50 sen par value. This is purely an accounting adjustment and had no impact on shareholders.

Note : a cancellation of 50 sen par value followed by consolidation of 2 shares into 1 will reduce the number of shares held by shareholders by half (the dreaded "Capital Reduction" scenario that is widely known).

However, a cancellation of par value WITHOUT consolidation of shares will be a pure accounting manouver to clean up balance sheet and has no impact on shareholders

(6) Conclusion

The company is interesting because it has small market cap and yet sizeable undervalued land bank at strategic locations (District of Petaling and Seberang Prai Selatan).

The Group is currently profitable. Earnings in latest four quarters are RM12.8 mil, RM3.2 mil, RM7.6 mil and RM8.6 mil respectively. This translates into historical PER of 5.6 times.

Major shareholders and senior management had demonstrated willingless to further unlock value by growing profitability through development of the group's undervalued land banks (as evidenced by the recent cash call to amongst others, beef up working capital).

It is not inconceivable that profit could double over next, two to three years, thereby propelling valuation to a higher level.

Please refer to the article below by OSK (now RHB). The article is 6 months old, but the info seemed to be still valid

3 Key Takeaways from Seth Klarman’s 2013 Letter


Seth Klarman of Baupost is clearly skeptical of two big themes today. (Check out notes from his 2013 annual letter here and here.)

The bull market in the U.S.
The opportunity mindset in Europe.

Remember that his approach and views are freakishly spot on.

Two obvious ones include avoiding the Internet bubble in 1999 and the 2008 crisis.

Klarman isn’t just a smooth talker though. He walks the walk.

During the “lost decade”, Baupost obliterated the averages, returning 14.8% and 15.9% for the 5 and 10-year periods ending December 31st versus -2.2% and -1.4%, respectively, for the S&P. – Outstanding Investor Digest

While everyone was freaking out during the 2008 crisis, this is what Klarman did.

During the crisis in 2008, Baupost lost “between 7% and the low teens.” Still though, he certainly outperformed the market indices and much of his investment management brethren in a time of panic. – MarketFolly

When Klarman talks, you should listen.

So based on the latest annual letter, here are 3 key takeaways you should know and the implications involved.
Key Takeaway #1
“If you’re more focused on downside than upside, if you’re more interested in return of capital than return on capital, if you have any sense of market history, then there’s more than enough to be concerned about”


This is related to what Bruce Greenwald means when talking about earnings power value.

If a business is unable to generate more cash than what it needs to operate (or reproduction cost), then it’s just earning enough cash to sustain itself.

This is a tricky comparison.

According to simple metrics, such as return ON capital, the company may be making a killing. But this difference is going to make many investors pour money into overvalued assets and taking on unnecessary risks.
Key Takeaway #2
“Fiscal stimulus, in the form of sizable deficits, has propped up the consumer, thereby inflating corporate revenues and earnings. But what is the right multiple to play on juiced corporate earnings?”

Warren Buffett said that “probably the best single measure of where valuations stand at any given moment” is the Wilshire Total Market Capitalization divided by the US GDP.

As of March 12th, the total market cap highlights a significant overvaluation at about 117.2% of the last reported GDP.

This implies a 1.6% return a year going forward.

Total Market Cap to US GDP

Another frequently used tool is the Shiller P/E.

Right now, the Shiller PE reflects a value that is 54.5% higher than the historical mean, also implying a return of 1% for next year.

The Shiller PE

So what is the right multiple to play on juiced corporate earnings?

The question that Seth Klarman poses is one to reflect upon. As investors look at all the profits taken in recent years, their mouths could be watering. Is the expensive price justified to enter now at the market?
Key Takeaway #3
“On almost any metric, the U.S. equity market is historically quite expensive. A skeptic would have to be blind not to see bubbles inflating in junk bond issuance, credit quality, and yields, not to mention the nosebleed stock market valuations of fashionable companies like Netflix , Inc. and Tesla Motors Inc.”

Look at the yield spreads between high yield bonds and the Treasury spot curve at the moment.

We’re really close to historical low digits, and the spread is 7.25%.

Without question, QE has initiated a search for yield that impacted nearly every market available to investors.

Best Time to buy Oil Palm Plantation Stocks - Koon Yew Yin


Koon Yew Yin 27th March 2014

Like most commodities, palm oil price also moves in cycle. There are several reasons why commodity price is cyclical in nature. The price of any product depends largely on the theory of supply and demand which also depends on other economic factors such as economic expansion, recession, interest rate and other factors, all of which are also cyclical in nature.

A few weeks ago, I posted an article under the title ‘Palm Oil Price Trend’ on this forum where I said the average CPO price was Rm 2,250 for last year per ton and in the recent Malaysian Palm Oil conference, all the experts expect CPO price to rise to Rm 3,000 soon. The average CPO price for this year will most likely be about Rm 2,750 per ton. As a result, all plantation companies will enjoy an additional profit of RM 500 per ton for no additional effort, literally for doing nothing.

As we all know, due to the poor CPO price for last year, the share price for all plantation companies have been depressed. Most of them are on cheap sale.

Since the CPO price is at the beginning of the uptrend cycle, all plantation companies will show increasing quarterly profit in the next several quarters.

About 80% of my total investment is on the plantation sector. I have Kulim, FGV, SOP, TH Plantation and Jaya Tiasa and their closing prices are Rm 3.40, 4.46, 6.40, 2.00 and 2.75 respectively. I must warn you that if you decide to buy, you are doing it at your own risk.

Moody's: Malaysian banks resilient to severe credit, market losses


KUALA LUMPUR: Malaysian banks are resilient to severe credit and market losses and are able to withstand a scenario worse than the 2008-09 global financial crisis, say Moody's Investors Service.
In its credit outlook issued on Thursday, it said Bank Negara Malaysia's (BNM) report of its stress test of the country's banks showed banks "are well capitalised".
"The results of the stress test (issued by BNM on March 19) are credit positive for Malaysian banks because they show the banks are resilient to severe credit and market losses," it said.
According to BNM's adverse stress test, the aggregate total capital ratio of Malaysia's banks would be 10% under the central bank's adverse stress scenario, while their common equity Tier 1 (CET1) ratio would be 7%.
BNM's scenario included severe loss assumptions such as up to a six-fold increase in probability of default to around 11.6% versus current impaired loan ratios, a 330-basis point increase in yields on government bonds and a severe drop in real estate prices of up to 30%.
Moody's said as of Sept 30, 2013, its rated Malaysian commercial banks had an average CET1 ratio of 9.5%, which was "way above" Malaysia's Basel III minimum requirement of 4.0% for 2014.
It pointed out HSBC Bank Malaysia Bhd (A3 positive, C-/baa1 stable8), Malayan Banking Bhd (A3 positive, C/a3 stable) and Hong Leong Bank Bhd (A3 positive, C-/baa1 stable) would better withstand unexpected losses owing to their higher capital buffers, although this assessment does not consider the relative riskiness of their loan books, which the central bank's stress test did take into account.
Below is the credit outlook issued by Moody's:
On March 19, Bank Negara Malaysia, Malaysia's central bank, published the results of its stress test of the country's banks, which showed that banks are well capitalised to withstand a scenario worse than the 2008-09 global financial crisis. The results of the stress test are credit positive for Malaysian banks because they show the banks are resilient to severe credit and market losses.
According to Bank Negara Malaysia's adverse stress test, the aggregate total capital ratio of Malaysia's banks would be 10% under the central bank's adverse stress scenario, while their common equity Tier 1 (CET1) ratio would be 7%.
The central bank's scenario includes severe loss assumptions such as up to a six-fold increase in probability of default to around 11.6% versus current impaired loan ratios, a 330-basis-point increase in yields on government bonds and a severe drop in real estate prices of up to 30%.
As of Sept 30, 2013, our rated Malaysian commercial banks had an average CET1 ratio of 9.5%, way above Malaysia's Basel III minimum requirement of 4.0% for 2014.
Banks such as HSBC Bank Malaysia Bhd (A3 positive, C-/baa1 stable8), Malayan Banking Bhd (A3 positive, C/a3 stable) and Hong Leong Bank Bhd (A3 positive, C-/baa1 stable) would better withstand unexpected losses owing to their higher capital buffers, although this assessment does not consider the relative riskiness of their loan books, which the central bank's stress test did take into account.
Bank Negara Malaysia's stress test results are consistent with our own stress test and support our stable outlook on Malaysian banks.
Under our adverse scenario, the aggregate total capital ratio for Malaysian banks fell to around 12.5% from 14.4% as of the end of December 2013, while the CET1 ratio decreased to 10.3% from 12.1% over the same period.
Under our scenario, we assume an average probability of default of 8% and a loss-given default of 40% for business loans and up to 100% for consumers' loans over six quarters.
Malaysian banks' capitalisation is particularly sound in the context of their low impaired loans ratio, which was a stable 1.8% at 31 January 2014 and fully covered by reserves. 
However, as in other ASEAN markets, Malaysian banks' asset quality is vulnerable to a shift in interest rates and the negative effect of higher rates on borrowers.
The leverage of Malaysian households is a particular risk: at 87% of GDP at the end of 2013, it was the highest among ASEAN countries. However, based on Bank Negara Malaysia's and our stress test results, Malaysian banks have enough capital to withstand significantly higher default rates and price corrections.
We note that Bank Negara Malaysia's stress test, while credible, spans a three-year period, whereas there is a risk that a downside scenario could unfold more quickly, causing bank balance sheet problems to materialise faster.
This would result in banks having to absorb credit costs more quickly and without the benefit of a longer stress test horizon, which takes into account higher retained earnings generated by the banks.
For example, the recent stress test by the US Federal Reserve had a two-year horizon, while our scenario for Malaysia usually looks 1.5 years ahead.

Singapore Exchange said to plan starting physical gold trade


Singapore Exchange, Southeast Asia’s biggest bourse operator, is considering starting physical gold trading, according to three people with direct knowledge of the matter.

The plan would include bullion deliveries into and out of the Southeast Asian country, said the people, who asked not to be identified because the issue is confidential. SGX declined to comment in an e-mailed statement.
SGX may join peers in South Korea and China in offering physical bullion trading as Asian demand increases, drawing supplies out of Europe. The Singapore government is promoting the city-state as a center for precious metals by removing a sales tax on investment-grade metals in 2012, and as JPMorgan Chase & Co. and UBS AG started storing gold for customers.

“SGX is constantly looking into ways to help customers tap growth opportunities and manage risks,” the company said in reply to Bloomberg questions. “While we will publicly announce any new initiatives, we do not comment on speculation.”

Spot gold, which rose 7.5% this year amid tension in Ukraine, was 0.6% lower at US$1,296.21 an ounce at 4:42 p.m. in Singapore. Prices slumped 28% last year, ending a 12-year rally, as rising equities and prospects for a U.S. economic recovery curbed the need for a store of value.

Bullion demand in the three Southeast Asian economies of Thailand, Vietnam and Indonesia expanded 42% to 300.3 metric tons last year, according to data from the London-based World Gold Council. That compares to usage of 308.9 tons in Western Europe, where consumption contracted 3.4%.


Korea Exchange Inc., which has had gold futures since 1999, started offering physical metal this month as the government sought to curb as much as US$3 billion ($3.80 billion) of black-market transactions. The Shanghai Gold Exchange, started in 2002, handles gold deliveries in the world’s largest bullion user.

SGX lists rubber and fuel-oil futures, while its unit AsiaClear handles products including steel, iron ore and freight. Shares in the company traded 0.4% lower at $6.91 today, down 4.8% this year.

Gold may fall for a second year and average US$1,332 an ounce in 2014 as some investors shift money to stocks and property, according to Jeffrey Christian, managing director of New York- based CPM Group. That compares with the average US$1,408.83 in Comex futures last year.

Thursday, March 27, 2014

哈萨克以外拓展 幸马泰探进俄英欧印尼



Kimlun secures RM53.43m Singapore MRT project


KUALA LUMPUR: Kimlun Corporation Bhd has bagged a S$20.52mil (RM53.43mil) contract to supply precast concrete segments for Singapore's Mass Rapid Transit system.

Kimlun said its unit SPC Industries Sdn Bhd had accepted the letter of award fromShanghai Tunnel Engineering Co. Ltd to supply the products for the Thomson Line of the MRT system over 36 months.

"The supply contract is expected to contribute positively to the earnings and net assets to Kimlun Group for the financial years during the supply period," it said.

Maybank IB unveils EzyInvest for retail investors


KUALA LUMPUR: Maybank Investment Bank Bhd, in a bid to attract first-time investors and expand its retail customer base, is offering cheaper brokerage fees to clients who buy and sell pre-selected quality counters.
Head of retail equities Lim Chee Kiong said the bank and the industry was pushing for more retail participation in the Malaysian stock market as there were many new as well as dormant investors, especially since the Asian financial crisis in the 1990s.
“This is a low-cost product and we are not expecting a big contribution to our revenue. We want retail participation to increase by leaps and bounds for the market.”
The investment bank launched a first-of-its-kind investment product yesterday, called EzyInvest.
EzyInvest has a low entry cost as clients need only to pay a brokerage fee of 0.4% or RM3, whichever is higher, to start investing.
Investors will be set up with an automated buying instruction where they get to decide on the quantity of shares to be purchased either on a monthly or quarterly basis, based on the share price at the time of each purchase.
The 10 stocks Maybank Investment Bank has pre-selected are Ambank BhdCahaya Mata Sarawak BhdDiGi BhdDRB BhdGamuda BhdGenting Malaysia Bhd, Maybank Bhd, Perisai Petroleum BhdTimecom Bhd and Telekom Malaysia Bhd. Seven of these counters are syariah-compliant.
Lim said “a few thousands were expected to take up the investment product this year.”
Chief executive officer John Chong said EzyInvest was designed to help investors save using equities as part of their investment portfolio.
“We know many people think that investing can be expensive and risky, but we would like them to know that there are less risky options when it comes to the stock market,” he said told the media after the product launch.
EzyInvest is targeted at novice or dormant retail investors, providing a pre-selected list of stocks for them to choose to invest in.
The stocks are chosen based on their potential for long-term returns, backed by solid track record and consistent performance. It is not meant for speculative trading.