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Friday, May 30, 2014

Ongoing projects boost i-Bhd net profit


PETALING JAYA: I-Bhd’s net profit jumped 23.7% to RM6.1mil for the first quarter ended March 31 from RM4.9mil previously on higher profit recognition from ongoing projects.
Revenue expanded 65% to RM44.9mil from RM27.1mil a year ago.
I-Bhd said its property development revenue for its first quarter stood at RM32.7mil which was more than double on a year-on-year basis, adding that this trend was expected to continue for the remaining quarters moving forward.
Pre-tax profit for its property development segment grew to RM8.8mil from RM2.7mil in the previous corresponding period.
“We are seeing sizeable contribution from the sales and progressive completion of the projects that were launched over the past two years, namely from the i-Residence, i-SoVo (small office versatile office) and i-SoHo projects,” I-Bhd executive chairman Tan Sri Lim Kim Hong said in a press statement.
“We expect the growth momentum to continue in the coming months as we have the contribution from i-Suite (phase 1) that was launched towards the end of last year that will enhance our results,” Lim added.
Lim also said in the statement that this performance was in line with its aims to eventually be a bigger property player, noting that its property development segment in the first quarter contributed 73% of its revenue and would continue to be its main contributor moving forward.
I-Bhd will be launching RM1.6bil worth of properties in the coming months including the Grand i-Residence@Kia Peng and the next phase of i-Suite (phase 2) at i-City, Shah Alam.
“Our target is to reach a steady stage in four to five years’ time where we are able to recognise about RM500mil to RM600mil of revenue per year from property development. By then, we would also have built up our investment property portfolio to RM1bil,” Lim said.
“At the same time, the leisure segment revenue would have correspondingly increased to RM100mil per year,” he added.
I-Bhd is also planning to launch The Jewel, its four million sq ft integrated residential, office and hotel at i-City that would be linked to its Central Tower development.

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5.  LVMAMA - 杭州旅游攻略

6. 中国古镇网

Thursday, May 29, 2014

Naim Holdings - 1Q14 Core Net Profit Grows 10% Y-o-y


Naim’s 1Q14 results missed expectations. We cut our FY14/15 forecasts by  12%/15%  respectively  after  factoring  in  lower  associate  earnings. However, we maintain our BUY call and raise our FV by 1% to MYR5.06 as we roll forward our valuation base year to FY15. We still like Naim as it is a proxy to the booming property markets in Miri/Bintulu, backed by massive oil & gas and heavy industrial developments in Sarawak.
  • Exceptionally strong property profits  in  1Q14.  Naim’s 1Q14  core  net profit of MYR33.2m (excluding MYR62.2m  exceptional gain largely  from the  disposal  of  shares  of  30.9%-owned  associate  Dayang  (DEHB  MK, BUY,  FV:  MYR4.80))  came  in  at  27%/24%  of  our  full-year forecast/consensus  estimates  respectively.  However,  we  consider  the results  below  expectations  as:  i)  exceptionally  strong  property  profit  in 1Q14  was driven by an abnormally high property  profit before tax (PBT)margin  of  38%  (as  write-back  of  “cost  savings  from  substantially completed projects”) will not be sustainable, and ii) weak 1Q14 results of Dayang (see  Dayang Enterprise Holdings -  Expect Inflection  Point From 2H14).
  • Forecasts.  We cut our FY14/15  forecasts  by  12%/15%  respectively  to factor in Dayang’s earnings downgrade.
  • Risks.  These  include:  i)  new  construction  contracts  secured  in  FY14falling  short  of  our  assumption  of  MYR500m,  ii)  an  escalation  in  input costs, and iii) weak demand for Naim’s property launches.
  • Maintain  BUY.  The  prospects  for  the  construction  sector  are  strong, underpinned  by  an  extended  upcycle  driven  by  the  MYR73bn  Klang Valley mass rapid transit (MRT) project which will keep players busy until 2021.  For  Naim,  it  will  also  be  buoyed  by:  i)  the  booming  property markets  in  Miri  and  Bintulu,  backed  by  massive  oil  &  gas  (O&G)  and heavy industrial developments in Sarawak, ii) construction projects underthe  Sarawak  Corridor  of  Renewable  Enegy  (SCORE),  and  iii)  high earnings  growth  of  its  30.9%-owned  associate  Dayang.  Despite  the earnings downgrade, our FV is raised by 1% to MYR5.06 from MYR4.99as  we  roll  forward  our  valuation  base  year  to  FY15  from  FY14.  Our revised FV is  based on 10x revised  FY15  EPS, in line with our 1-year forward target P/E for the construction sector of 10-16x.

(Icon8888) OSK Property (Part 4) - Is PE Multiple Heading Towards 4 Times ?


On 22 May 2014, OSK Prop reported net profit of RM22.9 mil for Q1 of FY2014. This translates into quarterly EPS of 9.5 sen.

FYE 31 Dec    Full year 
(RM mil)Q1 2013Q2 2013Q3 2013Q4 20132013Q1 2014
Net profit6.311.220.117.855.424.1
EPS (sen)

As explained in Part 1 of my article dated 26 March 2014, OSK Prop targets to open Atria Mall by Q4 2014. Based on preliminary calculation, net profit contribution from the new Mall could potentially amount to RM19 mil. Based on number of shares of 240 mil, that would add another 8 sen EPS to the Group. 

Based on annualised EPS of 38 sen (being 9.5 sen x 4) and additional 8 sen from Atria Mall, could we be looking at potential EPS of 46 sen next year ?

Based on latest closing price of RM1.90 and EPS of 46 sen, Prospective PE multiple works out to be 4 times only.

Based on PE multiple of 7 times, fair value for mother share would work out to be RM3.22.

Based on exercise price of RM1.00, fair value for Warrants C ("WC") would work out to be RM2.22, an upside of 131% based on latest closing price of RM0.97.

No wonder Tan Sri Ong Leong Huat has been actively buying back WC at price as high as 85.5 sen recently (please refer to table below).

Acquisition of OSKProp-WC by Tan Sri Ong Leong Huat Since January 2014 
 UnitsPrice Paidunits 
21 Apr 201440,0000.85581,223,50976.52
18 Apr 2014126,8000.841  
17 Apr 201459,7000.84481,056,70976.36
15 Apr 201432,5000.810  
9 Apr 2014149,0000.79980,964,50976.28
8 Apr 201461,1000.796  
1 Apr 20142,1000.77980,754,40976.08
28 Mac 2014478,6000.78780,752,30976.08
27 Mac 201441,5000.710  
26 Mac 2014146,8000.688  
21 Mac 2014590,1000.61180,085,40975.45
20 Mac 2014229,0000.600  
19 Mac 2014122,0000.59279,266,30974.68
18 Mac 2014645,4000.600  
17 Mac 2014652,9000.606  
16 Jan 2014227,3000.52876,646,80972.21
10 Jan 2014363,3000.54776,419,50971.99

PM Lee offers his definition of 'constructive politics'


The Prime Minister spelt out what he felt made for constructive politics in Parliament, touching on factors like effective policy-making and maintaining high standards of integrity.

SINGAPORE: Prime Minister Lee Hsien Loong weighed in on the debate over constructive politics, as he charted out the Government's agenda for the second half of its term in Parliament on Wednesday (May 28).

Politics cannot be about politics alone, because Singaporean lives and futures are at stake, he said. Rather, politics is about what leaders stand for, what they believe in, and what they want to achieve.

He said it was "striking" how Opposition Member of Parliament Low Thia Khiang's speech had nothing to say about the substance of the Government's programmes: "No critiques, no suggestions, no alternatives - nothing."

Constructive politics, said the Prime Minister, can help Singapore scale new heights, and the wrong politics will doom the country. He then outlined what he believed constructive politics to be.

First, developing effective policies for Singaporeans, which means solving problems, creating opportunities and making difficult trade-offs to improve lives.

Second, putting forward good people to lead. Mr Lee said institutions are important, but equally critical are the Ministers and MPs, and those who aspire to be such.

Third, having a robust and open debate where proposals are scrutinised, so that the best ideas for the country are gleaned. Mr Lee said he was "disappointed" that the Opposition has offered very little of this in Parliament.

Scrutiny must extend beyond policies and personalities, he added. "Certainly if ever a PAP MP were accused of making false and untruthful statements, I would get to the bottom of the matter," he said.

Fourth, maintaining high standards of integrity and honesty. Mr Lee said this is the key differentiator between politics in Singapore and in many other countries.

And finally, rallying people together around a common cause. Mr Lee noted this is more of a challenge now as society becomes more diverse and interests less aligned. It is thus even more important to navigate this next phase of nation-building together, because if the country ends up with factional politics that divide society, then "politics would have failed Singapore", he said.

The Prime Minister added the ruling People's Action Party has tried its best to practice constructive politics by offering serious policies and debating trade-offs even when issues are sensitive, admitting wrong-doing and putting them right, and engaging Singaporeans in a shared future.

Mr Lee said opposition parties, too, must uphold the same standards. "Case in point: Indranee Rajah on Monday pointed out the WP has flip-flopped on foreign workers. Low Thia Khiang denied this. He said 'whether we flip-flop… No. We are not. If she wishes to have a full debate on that please file a motion, we are prepared to debate that.' Mr Low's denial is simply false. WP did flip-flop. The record is there in the Hansard, for everyone to see. But his suggestion to file a motion is not a bad idea and I think it's worth considering," said Mr Lee.

Citing the experiences of other countries like the US and Thailand, Mr Lee said many other countries have gotten in trouble because they have not gotten their politics to work.

"We must maintain constructive politics in Singa­pore. Develop good policies to solve people's problems. Encourage good people of integrity and character to serve. Help us make common cause together, to face our future confidently as one people, and that's a task I ask all MPs and political parties to join us in this effort," said Mr Lee.

- CNA/xy



(吉隆坡28日訊)依文仙台(SENDAI,5205,主板建筑組)攫取5億8千萬令吉油氣業工程、採購、施工合約,以供應全面配備的多功能服務型平台(LIFT BOAT),這第二項油氣工程使其手握工程增至16億8千萬令吉。







获5.8亿造船合约 依华建台进军油气业






























Microsoft shows off real-time Skype translator


RANCHO PALOS VERDES Calif.: Microsoft Corp showed off a test version of a real-time, spoken-word translation service for Skype calls on Tuesday, the first time the world's largest software company has demonstrated the breakthrough technology publicly in the United States.

Skype Translator, as it is currently called, allows speakers in different languages to hear the other's words spoken in their own language, according to a demo introduced by Chief Executive Officer Satya Nadella at the Code Conference technology gathering in Rancho Palos Verdes, California.

"It is going to make sure you can communicate with anybody without language barriers," said Nadella, who took over as Microsoft CEO in February and is keen to re-establish the company as a technology leader after a decade of slipping behindApple Inc and Google Inc in mobile computing.

Nadella described the underlying technology as "magical," but said the task now was turn it into a real product rather than just a research project, promising it would launch by the end of the year. He did not say if it would be a free add-on for Skypeusers or a paid extra.

Immediate reaction to the demo, featuring an English-speaking Microsoft executive chatting with a German counterpart, was mixed. One German-speaking audience member said the translation was good enough for vacation, but not for business.

The new technology, which Microsoft demoed in a rougher form 18 months ago in China, could represent a significant feature for its Skype online chat service, which boasts hundreds of millions of users. It is an advance on Microsoft's current translation features that only work with written words on its Bing search engine and Internet Explorer browser.

Microsoft has been working hard on speech recognition technology for years. Earlier this year it showed off Cortana, its voice-activated "personal assistant" designed to rival Apple's Siri.- Reuters

Coastal Contracts profit 58% up in first quarter


PETALING JAYA: Offshore support vessel (OSV) fabricator and emerging jack-up oil rig player Coastal Contracts Bhd saw a 58% leap in net profit to RM49.2mil for the first quarter ended March 31, 2014.
Up from RM31.1mil in the previous corresponding quarter, the stronger bottomline was attributed to the increased delivery of OSV newbuilds in addition to an enhanced product mix comprising higher-value OSVs.
Coastal Contracts’ first quarter group revenue rose 33.1% to RM224.7mil from RM168.9mil previously, flowing from the larger deliveries of higher-specification newbuilds.
Its executive chairman Ng Chin Heng said its prospects were underpinned by an encouraging OSV market with higher selling prices and stronger delivery orders, adding that it had delivered RM196.5mil worth of OSVs in the quarter, up from RM164.2mil previously.
As of March 28, its order book stood at about RM2.4bil, of which fabrication of OSVs and other vessels constitute RM1.2bil while the balance comprises the fabrication and charter of a gas compression service unit to Mexican national oil company Petróleos Mexicanos, targeted for delivery in the second half of 2015.
The group is also in the midst of fabricating a US$210mil (RM676.9mil) high-specification jack-up rig, slated for completion in the fourth quarter of this year, which is its maiden foray into the rig-building and chartering sector.

Wednesday, May 28, 2014

Matrix: Sendayan To Lead The Way


Wednesday, 28 May 2014 
Matrix FY14Q1 Financial Result
Res & Com Prop % 74.166.776.076.0
Industrial Prop % 20.827.821.024.0
Industrial Land %
Total Equity582.0552.4540.1518.3387.9
Total Assets964.5900.5862.8793.0645.4
Trade Receivables144.3140.8161.5118.1185.7
Prop dev cost523.5443.8362.4400.0360.5
Cash -OD96.083.8211.2206.538.5
Total Liabilities382.5348.1322.7274.7257.5
Trade Payables299.3245.7229.5198.3204.8
ST Borrowings34.435.536.78.817.0
LT Borrowings13.215.315.516.116.9
Net Cash Flow 53.4180.8176.18.1
D/E RatioNet cashNet cashNet CashNet cashNet Cash
Matrix latest FY14Q1 result is slightly poorer QoQ, mainly due to timing of construction billings and absence of land sales from its Sendayan TechValley (STV).
Its PBT margin improves slightly to 40.1% even without the high margin land sales.
Its is reported that Matrix is close to secure at least RM100mil (RM130-147mil) from 75 acres of land sales in STV within this year. Matrix has 243 acres of industrial land remaining at the end of year 2013 and it is in the process of replenishing its STV land.
Matrix achieved sales of only RM126mil (292 units) in the first quarter, with an average take-up rate of about 40% two months after launch. It is expected to post better sales & result in the subsequent quarters.
The management target to launch RM763mil worth of properties (excluding industrial land sale) in FY14, mainly in Bandar Sri Sendayan. The launch of condominium in Kuala Lumpur has been delayed to second half of FY15.
Unbilled sales currently stand at RM440.8mil, increases marginally from RM437mil at the end of Dec13.
Matrix's balance sheet and cash flow remain strong. It has declared a first interim single tier dividend of 5sen for FY14. 
Now the government is looking to extend express rail link (ERL) from KLIA to Malacca. It is confirmed that there will be a stop at Seremban.
By looking at the geographical location of Bandar Sri Sendayan (BSS), KLIA, Seremban and Malacca, it is highly likely that the ERL route will pass through and stop at BSS.

The proposed Senawang-KLIA expressway will pass beside BSS as well.
If this is true, then it will certainly increase the demand of properties in Sendayan.


Even though BSS has over 5,000 acres of land, actually quite a big portion of it are for STV (934 acres), TUDM (750 acres) and also for agricultural use (1,241 acres). Its actual size for residential & commercial development is 1,942 acres.

The initial plan of TUDM Academia & Training City includes a 18-hole golf course, university, training centre & residential units for TUDM personnel.

For the agriculture land, I'm not sure whether it has been or will be converted to residential, commercial or industrial use. I think this will happen sooner or later.

Anyway, in Negeri Sembilan and KL, Matrix still have 1,779 acres of land with GDV of RM6.6 billion for its future projects starting from year 2015 to 2022.

       Acquisition of land in 2013 to extend Bandar Sri Sendayan

Personally I am still comfortable to hold Matrix's shares even though property market is slowing down. This is because Matrix pays good dividend and mainly builds landed properties, which should be more resilient in a difficult market.

Besides, the freehold Bandar Sri Sendayan, supported by Sendayan TechValley, has a massive potential to become a very successful township.

Eversendai Corporation - Secured RM580m Related-Party Contract


News Eversendai has secured contracts for the construction of 2 units of GustoMSC NG-2500X liftboats at a combined value of RM580m from a related-party company, Vahana Offshore (S) Pte. Ltd (Vahana).

The contracts are for the engineering, procurement, construction and delivery of 2 units of fully equipped liftboats, Aryan and Arjun, in February and May 2016, respectively. Both units will be executed at Eversendai Offshore’s fabrication yard on a waterfront land measuring approximately 200k sq m with 550 m of quayside in RAK Maritime City, Ras Al Khaimah in the United Arab Emirates.

Comments Although it is a related party transaction, we view the announcement positively as: (i) the contract could provide good profits; assuming 10% net margin, the project would contribute RM29m per annum to the Group’s bottomline until 2016, (ii) this maiden project will eventually provide another stream of income i.e. marine and shipbuilding to Eversendai in a foreseeable future, (iii) including this contract, the Group has secured RM752m worth of jobs YTD against our forecast of RM1.0b new contracts assumption in FY14.

Outlook This contract could be a prelude to more O&G-related contract flows for the Group in the foreseeable future. This project will build up Eversendai’s track record in this new sector.

Elsewhere, Eversendai is eyeing more steel structural jobs in the Middle East, particularly in Commonwealth Independent States (CIS) countries such as Azerbaijan. It has already secured one project in the country last year (a 41-storey office tower in Crescent City project). Other than that, Eversendai is sanguine about Dubai hosting the World Expo in 2020. There will be more convention centres to be built there and hence opportunities for steel-structural market leaders such as Eversendai.

Forecast We are leaving our forecast unchanged pending more clarification from management in today’s Analyst Briefing.

Rating Maintain MARKET PERFORM

Maintain MARKET PERFORM rating on Eversendai at this juncture pending more clarification from today’s Analyst briefing.

Valuation Maintain our TP at RM1.18 based on unchanged fwd-PER of 9x on FY15 EPS.

Risks to Our Call Better progress in construction projects

Lower-than-expected input costs.

Secure O&G contracts in near-term

Source: Kenanga

SBC Corp - No goodwill amortisation boost


Target RM3.96 (Stock Rating: ADD)

At 114% of our full-year forecast, SBC's FY03/14 net profit was above our expectation, mainly due to the absence of goodwill amortisation and higher profit margins. The company also announced a 1:2 bonus issue, which was a positive surprise. We raise our FY15 EPS forecast to reflect the zero goodwill amortisation and added new FY17 numbers. The stock remains an Add, with an unchanged target price of RM3.96, a 40% discount to its RNAV, in line with the discount for other small-cap property stocks. Upcoming new launches in its Jesselton Quay project and its current huge RNAV discount should catalyse the stock.

FY14 net profit up 34%
Although SBC's FY03/14 revenue was up only 8% yoy, net profit expanded at a faster 34%. The 4.75 sen final DPS declared was within our expectation. The stronger FY14 net profit was mainly due to higher overall profit margin, lower effective tax rate and the absence of goodwill amortisation during the financial year. In FY12/FY13, the goodwill amortisation recognised was around RM5m annually but SBC's auditors indicated that there was no need to do so in FY14. Goodwill came from the purchase of the Batang Kali landbank many years ago.

New property launches later this year
SBC's unbilled sales is currently around RM220m. However, this is expected to rise later as it has several new launches planned later this year. This includes the RM200m Cantonment Exchange shop offices (on Jalan Ipoh), Kiara East residential units, and the maiden launch of its Kota Kinabalu Jesselton Quay (JQ) integrated waterfront project. In mid-May, SBC finally received the final approvals for the JQ project. We expect it to launch JQ's first phase for sale in the next 3-4 months - retail and serviced suites worth a total of RM500m. We project JQ to contribute to its bottomline from FY16 onwards.

Bonus issue a positive surprise
SBC has also this evening proposed a 1:2 bonus issue, which was a positive surprise to us. This should improve the stock's trading liquidity and make it more affordable to retail investors. The proposed 1:2 bonus issue should be completed before the end of the year.

Eversendai bags RM580m worth of contracts


PETALING JAYA: Eversendai Corp Bhd's wholly owned subsidiary Eversendai Offshore RMC FZE has been awarded contracts worth RM580 million for the construction of two units of GustoMSC NG-2500X liftboats.

"The contracts from Vahana Offshore (S) Pte Ltd are for the engineering, procurement, construction and delivery of two fully equipped liftboats, Aryan and Arjun in February and May 2016 respectively," it said in a filing with Bursa Malaysia yesterday.

Both units will be executed at Eversendai Offshore's fabrication yard on a waterfront land measuring 200,000sq m with 550m of quayside in RAK Maritime City, Ras Al Khaimah in the United Arab Emirates.

The group said its foray into the oil and gas (O&G) offshore and marine sectors through Eversendai Offshore will see it actively participating in the engineering,
procurement and construction of jack up rigs, liftboats and related equipment; upgrade and refurbishment of offshore jack up rigs; new build construction for the offshore O&G sector including floating production, storage and offloading (FPSO) systems and other offshore and onshore modular structures as well as oilfield engineering services, such as the upgrade, refurbishment and new build of land rigs.

"This is a breakthrough contract for Eversendai; one which will see us provide our proven skills in a brand new sector. This contract is particularly exciting to us as it supports our strategic decision to establish our offshore O&G and marine operations and is in line with our strategy to strengthen our foothold in the Middle East, where we have enjoyed a dominant market share in terms of business opportunities," said its executive chairman and group managing director Tan Sri A.K. Nathan.







營運方面,除了新加坡西拉雅能源以外,該集團旗下所有核心業務都取得盈利增長。達證券指出,受益於價格升長、稅負降低和馬幣兌英鎊走貶,英國韋塞水供(Wessex Water)稅前盈利按年成長16.7%至5億9千120萬令吉。






此外,能源委員會(E C)料將在近期內開啟4A電力計劃,楊忠禮電力和國家能源(TENAGA,5347,主板貿服組)被市場視為是該計劃的有利競爭者。達證券暫且對競標情況抱持開放的態度,惟一旦奪標將會成為楊忠禮電力的長期盈利催化劑。

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Boustead unit promises good dividend payout


PETALING JAYA: Boustead Plantations Bhd, en route to a Main Market listing next month, aims to provide a dividend payout ratio of at least 60% of its after-tax profit in the coming financial years.
The plantation arm of Boustead Holdings Bhd said the after-tax profit would exclude profit retained by its associate and joint-venture companies, as well as any unrealised income from fair-value adjustments that are non-cash in nature.
Boustead Plantations expects to raise up to RM1.05bil from its initial public offering (IPO) based on an indicative price of RM1.60 per share.
Set to be one of the largest IPOs in the country, Boustead Plantations, which is scheduled to list on June 26, said of the total proceeds, RM928mil would accrue to itself, while the balance of RM121mil will go to Boustead Holdings.
“Demand for our stock has been quite encouraging,” Boustead Plantations vice-chairman Tan Sri Lodin Wok Kamaruddin said.
“We’ve been getting many requests for our IPO shares, but unfortunately, we do not have that many shares to offer. So, we hope investors who have not been able to subscribe to our IPO shares would buy our shares from the open market,” Lodin said after the launch of Boustead Plantations’ prospectus yesterday.
Boustead Plantations is offering up to 656 million shares to investors, out of which 163.57 million will be offered to institutional investors, while the remaining 492.43 million will be offered to retail investors, including unitholders of Al-Hadharah Boustead Reit, Boustead Holdings and eligible directors and employees. Only 64 million shares will be opened to the public.
Upon listing, the total enlarged and paid-up share capital of Boustead Plantations will be RM800mil, comprising 1.6 billion shares.
Lodin said Boustead Plantations planned to expand its total planted area to 100,000ha within the next three years from the current 71,000ha.
“My personal target is that by 2016, we should be managing 100,000ha of plantation area,” Lodin said.
He said the group’s land bank expansion programme would be achieved through the acquisition of existing plantations and plantation reserve land, primarily in Malaysia.
“The priority is to focus on Malaysia, but if good opportunities emerge in Indonesia or Papua New Guinea, we will certainly consider them,” Lodin said, adding that by increasing its planted land bank, the group would be able to increase its yields and strengthen its profitability for the long term.
According to its prospectus, Boustead Plantations would allocate up to RM420mil from its IPO proceeds to acquire plantation land, and a further RM96mil for replanting exercise and capital expenditure. The remainder would be used for the repayment of bank borrowings and listing expenses.
Lodin said crude palm oil (CPO) prices are expected to move higher over the next six months, driven by improving demand amid a “decent” stockpile level.
“In the next one month, we could see a pickup in demand from consuming countries such as Pakistan and India, given the upcoming Ramadhan and Aidil Fitri festivities,” Lodin said.
“We expect CPO prices to hover between RM2,700 and RM2,800 per tonne by the third and fourth quarters of this year,” he added.
The three-month benchmark CPO futures contracts are currently trading at around RM2,500 per tonne.

TH Plantations to focus on consolidating operations


KUALA LUMPUR: TH Plantations Bhd will this year focus on consolidating its operations after it recorded a healthy bottom line growth from acquisitions in the financial year ended Dec 31, 2013 (FY13), according to chief executive officer Datuk Zainal Azwar Aminuddin.
“The acquisition has augured well for the company and has resulted in a 49% growth in our fresh fruit bunches (FFB) production in FY13 compared with FY12. When we acquired a plantation that is double our size in greenfields and brownfield ones, this impacted our finance costs,” Zainal said after the company’s AGM yesterday.
He said the company would like to remain prudent at this juncture and that its gearing was at an acceptable level today.
“The challenge now is to produce enough to sustain our growth to mitigate the amortisation and finance costs.
“Upstream plantations are a volume game and we will have to improve our yield performance further – we achieved 23.86 tonnes per ha last year,” he said, adding that the company’s yield outlook for FY14 was to achieve 22 tonnes (per ha) average. Growth will be seen mainly from its fields in Sarawak.
“Sarawak will contribute to some 44% of the total production of our plantations this year. And by 2017 this will grow to 66% in terms of contribution to the company; (while) we also target 1.3 million tonnes of (total) FFB quantity then,” he added.
The company had seen its land bank ownership growing by seven times today to 109,000ha compared with the year it was listed in 2006 at 15,000ha.
It is also allocating RM105mil for capital expenditures in FY14 mainly to build a palm oil mill in Bintulu, Sarawak, that is expected to be complete at the end of two years.
Meanwhile, he also said that the anticipated El-Nino dry weather would see its direct impact on its fruits and yields should it come to pass.
“We would likely see forced ripening (of fruits) and an immediately lower production of crude palm oil. While the major impact would be felt in the year 2015 and 2016. We expect a significant impact of about 10%-15% down (in output),” he said.
“The dry weather would also impact the formation of the fruits which would take at least 12-24 months when we will see the impact.”
Shareholders at its AGM yesterday approved all resolutions for the company including its dividend of 3.62 sen per share that represented a 50% payout of its FY13’s net profits.

RHB Research maintains Buy on Ahmad Zaki


KUALA LUMPUR: RHB Research has maintained its Buy call on Ahmad Zaki with a fair value of 96 sen, adding that the group is a good small-cap proxy to public infrastructure spending given its involvement in the construction of the Klang Valley mass rapid transit (MRT) project and various government facilities.
It said on Wednesday that Ahmad Zaki’s 1Q14 net profit met expectations at 27% of RHB’s full-year forecast/consensus estimates respectively.
“We project Ahmad Zaki’s net profit to hit the RM30mil mark in FY15 from less than RM6mil in FY13,” it said.
RHB said Ahmad Zaki’s current outstanding construction orderbook of RM2bil, which can already last for 2-3years will surge by 80% to RM3.6bil when the RM1.55bil East Klang Valley Expressway (EKVE) hits the ground over the immediate term.
“We also like Ahmad Zaki for its stable of concession assets comprising a highly profitable bunkering operation at the Kemaman Supply Base in Terengganu, theInternational Islamic University of Malaysia (IIUM) Teaching-Hospital under construction (26% completed) and the EKVE under planning.
“In addition, there is tremendous value in its 21,000 ha oil palm plantations (23% planted) in West Kalimantan, Indonesia,” it said.
RHB expects Ahmad Zaki’s net profit to surge five times between FY13 and FY15, backed largely by improved construction profit and reduced plantation losses.

Tuesday, May 27, 2014

Teaching a Debt Perspective to 12-Year-Olds -


A few weeks ago, my buddy and former HBS classmate, Allan, asked me if I’d like to give a talk about my debt pay-off to the youth group that he leads at his church. I was intrigued and asked who the audience would be. “About a dozen young men, ages 12 to 18.” I became both very interested and very intimidated at the same time. What a great time to talk to them about debt! Young people should hear this message sooner rather than later. But also, what a difficult time to talk to them about debt! Will they listen and pay attention? Can they relate? How the heck do I effectively talk to them about debt without getting too simplistic and general?
Well, I literally just got back from giving the talk, and I couldn’t be happier with how it went. The group of guys was extremely engaged and super sharp. They asked a bunch of really good questions at the end, and it felt like they really understood the very complex message that I was trying to express to them. One of them was even jotting down some notes during my talk and came up to me afterwards to ask for some advice. I think I’ve planted a seed with some of them and I’m glad I  took Allan up on his offer.
What follows are the slides and the script that I loosely followed.
This is one of those adult topics. This is one of those “how the world works” topics. When I was growing up, I always wanted to know how the world worked. Allan wants to make sure you’re exposed to this kind of thinking. He wants to make sure you know how the world works. Today you’re going to get one of those rare glimpse into how the world works and we’re  going to talk about a very adult topic: money. 
What is perspective? Perspective is like a point of view. When you were a one-year-old, you had the point of view of a one-year-old. You only cared about your naps and eating and having a clean diaper. You weren’t really interested in current events, or international news, or anything like that.  A dog has the point of view of a dog. It only cares about naps and eating and and playing.
Your current perspective as 12 to 18-year-olds is much different than the one you had when you were one. It’s the result of what you experience, read, see on TV, hear about from your parents and teachers. It changes as you go through life.  Today, I want to try to change your perspective and get you to think about certain things a little differently.
You already know this is a fact. This is not the secret. How do you know that success is important in our society? One way to answer that question is to ask yourself what you get pressured to do well on. Grades? Sports? Every time your parents ask you how you did on a test, they’re asking if you were successful.Why? Because success is important. Every time your parents cheer for you while you’re playing a sport, they’re cheering for your success because success is important.
Every time your parents ask about your performance, they’re asking about your success, and they’re sending you a signal that success is important.
We automatically consider somebody successful if they have a lot of cool stuff.
Something that we do automatically is something we do without thinking. A perspective is automatic. We take our experiences and what we hear from our parents and see in advertising and in TV shows and movies and we start making snap/automatic judgments about people.
Here’s an advertisement for a very expensive watch. This advertisement helps shape your perspective that somebody is successful if they have a lot of cool stuff.
This advertisement is saying: Eli Manning is a very successful football player and he wears a Citizen watch. Are you successful like Eli? Then you can wear this watch, too. Buy this watch.
Citizen couldn’t care less about whether you are or are not successful enough for this watch. They just want you to want this watch, and they use Eli Manning to make it attractive.
These kinds of advertisements that associate successful people and cool stuff are all over the place. We’re constantly being bombarded by them. Seeing so many of them makes you think that a person is successful if they have cool stuff; it shapes your perspective.
Let’s pretend these two guys are twins. We’ll call them Bob and Ted. Who has his life under control? Who has all the answers? Who’s the more successful one? Let’s say they’re both friends of your father and they come to the house from time to time, or you see them at church. Who would you want to get homework help from? Who would you want as a coach? As a teacher?
So the perspective that most people have about success is that being in possession of a lot of cool stuff means the owner of those things is successful.
Another common perspective most people have is that a lot of cool stuff will make us happy.
Why do we think that? Here’s an advertisement for a gaming system that helps shape your perspective that people are happy if they have a lot of cool stuff.
This advertisement is saying: These kid are happy because they’re playing WiiSports. Do you want to be happy? Then you should buy WiiSports.
These kinds of advertisements that show happy people enjoying something that a company is trying to sell you are all over the place. Seeing so many of them makes you think that cool stuff really will make you happy.
Ok, so thanks to what we hear from adults and see on TV and in advertising, we have a very basic perspective: Being successful, which is extremely important, will lead to cool stuff, which will lead to happiness.
Is there anybody who disagrees with the logic of this statement? It sounds pretty reasonable, doesn’t it?
Now, let’s say everybody in this room is an adult. You’re 18 years old. You’re not successful yet and, just like everybody else, you want to be happy. You also want to show people that you’re successful—you want to give off that vibe, have that image. But you don’t have any money. What do you do?
Well, you can borrow money to buy cool stuff.
Is it difficult to borrow money? Not at all. Banks love to lend people money. You don’t have to pay it back quickly. Banks accept repayment over a period of months and even years. There are lots of different ways to borrow money. Has anybody ever borrowed money from their mom or dad? It’s kind of like that… 
When I was 26, I wanted to appear successful, and I wanted to be happy. So I went out and bought a house, furniture for the house, a couple of cars, and a motorcycle. Did I look successful?
I owed the bank $90k, and that wasn’t even including my mortgage. I created a façade that I was successful. I fooled you. You had this perspective that I was successful, but I owed a ton of money to the bank. I hadn’t actually done anything to deserve those things. I didn’t pay for them with my own money.
Which of these guys is successful? Bob, who owes the bank $1M to pay for his stuff? Or Ted, who has his house and car paid off and has $500k in the bank?
Society—advertising, what we see in the movies, on tv, etc.—has trained you to automatically perceive that anybody with cool stuff is successful, when in reality, they might be trapped under a mountain of debt.
Here’s a broader question. Why are we defining success so narrowly? Because it’s what we’ve been taught. We’re supposed to get good jobs and be really good at them and accumulate a lot of stuff and be happy.
Do you know what’s interesting? There’s a group called Alcoholics Anonymous designed to help alcoholics recover from their alcohol addiction. There’s a recovery group for almost every single type of addict. But there’s not a recovery group for wealth addicts, people whose every thought is consumed by the need to get richer and richer. Why not? Because our society embraces that kind of addiction. We think it’s a positive thing. So people who are literally suffering from this affliction are being lauded and praised by our society for their gumption rather than being treated for their sickness.
Let’s teach ourselves something different. If we were to put as much work into making a positive difference in this world as we do accumulating cool stuff, what kind of a world do you think we would live in?
How do you perceive success?
Which twin do you think is actually happier? Bob, who’s basically living paycheck-to-paycheck to pay for his huge mansion and fancy car? He knows that if he loses his job, he will lose his house and his car. Do you think he sleeps easy at night? Or is Ted the happier one? He could quit his job tomorrow and go on a summer vacation for five years and enjoy his freedom.
Here’s a broader question: How do you define happiness? Studies have shown that lottery winners will experience elation when they win the lottery, but they’ll eventually return to their original state. Think back to this past Christmas about a month ago. You were probably super excited to open your presents. Remembered how happy you were to play with or use your gifts for the first time? Where are those gifts now? Are you as happy using them now as you were the first time?
No material thing can ever bring somebody a lifetime of happiness.
How do you perceive happiness?
The answer is no. Moving from a house into an apartment was awesome. For a month. Then I got used to it. Driving that convertible was awesome for a couple of weeks, then I got used to it. Same goes for the bike. I bought these things thinking they would make me a happier person, and they did temporarily, but never permanently.
The truth is that money doesn’t really buy happiness. And borrowing money to buy things for happiness…?
That will make you absolutely miserable. Owing money to the bank truly is a prison sentence. You don’t have as many options when you owe money to the bank. If you don’t pay the bank the money you owe it, they will take away your stuff. And when they run out of stuff to take, they’ll take most of your paycheck and give you whatever’s left over.
I realized I had limited options when I owed the bank  $90,000. I felt trapped. I had this tremendous IOU. It felt like I had limited options. If I lost my job, I would be in big trouble until I found another one. I was living to work, but I wanted to be working to live.
So I had this epiphany, this breakthrough. My perspectives on success and happiness changed. I decided I didn’t care if people thought I was successful or not. I decided I wouldn’t expect cool stuff to make me happy. I sold off the extra car and the motorcycle. I shared my house. I stopped spending money on stuff for seven straight months. I decided to create my own happiness.
A Level 1 perspective is extremely basic.

A Level 2 perspective is slightly more advanced in that it acknowledges that actual real success is necessary to owning stuff free and clear, without any burdensome debt.
A Level 3 perspective is even more advanced because it shows that hard work is a critical ingredient for success which will lead to cool stuff.
A Level 4 perspective goes one step further and shows that owning cool stuff doesn’t lead to happiness. We’re responsible for our own happiness.
A Level 5 perspective is the most advanced perspective. Hard work leads to success, but not necessarily financial or career success, but success that you define on your own terms. It also doesn’t advocate for “cool stuff,” but normal stuff because cool stuff shouldn’t be the end game, the motivator.
The five rules of a level 5 perspective are:
  1. Love yourself. Don’t measure your self-worth based on what you own.
  2. Create your own happiness. Don’t expect stuff to make you happy.
  3. Say no to IOUs. Live within your means. Don’t borrow money to buy cool stuff.
  4. Be free. Save money for an emergency fund and retirement.
  5. Have an impact. Define success on your own terms.
Jose Mujica is a level 5 leader. This is a man who could have a mansion and 42 servants. Instead he has a small house and a dog. He doesn’t care if he looks unsuccessful in the eyes of society. He knows that the mansion and servants won’t make him happy.
Most people we know probably don’t look up to Jose.
Is there anybody who doesn’t think Jose looks happy? I actually think he looks very  content, which is even better than happy. 
I’ve shared my perspective with people on my blog. Here are some emails I’ve received from visitors that I thought you might find interesting.
Edit (2/10/14): I found this really great article last week that suggests ways for parents to express encouragement and support for their kids’ endeavors without making it all about performance and success.