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Saturday, November 29, 2014

What now for Perak Corp?

Source: http://www.kinibiz.com/story/tigertalk/116787/what-now-for-perak-corp.html

Ten months on, it looks like Perak Corporation Bhd may not be going private after all. But what of the proposed new ventures that sparked the proposal in the first place? Perbadanan Kemajuan Negeri Perak (PKNP) will have some explaining to do if these new ventures are shelved.
So the proposed privatisation of Perak Corporation Bhd has hit a snag. The deal-breaker here is Sime Darby Property Bhd, who declared last week that they will vote against the proposal if an extraordinary general meeting is convened.
This hurdle is tricky because Sime Darby Property has sufficient shares to block the exercise with 6.13% of Perak Corp’s total shares base. Given that the offerors, who control 52.9% collectively when the proposal was mooted in January, cannot vote, Sime Darby Property effectively has 13% of the votes at play in such a meeting.
And any such proposal cannot go forward if the votes against the proposal exceed 10%. Therefore the offerors asked Perak Corp’s board to withdraw the proposed privatisation subject to the Securities Commission’s approval, according to regulatory filings.
So what now for majority shareholder Perbadanan Kemajuan Negeri Perak (PKNP)’s grand plans? It would be interesting to see if PKNP will push on regardless if it fails to take the company private.
To recap, in January PKNP proposed a selective share capital reduction and a corresponding capital repayment under Section 64 of the Companies Act 1965 worth RM183.69 million in cash payments. This translates into RM3.90 per Perak Corp share for the other shareholders.
According to regulatory filings, the rationale for the privatisation exercise was to accommodate for the changing business and risk profile of Perak Corp as well as to facilitate the internal re-organisation of Perak Corp.
The gist of it is that with sizeable land bank for property development in Perak, PKNP had intended to expand the company’s revenue base by moving into other property-related activities given stabilising revenue growth.
PKNP said it is eyeing the tourism and hospitality sector by leveraging on said land bank, following on from Perak Corp’s 2012 animation theme park joint venture in Ipoh worth RM503 million, given that the market for property development launches is quite limited in Perak where its land bank is located.
However these new ventures would have a long gestation period likely to exceed five years and would change the company’s risk and return profile as far as investors and shareholders are concerned, said PKNP, hence the privatisation exercise.
“In addition there is no certainty that the expected revenue contribution from these new activities will materialise,” said PKNP in January. “The group will be required to obtain borrowings and conserve its cash balances for the purpose of financing the new business activities.”
“Accordingly, it is expected that Perak Corp will face uncertainties with regard to its financial performance and cash flow position in the future and this may have an impact on its ability to pay dividends and the market price of Perak Corp shares going forward,” said PKNP further in January.
Perak Corporation LogoAnother reason was to ease the internal restructuring of Perak Corp to re-align the company’s activities with PKNP’s socio-economic objectives.
To summarise, PKNP apparently intended to try new, hopefully profitable ventures with Perak Corp’s land bank in the Perak state and wanted to spare shareholders the agony of waiting for returns — in fact, waiting to find out if there will be returns — and the anguish of owning shares in an entity that is changing direction from when those shares were originally purchased.
But Sime Darby Property’s refusal to play ball is intriguing. Are they implicitly saying that they are fine with the diversification risks and the potentially long gestation period of any new ventures?
Maybe but maybe not. Sime Darby Property’s opposition to the offer may simply be due to the fact that a good chunk of Perak Corp’s land bank appears acquired in the 1990s, according to the company’s latest annual report, which raises the question of how current the book values of these properties are.
The offered price of RM3.90 per share is already unattractive at the net asset value per Perak Corp share of RM5.32, according to regulatory filings. It would be interesting to compare the offered price to Perak Corp’s asset value per share following a fresh valuation of all the company’s assets.
However there is another question that begs consideration. What if other shareholders, too, want in on the new ventures that PKNP is eyeing for Perak Corp going forward?
As discussed in this column months ago, if shareholders want to come along for the ride, they should be able to do so.
The privatisation bid is a signal that despite the risk and the potential difficulties in pursuing new ventures, PKNP sees sufficient fundamentals to justify such new investments. If the potential rewards are well worth the risk in the long run, surely shareholders would stand behind PKNP in these new pursuits.
After all if these new ventures are really that risky, PKNP is amplifying the risk for themselves by taking full control through the proposed privatisation while at the same time closing the door on financing through the capital markets — this does not make sense going by the rationale for privatisation given by PKNP.
So PKNP is now in an interesting position: Shall they go ahead and propose the new ventures for Perak Corp if the privatisation doesn’t happen? They should, for the reasons outlined above.
But if PKNP doesn’t do this, they’ll have to explain why.
The essence of the privatisation rationale, as far as the new ventures are concerned, was to spare shareholders from the risk of new investments. But shareholders who are disinclined to participate can exit the company and invest somewhere else anyway.
If the fundamentals really does justify PKNP’s proposed new ventures then there should not be any problems in pitching these new activities to the rest of Perak Corp shareholders.
Most importantly, it does not seem like the proposed new ventures can only be undertaken by private entities. In other words, there should be no problems for Perak Corp to proceed with them as a listed entity.
Therefore shelving these proposals on the basis of the cancellation of the privatisation, on the other hand, would raise hard questions on why PKNP proposed privatisation in the first place.
GRRRRR!!!!

Bumi Armada: A long way to a rebound

Source: http://www.kinibiz.com/story/stock-stalk/123817/bumi-armada-a-long-way-to-a-rebound.html

Most analysts appear upbeat on Bumi Armada Bhd (BAB), which recently reported its third quarter 2014 (3Q2014) results and are optimistic that falling oil prices will not hurt the company’s floating production storage and offloading (FPSO) business. Yet the company’s share price continues to fall. Will things pick up eventually for the stock?
Business model: Most people know BAB as a Malaysian company providing international offshore oilfield services across Asia, Africa and Latin America. It was founded in 1995 and listed on Bursa Malaysia in 2011. The company has more than 45 vessels and is the fifth largest FPSO operator in the world. It is also among the top three offshore support vessels (OSV) players in Southeast Asia.
Not much has changed since our previous StockStalk on the company. It did make headlines however, when it recently announced that its RM3.8 billion FPSO contract with Indonesia’s Husky-CNOOC Madura Ltd (HCML) was delayed for the second time. The company announced to Bursa Malaysia on November 13th that it had for postponed the execution date for the contract for the second time.
The FPSO contract was first announced in mid-August when it received the letter of intent from HCML. “The LOI period has been extended to 27th November 2014 and we expect to finalise the contract within this time,” the company told KiniBiz via email.
Commenting on the effect of falling oil prices on Bumi Armada’s business, the company noted that while oil prices have generally been relatively volatile, the impact is very much dependent on the long term direction of oil prices.
“If the current weakness is short term in nature, then the impact will be relatively minimal to the industry. If however, the medium term is for prices to weaken or remain low, then it will impact the industry as oil companies review their investment patterns. As a company, BAB has a large order book of committed contracts with clients and especially with the FPSOs, has strong contracted earnings’ visibility going forward,” Bumi Armada said.
Shareholders and management:  Bumi Armada has strong ties to tycoon Ananda Krishnan. It has been helmed by Dutch national Hassan Assad Basma, its chief executive officer and executive director since 2005. As of November 21, the company’s major shareholders are Ananda Krishnan’s Usaha Tegas (34.9%), the Employees Provident Fund (8.7%) and Ombak Damai Sdn Bhd (7.1%).
Bumi Armada Bhd 1-year price chartShare performance: Bumi Armada’s share price has got a walloping so far, giving a one-year return of -44.23% as of last Friday according to data from Bloomberg. Its 52-week trading range was between RM1.34 and RM2.52 as of last Friday, with Reuters giving it a beta coefficient of 1.27. A beta coefficient of more than 1 means that Bumi Armada is trading at a higher volatility than market average.
What analysts think:  Despite the current state of oil prices and its share price performance, analysts tracked by KiniBiz are generally upbeat on the stock. Among its supporters are MIDF Research, which maintained its ‘buy’ call on the stock as of November 21, despite the company’s lower 3Q net profits. MIDF said it in a report last Friday that it was maintaining its recommendation “premised on expanding topline, increasing in quality orderbook value coupled with sizeable extension options, sustainable profit margin and undemanding valuation”.
Bumi Armada Bhd analyst CallsUOBKayHian, which also has a ‘buy’ recommendation on the stock, was more cautious. In a report last Friday it said that despite the company’s OSV fleet rationalisation programme to dispose of unprofitable vessels and replacing them with newer vessels, it was cautious on an overall oversupply situation in the OSV segment.
Risks to its call, said UOBKayHian, include Bumi Armada’s inability to clinch new contracts in the medium term and unexpected cost overruns resulting in lower profitability. However, it still likes Bumi Armada in the current low oil price environment as its long-term FPSO charter contracts are locked in during the firm period of a charter contract.
RHB Research in a report last Friday, downgraded Bumi Armada from a ‘buy’ to a ‘neutral’, due to Bumi Armada’s disappointing 9 months of 2014 numbers. “With only an 8% upside to our TP (target price), we downgrade Bumi Armada to ‘neutral’, as the company will only start to register meaningful earnings in FY16,” it said.
Earnings Forecast:
Bumi Armada earnings forecast
StockStalk: We are somewhat concerned about Bumi Armada’s persistently spiraling share price and the oversupply situation in the OSV segment. According to UOBKayHian 9% of the company’s firm contracts are from this segment, while 6% are from transport and installation and 85% from the FPSO segments respectively.
Despite its ‘buy’ rating on the stock, Maybank IB Research remained relatively realistic on the share price performance. “We reckon most of the negatives on the stock have been priced in but acknowledge that confidence may take a longer period to recover,” it said in a November 21st report.
Commenting on the company’s share price downtrend and what measures Bumi Armada are taking to restore investor confidence in the stock, Bumi Armada said: “The company has always actively engaged with equity analysts and investors to consistently provide the latest updates to our projects and tenders as well as the corporate updates, and we will continue to do so going forward.
“Although we believe most of the correction has been related to the recent downturn on crude (oil) prices, we will continue to provide the latest updates to our projects when we are allowed to publicly disclose the information.”
We think that Bumi Armada’s share price will remain depressed as long as investor confidence stays shaky concerning oil prices. The falling oil prices are truly testing investors’ patience it seems, and those already invested in the stock would be wise to hold their positions until oil prices return to a more ‘normal’ level. New investors may find this a good time to buy cheaply into the stock, however they too should exercise patience as analysts expect meaningful earnings to come only in FY2016.
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Important Note and Disclaimer: This article should NOT be taken as a cue to either buy or sell the stock. The intention is to highlight the key factors you might want to think about before plunging in or scrambling out. While KiniBiz makes every endeavour to ensure facts are right and opinion is fair, no liability can be assumed for anyone relying on this information. In other words let the buyer (or seller) beware — a reflection of Bursa Malaysia, we say.

Bumi Armada: A good long-term bet?

Source: http://www.kinibiz.com/story/stock-stalk/102368/bumi-armada.html

Despite a RM31-billion order book and good long-term prospects, Bumi Armada’s share price has been plummeting in past months. Is it caused by a coming rights issue? Could this week’s delayed results announcement halt the slide?  
Business model: Bumi Armada is a Malaysian oil & gas company providing international offshore oilfield services in 12 countries covering Asia, Africa and Latin America.
It was incorporated in 1995 and listed on Bursa Malaysia in 2011. Bumi Armada has over 45 vessels and is the fifth largest FPSO (floating production storage and offloading) operator in the world and among the top three OSV (offshore support vessels) players in Southeast Asia.
bumi-armada-logoCurrently its core business is the building and chartering of FPSOs, vessels equipped with hydrocarbon processing facilities that can either be new builds or converted vessels. Raw oil is processed and stored on the FPSO and subsequently distributed via pipelines and tankers. A FPSO can cost between US$400mil and US$3bil to manufacture, depending on the size and complexity of the vessel.
Other than FPSOs, it is also venturing into deep water gas fields with FSRUs (floating, storage and regasification units) that are enhancements of its FLNGs (floating liquefied natural gas) vessels.
Bumi Armada is also involved in transport & installation (T&I) and oil field services (OFS). It also has three support units – asset and management operations (AMO), major projects (MP) and engineering & technology (E&T).
Shareholders and management: The company is linked to Malaysian tycoon Ananda Krishnan. Since 2005, Bumi Armada has been led by its CEO (chief executive officer) and executive director Hassan Assad Basma, a Dutch national with over 30 years of experience in the oil & gas industry around the world including Middle East, India, Southeast Asia and Australia.
Bumi Armada price chart 1 year 150814Share performance: Although the company has secured two big FPSO projects in Kraken (US$1.4 billion) and Eni Angola (US$2.9 billion), Bumi Armada has plunged by more than 18% year-to-date (ytd).
Last Friday, Bumi Armada’s share price closed trading at RM3.35, up 8 sen.
Last week, company was supposed to announce its financial results for the second quarter ended June 30 2014 (2Q14) but cancelled it at the last minute due to some new developments. It will reschedule the announcement this week.
The company is planning a RM2.2 billion bonus and rights issue to fund expansion.
The bonus and rights issue, once approved by shareholders, would award shareholders one bonus share for every two shares owned as well as one new rights share for every two shares owned (not including bonus shares).
The capital raising exercise would enable the company to reduce leverage ratios, creating additional headroom for borrowing ahead of anticipated large projects awards and expansion. The bulk of the funds is expected for the large capex (capital expenditures) of new FPSOs.
Analyst Calls on Bumi Armada 150814What analysts think: Analysts are generally still positive about Bumi Armada despite the underwhelming share price. Reports by UOB Kay Hian (UOBKH) and Alliance DBS still recommend to buy Bumi Armada’s shares with target prices of RM4.00 and RM4.20 respectively.
UOBKH feels that Bumi Armada’s sliding share price could be attributed to the uncertainties over the rights issue as well as concerns over simultaneous executions of the two key contracts in Kraken and Angola.
“Underperformance in its share price could be due to two key reasons. The  share overhang as some of the major shareholders look to pare down their stake as they are not keen to participate in the rights issue. The other being concerns over the higher execution risk involved as Bumi executes two major contracts concurrently,” said UOBKH.
Nevertheless, the analysts still back Bumi Armada based on its solid earnings up to 2030 backed by a RM31 billion order book, its long-term partnership with Keppel Shipyard and attractive valuation of 16.4x 2015 F PE (price earnings).
Earnings forecast for Bumi Armada 150814Earnings forecast: Both Alliance DBS and OBKH have lowered Bumi Armada’s earnings estimates due to its revenue recognition method.
“Bumi’s earnings would be back-end loaded to 2016F (financial year) once it delivers its FPSOs (FPSO Kraken and FPSO Armada Ali). We lower our 2014F/2015F/2016F earnings by 15.2%/7.1%/5.4% respectively as we tweak our forecasts to account for the changes,” said UOBKH.
For the financial year 2013, it posted net profit after tax of RM431 million on RM2 billion revenue. Currently, Bumi Armada’s has an order book of RM31 billion and is bidding for new tenders in Indonesia, Brazil, Nigeria and Mexico. Out of its current orderbook, 84% of the company’s business is in the FPSO segment, 9% OSV and  7% T&I.
StockStalk: Although Bumi Armada’s share price has dropped in recent months, most analysts feel that Bumi Armada is still a good long-term bet, with its huge order book and strong fleet of vessels with deep water capabilities.
According to a recent MIDF Research sector update on the oil & gas industry, approximately 70% of hydrocarbon discoveries in the last two years are from deep water fields and therefore Bumi Armada’s FPSO business should benefit from the continuing demand for deep water vessels in the near future.
Nevertheless, investors might still be concerned about a rights issue overhang with major shareholders paring down their shareholding. Investors could also be holding off until this week’s delayed 2Q14 results (and possibly a new announcement) before buying in.
These developments, along with concerns over its simultaneous executions of projects in Kraken and Angola, would be important to watch and consider for investors looking at this counter as a way to tap into the oil and gas sector.
Once these uncertainties and worries are cleared up, however, it would be interesting to see if there would be a rebound — and how high if so — in Bumi Armada’s share price given its apparently solid fundamentals against positive sector outlook going forward, especially if the developments swing the company’s way.
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Important Note and Disclaimer: This article should NOT be taken as a cue to either buy or sell the stock. The intention is to highlight the key factors you might want to think about before plunging in or scrambling out. While KiniBiz makes every endeavour to ensure facts are right and opinion is fair, no liability can be assumed for anyone relying on this information. In other words let the buyer (or seller) beware — a reflection of Bursa Malaysia, we say.

Best Books for Investors: A Short Shelf - Jason Zweig

Source: http://klse.i3investor.com/blogs/jason_zweig/65366.jsp

By Jason Zweig
10:11 am ET  Nov. 25, 2014

I’m often asked, especially as the holiday gift-giving season approaches, which books I recommend for investors.
I haven’t kept exact count, of course, but over the past quarter-century I have surely read (or tried to read) a couple thousand books on investing. Nearly all of them were a tragic waste of good trees. Most weren’t worth reading even a few pages of.
So I feel strongly that the usual article on “best investing books” has far too many entries and ends up suggesting good books you might read, rather than recommending great books you must read.
Here’s a list that I would still be comfortable with decades from now. Every book below has already stood the test of time and, I’m confident, will remain useful for generations to come. You will quickly note that some aren’t about investing at all. But they all will help teach you how to think more clearly, which is the only way to become a wiser and better investor. I’ve listed them alphabetically by author.

In clear, simple prose, Belsky and Gilovich explain some of the most common quirks that cause people to make foolish financial decisions. If you read this book, you should be able to recognize most of them in yourself and have a fighting chance of counteracting some of them. Otherwise, you will end up learning about your cognitive shortcomings the hard way: at the Wall Street campus of the School of Hard Knocks.
The founder of the Vanguard Group and father of the index-fund industry methodically sorts fact from fiction. Following his logical arguments can benefit you even if you never invest in a mutual fund, since Bogle touches on just about every crucial aspect of investing, including taxes, trading costs, diversification, performance measurement and the power of patience.
Elroy Dimson, Paul Marsh and Mike Staunton, Triumph of the Optimists
Neither light reading nor cheap (it’s hard to find online for less than about $75), this book is the most thoughtful and objective analysis of the long-term returns on stocks, bonds, cash and inflation available anywhere, purged of the pom-pom waving and statistical biases that contaminate other books on the subject. The sober conclusion here: Stocks are likely, although not certain, to be the highest-performing asset over the long run. But if you overpay at the top of a bull market, your future returns on stocks will probably be poor.
These captivating oral histories of the great Nobel Prize-winning physicist ostensibly have nothing to do with investing. In my view, however, the three qualities an investor needs above all others are independence, skepticism and emotional self-control. Reading Feynman’s recollections of his career of intellectual discovery, you’ll see how hard he worked at honing his skepticism and learning to think for himself. You’ll also be inspired to try emulating him in your own way.
Benjamin Graham, The Intelligent Investor
Originally published in 1949, called by Warren Buffett “by far the best book on investing ever written,” this handbook covers far more than just how to determine how much a company’s stock is worth. Graham discusses how to allocate your capital across stocks and bonds, how to analyze mutual funds, how to take inflation into account, how to think wisely about risk and, especially, how to understand yourself as an investor. After all, as Graham wrote, “the investor’s chief problem — and even his worst enemy — is likely to be himself.” (Disclosure: I edited the 2003 revised edition and receive a royalty on its sales.) Advanced readers can move on to Benjamin Graham and David Dodd, Security Analysis, the much longer masterpiece upon which The Intelligent Investor is based.
This puckish riff on how math can be manipulated is only 142 pages; most people could read it on a train ride or two, or in an afternoon at the beach. As light as the book is, however, it is nevertheless profound. In one short take after another, Huff picks apart the ways in which marketers use statistics, charts, graphics and other ways of presenting numbers to baffle and trick the public. The chapter “How to Talk Back to a Statistic” is a brilliant step-by-step guide to figuring out how someone is trying to deceive you with data.
Daniel Kahneman, Thinking, Fast and Slow
Successful investing isn’t about outsmarting the next guy, but rather about minimizing your own stupidity.Psychologist Daniel Kahneman, who shared the Nobel Prize in Economics in 2oo2, probably understands how the human mind works better than anyone else alive. This book can make you think more deeply about how you think than you ever thought possible. As Kahneman would be the first to say, that can’t inoculate you completely against your own flaws. But it can’t hurt, and it might well help. (Disclosure: I helped Kahneman research, write and edit the book, although I don’t earn any royalties from it.)
Charles P. Kindleberger, Manias, Panics, and Crashes
In this classic, first published in 1978, the late financial economist Charles Kindleberger looks back at the South Sea Bubble, Ponzi schemes, banking crises and other mass disturbances of purportedly efficient markets. He explores the common features of market disruptions as they build and burst. If you remember nothing from the book other than Kindleberger’s quip, “There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich,” you are ahead of the game.
This book remains the most comprehensive and illuminating study of Warren Buffett’s investing and analytical methods, covering his career in remarkable detail up until the mid-1990s. If you read it in conjunction with Alice Schroeder’s The Snowball, you will have a fuller grasp on what makes the world’s greatest investor tick.
Burton G. Malkiel, A Random Walk Down Wall Street
In this encyclopedic and lively book, Malkiel, a finance professor at Princeton University, bases his judgments on rigorous and objective analysis of long-term data. The first edition, published in 1973, is widely credited with helping foster the adoption of index funds. The latest edition casts a skeptical eye on technical analysis, “smart beta” and other market fashions.
Russell is Buffett’s favorite philosopher, and these short essay collections show why. Russell wrote beautifully and thought with crystalline clarity. Immersing yourself in his ideas will sharpen your own skepticism. My favorite passage: “When a man tells you that he knows the exact truth about anything, you are safe in inferring that he is an inexact man…. It is an odd fact that subjective certainty is inversely proportional to objective certainty. The less reason a man has to suppose himself in the right, the more vehemently he asserts that there is no doubt whatever that he is exactly right.” Think about that the next time a financial adviser begins a sentence with the words “Studies have proven that….”
With unprecedented access to Buffett, Schroeder crafted a sensitive, personal and insightful profile, focusing even more on him as a person than as an investor — and detailing the remarkable sacrifices he made along the way. If you read it alongside Lowenstein’s Buffett, you will have an even deeper understanding of the master.
First published in 1940, this is the funniest book ever written about investing — and one of the wisest. Schwed, a veteran of Wall Street who survived the Crash of 1929, knew exactly how the markets worked back then. Nothing has changed. Turning to any page at random, you will find gleefully sarcastic observations that ring at least as true today as they did three-quarters of a century ago. My favorite: “At the end of the day [fund managers] take all the money and throw it up in the air. Everything that sticks to the ceiling belongs to the clients.”
“Adam Smith,” The Money Game
In the late 1960s, the stock market was dominated by fast-talking, fast-trading young whizzes. The former money manager George J.W. Goodman, who wrote under the pen name “Adam Smith,” christened them “gunslingers.” In this marvelously entertaining book, Goodman skewers the pretensions, guesswork and sheer hogwash of professional money management. Reading his mockery can help sharpen your own skepticism toward the next great new investing idea — which almost certainly will turn out to be neither great nor new.

MKH land bank increases to GDV of RM10b

Source: http://www.thestar.com.my/Business/Business-News/2014/11/28/MKH-land-bank-increases-to-GDV-of-RM10b/?style=biz

KUALA LUMPUR: MKH Bhd’s latest joint ventures for high rise developments in Mont Kiara, Puchong and Kajang town has seen its land bank increase to a gross development value (GDV) of RM10bil.
MKH executive chairman Tan Sri Alex Chen said on Friday the GDV of RM10bil would “keep us busy for the next 10 years”. 
He said the group’s foothold in property and plantation would be the twin boosters to support the group’s future earnings and growth momentum. 
Chen said MKH had set its sales target at RM850mil for FY15 from its planned launches for different market segments with greater focus on affordable housing in Kajang, Semenyih, Cheras and Puchong.
MKH recorded earnings of RM102.33mil in FY14 ended Sept 30, 2014 compared with RM103.97mil in FY13. Pre-tax profit rose 20.2% to RM161.43mil from RM134.25mil a year ago. Group revenue rose 17.2% to RM806.55mil from RM688.22mil.

The company said then stronger financial performance was underpinned by strong sales performance of the group’s property developments and sale of crude palm oil (CPO) and kernel. 
The better financial performance was mainly supported by robust profit from its oil palm plantation segment and higher gain in fair value derived from investment properties.
This was after excluding unrealised foreign exchange (forex) losses of RM17.8mil due to translation difference on US dollar and ringgit borrowings against the rupiah for its plantation business in Indonesia,” it said.
MKH said there was the absence of bargain purchase gain on acquisition of subsidiaries of RM31.2mil, higher interest expense of RM15.5mil and lower share of profit of an associate following the completion of Areca Residence this year compared to a year ago.
The group’s property & construction segment recorded an increase of 11.3% in revenue to RM530.0mil from RM476.1mil a year ago following good response to its new property launches across the year including Hillpark @ Shah Alam North, MKH Avenue I, Saville @ Kajang and Pelangi Heights. 

“Flexibility in its product mix ranging from commercial properties to premium homes with greater focus on affordable housing has proven to be a successful strategy adopted by the group. 

“This is evident from its record-breaking new property sales of RM820mil, a marked improvement of 41% from RM580.8mil recorded at end of FY13. 

“Consequently, MKH’s unbilled sales reached a new record high of RM823.0mil, 64% up from RM503.2mil recorded a year ago,” it said.

Despite the increase in revenue, the property and construction division recorded lower profit before tax of RM85.2mil compared to RM143.8mil a year ago.
 
MKH said this was mainly due to the absence of bargain purchase gain on acquisition of subsidiaries of RM31.2mil, higher interest expense of RM15.5mil and lower share of profit of an associate following the completion of Areca Residence this year compared to a year ago.

Slower profit recognition for new launches in the preliminary development stage, namely Hillpark Shah Alam, Pelangi Heights, Kajang East and MKH Avenue also contributed to the lower profit before tax. 

“However, the rising and unprecedented high unbilled sales of RM823.0mil will underpin long-term earnings visibility for the Group from which attributed sales revenue and profits will be recognised progressively as the developments of completion progresses,” it said. 

Commenting on the oil palm division, MKH said this was another key growth driver to the group. While, CPO prices had fallen sharply recently, the segment contributed substantially to the group with its new high-record profit before tax (PBT) of RM22.2mil, up 149% from the RM44.9mil loss before tax in FY13. 

“PBT excluding the unrealised forex losses surged 751% to RM40.0mil from RM4.7mil a year ago. The turnaround from loss before tax to profit for FY14 was attributed to higher revenue and gross profit coupled with lower unrealised forex losses of RM17.8mil compared to RM49.6mil in the preceding year,” it said.

MKH said revenue from the sale of CPO and palm kernel increased by 63% to RM164.8mil from RM101.1mil a year ago, buoyed by increasing fresh fruit bunches (FFB) yield of 295,000 tonnes which surpassed its yearly target of 270,000 tonnes. 

Fresh fruit bunches (FFB) yield improved by 31.3% to 21 tonnes a ha from mature and immature trees, while oil extraction rate efficiency (OER) improved to 21.5 % for FY 14.

MKH recently upgraded its CPO mill to 90 tonnes an hour to cater to its fast growing FFB yield of 360,000 tones with increased oil extraction rate to 23% for FY15.

In the fourth quarter ended Sept 30, 2014, its earnings slipped to RM23.24mil from RM24.78mil a year ago. Revenue rose 2.6% to RM223.61mil from RM217.78. Earnings per share were 5.54 sen compared with 6.01 sen.

Malaysian glovemaker UG Healthcare to sell 28.8 million shares at 21.5 cents each in Singapore IPO

Source: http://www.theedgemarkets.com/en/node/172308

SINGAPORE (Nov 29): UG Healthcare Corporation, an established Malaysia-based manufacturer and distributor of examination gloves, is launching an IPO on the SGX.

UG Healthcare manufactures and distributes natural latex and nitrile examination gloves under its own brands including its “Unigloves” brand name as well as third party labels where it is engaged as original equipment manufacturer.

The group also distributes ancillary products such as surgical, vinyl and cleanroom gloves, face masks and other medical disposables.

While its gloves are used predominantly in the healthcare industry, they are also used across a diverse range of industries such as laboratories, food handlers, automotive, beauty and cleanroom.

The company said it lodged its IPO offer document with the bourse operator yesterday (Nov 28).

In the IPO, 28.8 million shares are being offered for subscription by way of offer and placement at the invitation price of 21.5 cents per share.

The invitation comprises 1.8 million shares by way of offer to the public in Singapore and 27 million shares by way of placement to retail and institutional investors in Singapore.

UG Healthcare plans to use the net proceeds of $4.22 million for the expansion of the group’s production capacity, sales and distribution network, and R&D efforts of new products.

Upon completion of the IPO, UG Healthcare’s total issued share capital will be about 188 million shares, with its market capitalisation expected to be $40.4 million, based on its invitation price of 21.5 cents per share.

Following the completion of the invitation, the promoters and pre-invitation investors will collectively hold 84.68% of the total number of shares in UG Healthcare.

In FY2014 ended June, net profit increased 28.9% to $4.9 million from $3.8 million in FY2013 while group revenue increased 4.3% to $49 million from $47 million on the back of higher sales of natural latex and nitrile examination gloves.



The public offer opened at 6.00 p.m. yesterday and will close at 12 noon on Thursday, Dec 4.

TRIYARDS: Rising High Above Weak Oil Prices

Source: http://www.nextinsight.net/index.php/story-archive-mainmenu-60/924-2014/9338-triyards-rising-high-above-weak-oil-prices

Excerpts from analyst's report

We initiate coverage on Triyards Holdings (“Triyards”) with a BUY rating and a fair value of S$0.92 based on 9x FY8/15F P/E.

Confidence boost by Ezion. The recent subscription of warrants by Ezion supports our investment thesis of Triyards’ capabilities in building Self-elevating Units (SEUs or more commonly known as Liftboats). This will also provide a boost to its orderbook – potentially adding around US$150m to Triyards’ orderbook, which would bring its orderbook to an all-time high of cUS$550m, giving visibility over the next two years.


Liftboat demand growth intact despite low oil prices. Triyards share price has fallen in line with the recent 30% drop in oil prices, which we think does not reflect the fundamentals of liftboat demand. Liftboat demand will mainly be driven by the increasing acceptance from operators and from offshore operational activities to maintain and extract additional oil and gas from existing shallow offshore platforms.


Key catalysts. An order win for its proprietary jackup rig will boost confidence even further. Meanwhile, momentum is picking up for its liftboats orders and we are positive on more order wins over the next few months. Assuming the Ezion deal goes through, Triyards will just have to win 6 liftboat orders (cUS$55m/each) or just one jackup order (US$200m) to reach our 3 year forecasts.

Initiate BUY with target of S$0.92, based on 9x FY8/15F P/E, a 20% discount to the average forward P/E of Keppel and SembCorp Marine and within range of small-mid cap O&G yards. Our fair value represents a 40% upside to current prices. The stock’s valuation are undemanding at 6.4x/6.0x/5.6x FY15F/16F/17F.

Its 0.9x FY8/14 P/B is trading at more than 40% discount to its peers in the sector, which we think seriously undervalues the group given its track record of delivering ROEs of 14-42% over the last four years.

Worst case scenario still looks good. In our worst case scenario that the Ezion deal doesn't go through, its orderbook should still sustain it for another 1.5 years. That should give it ample time to secure more orders. We ascribe a larger 40% discount to its FY8/15F P/E to account for shortened visibility. That still translates to a fair value of S$0.79 based on 7x FY8/15F, still a 19% upside to current prices.

Friday, November 28, 2014

Credit Suisse initiates coverage on Mah Sing

Source: http://www.theedgemarkets.com/en/node/172140

KUALA LUMPUR (Nov 28): Credit Suisse (M) Sdn Bhd initiated coverage on Mah Sing Group Bhd, with an “outperform” rating and target price of RM2.90.

Credit Suisse said in its research note today that property developer Mah Sing shares were undervalued, in price-earnings ratio (PER) terms. Credit Suisses said
Mah Sing shares were traded at a 2015 PER of 10.1 times

According to Bloomberg data, the property sector's average PER is about 14 times.

Credit Suisse said "Mah Sing is our top pick in the Malaysia property sector, and the cheapest developer under our coverage."

“We believe it (Mah Sing) is in the most stable and resilient markets, in terms of pricing points and locations, and provides one of the strongest earnings visibility,” Credit Suisse said.

According to Credit Suisse, Mah Sing and SP Setia Bhd provide the strongest earnings visibility among Malaysian property developers. This is because Mah Sing and SP Setia's unbilled sales made up over two times their latest full-year revenues.

Credit Suisse mentioned Mah Sing had positioned itself in the right market, within the affordable segment.

According to Credit Suisse, 81% of Mah Sing's property launches are priced below RM700,000, while 60% of its land bank (by gross development value) is located in the Klang Valley.

Mah Sing is also well known for its quick turnaround business model, where it usually unlocks the value from its land-bank quickly, Credit Suisse said.

“The company usually targets to launch projects within nine months of land acquisition; and has been able to achieve higher property sales, despite having a much smaller land-bank versus peers,” Credit Suisse noted.

As such, the Mah Sing’s five-year average return on equity of 16% is 60% higher than sector average.



IQ Group - Strong Exports Support Growth

Source: http://klse.i3investor.com/blogs/rhb/65247.jsp

IQ’s 1HFY15 (Mar) results beat our estimates, with MYR109m revenue (+21% YoY) and MYR14m net profit (+67% YoY) reaching 59% and 99% of our respective full-year estimates, driven by strong overseas sales and favourable foreign exchange rates. Maintain BUY with a higher TP of MYR2.51 (47.6% upside), pegged to a FY15F P/E of 12x. We raise our FY15 earnings estimate by 29% and introduce our FY16-17 forecasts.

Above expectations. IQ Group’s (IQ) 1HFY15 results were above our expectations, with revenue of MYR109m (+21% YoY) and net profit of MYR14m (+67% YoY) accounting for 59% and 99% of our respective full-year estimates. By segment, both manufacturing and trading divisions recorded higher sales contributions in 1HFY15, up 26% and 20% YoY respectively. The better results were driven by higher export sales and favourable foreign exchange rates.

Interim DPS of 4 sen. IQ proposed an interim dividend of 4 sen per share to reward its shareholders. This is the first dividend payout since FY07 (4 sen per share), suggesting that the company’s performance has improved and it would like to resume its policy of paying dividendsannually.

Maintain BUY with a higher MYR2.51 TP. We believe IQ could do well in FY15 as exports to the US, Europe and Japan markets remain encouraging. We have tweaked our FY15F revenue and net profit forecasts higher by 10% and 29% respectively, to reflect its better performance, and introduce our FY16-17 forecasts. We maintain our BUY call on IQ, with a higher TP of MYR2.51 (from MYR2.03), pegged to a FY15F P/E of 12x – which is within the range of 10-15x P/Es of the consumer stocks (excluding consumer staples) under the coverage of our consumer analyst. As at end-Sep 2014, IQ had MYR18m cash in hand with zero borrowings.

罗杰斯: 各国央行狂印钞 10年恐爆2金融危机

Source: http://www.nanyang.com/node/665071?tid=462

(北京26日讯)商品投资大师、罗杰斯控股公司董事长罗杰斯(Jim Rogers)预言,未来十年将爆发两次金融危机,并导致一些优秀企业消失。

据《经济日报》报道,罗杰斯近期在CCTV证券资讯频道主办的投资联合会首届高峰论坛上,做出以上表述。

他指出,由于各国央行都大开“印钞机”

大量印钱,已引发市场流动急剧上升。

或售中国股票

“现在全球就像一个钱的海洋,如果这个海洋在未来枯竭了,将导致巨大的金融波动,引发金融危机。”

从上世纪80年代起,罗杰斯就长期持有中国股票,而他的原则是:一旦持有就不卖。

不过,出于对未来十年全球经济的悲观预期,中国的二级市场或将出现泡沫式膨胀,他表示自己也许会打破“不卖”原则。

提及中国,罗杰斯认为,随着人民币国际化进程不断深入,人民币受国际市场的影响程度也将随之增大。

“因此,未来十年仍然会有投资者能获得二、三十倍的高回报,但这些人一定要意识到,新行业和新业态的出现,可能会将他们的智慧扫荡一空。”

“建议所有投资者都要做好准备,有所打算。”

俄国前景看俏

罗杰斯昨日接受彭博社电视专访时表示,他对俄罗斯仍抱持乐观的态度,因为克里姆林宫的态度已有改变,这也是他决定投资的主因。

“在过去,俄罗斯对外国投资者的态度很糟,随意强夺外国人资产、任意枪毙或将人送入监牢作法相当常见。”

“但现在情况已大不同,俄国政府终于体认到,他们不能如此对待外资,共产主义与KGB特务的时代已经过去。”

最近俄罗斯在油价重挫、欧美制裁的压力下,经济面临严重逆风,而卢布也如自由落体般重贬。

但罗杰斯对此并不担忧,原因是该国拥有庞大的外汇存底,而且负债比重并不多。

他对俄罗斯是以长期的观点来看,目的是想趁当地经济还在挣扎时就进场投资。

建议日本年轻人出走

罗杰斯对俄国的乐观看法,与欧洲、日本形成强烈对比。

他认为,日本首相安倍晋三对日本作出了非常可怕的事,建议日本年轻人赶紧出国、避免受伤。

“但短期内,我相信日本股市有一些投资机会,主要是受惠于日本央行的宽松政策。”

金买点将浮现

欧元区方面,他则表示手上没有欧元、未来也不想买进,而且宁愿投入俄罗斯。

至于黄金,罗杰斯指出,他已有3至4年的时间并未加码黄金。

不过,由于全球央行对金融体系的管制不当,他确定在不远的将来肯定会有买进的机会,而届时也会抢进更多黄金。

巴克莱富国贷款恐损失28亿 油价急跌冲击银行业

Source: http://www.nanyang.com/node/665265?tid=462

(伦敦27日讯)巴克莱(Barclays)、富国银行(Wells Fargo)等银行向两家油气企业发放的8.5亿美元(约28.4亿令吉)贷款面临潜在重大损失,这迹象表明油价急剧下滑引发的冲击波正传遍整体经济。

油价低迷的冲击波正传递到能源行业以外,打击产油国的货币和国家预算,以及能源企业的股价之际,银行也已受影响。

英国《金融时报》报道,巴克莱和富国银行今年曾牵头一笔8.5亿美元(约28.4亿令吉)的过渡贷款协议,意在为两家美国的石油企业———Sabine Oil & Gas和Forest Oil的合并提供资金。

但据市场参与者透露,这笔贷款在6月首次提供销售时,投资者却步,而在自那以来的几个月里,油价下滑加上动荡的信贷市场,挫败了销售贷款或安排银团贷款的进一步尝试。

对此,巴克莱和富国银行均拒绝置评。

贷款面值或缩60%

由于承销银行无法将贷款转卖给投资者,它们在这笔交易上面临亏损,因两家油企债务的价值缩水了。

其中,Sabine的债券交易价格在6月达到大约105.25美元(约352.17令吉),高于面值,但此后已跌至94.25美元(约315.36令吉),深陷“问题债务”范畴。

竞争对手的银行家估计,如果巴克莱和富国银行现在试图对这笔贷款安排银团贷款,其价值可能缩水至面值的60%。

标普资本智商的数据显示,能源行业现在占未偿还杠杆贷款的4.6%,高于10年前的3.1%;巴克莱的数据指出,能源债券在1.3兆美元(约4.3兆令吉)的垃圾债券市场占到15.7%,远高于10年前的仅4.3%。

海湾油盟国不减产

然而,石油输出国组织(OPEC)的海湾地区产油国此时却表示不会在会议上提议减产,降低了OPEC联合行动以支撑油价的可能性。

海湾地区一产油国驻OPEC代表对路透表示,海湾阿拉伯国家合作委员会(GCC)已就不减产达成一致。

沙地阿拉伯石油部长欧那密说:“我们坚信OPEC会取得统一的立场。”

伊朗:明年过剩更严重

另一方面,伊朗石油部长南达桑加尼更预期,明年全球石油供应过剩现象将更为严重。

“市场所有专家都认为,市场已供应过剩,而明年这个问题会更加严重。”

他表示,OPEC会员国必须团结面对市场日益供应过剩的情况,但补充解决这问题不能只靠该组织。

下月15上市发售价29仙 Kronologi 亚洲筹1718万

Source: http://www.nanyang.com/node/665278?tid=462

(吉隆坡27日讯)Kronologi亚洲配合下月15日在马交所创业板上市,公开发售5924万7000新股,预计筹资1718万令吉。

这批新股每股面值10仙,发售价为29仙。

上市所筹的资金,600万令吉作为开发市场之用,350万令吉用于研发,448万2000令吉是营运资本,剩余320万令吉为上市开销。

Kronologi亚洲是一家企业数据管理公司,提供包括数据管理、备份与复原等服务。业务遍布大马、新加坡、菲律宾、泰国、印尼和印度等。

发售的新股中,473万9500股供公众认购,710万9500股给董事、职员及对公司有贡献者;其余4739万8000股则配售给特定投资者。

截至2013年12月31日财年,该公司共取得4217万令吉营业额,净赚556万令吉。截自2014财年的首6个月,营业额报2810万令吉,净利341万令吉。

拓展越南缅甸斯里兰卡

Kronologi亚洲总执行长陈英铭(Piti Pramotedham)推介招股书后指出,目前积极扩展版图,除了增聘员工和巩固基础,未来将在越南、缅甸和斯里兰卡等发展业务。

该公司采用FABRIK框架作为科技与调度蓝图,确保数据管理服务高度稳定与系统化,可适应不同的市场需求,同时保障科技与产品。

他说,公司深受大众银行(PBBANK,1295,主板金融股)、新加坡StarHub和泰国PTT勘探生产等信赖。

大马回教银行是这项上市计划的总顾问、独家包销商、保荐人和配售代理。

大马回教银行董事经理拿督斯里祖吉利沙末透露,Kronologi亚洲是该银行负责的第四家新上市公司,也是首家上市创业板的公司。

Kronologi亚洲首次公开募股
●新股发行:5924万7000股
●每股面值:10仙
●每股发售价:29仙
●认购日期:27/11/2014
●散户认购截止日期:04/12/2014
●抽签日期:08/12/2014
●配股日期:10/12/2014
●预计挂牌日期:15/12/2014

Perak Corp 3Q earnings up 300% to RM24m

Source; http://www.thestar.com.my/Business/Business-News/2014/11/27/Perak-Corp-3Q-earnings-up-300pct-to-RM24m/?style=biz

KUALA LUMPUR: Perak Corporation Bhd’s earnings jumped 300% to RM24.20mil in the third quarter ended Sept 30, 2014 from RM7.87mil a year ago, boosted by land sales under its township development.

It said on Thursday its revenue rose 131% to RM81.15mil from RM35.04mil. Earnings per share were 24.2 sen compared with 7.87 sen.

Perak Corp said its township development revenue increased to RM57.96mil from RM13.10mil a year ago.

Management services and others recorded RM6.62mil in revenue from only RM1.79mil. There was also a contribution of RM2.66mil from the hotel operations.

Its infrastructure was slightly lower at RM20.17mil from RM21.42mil. The revenue was mainly from port operations at Lumut Maritime Terminal (LMT) and contractual revenue under the operation and maintenance of the Lekir Bulk Terminal besides revenue from the sale and rental of the LMT port related industrial land. The lower revenue was due to a 6% decline following lower cargo throughput of 6% and no land sales.

For the nine months, Perak Corp’s earnings rose to RM32.77mil from RM20.40mil in the previous corresponding period. Revenue rose to RM139.65mil from RM95.85mil.



Maybank Research cuts Icon Offshore earnings outlook

Source:http://www.thestar.com.my/Business/Investing/2014/11/28/Maybank-Research-cuts-Icon-Offshore-earnings-outlook/?style=biz

KUALA LUMPUR: Maybank KE Research has cut earnings forecast for Icon Offshore Bhd's financial year ending Dec 31, 2015 and 2016 due to delivery delays for five out of seven new offshore support vessels (OSV). 
"We now expect Icon to register lower adjusted net profits of RM95mil and RM147mil for 2015 and 2016," it said on Friday. 
The next year is expected to be challenging due to the rise in operating expenditure and delay in OSV deliveries. 
Deliveries of for five new OSVs have been pushed back by one to two quarters. 
Its sizeable exposure in the small-sized OSV space bears weaker daily charter rates and utilisation risks if the current weak oil price environment persists, the research house said. 
Icon's third quarter cost of goods sold was 20% higher due to higher crew costs.
Overall OSVs utilisation averaged a lower 79% in the nine-month period versus 84% a year ago. 
Maybank Research continues to recommend a "hold" on the stock with a target price of RM1.20. 

Umno is losing its appeal among more Malaysians, and its president Datuk Seri Najib Razak has been the cause of this with new approaches that pushed the party out of the political spotlight, effectively making it less relevant to the people, The Edge Review columnist, Bridget Welsh, wrote.
Among these were the "outsourcing" of Umno's traditional role as defender of the Malays to right-wing groups like Perkasa, competing with PAS to be the defender of Islam, use of government resources and machinery to dispense patronage, and relegating the party to the sidelines in the making of government policy.
Writing in this week's edition of the digital magazine, Welsh, a political analyst, said Najib had changed Umno's role and in so doing, made the party "less politically relevant".

She noted that Umno has long relied on the "racial insecurity" of Malays to maintain power but outsourcing its role as defender of the Malays to other groups had "marked the start of Umno's slide to the sidelines".
Although these groups received government funding and were closely linked to Umno, holding memberships in both, they had come to take over Umno's position in spearheading calls to protect Malay interests.
The next approach, competing with PAS to "position Umno as the defender of Islam in Malaysia" effectively moved Umno further from its "moderate roots", causing it to be perceived by the public as becoming more zealous and hardline.
Najib, as prime minister, allowed increased funding for Islamic institutions, Islamic-based groups, religious schools and the state's religious apparatus, and while this impacted PAS negatively, it also strengthened the religious bureaucracy within the government service, making it even more powerful and autonomous, Welsh noted.
Equally damaging to Umno's ability to win new support was Najib's use of government handouts which "replaced the party as the vehicle for wooing voters".
Of such initiatives, the 1Malaysia People's Aid programme (BR1M) was the most visible and was used widely during elections.
This re-branding of the ruling coalition, Barisan Nasional, during election campaigns, served to take the focus off Umno and its baggage, but the party no longer became the "face of political patronage". While loyalty to Umno was still expected, it was "less direct", Welsh said.
Welsh used these approaches to illustrate how Umno's decline in the public eye had come from an unlikely cause – from "within the party leadership itself".
"In fact, one of the distinguishing features of Najib Razak’s tenure has been the displacement of Umno as a truly dominant political actor," she wrote.
The moves to outsource Umno's role as defender of the Malays, to appear more Islamic and to hide behind the face of government as benefactor was the party's way of dealing with the massive loss of support in the general election of 2008, she said.
Umno then was rejected for its racial politics and corruption, and went on to lose its customary two-thirds majority in Parliament.
Welsh said Umno was unable to transform itself in response to the public's new political awareness, and opted instead for different tactics, which only worsened its political capital.
Other approaches detrimental to the party have been in the area of party and election financing, and government engagement, Welsh added.
She said Najib had to tap from "new vehicles for election funding, including the scandal-ridden 1Malaysia Development Berhad fund, which was a departure from the past whereby Umno itself had a sufficient war chest.
"Today, other investment arms and entities have changed Umno’s dominant position. It has opened up alternative sources of funding for party leaders, but at the same time reduced the party’s role in setting the direction of financing," she wrote.
Yet another way Najib has diminished Umno's role was in reducing the party's engagement in policy-making, having brought in "hired consultants" to the government, Welsh said.
"The common feature of all of these changes has been to push Umno back from the political front line," Welsh concluded, and while this had made it "more obsessed" with clinging to power, it was ironically contributing to its own decline. – November 28, 2014.
* For the full story go to http://www.theedgereview.com/subscribe/register?source=TMI&country=MY
- See more at: http://www.themalaysianinsider.com/malaysia/article/najib-making-umno-less-relevant-to-malaysians-says-columnist#sthash.psOnAxXI.dpuf
Umno is losing its appeal among more Malaysians, and its president Datuk Seri Najib Razak has been the cause of this with new approaches that pushed the party out of the political spotlight, effectively making it less relevant to the people, The Edge Review columnist, Bridget Welsh, wrote.
Among these were the "outsourcing" of Umno's traditional role as defender of the Malays to right-wing groups like Perkasa, competing with PAS to be the defender of Islam, use of government resources and machinery to dispense patronage, and relegating the party to the sidelines in the making of government policy.
Writing in this week's edition of the digital magazine, Welsh, a political analyst, said Najib had changed Umno's role and in so doing, made the party "less politically relevant".

She noted that Umno has long relied on the "racial insecurity" of Malays to maintain power but outsourcing its role as defender of the Malays to other groups had "marked the start of Umno's slide to the sidelines".
Although these groups received government funding and were closely linked to Umno, holding memberships in both, they had come to take over Umno's position in spearheading calls to protect Malay interests.
The next approach, competing with PAS to "position Umno as the defender of Islam in Malaysia" effectively moved Umno further from its "moderate roots", causing it to be perceived by the public as becoming more zealous and hardline.
Najib, as prime minister, allowed increased funding for Islamic institutions, Islamic-based groups, religious schools and the state's religious apparatus, and while this impacted PAS negatively, it also strengthened the religious bureaucracy within the government service, making it even more powerful and autonomous, Welsh noted.
Equally damaging to Umno's ability to win new support was Najib's use of government handouts which "replaced the party as the vehicle for wooing voters".
Of such initiatives, the 1Malaysia People's Aid programme (BR1M) was the most visible and was used widely during elections.
This re-branding of the ruling coalition, Barisan Nasional, during election campaigns, served to take the focus off Umno and its baggage, but the party no longer became the "face of political patronage". While loyalty to Umno was still expected, it was "less direct", Welsh said.
Welsh used these approaches to illustrate how Umno's decline in the public eye had come from an unlikely cause – from "within the party leadership itself".
"In fact, one of the distinguishing features of Najib Razak’s tenure has been the displacement of Umno as a truly dominant political actor," she wrote.
The moves to outsource Umno's role as defender of the Malays, to appear more Islamic and to hide behind the face of government as benefactor was the party's way of dealing with the massive loss of support in the general election of 2008, she said.
Umno then was rejected for its racial politics and corruption, and went on to lose its customary two-thirds majority in Parliament.
Welsh said Umno was unable to transform itself in response to the public's new political awareness, and opted instead for different tactics, which only worsened its political capital.
Other approaches detrimental to the party have been in the area of party and election financing, and government engagement, Welsh added.
She said Najib had to tap from "new vehicles for election funding, including the scandal-ridden 1Malaysia Development Berhad fund, which was a departure from the past whereby Umno itself had a sufficient war chest.
"Today, other investment arms and entities have changed Umno’s dominant position. It has opened up alternative sources of funding for party leaders, but at the same time reduced the party’s role in setting the direction of financing," she wrote.
Yet another way Najib has diminished Umno's role was in reducing the party's engagement in policy-making, having brought in "hired consultants" to the government, Welsh said.
"The common feature of all of these changes has been to push Umno back from the political front line," Welsh concluded, and while this had made it "more obsessed" with clinging to power, it was ironically contributing to its own decline. – November 28, 2014.
* For the full story go to http://www.theedgereview.com/subscribe/register?source=TMI&country=MY
- See more at: http://www.themalaysianinsider.com/malaysia/article/najib-making-umno-less-relevant-to-malaysians-says-columnist#sthash.psOnAxXI.dpuf
Umno is losing its appeal among more Malaysians, and its president Datuk Seri Najib Razak has been the cause of this with new approaches that pushed the party out of the political spotlight, effectively making it less relevant to the people, The Edge Review columnist, Bridget Welsh, wrote.
Among these were the "outsourcing" of Umno's traditional role as defender of the Malays to right-wing groups like Perkasa, competing with PAS to be the defender of Islam, use of government resources and machinery to dispense patronage, and relegating the party to the sidelines in the making of government policy.
Writing in this week's edition of the digital magazine, Welsh, a political analyst, said Najib had changed Umno's role and in so doing, made the party "less politically relevant".

She noted that Umno has long relied on the "racial insecurity" of Malays to maintain power but outsourcing its role as defender of the Malays to other groups had "marked the start of Umno's slide to the sidelines".
Although these groups received government funding and were closely linked to Umno, holding memberships in both, they had come to take over Umno's position in spearheading calls to protect Malay interests.
The next approach, competing with PAS to "position Umno as the defender of Islam in Malaysia" effectively moved Umno further from its "moderate roots", causing it to be perceived by the public as becoming more zealous and hardline.
Najib, as prime minister, allowed increased funding for Islamic institutions, Islamic-based groups, religious schools and the state's religious apparatus, and while this impacted PAS negatively, it also strengthened the religious bureaucracy within the government service, making it even more powerful and autonomous, Welsh noted.
Equally damaging to Umno's ability to win new support was Najib's use of government handouts which "replaced the party as the vehicle for wooing voters".
Of such initiatives, the 1Malaysia People's Aid programme (BR1M) was the most visible and was used widely during elections.
This re-branding of the ruling coalition, Barisan Nasional, during election campaigns, served to take the focus off Umno and its baggage, but the party no longer became the "face of political patronage". While loyalty to Umno was still expected, it was "less direct", Welsh said.
Welsh used these approaches to illustrate how Umno's decline in the public eye had come from an unlikely cause – from "within the party leadership itself".
"In fact, one of the distinguishing features of Najib Razak’s tenure has been the displacement of Umno as a truly dominant political actor," she wrote.
The moves to outsource Umno's role as defender of the Malays, to appear more Islamic and to hide behind the face of government as benefactor was the party's way of dealing with the massive loss of support in the general election of 2008, she said.
Umno then was rejected for its racial politics and corruption, and went on to lose its customary two-thirds majority in Parliament.
Welsh said Umno was unable to transform itself in response to the public's new political awareness, and opted instead for different tactics, which only worsened its political capital.
Other approaches detrimental to the party have been in the area of party and election financing, and government engagement, Welsh added.
She said Najib had to tap from "new vehicles for election funding, including the scandal-ridden 1Malaysia Development Berhad fund, which was a departure from the past whereby Umno itself had a sufficient war chest.
"Today, other investment arms and entities have changed Umno’s dominant position. It has opened up alternative sources of funding for party leaders, but at the same time reduced the party’s role in setting the direction of financing," she wrote.
Yet another way Najib has diminished Umno's role was in reducing the party's engagement in policy-making, having brought in "hired consultants" to the government, Welsh said.
"The common feature of all of these changes has been to push Umno back from the political front line," Welsh concluded, and while this had made it "more obsessed" with clinging to power, it was ironically contributing to its own decline. – November 28, 2014.
* For the full story go to http://www.theedgereview.com/subscribe/register?source=TMI&country=MY
- See more at: http://www.themalaysianinsider.com/malaysia/article/najib-making-umno-less-relevant-to-malaysians-says-columnist#sthash.psOnAxXI.dpuf