Showing posts with label Fala Chen Fat Lai. Show all posts
Showing posts with label Fala Chen Fat Lai. Show all posts

Wednesday, 7 March 2012

I Don't Mention This Person Often, Now You Know Why

From Asia Sentinel:

Mahathir's Disastrous Financial SpeculationPDFPrintE-mail
Written by Our Correspondent   
MONDAY, 05 MARCH 2012
 
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photo credit: Financetwitter.com
A murky and embarrassing case is closed, hiding top government officials’ involvement
Sometime over the next few days, a court in Kuala Lumpur will put the finishing touches to an agreement that allows Tajudin Ramli, the former head of Malaysian Airline System, not only to walk away from charges that he had  looted the airline of tens of millions of US dollars but with an RM580 million (US$293.2 million) out-of-court settlement from the government.

It appears to be a settlement that the government would rather keep to itself. At the heart of the agreement with Tajudin is a convoluted story that began as long ago as the 1980s when Malaysia’s central bank, Bank Negara Malaysia, at the urging of then-Prime Minister Mahathir Mohamad, began speculating aggressively in global foreign exchange markets, at one time running up exposure rumored to be in the region of RM270 billion -- three times the country’s gross domestic product and more than five times its foreign reserves at the time. 
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Eventually, playing with the big boys came home to roost. In 1992 and 1993, Mahathir became convinced he could make billions of ringgit by taking advantage of a British recession, rising unemployment and a decision by the British government to float the pound sterling free of the European Exchange Rate Mechanism.

Mahathir ordered Bank Negara to buy vast amounts of pounds sterling on the theory that the British currency would appreciate once it floated. However, in what has been described as the greatest currency trade ever made, the financier and currency wizard George Soros’s Quantum hedge fund established short positions, borrowing in pounds and investing in Deutschemark-denominated assets as well as using options and futures positions.

In all, Soros’s positions alone ac counted for a gargantuan US$10 billion. Many other investors, sensing Quantum was in for the kill, soon followed, putting strenuous downward pressure on the pound. The collapse was inevitable. Quantum walked away with US$1 billion in a single day, earning Mahathir’s eternal enmity and earning Soros the title “the man who broke the Bank of England.”
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Mahathir and Bank Negara, on the other hand, walked away with a US$4 billion loss, followed by another US$2.2 billion loss in 1993, the total equivalent of RM15.5 billion. Although the disastrous trades destroyed the entire capital base of Bank Negara, after first denying it had taken place, the then-Finance Minister Anwar Ibrahim repeatedly reassured parliament that the losses were only “paper losses” and, now that he is Opposition Leader and head of the Pakatan Rakyat opposition coalition, has managed to skate free of the controversy.

Eventually, the Finance Ministry had to recapitalize the central bank, almost unheard of for any government anywhere. It is reliably estimated that Bank Negara lost as much as US$30 billion in this and other disastrous currency trades, costing the head of the central bank and his currency trader deputy their jobs.

It was at one with Mahathir’s unfortunate penchant for believing he could beat the global financial system in other ways. In the early 1980s, at his behest the Malaysian government attempted to corner the tin market through Maminco Sdn Bhd, a dummy company set up to buy tin futures and physical tin to push up prices on the London Tin Market. Malaysia at that point was producing 31 percent of the world’s tin.

However, the rising prices as a result of Malaysia’s action caused miners to increase production in the other 69 percent of the tin world. At the same time the US government released its tin stockpile. The price collapsed, costing Malaysia RM1.6 billon with the subsequent low prices wrecking Malaysia’s tin industry. Mahathir has repeatedly railed against western governments for rigging the rules against him.

The attempt to corner the tin market and the subsequent loss established an interesting precedent in terms of what would take place with the speculation in the pound sterling. Rather than acknowledge the losses in the tin speculation, the government set up another dummy company called Makuwasa Sdn Bhd, creating new shares supposedly reserved for ethnic Malays which were allocated to the Employee Provident Fund, the country’s retirement fund for private and public workers. The plan was to sell these cheaply acquired shares, supposedly reserved for poor bumis, at market price for a profit to cover Maminco’s losses. Finally, in 1986, Mahathir was forced to admit that Makuwasa was created to recoup the government’s losses from the Maminco debacle and to repay loans to Bank Bumiputra.
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Fast forward to today and the out-of-court settlement between several government-linked companies and Tajudin Ramli, in which the government quietly cancelled Tajudin’s debt of RM840 million. It is believed to be the biggest such sum awarded in Malaysian history.

In 1994, according to affidavits that Tajudin filed in court he bought 32 percent of the shares of the government-controlled Malaysian Airline System at a price of RM8.00 at Mahathir’s behest – while the shares were trading at RM3.30 – and became executive chairman using funds from government-linked companies. According his allegations, the idea was to use the “profit” off the share sale to cover as much as possible of the forex losses by Bank Negara from Mahathir’s currency speculation.

When Tajudin took control of MAS in 1994 through his company, Naluri Bhd, MAS had a cash reserve in excess of RM600 million. Seven years later, in 2001, when the government bought back MAS for RM8 a share, the state-owned airline had accumulated losses in excess of RM8 billion. The government bought back an almost bankrupt airline for the same price that it sold to Tajudin.

In the welter of lawsuits and countersuits that eventually followed, including a RM13.46 billion statement of claim that Tajudini brought against a government-linked company involved in the mess, he alleged in his affidavit that it was Mahathir who had instructed him to acquire the stake to bail out Bank Negara.

Like Mahathir, the then 49-year-old Tajudin was a native of Alor Setar in Kedah state. He was regarded as a shining example of the bumi businessman that Mahathir wanted to foster to run the country and take the commanding heights of the economy back from the ethnic Chinese.

Unfortunately, according to a long list of whistle-blowers within the airline, he was also involved in looting it of tens of millions of dollars and very nearly putting it into bankruptcy before the government buyback. When officials not connected to the United Malays National Organization recommended prosecution, they came under fire that nearly ruined their careers and almost put them in jail.

According to allegations in documents made public in August of 2010, Tajudin colluded with three other MAS officers and directors through two nominee companies, one in Singapore and the other in Hong Kong, to establish a company called Advanced Cargo Logistics GmbH Germany, at Hahn Airport in Frankfurt, Germany, to provide ground-handling services for MAS.

According to a report filed in March 2007 to then-Prime Minister Abdullah Ahmad Badawi by Ramli Yusuff, the director of Malaysia's Commercial Crime Investigation Department and an official who seems to have been singularly incorruptible, "Tan Sri Tajudin Ramli was in control of MAS from 1994 to 2001. When he left MAS in 2001, MAS had accumulated losses in excess of RM8 billion (US$2.54 billion). Many projects were made under very suspicious circumstances."

Ramli Yusuff’s report indicated a wide range of abuses that said Tajudin’s family was deeply involved in setting up shell companies to siphon off money from MAS ancillary operations. But instead of preferring charges against Tajudin, the Malaysian Anti-Corruption Commission (MACC) went after the inspecting officer, Ramli Yusuff for allegedly not declaring his assets, for misusing a police airplane, and abusing his power as a police officer, all of which were convincingly refuted.

Ramli, however, wasn't the only one to go before the courts. His lawyer, Rosli Dahlan, who was also the lawyer for the airline itself, prepared Ramli's defense against the criminal charges only to be arrested on charges of collaborating with Ramli. At one point, on a pretext that Rosli had mishandled a letter from the MACC, police officers invaded Rosli's office, arrested and handcuffed him, then kept him in a cell overnight, refusing him medical treatment for injuries to his wrists from the handcuffs. They also refused his request to file a report against the arresting officers.

Rosli went to a court especially created to handle MACC cases, only to have the case fizzle out when a prosecutor announced that neither Rosli nor Ramli had been charged for corruption, having been summarily acquitted without having to put on a defense.

For his part, Rosli has charged that the MACC, Bank Negara, the government of Malaysia and the three major newspapers owned by the political parties had conspired with those in power to damage him for his attempts to defend Ramli. 
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And for his part, Tan Sri Tajudin Ramli remains uninvestigated and uncharged, and a continuing example of bumiputera power at the top of Malaysia's political and social structure, apparently RM580 million richer.

It also brings into question Prime Minister Najib Tun Razak’s March 30, 2010, statement that the government "can no longer tolerate practices that support the behavior of rent-seeking and patronage, which have long tarnished the altruistic aims of the New Economic Policy. Inclusiveness, where all Malaysians contribute and benefit from economic growth - must be a fundamental element of any new economic approach."

Monday, 10 October 2011

PER 2.2x, P/B 0.3x, Gearing 16%

How do you fancy a stock trading at 2.2x earnings this year and 2.5x earnings next year? No, its not a China shoe maker. Paid up just 348.4m shares. Just announced a new very credible CEO yesterday. Pays dividend of 1.5 sen. Has  Price/Book value of 0.3x. Gearing at 16%.



2010 saw revenue hitting RM346.9m and a net profit of RM21.9m. This year should be RM462m and net profit of RM72.5m. Yes, its MALTON.


Malton released a strong set of 4QFY11 results which came in ahead of our expectations due to higher than expected billings at the property development and construction divisions.  During the year, Malton recognised en bloc sales for an office tower at V Square, and contributions from a re-engineering project under the construction division for the completed and fully-sold Amaya Saujana condominium.


Things cannot be so nice and wonderful and expect no one to spot it. There must be some inherent reasons for the gross mis-valuation. Maybe something we don't know yet. In all likelihood, its probably the recent capital exercise. On 30 Dec 2010, Malton proposed a renounceable rights issue of up to RM156.57m nominal value 7-year 6% redeemable convertible secured loan stocks (RCSLS) at 100% of its nominal value, together with up to 156.57m free detachable new warrants and up to 78.28m new ordinary shares of RM1.00 each in Malton (bonus shares) attached on the basis of RM2.00 nominal value of RCSLS together with two warrants and one bonus share for every five Malton shares held.
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The group also proposed an exemption for Malton and parties acting in concert from the obligation to undertake a mandatory take-over offer for the remaining Malton shares and convertible securities not already held by them after the proposed rights issue. The rights issue is to raise funds for working capital and possible strategic acquisitions, investments and business expansion. The proposal was completed with the listing and quotation of the RCSLS, warrants and bonus shares on 8 Jul 2011.


Note that the whole exercise was completed in July 2011, and we all know how difficult the markets had been since then. If the controlling shareholders does not have sufficient funds to mop up the "new and free shares", you'd see a mini collapse. I looked at every angle, there isn't anything seemingly sinister, just the sentiment was not right.


Malton’s revenue and profit in FY12F-13F are expected to be supported by total unbilled sales from existing property development projects of around RM250-300m currently, as well as billings from the RM175m Jaya Shopping Centre construction project.


In addition to existing projects, new launches in the pipeline include:
o Ukay Springs initial phase, Ampang semi-detached and bungalow houses (GDV of RM120m,
targeting launch in end FY2011);
o Nova Saujana serviced apartments (GDV of RM320m, targeting launch in end FY2011);
o Seri Kembangan serviced apartments (GDV of RM180m, targeting launch in end FY2011);
o Sungai Buloh commercial development (GDV of RM500m, targeting launch in early FY2012);
o Bukit Rimau semi-detached and bungalow houses (GDV of RM15m); and
o Cantonment Road, Penang high-end duplex condominiums (GDV of RM50m, targeting launch in
early FY2012).


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How to find a fair value, not much debt, 0.3x book ... even with the slightly downgraded property sector, Malton looks to be a very safe bet with a great cushion. First target is to match its 52 week high of 86 sen.


If the owners were smart, they'd be looking to take this private, I am sure with a more stable environment, private equity players would be lining up to offer full funding. Failing which, I am sure there are other vultures who will come in and try to take the owners out soon.



 Pavilion REIT, part-owned by the Qatar Investment Authority, plans to sell units on Malaysia’s stock exchange as early as next month through a property trust, said two people with knowledge of the matter.
The company, which owns the Pavilion shopping, residential and office project in Kuala Lumpur, aims to raise about 800 million ringgit ($255 million), said the people, who declined to be identified as the information is private. The size of the initial public offering may rise to as much as 1 billion ringgit depending on demand, one of the people said.
At 800 million ringgit, the Pavilion IPO would be Malaysia’s fourth-biggest share sale this year, after offerings by Bumi Armada Bhd., UOA Development Bhd. and MSM Malaysia Bhd. Companies canceled or postponed $8.9 billion of IPOs around the world in the third quarter as stocks plunged, putting the market on track to set a record for pulled deals.
Fitness First Ltd., which had sought to list in Singapore by the end of this year, is among those delaying IPO plans, people with knowledge of the matter said this month.
Pavilion is owned by Malton Bhd. Chairman Desmond Lim Siew Choon and his wife, together with Qatar Investment Authority. Its flagship development comprises a 1.4 million square-foot retail mall with 450 outlets, plus one office building and two residential towers in Kuala Lumpur’s city center, according to Malton’s website.
This would be Malaysia’s third-largest listed property trust at 800 million ringgit. Sunway Real Estate Investment Trust raised about 1.5 billion ringgit last year in the Southeast Asian’s biggest public offering by a trust.
CIMB Group Holdings Bhd., Malayan Banking Bhd. and Credit Suisse Group AG are managing the offering, the people said.



New CEO effective yesterday is Chia Lui Meng. He joined Hiap Aik Construction Berhad in September 1995 as General Manager. In June 1997, he joined United Malayan Land Bhd as General Manager rising to the position of PA to MD & Group CEO before leaving in March 2008. He joined Viet Hung Urban Development & Investment J.S.C Land Bhd as Chief Operating Officer and was based in Hanoi, Vietnam until March 2009. From May 2009 till prior to joining Malton Berhad, he was attached with Naza TTDI Sdn Bhd as Director and Advisor to Group MD.

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