Saturday, March 5, 2011

MRT – mired in controversy

The Star Online > Business
Saturday March 5, 2011

MRT – mired in controversy


THE planned mass rapid transit (MRT) project may be just what the city of Kuala Lumpur needs as a long-term solution to public transportation. But the MRT plan is today mired with controversy.

Some resident associations have been up in arms about the potential disruption to their homes and likely increased traffic congestions during the construction phase of the mega project. Some are also questioning the proposed alignment of the MRT on the grounds that the Sungai Buloh to Kajang route does not reach the right catchment areas while unjustifiably passes through mature and wealthier neighbourhoods that have less of a need for public transport.

Click thumbnail for larger image. Another oft-cited critique is that the Government should first fix other forms of public transport such as the bus system, which should cost much less to solve, before embarking on the multi-billion MRT.

That then leads to the issue of cost can the Government really afford to fork out the estimated whopping RM50bil needed for building the MRT?

There are also concerns about the Government's choice of making Syarikat Prasarana Bhd the MRT project owner. Critics argue that since Prasarana and its subsidiary RapidKL have failed at something as basic as creating an efficient public bus service in the city, that it isn't the best body to be owning the MRT.

Not only that, Prasarana's track record is questionable. According to the 2008 Auditor-General's report, a number of troubling allegations were made over the past management of Prasarana, including the acquisition of land at inflated prices, the purchase of loss-making entities for no good reason and buying buses that didn't work properly. Its financial strength is another issue.

Yet another grouse with the MRT is the choice of making Gamuda Bhd and MMC Corp Bhd the project delivery partners (PDP) of the MRT project, considering that these two companies are planning to bid for a significant portion of the whole project mainly the tunnelling works.

To be fair, many of these concerns are being addressed. Consider first the worries of residents in pockets such as Taman Tun Dr Ismail (TTDI). What had heightened their concerns was the pasting of notices in their neighbourhood that some of their houses could be acquired under the Land Acquisition Act 1960 for the purposes of building the MRT track.

SPAD sheds light

But the body at the centre of the MRT, the newly-formed Land Public Transport Commission (SPAD), is helping to ease concerns. For starters, soon after the TTDI fiasco concerning the land acquisition notices, Spad issued a statement saying that houses there need not be acquired as they are located beyond the 20m minimum buffer zone for the proposed MRT line. Spad said that the final decision on the land acquisition would only be made after the public display ends in May. “At this moment, the proposed alignment does not require acquisition of residential homes in TTDI.”

Members of the public looking at an exhibition on the MRT project in Bangsar LRT station.
In an interview with StarBizWeek, SPAD's chief executive Mohd Nur Ismal Kamal stressed that it was open to feedback from the rakyat. “This (the MRT project) is not about bulldozing ideas or pushing solutions down people's throats,” he said.

SPAD has opened various lines of communication for public feedback on the project, especially on the alignment of the MRT stations, through public displays, its website and telephone lines. Nevertheless, a consultant says for a project that may cost up to RM50bil or more, there is little information about the stations, traffic flow, parking facilities, or fare mechanism.

The environmental impact assessment (EIA) report, which has been made public, is another source of information on the MRT.

Notably, the EIA report itself has raised a few issues about the MRT, such as traffic congestion, noise, dust and pollution and ground vibrations that could affect households from the building of the MRT. The report said the MRT project will affect 108,000 residential units in 403 lots where the 51km mass rapid transit line will traverse.

However, the EIA report also recommended steps to overcome or mitigate those impacts. SPAD has said it would ensure the MRT project owner would follow the steps.

Is Prasarana right for the job?

As for the choice of Prasarana as the project owner, questions are raised as to its suitability. Not only are there questions about its track record and alleged past transgressions, there is also the concern about its financial viability. It has been reported that Prasarana had total debts to the tune of RM9.64bil as at end-2009 and has to repay bonds to the tune of RM7.1bil (in principal amounts) that will mature between 2011 and 2023. There are also reports that the Government has allocated RM2.5bil to pay for Prasarana-issued bonds which are due in November 2011.

Prasarana has recently said it would be raising between RM5bil and RM10bil over the next five years via a bond sale to fund the light rail transit (LRT) extensions. It had also raised RM2bil in 2009.

According to SPAD, there is sound rationale for the choice of Prasarana as the MRT project owner. “It is 100%-owned by the Ministry of Finance Inc and was set up to facilitate, coordinate, undertake and expedite infrastructure projects approved by the Government. As the MRT is a government-funded infrastructure project, Prasarana is the most relevant entity to be the owner of the asset of the (MRT) network. It also has a lot of expertise in owning public transport assets built up over the years,” explains SPAD's Mohd Nur. He adds that there is going to be a governance structure in place to ensure that Prasarana meets the high standards expected of it.

Prasarana's property play

Interestingly, Prasarana will play a key role to try to make money from real estate opportunities given to it by the government.

The financial model being used for Malaysia's MRT is called “rail plus property” and is similar to what Hong Kong's Mass Transit Railway, which is often cited as one of the world's most-successful examples of a well-run and financial-viable inner city train project.

Explains Prasarana's newly-appointed group managing director Shahril Mokhtar in a recent interview with StarBizWeek: “We are doing a study that out of the 51 km (line of proposed MRT), we have to identify a few parcels (of land) that can be developed into commercial or residential areas. We can partner with property developers and profit from the development can be shared. These properties will be around the station or on top of the stations. It can be rented or sold. The profit can be returned to the Government to offset the cost of the MRT. Hong Kong has done this for the last 20 over years.”

According to a consultant familiar with the Hong Kong experience, it had the advantage of planning the system in the 70s when it was still developing. Another success factor was the strict check and balances imposed by the Government on the operator of the MTR.

Shahril says that under his stewardship, Prasarana will become self-sustaining, with a target of breaking even by 2015. Prasarana has yet to reply to specific questions on its financial status.

Shahril took over the helm of Prasarana in October last year and his mandate is to transform the asset owner and operator of several public transport providers. Two months after he came on board, he dished out a 2-year transformation plan while a five-year master plan is crafted. He also restructured the management team, tweaked the organisational structure and set a direction for the company.

“We have to win the trust of the customer. If there is no trust, it would be tough. We also need to change the perception of Prasarana,'' he says.

The PDP issue

Back to the MRT. On the appointment of the MMC-Gamuda joint venture as the project's PDP, SPAD has explained that MMC-Gamuda will be the MRT project manager but with the added responsibility of having to deliver the project within an agreed time and cost.

“Any cost overrun and delays in project completion which are basic common risks in projects will be borne by the PDP. The PDP is not a turnkey contractor and the project will be divided into work packages which will be awarded individually through open tender. The Government will make the final decision on the awarding of contracts.”

The fact remains though that the Government will be footing the bill of the MRT, which means MMC-Gamuda should stand to make a decent profit as project managers of the multi-billion project. It is understood that MMC-Gamuda were picked as the MRT projects PDP as they are the ones to have first pitched the MRT project to the government, having hired consultants to do a detailed study on it.

MMC-Gamuda will also not be allowed to tender for any of the work packages except for tunnelling works. SPAD said the Government felt that an exception should be made as the PDP is the only local construction company that has experience in major tunnelling works. Still, the tunnelling work should again provide decent profit margin to MMC-Gamuda if they win the bid.

SPAD's Mohd Nur also says that costs will be kept down through the implementation of a value management study where an independent party will scrutinise the project plans to ensure that optimum value is derived.

Together with the “rail plus property” model, the plans sound good but that's only on paper. It is left to be seen if the MRT project will be carried out without any excesses and in the most transparent way possible. To be fair, one positive step has already been the setting up of SPAD.

“Before, public infrastructure projects were just dished out to different parties, who subsequently needed to be bailed out by the Government. Now at least, there is a one-stop regulator that is trying to ensure that things get done correctly,” says one observer.

One of SPAD's first tests will be to decide on the alignment of the MRT, which is turning out to be a challenging job.

“We're having to look at it from a myriad of perspectives and balance it all,” says Mohd Nur. Among the factors being taken into account are the social impact, engineering aspect or “constructability”, journey times, land acquisition costs, accessibility to users and ridership.

It will certainly be interesting to see SPAD's final decision on the MRT allignment and the basis at which it came to that conclusion.

Source/转贴/Extract/:The Star Online
Publish date:05/03/11

Hard to gauge high oil’s impact on MAS, AirAsia

The Star Online > Business
Saturday March 5, 2011

Hard to gauge high oil’s impact on MAS, AirAsia


PETALING JAYA: Rising fuel prices will affect even the most profitable airlines to varying degrees.

But at the moment, it is hard to gauge the impact on the profits of Malaysia Airlines (MAS) and AirAsia Bhd although a prolonged oil price hike would likely hit their bottom lines.

Analysts said rising fuel costs would be a setback for airlines, as higher oil prices would increase their operating expenses.

However, they believed that airlines would be “better prepared” and able to react to the situation, given their past experiences.

High oil prices, which have crossed US$102 per barrel in the past few days, will cause a squeeze on airlines' margins. Fuel is the biggest operating expense for any airline. Jet fuel is usually traded at a US$20 premium to crude oil.

A local analyst said airlines' push to grow their ancillary income would provide some form of cushion against rising oil prices.

“Some airlines have been more resilient than others in difficult times. Airline profitability, in general, depends on two factors passenger load and yields from the routes they ply,” an analyst said.

However, the analyst said, it was hard to gauge how the profitability of MAS and AirAsia would be affected this year as the surge in oil price could be just the beginning of an uptrend.

“If high oil prices prolong, we expect both carriers' profits to take a hit as what we witnessed in 2008 when oil prices surged to a record US$147 per barrel,” an analyst said.

At least 24 airlines had gone bust due to rising oil prices in 2008.

In the financial year ended Dec 31, 2010 (FY10), AirAsia's fuel consumption was 5% higher at 4.1 million barrel at an average price of US$91.80 per barrel. MAS' fuel expenses had also risen by some 25% to RM4.38bil in FY10.

“For every US$1 per barrel increase in jet fuel cost (against the assumption of US$95 per barrel), MAS' FY11 net profit will be eroded by 7%,” RHB Research said.

It added that the recent turnaround in the global aviation sector could also be cut short as surging crude oil prices could throw a spanner in the works.

MAS has only hedged 25% of its FY11 fuel requirements at US$88 per barrel West Texas Intermediate (WTI).

OSK Research has tweaked its forecast for MAS' FY11 earnings downward by 14.1% in view of the higher jet fuel price assumption.

AmResearch said jet fuel prices were a “rising concern but AirAsia's strong ancillary income should help offset” some of the impact.

MIDF Investment Bank Research said every 1% change in crude oil prices would slash the bottom lines of MAS and AirAsia by 2% and 6% respectively.

AirAsia chief executive officer Datuk Seri Tony Fernandes had said that every RM1 per pax spent provided about US$1 per barrel of buffer.

He said AirAsia might consider re-introducing fuel surcharge removed in November 2008 if oil prices were to remain high.

MAS managing director and CEO Tengku Datuk Seri Azmil Zahruddin said recently that the airline was monitoring fuel prices and the crisis in the Middle East before deciding if there was a need for an increase in surcharge.

The higher charges are not there yet but it is only a matter of time for their imposition. All local airlines are watching oil prices with an eagle eye and any slight change can trigger a chance for them to impose fuel surcharges.

Source/转贴/Extract/: The Star Online
Publish date:05/03/11
The Star Online > Business
Saturday March 5, 2011

MRT project cost now estimated to reach RM50b


PETALING JAYA: The construction cost of the entire 150km Mass Rapid Transit (MRT) urban transport project may run up to RM50bil, three sources said, two of whom are directly involved in the project. The third is an independent party doing consulting work for the MRT line.

“When Gamuda-MMC first gave an estimate a couple of years ago, a figure of RM36.6bil was brought up for the 150km line,” said the source who is directly involved with the project.

“Now that we are concentrating on one line Sg Buloh-Kajang we have asked them for an estimate and they said it may cost RM18bil to RM20bil to construct. This does not include the rolling stock, land acquisitions and other provisions.”

Land Public Transport Commission chief executive officer Mohd Nur Ismal Kamal said the Government was doing all it could to drive down the cost.

“With land acquisition and rolling stock, it could come up to RM50bil, but it is too early to say,” he said. “We will know the full picture later as the project is still at the public display stage. This will end in middle of May.”

“From the feedback, we will then consider the alignment and the length of the platforms for the stations, whether it is a four-car train or more,” Mohd Nur added.

He said that once the public display was over, a target cost would be worked and agreed on. Once the tender was over, it may be different from the target cost, he said.

“The MRT is not just a transport project. It will have a catalytic effect,” Mohd Nur said, adding that an independent party would scrutinise the project plans and ensure that optimum value was derived.

The entire project will be fully funded by the Government and a special-purpose vehicle under the Finance Ministry would be set up to advise, manage and raise the funds.

CIMB Research in its report yesterday said that the higher cost for the Sungai Buloh-Kajang line was not a surprise as the earlier number was based on 2009 prices. (Higher construction cost and inflation may contribute to the current cost which is estimated to reach RM20bil for the Sg Buloh-Kajang line.)

“Based on the average RM353m/km for the line, the entire MRT project (150km) could be worth RM53bil compared with the current estimate of RM36bil,” it said, commenting on the outcome of Syarikat Prasarana Negara Bhd's contractors' briefing on Thursday.

The briefing was to provide an overview of the MRT project and the job opportunities available.

The event was packed with more than 100 contractors, according to a Prasarana spokesman when contacted by StarBizWeek.

Prasarana project director Zulkifli Mohammad Yusof and Datuk Azmi Mat Nor, who represented the Project Development Partner (PDP), chaired the event. (MMC-Gamuda JV Sdn Bhd manages the project as the PDP.)

CIMB Research said the briefing focused on the Sg Buloh-Kajang MRT line's project structure, alignment specifications, tender guidelines/timelines and updated cost breakdown.

“The main takeaways from the briefing were the prequalification process that will start this month and the total estimated cost for Sungai Buloh-Kajang MRT line that is RM20bil,” it said.

It said Prasarana would start the ball rolling with the elevated structure package (elevated portion is worth RM10.8bil of the total cost of RM20bil) which would be broken up into several sub-packages and was open to all contractors except the PDP.

“Priority will be given to contractors with financial strength, expertise and track record. Contractors who do not prequalify will still be able to bid for the subcontracting packages,” it said.

It added that this suggested the awards were likely to take place no earlier than May 11, while the July 11 timeline for the start of work was still intact.

Prasarana and the PDP will work together in rolling out the award of the MRT packages and disbursing the funds via progress payments.

“Funding/payment will be drawn down from a special company under the Finance Ministry,” it said.

Source/转贴/Extract/: The Star Online
Publish date:05/03/11

Friday, March 4, 2011

All eyes on trusts

Next week (Mar 7-11) is a big week for the market as it awaits the results of a book-building exercise for Hutchison Port Holdings Trust, Singapore’s biggest IPO, which closes on Monday (Mar 7), and Perennial China Retail Trust which closed today (Mar 4).

HPH Trust, a container port business trust which will own Hongkong International Terminals (HIT), Cosco-HIT and Yantian International Container Terminals, is seeking to raise as much as US$5.8 billion ($7.4 billion). The indicative offer price range is between US$0.91 and US$1.08 a share, with a projected yield of 5.5%‐6.5% for FY11 and rising to more than 7% in FY12.

Perennial China Retail Trust is seeking to raise $1.1 billion with units priced at $1.00 each. According to the prospectus, 38.8% of the total issue will be earmarked for cornerstone investors, including AEW, AIA, CBRE, Henderson, Lion Global Investors, a unit of Nan Fung, and Prudential funds. In total, the China-based portfolio includes four individual retail malls and two office towers located in Shenyang, Chengdu and Foshan. Initial yield is likely to be 3% and the trust is being marketed as a yield plus growth story.

While reaction from investors to both trusts are said to be “lukewarm”, dealers say HPH Trust will probably “cover the book”. A March 2 Credit Suisse report points out that by market cap, HPH Trust would be the 17th largest stock in Singapore. “On a free-float weighted basis on the MSCI index, it would rank in the top 10 (estimated weighting: 3.3 percentage points). Therefore, the stock is likely to be included in the key Singapore indices immediately upon listing (expected in March),” the report states.

Credit Suisse expects HPH Trust, sponsored by Li Ka-Shing’s Hutchison Ports Holdings, a unit of Hutchison Whampoa, to attract significant investor interest. Li, often called Superman, is Asia’s richest billionaire. However, Kim Eng points out that the performance of the most recent mega-IPO, Global Logistic Properties, hasn’t been sterling. “It is interesting to note the performance of GLP, Singapore’s third‐biggest IPO behind HPH Trust and Singapore Telecoms. The stock currently trades at 3% below its IPO price and is down 12% year‐to‐date, trailing far behind the STI and its logistics peers, and understandably so partly because it pays out little dividends,” Kim Eng says.

The projected yield means that HPH Trust will rank within the top 10 index names by dividend yield, Credit Suisse points out. However, business trusts are not required to pay out at least 90% of their earnings, and there is no ceiling on debt. Moreover, the experience investors have had with business trusts hasn’t been great. The three shipping trusts and CitySpring Infrastructure Trust are trading below their IPO offer prices. Still, Credit Suisse insists that the trust’s listing is positive for the Singapore Exchange. “In addition to the potential direct impact on trading volume, the IPO could also set the path for more business trusts and ports related names to list here,” the report states.

Source/转贴/Extract/: TheEdgeSingapore
Publish date:04/03/11


Created 03/04/2011 - 18:30







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“隔夜美股靠穩,我們預見今日富時綜指將出現裂口上升(Gap Up)格局,但基於市場近期重返1474點低位,意味著指數劃出頭肩形(Head and Shoulders)上漲模式,即任何低交投引導的漲勢,將為投資者創造趁高套利機會。”



日本野村證券(Nomura Securities)分析員指出,日圓轉疲、油價暫時喘息,外加良好經濟數據支撐,市場料湧現買盤。






Publish date:04/03/11

Trouble in MENA

Popular uprisings in the Middle East and North Africa have turned an area brimming with opportunity for companies such as Hyflux, Boustead and Rotary Engineering into a very risky place. How badly are they affected? And, how are they reacting?

Olivia Lum doesn’t seem at all concerned about the battering Hyflux’s shares have suffered recently when she turns up for the company’s results briefing. Hyflux has lost about 12% of its market value, or some $240 million, in a mere fortnight on worsening turmoil in Libya that could put its US$100 million ($127 millon) seawater-desalination plant in Tobruk in jeopardy, and derail negotiations for two other desalination projects in Tripoli and Benghazi worth some $1 billion. When the founder and CEO of Hyflux takes the microphone, she reveals the reason for her nonchalance.

Hyflux has zero exposure to Libya, she says. The proposed desalination plants in Tripoli and Benghazi haven’t actually been awarded, while the Tobruk plant was only secured in November. “We’re in the midst of signing the final contract to start work. Fortunately, or unfortunately, we have not started work. So, we have no investment in Libya.” Located in the east of Libya, Tobruk is among the cities that have slipped from the grasp of Muammar Gaddafi, the strongman who seized power four decades ago. “Together with the two big projects under negotiation, it is definitely going to be delayed,” Lum says.

The irony isn’t lost on analysts and reporters who have been following Hyflux’s progress in the Middle East and North Africa (MENA region. The company has two major projects in neighbouring Algeria, including the world’s largest seawater-desalination plant at Magtaa, which it secured in 2008. Since then, it has struggled to come up with the second act for its expansion in the region. In 2009, it seemed to have hit pay dirt with negotiations getting off the ground for the desalination plants in Libya. But, nothing came of the talks for months. Eventually, Hyflux secured the smaller project in Tobruk. It was to have been the harbinger of greater things to come in Libya. Now, it looks like a bullet that Hyflux was lucky to have dodged.

As for the projects in Algeria, which are nearing completion, Lum is careful to temper expectations. So far, there haven’t been demonstrations or riots and the government is stable. “Our side is not affected at all, and we still have a lot people travelling there, including Sam Ong,” Lum says, referring to Hyflux’s deputy CEO, who was scheduled to leave for Algeria the day after the Feb 23 briefing. Instead of emphasising the headline value of these two projects of roughly US$700 million, Lum stresses that Hyflux’s investment is only about $60 million, with the rest of the financing coming from Algeria-based lenders.

Yet, even amid all the social and political turmoil, Lum still can’t resist sounding a little hopeful about the prospects for Hyflux in the MENA region. “No government will want to mess around with water,” she tells The Edge Singapore. “It’s very natural that whichever government comes along, this is going to be the right infrastructure they should focus on. Every government wants affordable water.”

Hyflux is just one of a number of Singapore companies that have used MENA as a springboard for fast growth. For a few years now, the region has been attracting significant foreign investment and companies that market their expertise in developmental infrastructure such as water and waste-treatment facilities, or that are eager to tap the booming oil-and-petrochemicals industry. And, like Hyflux, other companies that have ventured into the region are now discovering the risks that come with the opportunities.

Infrastructure engineering company Boustead Singapore spent last week trying to get all its foreign staff in Libya out and home safely. The company announced soon after the unrest started the evacuation from the country, where it is in a joint venture with a Libyan government-owned construction company to build a township in Al Marj, east of the capital, Tripoli. The project was announced in August 2007 and DBS Vickers estimates that Boustead still has some $200 million of contract value unrecognised.

Late last year, Boustead restructured the JV from its initial 65% stake to 35% when it became clear that the project was going to be a drag, slowed by political red tape and delayed payments. The company reported a net loss of $1.1 million from the project in its 3QFY2011 results, and said it would no longer recognise revenue or profits from the project.

It is unclear at this point if the township will be completed, although the onus is now on the majority JV partner, General Construction and Building Co, which will also be putting up any funds that are needed.

Keith Chu, vice-president for corporate marketing and investor relations at Boustead, says the company may have to make additional provisions in the future, but adds that any impact cannot be calculated at this point, owing to the volatility of the situation. DBS analyst Yeo Kee Yan expects earnings impact from the MENA crisis to be minimal.

Over in the oil-and-petrochemicals sector, oil-tanking specialist Rotary Engineering has also been in the spotlight for its work in the Middle East. It is building a refinery tank farm in Jubail, Saudi Arabia, and recently scored a win in Fujairah, one of the emirates making up the UAE. Together, the two countries make up 91% of its current order book of $922.3 million, the bulk of which is from Saudi Arabia. The Jubail project also contributed about 65% of revenue, or nearly $458 million, for FY2010.

Chia Kim Piow, chairman and managing director of Rotary, says the likelihood of civil unrest seems remote for now, especially since the Saudi government pledged to spend billions of dollars on improving education, infrastructure and healthcare in the country. On the other hand, the fact that protests, political parties and labour unions are banned in the oil-rich kingdom makes it hard to gauge popular discontent. At any rate, Chia figures the projects that Rotary is undertaking in Saudi Arabia are too important for the country to shelve. “It’s such a big project,” he says, referring to Saudi Aramco TOTAL Refining and Petrochemical Co’s Jubail refinery project that’s worth an estimated US$10 billion. “They are more concerned than us to carry on with the job.”

Bigger players more diversified
The MENA region has also been a magnet for investment from some of Singapore’s bigger companies. For instance, Sembcorp Industries owns 60% of the roughly US$1 billion Salalah independent water and power plant in Oman, which is due to be completed and operational next year. There’s also a 15-year contract to supply water and power from the facility to the Omani government. In the UAE, Sembcorp owns 40% of the US$1.7 billion Fujairah independent water and power plant, which is already operational and supplies power and water on a fixed-price basis. “Traditionally relatively stable countries, they have so far not been affected by the recent instability in the Middle East. Nonetheless, we continue to monitor the situation in the region,” says a company spokesman.

CIMB Research analyst Lim Siew Khee notes that MENA contributes 10% to Sembcorp’s utility earnings. She believes the UAE and Oman are not expected to see a regime change, given the large foreign population in the former and loyalty to the monarch in the latter. However, “any regime change could result in loss of control of the independent water and power plants and affect group earnings”, she cautions.

Elsewhere, Keppel Corp has $3.2 billion worth of wastewater- and solid-waste-treatment facilities in Qatar under its infrastructure division. Keppel will operate and maintain the facilities for 10 and 20 years, respectively. Also in Qatar, Keppel Offshore & Marine has a shipyard facility jointly developed with the Qatar Gas Transport Co. The offshore and marine division also has an associate company that does shipbuilding, conversions and repairs in the UAE.

Meanwhile, the group’s property unit, Keppel Land, is in a JV with Saudi Economic and Development Co to develop luxury seafront residences in the Red Sea city of Jeddah in Saudi Arabia. The project is expected to cost some SAR3 billion ($1 billion).

DBS notes that any impact on Keppel from the unrest, in the case of the wastewater- and solid-waste-treatment facilities, will be mini-mal, as the company had already provided for losses and cost overruns last year owing to delays. At the same time, the infrastructure division is still a small unit, and contributions to profits are less than 5%. From the company’s perspective, a Keppel spokesman would only say that it “has business continuity plans in all the countries where we operate”.

Elsewhere, CapitaLand has been forced to write off $59.1 million on its Raffles City Bahrain project for FY2010. “We decided to freeze the project in Bahrain at the foundation level and our four staff there are safe,” says chief financial officer Olivier Lim. Meanwhile, wholly owned subsidiary The Ascott Group only manages and does not own properties in the Middle East, including in Bahrain, Qatar and the UAE. The region only contributed about 3% of The Ascott Group’s FY2010 revenues of $749 million.

Are heavyweights like Keppel, Sembcorp and CapitaLand better able to navigate the troubled MENA region than their mid-sized peers? Analysts say it isn’t a company’s size but the proportion of its exposure that counts. “Even if you have deep pockets, if 80% of your projects are there, you can stay put and not generate any growth, and just stagnate,” says DBS Vickers’

Tan Ai Teng, who tracks Sembcorp, Hyflux, Boustead and Sound Global. “When things are not that great in MENA, you must have other growth angles to go forward.” Tan points out that with their diversified businesses, companies like Sembcorp and Boustead have other business lines that will help cushion the impact of any failure in MENA.

With the situation in MENA still uncertain, diversification counts more than ever now. “Uncertainty is the issue here,” stresses DMG & Partners’ Selena Leong. “The dangerous part about this is that it’s very contagious and you never know  even if a government steps down peacefully and a new one takes over, you still have the issue of political uncertainty. What if they change policies?” Leong adds that companies run the risk of work stoppage and the region becoming bad for business should the unrest spread. “Saudi Arabia is lucky because it’s rich, but so is Bahrain,”

she says. “But, at the end of the day, business is about risk. As long as you know the company is in good hands, they are aware of the risks and actively managing it, that’s the most you can expect.”

Weighing their options

What are companies exposed to the MENA region planning to do next? Chia of Rotary maintains that the region is still a key market for his company, and he isn’t about to abandon the opportunities there, although he’s definitely going to be more cautious. “We are already very selective. We’re going to neutral places  Saudi Arabia, the UAE,” he says. “You’ve got to be there. Mitigating risks doesn’t mean you don’t do anything.” CIMB analyst Yeo Zhi Bin, is keeping his “outperform” call on Rotary with a price target of $1.28, based on nine times FY2012 earnings, although he acknowledges that, should the unrest spill over to Saudi Arabia or the UAE, “the stock stands to lose”.

Boustead plans to be more careful about any investment opportunities in MENA in the future. It still has ongoing projects in the region, albeit in relatively calmer places, including building a $21 million water-recycling plant in Abu Dhabi. However, these are done on a turnkey basis, meaning that Boustead is paid progressively as each stage is completed. Boustead’s Chu adds that, since the company is technically a subcontractor under the major MNCs, should work be halted, it would still have to be compensated for work done.

Boustead also says it has been refocusing on business development in Asia-Pacific since the credit crunch hit two years ago, although it still has up to 15% of its revenues from the MENA region. Still, the turn of events in Libya and elsewhere undoubtedly came as a surprise. Chu concedes that the firm “would certainly have to re-assess any major business development opportunities in that region and will only take up future contracts in countries which we see as economically and politically stable, and through a turnkey engineering contract”.

As for Hyflux, Lum says the company has been refocusing on Asia, particularly China, where it has built up a good track record in the area of build-operate-transfer (BOT) water- and wastewater-treatment facilities for both municipal and industrial use. In fact, Hyflux had announced a slew of new projects in China totalling US$76 million in recent weeks.

The company stopped taking on new projects in China for a while because China’s BOT projects are often too small for project financing, and having too many of them pressured the company’s balance sheet. As such, Hyflux wanted to develop a robust funding structure before taking on new projects. “We stopped for a while only for municipal investments, but business development is always there,” Lum explains. Now, Hyflux has tied up with Japanese fi-nancial institutions such as JBIC, JGC and Mitsui as backers and is ready to push farther into China. “Because of this fluid situation in MENA, we will want to look at China even more intensely,” she says.

Still, Hyflux has no plans to pull out of MENA, Lum adds, noting that it’s still one of the key emerging markets that hold significant opportunities for the company. The region contributed 60% of revenue for FY2010, which was 9% higher y-o-y at $569.7 million, resulting in 18% more earnings that total $88.5 million. “When we first went to China, everybody said it was a risky market, but today, everybody says it’s the best market,” she says.Analysts aren’t as sanguine as Lum, though. While failing to get its projects in Libya off the ground quickly may have been a blessing in disguise, the company will now have to work harder to replenish its order book, as the more than $1 billion worth of projects are not likely to materialise.

Kim Eng has downgraded the stock to a “sell”, with a price target of $1.59 to account for a higher risk premium, and because its FY2010 results were below expectations.But, CIMB analyst Gary Ng maintains his “outperform” call on Hyflux, with a price target of $2.71. “We believe its selldown in recent days is overdone, considering the group has made it clear it is beefing up operations in China in the near term, not MENA,” he writes in a Feb 24 report. “Its JV with Mitsui should facilitate growth in China, while opportunities for tariff increases could boost its operations and maintenance income.”

Lum isn’t worried about Hyflux’s prospects at all. “There are so many tenders in the world,” she says with a smile. “Water shortages will not become better.” But like every other company with a foothold in the MENA region, Lum is likely to spend the next few days, or weeks even, watching history unfold and reassuring investors that the company isn’t too heavily exposed to the risks there.  With additional reporting by Goola Warden

Navigating the desert storm
Mohamed Bouazizi couldn’t have foreseen the impact that his desperate act of self-immolation would have on geopolitics and global financial markets. The 26-year-old Tunisian street vendor set himself ablaze in December after being harassed by police and prevented from making his modest living. It sparked demonstrations and rioting that,
in less than a month, ended the 23-year rule of Tunisia’s president Zine al-Abidine Ben Ali. Now, people across the Middle East and North Africa, also known as MENA region, vexed by poverty and unemployment, are taking to the streets. The uprisings have already ended the 30-year reign of Egypt’s president Hosni Mubarak and appear close to dislodging Libya’s strongman Muammar Gaddafi.

In Singapore, analysts and investors are counting the cost of the social unrest. While few companies have significant direct exposure to the troubled region, the risk of escalating geopolitical tensions as longstanding regimes fall is casting a chill across global financial markets. “The dynamics of the entire region is now called into question,” says one Singapore-based observer, who used to advise an investment fund linked to a royal family in the Gulf region. “The amount of animosity among the people and its intensity has created a huge risk  that the entire region could really unbuckle.”Anticipation of trouble has already spurred oil prices to their highest levels since 2008. Adding to the pressure of rising food prices, the jump in energy costs could quickly choke global growth. “Asia will be directly affected by a growing terms-of-trade shock. This will manifest itself in rising inflation, compressed margins and shrinking consumption. The worry is that this will slow global growth,” says Sean Darby, Asia strategist at Nomura.

In the meantime, the uncertainty of what’s to come could well deter companies from making investment decisions, which would in itself have an adverse impact on economic activity. “If things get worse in Bahrain, and they spread to Saudi Arabia, then we are looking at real big trouble. I think the Saudis are very worried about the possibility that what has happened in Bahrain could spread to the eastern part of Saudi Arabia, where the oil is,” says Professor Michael Hudson, director of the Middle East Institute, an autonomous research body based in Singapore.

Growing civil unrest is also seen in Iran. Any disruption in the Strait of Hormuz, a narrow sea passage located south of Iran that provides the only maritime option for exporting crude oil from Persian Gulf states, will have severe repercussions, according to Hudson. “A huge amount of world oil exports passes through the very narrow Strait of Hormuz. If things get chaotic in Iran, I don’t know where oil prices would head.”

Beware oil-sensitive stocks

DBS Vickers strategist Yeo Kee Yan says while oil prices are currently still “a good distance” from their peak levels in 2008, when they reached US$147 a barrel, inflationary pressure is set to increase and profit margins for many industries will deteriorate if they catch up with the recent rises in commodity prices. “The last thing the global economy, especially Asia, needs right now is for oil prices to join in the commodities rally in a rapid way.”

If the North African states of Libya and Algeria halt oil production together, oil prices could reach in excess of US$220 a barrel, Nomura estimates. Libya is the first member of the Organization of the Petroleum Exporting Countries (Opec) to be rocked by civil unrest in the region.

The impact on a sector like airlines, for instance, can be significant. UBS notes that the current jet fuel price of about US$120 a barrel is already 34% higher than last year’s average. “Recent events in the Middle East and Africa appear likely to push up oil prices further.” Of late, carriers such as Singapore Airlines have raised fuel surcharges, but such increases may not be enough if fuel costs climb even higher. Kim Eng Securities estimates that every additional US$10-a-barrel increase in the price of jet kerosene could reduce SIA’s earnings by about $300 million, if hedging is excluded. Low-cost carriers tend to be more vulnerable, as passing on costs to passengers can be difficult since they target primarily the price-sensitive customer.

Other transport companies, including SMRT, ComfortDelGro and Neptune Orient Lines, can also expect operating costs to rise further if oil prices escalate. SMRT, for one, has for several quarters said that higher energy prices, among other things, would hurt its bottom line.

Buying opportunity?

Amid the turmoil, some analysts and market watchers are seeing opportunity. The Chicago Board Options Exchange Volatility Index, better known as the fear gauge, is now at its highest level since December. Against that backdrop, safe-haven assets such as gold have been edging higher. But, analysts say investors shouldn’t panic just yet. “The rather fluid situation on the ground means that businesses in general will keep their heads low. But, so far, the riots don’t appear to have shaken business confidence in a big way,” says CIMB Research conomist Song Seng Wun.

In fact, analysts say that the sell-off in global equity markets could turn out to be another passing squall rather than a turning point in the recent bull market. “We think this is an intermediate correction in what is still a long-term bull theme. Looking at how asset prices are behaving right now, I still don’t see the panic button being hit,” says Phillip Capital strategist Joshua Tan. “For oil, I think even if something bad happens in Libya, there will be a supply response from the rest of the Middle East.” Indeed, Saudi Arabia has said that Opec is prepared to meet any shortage of supply and that its members have enough spare production capacity to do so.

CIMB notes that stocks in certain sectors outperformed others in 2005, when oil prices jumped 60% on the back of strong global growth, US supply disruptions and the after-effects of the second Gulf War. These industries included healthcare, oil and gas, consumer, conglomerates and offshore and marine. “We expect much of the same this time around,” the brokerage says.OCBC Investment Research says Noble Group and Olam International are fundamentally sound and ideal for longer-term investors, although more downside is possible in the immediate term, as both commodity supply-chain managers have businesses in the Middle East. Telcos, which did not escape the recent sell-off despite their generally defensive business, are more attractive now, as their dividend yields have gone up, OCBC says.

Yeo of DBS, meanwhile, cautions against chasing after Keppel Corp and Sembcorp Marine shares based purely on higher oil prices, which normally bode well for these rig-builders. He notes that both stocks peaked when Brent crude prices rose to about US$90 a barrel in 2007, but went the opposite direction mid-2008, when Brent prices soared past the US$130 mark. “It is one thing if demand is driving oil prices higher and another matter altogether if the rally is fuelled by supply disruption concerns.”

Finally, investors should perhaps keep an eye out for new opportunities in the event that the MENA region manages to transform itself. MENA nations that haven’t already been engulfed by civil unrest are now scrambling to head off protests. Oil-rich Saudi Arabia’s King Abdullah has pledged to dish out billions of dollars in new benefits for the country’s citizens, aimed at addressing inflation, meeting housing needs, cutting education costs and reducing unemployment. If other MENA nations follow its example, Tunisia’s Mohamed Bouazizi would not have died in vain and the region might emerge as a more comfortable and less uncertain place for everyone.

Publish date:28/02/11

Berlian Laju’s debt-fuelled expansion plans

PT Berlian Laju Tanker, Indonesia’s largest operator of chemical tankers, is taking on more debt in yet another attempt to expand its fleet-size and capture emerging growth opportunities in the Indonesian shipping sector.

Over lunch at Victoria Peak Restaurant in Suntec Convention Centre on Feb 22, finance director Kevin Wong announced that the company had secured commitments from six banks  including DnB NOR Bank ASA and Standard Chartered plc  to provide it with a term loan of US$685 million ($877 million). The loan, which has a principal maturity of five years, is Berlian Laju’s largest so far and also one of the biggest ever extended to an Indonesian company. It is to be repaid in full over 10 years and secured by 43 tankers, three of which have yet to be delivered.

Proceeds of the loan facility will be used to fund the three incoming ships and refinance 10 existing loan facilities with an outstanding amount of US$593 million. The loan will help trim Berlian Laju’s debt payments of US$166.9 million over the next three years, “increasing liquidity and the company’s debt service coverage ratio to 1.3 times from 1.05 times before”, Wong says. It will also fund 81% of the company’s capital requirements for new ships in 2011. The company has US$2.27 billion worth of bonds and loans maturing before end-2017.

“We have strong potential to capture demand in the Indonesian market and we also have a young fleet [aged an average of] 7.5 years and a good track record,” Wong says. “The provision of this credit facility will significantly increase our liquidity and strengthen our balance sheet. It also shows that the banks recognise our long-term growth prospects.”

Berlian Laju is raising the funds to expand its fleet of 96 chemical and gas tankers, just as Indonesia’s domestic shipping market is forecast to grow 8% in 2011. This year, Berlian Laju will take delivery of three chemical tankers and one gas tanker to accommodate rising demand. Next year, three gas tankers will be added.

Indonesia’s state-owned oil-and-gas company Pertamina now spends up to US$400 million annually chartering over 100 ships at a time to transport commodities such as liquefied natural gas, petroleum and coal within the country as new cabotage laws kick in. Under the new rules, all ships operating in domestic waters must be Indonesian-flagged and owned by an Indonesian shipping company, a move that benefits Berlian Laju. In addition, tanker rates in Indonesia are nearly 35% higher than international market rates.

To be sure, this isn’t the first time Berlian Laju has turned to the banks for financial aid to expand its fleet. In 2007, it borrowed heavily from a clutch of banks to finance the acquisition of US-based Chembulk Tankers. However, when the shipping cycle took a turn for the worse in late 2008, Berlian Laju was forced to sell a handful of its tankers at fire-sale prices to repay the loans. Then, in 2009, it announced plans to acquire Norwegian shipper Camillo Eitzen & Co by issuing convertible bonds, only to call the deal off after it failed to secure regulatory approval to float the bonds.

But, Wong is adamant that size will matter to Berlian Laju. “The time for tankers is now, and we have the first-mover advantage, because we are, by far, the largest Indonesian tanker company. If a 10-year contract is awarded now, it will not be awarded again in the next 10 years, so we don’t want to waste this once-in-a-lifetime opportunity,” he reasons. As of now, 90% of Berlian Laju’s fleet is tied up in contracts. “The oil producers are not going to wait. If we don’t go in there now, someone else will.”

Is Berlian Laju biting off more than it can chew? Should it focus on delivering shareholder value instead? Investors have certainly not been impressed. Shares of Berlian Laju closed on Feb 24 at 4.5 cents apiece, barely moving a notch since Wong made his announcement two days earlier. At its all-time high in December 2007, the shares were trading at 29 cents apiece. A year later, the stock tumbled to a low of just three cents. Since then, it has barely moved above 10 cents.

For the year ended Sept 30, Berlian Laju posted revenue of US$494.5 million, up 9.8% y-o-y. However, the company widened its loss to US$31.5 million, from US$9.6 million the year before.

So, while Wong’s debt-fuelled ambitions could prove to be right in the long run, Berlian Laju must start showing some results fast.

Publish date:28/02/11

Warren Buffet On CNBC 3-2-2011

Warren Buffet On CNBC 3-2-2011 Squawk on the Street Where is economy headed Housing Employment Unions Budget States cities municipalities debt bonds fail bankruptcy retirement benefits layoff SEIU UPEC Jobs Berkshire Hathaway muni democrat republican "tea party" tea party deal shut down spending cuts

Source/转贴/Extract/: youtube
Publish date:03/03/11


March 3, 2011 23:45

(華盛頓3日訊)為了提振經濟, 美國聯邦儲備局(Fed,簡稱聯儲局)主席柏南奇不排除擴大資產收購計畫規模,因不想看到美國經濟再度陷入衰退中。

柏南奇在眾議院金融服務委員會(House Financial Service Committee)聽證會上被問及,在什麼情況下有必要推出第3輪量化寬鬆政策(QE3)時,他說:“我們想看到的是持續性復甦,並不想看到美國經濟陷入二次衰退或出現停滯。”





Source/转贴/Extract/: 中國報
Publish date:03/03/11

Hyflux points share price plunge to Libya situation

06:25 PM Mar 03, 2011

SINGAPORE - Olivia Lum's water treatment group Hyflux Limited has responded to queries from the Singapore Exchange about the sharp fall in its share price Thursday, citing the potential link to the volatile political situation in Libya.

In a statement last night, Hyflux said:"One possibility could be the market reaction from the situation in Libya. We have shared with our shareholders that our project in Libya may be delayed and there could be potential loss of revenue. We have at the same time explained that we do not have any investment exposure in Libya.''

Hyflux share price plunged over 6 per cent or 12 cents at S$1.81 apiece yesterday, continuing the fall from around S$2.40 only early this year. "As the situation in Libya is fluid, the company will increase its focus in Asia to balance our growth strategy,'' Hyflux said. The stock recovered slightly this morning, up three cents at S$1.84.

In addition to its current joint venture platform with partners such as Mitsui & Co. Ltd and JGC, Hyflux said it is exploring other non-dilutive financial platforms such as use of preference shares to support the company's expansion plans to capture the

potential growth in Asia. The company has applied to SGX for its proposed amendments to its articles of association to allow for issue of preference shares and to seek shareholders' approval for a preference share mandate.

Source/转贴/Extract/: TODAY
Publish date:03/03/11

S'pore $ at all-time high

by Christopher Howells

05:56 AM Mar 04, 2011

SINGAPORE - The Singapore dollar rose to a new record of S$1.2678 against the US dollar yesterday before retreating slightly.

Analysts said the local dollar would likely trade even higher as concerns over inflation prompt the Monetary Authority of Singapore (MAS) to tighten policy again in April.

However, they added the local currency may not strengthen as much as it did last year, when it rose 9 per cent against the greenback.

Asian currencies continue to trend higher as the US dollar weakens.

Factors contributing to the greenback's slide included the policy meeting of the European Central Bank yesterday, where it was expected to step up its anti-inflation rhetoric and even signal the withdrawal of some crisis measures soon.

Meanwhile, across the Atlantic, United States Federal Reserve chairman Ben Bernanke indicated in Congressional testimony that the central bank would not rule out a third round of quantitative easing. Currency traders, as a result, are betting on a stronger euro.

But the US dollar's slide in Asia is more profound, analysts said. With higher inflation in Singapore and the region, the monetary authorities are allowing their currencies to gain to help tackle the rising prices of imported commodities, they noted.

Mr Sanjay Mathur, head of research & strategy, Asia ex-Japan, RBS, said: "We do see a further tightening in monetary policy, in terms of exchange rate policy."

The market consensus is overwhelmingly in favour of further tightening by the MAS, which will result in further appreciation in Singapore dollar, he said.

"As of now, April is a certainty. I think we need to watch for how the global growth dynamics evolve thereafter but April is pretty much in the bag now," he said.

But gains in the Singapore dollar could be capped if the US recovery gathers pace later this year.

This may boost the US dollar on expectations that monetary stimulus by the Fed could be withdrawn.

CIMB regional economist Song Seng Wun said: "If there are reasons to believe the US economy is gradually on the road to recovery, then we may see the US dollar gain some ground in the second half of this year, which means for other currencies in the region where Singapore is concerned, the appreciation will be much more modest."

For now, the consensus view is for the Singapore dollar to appreciate to S$1.23 against the US dollar by the end of this year

Publish date:04/03/11

Analysts' stock picks in the bear market

By Zaidi Isham Ismail and Francis Fernandez

Investors should buy stocks with a low price to earnings (PE) ratio, and those from the property sector, to benefit from the current bearish market, analysts said.
The stock market's main benchmark, the FTSE Bursa Malaysia KLCI Index has lost 1.8 per cent so far this year.

Mercury Securities Sdn Bhd's head of research Edmund Tham said low PE stocks trading below the RM1 mark provides opportunities, and minimal downside risk.

Those on his radar are fire-fighting equipment supplier Fitters Diversified Bhd and jewellery group Tomei Consolidated Bhd. Fitters closed the day at 73 sen while Tomei ended the day at 63.5 sen a share.

"These are stocks that are trading below (a PE) of eight," said Tham.

Fitters is expected to register a net profit of RM35.5 million this year, according to RHB Research, and based on its current price, the stock is trading at a PE of below seven.

"I attended a Tomei briefing. The company is expected to register around RM25 million in net profit this year. Their PE ratio is only about five times," said Tham.

Jupiter Securities head of research Pong Teng Siew, meanwhile, said investors should not look at sectors now as stocks from across the board have come down.

"I suppose there is value everywhere, but the third liner stocks - those listed on the ACE Market have felt the brunt of the selldown," said Pong.

He estimates the ACE Market have come down as much as 17 per cent from its peak, while the benchmark index have shed slightly more than 90 points from its January peak.

"Some of the second liner stocks worth having a look at are Coastal Contracts Bhd and SEG International Bhd," said Pong.

Sector-wise, according to Pong, investors could take a look at property stocks if they want to bargain-hunt. The sector is down by slightly more than 9 per cent since the KLCI closed at its peak on January 17 this year.

AmResearch yesterday maintained its "buy" call on SP Setia Bhd, with a fair value of RM7.38 a share. ECM Libra Capital Sdn Bhd's Bernard Ching also likes SP Setia.

Ching said although property stocks look attractive, investors still need to be cautious as interest rates could rise, implying the sector has reached the top of its cycle.

"I wouldn't give an 'overweight' recommendation on the sector," he said.

Publish date:04/03/11

Thursday, March 3, 2011








昨日,AmBank高级经济分析员玛诺卡蓝(Manokaran Mottain)向《马新社》表示,由于中东局势不稳,中东的投资者势必停止到外国投资,而这将直接影响我国的经济转型计划,因为当中的许多计划都依赖中东资金运转,包括总值260亿令吉的吉隆坡金融区域计划。

















Source/转贴/Extract/: malaysiakini
Publish date:03/03/11


Created 03/03/2011 - 19:06









Publish date:03/03/11

Provide small investors a way out of suspended companies

Business Times - 03 Mar 2011

Provide small investors a way out of suspended companies
SHOULD small investors be left holding the proverbial baby for a seeming eternity when a company's stock is suspended following the discovery of some irregularities?

That is the question David Gerald, president of the Securities Investors Association (Singapore), raised this week in the wake of the suspensions of China Hong- xing and Hongwei Technologies after their auditors refused to sign off on their accounts.

The two companies shocked the market when news broke over the weekend that their auditors (Ernst & Young in both cases) could not finalise the audit for the financial year ended Dec 31, 2010, as they could not confirm the cash and bank balances in the companies.

The stocks were promptly suspended.

These two are just the latest in a string of S-chips which have hit the rocks over the past three years due to a variety of serious issues. Most remain suspended, and some have been ultimately delisted. And in the process, thousands of shareholders - the majority of whom are retail investors - have lost huge bundles of money.

Mr Gerald reckons the sudden suspension of Hongxing and Hongwei has left some 14,000 minority shareholders in a quandary. And given the precedents set by previous suspensions of other S-chips under similar circumstances, there is a high likelihood that these two counters will remain suspended for months, if not years.

Being the advocate of the retail investor that he is, Mr Gerald also suggested that trading of the shares be allowed to continue, but under certain restrictions.

He has a point.
One can debate endlessly about the merits of trusting S-chips, and the principle of investors taking responsibility for their own actions.

But the fact remains that these are companies which were listed and traded on the local stock market, where they are accessible to all variety of investors, be they sophisticated ones or the 'moms and pops'. And all become equal victims when irregularities are detected and the shares are frozen for an indefinite period.

The Singapore Exchange (SGX) is perfectly correct when it says that allowing trading of shares in China Hongxing and Hongwei right away would be more detrimental to shareholders and throw the fairness and transparency of the market into question. Of course, investigations have to be done, and transparency has to be restored.

But surely there is some room for a solution to address the concerns of innocent shareholders who are being punished for a mess which is not of their doing.

Suspension means just that: no trading, no price discovery and no market value for the security.

One solution may be for the authorities to set a timeline for the investigations, and thus the suspension. This timeline - say, six months - would not only enable special auditors to come up with a preliminary report which would provide more information to the market, but also provide a cooling-off period.

Once this period is over, there could be restricted trading in the stock. Investors would have at least some facts with which to make informed decisions.

The controls can be as tough as necessary, with restrictions such as cash-only trades, a total ban on short-selling, and barring all insiders or company officials from trading their stock - whatever is necessary to ensure an orderly market.

The point is to allow the market to price the stock and, more importantly, to give minority shareholders a viable exit strategy.

Hongxing, for example, was among the most actively traded stocks on the market for weeks, if not months. Its market cap was some $500 million a week before the suspension. This value now remains trapped.

Of course, the price will likely collapse on resumption of trading. But even if it drops to, say, 3 cents, this would be better than the imputed zero-value as it remains suspended.

Resumption of restricted trading would not only enable sellers to exit, but could also attract potential buyers. These could be investors who hope to make a windfall gain if and when the company - which still has a thriving sports retail business in China - gets its act together.

The whole process enables price discovery and provide transparency. It also gives hope to the thousands of small investors who have collectively invested millions of dollars in the company.

Not quite the perfect solution, but far better than the black hole many innocent minority shareholders find themselves in.

Publish date:03/03/11

Maintain OVERWEIGHT Impact of interest rates hike on S-REITs (OCBC)

Debt profile varies among the S-REITs. We consolidated the debt profiles of the S-REITs under our monitor, and we think that any impending interest rates hike will add on to borrowing costs, and thus affect distributable income for unitholders. However, not all S-REITs will be impacted similarly. Some of the S-REITs have more fixed-rate borrowings than others (using instruments such as fixed rate CMBS, fixed rate term loan, fixed rate MTN, convertible bonds, retail bonds etc.) S-REITs also have varying degrees (as % of total borrowings) of hedging their outstanding loans using interest rate swaps. The debt maturity profiles are different for different S-REITs. Some are weighted more towards short-term borrowings, while others are contracted on longer-term basis, which may or may not be fixed rated. The resulting refinancing risks are thus different for different S-REITs.

Impacting S-REITs differently. We think any rate hike is likely to have a greater impact on S-REITs that 1) have a lower percentage of fixed rate borrowings, and 2) have a substantial amount of borrowings maturing near the interest rate hike period (likely 2H11-FY12), or if they still have not refinanced to a latter date. Any refinancing done thereafter will be at much higher rates, even for fixed rate borrowings.

Mitigation tactics. Generally, all S-REITs under our monitor have some form of fixed rate contractual agreements or hedge using interest rates swaps to mitigate the effects of interest rate risks. For FY10/11, some S-REITs have taken the following actions in anticipation of the interest rate hike, 1) lengthening the debt term-to-maturity with more fixed rate borrowings, 2) hedging using Interest rate swaps, and 3) cash hold-up for some since FY10, in anticipation of borrowings maturing in 2011-2012.

Conclusion. Overall, we think fundamentals for the majority of the S-REITs remain strong, and any increase in interest rate will have some, but not material impact on their financials (since most of them are already expecting a hike in interest rate and have been preparing for it). This is corroborated by our correlation analysis of the percentage change of the FSTREI index vis-à-vis pp change of the 3-month Sibor, which registered a low -3.4% from 2006 till to-date. Factoring in delay effects of 1-24 months, the correlation is also marginal, ranging from -7.8% to 8.6%. Maintain our OVERWEIGHT rating on the S-REITs sector.

Interest rate hike imminent in 2012. The McKinsey Global Insititute (MGI) study has forecasted that a surge in global investment demand fuelled by rapid emerging markets growth could drive interest rates upwards within the next five years. China, India, Indonesia, Thailand and South Korea have all lifted rates in 2010/2011 to try and cool their hot economies and keep a lid on accelerating prices. However, back in Singapore, interest rates remain at record lows and even equity fund outflows have made no impact, given the Monetary Authority of Singapore's (MAS) tool of choice: using the exchange rate to dampen further price increases. The MAS manages the Sing dollar's strength by buying or selling currencies to keep its exchange rate against major currencies within a policy band, and by adjusting the band occasionally to steer the exchange rate. This FX-centred monetary policy regime means that Singapore's short-term interest rates are essentially a function of US short-term interest rates. Hence, Singapore has effectively imported the US's interest rate policy, despite obvious domestic inflationary pressures. On the other hand, many economists expect the Fed to start normalising rates only towards the latter part of 2012 - which, if correct, would imply the Sibor will stay at current low levels through 2011.

Debt profiles of S-REITs. We consolidated the debt profiles of the SREITs under our monitor, following the latest quarterly results, and we think that any impending interest rates hike will add on to borrowing costs, and thus affect distributable income for unitholders. Below are the debt profiles of the S-REITs, categorized according to subsectors: Office, Industrial & Retail:

Impact on S-REIT. We think any rate hike is likely to have a greater impact on S-REITs that:

(1) Have a lower percentage of fixed rate borrowings, such as the newly listed MIT (in comparison) etc.

(2) Have a substantial amount of their borrowings maturing near the interest rate hike period (likely 2H11-FY12), or if they still have not refinanced to a latter date. Any refinancing done thereafter will be at much higher rates, even for fixed rate borrowings. Likely candidates include CCT, FCOT, CMT, FCT, LMIRT etc.

Mitigation tactics - in anticipation of future rate hikes. In general, all S-REITs under our monitor do have some form of fixed rate contractual agreements or hedge using interest rates swaps to mitigate the effects of interest rate risks. For FY10/11, we have also witnessed some S-REITs undertaking some of the courses of action mentioned below, in anticipation of the interest rate hike:

(1) Lengthening the debt term-to-maturity with more fixed rate borrowings. Cache and CMT for example recently launched their S$500m fixed rate MTN and S$2.5b retail bond programmes respectively in order to lock in low interest rates. We do note however that it may not always be "cheap" to contract for fixed rate borrowings, and it depends a lot on the negotiating power between the trust and the lending party (bank, public etc.)

(2) Hedging using interest rate swaps. We have seen some of the smaller S-REITs (such as Cache, AIM AMP Capital Industrial REIT) taking up interest rate swaps to protect against interest rate risks.

(3) Cash hold-up. Some of the S-REITs also begun to hold up cash since FY10, in anticipation of their significant amounts of borrowings maturing in 2011-2012. For example, CCT held up some S$730m cash for the most part of 2010 following the divestment of Robinson Point and Starhub Centre. CMT also has some S$710m on hold for its refinancing needs in 2011- 2012.

Overall, we think the fundamentals for the majority of the S-REITs remain strong, and any increase in interest rate will have some but not material impact on their financials (since most of them are already expecting a hike in interest rate and have been preparing for it, following the courses of action mentioned). This is corroborated by our correlation analysis of the percentage change of the FSTREI index vis-à-vis pp change of the 3-month Sibor, which registered a low -3.4% from 2006 till to-date. Factoring in delay effects of 1-24 months, the correlation is also marginal, ranging from -7.8% to 8.6%.

Share price analysis. Historically, interest rate hikes have typically caused share prices to edge lower in the short-term. An increase in interest rate is also likely to reduce the yield spread between the REIT and traditional comparables (such as 10-yr Government bond, 12-mth fixed deposit etc), and thus bring down the "attractiveness" of S-REITs to investors. Despite S-REITs being more defensible, we think some of them may still be dragged down by market momentum in the short term. However, we remain positive on the medium-term prospects of the S-REITs and are confident that most REITs managers will optimize their financial means to protect the trusts from further interest rate and refinancing risks.

Source/转贴/Extract/: OCBC Investment Research
Publish date:03/03/11

4Q10 results round-up (CIMB)

4Q10 results round-up
1,491 @28/02/11
Target Index: 1,700
Below expectations

• Maintain OVERWEIGHT despite poor showing. The 4Q10 results season was generally disappointing as the earnings revision ratio (upgrades/downgrades) stayed negative at 0.8x. We raised CY10-11 EPS by less than 1% while shaving 0.4% off CY12 EPS. The past 4-5 results seasons have been less than sterling, which is one of the reasons why investors need to stay vigilant. Nonetheless, we maintain our OVERWEIGHT stance on Malaysia and end-2011 KLCI target of 1,700 points based on an unchanged P/E target of 14.5x. Valuations are undemanding and there are other catalysts that will give the market a boost in the short- to medium-term including 1) the various transformation programmes and 2) the election effect.

• Weak 4Q results season. The Feb results season came in below expectations as the revision ratio stayed negative at 0.7x, same as in Nov. Some 52% of the companies in our universe met expectations (60% previously) and a higher 28% failed to deliver (23% before). 20% did better than expected, an improvement on the Nov results season’s 17%. For the month of Feb, CY10 EPS was raised slightly by 0.5%, CY11 was unchanged while CY12 EPS was cut by 0.9%. EPS upgrades for CY10 came mostly from the gaming, property, plantations and media companies.

• Record 2010 EPS growth of 35%. 2010 EPS growth ended the year at a record 35%, the strongest in more than 10 years. Although the growth was off a low base and followed two years of EPS contraction (-5% in 2008 and -7% in 2009), it was very encouraging as the growth was across the board. ROE also improved to nearly 16% while net gearing is at its lowest at 19%. We are forecasting a moderation of EPS growth to 12% in CY11-12, driven by the banking, plantations, construction, oil & gas, property, gaming and transport sectors.

• Selling pressure in early 2011 just a hiccup? Regional markets including Malaysia have come under selling pressure due to the twin effects of 1) the pullout of global funds from emerging markets back to developed markets, and 2) concerns over the political situation in MENA countries which caused oil prices to shoot up. We believe that global funds’ exodus from emerging markets into developed markets will have a temporary effect as that trend has longer-term positive implications for the global economy. The upheaval in MENA, on the other hand, is trickier as it is difficult to predict how far the uprisings will spread and how high oil prices will reach.

Source/转贴/Extract/: CIMB Research
Publish date:03/03/11

4Q10: results are past, watch the domino effect (CIMB)

Singapore Strategy
3,027.5 @02/03/11
Target Index: 3,560
4Q10: results are past, watch the domino effect

• Maintain Overweight and end-CY11 FSSTI target of 3,560. Our index target remains bottom up, implying 1.9x CY11 P/BV (slightly above mean) and 14.2x CY12 P/E (below mean). We believe such valuations are conservative and could be surpassed in 2H11 when the market refocuses on Asia. Our Overweight position on Singapore is premised on: 1) its below-mean valuations offering a measure of defensiveness if markets continue to sell down; and 2) its likely relative resilience to bubbling inflation across the world. In the short term, we expect the volatile combination of social unrest, rising commodity prices and unresolved sovereign-debt concerns to cascade and play out like a domino. One could lead to another and this will make for a fragile investing ground in 1H11. By 2H11 though, we suspect Asia should come through better in coping with inflationary pressures than the developed world. We expect Asian equity markets to do well in 2H11 and make up for the losses in 1H11, the FSSTI together with it. Catalysts for the market should be initial rounds of upgrades for the O&M sector (from Petrobras orders), followed by banks; then valuation multiple expansion as investors buy back into Asian growth later in the year.

• 4Q10 results review. Singapore companies had a fairly good 4Q. The positive negative earnings surprise ratio swung to 0.8x in 3Q10, but was back to 1.3x in 4Q10. The main sector that beat expectations was offshore & marine (higher margins from recognition of high-value contracts). The supporting cast (with earnings outperformances) was upstream plantations and agri-logistics. Shipping, exchanges, and property developers were some of the sectors that missed expectations. Banks met forecasts as their fee income, trading income compensated for margin pressure. Telcos’ margin compression was partially reversed but they did not deliver on capital management, as much as we had expected. The key risk now is clearly oil. Over the past three months, our FSSTI EPS estimates have been upgraded the most for the O&M sector but downgraded the most for the transport sector.

• Our top picks are Cache Logistics, CWT, DBS, Golden Agri, Genting Singapore, Keppel Corp, Keppel Land, UOL, SembMarine, and STX OSV. Financials, conglomerates and plantations/commodities remain our preferred sectors. We have added SembMarine, which is now our preferred stock in the O&M sector as we believe its orders will catch up. Transport stocks have been erased from our list. For large-cap picks, we would buy banks on market weakness.

Source/转贴/Extract/: CIMB Research
Publish date:03/03/11


Created 03/03/2011 - 12:13













油價飆破每桶100美元,航空類股因成本壓力跌勢最大,馬航(MAS, 3786, 主板貿服組)和亞洲航空(AIRASIA, 5099, 主板貿服組)分別跌4仙和16仙,各報1令吉82仙和2令吉40仙。



Publish date:03/03/11


Created 03/03/2011 - 12:15

(吉隆坡2日訊)馬航(MAS, 3786, 主板貿服組)放眼該公司在2011及2012財政年的收益率增長2仙,主要由新飛機啟動後的高收益產品拉動,但興業研究對該公司通過全盤的機隊更新計劃仍然無能力讓收益率增長仍然存有隱憂。













Publish date:03/03/11


Created 03/02/2011 - 19:15


該國市值最大上市銀行Al-Rajhi Bank股價大跌至1年來最低,世界最大石油化學製品廠商Saudi Basic Industries Corp.下殺7.8%。

利雅得時間1日下午3:30收盤,沙地阿拉伯Tadawul All Share指數急跌6.8%,報5,538.72點。自升抵2010年高峰算起,已經回跌20%,步入空頭市場。

迪拜Gulfmena Alternative Investments股票策略師安薩利(Omair Ansari)表示:“沙地阿拉伯股市的表現說明了這個地區的地緣政治風險仍未解決,出現3月11日與20日發動抗爭的謠傳,存在一定程度的不確定性,即便事情尚未發生。”


人權觀察(Human Rights Watch)週二提出聲明,沙地阿拉伯政府“應立即釋放”雅米爾(Tawfiq al-Amir)。雅米爾是什葉派教士,因主張君主立憲而被拘捕。

阿曼股市急漲4.1%,週二摜低4.9%。DFM General指數漲升1%。科威特SE Price指數拉回2.5%。巴林BB All Share指數小跌0.5%。阿布扎比ADX General指數回檔0.6%。


Publish date:03/03/11

Sands China shares slump on probe news

05:56 AM Mar 03, 2011
HONG KONG - Sands China fell the most in more than three months in Hong Kong trading after its majority shareholder, billionaire Sheldon Adelson's casino company, said it faced investigations from the United States Securities and Exchange Commission (SEC) and Justice Department.

Sands China tumbled 6.2 per cent to HK$17.86 (S$2.91), the biggest decline since Nov 17, paring its climb over the past year to 67 per cent. The benchmark Hang Seng Index fell 1.5 per cent.

Mr Adelson's Las Vegas Sands, the parent of the Macau casino operator, said yesterday it received a subpoena from the SEC to produce documents relating to its Macau operations' compliance with the Foreign Corrupt Practices Act (FCPA). The Justice Department is conducting a similar investigation, the Las Vegas-based company said in a regulatory filing.

The FCPA prohibits US companies and their intermediaries from making improper payments to foreign officials to win or retain business.

"This could drag on for some time," said Mr Tan Teng Yee, a Hong Kong-based analyst at CIMB-GK Securities HK. "I would expect this overhang to continue to weigh down Sands China's share price, until we see a meaningful resolution."

Mr Aaron Fischer, a Hong Kong-based analyst at CLSA, said: "News of the investigation is clearly negative," but the probe is unlikely to have a "major impact" on Sands China's earnings in the short term, he said.

Mr Ron Reese, a spokesman for Las Vegas Sands, described the contact by the authorities as "making fact-finding inquiries".

Las Vegas Sands, which owns a 70.3-per-cent stake of Sands China, according to data compiled by Bloomberg, fell 6.3 per cent to US$43.70 in New York Stock Exchange composite trading yesterday. Bloomberg

Publish date:03/03/11

2011 Singapore Stock Market Outlook By Dennis Ng

Source/转贴/Extract/: youtube
Publish date:03/03/11

Wednesday, March 2, 2011

Yangzijiang A series of investments (DBSV)

Yangzijiang Shipbuilding
BUY; S$1.85;
Price Target: 12-Month S$2.60
A series of investments

Yangzijiang announced that it has embarked on three acquisitions and investments including:
1. Jiangsu Xinfu Shipbuilding
Acquisition of additional 40% interest in Jiangsu Xinfu Shipbuilding for a consideration of US$57.15m or RMB 377m, raising its effective stake to 60%. The Xinfu yard, currently under construction and originally planned for shipbreaking business, will now be converted for shipbuilding, ship repair, production and processing of large scale steel structures. Annual capacity is estimated to be 3m dwt, which is equivalent to 10 units of VLCC or 12 units of 10k TEU containerships.

Aiming for large-sized vessels. The consideration for the 40% stake represents a 27% premium over the 20% stake bought a year ago, which is probably fair to compensate existing shareholders for the dilution resulted from new capital injection by Yangzijiang. We read the shift of plan from shipbreaking to shipbuilding positively as Yangzijiang's other shipbreaking yard is relatively large as well. In addition, the new yard is expected to be equipped with more advanced facilities and cater for large-sized vessel demand ie 10k TEU containerships, as part of Yangzijiang's strategy to move up the value chain.

We do not expect material impact from this new yard in the coming two years as it will only come onstream by early 2013. There will then be a 1.5 years of window period for Yangzijiang to scale up in securing orders of large-sized vessel for the new yard.

2. Marine Import and Export Co.
Incorporation of Jiangsu Tianchen Marine Import and Export Co. for a registered paid up capital of RMB100m, to provide services to shipbuilders to facilitate the sale and export of vessels.

To capture profits along the supply chain. While this is not expected to have material impact on earnings, the upstream integration should reduce Yangzijiang's dependency on 3rd party and enhance its margins by capturing the profits along the supply chain.

3. Venture capital
Subscription for RMB500m equity interest in the capital of Jiangsu Renhe New Energy Industrial Investment Centre, which is a venture capital with total capital of RMB2.5bn.

To enhance return of its cash hoard. This is in line with management's strategy to leverage on its cash hoard and enhance shareholders' value through prudent investment in micro finance and venture capital. While it may not be a commendable strategy to many investors, such investments offer lucrative yields.

On the right track. In conclusion, the three acquisitions and investment, amounting to less than RMB1bn or approx, S$200m, are not expected to have material impact on Yangzijiang's bottomline in the coming two years. Nonetheless, all these should contribute positively in the longer term. We believe Yangzijiang is on the right track in building a diversified and robust business model, comprising shipbuilding, shipbreaking, offshore and shipbuilding related businesses. We maintain our BUY recommendation on Yangzijiang. TP is unchanged at S$2.60, based on 14x FY11 PE.

Source/转贴/Extract/: DBS Vickers Research
Publish date:02/3/11

國民大會:股匯雙殺油金熱 20110302

國民大會:股匯雙殺油金熱(1/4) 20110302

國民大會:股匯雙殺油金熱(2/4) 20110302

國民大會:股匯雙殺油金熱(3/4) 20110302

國民大會:股匯雙殺油金熱(4/4) 20110302

Source/转贴/Extract/: youtube
Publish date:02/03/11

MIIF To reinvest or return cash (NRA)

Macquarie International Infrastructure Fund Ltd
Current Price S$0.55
Fair Value S$0.63

To reinvest or return cash
_ FY10 results were in line with expectations. 4QFY10 distribution income fell 94.8% YoY to S$0.4m. The decline is marginally less than our expectations as there was an unexpected small distribution from Taiwan Broadband Communications (TBC). FY10 dividend distribution income fell 26.3% YoY to S$42.2m while net income declined 33.9% YoY to S$37.2m on an adjusted basis, and were largely in line with our expectations. The decline was the result of disposal of MIIF’s interest in Macquarie European Infrastructure Fund (MEIF) in 4QFY09 and MIIF’s interest in Canadian Age Care (CAC) and Arqiva in 1QFY10 and 2QFY10 respectively. Dividend distribution from the remaining investments was the result of higher distribution from Changshu Xinghua Port (CXP) of S$4.6m (+199.9% growth YOY), Hua Nan Expressway (HNE) of S$21.3m (+49.4% growth YoY) but was offset by lower distributions from TBC of S$13.1m (-21.2% YoY) due to the scheduled amortisation of senior debt facilities. MIIF declared a final dividend of 1.5 cents per share, as expected.

_ Unable to sustain long-term annual distribution of 3 Scts per share unless... MIIF’s portfolio of businesses performed well with all businesses registering YoY EBITDA growth in FY10 with the exception of Miaoli Wind (MW). MIIF’s financial position remained strong with cash balance of S$476.3m as at 31 Dec 2010 (S$478.6m as at 30 Sep 2010). At the corporate level, MIIF has no debt. However, distributions from the existing four businesses and cash holdings will not be able to sustain a long-term annual distribution of 3 Scts per share, without investing.

_ … cash is reinvested. Management remains committed to reinvest the cash hoard into Asian infrastructure businesses with mid to high teen IRR portfolio return comprising both distribution yield and capital growth. Todate, management has reviewed 60 opportunities but there are no firm deals. Management does not plan to hoard cash for a protracted period and in the event reinvestment opportunities are not available, management has the ability to purse options such as the payment of a special dividend and/or a share buyback.

_ Valuation and Recommendation. The quality of assets enabled management to dispose off MEIF at a discount of less than 20% in 4QFY09 and Arqiva at a marginal premium in May 2010. Assuming management invests cash fully and based on a 20% discount to asset valuations, using DCF, we value MIIF at S$0.63, (previously S$0.65), which offers a return of about 14%. Further, MIIF offers a dividend yield of about 5% (based on dividend per share of 3 cents). The share is also supported by our NAV per share of S$0.79. Maintain BUY.

Results Review

4QFY10 distribution income fell 94.8% YoY to S$0.4m and the decline is marginally less than our expectations as there was an unexpected small distribution from TBC.

FY10 dividend distribution income fell 26.3% YoY to S$42.2m while net income declined 33.9% YoY to S$37.2m on an adjusted basis, and were largely in line with our expectations. The decline was the result of disposal of MIIF’s interest in MEIF in 4QFY09 and MIIF’s interest in CAC and Arqiva in 1QFY10 and 2QFY10 respectively.

Dividend distribution from the remaining investments was the result of higher distribution from CXP of S$4.6m (+199.9% growth YOY) and reflected the steady performance of the business with strong growth in general cargo and container volumes while distribution from HNE of S$21.3m (+49.4% growth YoY) reflected the improved traffic volumes experienced during 2010. Higher distributions from these operations were however offset by lower distributions from TBC of S$13.1m (-21.2% YoY) due to the scheduled amortisation of senior debt facilities. The amortization started in Oct 2009 and had a negative impact on cash available for distribution to TBC sharesholders in 1HFY10.

MIIF declared a final dividend of 1.5 cents per share. Including an interim dividend of 1.5 cents per share, a total dividend of 3.0 cents per share was declared for FY10.

Operational Review and Prospects

MIIF’s portfolio of businesses performed well in 4QFY10 and FY10, with the exception of Miaoli Wind (MW).

Changshu Xinghua Port (CXP)

At CXP, 4QFY10 EBITDA of RMB31.9m dipped 0.9% YoY and 2.1% QoQ due largely to cost pressures. As a result, overall EBITDA margin fell 10.7 percentage points YoY and 0.2 percentage points QoQ to 45.2% in 4QFY10.

FY10 EBITDA grew 7% to RMB127.5m as volumes across all products, except for international steel, grew. In particular, log volumes grew 56.1% YoY due to higher log volumes from New Zealand while non-steel products rose 71.2% YoY due to the handling of new products such as sodium sulphate, borax and mining equipment. Container volumes also rebounded, growing 10.1% YoY. However, steel volume fell 4.3% YoY due to change in mix towards more domestic steel trading when pricing differential between international and domestic steel was marginal. MIIF received a total dividend distribution of S$4.6m in FY10 from CXP, in line with expectations.

CXP is expected to benefit from continued volume growth across most products groups into FY11. Riding on strong economic growth in the PRC, CXP achieved growth in volumes across most of its products in 2010 and this trend is expected to continue into 2011. There will be ongoing efforts to diversify cargoes handled at CXP to reduce reliance on the steel sector, which currently offers lower margins as CXP handles more domestic steel trading. These efforts include increasing exposure to the North American log market, increasing the handling volume of sodium sulphate and developing more project equipment.

Hua Nan Expressway (HNE)

At HNE, 4QFY10 EBITDA of RM91.4m fell 16.7% YoY and 23.3% QoQ due to rising costs as well as a fall in traffic volume of 15.7% YoY and 17.5%* QoQ to 11.2m ensuing from measures to reduce traffic in Guangzhou for the period from 1 November to 22 December 2010, with the aim of reducing traffic levels by 50% during the 2010 Asian Games in December 2010. As a result, overall EBITDA margin fell 4.9 percentage points YoY and 7.4 percentage points QoQ to 75.5% in 4QFY10. (* A noteworthy point is that traffic volume fell less than expectations of a decline of 30% to 40% in 4QFY10).

FY10 EBITDA grew 8% to RM424.8m on traffic volume growth of 9.3% YoY to 50.5m vehicles, despite temporary measures to reduce traffic during the Asian Games. MIIF received a dividend distribution of S$21.3m in FY10 from HNE, in line with expectations.

Traffic volume is expected to expand into 2011, marginal negative impact from detolling of XGE. Riding on the continuous growth in the Chinese economy and the opening of Guanghe Expressway, a complementary road, in 2H11, the traffic volume at HNE is expected to expand into 2011. However, a government-owned competing road, Xinguang Expressway (XGE), has been permanently detolled since the Asian Games in Dec 2010 and this will have a negative impact on HNE’s traffic volume. The impact is likely to be marginal, estimated at 1% to 3%, as XGE is an existing congested road.

Taiwan Broadband Communications (TBC)

At TBC, 4QFY10 EBITDA of NT$1.1bil grew 4.5% YoY but dipped 0.1% QoQ due to rising costs pressures. The lower EBITDA was despite an increase in subscriber numbers across all the businesses. Basic cable subscribers increased by 0.4% QoQ, broadband subscribers rose 1.9% QoQ while digital subscribers increased by 21.0% QoQ. Overall EBITDA margin improved 0.3 percentage points YoY but fell 1.0 percentage points QoQ to 61.4% in 4QFY10.

FY10 EBITDA grew 5.1% YoY to NT$4.3bil due to increases in subscriber numbers across all the business segments. Basic cable subscribers increased by 1.9% YoY, broadband subscribers rose 9.3% YoY while digital subscribers increased by 122.4% YoY. EBITDA margins improved 0.6 percentage points to 62% in FY10. MIIF received a dividend distribution of S$13.1m in FY10 from TBC, a decline of 21.2% YoY, due to scheduled amortization of senior debt facilities which started in Oct 2009 which had a negative impact on cash available for distribution to TBC shareholders in 1HFY10. There was also an unexpected distribution of NT0.39mil in 4QFY10.

Expect downward pressure on TBC’s rate cap. In Dec 2010, Taiwan’s Investment Commission and National Communications Commission approved the local Tsai family’s acquisition of cable TV operator, KBro Co (KBro) with the condition that KBro’s basic cable TV rates be reduced to Taiwan’s national average rate. As a result, the local authorities in which TBC operates also came under pressure to apply for a reduction in TBC’s rate cap which is expected to negatively impact TBC’s revenue. However, the downside is expected to be modest in light of revenue and costs initiatives.

Focus on digital TV to provide TBC’s next growth phase and enhanced margins. TBC continues to enjoy strong recurring cashflows from its basic cable television services, but digital TV will provide the next phase of growth. Currently digital TV represents only 7.5% of total basic cable TV, implying significant growth potential exists from successful up-selling of digital TV products to basic cable TV subscribers through continued rollout of digital television and bundling broadband, premium content and additional value-added services on existing network infrastructure. This move will also enhance operational margins.

Capital management on debt facilities to ensure distributions to shareholders not significantly compromised. On 30 June 2010, TBC successfully completed the refinancing of its previous debt facilities, which commenced amortisation in 4QFY09. The new facilities include a senior secured debt facility of NT$24.5 bil maturing in June 2017 comprising a NT$23.3 bil term debt which has a lower amortising profile in early years as well as a NT$1.2 bil revolving facility to fund capital expenditure and working capital. There is also a subordinated debt facility of US$135 mil maturing in Dec 2017 and this facility is non-amortising.

The refinancing has lowered the overall costs of debt, reduced the overall level of future amortisation in early years and the tenor of debt has been extended to 2017. Also, a hedging programme has been implemented to manage risk associated with higher interest rates in Taiwan.

Miaoli Wind (MW)

At MW, 4QFY10 EBITDA of NT$78.2m surged 250.7% QoQ on 154.8% improvement in total energy production to 47.9GWh. Notwithstanding that, 4QFY10 EBITDA still fell 5.7% YoY on falling energy production of 7% YoY.

FY10 EBITDA fell 7.2% to NT$188.9m on 5.2% YoY fall in total energy production to 127GWH.

Since acquisition, wind speed performance has been lower than expected. As a result of poor wind performances, there were no dividend distributions to MIIF in FY10. The poor wind performance has been reflected in the valuation of the business. As at 31 Dec 2010, no value has been attributed to MW.

Progressing well with application for carbon credits. In view of disappointing operational performance and the relatively small size of the asset (about 3% of total portfolio), management is open to disposing MW. MW has lodged an application for Voluntary Gold Standard carbon credits. The Gold Standard Foundation has accepted the project’s pre-feasibility assessment and the project is undergoing the validation process. If successful, it will enhance the value of MW as well as generate incremental revenue through the sale of these credits.

However, as the registration for the carbon credit is not guaranteed, the additional revenue stream and potential increase in the valuation will not be reflected at this point in time.

Source/转贴/Extract/: NRA Capital
Publish date:01/03/11
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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