Don't You Ever Trust Them Headline News

I got so excited when I saw the headlines.

Them foreign funds are backkkkkkkkkkk and they are buying!

This is a must read news clip for me. So there I was getting all excited reading the news piece.

• Foreign funds buy RM3.8b stocks in two weeks
  
  By Goh Thean Eu Published: 2011/05/09
  
  Analysts, however, feel it is too early to conclude that the buying spree will be sustainable over the long term.
  
  Kuala Lumpur: Foreign funds were net buyers of Malaysian stocks over the past two trading weeks.
  
  Analysts, however, feel it is too early to conclude that the buying spree will be sustainable over the long term.
  
  Since April 20, foreign funds bought shares worth RM3.8 billion, while they sold about RM3.4 billion worth of shares, which translated into a net purchase of about RM320 million worth of shares.
  
  Foreign funds were net buyers for nine consecutive days beginning April 20.
  
  During the period, the FTSE Bursa Malaysia KLCI rose almost 10 points, or 0.7 per cent, to 1,531.47. However, foreign funds were net sellers in the last three trading days.
  
  Analysts said there were several factors which spurred the buying activities.
  
  "I think the foreign funds are just mainly trading and buying blue chips on pullback. Perhaps, they are averaging down," said Jupiter Securities head of research Pong Teng Siew.
  
  Other factors which may have sparked the buying spree were the underperformance of the Malaysian stock market, as compared to regional peers.
  
  Foreign funds were mainly net sellers in late January 2011, as they were concerned about how emerging markets like Malaysia will cope with rising inflation.
  
  Although the inflation fears have eased, investors' sentiment remained bearish as they are worried about the global economic outlook over the near to medium term, driven by below-than-expected data from the US as well as signs of slowing down in China.
  
  "Nevertheless, I think the increase in the interest rate could help keep the foreign funds interested for a short while," said Pong.

Err.... That statement in red made me wonder about the headline news.

• Since April 20, foreign funds bought shares worth RM3.8 billion, while they sold about RM3.4 billion worth of shares, which translated into a net purchase of about RM320 million worth of shares.

Comeon.... given the above statement, just how on earth did they conclude that the best fitting headline is that " Foreign funds buy RM3.8b stocks in two weeks ".

Comeon... during that same period, they SOLD just as much.

Yeah they sold only 3.4 billion worth.

Which meant that only rm 320 million net purchase was made.

rm 320 million, that's about it.

Well think about it.

In two weeks, there are 10 trading days. Which means that a net purchase of 32 million worth of shares were made daily.

And 32 million worth of shares? Is that a lot?

Let's see, how about the following 2 headlines.

" Foreign funds buy RM320 Million stocks in two weeks "

" Foreign funds buy RM32 Million stocks daily for past two weeks ".

Would those two headlines generate as much excitement?

Of course not.

>Yeah, don't you ever trust them headline news. You better read the rest of the article!

Read more...

Different. Just Different.

Sometimes it's best not to take what we read for granted!

Here's an article published on the Edge website last night: RAM Ratings cautious about Star Publications’ new investments

• RAM Ratings cautious about Star Publications’ new investments
  Written by Joseph Chin of theedgemalaysia.com
  Thursday, 21 April 2011 19:33
  
  KUALA LUMPUR: RAM Rating Services Bhd is cautious about STAR PUBLICATIONS (M) BHD []’s new new investments may pose new risks to the group.
  
  The ratings agency said on Thursday, April 21 that in the near term, the group “may invest some RM60 million in new media assets”, that is television channels, radio stations, online media and event organising.
  
  “The group is expected to incur losses from some of these investments during their respective gestation periods given that they are fairly new businesses.
  
  “In addition, Star lacks experience in the TV segment, which is viewed to be more competitive than its mainstay newspaper business,” it said.
  
  RAM Ratings assigned respective preliminary long- and short-term ratings of AA1 and P1 to Star’s proposed up to RM750 million medium-term notes (MTN) programme (2011/2026) and proposed up to RM750 million commercial papers programme (2011/2018); both facilities have a combined limit of RM750 million in nominal value.
  
  Concurrently, RAM Ratings reaffirmed the AA1/P1 ratings of STAR’s RM350 million commercial papers/MTN programme (2005/2012). Both long-term ratings have a stable outlook.
  
  It said the ratings reflect Star’s dominant market position and robust financial profile. The Group’s flagship daily, The Star, remains the clear leader in the local English-language newspaper market, supported by its strong circulation and readership bases.
  
  RAM Ratings said Star’s balance sheet and cashflow-protection metrics remained strong as at end-December 2010; its gearing ratio had more than halved to 0.09 times (end-December 2009: 0.23 times), underscored by a lighter debt load.
  
  At the same time, Star retained its net-cash position. Led by its lower borrowings and stellar operating performance amid a more robust advertising market in 2010, the group’s funds from operations debt cover (FFODC) catapulted from 0.70 times to over 2 times.
  
  However, the ratings agency said the ratings remained constrained by the group’s susceptibility to economic cycles, its vulnerability to newsprint price volatility and the increasing prominence of other media platforms.
  
  While print advertising expenditure (adex) has expanded, TV and radio adex has been rising more rapidly.
  
  Circulation and readership of English-language newspapers have also been declining (although at a slower pace than in more developed nations).
  
  Nonetheless, it said print will remain relevant in the eyes of Malaysian advertisers, at least in the medium term.
  
  “Even factoring in additional borrowings for its investments, capital expenditure for the possible development of the Star media hub in Shah Alam and working capital, we expect the group to continue exhibiting conservative gearing levels and sturdy debt-coverage ratios.
  
  “Star’s gearing ratio is expected to be kept at around 0.3–0.4 times while its FFODC is envisaged to slip, albeit remain favourable at a minimum of 0.5 times over the next two years,” said RAM Ratings’ head of consumer & industrial ratings Kevin Lim.

Today, Star business decided to carry the same article.: RAM assigns AA1 and P1 to Star’s debt facilities

• Friday April 22, 2011
  
  RAM assigns AA1 and P1 to Star’s debt facilities
  
  PETALING JAYA: RAM Ratings has assigned preliminary long- and short-term ratings of AA1 and P1 to Star Publications (M) Bhd’s proposed medium-term note and commercial papers programme of up to RM750mil respectively.
  
  Both facilities have a combined limit of RM750mil in nominal value.
  
  The rating agency has also reaffirmed the AA1/P1 ratings of the newspaper publishing group’s RM350mil commercial papers/medium-term note programme with a stable outlook.
  
  The ratings reflected The Star’s dominant market position and robust financial profile, RAM Ratings consumer and industrial ratings head Kevin Lim said in a press release yesterday.
  
  “The group’s flagship daily, The Star, remains the clear leader in the local English-language newspaper market, supported by its strong circulation and readership bases,” he said.
  
  Lim added that the group’s balance sheet and cashflow-protection metrics remained strong as at end-December 2010; its gearing ratio had more than halved to 0.09 times (end-December 2009: 0.23 times), underscored by a lighter debt load.
  
  At the same time, the group retained its net-cash position.
  
  “Led by its lower borrowings and stellar operating performance amid a more robust advertising market in 2010, the group’s funds from operations debt cover catapulted from 0.70 times to over two times,” Lim said.
  
  He expects the group to continue to exhibit conservative gearing levels and sturdy debt-coverage ratios, even factoring in the additional borrowings for the investments, capital expenditure for the possible development of the Star media hub in Shah Alam and working capital with gearing ratio expected to be kept around 0.3 to 0.4 times.

Can we spot the difference?

Can we?

Glee!

Here's the article from RAM website: RAM Ratings assigns preliminary AA1 and P1 ratings to STAR’s proposed debt facilities, reaffirms existing ratings

• RAM Ratings assigns preliminary AA1 and P1 ratings to STAR’s proposed debt facilities, reaffirms existing ratings
  
  Published on 21 Apr 2011
  
  RAM Ratings has assigned respective preliminary long- and short-term ratings of AA1 and P1 to Star Publications (Malaysia) Berhad’s (STAR or the Group) proposed up to RM750 million Medium-Term Notes Programme (2011/2026) and proposed up to RM750 million Commercial Papers Programme (2011/2018); both facilities have a combined limit of RM750 million in nominal value. Concurrently, RAM Ratings has reaffirmed the AA1/P1 ratings of STAR’s RM350 million Commercial Papers/Medium-Term Notes Programme (2005/2012). Both long-term ratings have a stable outlook.
  
  The ratings reflect STAR’s dominant market position and robust financial profile. The Group’s flagship daily, The Star, remains the clear leader in the local English-language newspaper market, supported by its strong circulation and readership bases. STAR’s balance sheet and cashflow-protection metrics remained strong as at end-December 2010; its gearing ratio had more than halved to 0.09 times (end-December 2009: 0.23 times), underscored by a lighter debt load. At the same time, STAR retained its net-cash position. Led by its lower borrowings and stellar operating performance amid a more robust advertising market in 2010, the Group’s funds from operations debt cover (FFODC) catapulted from 0.70 times to over 2 times.
  
  On the other hand, STAR’s new investments may pose new risks to the Group. In the near term, it may invest some RM60 million in new media assets, i.e. television (TV) channels, radio stations, online media and event organising. The Group is expected to incur losses from some of these investments during their respective gestation periods given that they are fairly new businesses. In addition, STAR lacks experience in the TV segment, which is viewed to be more competitive than its mainstay newspaper business. The ratings also remain constrained by the Group’s susceptibility to economic cycles, its vulnerability to newsprint price volatility and the increasing prominence of other media platforms. While print advertising expenditure (adex) has expanded, TV and radio adex has been rising more rapidly. Circulation and readership of English-language newspapers have also been declining (although at a slower pace than in more developed nations). Nonetheless, we opine that print will remain relevant in the eyes of Malaysian advertisers, at least in the medium term.
  
  “Even factoring in additional borrowings for its investments, capital expenditure for the possible development of the STAR media hub in Shah Alam and working capital, we expect the Group to continue exhibiting conservative gearing levels and sturdy debt-coverage ratios. STAR’s gearing ratio is expected to be kept at around 0.3–0.4 times while its FFODC is envisaged to slip, albeit remain favourable at a minimum of 0.5 times over the next 2 years,” notes Kevin Lim, RAM Ratings’ Head of Consumer & Industrial Ratings.
  
  Media contact
  Low Su Lin
  (603) 7628 1071

Read more...

Berjaya Corp's Net Profit... err....errr...

The Edge Financial Daliy's version: Berjaya Corp 2Q net profit up 66.9% to RM86.54m

• Berjaya Corp 2Q net profit up 66.9% to RM86.54m
  Written by Surin Murugiah of theedgemalaysia.com
  Thursday, 30 December 2010 19:03
  
  KUALA LUMPUR: BERJAYA CORPORATION BHD net profit for the second quarter ended Oct 31, 2010 jumped 66.9% to RM86.54 million from RM51.83 million a year ago.
  
  The better performance was due mainly to write-back of impairment in value of investment in associated companies and gain on disposal/partial disposal of subsidiary companies as well as gain arising on accretion of interest in an associated company and lower finance costs.
  
  BJCorp said on Thursday, Dec 30 its revenue for the quarter rose 6.2% to RM1.72 billion from RM1.62 billion in 2009. Earnings per share were 1.97 sen while net assets per share was RM1.39.
  
  It said the increase in revenue was mainly due to higher revenue contribution from the direct selling, retail and distribution business, higher property sales reported by the property development and investment division and higher agency sales registered by the general insurance business in the current quarter.
  
  For the six months ended Oct 31, its net profit rose 231% to RM212 million from RM91.73 million, while revenue increased to RM3.46 billion from RM3.23 billion in 2009.
  
  BJCorp said barring unforeseen circumstances, the company’s operating performance for the remaining quarters of the financial year ending April 30, would remain satisfactory.

The Star Biz version: BCorp Q2 net profit up on write-back of impairment

• Friday December 31, 2010
  
  BCorp Q2 net profit up on write-back of impairment
  
  KUALA LUMPUR: Berjaya Corp Bhd's (BCorp) net profit for its second quarter ended Dec 31 surged 67% to RM86.54mil from RM51.83mil previously.
  
  It told Bursa Malaysia the higher profit was mainly due to RM32.64mil write-back of impairment in value of investment in associated companies and gains on disposal/partial disposal of subsidiary companies as well as gains from accretion of interest in an associated company and lower finance costs.
  
  Revenue for the period rose 6.2% to RM1.72bil.
  
  In a separate statement, BCorp announced that it had appointed Datuk Robin Tan Yeong Ching as chief executive officer effective Jan 1, 2011.
  
  He replaces his father, Tan Sri Vincent Tan Chee Yioun, who has been redesignated as chairman.

Read more...

Notion VTec Denies Article Published On The Edge Financial Daily

On today's Edge Financial Daily: Notion Vtec to gear up after shelving share placement

• KUALA LUMPUR: Hard disk drive (HDD) component manufacturer Notion VTec Bhd plans to gear up after shelving a plan to place out a 10% stake in the company following the fall in its share price.
  
  Chairman and executive director Thoo Chow Fah told The Edge Financial Daily that the company is in the process of securing a bank loan of around RM80 million to finance the expansion of a new plant, after seeing its share price plunge 30% over the last two months to RM1.65 last Friday, close to its 15-month low of RM1.50 on Sept 1.
  
  For 3Q2010 ended June 30, both the group’s long- and short-term borrowings stood at RM91.32 million, while cash and bank balances stood at RM32.51 million. With shareholders’ equity of RM224.96 million, its net gearing stood at 0.26 times.
  
  Thoo expects the group’s gearing to rise to around 0.4 time when the bank facility is approved, of which he is confident because Notion has “a good credit line with the bank”.
  
  In April, Notion announced a plan to place out a 10% stake to raise RM45.9 million, to be used to buy equipment and machinery for its new 2.5-inch HDD manufacturing plant in Klang.
  
  At that time, Notion’s shares were trading at a much higher level of RM3.50.
  
  The entire new plant is to be rolled out in three phases and will cost RM150 million over two years. The plant is expected to significantly boost its current production level of baseplates.
  
  But due to unfavourable market conditions and lower demand for HDD, which have affected Notion’s share price recently, Thoo said the private placement exercise had to be cancelled.
  
  In January, the company placed out a 10% stake to Nikon Corp to raise RM33.78 million to expand its single lens reflex (SLR) camera parts manufacturing plant in Thailand.
  
  The RM150 million, 2.5-inch HDD plant is already facing setbacks with a high rejection rate of baseplates due to a steeper than expected learning curve.
  
  High rejection rates at the die casting and machining stage have been reported, resulting in delays in reaching production targets.
  It was also reported that Notion has set a turnaround deadline by next March to resolve its manufacturing issues.
  
  Thoo had said recently that the learning curve at the new plant is longer than expected.
  
  But he described these as short-term setbacks and was optimistic that the 2.5-inch baseplate project will eventually bear fruit.
  
  For 3QFY2010 ended June 30, Notion’s revenue rose 36% year-on-year (y-o-y) from RM44.71 million to RM60.81 million, while net profit fell 73% y-o-y to RM2.97 million from RM11.09 million.
  
  This was attributed to initial start-up costs such as R&D, depreciation, materials and labour, and foreign exchange movements. EPS, meanwhile, dropped from 7.88 sen to 1.92 sen.
  
  Thoo said that demand for HDD is weak at the moment, so the company is expecting lower revenue for 4QFY2010 compared with 3Q due to lower HDD orders.
  
  “We also expect minimal contribution from the 2.5-inch baseplate project as we tackle the problems of casting, machining and ED coating and getting the stator assembly into operation.
  
  The higher than anticipated rejects arising from this baseplate project are to be finalised and the loss will be taken up in 4Q.
  
  We therefore do not expect the net margins to improve in the quarter,” the company said in a statement.
  
  
  This article appeared in The Edge Financial Daily, October 4, 2010.
  

Cancellation of the private placement is a huge deal, yes?

When asked by Bursa Malaysia, Notion Vtec gives the following reply:

• We refer to the above article which appeared in The Edge Financial Daily, Home Business Section, page 4, on 4 October 2010.
  
  Referring to the statement "...Thoo said the private placement exercise had to be cancelled", we wish to clarify that Mr Thoo Chow Fah, the Executive Chairman of Notion VTec did not make such statement to The Edge Financial Daily as implied in the article.
  
  The Board of Directors of Notion VTec, after due inquiry with all the directors and major shareholders of the Company as well as all such other persons reasonably familiar with the matter, wishes to clarify that as at to-date, the proposed share placement has not been cancelled.
  
  This announcement is dated 4 October 2010.

So what's up?

Read more...

Another Stock Spin, Another Denial

So where have you seen this trend before?

Where eh?

On the Business Times:

• EPF denies report on RHB Capital merger
  
  Published: 2010/09/07
  
  THE Employees Provident Fund (EPF) has denied a report that it may merge RHB Capital Bhd (1066) with another local bank.
  
  The pension fund is the major shareholder of RHB Capital, the country's fourth largest banking group by assets.
  
  "The report is not true," EPF's general manager for public relations Nik Affendi Jaafar told Business Times yesterday.
  
  A business weekly had, over the weekend, cited sources as saying that the EPF was considering such a merger in its move to pare down its stake in the bank to less than 40 per cent from 55 per cent now.
  
  Potential partners for RHB Capital include AmBank Group, Malayan Banking Bhd and CIMB Group, it reported.
  
  The news boosted RHB Capital's share price to its highest close in just over 13 years on Bursa Malaysia yesterday.
  
  The share price closed at an intra-day high of RM7.13, about 4.2 per cent higher than the previous trading day, making it the day's third biggest gainer in absolute terms. It was its highest close since July 31 1997.
  
  Read more: EPF denies report on RHB Capital merger here

How?

That so-called financial newsletter writes... stock flies... company denies...

And it happens over and over and over again.

So fun eh?

ps... do they know what's need to be done? .... do they?

harloooooo...... is there anybody out there?

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Misleading

theSun have this article http://203.115.192.117/tuesday/tue_page15.html

• KUALA LUMPUR: Berjaya Land Bhd’s (BLand) pre-tax profi t for the third quarter ended Jan 31, 2010 rose to RM79.7 million from RM78.9 million seen in the previous corresponding quarter.
  
  Revenue, however declined to RM993.9 million from RM1.158 billion, it said in a statement yesterday. It said the higher profi t contribution came from its property development division, higher share of profits from associated companies and lower finance costs, which offset the impairment loss on quoted investments and investments in associated companies as well as loss on partial disposal of investment in a subsidiary company.
  
  It attributed the lower revenue to lower revenue reported by the Number Forecast Operator (NFO) business operated by Berjaya Sports Toto Bhd (BToto) and the hotels and resorts division. For the nine-month period under review, the group reported a drop in revenue of about 8% whilst pre-tax profi t showed an increase of about 48% as compared to the previous year corresponding period.
  
  It attributed the lower revenue reported by the Number Forecast Operator (NFO) business operated by Berjaya Sports Toto Bhd (BToto) and the hotels and resorts division. For the nine-month period under review, the group reported a drop in revenue of about 8% whilst pre-tax profit showed an increase of about 48% as compared to the previous year corresponding period.
  
  BLand said with the property market and the hotels and resorts businesses all set to rebound given the improving economic conditions, and expected improvement in BToto’s gaming business following the launch of the Supreme Toto 6/58, which offers a guaranteed minimum upfront jackpot of RM8,888,888 – the highest in town – the group’s operating performance for the remaining quarter of the fi nancial year ending 30 April 2010
  will remain satisfactory.

Financial news talking only about pre-tax profits???????

What the heck?

Err... no need to pay taxes ah?

Anyway, here's a different version of Bland's earnings. BLand posts bigger net loss in 3Q. (Yeah, Bland reported a higher net loss!)

• KUALA LUMPUR: Berjaya Land Bhd’s (BLand) net loss widened to RM8.57 million in its third quarter ended Jan 31, 2010 (3QFY10) from a loss of RM356,000 a year earlier on the back of lower contributions from its numbers forecasting operations (NFO) and hotels and resorts division.
  
  Group profit after tax rose 6.9% to RM43.42 million from RM40.62 million, but higher minority interest portion at RM512 million versus RM40.97 million previously resulted in the widening of the net loss.
  
  Revenue fell 14.2% to RM993.96 million from RM1.16 billion while loss per share was 0.69 sen versus loss 0.03 sen previously. No dividend was declared.
  
  It said lower revenue from its gaming business operated by Berjaya Sports Toto Bhd (BToto) was due to the traditionally high Chinese New Year festive sales in January 2009 combined with stronger sales from high jackpots in the Mega 6/25 game and lower revenue from its hotels and resorts division which saw cutbacks in business travel due to the global economic downturn.
  
  BLand said the lower revenue was partly mitigated by a two-fold increase in property sales from several successful residential and commercial development sales launches by the property development division.
  
  Despite the lower revenue, it said the group’s pre-tax profit was marginally higher at RM79.65 million versus RM78.89 previously mainly due to the higher profit contribution from the property development division, higher share of profits from associated companies and lower finance costs.
  
  It said these offset the impairment in value of quoted investments, investment in associated companies and loss on partial disposal of investment in a subsidiary company, all totalling RM12.36 million.
  
  For the nine months ended Jan 31, 2010, net profit was RM35.42 million versus a net loss of RM48.17 million a year earlier.
  
  The higher profit was attributed to higher net investment income consisting mainly of reversal of impairments in value of quoted investments in the current period arising from improved stock market conditions compared to the previous year where the group incurred substantial impairments in value of investments in associated companies and quoted securities due to poor stock market performance.
  
  Revenue was RM2.93 billion from RM3.18 billion while earnings per share was 2.84 sen from loss per share of 3.84 sen.
  
  On its prospects, it expected the property market and the hotels and resorts businesses to rebound.
  
  “BToto’s principal subsidiary, Sports Toto (Malaysia) Sdn Bhd, had on March 18, 2010 launched its new game, Supreme Toto 6/58 in replacement of its Super Toto 6/49 game.
  
  “The Supreme Toto 6/58 game offers a guaranteed minimum upfront jackpot of RM8,888,888 which is the highest in town,” it said.
  
  “With the launch of Supreme Toto 6/58 lotto game, the directors are optimistic that the NFO business under BToto will be good in the remaining quarter of the financial year ending April 30, 2010.”
  
  
  This article appeared in The Edge Financial Daily, March 23, 2010.

Here comes the trick question. Who owns this two papers?

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Which News Version Would You Want?

It's incredible really.

Here's the Business Times version.

• Stocks still offer good growth: Prudential
  
  Published: 2010/01/14
  
  PRUDENTIAL Fund Management Bhd, which manages RM17 billion, said global stocks still offer good growth even after a rally in world stock markets last year from multi-year lows in March.
  
  The fund manager remains bullish on China, India, the Philippines and Thailand, but Hong Kong and Malaysia are likely to offer limited growth this year.
  
  "We have been saying this for years and (will) once again (say) Malaysia is a good story, but not enough in a world of great stories. There's much better value elsewhere from a global fund perspective," said Robert Rountree, head of investment marketing at Prudential Fund Management Services, in Kuala Lumpur yesterday.
  
  "Last year, we were overweight on Indonesia because it was due for a major re-rating. We were very bullish on the Indonesian banks then. Then there was the rally. But eventhough the valuation in Indonesia has risen sharply, we can still find value there.
  
  "Comparatively, Malaysia is never cheap," Rountree told a media briefing on global market outlook.
  
  Prudential has a neutral stance on Indonesia this year, along with Australia, South Korea, Singapore and Taiwan.
  
  Meanwhile, its head of investment services Bernice Leaw said more positive policy surprises from the government could drive up Malaysian stocks this year.
  
  Foreign investors will also likely see bigger initial public offerings such as Maxis last year coming to the market, she said.
  
  "The market has reacted positively towards Prime Minister Datuk Seri Najib Razak's liberalisation measures so far, it will be good if there's continued efforts in that area.
  
  "The government has a lot of good policies, but as always, the implementation is key. Investors usually will give it six to eight months to see the results," Leaw said.
  
  It was reported that Asian stocks helped lead 2009's global rally as unprecedented government stimulus measures and economic recovery sent investors back to the region's markets en masse.
  
  With the exception of Japan, stock markets in Asia rocketed after touching lows in March with some gaining 80 per cent or more for the year.
  
  
  
  

How would you interpret that article?

Don't you think the TITLE of the article is rather misleading? Yes, stocks still offer good growth but if you are a Malaysian stock market player and you just read only the headline news that 'stocks still offer good growth', won't you be mislead? Further more, Mr. Roundtree said "Comparatively, Malaysia is never cheap"!

Yup, the danger of reading just the headline or the title of the article.

Now the Edge Financial Daily also carried the same story.

And unfortunately, it (the tone of the article) comes out different!

Prudential: Equities expensive but not in ‘bubble territory’

• Prudential: Equities expensive but not in ‘bubble territory’
  Written by Daniel Khoo
  Wednesday, 13 January 2010 22:16
  
  KUALA LUMPUR: Share prices which have enjoyed a good run-up since the first quarter of last year looks "expensive" in the short term and might be vulnerable to a correction, according to Prudential Fund Management Services' head of investment marketing Robert Rountree.
  
  However he added also that at the moment, "equities don't appear to be in bubble territory" implying that in the longer term, equity valuations are still considered cheap, compared to the years before the TECHNOLOGY [] bubble burst in the US.
  
  He said at a regional market outlook briefing titled Bonds & Equities 2010 Malaysia, that among external factors that could possibly spark a sell off in equities are if the US Federal Reserve decides to raise interest rates in the US.
  
  "The carry trade is coming back. So, a lot of the money that has been created in the central banks in the US and in Europe is coming into Asia. So if we do see a tightening of interest rates, then we could see money coming out of Asia in the short term," he said.
  
  Low interest rates in the West fuels the currency carry trade where international investors borrow in the lower yielding currency to invest into another country's higher yielding currency for higher gains — some of the borrowed money is then invested into equities for quick short term gains.
  
  Prudential had this suggestion for investors to look at purchasing corporate bonds instead in Malaysia because yields will continue to remain suppressed for the foreseeable future on the back of the expectation that interest rates will continue to remain at the same levels at least in the first half of this year.
  
  Suppressed bond yields mean that bond prices is expected to continue to stay at their present levels.
  
  However, at the same briefing, Prudential's Head of Investment Services Bernice Leaw said that "over the long term, equities will always give better returns than bonds," adding that she was bullish on Asian economic growth — led by China and India.
  
  The fund manager is overweight on China, India, Philippines and Thailand. Prudential is however underweight on Malaysia because from an international point of view, there is better value in markets elsewhere.
  
  "In other words, Malaysia's perennial problem, a good story in a world of great stories," Rountree said implying that Malaysia now has to compete with other rapidly industrialising countries like India and China.
  
  He added that this year there may be another shift towards the trend where Asian economies "delink" from the developed West — where "Asian economies start to generate its own momentum", Rountree added.
  
  Asia's actual declared profits seemed to have kept up so far with profit forecast expectations. However, actual profits declared by US companies show a different picture altogether, with profits only staying flat while historically, profit forecasts have gone up higher than that. He noted that the run up in equities so far in the US is due to high expectations of a recovery.
  
  A realisation of this stark reality could also be another contributing factor to a possible correction in world equity markets. "However, (any potential correction) would be viewed as a buying opportunity," Rountree said.

LOL! So how? Just as expected eh? So which news versions would you want to hear?

:P

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How Now For The Plantation Sector

Where would an investor get source of information for their investment research?

One of the SOURCE (and not chili sauce hor :p) is from the local financial media.

How can Bursa Malaysia stock market progress?

Don't we want more educated investors/traders/punters?

Now if we get conflicting and confusing financial news reporting, how could the local stock market progress? Without proper information, how long could the investor/punter/trader last in the shark filled stock market? How does one rate their chances?

Here's an easy example.

One of the strong sectors in our local market has to be the plantation sector. Yes? So as an investor/punter/trader, surely one might be interested in this sector since the crude palm oil has recovered a bit lately. Yes?

So how now for the plantation sector?

Let's use recent and latest financial news articles. Let's see if one can come up with an educated reasoning on whether one should be IN this sector, or not.

This was published on the Edge Financial Daily: Analysts maintain mixed calls on planters

• KUALA LUMPUR: Analysts didn’t rush in to upgrade their ratings on PLANTATION [] stocks and forecasts on crude palm oil (CPO) prices despite a lower-than-expected stockpile in November 2009.
  
  Although lower stockpile signals a positive development for the near-term prices of the commodity, OSK Research maintained its underweight call while CIMB Research, AmResearch and ECM Libra stayed neutral on the sector.
  
  All research houses retained their CPO price forecasts, which ranged from RM2,240 per tonne to RM2,300 for 2009, RM2,380 to RM2,500 for 2010 and RM2,440 to RM2,700 for 2011.
  
  ECM Libra said there were risks that investors should keep tabs on — the rain levels in the low season starting this month, soy planting progress in Argentina, El Nino weather, crude oil prices and the corresponding US dollar.
  
  “We believe these key developments will induce the necessary swings in CPO prices in the year,” it added.
  
  Furthermore, it said although stock levels declined in November, exports were flattish month-on-month.
  
  “Looking forward, we do not expect export numbers in 2010 to be exceptionally higher like they were in 2009. To note, exports are so far, for the first 11 months of 2009, 6% higher than that in 2008,” ECM Libra said in a note.
  
  The investment bank, which has a target average selling price for CPO of RM2,400 per tonne for 2010, viewed plantation stocks as expensive.
  
  It retained hold and sell calls on all the plantation counters under its coverage, which include BOUSTEAD HOLDINGS BHD [] (sell) and TSH RESOURCES BHD [] (hold).
  
  OSK Research, meanwhile, said with valuations at “uncompelling” levels, it maintained its underweight stance on the sector.
  
  It said the risk of CPO inventory crossing the two million-tonne mark would emerge again in the second quarter of next year when supply starts to go up.
  
  The research house reiterated its view that the average CPO price would be lower next year due to supply normalisation of both palm oil and soybean oil.
  
  CIMB Research, meanwhile, maintained its CPO price targets at RM2,240 per tonne for 2009, RM2,380 for 2010 and RM2,450 for 2011.
  
  It preferred Singapore-listed planters for their more appealing valuations.
  
  CIMB’s picks in the region remained with Golden Agri Resources Ltd, Wilmar International Ltd, SIME DARBY BHD [], Astra Agro Lestari Tbk, London Sumatra Indonesia Tbk and Sampoerna Agro Tbk.
  
  HwangDBS, meanwhile, cautioned investors to remain selective, as based on its estimates, most local plantation stocks were trading at levels that had already priced in high CPO price expectations next year.
  
  It also expected both soybean and palm oil prices to moderate once soybean oil inventories get replenished post South American harvests.
  
  It favoured sector laggards such as Indonesia’s First Resources Ltd, Wilmar and Sampoerna Agro, which are fundamentally sound but yet overlooked in their earnings growth potential.
  
  HwangDBS’ forecasts for CPO prices were unchanged at RM2,300 per tonne for 2009, RM2,380 for 2010 and RM2,440 for 2011.
  
  RHB Research, perhaps the most optimistic among the lot, kept its outperform call on the sector while maintaining its CPO price targets at RM2,300 per tonne for 2009, RM2,500 for 2010 and RM2,700 for 2011.
  
  It noted the current CPO inventory level of 1.93 million tonnes in November represented only about one-and-a-half months of average historical monthly consumption.
  
  It expected inventory levels to continue to fall through to June-2010, as production levels taper off from the peak.
  
  RHB said every RM100 per tonne rise in CPO prices would benefit purer plantation players like IJM PLANTATIONS BHD [] (IJMP) and Genting Plantations Bhd the most, compared to more diversified firms like Sime Darby Bhd and IOI Corp Bhd.
  
  Based on Bloomberg data, IJMP is trading at a trailing price-to-earnings ratio of 25.12 times, Genting Plantations at 23.71 times, Sime 25.64 times, IOI Corp 28.25 times, Boustead Holdings 8.08 times and TSH Resources at 23.31 times.
  
  Meanwhile, regional peers Wilmar is trading at 16.13 times, Golden Agri at 14.77 times, Astra Agro at 21.38 times and First Resources at 8.38 times.
  
  
  This article appeared in The Edge Financial Daily, December 14, 2009.

So from the above article, what do we get?

• "OSK Research maintained its underweight call while CIMB Research, AmResearch and ECM Libra stayed neutral on the sector... HwangDBS, meanwhile, cautioned investors to remain selective, as based on its estimates, most local plantation stocks were trading at levels that had already priced in high CPO price expectations next year. "

Underweight, neutral and cautious is the call, yes? That's 14th December 2009.

Yesterday, 16 December 2009, on the Business Times.

• Worker woes may hit palm oil earnings
  
  By Ooi Tee Ching Published: 2009/12/16
  
  Malaysia could lose billions of ringgit in palm oil export earnings if a serious labour shortage in Sabah continues, industry officials say.
  
  The plantation sector in Sabah, Malaysia's most productive palm oil producer, has seen its workforce fall by a fifth recently, Malaysian Palm Oil Association (MPOA) chief executive Datuk Mamat Salleh said.
  
  Checks with plantation companies revealed that more than 10 sizeable oil palm estates in the state did not have enough workers because those who had gone home to Indonesia for the Hari Raya Puasa and Haji holidays did not come back.
  
  The main reason was that estates in Kalimantan were paying the same wages offered in Sabah, Mamat said.
  
  "If foreign workers, comprising half of the 600,000 workforce in the palm oil industry, are reduced by 30 per cent, our country's palm oil export earnings could shrink as much as RM10 billion a year," he told Business Times in an interview.
  
  Sabah produces seven million tonnes of palm oil a year, or 40 per cent of the national output.
  
  The palm oil industry earned a record RM65 billion in export earnings last year, thanks to high prices.
  
  Two months ago, East Malaysia Planters' Association (Empa) chairman Othman Walat reportedly said that oil palm planters in Sabah and Sarawak might recruit workers from China, Bangladesh and the Philippines to make up for the shortage of Indonesian workers.
  
  However, industry officials felt that it was easier said than done as other nationals did not prefer working on the estates, while Malaysians were under the mistaken assumption that the job did not pay well.
  
  "But plantations these days are offering productivity-based salaries. A harvester, for instance, can earn between RM1,500 and RM2,000 a month, depending on the quantity and quality of fruit bunches he harvests.
  
  "A family of three working together can earn up to RM3,000," Othman said.
  
  Furthermore, the job offers housing, uninterrupted supply of electricity and piped water, medical, schooling and recreation facilities free of charge by the estate owners.
  
  These are now enjoyed by the foreign workers.
  
  While, the MPOA understands and fully supports the government policy to employ more locals and enhance mechanised harvesting on the estates, the reality is far from expectations.
  
  Mamat said that young locals entering the labour market were just not interested in menial jobs like the harvesting of oil palm fruits.
  
  "We do not want to be too dependent on foreign labour, but do we have any other feasible and practical alternatives?" he questioned.

What can one conclude from that above news article? Not too rosy, yes?

Today, 17 December 2009, on Business Times,

• Plantation stocks set for uptrend
  
  By Ooi Tee Ching Published: 2009/12/17
  
  Analysts are generally bullish on plantation counters in the short term given the shortage of workers on oil palm estates in Sabah, the country's biggest palm oil producer.
  
  Shares of plantation companies bucked the broader market's fall yesterday after industry officials said that palm oil production could be hit by a serious lack of harvesters in the state.
  
  "The market needs to be aware that labour is a growing problem for oil palm planters today, especially with the massive greenfield development in Indonesia over the last two years," KAF Seagroatt-Campbell Securities Sdn Bhd senior analyst Vince Ng said.
  
  Among vegetable oils, palm oil is the most labour-intensive and productivity is also low. A worker can produce up to 20 tonnes of oil a year compared to up to 600 tonnes for US soyabean and UK rapeseed.
  
  It is also difficult to mechanise the harvesting process for palm fruits.
  
  Kenanga Investment Bank analyst Liong Chee How acknowledged that labour shortage in the industry was a longstanding structural problem, but over the last 18 months had become more severe.
  
  "In view of the current high palm oil prices, the short-term solution is to offer higher salaries to skilled harvesters," he said.
  
  "In the longer term, planters will need to invest in mechanisation and automation wherever possible," he added.
  
  Yesterday, palm oil futures on the Bursa Malaysia Derivatives Market rose the highest in six months to close at RM2,586 a tonne.
  
  On the stock market, IOI Corp Bhd, Negeri Sembilan Oil Palms Bhd and Chin Teck Plantations Bhd were among the top gainers.
  
  Another analyst, who declined to be named, has raised his palm oil price target for next year.
  
  "We've upgraded next year's average palm oil price forecast to RM2,600 a tonne from RM2,400 previously. We have also raised our long-term palm oil price to RM2,200 from RM2,000.
  
  "We stay overweight on plantation," he said, adding that his top picks included Sime Darby Bhd, PPB Group Bhd, Genting Plantations Bhd, United Plantations Bhd, Hap Seng Plantations Bhd and Kulim

I am so confused!!!!

I am sure you are too!

How on earth did that reporter comes up with such a headline, "Plantation stocks set for uptrend"????

• Analysts are generally bullish on plantation counters in the short term given the shortage of workers on oil palm estates in Sabah, the country's biggest palm oil producer.

Errr.... so in the short term, shortage of workers means.... it's bullish? How did this conclusion come about?

Is that what the article or reporter is saying???

Let's look at the analysts mentioned in the article...

First one is Vince Ang from KAF.

• "The market needs to be aware that labour is a growing problem for oil palm planters today, especially with the massive greenfield development in Indonesia over the last two years," KAF Seagroatt-Campbell Securities Sdn Bhd senior analyst Vince Ng said. Among vegetable oils, palm oil is the most labour-intensive and productivity is also low. A worker can produce up to 20 tonnes of oil a year compared to up to 600 tonnes for US soyabean and UK rapeseed. It is also difficult to mechanise the harvesting process for palm fruits.

What was Vince Ang saying? Wasn't he bullish or was he just acknowledging the problem associated within the sector?

Second one is Kenanga Investment Bank analyst Liong Chee How

• Kenanga Investment Bank analyst Liong Chee How acknowledged that labour shortage in the industry was a longstanding structural problem, but over the last 18 months had become more severe.
  
  "In view of the current high palm oil prices, the short-term solution is to offer higher salaries to skilled harvesters," he said.
  
  "In the longer term, planters will need to invest in mechanisation and automation wherever possible," he added.

Ok... what is Mr. Liong saying? Isn't he just acknowledging the labour shortage issue? Does it state that he is bullish?

Now I am lucky I have a copy of KN recent report on the sector.

Ahem.... it would appear to me that Mr.Liong has stated clearly that he has a NEUTRAL recommendation on the sector. That report was dated 11 December 2009. Today is only 17 December.

How? Was this analyst bullish?

Lastly, the analyst, who declined to be named!

• Another analyst, who declined to be named, has raised his palm oil price target for next year.
  
  "We've upgraded next year's average palm oil price forecast to RM2,600 a tonne from RM2,400 previously. We have also raised our long-term palm oil price to RM2,200 from RM2,000.
  
  "We stay overweight on plantation," he said, adding that his top picks included Sime Darby Bhd, PPB Group Bhd, Genting Plantations Bhd, United Plantations Bhd, Hap Seng Plantations Bhd and Kulim

How? So out of 3 analysts, only the one, that does not want to be named, gave the outright bullish call on the sector! My is he the special one?

LOL! Yeah, am I dreaming?

So 1 out of 3... and the financial reporter comes out with the conclusion that "Analysts are generally bullish on plantation counters in the short term"

Err.... like this also can meh????

And because of 1 out of 3 analyst... the news reporter boldly proclaim that "Plantation stocks set for uptrend...."

How lah?

Based on these financial news, should I or should not bet on this sector?

==============================

Replies to the posting:

• Gamelion said...
  Currently all commodities r followingclosely to the volatile fluctuationof US$ and have nothing to do with any of the fundamental of the commodities.This might explain the widely confusion and uncertainty among the analyst.

Gamelion, this posting merely reflects on what the local analyst said to our financial media.

This posting is NOT a posting on whether these anaylsts are correct or WRONG.

Let me repeat.

First article highlighted:

• "OSK Research maintained its underweight call while CIMB Research, AmResearch and ECM Libra stayed neutral on the sector... HwangDBS, meanwhile, cautioned investors to remain selective, as based on its estimates, most local plantation stocks were trading at levels that had already priced in high CPO price expectations next year. "

These are "Underweight, neutral and cautious is the call, yes?" And that's 14th December 2009. (note: I am not debating if their calls are correct or not)

My main issue was what's published on today's Business Times article. How did the reporter come with the conclusion that "Plantation stocks set for uptrend...." ?

In that article, he mentioned 3 analyst. Did KAF Seagroatt-Campbell Securities Sdn Bhd senior analyst Vince Ng actually say he was bullish? Did Kenanga Investment Bank analyst Liong Chee say he was bullish? (Liong had a NEUTRAL call in his research report dated 11th December!)

And the only bullish analyst was the un-named analyst!!!!!!!!!!!!!!!!!

Given only 1 of 3 analyst mentioned, only the un-named one was bullish. So how did the financial news reporter come out with the following conclusion...

• Analysts are generally bullish on plantation counters in the short term given the shortage of workers on oil palm estates in Sabah, the country's biggest palm oil producer.

That's my issue. That very statement. How did the reporter come out with the conclusion that analysts are generally bullish on plantation counters?

Yeah... some would quickly put of this fire by claiming that this is normal and that it's also normal with financial news article in the rest of the world. Normal practice what. Every other country does the same. US even worse.

Yes, I am afraid that's sadly so true.

However, what about us? Who cares about the rest of world? Don't we want to see improvement? Don't we want the best for ourselves? If others are bad, does it mean that our news report should also follow suit?

==================

solomon said...
If you think that production factors are generally going drive the CPO price up, there is two words for you "excuse me".

Off all, why not talk about more pertinents factors like world fats consumption (the demand), overall yield efficiencies (the supply) and the product alternatives like soya (the supply). It makes more cow sense writing, isn't it?

Let see what they write if next 3 months the CPO price suddenly collapse.

Lastly, my dad always says, "over-bullish sometimes can be bullshits" (Sorry not meant to offend, but this is what he says)

Read more...

Boustead Net Profit Up Or Down?

On Business Times:

• Boustead Q3 net profit up 72pc
  
  Published: 2009/11/25
  
  BOUSTEAD Holdings Bhd (2771) yesterday reported a net profit of RM108 million for its third quarter, 72 per cent bettter than the RM63 million profit recorded in the preceding quarter.
  
  The strong result was achieved on a turnover of RM1.4 billion.
  
  For the nine month period, Boustead registered a net profit of RM239 million on the back of a RM3.9 billion turnover.
  
  Earnings per share was 29.1 sen while net assets per share was lower at RM4.08 due to the dilutive effect from the recently concluded rights issue.
  The Boustead board has declared a third interim dividend of 7.5 sen which brings dividend for the 2009 financial year to 17.5 sen or 35 per cent.
  
  "Given our third quarter results, clearly the tide and sentiments are turning by virtue of the fact that our earnings are up. The sectors of the economy we are involved in, namely the consumer and the heavy industries segments bode well for the group while our plantations continue to be a steady revenue generator and profit contributor," Boustead group managing director Tan Sri Lodin Wok Kamaruddin said in a statement.
  
  He said Boustead's balance sheet appears strong, following its recent rights issue which generated proceeds in excess of RM700 million while its gearing ratio has dropped significantly to 0.8 times from 1.2 times.
  
  During the quarter under review, Boustead's heavy industries division emerged as the main contributor, with a profit of RM49 million.
  
  The plantation division recorded a profit of RM17 million compared with RM10 million achieved in the preceding quarter while Boustead's property division recorded a 15 per cent decline in profit to RM19 million.
  
  The finance and investment division achieved a profit of RM20 million compared with RM6 million achieved in the preceding quarter while its trading division registered a profit of RM14 million against RM4 million recorded in the preceding quarter
  

Here is the screen shot of the article.

This is the Edge Financial Daily version. Boustead’s 3Q profit down 47% y-o-y

• Boustead’s 3Q profit down 47% y-o-y
  Written by Isabelle Francis
  Tuesday, 24 November 2009 10:28
  
  KUALA LUMPUR: BOUSTEAD HOLDINGS BHD [] posted a net profit of RM86.2 million in the third quarter (3Q) ended Sept 30, 2009, down 47% from RM164 million a year earlier but up 84% from the preceding quarter’s earnings of RM63 million.
  
  Revenue dropped 27% year-on-year (y-o-y) to RM1.42 billion from RM1.95 billion but was up 11% from the preceding quarter. Basic earnings per share (EPS) fell to 12.41 sen from 25.48 sen a year earlier.
  
  It declared a third interim dividend of 7.5 sen per share less tax, bringing the total to 17.5 sen or 35% per share less tax for the current financial year ending Dec 31, 2009. The latest dividend is payable on Dec 29, 2009.
  
  For the nine-month period, net profit fell 59% to RM193.92 million from RM468.2 million a year earlier, while revenue dipped 33% to RM3.91 billion from RM5.8 billion.
  
  EPS fell to 16.55 sen from 48.36 sen, partly due to the dilutive effect of a rights issue.
  
  “Clearly the tide and sentiments are turning by virtue of the fact that our earnings are up (quarter-on-quarter). The sectors of the economy we are involved in, namely the consumer and the heavy industries segments bode well for the group while our PLANTATION []s continue to be a steady revenue generator and profit contributor.
  
  “Our balance sheet looks strong given our recent rights issue which generated proceeds in excess of RM700 million. Our paid-up capital has increased to RM456 million and our gearing ratio has dropped significantly to 0.8 from 1.2 times. In essence, our financial strength is strong while our prospects look better,” said group managing director Tan Sri Lodin Wok Kamaruddin in a statement yesterday.
  
  Boustead told Bursa Malaysia yesterday its highest profit earner — the heavy industries division — contributed a pre-tax profit of RM113 million for the nine-month period versus RM233.1 million a year earlier due to slower progress of work and cost escalation.
  
  Its second-largest profit contributor, the plantation division, contributed a pre-tax profit of RM50.7 million versus RM260.8 million.
  
  Boustead said the division achieved an average palm oil price of RM2,172 per tonne versus RM3,103 per tonne previously. Fresh fruit bunch harvest totalling 827,850 tonnes was 5% lower than last year.
  
  It said its property division’s pre-tax profit of RM58.9 million for the period was 44% lower than last year’s. Profit from its hotel operation was lower due to the start-up cost of the recently opened Royale Chulan Hotel. It added that the property development segment profit was also lower, due to the absence of corporate lot sales.
  Boustead said its finance and investment division reported an improved pre-tax profit of RM29.6 million.
  
  It noted that BH Insurance posted a 62% higher pre-tax profit of RM24.5 million, mainly due to the increase in underwriting and investment income.
  
  Meanwhile, it said the Affin Group posted a better pre-tax profit of RM383.2 million versus RM288.6 million a year earlier, due to improved net interest and Islamic banking income, while loan provisions were also lower.
  
  Boustead said the trading division, meanwhile, posted a lower profit of RM21.5 million. The division gained profits from its petroleum retail unit Boustead Petroleum Marketing Sdn Bhd (BHPetrol), and from the LCCT Baggage Handling system project.
  
  On its outlook, Boustead said its most lucrative business, the heavy industries division, will continue with its effort in developing its defence and commercial businesses. It will also establish more partnerships.
  
  The company is cautiously optimistic that CPO prices could sustain at the RM2,200 to RM2,400 level till year-end on the back of steady overseas demand as economies around the world recover.
  
  It said a factor that bodes well for the CPO price would be the potential for further weaknesses in the US dollar.
  
  It added that the property division’s earnings would be driven by the ongoing developments at Mutiara Damansara and Mutiara Rini townships and the division’s stable of commercial and retail PROPERTIES [].
  
  The company said that the expansion of the hotel activities, which now include the five-star Royale Chulan Hotel and Royale Bintang Seremban are expected to further increase revenue for the hotel division.
  
  
  
  This article appeared in The Edge Financial Daily, November 24, 2009.

And I would bet that the mak cik at the canteen would say 'Aiseh macam mana ni?'

Me?

I think the below table says it all!

Read more...

Speculative Article Drives Affin Up!

Monday Nov 16th 2009: Affin surges on possibility of merger with HL Bank

• Affin surges on possibility of merger with HL Bank
  Written by Joseph Chin
  Monday, 16 November 2009 09:40
  
  KUALA LUMPUR: Shares of Affin Holdings rose on speculation that the Guoco Group may look into a merger between HONG LEONG BANK BHD [] and Affin Bank Bhd.
  
  At 9.27am, Affin was up 20 sen to RM2.54 with 1.7 million shares done. Affin-WC rose five sen to 20 sen with 18.4 million units done.
  
  The Edge weekly reported Guoco is believed to have put out feelers to gauge the possibility of raising ringgit funding in the domestic capital market. It was earlier reported that Guoco was busy accumulating shares in Bank of East Asia.
  
  The report said speculation is rife of a merger between Hong Leong Bank Bhd and Affin Bank Bhd, in which Bank of East Asia owns 20.5%.

The classical IS BELIEVED justification used to ram up a stock.

And it WORKED like a charm in a hot market.

And what's amazing is that the local market community and the stock researchers started commenting on what is basically a 'rumour', a 'speculation'. Which as you know is nothing more than coffee talk.

Here is a snippet from a CIMB research note.

• By Winson Ng Gia Yann CFA
  The Edge reported that speculation is rife that Guoco's potential acquisition of a stake in Bank of East Asia (BEA) could spark a merger of Hong Leong Bank and Affin Holdings, which is 20% owned by BEA. If true, it would be positive for Hong Leong Bank as it would give it a quantum leap in size and help it achieve cost savings in the longer term. However, the impact of any deal on the bottomline would hinge on the pricing. We believe that Hong Leong Bank's positive attributes have been priced in, going by the 41% jump in its share price over the past three months, which has pushed valuations above industry average. We retain our earnings forecasts and target price of RM7.50, (10% premium over DDM value). The stock remains an UNDERPERFORM premised on the potential de-rating catalysts of (1) above-average valuation, (2) slower recovery in loan growth, (3) lower-than-expected dividend payment, and (4) margin compression. We prefer AMMB Holdings for exposure to the sector.

And even RHB Research technical analysis was quick enough to spot the break out in the stock and released a technical report on the stock and gave it a BUY rating.



End result?

The stock surged 13%!!!!!!!!!!!

Let's look at Affin-W.

How nice eh?

These guys speculated on an event, published it and the stock flies!

Wonder what the journalists would be saying to themselves when they retire?

However, at the day end, all hell broke loose! Affin Holdings quickly denied the whole speculation.

On Business Times the next morning:

• Affin: No merger talks with Hong Leong Bank
  
  By Adeline Paul Raj Published: 2009/11/17
  
  Affin Holdings' stock surged 13 per cent yesterday after it was reported that the bank might merge with tycoon Tan Sri Quek Leng Chan's Hong Leong Bank
  
  AFFIN Holdings Bhd (AHB) (5185), owner of the country's second smallest lender Affin Bank Bhd, says it is not in talks to merge its bank with Hong Leong Bank Bhd.
  
  AHB's stock had surged 13 per cent yesterday after a local business weekly reported that the bank might merge with tycoon Tan Sri Quek Leng Chan's Hong Leong Bank.
  
  Its share price rose 30 sen to RM2.64, its highest close in about 22 months. Some 16 million shares changed hands, more than six times that of the previous trading day.
  
  Hong Leong Bank, meanwhile, shed 2 sen to RM8.30.
  
  "The board wishes to clarify that it is not involved in any discussions involving a merger of Affin Bank and Hong Leong Bank," AHB said in a statement to the stock exchange after the market closed.
  
  It said that it was, in fact, not in talks on any potential merger or acquisition relating to its banking operations at the moment.
  
  The business weekly had quoted unnamed sources as saying that a merger between the two banks might be possible as there was speculation that Hong Kong's Guoco Group Ltd might buy a controlling stake in Bank of East Asia Ltd (BEA).
  
  The speculation came about after Guoco raised its stake in BEA last week to 8.01 per cent from 7.99 per cent, emerging as its second largest shareholder.
  
  Quek controls both Guoco and Hong Leong, while BEA has a 20.5 per cent stake in Affin Bank.
  
  "As BEA has 20.5 per cent of Affin, this news sparked talk of a potential merger of Hong Leong Bank and Affin," CIMB Research said in a note yesterday.
  
  BEA's share price rose sharply after Guoco increased its stake in the lender last week. The bank has, however, since said that it has not been in any talks relating to intended acquisitions.
  
  BEA, Hong Kong's largest independent local bank, yesterday officially opened its new regional headquarters in Singapore.

And of course the stock started falling!

By 9.36 am, the following newsclip appeared on the Daily Edge. Investors take profit on Affin

• Investors take profit on Affin
  Written by Joseph Chin
  Tuesday, 17 November 2009 09:36
  
  KUALA LUMPUR: Investors were quick to take profit on AFFIN HOLDINGS BHD [] shares and its warrants in early trade on Tuesday, Nov 17 after it clarified it was not in discussions involving a merger with HONG LEONG BANK BHD [].
  
  At 9.25am, Affin-WC fell 5.5 sen to 39 sen and it was the most active with 21.68 million units done while the shares slipped 10 sen to RM2.54.
  
  The 30-stock FBM KLCI rose 8.62 points to 1,286.93. Turnover was 139 million shares valued at RM113 million.
  
  In a late statement on Monday, Affin said it was not involved in any negotiations on any potential acquisition or merger relating to the banking operations of the group.
  
  However, investors should note the statement from the board of Affin Holdings that it is "continuously looks at measures to further enhance the performance and value of AHB Group for the benefit of its shareholders".
  
  Its share price rose to a 22-month high yesterday after The Edge weekly reported that the Guoco Group was exploring funding options for a takeover of Affin Bank.

Take profit???????????

Omigosh!

Consider the fact.

If someone bought the story based on the speculations and the speculations have been denied, what does one expect these buyers to do?

Sell would be the logical thing, yes?

And would you call such an action as 'taking profit'?

They were taken for a ride and since the speculation is denied, what else can they do?

How nice can it be? The Edge Weekly spun the news out. Stock flew. Company denies. Stock falls!

Have we not hear such a theme before?

Strange too. Don't you ever wonder about the roles of these so-called business journalists? Are they here to spin out speculations? And if the stock flies, do they consider their job as well done?

And if that was enough, try read the following article on the Daily Edge published at 11.50am, knowing very well the stock is tumbling down!

Talk of possible merger lifts Affin shares

• Talk of possible merger lifts Affin shares
  Written by Joyce Goh & Fong Min Hun
  Tuesday, 17 November 2009 11:50
  
  PETALING JAYA: AFFIN HOLDINGS BHD [] shares rose to a 22-month high yesterday, following market talk of a possible merger of its unit Affin Bank Bhd — the country’s second smallest bank — and Tan Sri Quek Leng Chan-controlled HONG LEONG BANK BHD [].
  
  At the close of trade yesterday, Affin Holdings gained 30 sen to RM2.64 with 16 million shares changing hands.
  
  The merger talk was prompted by news reports that Quek’s Guoco Group Ltd may consider buying over Hong Kong’s Bank of East Asia (BEA), which owns a 20.5% stake in Affin Holdings.
  
  “Getting the 20.5% stake in Affin through BEA is nothing to be excited about. If it leads to a GO, then that’s something to shout about… But for the moment, it’s better not to jump the gun given that things on the possible BEA buy is said to be still ‘fluid and early’,” said a banking analyst with a local research house.
  
  “If the merger does happen, it will be a convoluted effort as it involves levels above the two banks. Quek will be getting a stake in Affin very indirectly should he buy over BEA. He could just buy it and keep Affin as an investment,” noted the analyst.
  
  Affin in a written note to Bursa Malaysia yesterday, clarified that its board was not involved in any discussions involving a merger of Affin Bank and Hong Leong Bank.
  
  ”The board of Affin continuously looks at measures to further enhance the performance and value of Affin group for the benefit of its shareholders. However, at this juncture, the board of Affin is not involved in any negotiations on any potential acquisition or merger relating to the banking operations of the Affin group,” it said.
  
  Meanwhile, earlier yesterday, Affin Bank’s head of corporate communication Thomas Tan noted in a written reply: “Affin Bank does not comment on rumours related to market activities. It does not have a statement to issue at this time.”
  
  Hong Leong Financial Group and Hong Leong Bank officials could not be reached for comment, while Guoco Group’s corporate communications department in Hong Kong had yet to return our call at press time.
  
  Meanwhile, banking analysts and fund managers noted that the management of both Affin Bank and Hong Leong Bank were very diverse and it would take a long drawn effort to merge their operations.
  
  “I guess anything is possible at the moment. It makes business sense because it may be a good time to merge ahead of recovery… but they have to resolve shareholder and cultural issues,” said Choong Khuat Hock, Kumpulan Sentiasa Cermelang Sdn Bhd’s director of research and fund manager.
  Some are not sold on the idea.
  
  “I am really doubtful that a merger will happen,” said another local fund manager, adding that Quek’s sights were now trained outside the country.
  
  Regardless, a banking analyst noted: “Investors should look at the fundamentals of the bank and not buy on rumours. With or without this possible merger, we still like Hong Leong Bank as a stock,” said the analyst.
  
  Just recently, Hwang-DBS Vickers upped its target price for Hong Leong Bank to RM9.50 from RM8.
  
  “Although Hong Leong Bank has surged 46% since August 2009, we believe there are still prospects for growth from its regional expansion. We have not accounted for potential growth in Vietnam and possibly Indonesia should any acquisition take place.
  
  “Even at this juncture, we believe Hong Leong Bank offers attractive value proposition with a sustainable 16% ROE in addition to a 3% stable dividend yield with an upside potential,” it noted in a Nov 12 report.
  
  Yesterday, Hong Leong Bank ended trading at RM8.30 while HONG LEONG FINANCIAL GROUP BHD [] closed at its 52-week high of RM6.80.
  
  CIMB Research noted at the beginning of the month it was positive on Affin’s aggressive target of 20% return on equity (ROE) and lower non-performing loans (NPL) ratio. The group’s net NPL ratio declined to 2.96% as at end-June 2009 from 3.3% at end-2008.
  
  “In FY08, Affin Holdings recorded an ROE of 6.8%, which is projected to improve to 9% in FY11. Assuming Affin Holdings and Affin Bank have similar ROE (targets), the group would record a net profit of RM1 billion in FY11, 122.2% higher than our forecast, if it manages to hit an ROE target of 20%,” it said.
  
  CIMB Research set its dividend discount model-based (DDM) target price for Affin Bank at RM2.59 based on 7.9 times FY10 price earnings (PE).
  
  Despite this, some industry observers believe Affin still needs to prove itself. “They still need to reinvent themselves and set itself apart from the other banks in the country. Setting targets is one thing… delivering it, is another,” said an industry observer.
  
  This article appeared in The Edge Financial Daily, November 17, 2009

See how Affin-W comes crashing down!



How now my dearest brown cow?

How nice to be a reporter eh?

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Is America Out Of Recession?

On UK Telegraph: The grim reality is that America is not out of recession

• The grim reality is that America is not out of recession
  
  By Liam Halligan, Economic Agenda
  Published: 6:28PM GMT 31 Oct 2009
  
  So I was pleased last week when I heard that, after four successive quarters of contraction, America's economy grew by an impressive 3.5pc between July and September, compared to the quarter before. "The US is out of recession" numerous newspaper headlines screamed. No wonder share prices surged.
  
  As ever, the numbers warrant a closer look. For one thing, this is annualised data. So the US economy actually expanded by only 0.9pc during the third quarter – a fact most newspaper reports ignored. What growth we did see resulted from a 3.4pc annualised rise in US consumption between July and September, which was in turn caused by a 22.3pc spike in spending on consumer durables.
  
  That increase, though, was largely driven – quite literally – by last-minute vehicle purchases under the soon-to-expire "cash for clunkers" scheme. The much-trumpeted rise in residential construction – the first in four years – was also dependent on a temporary tax credit for first-time buyers. In other words, this latest US growth spasm stemmed from one-off government "giveaways" – with the public only able to take advantage of such gimmicks by going deeper into debt. The rise in US consumption coincided with a 3.4pc fall in household disposable income and a plunging savings rate too. With government and household debt spiralling anew, America's so-called "return to growth" is nothing but a return to higher leverage.
  
  Consumer spending makes up 70pc of the US economy. So we should all be concerned that after a "euphoric" third quarter, the mood darkened significantly this month. The respected Conference Board measure of consumer confidence just plunged to a 26-year low, which is hardly surprising. US unemployment, now at its highest since the early 1980s, is still rising fast.
  
  Extremely weak consumer sentiment is a stark reminder of how fragile the world's largest economy remains, not least as the "bold" stimulus measures subside. The grim reality is that America isn't out of recession, whatever your stockbroker tells you. Over the last 40 years, all US slumps have been interrupted by at least one quarter of positive growth, followed by a renewed downturn.
  
  America hasn't yet recovered and it won't anytime soon – not unless President Obama finds the courage to hose down his friends in the banking sector and force them to start lending.

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Fair Reporting On MAS?

On the Edge Financial Daily: MAS posts RM875.5m net profit in 2Q

On the Sun: MAS posts record RM676m net profit for Q2.

On Business Times: MAS in the black

On Star Business: Malaysia Airlines' Q2 profit highest ever despite economic crisis

Bottom line? Let me use this two lines from the Edge Financial Daily.

• The group recorded an operating loss of RM420.8 million in 2Q compared with profit of RM62.0 million a year ago mainly due to lower operating revenue in line with the declining trend in global travel and cargo movements resulting from the current economic downturn.
  
  Derivative gain/(loss) consisted of realised gain/(loss) on settlement of hedging contracts during the quarter and fair value changes due to movement in mark-to-market (MTM) position on outstanding hedging contracts at June 30, 2009 as compared to Jan 1, 2009.

An operating loss of rm420.8 million!

And our local media is talking about MAS back in black and with RECORD profits even!

Ahh... fair reporting.

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This Company's Earnings Soared 27-fold

Here's a financial news report that should win an award!

• YHS’ 2Q net profit up 27-fold
  Written by Loong Tse Min
  Friday, 31 July 2009 10:54
  
  PETALING JAYA: Drinks and food products maker YEO HIAP SENG (M) BHD (YHS) posted a 27-fold jump in net profit to RM2.1 million in its second quarter (2Q) ended June 30 from RM79,000 a year earlier, mainly due to higher sales in all sectors, festive sales in Indonesia and favourable foreign exchange rates.
  
  Revenue rose 10% to RM142.25 million from RM129.33 million due to higher turnover in all sectors, including export sales. Earnings per share rose to 1.4 sen from 0.05 sen.
  
  It declared an interim dividend of three sen per share less tax, totalling RM3.44 million.
  
  Cumulatively, for the six months to June 30, YHS posted a net loss of RM6.59 million versus a net profit of RM1.3 million a year earlier, mainly due to the impairment of an investment recognised in 1Q.
  
  Revenue fell 3.5% to RM271.09 million from RM280.8 million.
  
  In its 1Q, YHS had written down RM7.81 million in an investment in quoted securities. Coupled with lower sales and competitive pricing, the company had posted a quarterly pre-tax loss of RM8.91 million.
  
  YHS said the economic situation had improved but competition continued to be severe with aggressive pricing. “The company will continue to take necessary measures to protect its market share,” it said.
  
  
  This article appeared in The Edge Financial Daily, July 31, 2009. (source: here )

How on earth could they come out with such an header??? Sigh!!!

I will not add further except the following screen shot of YHS recent quarterly earnings.

Oh yeah... market is hot.

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Confusing Headlines On Malaysian Export Numbers

On Business Times: 'Malaysian exports inching towards recovery'

• By Rupa Damodaran Published: 2009/07/02
  
  MALAYSIAN exports are taking small steps towards recovery as manufacturers take advantage of inventory replacement activities worldwide, economists said.
  
  Malaysian manufacturers mainly produce electronic and electrical items that are used to make computers, among others.
  
  They have been hit hard by weak demand due to the global recession.
  
  Although there seems to be some improvement in the month-on-month E&E orders and industrial output, economists were still concerned whether the data was sustainable.
  
  They forecast May exports to contract further by 28.83 per cent, with imports also down by 23.91 per cent. Trade balance may average RM8.68 billion.
  
  The contraction in May, from a minus 26.3 per cent in April, will be made worse by high numbers last year as commodity prices were strong then.
  
  The International Trade and Industry Ministry will release the data tomorrow.
  
  Irvin Seah from DBS said the worst quarter of the recession was behind and an impending recovery for Malaysia would be visible in the months ahead.
  
  "As far as we're concerned, the trough of the export cycle (in absolute level) was back in January."
  
  "Improvement in the global economic environment, led by restocking by producers as well as the recent increase in oil prices probably will contribute to the headline export figure in May."
  
  The oil prices also rose to US$65 (RM228.80) per barrel from US$39 (RM137) per barrel between April and May.
  
  "That's a 32 per cent increase, which will certainly inject some 'price effects' to the export number."
  
  Standard Chartered Bank economist Alvin Liew expects a sharper contraction in exports in May, driven by the plunge in export value of key commodities like crude palm oil and crude oil.
  
  This would translate into a trade surplus of RM7 billion, which could be the narrowest monthly surplus since April 2007.
  
  TA Research economist Patricia Oh said faltering trade activities are likely to persist considering the rise in unemployment, dampened consumer sentiment and reduced demand for goods and services.

Hmm... I wonder why Business Times decided to name that headline ''Malaysian exports inching towards recovery' when two of the three economists mentioned inside the article itself weren't optimistic at all.

Strange eh? :p2

On Star Business, the headline was Economists see further fall in Malaysia’s exports

• By FINTAN NG
  
  PETALING JAYA: Malaysia’s exports continued to contract year-on-year in May as the bottoming-out process worked its way through the global economy.
  
  A Bloomberg poll of 12 economists saw exports contracting 28.2% year-on-year in May (April: minus 26.3%), imports falling 23.2% (April: minus 22.4%) and the trade balance rising to RM8.8bil (April: RM7.4bil).
  
  The Statistics Department is expected to release the external trade figures tomorrow.
  
  Economists are still cautious of the landscape although there are signs that things are looking better ahead with China’s purchasing managers’ index expanding for a fourth month in June and consumer confidence in Britain and the euro-zone rising.
  
  However, a gauge of US consumer confidence dropped in May while Japan’s Tankan business survey showed confidence among the country’s manufacturers was still down in June as factories remained under-utilised.
  
  The economists said the key driver remained government stimulus measures to boost domestic demand as there was no recovery in exernal demand.
  
  Oversea-Chinese Banking Corp Ltd treasury research and strategy head Selena Ling said global demand, especially from the G3 countries (the United States, Japan and the 25 members of the European Union) remained “very weak”.
  
  “In Malaysia’s case, we see continued weakness in the electrical and electronics (E&E) segment of manufacturing, with revenue contribution to exports versus commodities continue falling,” she told StarBiz yesterday.
  
  Ling said the conflicting data coming from various parts of the world was quite common at the inflection point.
  
  “It’s a bottoming-out process, there will be stabilisation but there will not be real growth as most of it is coming through stimulus measures,” she said.
  
  Forecast Pte Ltd economist Joanna Tan said there were still no blatant signs of demand recovery, with the global E&E sector still in contractionary mode although it was off its lows from the start of the year.
  
  “Right now, it’s good to be cautious as there are no compelling signs the recovery is gaining momentum,” she said.
  
  Standard Chartered Bank economist Alvin Liew said even if China were to recover, final demand still hinged on the G3 nations.
  
  “However, countries such as Australia and Malaysia, with strong base in commodities, will benefit from China’s relatively stronger performance,” he said.
  
  Liew said the liberalisation measures taken by Malaysia would help but benefits should be seen only in the long term.
  
  On Tuesday, Prime Minister Datuk Seri Najib Razak announced measures aimed at liberalising the capital markets, of which the dismantling of the 30% bumiputra equity policy was an important part.
  
  United Overseas Bank Ltd economist Ho Woei Chen said the bullish stock markets and upturn in consumer sentiment signalled that the worst was over but a firm recovery in external demand had yet to happen.
  
  “Most trade statistics in Asia remain weak and will likely be the case for the coming months until we see US consumers spending again,” she said.
  
  HSBC Holdings plc senior Asia economist Robert Prior-Wandesforde said the data in recent months were not quite as bad.
  
  “The Tankan survey showed a drop in business confidence but capital investment has improved quite a lot,” he said.
  
  Prior-Wandesforde added that China was clearly at the forefront of the global recovery. Although its exports had fallen, fixed investment was up more than 40% year-on-year while industrial output had also improved, he said.
  
  He said the leading indicators had shown for some time that things were starting to improve. “We believe the worst is over, with industrial output in Taiwan, South Korea and Singapore rising more than 20% from the lows.”

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