Tuesday, 28 March 2017

Land value increased 10 times in 3 years?

Boustead Plantations announced it proposes to sell a piece of land for RM 620.1 Million:



The company specified the cost of investment:



The company gave more background over the history of the land:



Regarding the acquisition of the land, we can find more announcements here, the independent advice circular (dated November 20, 2013) of the Al-Hadharah Boustead REIT which was subsequently delisted.

The acquired land consists of 678 hectares of the 1,379 hectares from the Malakoff Estate in Penang:





In other words:

  • Boustead Plantations proposes to sell a piece of land for RM 620.1 Million based on a valuation report by Raine & Horne dated December 1, 2016.
  • The land was acquired for only RM 60.4 Million three years earlier based on a valuation report by WTW dated September 5, 2013.
  • The difference in valuation is more than ten times over only three years, which seems shocking.

While the deal appears to be good for shareholders of Boustead Plantations, the previous unit holders of Al-Hadharah Boustead REIT might feel short changed.

The authorities should look into the two valuation reports (both the valuation given and the methods used), the difference in value looks much too large.

They should also revisit the delisting exercise of Al-Hadharah Boustead REIT to review if the deal for minority shareholders was indeed "fair and reasonable", as the independent adviser (Hong Leong Investment Bank) claimed.

Saturday, 25 March 2017

DFTZ: what about the losers?

A lot of hype and euphoria regarding Alibaba, Jack Ma and the DFTZ (Digital Free Trade Zone), stories about jobs been created, opportunities for Malaysian SMEs etc.

But not much attention to who the losers will be, surely there will be some.

A good article in The Star: "DFTZ - boom or bane for our local SMEs?", one snippet (emphasis mine):


Losers from DFTZ?

Depending on the manufactured products brought in from China, our importers, wholesalers, retailers, manufacturers and e-commerce SME’s will be badly disrupted due to lower cost products and tax free, GST free imports. It definitely will be an uneven playing field for our local SME’s. Our authorities should note that we have 200,000 retail outlets in Malaysia and the retail industry hires 1.2 million workers. Even if the DFTZ model disrupts 30% of our commerce retail business, we will lose 360,000 jobs and close down 60,000 outlets. And that is not counting the disrupted manufacturing industry.


Customs Revenue. Assuming 30% of the US$65bil DFTZ sales is imported into Malaysia. Collection of GST alone will be lower by US$1.2bil or RM5bil a year. Not counting those items that still attract import duties.


Our National GDP will actually shrink as the whole market will trade on lower prices.


I agree with the above. There will be lots of winners and lots of losers, very hard to quantify at the moment how the results will be in say 5 or 10 years down the road.

I also agree with the writer of the above article: "Alibaba is a sure winner with this unparalleled tax free advantage".

What should be of some concern for Malaysians is that the big e-commerce players (Alibaba, Amazon, Lazada, Qoo10 etc.) are all foreign owned. How will the future look like, taking into consideration network effects and deep pockets, which might crowd out the smaller local players?

Wednesday, 22 March 2017

Fight between Cyrus Mistry and Tata: AirAsia and Singapore Airlines are mentioned (5)

I was rather disappointed about AirAsia's announcement on October 31, 2017 regarding irregularities at AirAsia India:


"The announcement is quite disappointing, both in size and in content. No timeline is mentioned, nor amount of money involved, no details are given (more information has been released through other channels than was announced).

Also AirAsia does not give a reason why shareholders were not informed before about this matter, the amount of money (allegedly the amount is around RM 13 Million) and the seriousness of the issues at hand seem to warrant that."



AirAsia made today a new announcement in this matter:


"..... as a result of investigations by AirAsia (India) Limited (AAIL) (which were conducted by an external agency), AAIL has been recommended to lodge a police report on the findings of the investigations. AAIL has consequently filed a police complaint before the competent authorities in Bengaluru, Karnataka, India on 9 November 2016. The police is investigating the matter. "


Why the delay of more than four months since the police complaint in making this announcement? No reason is given.

Saturday, 18 March 2017

Sydney Morning Herald blunder

Article on the website of Sydney Morning Herald:

The five faceless investors who own much of Australia's largest companies

One snippet:


It turns out that five investors – HSBC, JP Morgan, National Nominees, Citicorp and BNP Paribas – own a massive chunk of our listed companies. What's surprising about this is that many Australians probably haven't heard of some of them. What's even more surprising is that if you look at the big players in our 20 largest industries, the five faceless investors have a majority stake in most of them. They dominate industries as diverse as airlines, insurance, telecommunications and mining.


Oops, as pointed out by many commentators, these banks don't actually own those shares, they are just the trustee.

Would such a mistake have been possible in Malaysia? I don't think so, please take a look at the last annual report from Maybank:




It is clearly stated that Citigroup, HSBC etc. are the nominees, and the names of the beneficial owners are spelled out.

Kudos to Bursa Malaysia for the added transparency, which is missing in many other countries.