Friday, 22 September 2017

Bumi Armada loses court case

Bumi Armada (defendants) lost its court case against Tozzi Industries (plaintiff), according to this judgment:


For the foregoing reasons, we grant the plaintiff’s claim against both defendants with damages to be assessed. We also order the defendants to bear the costs of this trial on liability, to be taxed if not agreed following the assessment of the damages. Costs of the assessment will be dealt with separately.


Probably nothing major, but still noteworthy.

Wednesday, 13 September 2017

Raising the bar for SGX delistings

Article in The Straits Times, some snippets:


For a company to be voluntarily delisted, a shareholders' meeting must be held where approval for the move must be received from 75 per cent of the shareholders present and where not more than 10 per cent disagree with the move.

The snag is that this feat is made easier because the listing rules here do not bar directors and major shareholders from voting - and since the major shareholder, usually also the company boss, is the party proposing the delisting move, the odds are stacked heavily against minority shareholders.

In recent years, however, some companies are being taken private at a very low valuation at the bottom of the business cycle, only to be relisted in another jurisdiction at a much higher valuation.

No wonder, some minority shareholders feel existing listing rules fail to give them adequate protection if an opportunistic major shareholder wants to delist the company and attempt to squeeze them out of their shares at unattractive prices.

..... the academics observed that there had been instances of IFAs assessing offers as being "fair and reasonable" even when the exit offer in question was at a steep discount of more than 30 per cent to the latest NAV of the takeover target.


Against this backdrop, I would say that the SGX listing manual is due for an overhaul.

Delistings have become a red-button issue among aggrieved minority shareholders. It is one area that urgently needs to be looked into when the rule book is revamped.


The same applies to Bursa, a revamp is needed in which minority investors receive more protection from delistings at a very low price, it is long overdue.

Thursday, 31 August 2017

Late "strong pick-up" by Bursa

Article from The Star, one snippet (emphasis mine):


Bursa Malaysia staged a late strong pick-up before closing, led by gains in selected blue chips such as CIMB Group Bhd, Axiata Group Bhd and MISC Bhd.

The benchmark FTSE Bursa Malaysia KL Composite Index (FBM KLCI) closed 12 points higher to 1,773.16 yesterday, after a slow start to the week.

Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said foreign investors were net sellers yesterday despite the strong pick-up in the FBM KLCI.

It was a last-minute push before the long holiday, and it was quite unusual considering the results season is still ongoing,” he told StarBiz.


It was definitely unusual, let's zoom in on a few counters.

On 16:50:01 it was CIMB's turn, a sudden 32 cent jump in price:



Two seconds later UMW's turn, a 45 cent jump:


And one second later at 16:50:04 Timecom's turn, a 53 cent jump in price:


As a consequence, a sudden spike in the KLCI:



Who was (were) the buyer(s), may be a fund that needed to show good results at the last trading day of August?

It looks all very artificial, is this actually allowed, will SC take action?

Monday, 28 August 2017

PNB reveals secret of how it makes money to pay high dividends (3)

I wrote before about this subject: here and here.

A lot of articles recently about PNB and the new group chairman Tan Sri Abdul Wahid Omar, both in The Edge and in The Star.

Unfortunately, again what I called "the most important number" is missing, this is what I wrote before:


Lots of numbers are mentioned, but the most important number (per managed fund) is missing:
"The increase/decrease in the Net Asset Value (marked to market) per unit over 2016"

This is a pretty basic number, essential to measure the long term performance in the long run.

Once we know this number we can compare it to other funds, or to the total (that is taking into account dividends received) returns on Bursa.

A simple question: was this number positive over 2016? And how does it compare to the price investors pay per unit?

Disappointing that this all important number is not given, and that the journalists present didn't ask for it.


From The Edge:


This is not a Ponzi Scheme. As I said, in good times, we create reserves and we don’t distribute all the gains in any particular year. So, we will have those reserves to buffer the payment of dividends during the tough years,” said Wahid.

The point was raised as questions over whether the high dividend at PNB-managed Amanah Saham Bumiputera are real and sustainable have been bandied for some time.


It should be noted that even when the local bellwether FBM KLCI fell 39% year on year in 2008 — and the dividend payout by the Employees Provident Fund (EPF) dropped to 4.5% — ASB’s dividend remained at an envied 7%. Yup, that is 378 basis points above the so-called risk-free-rate or 10-year Malaysian Government Securities of 3.22%.


Well aware of the scepticism, Wahid offered simple logic instead of going on the defensive. “It is a very simple model in the sense that during good times, you don’t pay all the returns. So, we keep some reserves. And during tough times like the past three years, we’ve been realising returns from the unrealised gains. No magic. It’s a very basic model,” he explained.


The yearly distributed returns are known, why not make the realized returns (marked to market, after expenses) public? We can then compare them to each other to check if they match, if there are any long term trends and to compare them to returns from similar Malaysian unit trust schemes.

Monday, 14 August 2017

Sunday, 13 August 2017

Brdigewater returns faltered

Interesting article about Ray Dalio and Bridgewater, the largest hedge fund in the world, looking forward to his new book "Principles", soon to be published.

One snippet:


The transition comes as returns at the hedge fund’s flagship product have faltered, just like at other so-called macro managers. Since the beginning of 2012, Bridgewater’s Pure Alpha II has posted an annualized return of 2.5 percent, according to a document reviewed by Bloomberg Markets, a far cry from its historic average of 12 percent. It’s down 2.8 percent this year through July. (A smaller Bridgewater hedge fund, Pure Alpha Major Markets, has fared better, as has the company’s long-only product.)





Apparently it has not been easy to make money in the last six years, may be of some comfort for investors who have missed out mostly on the bull run of the US stocks:



Saturday, 12 August 2017

Dual class shares: another really bad idea (3)

Bursa announced the following rather terse media release:


There have been some misleading reports of late which have caused confusion on Bursa Malaysia’s position on the listing of dual class shares. Bursa Malaysia’s position has been misunderstood and taken out of context. We wish to inform that presently, we have no plan to facilitate the listing of dual class shares. In Bursa Malaysia’s pursuit to remain attractive and competitive, we are committed to uphold market integrity and ensure sound investor protection in all our market development initiatives.


One could deduct (although it is not written explicitedly) that facilitating dual shares might help Bursa to remain attractive and competitive, but would weaken market integrity and investor protection.

Wednesday, 9 August 2017

Dual class shares: another really bad idea (2)

I wrote before about this subject.

It seems that Bursa is still considering to allow dual class shares in Malaysia.

Just to show one "horror" case what might happen, Alphaville wrote about the company DryShips (listed as DRYS on the NASDAQ): "Who buys DRYS?".

One snippet:


Taking into account the rapid series of share consolidations Dryships has had down the years, the stock price has fallen from $1.483bn per share to $1.40.

So what’s going on?

We first looked at this thing last month, at which point the peak-to-trough stats stood at an historical high of $206m and a low then of 99 cents. Over the past fortnight, following fresh consolidation of the shares, the price has fallen 80 per cent.


The company has a market cap of $7.26m, but (as of July 21) it held cash of $58.6m and a book value of $652m, against debt of $237m. Its fleet of tankers and drybulk vessels stands at 39.


Confused? Here’s what’s happening.


In April this year DryShips, which is registered in the Marshall Islands, struck a deal with a BVI firm, Kalani Investments, whereby Dryships would sell up to $226m worth of stock to the BVI entity over a two year period.


The deal sees Kalani getting the DryShips stock at a discount and they quickly dump the newly-issued equity on the US market. The flood of stock depresses the share price, which falls below $1 — risking suspension under Nasdaq rules. So, once a month for the past four months, DryShips has enacted share consolidations — most recently at 1-for-7 — to get the price back above a dollar.


It’s these repeated consolidations which throw up the comic historic share price high of $1.483bn when the chart is reset.


The company is controlled by a Greek shipping financier, George Economou, through super-voting stock. Many of the vessels in the DryShips fleet have been acquired from Economou’s private interests — so if you follow the money you’ll see it is flowing from US investors, by way of the Caribbean, to his family estate.



David Webb wrote again about the dual class shares "One Board, One Regulator".

Webb also mentions many other issues that are relevant to Malaysia (and Singapore), for instance:


8. Full disclosure of the identities of subscribers (including beneficial owners of 10% or more of their votes or equity) and the numbers of shares subscribed in placings, whether at initial listing or subsequently. [in the Malaysian context, a six year old blog posting Private Placements: abolish them or limit them, nothing has changed]

9. Full disclosure of the identities of beneficial owners of counterparties to notifiable transactions (acquisitions, disposals or loans) by listed companies. No more hiding behind BVI curtains. [in the Malaysian context just one example: Protasco's Puzzling Purchase, the vendor being owned by Anglo Slavic Petrogas Ltd, a BVI company]

11. INEDs: boards or shareholders can continue to nominate candidates for election as Independent Non-Executive Directors, but controlling shareholders, executive directors and their associates must abstain from voting in the elections, due to their obvious conflict of interests. This will leave independent shareholders to elect the INEDs. Otherwise, INEDs serve at the pleasure of the King, making a joke of their independence.

12. Tighten the permissible general mandate to dilute existing shareholders by issuing new shares for cash, with a maximum of 5% enlargement in any year, at a maximum discount of 5% (currently: 20% at a 20% discount). Any larger size or discount should require a rights issue, or approval by 75% of votes cast by independent shareholders on a special resolution. This would raise HK pre-emption standards to the UK's.


And regarding legislation:


1. provide investors with access to justice in the form of class action rights. The loser-pays costs system will deter vexatious or meritless cases;

Monday, 7 August 2017

Sapura Energy: excessive remuneration for Directors? (2)

I wrote about this issue before, one snippet:


"We notice three government linked funds in the list of substantial shareholders. Will they make noise about the above remuneration? At the last AGM that did not happen, all resolutions were approved by a large majority of the shareholders."




The largest vote against any of the resolutions was only 2%.

The company held its AGM on July 25, 2017, and the results are as follows:




Of interest are resolutions 8 (payments of director fees) and 10 (authorising the directors to issue new shares) which received 18% and 22% of the votes against, a very large change compared to the voting behaviour of a year before.

It is safe to assume that the controlling shareholders voted in favour of the resolutions, meaning that the percentage of votes against from the non-controlling shareholders is even higher.

Are these the signs of some shareholder activism which starts to pop up at Sapura Energy? I most certainly hope so.


The Edge Malaysia (edition August 7, 2017) brought up another issue regarding related party transactions. It wrote an article "A RM70 mil annual poser at Sapura", one snippet:

"It is not clear why the listed company has to pay this fee to its controlling shareholder, which has epresentatives on the board holding executive positions and are paid alaries and director fees."


The amount can be found in the annual report, second part, page 189 (pdf page 139):




Surely the minority shareholders of Sapura Energy deserve a proper explanation on the above transactions.

Thursday, 3 August 2017

XingQuan: boardroom getting rather empty

Two more independent directors of XingQuan resigned, "Due to time commitment issue" and somewhat more specific:


As he will not be able to discharge and perform the duties and responsibilities of an independent director due to the expiry of the employment contract of the CFO in early May 2017, the resignation of Audit Committee Chairman in end of May 2017, the recent resignation of the other independent director, and the inability of the Company to secure suitable candidates to fill the aforesaid vacancies since May 2017, he therefore tender resignation as an independent director.


That means that the audit committee is now vacant, as is the department of independent directors. Any takers? If not, who will defend the rights of the minority investors?

I have warned several times about XingQuan, the first time (XingQuan: does the company believe its own cash?) almost exactly two years ago.

So far no visible action has been taken by the authorities. Did it really have to come this far? Fast, adequate action might for instance have prevented the rights issue, pouring more good money after bad. Or may be some of the assets could have been saved and liquidated, to the advantage of the minority investors.

In a unrelated case, the Securities Commission has taken action against a father and son for submitting false or misleading information. But the punishment is a mere reprimand and permanent moratorium regarding listings in Malaysia. I guess the perpetrators will simply shrug their shoulders and move on, the world outside Malaysia is pretty large after all.

The real test will be if the Malaysian authorities will be able to fine foreigners or impose a jail sentence. So far no action of that kind has ever been taken against any of the listed Chinese companies in Malaysia. Time will tell if it ever will happen.

If it turns out to be near impossible to impose these penalties, then Bursa should never have allowed foreign companies to list in Malaysia, because of the absence of any significant deterrent.

Wednesday, 2 August 2017

Public Bank: end of an era

From The Star: Public Bank Bhd chairman Tan Sri Teh Hong Piow to retire

Some snippets:


Public Bank Bhd chairman Tan Sri Teh Hong Piow will leave his post on Jan 1, 2019 but will remain as the bank’s adviser.

“The details relating to the appointment of the new chairman of Public Bank will be announced at an appropriate time,” the bank said in a statement.


Teh will assume the title “chairman emeritus” after he relinquishes his position as chairman of Public Bank.


This, according to the bank, is in recognition of his “par excellence contributions” over the past 51 years since he founded Public Bank on Dec 30, 1965.


He would also remain as an adviser.

Teh is also retiring from his role as chairman of Public Islamic Bank Bhd and Public Investment Bank Bhd with effect from Jan 1, 2018, but would stay on as non-executive director in both wholly-owned subsidiaries of Public Bank with effect from the same day.


“The smooth transitions of the succession of the chairmanships of Public Bank, Public Islamic Bank and Public Investment Bank are in place,” the group said.



Public Bank under Teh's leadership has been one of the biggest success stories on Bursa, may be the best, but definetely in the top one percent group.

I only have data going back to 1987, over that 30-year timespan Public Bank compounded 16.4% (vs. 8.4% of the KLCI (both total return, taking dividends into account).

That means that RM 10,000 invested in Public Bank in 1987 is worth RM 1,014,000 now, while RM 10,000 invested in the KLCI is worth now RM 118,600, an outperformance of about 8.5 times.

Public Bank itself is a component of the KLCI, so relative to the other 29 counters it would have done even slightly better.

All very impressive, and one good example how much a succesful buy-and-hold strategy through an investment in a good quality company can yield. No wonder there are a lot of happy faces at the yearly AGM meetings.

Public bank has never reported a loss, not even in the horrific Asian crisis of 1997/98.

Tuesday, 1 August 2017

Idea: Tracker Fund of Hong Kong (2800.HK) (3)

I recently have sold my Tracker Fund of Hong Kong (I wrote about it before here and here).

I don't think the price is now particularly expensive, but with a lot of risk globally and a quite high portion of the fund being invested in financials (of which I am not a fan) I have decided to take profit.

Given the recent increase in share price the dividend yield (one of the reasons I bought the share, that time close to 4%) has also fallen.

Including two dividends (of HKD 0.62 and HKD 0.15) the return is about 38% for a holding period of just over one year.




Disclaimer: this is not a recommendation. Please do your own homework and make your own investment decisions or ask advice from a professional advisor.

Saturday, 22 July 2017

FGV's lack of transparency

Good article in The Star: Why FGV should handle whistle blowers with care

Some snippets and some comments by me:


In fact, one of the reasons why the Employees Provident Fund (EPF), a stickler for corporate governance, disposed of its interest in FGV is because there was no separation of powers between the board and the major shareholders.

The provident fund, for instance, felt that the total remuneration package for the chairman, which was stated at RM2.67mil in the 2016 annual report, was seen as too high.


The powerful provident fund expressed its dissatisfaction on the way FGV was managed by disposing its shares. In fact EPF’s chief executive officer Datuk Shahril Ridza Ridzuan hardly completed a year as a board member of FGV.



I am sorry to say but I find this very disappointing from the EPF. By selling they even drove down the share price giving them an even lower price for the last shares they sold.

Could they not have done more? If they were unhappy about the Corporate Governance inside FGV then they could have voiced out their concerns, first internally, and when no adequate response has been issued, they can simply call for a press conference. Surely journalists from all major media outlets would show up and report on the issues. That would have forced the company to issue replies to some thorny issues and would have given some much needed transparency. Who knows, some M&As might have been prevented that way, for the benefit of almost all parties involved.


Only now, after Isa has been moved out of FGV does the board admit that the company lacked governance.


The problem with all the initiatives from Bursa and SC is that it looked like CG was good inside FGV. But FGV was simply ticking all the boxes.

"Real" CG is not about ticking boxes, but how the company handles itself for instance in cases of conflict of interest (rather common in Malaysia), transparency towards shareholders, major strategic decisions like M&A activities, etc.

The question is if FGV actually has improved its CG? From the announcements that have been made on the Bursa website I doubt it, I find hardly any relevant information on what has been going on the last few months, for instance nothing about:

  • The work done by Idris Jala, let alone the contents of his report (probably only the major shareholder is privy to this information).
  • The serious allegations by Zakaria (and others) regarding expensive, non-core acquisitions in the past
  • The real reasons for the resignation of the previous Chairman and who the new chairman is (the last might have been an honest oversight though)
  • The Edge Malaysia wrote a very good series of articles with lots of useful information (including interviews of the main persons involved), most of which was never revealed


He [Zakaria] should not be penalised for speaking out. Because this would render redundant all the governance structures and whistle blowing channels that are in place in FGV.


Exactly. Whistle blowing in Western countries is already difficult enough (many regret later on that they blew the whistle), doing the same in Malaysia (a country with the highest Power Distance Index in the world) is so much more difficult. We need to respect people who speak out based on conviction and proper information.

I hope to see a healthy dose of transparency in the near future, what was really going on the last few months, and a proper, honest evaluation of the controversial M&As FGV has done in the past. Several companies in Singapore (most notably SingPost and Singtel) have done so in similar situations (by an independent advisor under the guidance of the independent directors) and an extract of the final report has been forwarded to the SGX website. Will the same happen with FGV? We will wait and see.

MACC nabs two ex-real estate execs over Felda's UK hotel buy

Article on MalaysiaKini's website, some snippets:


"The Malaysian Anti-Corruption Commission (MACC) has arrested two former real estate executives as part of its investigation into Felda investment Corporation's (FIC) purchase of the four-star Kensington Hotel in London.

MACC in a statement today said the duo were arrested at 1pm when they presented themselves at the MACC headquarters to give their statement.

"Based on the investigation, the two were suspected of manipulating the hotel price (valuation) resulting in FIC overpaying tens of millions," it said.

MACC said when the purchase of the hotel was underway between 2013 and 2015, the two served as chief corporate adviser and director respectively at the real estate agency Raine and Home."


Most likely the writer means Raine and Horne (not Home), a valuer that has also done many valuations regarding property owned by Bursa listed companies, so I assume that Bursa and the SC will follow this case with interest. If the allegations of the above deal are true, then other valuations done by the same people might have to be reviewed as well.

If FIC overpaid tens of millions, then the logical question will be who benefitted from this transaction, hopefully MACC will answer that question soon.

Tuesday, 11 July 2017

"Lotte's Chemical Reaction"

A rather negative story about Lotte Chemical Titan from Bloomberg.

Some snippets:


Lotte Group seemed to be getting back to business after a rough year of court battles, family feuds and strained relations with China. 

Not so fast.


Believers in South Korea's fifth-largest conglomerate were hoping for a much-needed win with Lotte Chemical Titan Holding Bhd., the petrochemical unit that began trading in Malaysia Tuesday. Revival of the long-delayed 3.77 billion ringgit ($877 million) initial public offering, Malaysia's biggest since 2012, caps a period that has seen the group also take steps to settle family disputes and boost corporate debt sales.

But in the opposite of a typical IPO bump, shares of Lotte Chemical Titan fell below the opening price pretty much immediately -- and that was after the company cut the bottom of its price range to 6.50 ringgit a share, from 7.60 ringgit. By midday in Kuala Lumpur, the shares were down 2 percent.


Investors are right to bet against the newly listed company. The reason the Malaysian chemical maker cut its IPO price and trimmed the number of institutional shares has little to do with macro issues like equity demand and more to do with how Lotte missed a fundamental shift in the petrochemicals market.

While Lotte was hell-bent on getting the flotation done after taking the company private more than six years ago, it miscalculated in betting that the market would be willing to overlook the business's problems just because of a dearth of IPOs for large investors.


Back when Lotte took the unit private, the global economic recovery was driving strong demand for the raw materials used to make plastic and synthetic fibers used in everything from appliances to automobiles.

But as the years went on, Lotte Chemical did almost nothing to expand capacity -- unlike its global competitors -- despite having ample cash,  according to Smartkarma analyst Toh Zhen Zhou.


In the absence of investment, revenue growth slowed. Lower prices for inputs such as oil have helped prop up profit but as the sales outlook for products like cars weakens, demand for Lotte's offerings has waned. Meanwhile, raw material prices have declined and overcapacity in China is further pressuring the industry.


Is this really the best Bursa can do, as alleged by Bloomberg, the largest IPO since 2012?

A foreign company, again going through the "listed-delisted-relisted scenario", and with the above history?

Where are the homegrown Malaysian companies with increasing (international) revenues, juicy margins, high ROE, making unique products protected by IP (intellectual Property)?

Monday, 3 July 2017

Seth Klarman: "Margin of Safety"

Seth Klarman is a well known hedgefund manager behind the Baupost Group.

He wrote a book "Margin of Safety" that is long time out of print, and has quite a following, second hand books are sold for a small fortune on Amazon.

A discussion about the book can be found here, at an otherwise good forum about value investing.

The book is a bit outdated here and there, and mostly focussed on the US market, but other than that highely readable, and many topics and principles are timeless.

A download (from MediaFire) of Margin of Safety can be found here, at the second last comment.

Monday, 26 June 2017

Wing Tai GO: Pangolin not happy (3)

The Independent Advice is out and, as expected, the verdict is: "not fair but reasonable, accept".

More regarding this matter can be found on the following websites:

One snippet from the last source:


 .... unfortunately there is a ridiculous clause in the Malaysian Stock Exchange’s rules that insists on a 25% free float. This can be used as a weapon by potential acquirers of companies against minorities, as it is being used in this case. Basically, what WTS is saying is that once they get to 75%, the company will be in breach of the listing rules, that they will do nothing to rectify this breach and that they do not intend to maintain the listed status.

In Singapore, the minimum free float is 10%, which makes sense as it is in line with the compulsory acquisition threshold. I first complained about this crazy Malaysian ruling back in 2003 when Bumi Armada was privatised. Similar wording was used then. In the past couple of weeks, I have twice emailed Malaysia’s stock exchange chairman on this matter. No reply.

In a country where the majority of businesses are family-controlled, minorities need all the protection they can get. The current listing requirements make it easy for controlling shareholders to buy up their companies on the cheap. The authorities are failing investors.

Free float requirement for listed companies

Malaysia 25%
Indonesia 7.5%
Singapore 10%
Thailand 15%


This is indeed odd, and works very much against minority investors. The threat of holding shares in a company that might be delisted is not attractive to many, and definetely not to fund managers. And even if one would hold on, there is the chance that the shares will be mandatory acquired.

Pangolin's article continues:


The independent directors have appointed little-known Mercury Securities to give us independent advice. Cynics would contend that no board has ever appointed an Independent Adviser who will give guidance they don’t want.


In my very first blog posting in 2011 I wrote:


Immediately abolish all “Independent” Reports, they are useless and are even hurting the rights if the Minority Investors.


In every General Offer (GO) where the controlling shareholders want the minority investors to accept the (low) offer the recommendation will be "not fair but reasonable, accept".

When a GO is made according to the rules where the controlling shareholders want to keep the company listed, the recommendation will be "not fair, not reasonable, don't accept".

Independent reports give an undeserved air of credibility to the whole process of delisting, but in reality it is a complete waste of time and money.

In all those years since my first recommendation, basically nothing has changed. The wording used in the independent advice is now the rather curious "not fair but reasonable, accept" instead of "fair and reasonable, accept", and the quality of the independent report is somewhat higher, but the outcome is exactly the same, and minority investors basically don't stand a chance. 

Authorities should look into this matter and take concrete steps to level the playing field for minority investors:
  • The free float requirement should be reduced in line with neighbouring countries
  • Independent advice in the current form is a complete waste and even hampers minority investors
  • Independent directors should be appointed by the non-controlling shareholders, not by the controlling shareholders
  • The authorities should check if the controlling shareholders own or control shares held by nominees (so far enforcement in this matter seems to be close to zero)
  • Funds (especially Government Linked Funds which have been notoriously passive) should be engaged in shareholder activism, especially in these kind of exercises
  • Companies that are delisted should not be allowed to relist again; this would take away one of the incentives for delisting, since delisting will happen at a cheap valuation and relisting at a high one

Sunday, 25 June 2017

China government auditor detects fraud

Shocking (although not unexpected) article in The Malay Mail by Reuters: "China auditor uncovers 200b yuan in fake revenue at state firms", some snippets:


China’s government auditor said in its 2016 report published today that 18 of 20 central state firms it audited had inflated revenue by 200 billion yuan (RM125.4 billion) and profits by 20.3 billion yuan in recent years.

The companies audited include China National Petroleum Corporation, China Huaneng Group and Sinochem Group.


The report from the National Audit Office also said that due to inadequate risk control measures, the 20 centrally-administered firms had put overseas investments worth 38.5 billion yuan at risk.



Implications for China listed companies in Malaysia are bad, I expect things to be worse from an accounting point of view. Several of those companies are finally showing their true colours.

Will there be even a sliver of justice by the authorities coming down on the real culprits, and will the Chinese authorities lend a helping hand? I strongly doubt it.

With hindsight we are all experts. But the sad part is that many warnings were out there, already a long time ago. One of my first blog postings from 2011 (!) can be found here: China companies listed on BM.

"Where is Ze Moola" had written a lot about the same issue long before that.

Malaysian investors who poured hundreds of millions of RM in the IPOs of these companies have been hugely disadvantaged. Was this really necessary, should the authorities have listened more to the critical voices?

Wednesday, 31 May 2017

Sapura Energy: excessive remuneration for Directors?

From the annual report of Sapura Energy:




Those numbers seem very high, especially given the rather poor recent results of the company:




While the company lost a combined amount of RM 585,000,000 over the last two years, the directors earned a combined fee of more than RM 187,000,000 over the same period.

The share price over the last five years:



After reaching almost RM 5, the share price has declined by about 64%, nothing to shout about for the minority shareholders. And dividends have not been much better:




In other words: 37,000 shareholders received less in dividends than the Directors in remuneration. It seems the company is more interested in rewarding the Board of Directors than the shareholders.

If we look in more detail we notice the following:



Most of the remuneration for the directors is earned by a single person (I assume Sharil, the president and group CEO, although unfortunately the director is not named), and mostly based on performance.

But with the company losing more than half a billion over the last two years, the share price down a lot and the dividend cut, one wonders what the KPIs for that performance are.

The fees for the non-executive directors are also on the high side:



The major shareholders of the company:




We notice three government linked funds in the list of substantial shareholders. Will they make noise about the above remuneration? At the last AGM that did not happen, all resolutions were approved by a large majority of the shareholders.


Let's wait and see if the next AGM to be held in July will be any different.

Monday, 29 May 2017

Wing Tai GO: Pangolin not happy (2)

Article on the website of The Star:

Takeover offer for Wing Tai Malaysia seen undervalued

One snippet:


He further notes that only less than 15% shares in Wing Tai are held collectively by institutional investors, who are more likely to have the holding power.

“Even if they stand together, it will be difficult to pose any challenge to the offer,” he explains.



CIMB Research made the following comment:


We see this transaction as positive for Wing Tai, as it is earnings accretive by reducing minority leakage from WTM.


Loyal minority investors who held on to their Wing Tai shares throughout the years, through thick and thin, are now described as causing "minority leakage" to the majority shareholder.

Well, I guess that is one way to put it, definitely not mine though. Has the term ever been used when a company went for a listing, as in: "we want to IPO our subsidiary because we want to increase minority leakage"?

Saturday, 27 May 2017

China Automobile Parts: "bad reputation"? (3)

Things continue to worsen in regards to China Automobile Parts, PKF issued the following rather strong worded statement.

PKF retracted their 2015 audited accounts since the financial statements for FYE2015 do not give a true and accurate picture of the financial position of the company.

Unfortunately, appendix 1 and 2 (mentioned in the text) are not enclosed. That is a pity, they might provide details when things started to turn sour, and how bad things might be.

Audited accounts being retracted from a listed company might be a first in Malaysia, but definitely not for unlisted companies, 1MDB being a rather "famous" example of that.

SC sues Stone Master executive (3)

More and more developments in Stone Master, things are getting really murky.

The Edge Malaysia wrote an article "Stone Master Expose?"

From The Star's website  "Another one bites the dust", one snippet:


"Apparently, in consideration of the exclusive right to distribute the products of the Chinese companies, certain local representatives were paid a sum amounting to RM11.59mil in the form of a non-refundable deposit, of which RM11.54mil was subsequently paid by these local representatives to Chan, who is still a member of the board."


Luckily the last part is not correct, I wrote about this subject before, since then Chan has since retired, according to this announcement. Half a year too late, but at least it was done.

The article in The Star further writes about interesting developments in Samchem Holdings, one snippet:


Industrial chemicals distributor Samchem Holdings Bhd earlier in the week received a special notice from seven of its shareholders, who collectively hold 19.8 % in the company, asking for the removal of Ng Soh Kian as an executive director of the company.

Soh Kian was appointed as an executive director in February 2009, just four months before the company was listed. Interestingly, Samchem’s CEO Datuk Ng Lian Poh, the brother of the company’s founder and executive chairman, Thin Poh, resigned earlier this month. He resigned due to personal reasons.

Thin Poh, who has stepped in as acting CEO, holds a 44.14% stake in the company. Soh Kian has been steadily whittling down his stake in the company and now has only 0.26%.

No reasons were given for wanting to remove Soh Kian from the board by the seven .....

Thursday, 25 May 2017

SC sues 7 for insider trading

From the website of the Securities Commission:


Securities Commission Malaysia (SC) has filed a civil suit at the Kuala Lumpur High Court against seven individuals for insider trading involving the shares of Worldwide Holdings Bhd (Worldwide), a company previously listed on Bursa Malaysia.

Datin Paduka Low Siew Moi, Tan Cheng Teik, Liaw Huat Hin, Hoi Main Seng, Chua Keng Hong, Datuk Ter Leong Yap, and Ter Leong Hing were alleged to have been involved in the insider trading of Worldwide shares between 2006 and 2007.


In the suit filed on 18 May 2017, SC claimed that Low had communicated material non-public information, namely the proposed privatisation of Worldwide, which was undertaken by Perbadanan Kemajuan Negeri Selangor (PKNS), to Tan, Liaw, Hoi, Chua, and Ter Leong Yap, in breach of section 89E(3)(a) of the Securities Industry Act 1983. Low was the deputy general manager in PKNS and a director of Worldwide at the material time.


SC also alleged that Ter Leong Yap and Tan had further communicated the said information to Ter Leong Hing, and also Hoi and Liaw respectively. SC claimed that Tan, Chua, Hoi, Liaw and Ter Leong Hing breached section 89E(2)(a) of the SIA when they purchased Worldwide shares while in possession of the material non-public information.


SC is seeking a disgorgement of three times the profits earned by the defendants as a result of the insider trading and a civil penalty of RM1 million from each of the defendants.



Good that the SC chases insider trading activities, which have been rampant in Malaysia. Many significant corporate announcements have been preceded by a surge in volume and price, indicating that some participants were (most likely) privy to confidential information.

In a previous posting on this subject I wrote:

" .... the cases seem all rather old, the alleged events often took place 6-8 years ago. Does it really need to take such a long time before somebody can be charged?"

May be I was too mild, because the above case was 10-11 years old.

There is another interesting issue though, according to an article of The Malay Mail:


The Malaysian Anti-Corruption Commission (MACC) announced today it was cooperating with the National Chamber of Commerce and Industry of Malaysia (NCCIM) to fight graft, the same day the Securities Commission (SC) named NCCIM’s president as one of seven it was suing for insider trading.

The MACC said it has established a “network of cooperation” with NCCIM to fight corruption and also abuse of power, following a meeting between top officials from both the agency and the chambers.

“Businessmen play an important role in spurring our economic growth. The cooperation can help increase business activities and strengthen economic stability,” MACC said in a statement.

The chambers’ representatives were led by its president, Datuk Ter Leong Yap, who is also founder and executive chairman of Sunsuria Berhad, a property developer that is reportedly planning to launch projects with a total gross development value of RM1.55 billion this year.

However, SC announced today that it has filed a civil suit at the Kuala Lumpur High Court on May 18 against Ter and six others for insider trading involving the shares of Worldwide Holdings Bhd ― a company engaged in property environmental services, investment holding and medical device manufacturing businesses ― between 2006 and 2007.

Wednesday, 24 May 2017

Wing Tai GO: Pangolin not happy

Article in The Edge: "Wing Tai general offer seems unattractive".

Some snippets:


Controlling shareholders of Wing Tai Malaysia Bhd (WTM) want to take the property developer and apparel retailer private at RM1.80 per share.

The offer price is a 52% premium over its last traded price of RM1.18 on Monday before the stock was suspended from trading yesterday. However, it is 34% below its net tangible assets of RM2.73 per share as at March 31.


“WTM is massively undervalued at the takeover price of RM1.80,” said Pangolin Investment Management director James Hay. The asset management firm currently holds a 2% stake in WTM at an investment cost above RM2.

“Don’t forget there was a rights issue [in 2015 at RM1.15 per share],” said Hay, who pegs the fair value of WTM at RM3.63 per share.


His fair value is derived from sum-of-parts valuation, pricing the company’s retail unit (excluding its joint venture [JV] that operates Uniqlo stores) at RM132.8 million, or 28 sen per share, plus the 45% stake in the Uniqlo chain at RM211 million or 44 sen per share.


Also, Hay reckons that WTM’s high-end residential project Le Nouvel here could generate profit of RM100 million, or 21 sen per share.


Besides unsold properties and land bank, WTM manages a portfolio of 12 international fashion brands such as Topshop, Topman, Dorothy Perkins, Miss Selfridge, Warehouse, Burton and Furla. The company also owns a 45% stake in the JV with Japan’s Fast Retailing Co Ltd that operates 36 Uniqlo outlets in Malaysia.



Given the high premium offered, I think there is a serious chance that most minority shareholders will accept the offer and thus that the company will be delisted. That would mean the exit of another good company from Bursa.

Regarding the independent advise (still to be drafted), may I suggest another case of the intriguing "not fair but reasonable"?


Tuesday, 23 May 2017

Maxbiz CEO: “RM 50 million is nothing to shout about” (2)

I wrote before about this subject. Two of the many red flags I mentioned:


[2] Maxbiz and five directors received public reprimands and fines:
  • MAXBIZ had breached paragraph 9.16(1)(a) of the LR for failing to ensure that the 4th quarterly report for the financial year ended 31 December 2008 ("4th QR 2008") which was announced on 2 March 2009 took into account the adjustments as stated in the Company’s announcement dated 4 May 2009.
  • MAXBIZ had reported an unaudited loss after taxation and minority interest of RM6.227 million for the financial year ended 31 December 2008. However, the Company had on 30 April 2009 reported an audited loss after taxation and minority interest of RM76.926 million.
  • Bursa Securities also found that the directors of MAXBIZ to be in breach of paragraph 16.11(b) of the LR for permitting knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the above breach.

[4] Directors own not even a single share:



The Securities Commission has now charged one of the above directors, this time for (allegedly) insider trading.


Securities Commission Malaysia (SC) today charged Dato’ Vincent Leong Jee Wai (Dato’ Vincent Leong) for insider trading of shares of Maxbiz Corporation Berhad (Maxbiz).

Dato’ Vincent Leong, 58, was charged at the Kuala Lumpur Sessions Court this morning with two counts of communicating material non-public information between November 2010 and January 2011 to one Leong Wye Keong when he should have known that Leong Wye Keong would tend to dispose shares of Maxbiz Corporation Berhad (Maxbiz). Dato’ Vincent Leong was at the material time the Managing Director of Maxbiz.


The material non-public information for the first charge relates to the decrease in Maxbiz’s shareholders’ equity which was close to Maxbiz being classified as financially distressed. The second charge concerns the classification of Maxbiz as a Practice Note 17 (PN17) company.


Dato’ Vincent Leong claimed trial to both charges. Kuala Lumpur Sessions Court Judge, Puan Azian binti Othman fixed bail at RM250,000 with one surety.  Dato’ Vincent Leong was also ordered to surrender his passport to the court.


Insider trading is punishable under section 188(4) of the CMSA, with an imprisonment term not exceeding 10 years and a fine of not less than RM1 million.



A certain "Leong Wye Keong" is mentioned in this court case (most likely as an aggrieved investor in a fund managed by SJ Asset Management). I am not sure if it is the same person, but it could very well be so, the name is not very common. The court case is against SJ Asset Management (and other parties).

I wrote before:


A strange coincedence is the fact that SJ Asset Management was the 2nd largest shareholder of Maxbiz, an asset management company being examined closely by the Securities Commission (SC) due to irregularities in its accounts.


It is a small world, isn't it?

The Securities Commission is quite active in enforcement regarding insider trading these days. Unfortunately, the cases seem all rather old, the alleged events often took place 6-8 years ago. Does it really need to take such a long time before somebody can be charged?

Wednesday, 17 May 2017

Noble group, its bonds and more

I wrote a few times about Noble Group, but nothing recently. I was interested in the case because of the strange valuation of its holding in Yancoal. That valuation seemed way of the mark (needless to say, DCF was used, the weapon of choice for these kind of occasions). The logical follow-up question would be, if the same would apply to some of its other assets?

Its share price has since come down quite a bit, and more worrisome (recently) the price of its bonds.

"The Macro Tourist" wrote an interesting article about Noble "Was Noble the silver seller?".

It describes a possible involvement of Noble with silver. It is a speculative assumption, but it does show a few nice charts.

Friday, 12 May 2017

China Automobile Parts: "bad reputation"? (2)

In addition to my previous blog post about this subject, things have possibly made a clear turn for the worse, according to its latest announcement.


The Company’s auditor, PKF has requested to carry out certain procedures that include the verification of the Company’s value added tax devices with the relevant tax authorities’ system directly and complete the verification of the consignment notes/appropriate delivery documentation against the sales invoices. The Company wishes to inform that the tax system in Fujian Province, China underwent three major upgrades and reforms within a year and this may have resulted in certain tax information being inaccurate. In order to meet PKF’s request, the person in charge of the Company is in the midst of liaising with the tax department, so that the auditor can clarify directly with the tax department where necessary.


This seems like a good action by PKF, comparing the official tax numbers with the alleged comparable numbers as provided by CAP. Many short sellers use indeed tax numbers of the company, its subsidiaries or trading partners.


On the auditor’s request to seek confirmation with the banks on the Company’s recorded bank balances, the Company will co-ordinate and make the necessary arrangement with the bank for PKF to seek confirmation verification where applicable.


And this also deserves attention, in several cases of Chinese companies listed on Bursa I have strong doubt about the bank balances. I even recommended Bursa to let all these China based companies to do a voluntarily, independent confirmation of the bank balances by an expert party. If the cash is not there, immediate action can be taken, and there would be no need to throw more good money after bad money (for instance through a rights issue). However, if the cash is really there, then that might add to the credibility of the company.

This confirmation has to be done in a proper way though, there have been cases where a company falsified the statements and the online banking system, and even the regional branch manager of the bank was in the fraud.


The auditor highlighted that it has come to their attention that there appears to be certain ongoing litigation involving the Company and certain of its directors whereby certain records appear to indicate amongst others that the Company had undertaken significant borrowings and had defaulted in repayment, resulting in a claim and litigation during financial year ended 31 December 2016 (“FYE 2016”) against the Company and certain of its directors by the lending bank. The Company wishes to inform that it has appointed a lawyer, Fujian Shi Long Law Firm, to verify and confirm the litigation cases involving the Company and certain of its directors. The Company will make announcement on the development of the above matter in due course if necessary.


If the underlined is indeed true (and the auditor must have had pretty reliable information regarding this, otherwise the above would not have been published), then that would be an extremely serious matter.

Shareholders should brace themselves for the worst.

Thursday, 4 May 2017

Maxwell: More Mayhem (2)


Maxwell finally published its annual report, bit too late, but better late than never.

The start is promising:



"Moving Forward", interesting motto, but how to move forward when the revenue of the last three quarters has been exactly zero? In other words, the company has ceased all its business.

Regarding its financial position, the company remarks:


"The Group owned a cash and cash equivalents of RM360.673 million (2015: RM366.713 million) with zero debt as at the end of the financial year 2016. The Group has been in net cash position for the past 6 financial years since it was listed on the Main Market of Bursa Malaysia Securities Berhad back in 2011."


That sounds good, RM 361 Million cash, but the accounts are again heavily qualified by the auditors, and again in relation to its alleged cash (among many other items):


As disclosed in Note 10(b) to the financial statements, during the financial year, Jinjiang Zhenxing Shoes & Plastics Co. Ltd., a subsidiary company of the Company, placed RM337.21 million (RMB510.00 million) with an asset management company, Jinjiang Jin Chuang Private Capital Management Co. Ltd., (“Jin Chuang”) (晋江晋创民间资本管理有限公司). The management of Jinjiang Zhenxing Shoes & Plastics Co. Ltd., are unable to provide the relevant information and supporting documents to the Company in respect of the placement of the cash with the asset management company.

On 26 April 2016, the Company announced that Jinjiang Zhenxing Shoes & Plastics Co. Ltd., had on 6 April 2016 notified Jin Chuang to transfer all the funds. On 19 July 2016, the Company announced that the funds placed with Jin Chuang would be transferred into Jinjiang Zhenxing Shoes & Plastics Co. Ltd.’s bank account or a bank account nominated by Jinjiang Zhenxing Shoes & Plastics Co. Ltd., upon maturity.

We were unable to obtain sufficient appropriate audit evidence on the cash and cash equivalents
as at the end of the financial year. Therefore, we could not determine the effect of adjustment, if any, on the financial statements of the Group.


It really seems that the company is dragging its feet in proving that the funds (RM 337 Million) really exist. One possibility (which is rather likely, in my humble opinion) is that the cash is simply not there, it probably never was. It would not exactly be the first time that this would happen to a company from China.

The company further stated:


On 14 April 2017, the Company announced that the Company, Jinjiang Zhenxing Shoes & Plastics Co. Ltd. and Maxwell (Xiamen) Co. Ltd. appointed a legal firm in PRC, namely Shanghai Zinger Law Office (上海致格律师事务所) to conduct a special due diligence on Advertising and Promotion Expenses (Note 30.1(1)) and funds placed with Jinjiang Jin Chuang Private Capital Management Co. Ltd. (晋江晋创民间资本管理有限公司) (Note 30.1(2)) and to issue a special legal opinion thereon. As at the date of this report, the lawyer has yet to issue any legal advice on this matter.


I wrote about this marketing issue 18 months ago, why wait so long to appoint a legal firm to conduct due diligence? What have the independent directors and/or the regulators done all this time? Has there been any activity and/or pressure from their side, or do they let the company continue in this rather shameful way?

Sunday, 30 April 2017

Goodway: Path to recovery?

Goodway Integrated Industries announced its annual report. One snippet:


Path to recovery? You would not assume that, looking at the following extracts:




Please note that the left bar represents the latest (2016) numbers. In other words, the revenue numbers show a clear down trend.

More worrysome though are the profit numbers, which look pretty horrendous:



But that is not all, the accounts are qualified by the auditor, a very clear red flag:



Any mentioning of a "recovery" seems therefore rather premature.

China Automobile Parts: "bad reputation"?

It is not often that Bursa listed companies talk themselves down, but that is exactly what China Automobile Parts seems to have done.

In a reply to a query they wrote:




Mr Goh Yoke Tong was appointed as INED on March 31, 2017, became chairman of the audit committee on April 4, 2017 and resigned on April 28, 201 "Due to his other personal commitments".

That leaves only one member in the audit committee, we wish him good luck.

Saturday, 8 April 2017

Power Talk: Cheah Cheng Hye (2)

I noticed that blogger "Off-Piste investing" (an excellent website for Asian value investing, highely recommended) made a very precise transcript of the talk by Cheah.

Cheah described his attempts at chess and counting cards at BlackJack, both very familiar to this blogger, besides reading and value investing.

Friday, 7 April 2017

Power Talk: Cheah Cheng Hye

Great talk by the founder of Value Partners, I wrote about him before.





Performance of the Value Partners Classic Fund:


The performance is measured in USD, which makes it even more impressive.

I myself own some units of the Value Partners High Dividend Stocks Fund, which also has done well, but has a shorter history.

Wednesday, 5 April 2017

EPF lost only RM 97 Million on FGV?

Article in The Star:

EPF records RM203.18mil realised loss from Felda Global Ventures stake

One snippet:


The Employees Provident Fund (EPF) recorded a realised loss of RM203.18mil from its investment in Felda Global Ventures Holdings Bhd (FGV) as at August last year.

In a written reply to Dr Ko Chung Sen (DAP-Kampar), the Finance Ministry said, however, that EPF had gained a dividend income of RM105.77mil.



The assumption that most readers will make reading the above is that the loss EPF made on the FGV investment was RM 203 Million, that EPF did however receive RM 106 Million dividends, for a total loss of RM 97 Million.

That is bad, but given that EPF had bought a total of 309M shares in August 2013 for about RM 1.45 Billion, the loss equates to about 7%.

There is one "tiny" problem with the above: the assumption has to be wrong.

EPF must have lost much more on their investment in FGV, my guess is around RM 600 Million, so after adding the dividend of RM 106 Million about RM 500 Million.

The confusion comes (most likely) from losses that EPF had already booked in previous years on the FGV investment. How much these losses were is not revealed.

By mentioning the dividend income of RM 106 Million (which is the total dividend received by EPF over all years), the confusion is further increased. Mixing losses over a limited time with dividends over the lifetime in one paragraph without any further explanation does not seem like a good idea.

My reasoning behind the estimate of much larger losses can be derived from the share graph of FGV:




The first phase (June 2012 until August 2013, from IPO up to the 1st red line) is the accumulation phase in which EPF bought 309 Million shares, for an average price of about RM 4.70, total cost about RM 1.45 Billion.

The second phase (September 2013 until March 2015, between the 1st and 2nd red line) EPF had disposed 110 Million shares, it will definetely have lost money on these trades, but still limited.

The third phase (April 2015 until August 2016, between the 2nd and 3rd red line) is the really painful one, EPF disposed of 199 Million shares and received on average clearly less than RM 2 for these shares, the losses in this phase alone must have been more than RM 500 Million. It is this 3rd phase which makes it obvious that the reported loss of RM 203 Million does not cover all losses.

After adding the RM 106 Million in dividends received and subtracting expenses occurred (brokerage, operational) the losses will be substantial to the tune of about half a Billion RM, much more than the implied losses of RM 97 Million. And that is even without taking into consideration the rather large opportunity costs.

I hope that in the future we can have more clear statements regarding financial matters.

Ajiya: poor accounting

Ajiya announced:


AJIYA reported an unaudited profit after taxation and minority interest of RM18.712 million in the unaudited financial statements of the Company for the year ended 30 November 2016 which was announced to Bursa Malaysia Securities Berhad (“Bursa Securities”) on 19 January 2017 compared to an audited profit after taxation and minority interest of RM14.494 million in the audited financial statements of the Company for the year ended 30 November 2016.

The variance of RM4.218 million between the profit after taxation and minority interest stated in the announced unaudited financial statements and the audited financial statements of the Company for the year ended 30 November 2016 represents a deviation of 22.54% (“Deviation”).

The Deviation was mainly due to the following reconciliations/adjustments made in the audited financial statements of the Company for the year ended 30 November 2016:-

1. Dividend to Minority Interest of a subsidiary company amounting to RM2.898 million;
2. Bad debts, foreign exchange loss and other administrative expenses amounting to RM1.011 million; and
3. Provision for taxation and deferred taxation amounting to RM0.309 million.


That is not impressive at all, especially the first reason given, how in earth could they have overlooked that? Ajiya needs to get its accounting house in order, quickly.

Monday, 3 April 2017

The Shame of Germany's Ship Owners

Article from Handelsblatt Global:

The Shame of Germany's Ship Owners

"No country is more irresponsible when it comes to disposing of its ships than Germany. Even the United Nations is protesting about it."

A snippet:


The list names and shames companies that have their end-of-life ships broken up on beaches in Bangladesh, India and Pakistan. The German ship owners were responsible for the “worst shipbreaking practices amongst all shipping nations,” according to Shipbreaking Platform.
Until now, this has been a taboo topic in Hamburg shipping offices, and for good reason. South Asian beaching yards are notorious for eschewing environmental and safety standards and abusing worker rights. Oil and toxic chemicals seep into the sea. Laborers are exposed to asbestos. Many die in accidents.





Rickmers is mentioned, which manages and majority owns Rickmers Maritime, a business trust listed on the SGX.

Saturday, 1 April 2017

Huishan: all INEDs resign at the same moment, coincidence?

China Huishan Dairy Holdings has been lately in the news, for all the wrong reasons (for instance here, here and here).

The company made an announcement regarding several issues at hand. One of them was the resignation by all four independent non-executive directors.

  • Mr. Song would like to spend more time on his other business and commitments
  • Mr. Gu is getting increasingly busy with his other commitments and is afraid he may not have sufficient time to perform his duties as an INED
  • Mr. Tsui would like to concentrate on his company’s business and personal commitment which requires more of his dedication
  • Mr. Kan would like to concentrate on his other own commitments which require more of his dedication

It must be noted that every statement is different which seems to add to the credibitly of each one.

I strongly doubt though the sincerity of the reasons stated. Surely the real reason is that the company is in turmoil and the INEDs don't want to get dragged into the matter any further.

The fact that all four resign exactly now can not be a coincidence.

I am very much against these kind of "useless statements", if the directors don't want to give the true reason then a simple statement like "no comment" is much better. At least the reader does not feel like he is taken for a fool.

Thursday, 30 March 2017

Bernas eyes relisting in 2020?

Article in The Edge Financial Daily dated March 30, 2017: "Bernas eyes relisting in 2020".

One snippet:


That appears to be in sharp contrast with an earlier announcement to Bursa:


"after due enquiry with our Directors and major shareholders, the Board of Directors of Padiberas Nasional Berhad (“Company”), wishes to inform that as at today, the Company is not aware of any written arrangement on the following:

(i) any corporate restructuring that includes an impending relisting plan"



The authorities should look into this case.

Next to this, there is the very serious issue if all minority shareholders have been treated equally.

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.