Poor earnings growth for Bursa listed companies (6)

In my previous postings about this subject I used the FBMKLCI, the 30 heavyweights, based on market cap.

Another index is the MSCI Malaysia Index: "With 43 constituents, the index covers about 85% of the Malaysian equity universe.".

The EPS of this index is pretty similar to the numbers I gave for the FBMKLCI, with the exception that it peaked in 2012 instead of 2014:

One explanation could be that there were quite a few multi-billion RM rights issues in the last few years, which bolstered the profits for the companies (which I measured in the previous postings), but not necessarily on a per-share basis (as detailed in the above table).

Growth has been steady between say 2002 and 2012, about 10% yoy, but after that have clearly declined, with 2016 being most likely another poor year.

The index has lagged the emerging markets index over the last 15 years:

However, that doesn't mean the Malaysian shares are much more cheaper than those of other emerging countries, in the contrary:

Both on a PE and a P/BV basis Malaysia is actually more expensive, only the dividend yield is somewhat higher.

As one keen observer (of emerging markets and Malaysia particularly) put it:


I think the key factor underpinning Malaysia's  higher valuation multiples is the 'support'  from government-linked investment companies (GLICs - EPF,  Khazanah,  KWAP etc) who  consistently purchase Malaysian equities, and notably support them during market sell-offs.

This support has historically made the Malaysian market less volatile/lower beta vs. regional markets in the past.

While M'sia's P/E may seem unjustifiably high  relative to EM, its economy (c. 4-5% GDP growth, current account surplus, benign inflation etc) isn't  in too bad shape relative to the much of the rest of  EM- especially China, South Africa, Turkey, Russia,  Brazil etc.

Also, corporate governance is probably above average for an EM  - and better than those markets mentioned above.

The cost of capital - driven by lower bond yields - is also lower than the average EM - c.  10% vs. mid-teens or higher for some EMs, which should translate into higher P/Es.

All  these  factors should translate into above-average valuations for the M'sian market relative to EM.

That being said, earnings growth amongst the larger caps has been disappointing over the past few years.

Dufu directors, only a fine and reprimand?

Article from the Securities Commission:

Yong Poh Yow, former Executive Director and Chief Executive Officer of Dufu, was found to have made remittances totalling US$1,010,041 to foreign parties in the United States between January 2013 and October 2014 without authorisation from Dufu’s Board. The monies were then used to purchase several assets which were registered under his own name. This is a breach of section 317A(1) of the Capital Markets and Services Act 2007 (CMSA).  He was reprimanded and fined RM200,000.

Lee Hui Ta, also known as Li Hui Ta, former Executive Director and Chief Financial Officer of Dufu, was reprimanded and fined RM150,000 for abetting Yong by approving payment vouchers for the said unauthorised remittances. Lee is currently the Executive Chairman of Dufu.

While a breach of section 317A(1) of the CMSA carries upon conviction, a minimum imprisonment term of two years up to a maximum of 10 years and a fine not exceeding RM10 million, the SC had imposed administrative sanctions on both Lee and Yong after taking into consideration that Yong had fully repaid the amount of US$1,010,041 to Dufu.


The punishment looks extremely mild, is this really a proper deterrent? I strongly doubt it.

The company has not yet published the above on the announcement's website of Bursa, surely this is material information for investors in Dufu.

AirAsia: were all parties at the EGM equally informed? (2)

Announcement from AirAsia:


" ..... that the Company and the Subscriber have entered into a third supplemental letter dated 27 September 2016 in respect of the Subscription Agreement to extend the Cut-off Date of 27 September 2016 for a further period of sixty (60) days and expiring on 26 November 2016, or such longer period as the Parties may mutually agree in writing."

The first announcement about this share placement was on April 1st, 2016, about half a year ago.

Basically what the founders of AirAsia have received is a free call option on 559 Million AirAsia shares.

With AirAsia not paying any dividend (in other words no loss by buying the shares later) and the Cut-off Date being extended several times (saving interest charges, at least a few Million RM per month), it looks like a rather sweet deal for the founders of AirAsia.

I wrote before about this placement.

Poor earnings growth for Bursa listed companies (5)

Quick update on the earnings of the Top 30 listed companies on Bursa:

The companies with year end in December still have to report two quarterly earnings results, companies with year end in January have completed their 2016 results already and have started reporting their 2017 earnings.

At the moment it looks like that the earnings will come in around RM 53 Billion, lower than the 2012 results, about 12% lower than the 2014 results.

Counted in USD (for foreign investors), the results will be worse.

Open letter to iCapital.biz Berhad

Below is a open letter from Tan Tuan Phin who contacted me and asked me to publish the below letter. I hope many people can attend the AGM and vote according to their opinion, and possibly voice their concerns (if any). 

To ICAPITAL.BIZ Berhad,

Being a shareholder which owns 274,300 shares not including the shareholdings of my close family members, I wish to voice out my concerns regarding about the recent performance of ICAPITAL.BIZ BERHAD and wish it can be discussed in the Q&A session in the coming AGM on 24 September 2016.

Sadly I am not able to attend the AGM due to another appointment on 24 September 2016.

You may refer to my enquiries to ICAPITAL.BIZ Berhad as follows:

1)      Relative Poor Performance of the Fund from 2011 to 2016

ICAPITAL.BIZ Berhad		2016	2015	2014	2013	2012	2011
Cash Level		303,481,263	257,951,378	240,390,544	208,005,028	133,735,511	115,907,950
Investment		126,022,371	145,596,798	185,731,507	209,700,211	262,657,722	270,506,528
Total Valuation		429,503,634	403,548,176	426,122,051	417,705,239	396,393,233	386,414,478
% Cash VS Total Valuation		71%	64%	56%	50%	34%	30%

Based on the figures extracted from the annual report, the Compounding Annual Growth Rate of total investment plus cash and cash equivalents since year 2011 to 2016 is performed poorly at a CAGR of 1.78% per annum which is almost equivalent to non-performance at all or in another terms, basically wasted 6 years opportunity to grow the fund for the benefit of shareholders. Not every shareholders have a lot of 6 years to wait.

Kindly address and explain why has the fund performed so poorly for the past 6 years.

2)      Increased Management and Advisory Fees

ICAPITAL.BIZ Berhad	2016	2015	2014	2013	2012	2011
Management & Advisory fee	6,150,684	6,374,708	6,218,982	6,179,782	5,789,726	5,105,346

The management & advisory fee has been increasing at an annual compounding rate of 3.15%, while the performance of the investment fund is only growth at CAGR of 1.78% as highlight in my question No. 1. The growth rate of management and advisory fee is not in-line with the growth of the fund, while the growth pace of management & advisory fee is getting higher than the fund’s performance. (CAGR of Management & Advisory Fee = 3.15% > CAGR of Cash plus Investment = 1.78%)

Kindly address and explain why the CAGR of the increase in Management & Advisory Fee is higher and comparatively faster than the CAGR growth of the Cash plus Investment of ICAPITAL.BIZ Berhad.

3)      Increased in Impairment Loss on Investment

ICAPITAL.BIZ Berhad	2016	2015	2014	2013	2012	2011
Impairment loss	12,506,585	2,392,124	513,988	-	-	-

The impairment loss of the fund’s investment has been on an increasing trend. Especially for Boustead Holdings Berhad which is currently sit at an unrealised loss of RM2,177,080 and yet to be impaired.

a)      What is the rationale for not impairing the remaining RM2,177,080 of Boustead Holdings Berhad although almost similar amount (RM2,392,124) has being impaired for Malaysia Smelting Corporation Berhad? Does this practice comply with the Malaysian Financial Reporting Standards?

b)      The Fund has great opportunity to sell both Boustead Holdings Berhad and Parkson Holdings Berhad during year 2011 where both companies’ share were valued at peak of RM40,073,148 and RM54,901,782, however, the opportunity was not properly seize by the management and resulting in significant losses after 5 years.

Did the management of ICAPITAL.BIZ Berhad constantly followed up on the companies in their portfolio such as regular company visit or meeting with their management?

What are the policies and steps to be taken by the management to avoid making such wrong decision in future?

4)      Comparison of ICAPITAL.BIZ Berhad vs Berkshire Hathaway

As at 31 July Each Year	2016	2015	2014	2013	2012	2011
Berkshire Hathaway ($)	216,000	214,000	188,124	173,900	127,445	111,500
ICAPITAL.BIZ Berhad (RM)	2.29	2.28	2.46	2.40	2.24	2.16

After peruse through several years of ICAPITAL.BIZ Berhad’s annual report, I noticed that the management loves to compare the Fund’s performance against Berkshire Hathaway since both funds are closed-end fund.

The table above clearly explains the significant gap in performance of the both fund. If a person invested in both fund respectively, the CAGR of Berkshire Hathaway’s Share is 11.65% compared against the relative sluggish performance of ICAPITAL.BIZ Berhad’s 0.98% from year 2011 to 2016.

Which means ICAPITAL.BIZ Berhad has not performed at all for the past 6 years. This lead us back to the justification whether the management and advisory fees are commensurate for the poor performance of ICAPITAL.Biz Berhad.

Kindly address this issue and advise the management next course of action in order to improve in the Fund’s performance or reduce the management and advisory fees that reflects the actual performance of the fund.

Does the directors of ICAPITAL.BIZ Berhad review the fund manager performance in a periodic basis? What is the directors’ yardstick on the measurement of fund manager’s performance?

Or in a much serious scenario, if the fund still perform poorly in the coming years, have the board ever consider replace the fund manager or liquidate the fund that will give a higher return for the benefit of shareholders?

Regards,

A Very Concerned Shareholder

Tan Tuan Phin

Sona Petroleum is winding up

Article from The Malaysian Reserve:


Malaysian oil and gas (O&G) special-purpose acquisition company (SPAC) Sona Petroleum Bhd pledged to pay shareholders 97% of the funds held in its trust account by November 2016, weeks after the deadline for it to secure a qualifying asset passed on July 29.

The remaining 3% will be paid within two years from then, after deductions for the liquidation and obtaining tax clearance.


That was to be expected. Regarding its last proposed qualifying acquisition:


Canadian oil company Mitra Energy Inc purchased the Stag oilfield in Australia for US$10 million, just three months after Sona Petroleum asked investors to approve a US$25 million deal for the same asset.

Stag, an ageing field that used to be owned by the Australian oil giant, is currently producing about 4,000 barrels of oil per day.

Sona Petroleum came close to purchasing the asset after it received the go-ahead from the Securities Commission Malaysia this year, but investors wary of declining industry conditions voted resoundingly against the buy.

Mitra Energy only paid 40% of the price Sona proposed to pay for the acquisition.

The deal was deemed to be "not fair", so it seems that assessment was pretty accurate.

Current shareholders get back a decent amount of money, but lots of money has been lost, through the many expenses: wages, rental (a rather plush office in Menara Petronas 3), IPO related, etc..

From its last financial results:

Next to that there are rather high opportunity costs, at the very least the money could have been compounded risk free at 4% interest per year.

Was it all worth it? I doubt it, but then again, I have been skeptical about SPACs from the word "go".

iCapital: "Ostrich policy" will not solve the issues (4)

City of London has sent the following letter to the Board of Directors of iCapital:


Clients of City of London Investment Management Limited (CLIM) own 21,970,900 ICAP shares (15.7%). There has been no action in response to any of the points that were raised in our letter to you dated 26^th August 2015, which set out our concerns regarding ICAP's poor performance and persistently wide discount to NAV.  CLIM therefore confirms that it intends to continue voting against the re-election of incumbent directors. Accordingly, CLIM intends to vote against the re-election of Madam Leong So Seh at ICAP's 12^th AGM on Saturday, 24^th September 2016.

·     Performance

We reiterate our call for performance comparisons in shareholder communications to be made on a total return basis, which is universally accepted in the investment industry as best practice.

The total return in the five years to end May 2016 for the FTSE Bursa Malaysia Index has been 23.1% cumulative (equivalent to 4.2% pa). In comparison ICAP's NAV return has been 13.0% cumulative (2.5% pa). The share price return over this period has been even worse due to discount widening, at 6.4% cumulative (1.3% pa). These performance figures have been sourced from Bloomberg.

The Chairman stated, in his letter to shareholders, dated 19^th July 2016, that ICAP has 'performed beyond expectations'.  We wish to make clear that ICAP's performance over the past five years has fallen significantly short of our own expectations.

·     Cash Management

We note the continued extraordinarily high cash level, which has persisted at over 50% for 3 years and on which shareholders have been paying fees for fund management and investment research services. Cash at each calendar year end since ICAP was launched (31 December 2005 to 31 December 2015) has averaged 39%. ICAP is clearly operating with surplus cash which, in our opinion should be returned to shareholders.

·     Expense Ratio

ICAP's expense ratio in 2016 was 1.9% (2015: 1.9%) which compares unfavourably with other country specific closed-end funds. The most significant item is the aggregate 1.5% incurred for fund management and investment research. CLIM urges the Board to negotiate competitive fees in order to reduce the expense ratio to an acceptable level.

·     Discount Control

ICAP's prospectus dated 26 September 2005 explained clearly that the return for closed-end fund investors is a product of NAV performance and the discount movement. The Chairman's letter to Shareholders in the 2016 Annual Report refers to a 4% rise in ICAP's NAV for the 12 months ended 31 May 2016. However it does not mention that the share price actually declined over this period, because the discount widened. The discount averaged 22% in 2016 versus 20% in 2015 (source: Bloomberg). Neither the level nor the trend is acceptable and CLIM is disappointed that the Board has again failed to take any action to address this problem.

CLIM notes from the 2016 Annual Report the Board's deliberations on 27^th July 2015 regarding share buy-backs and the accompanying statement that the "Fund's NAV could deteriorate if it uses its available fund to purchase own shares". Repurchasing shares at a discount to NAV will actually increase the NAV per share and in CLIM's opinion this would be a sensible use of ICAP's cash, particularly in view of the Manager's apparent shortage of investment ideas.

ICAP's prospectus included a section (6.7, page 64) on managing discounts, noting that the options available include 'share repurchase, open-ending, takeover, liquidation'. CLIM urges the Board to consider all these options and to formulate a strategy to reduce the discount from its present unacceptable level.

MSWG announced it will raise certain issues at iCapital's AGM, for instance regarding the "other expenses" and the impairment loss. I hope they also support the above issues as described by City of London.

EA Holdings: where is the transparency?

EA Holdings published its 2016 annual report. Results do not look good:

The loss is for a large part due to impairment of intangibles. But strangely enough, hardly any background information on this issue is given.

Apparently both the Board of Directors and the auditors are ok with that.

Are the regulators (Bursa, SC and AOB) also ok with it?

Surely the minority shareholders deserve a proper explanation.

"Local Corporates Need To Buck Up on Corporate Governance"

I wrote before about James Hay from the Pangolin Fund.

Another interesting interview with BFM can be found here.

00:46 about research on pangolins needing funds
01:45 bonds versus equities
04:50 corporate governance, strong correlation between good CG and returns
05:15 many listed companies are family controlled
05:40 the need to visit companies and meet management
06:10 many companies, especially in Malaysia, still destroy value, diluting shareholders
07:20 lack of shareholder activism, very few fund managers go to AGMs and question management and INEDs
08:20 need to look in past history, company announcements
09:40 short term "adventures" by management in unrelated industries destroys value
10:10 companies should give excess cash back to shareholders, not waste it in risky investments
12:55 Hay also got "fooled", like in Silverbird's case
14:00 concentrated investing, intention to hold the shares for the long term
15:30 Challenger, Singapore listed
16:50 12% performance per year, calculated in USD

Why are so few local fund managers speaking out about bad CG?

It seems they "outsource" that work to MSWG, which is of course the "easy" solution, but not enough.

Hillary Clinton: "I feel great"

From the same producer as this video.

On a more serious note, the odds of Joe Biden and Bernie Sanders to become the next president of the US have shortened considerably:

iCapital: "Ostrich policy" will not solve the issues (3)

Last year I wrote two articles about iCapital's annual report, here and here.

iCapital published its new 2016 annual report, and I am sorry to say, it is even worse.

This time there is no mentioning at all of the large discount of the share price versus its NAV price, which is a rather common problem of Closed End Funds (CEFs) and also to shareholders of iCapital.

The last quoted NAV is RM 3.13, its share price is RM 2.34 for a rather large discount of 25%.

Also, again there is no proper reporting how iCapital performed the last 3 or 5 years, something that is completely standard for unit trust funds.

Interestingly, there might be hope for shareholders of iCapital. Bursa has published a "Proposed review of the framework for collective investments schemes", which includes CEFs.

Feedback can be given until September 19, 2016.

Hopefully next year iCapital will be forced to give a much more comprehensive account of its performance and other matters according to the new Bursa framework.

Strange that it had to come to this, surely iCapital as a licensed fundmanager with a long history should have revealed all the extra information on a voluntarily basis. And if it didn't, then the Board of Directors should have stepped in. Both the fundmanager and the Board of Directors must have known about the proposed framework and the additional information that would be requested.

Dual class shares: another really bad idea

Both the SGX and Bursa seem to contemplate allowing companies to list with a dual class share structure. That sounds like a really bad idea.

Luckily quite a few parties have spoken out against it, for instance:

• Business Times
• Mak Yuen Teen
• MSWG ("is Malaysia ready for dual-class shares" in The Edge Malaysia)
• Abderdeen

David Webb wrote about the same issues in the Hong Kong context.

The arguments in favour of a single class of shares are rather obvious: a simple, clear structure, which has been proven in time. With enforcement that is not "that great", a lack of shareholders activism in both countries, at least (in some rare cases), minority shareholders do have a chance.

What are the arguments of the people supporting a dual class share structure? They are often rather "vague", for instance:

• "The envisaged dual-class share structure listing framework is intended to enhance SGX’s attractiveness as a listing venue and to broaden and deepen Singapore’s capital market" (article)
• "This is about SGX and the Singapore authorities realising that tech companies need a space where they are safe and able to grow, at every stage of their development" (article)
• "The approval of the dual-class share structure in Singapore has shown our Garden City to be a progressive financial hub and might help bring in more listings here in the future." (article)
• ".... founders of companies often have a longer term vision in mind compared to investors who tend to be more focused on short-term gains. The structure hence, protects the founders against short-term pressure for returns" (article)

The argument about tech companies is really strange. Most tech companies will raise money from VC (Venture Capital) firms before they list on an exchange. The VCs will invest their money in exchange for shares, not the normal shares, but (rather ironically) preferred shares which will have much more rights attached than the founders, not less.

For instance they are entitled to a "liquidation preference", besides that they often have a veto right over corporate restructuring, sometimes they even have the right to fire the founders and/or push a deal through which they like and the fouders not.

Founders still accept those deals, because the money is good. So much for the "short-term pressure for returns" argument.

The other argument about attracting companies from outside: the regulators should ask themselves how far their enforcement reaches in case of a dispute, especially considering the many "failures" of China based companies on the SGX and Bursa. If you can't enforce, then there is no deterrent, the exchange will attract the wrong kind of people and fraud will happen.

I hope both exchanges will not introduce a dual class share structure. If founders really have a problem with the "one share, one vote" rule, they simply should not take outside money.

XOX: Director resigns due to "other" commitments

Announcement by XOX:

I wonder, could the "other work and personal commitment which requires his full attention" have anything to do with the below article from Al Jazeera:

Maldives: How do you launder $1.5 billion?

Xingquan: heavy losses (3)

Bursa was aparently not too happy about the explanation given by Xingquan and queried the company again, quite rare that something like that happened.

The company responded with an announcement.

It continues to be a strange case that an alleged batch of 3.6 million (!) custom made shoes did not meet the requirements. Common sense would dictate to have samples send to the customer, and subsequently the shoes in batches, with each quantity to be confirmed in writing by the customer having received them in good order.

But then again, Chinese companies listed on Bursa (or other foreign bourses) often seem to defy logic.

Mercury Securities issues research reports regarding Xingquan (a rather unenviable task, but then again, they do it voluntarily and even get some financial compensation for it), and decided to switch to a "Sell" recommendation, after having recommended to "Buy" the stock since its listing. In its very first report it came up with a target price of RM 1.96, a far cry of the current price of RM 0.105.

Mercury notes:


"Based on our forecast of Xingquan’s FY17 EPS and an estimated P/E of 1.5 times, we set a FY17-end Target Price (TP) of RM0.13. This TP is 3 sen lower than the market price at the start of the date of this report. Our TP for Xingquan reflects a P/BV of 0.07 times over its FY17E BV/share."


A bit peculiar, if I may add, either one trusts the numbers of Xingquan, and then a P/E of 1.5 and P/BV would mean a screaming "Buy".

Or one does not trust the numbers, and any valuation would be too much.

I don't own any share in Xingquan (or any other China listed company listed on Bursa), so the reader can guess in which camp I belong. On a side note, I do own some shares of Chinese companies, but large ones, with a much better CG track record, listed in Hong Kong.

The report continues:


"Unfortunately, we note that the investing public’s perception of PRC (People’s Republic of China)i.e. China-based companies that are listed outside China/Hong Kong, may not be entirely favourable."


And that may be the understatement of the year.


"PRC companies listed in Malaysia and Singapore are normally not especially large-cap, and as such may not be very liquid."


Liquidity has nothing to do with it, I think, I would be more than happy to own illiquid shares with  a P/E of 1.5, that is, if I trusted the numbers.


Nevertheless, we opine that with concerted efforts from various parties, the investing public’s perception on PRC companies listed here can be improved. This would include efforts such as – hiring top PR/IR agencies, arranging site visits and conducting investor road-shows.


"Hiring top PR/IR agencies" ...... I think that is about the last thing that is needed, more spin stories.

What the China listed companies should do is:

• Markedly improve their corporate governance practices, especially in the transparency department
• Share the company wealth with the minority investors, for instance by issuing meaningful dividends, embark on share buyback programs, etc (this can only be done if the alleged reported cash amount is indeed available of course, something I have my doubts about)
• Have a neutral party with relevant expertise (a forensic auditor for instance) confirm the bank balances of the companies

Unfortunately, I have not yet seen that happen with any of these companies.

"Death Spiral" Convertibles should be banned

Quite a few news articles in Singapore regarding "death spiral" comvertibles lately.

An interesting look in the kitchen of a company (Advance Capital) helpng to structure and issue those bonds can be found here:

"Singapore-based firm starts fund to buy 'death spiral' convertibles"

Some snippets:

The firm and its fund specialises in convertible bonds that have been called "death spiral convertibles" because of their dilutive impact on the underlying shares. Under Advance Capital's programme, a listed company that is in need of funds will issue to Advance Capital convertible notes that are convertible into new shares of the company at a fixed discount to the current market price. Because the notes set the conversion discount, and not the price, some notes have the potential to create a runaway negative impact on the underlying stock as each round of conversion gets even more dilutive.

Advance Capital has previously made such deals with Attilan Group (the former Asiasons Capital), Elektromotive Group, Yuuzoo Corp, Cacola Furniture International and OLS Enterprise. Other firms that are active in such programmes include Value Capital Asset Management, which has made deals with Annica Holdings, ISR Capital, Magnus Energy Group and LionGold Corp.

Advance Capital does not intend to hold the convertible bonds to maturity - Mr Ng told The Business Times that the bonds typically carry only a nominal coupon that is insufficient to cover the credit risk of the issuer. Instead, Advance Capital prefers to convert the notes into shares, and to sell the shares within a few days of conversion for a profit.


David Webb warned about these instruments already eleven years ago, some snippets (emphasis mine):


Webb-site.com has been aware of the toxic convertibles scam for many years and have repeatedly warned the regulators about them in private, urging a regulatory ban. In our view, there can be no logical reason why a listed company would want to cede control to a third party over what amounts to a stream of future equity issues at deep discounts to market. The Listing Rules should be amended to prohibit listed companies from issuing convertible instruments which carry floating conversion prices. We have waited until now to compile this article because we wanted to conduct a comprehensive study of the actual results of these deals, which can each last several years, to prove how damaging they are.


SGX's reaction:

"The company must send shareholders a circular written in plain English and without overly legalistic jargon, before the shareholder vote," Mr Tan wrote. "In it, the company must make clear to shareholders how such a bond could cause a downward spiral of the share price and result in massive dilutions detrimental to investors. The company must state the 'floor', or minimum conversion price and the maximum number of shares which could be issued on exercise." Directors must also give an opinion that the issuance is in the best interest of the company and shareholders, and "explain to shareholders the alternative sources of financing considered before arriving at the decision to issue the convertibles". SGX may reject applications to issue such instruments if disclosures do not meet those minimum standards. Beyond ensuring adequate disclosures, however, SGX is not in the business of assessing the merits of such convertibles, Mr Tan stressed. The instruments are ultimately a source of capital, the appropriateness of which is a commercial decision best left to companies and shareholders, Mr Tan stressed.


And with that we wholeheartedly disagree. SGX can stress the need for plain English in circulars, but who reads them anyway? How much chance realistically has a minority shareholder to overturn a proposal to issue these toxic bonds if the proposal is supported by the Board of Directors?

SGX should heed the advice of David Webb and simply ban convertible bonds which carry a floating conversion price by amending the listing rules.

AirAsia pilot ends in Melbourne instead of KL

From the Guardian:

"AirAsia pilot ends up in Melbourne instead of Malaysia after navigation error".


An AirAsia flight from Sydney to Malaysia ended up in Melbourne instead when the pilot entered the wrong coordinates into the internal navigation system, an air safety investigation has found.

The Airbus A330 was scheduled to leave Sydney international airport at 11.55am on 10 March 2015, and arrive in Kuala Lumpur just under nine hours later.

Instead, through a combination of data entry errors, crew ignoring unexplained chimes from the computer system, and bad weather in Sydney, it landed in Melbourne just after 2pm.

Melbourne airport is 722km southwest of Sydney. Kuala Lumpur is 6,611km northwest.


More comments on this incident can be found here, a "rumour network for professional pilots".

The incident should not have happened, thanks to the simple invention of the checklist, as neatly described in the highly recommended book "The Checklist Manifesto" from Atul Gawande.

The author has a medical background and is quite "jealous" at the airline industry, where checklists are common for many decades and have reduced the chance for errors to almost zero, in contrast with the medical industry, where errors are still rather common.

Many relevant examples are given in the book. Interestingly enough, also regarding investing, the usage of checklists seems to have a good effect on finding suitable investment candidates, both in the Venture Capital industry (regarding high-tech start up companies) and in the more conventional value investing industry.

Xingquan: heavy losses (2)

Bursa queried the company and the company replied.

Good that Bursa took some action and indeed through its questions highlighted relevant issues.

But I think this is not enough, the only correct action is to have an investigative audit on the operations of Xingquan, similar to what happened regarding the marketing issues of Maxwell.

Only that way we can get deep insights what really happened from an objective third party with experience in handling these kind of matters.

For more background on China based companies listed on Bursa, please read the following article at the website of The Edge:

China-based firms now going cheap, any takers?

One snippet:

"When Bursa started looking beyond the shores for potential IPO candidates, its move met with scepticism about attracting the rotten apples, instead, having seen the slew of corporate scandals in Singapore. Simply put, the scepticism seems to have proven that it is not that harsh after all."