Presentation by Khailee Ng of the ecosystem for Malaysian startup tech companies, which is indeed picking up and looking quite hopeful.
Malaysia does indeed have a few good success stories, the biggest one by far being JobStreet which has a valuation close to RM 1 Billion. People who invested in the company when it was listed will have done very well.
Malaysia also has lots of talent, the trick is to keep it in the country, and not to export it to other countries, which is what has happened so often in the past.
There are not that many angel investors compared to Singapore, but compared to other regional countries (Thailand, Philippines, etc.) it is quite ok. Recently tax brakes have been introduced for angel investors which might encourage more to follow suit. Also, a few good deals have been done, which might spark more interest.
The Securities Commission has recently revealed a framework for a platform for unlisted securities:
"to address the need of an unlisted securities platform to supply long-term risk capital and expand the financing base for innovation and local enterprises."
This might spur interest even more in start-up companies, but I am not completely convinced the platform will work in practice. A similar platform in Singapore (OTC, Over The Counter) never really took off, shares were hardly traded. With hundreds of Malaysian listed companies having low daily volume, I am scared that things might go the same way. The platform might be more useful for trading of shares of delisted companies, giving minority shareholders a venue to trade their stocks.
Monday, 10 June 2013
Saturday, 8 June 2013
The fall of Ekran and Ting Pek Khiing
On Anil Netto's website there is an article (mostly taken from The Edge Malaysia) titled:
"Curse of Bakun: The fall and fall of Ting Pek Khiing"
It describes one of the more infamous episodes in the history of Malaysian listed company Ekran, and its tycoon Ting Pek Khiing.
Unfortunately, not much attention in the article for the rights issue of Ekran and the fact that "Ting took some RM712.9mil from the company as an advance in return for the injection of some of his private assets in 1996/97. The amount has been long overdue – for more than 10 years."
The last quote can be found at the website of The Star, aptly called "The lack of deterrent sentencing" (Malaysia's perennial problem, especially when VIP's are involved).
"In November 2009, Tan Sri Ting Pek Khiing and six other directors of Ekran were handed total fines of RM630,000 for breaching Bursa Malaysia’s listing requirements pertaining to a related-party transaction. The penalty for Ting, the company’s executive chairman, was RM500,000. Four directors were fined RM25,000 each and the remaining two RM15,000 each. The breaches relate to the company’s failure to disclose the change in the terms of Ting’s settlement of the remaining amount owing to Ekran."
Besides the above breach (for which a fine was given less than 1/1000th of the amount of money involved, hence the title of the article in The Star), the important question is: "was the above transaction (paying RM 713 million for some of Ting's assets in the midst of the Asian crisis when the prices of assets were literally falling of a cliff) really in the best interest of the company?". I very strongly doubt it. Was ever anyone punished for that? Not that I am aware of.
Ting failed to settle the outstanding debt for a dozen years. Interestingly enough, at one moment he offered to settle part of the debt with a piece of land which was 90% under water:
Ekran was delisted in 2010. As The Edge reports, the minority shareholders are the ultimate losers. After becoming delisted it will be even more difficult for them to keep track of the company's financial conditions, including debt collection (from Ting), let alone recoup their investment losses.
Shareholders of other companies linked to Ting (like Wembley Industries, Granite Industries, PWE Industries) have not fared much better.
Ting was declared a bankrupt but according to this Focus Malaysia article that has not had much impact on him:
"Life is good to Tan Sri Ting Pek Khiing, 68. The former tycoon is seen in luxury vehicles, dining in fancy restaurants and posh hotels, attending boardroom meetings and is still very much in the news. The former developer of the Bakun Dam, via Ekran Bhd, was declared a bankrupt on Oct 28, 2010 by the Kuala Lumpur High Court. He appears to have not lost his social standing, hosting the Sarawak Yang di-Pertua Negeri at his family home during the recent Chinese New Year celebrations. So it is not Ting’s seemingly good life that is called to question, but whether he is functioning within the parameters of a bankrupt, reports Joseph Wong."
"Curse of Bakun: The fall and fall of Ting Pek Khiing"
It describes one of the more infamous episodes in the history of Malaysian listed company Ekran, and its tycoon Ting Pek Khiing.
Unfortunately, not much attention in the article for the rights issue of Ekran and the fact that "Ting took some RM712.9mil from the company as an advance in return for the injection of some of his private assets in 1996/97. The amount has been long overdue – for more than 10 years."
The last quote can be found at the website of The Star, aptly called "The lack of deterrent sentencing" (Malaysia's perennial problem, especially when VIP's are involved).
"In November 2009, Tan Sri Ting Pek Khiing and six other directors of Ekran were handed total fines of RM630,000 for breaching Bursa Malaysia’s listing requirements pertaining to a related-party transaction. The penalty for Ting, the company’s executive chairman, was RM500,000. Four directors were fined RM25,000 each and the remaining two RM15,000 each. The breaches relate to the company’s failure to disclose the change in the terms of Ting’s settlement of the remaining amount owing to Ekran."
Besides the above breach (for which a fine was given less than 1/1000th of the amount of money involved, hence the title of the article in The Star), the important question is: "was the above transaction (paying RM 713 million for some of Ting's assets in the midst of the Asian crisis when the prices of assets were literally falling of a cliff) really in the best interest of the company?". I very strongly doubt it. Was ever anyone punished for that? Not that I am aware of.
Ting failed to settle the outstanding debt for a dozen years. Interestingly enough, at one moment he offered to settle part of the debt with a piece of land which was 90% under water:
Ekran was delisted in 2010. As The Edge reports, the minority shareholders are the ultimate losers. After becoming delisted it will be even more difficult for them to keep track of the company's financial conditions, including debt collection (from Ting), let alone recoup their investment losses.
Shareholders of other companies linked to Ting (like Wembley Industries, Granite Industries, PWE Industries) have not fared much better.
Ting was declared a bankrupt but according to this Focus Malaysia article that has not had much impact on him:
"Life is good to Tan Sri Ting Pek Khiing, 68. The former tycoon is seen in luxury vehicles, dining in fancy restaurants and posh hotels, attending boardroom meetings and is still very much in the news. The former developer of the Bakun Dam, via Ekran Bhd, was declared a bankrupt on Oct 28, 2010 by the Kuala Lumpur High Court. He appears to have not lost his social standing, hosting the Sarawak Yang di-Pertua Negeri at his family home during the recent Chinese New Year celebrations. So it is not Ting’s seemingly good life that is called to question, but whether he is functioning within the parameters of a bankrupt, reports Joseph Wong."
Wednesday, 5 June 2013
David Webb: Improving financial disclosure
Webb-site founder David Webb spoke in a panel session at the IFRS event in HK:
"Improving the usefulness and clarity of financial disclosures: the investor's perspective".
His slides can be found here.
(FVTPL: financial instruments classified as financial assets or financial liabilities at Fair Value Through Profit or Loss)
His last remark is also very true in the Malaysian context:
"Fraud will only reduce if the incentives and deterrents are rebalanced".
"Improving the usefulness and clarity of financial disclosures: the investor's perspective".
His slides can be found here.
(FVTPL: financial instruments classified as financial assets or financial liabilities at Fair Value Through Profit or Loss)
His last remark is also very true in the Malaysian context:
"Fraud will only reduce if the incentives and deterrents are rebalanced".
Tuesday, 4 June 2013
Puncak Niaga issues
MSWG commented on the recent issuance of Puncak Niaga Holdings:
"This week we saw Puncak Niaga Holdings Berhad seeking approval from shareholders for an issuance of redeemable convertible secured Sukuk Ijarah, which despite the lack of information and clarity on the utilisation of proceeds, went through by poll vote. Several institutional shareholders and a large number of the retail minority shareholders, making up 23.7% of the total vote, had voted against the proposal. We were surprised that the Circular did not carry sufficient pertinent information for shareholders to make an informed decision. The Principal Adviser and Independent Directors were grilled by shareholders at the EGM. We hope the authorities will set a minimum standard requirement for fund raising, otherwise the onus should be on the Principal Adviser to advise the company to get clear and sufficient information for informed decision to be made by shareholders. Independent Directors must take that extra care to enable shareholders to make this decision, otherwise they ought to reject the proposals at the outset (See Quick take for further details)."
That sounds all very worrisome. Bursa Malaysia should really look into the quality of the circulars and insist that minimum standards of disclosure are met. It should also not hesitate to punish errant Principal Advisers, Bursa has been much too lenient in the past.
In "The Observer" (only for subscribers) MSWG gave the following details:
The voting pattern at the AGM was also interesting, 185 million shares in favour, 57 million shares against the proposal. Tan Sri Rozali owns 169 million shares, if he voted in favour (which is very likely), then from the remaining 73 million shares only 16 million shares (22%) voted in favour.
In the BFM radio show, Puncak Niaga was singled out as one of the cases where directors were overpaid.
According to the just released annual report, Tan Sri Rozali earned more than RM 33 million in 2012 in the form of renumeration:
Although the company did make a profit over 2012, the same can not be said about each of the four previous years.
Just for comparison sake, the total amount of money that all shareholders received through dividends was only RM 20 million. And with that they should already be content since the dividend in the previous year was zero.
"This week we saw Puncak Niaga Holdings Berhad seeking approval from shareholders for an issuance of redeemable convertible secured Sukuk Ijarah, which despite the lack of information and clarity on the utilisation of proceeds, went through by poll vote. Several institutional shareholders and a large number of the retail minority shareholders, making up 23.7% of the total vote, had voted against the proposal. We were surprised that the Circular did not carry sufficient pertinent information for shareholders to make an informed decision. The Principal Adviser and Independent Directors were grilled by shareholders at the EGM. We hope the authorities will set a minimum standard requirement for fund raising, otherwise the onus should be on the Principal Adviser to advise the company to get clear and sufficient information for informed decision to be made by shareholders. Independent Directors must take that extra care to enable shareholders to make this decision, otherwise they ought to reject the proposals at the outset (See Quick take for further details)."
That sounds all very worrisome. Bursa Malaysia should really look into the quality of the circulars and insist that minimum standards of disclosure are met. It should also not hesitate to punish errant Principal Advisers, Bursa has been much too lenient in the past.
In "The Observer" (only for subscribers) MSWG gave the following details:
The voting pattern at the AGM was also interesting, 185 million shares in favour, 57 million shares against the proposal. Tan Sri Rozali owns 169 million shares, if he voted in favour (which is very likely), then from the remaining 73 million shares only 16 million shares (22%) voted in favour.
In the BFM radio show, Puncak Niaga was singled out as one of the cases where directors were overpaid.
According to the just released annual report, Tan Sri Rozali earned more than RM 33 million in 2012 in the form of renumeration:
Although the company did make a profit over 2012, the same can not be said about each of the four previous years.
Just for comparison sake, the total amount of money that all shareholders received through dividends was only RM 20 million. And with that they should already be content since the dividend in the previous year was zero.
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