Axiata 6888

Bought Axiata at RM4.83/share today.

Haydi Öp (Keremcem)

My fav turkish singer

NTPM hit by rising costs

KUALA LUMPUR: A market leader in tissue products, NTPM Holdings Bhd is concerned about the rising costs of its main raw materials, recycled paper and pulp, but has decided not to pass down the cost increases to consumers.

In an email interview with The Edge Financial Daily, NTPM’s managing director Lee See Jin explained: “NTPM has to be socially responsible not to pass on the cost increase to the consumers each time there is a hike in the material and operational costs. The consumer is already burdened by the increase in daily living costs such as petrol and electricity.”

Pulp and recycled paper constitute 30% of NTPM’s cost of sales, he said.

The prices of recycled paper and pulp have been increasing by an average of 45% and 33% respectively over the last two years and this had an impact on NTPM’s profitability in its previous financial year ended April (FY11).

For its first quarter (1Q) ended July 31, NTPM posted a 13.2% year-on-year rise in revenue to RM106.95 million from RM94.5 million a year ago.

But due to the increase in raw materials cost and production overheads, its net profit fell by 25.6% to RM9.23 million from RM12.41 million previously.

Asked if NTPM is compromising its shareholder value by not passing down the cost increases to consumers, Lee said: “It all depends on the situation, that is, market forces and the competitors’ market position. Increasing our selling price will improve our profitability in the short term.

Lee said NTPM will continue to find ways to mitigate the impact of higher costs by continuing to improve its business operations and looking for avenues to bring down energy costs.

“However, using this strategy may result in some cost conscious customers seeking cheaper alternatives. Hence, we may lose some market share in the future.”

He said there should not be any price increment in NTPM’s products for now.

On the strategies against rising raw material prices, Lee said NTPM will continue to find ways to mitigate the impact of higher costs by continuing to improve its business operations and looking for avenues to bring down energy costs.

Electricity accounts for about 8.5% of NTPM’s cost of sales.

For 1QFY12, NTPM derived 80% of its revenue from tissue products such as facial tissue (19%), toilet rolls (33%), kitchen towels (6%), serviettes (5%) and jumbo rolls (8%).

The balance 20% came from personal care products such as facial cotton (3%), sanitary napkins (7%), baby diapers (9%) and adult diapers (1%).

NTPM’s Premier and Royal Gold brands are the top two market leaders in the facial tissue segment with a market share of 38.3% and 9% respectively.

Its Cutie brand is also the market leader in the toilet tissue segment with 48.5% market share.

Its Diapex brand in the baby diaper segment and Intimate brand in the sanitary napkins segment have a market share of 4% and 6.1% respectively.

Lee said the information for its products’ market share was extracted from ACNielsen’s market report for 2010. But the current market share for these products should not differ much, he said.

According to Lee, NTPM’s major competitors are Kimberly-Clark, Uni-Charm, SCA and DSG (Thailand).

Sales of NTPM’s baby diaper products have been growing rapidly with a 78% increase in FY11.

Lee said NTPM targets to achieve a market share of 10% to 20% for baby diapers in the future, which translates into sales of RM100,000 to RM200,000 per annum.

“We expect the contribution from baby diapers to be 5% to 10% of our total revenue,” he said.

On the introduction of new products, Lee said the company is interested in wet wipes and its inclusion will provide a comprehensive answer to the range of personal care products NTPM currently owns.

To increase market share and stay ahead of competitors, NTPM will focus on growth by expanding its product portfolio and introducing new innovative products, he said.

“NTPM will continue to enhance its distribution network in the country, which is one of the group’s core competencies, and strengthen its foothold on its higher value-added products range,” he added.

He said NTPM will also beef up its presence in established markets such as Malaysia and Singapore, and seek opportunities in Southeast Asia and the Oceania region.

For 1QFY12, most of its revenue came from Malaysia (67%). Other revenue contributors include Singapore (15%), Australia (5%), Thailand (3%), South Africa (3%), USA (2.1%), New Zealand (1.5%) and Brunei (1%).

In July, NTPM, through a wholly owned subsidiary, NTPM Paper Mill (Bentong) Sdn Bhd, had proposed to acquire land and machinery from Union Paper Industries Sdn Bhd for RM20 million.

Lee said Union Paper has two paper-making machines with a capacity of 30 tonnes per day. The machines are meant to produce “high runner” toilet rolls and facial tissue products.

The acquisition is expected to be completed by April 2012 and NTPM Paper Mill is expected to contribute to NTPM’s earnings from FY13 onwards, said Lee.

Currently, NTPM has 18 paper-making machines with a total capacity of 255 tonnes per day. NTPM is currently operating at 80% capacity.

For its personal care products, NTPM has two production lines for baby diapers and six machines for sanitary napkins. Both operations are currently operating at 50% capacity.

On the industry’s outlook, Lee foresees the market growth for NTPM’s products over the next year or two possibly moderating due to inflationary pressures on consumer spending power and waning consumer confidence.

“At the same time, we are feeling the pinch of intense competition from other market players.

“However, we are optimistic that we shall continue to do well and thrive in the years ahead mainly due to Asia’s robust growth led by its strong domestic demand,” he said.

Since its listing in 2003 until FY11, NTPM has chalked up compound annual growth rates for revenue and net profit of about 11% and 8% respectively.

For FY11, it registered revenue of RM420.23 million, an increase of 9.7% from RM383.12 million for FY10.

Despite the higher revenue, its net profit declined 12.2% to RM52.06 million from RM59.32 million previously, due to the increase in raw material prices.

NTPM has a market capitalisation of RM555.98 million at its closing price of 49.5 sen last Friday. Its stock has fallen 11.61% year-to-date and has traded between a 52-week high of 58 sen and a low of 46 sen.

As at July 31, NTPM had cash reserves of RM20.75 million and total borrowings of RM75.8 million.

For FY11, it paid a total net dividend per share of 2.9 sen which represented a payout ratio of 62.56%. Its dividend yield was 5.86% based on its last traded price.

In a Sept 26 report, OSK Research downgraded NTPM to a “sell” with a fair value of 46 sen from 53 sen previously.

OSK Research said NTPM posted poorer than expected results in 1QFY12 as margins were impacted from gas and electricity price hikes, higher raw material prices, and higher indirect raw material such as chemical and packaging prices.

However, it stated that if the global economic conditions worsen, the potential decline in pulp prices would augur well for NTPM.

Raising some cash

Took some (30%) profit on my Mahsing @ RM1.80. Holding too much property stock make me nervous looking at current uncertainty. Well, there's nothing new and exciting news from europe, thus, its better for me stay in sideline.

BNP, Societe Generale Say French Report They May Raise Capital Is False Q

By Francois de Beaupuy - Oct 9, 2011 11:00 PM GMT+0900

BNP Paribas (BNP) SA, France’s largest bank, and Societe Generale SA denied a report in today’s Le Journal du Dimanche that they may seek to raise billions of euros to shore up their capital as part of a Europe-wide plan.

“BNP Paribas is denying this report, and is confirming that it plans to reach a Tier 1 capital ratio of 9 percent,” complying with Basel III rules “by the start of 2013, six years before the deadline, without a capital increase,” spokeswoman Carine Lauru said in a telephone interview today.

Societe Generale also “denies the report” and confirmed its strategic plan to reach a Tier 1 ratio of “well above 9 percent by the end of 2013 without a capital increase,” Laetitia Maurel, a spokeswoman for the Paris-based bank, said in an email statement.

Le Journal du Dimanche today reported that BNP Paribas and Societe Generale (GLE) may seek to raise 7 billion euros ($9.4 billion) and up to 4 billion euros respectively as part of a Europe-wide plan to be discussed between France and Germany to shore up the region’s banking system. The French newspaper didn’t say where it obtained the information.

Paris-based BNP Paribas and Societe Generale, France’s second-largest bank, said last month they were taking steps to assuage investors’ fears and reduce their need for U.S. dollar funding.

Balance Sheet Cuts

BNP Paribas is planning to reach a Tier 1 capital ratio, a measure of financial strength, of 9 percent by the start of 2013 through measures including cutting its corporate- and investment-banking balance sheet by $82 billion, according to a Sept. 14 presentation.

German Chancellor Angela Merkel and French President Nicolas Sarkozy, who are meeting today, will set a timeframe to reach equity goals in coming weeks because a signal must be given to reassure markets, Le Journal du Dimanche said, citing an unidentified person close to Sarkozy.

Banks will have to seek funds from private investors, according to the newspaper. If they fail to find private investors, governments or the European Union will take stakes in banks, it said.

Taylor Swift - Mean

Always love Taylor Swift.

BFood on expansion spree

I really like this counter, looking for the right time to buy in. Injection 50% of Berjaya Starbuck asset under Berjaya Foods definitely will offer a better growth opportunity rather than just relying on KRR. Its a good brand but i dont really feel like KRR has a ummph factor to drive customer to their restaurant frequently like KFC or McD.

Now, with Starbucks under BJFood umbrella, will give us opportunity to participate Starbucks' growth potential. Clean balance sheet, good business model and future growth through restaurant expansion and potential of enjection of other Berjaya asset such as Krispy Kreme and Wendy's

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KUALA LUMPUR: Berjaya Food Bhd (BFood) is showing promising growth prospects with the injection of Berjaya Starbucks Coffee Co Sdn Bhd into its business and the plan to expand its chain of Kenny Rogers Roasters (KRR) restaurants in Malaysia and Indonesia.

BGroup, which holds the global KRR franchise via wholly-owned Roasters Asia Pacific (HK) Ltd, is venturing into China.

BFood, on the other hand, is principally involved in the development and operations of KRR in Malaysia through wholly-owned Berjaya Roasters (M) Sdn Bhd, the franchise holder of KRR restaurants in Malaysia.

Listed on Bursa Malaysia in March, BFood’s FY11 net profit was up by 17% to RM10.2 million from RM8.68 million in FY10. Revenue grew by 19% to RM71.9 million from RM60.42 in FY10.

In a recent interview with The Edge Financial Daily, BFood CEO Datuk Francis Lee expected the company’s revenue and net profit for FY12 ending April 30 to grow at the same pace as in the previous year.

BFood’s earnings for FY13 onwards will get a boost from the ongoing acquisition of Berjaya Starbucks, which will be concluded in the first quarter of 2012, said Lee, a former director of Berjaya Starbucks.

Last month, BFood proposed to buy a 50% stake in Berjaya Starbucks from BGroup for RM71.69 million cash or at a price-to-earnings ratio (PER) of 13.5 times.

The acquisition will be financed by a proposed cash call to raise over RM70 million. The proposed rights issue is on the basis of four rights shares together with four free warrants for every five existing shares held at an issue price of 65 sen per share.

Kenny Rogers Roasters at Aeon Bandaraya Melaka shopping centre.

Berjaya Starbucks, for its FY11 ended April 30, recorded a net profit and revenue of RM10.62 million and RM145 million respectively.

When asked if the acquisition of Berjaya Starbucks at a PER of 13.5 is expensive, Lee’s response was: “At 13.5 times, I think it’s a fair value because of the visibility of Starbucks in the whole of Malaysia. It will propel BFood to a different level.”

“If you look at Starbucks Corporation (listed on Nasdaq) itself, it has a PER of 26 times,” he added.

However, Lee declined to give details of Berjaya Starbucks’s expected future earnings. He only revealed that Berjaya Starbucks same-store sales growth has been about 15%.

According to Lee, BFood is targeting to open 12 to 15 Starbucks outlets every year.

“With 120 outlets currently, Berjaya Starbucks’ store growth would be about 12%,” he said, adding that BFood plans to have 200 outlets over the next five years.

Lee said a master development agreement with Starbucks Corporation was in the process of being re-signed and should be concluded within two months.

The new agreement will allow Berjaya Starbucks to run its franchises for 20 years compared with 10 years previously.

Going forward, Lee said Starbucks would always be the preferred brand in Malaysia.

“Starbucks will be the first port of call when it comes to any mall or premises that is ready to be occupied because of its unique position and strength, US backing, product development and marketing tools,” he said.

On BFood’s expansion into Indonesia, Lee said in about two weeks, it would complete a deal allowing BFood to develop and operate the KRR franchise in Indonesia.

In late July, BFood entered into a joint venture with PT Mitra Samaya, PT Harapan Swasti Sentosa and PT Boga Lestari Sentosa to develop and operate the KRR franchise in Indonesia under PT Boga.

Under the deal, BFood will pay RM1.91 million for a 51% equity stake in PT Boga. On top of that, BFood will extend a RM6.09 million loan to the Indonesia-based company and will subscribe to the rights issue of PT Boga that will cost about RM1.99 million. BFood is granted an option to raise its shareholding to 70% within seven years.

PT Boga has four KRR restaurants in major shopping malls in Jakarta.

In addition to the four restaurants in Indonesia, Lee said PT Boga will open another five by the end of this year, and another three more by end-June 2012. In total, there will be 12 stores by end-June 2012.

Lee expects the KRR restaurants in Indonesia to break even by April 2012 and contribute to BFood’s earnings in FY13.

“The following financial year-end should have some positive growth in terms of bottom-line numbers,” he said.

Lee emphasised the potential of BFood’s business in Jakarta, the most populous city in Southeast Asia, with a population of over 20 million.

After opening 20 to 25 KRR restaurants in Jakarta, BFood will also look at other places in Indonesia, Lee said.

Within the next five years, he expects a total of 60 to 70 KRR restaurants to be in Indonesia.

Lee said Indonesia will be the company’s focus for the moment but other potential countries will include India, Taiwan, Vietnam and Thailand.

In Malaysia, there are currently 68 KRR restaurants — 55 BFood-owned and 13 franchised restaurants. BFood plans to open another 15 KRR restaurants in FY12, Lee said.

While BFood’s focus will be mostly in Southeast Asia for the moment, BCorp will be the vehicle for the KRR franchise venture in China.

In April, Lee had set up a team in Shenzhen, China, and said BCorp would open its first KRR restaurant there in the first week of November.

The restaurant will be located in Shenzhen Link City Underground Shopping Mall in Futian district. The unique underground mall is linked to an underground mass rapid transit, he said.

“It’s on the border of Kowloon and China, so there is a lot of traffic and people passing through,” he said.

Lee said BCorp has set up five stores in China and is under negotiation to open another 20.

BFood may inject other food and beverage (F&B) brands held under BGroup such as Papa John’s Pizza, Wendy’s Restaurants and Krispy Kreme Doughnuts.

“When the other franchises [under BGroup] are ready [in terms of earnings] there may be a possibility of injecting them into BFood,” he said.

“The idea is to hold BFood as the preferred route to hold all of our group’s F&B businesses,” he added.

Lee said BFood will look to buy other F&B businesses at low PERs to add value to the company. “BFood’s growth can be organic and also through external acquisitions,” he said.

To ensure a high success rate for its KRR operations, Lee said BCorp consults focus groups.

Based on the focus groups’ findings, Lee said they will tweak the KRR menu to better suit the food taste of different countries. For instance, people in China prefer a slightly sweeter sauce, whereas in Indonesia, a slightly saltier or spicier sauce is preferred.

However, KRR restaurants worldwide will maintain their signature products and sauces, he said.

KRR has redesigned its restaurants to create a modern and contemporary ambience, Lee said.

The KRR logo has been changed, too. The face of Kenny Rogers, country musician and co-founder of KRR, has been replaced with a flame and the new overall logo has more aggressive colours, Lee said.

“The younger generation does not know who Kenny Rogers is,” he explained.

Lee said BFood has streamlined the KRR menu to increased gross profit margins. He added that the average spending in Malaysian KRR restaurants is about RM45.

KRR’s competitors are table service restaurants in the mid-casual segment such as Pizza Hut, which has a similar ambience to KRR restaurants, he said. He clarified that KRR is not a fast food business.

To ensure KRR’s quality is maintained while the business is expanding, Lee said an important criteria is to keep recruiting and training employees.

Not known to many, Lee said KRR and Berjaya Starbucks have a mobile restaurant capable of serving up to 200 guests.

“If you can have the Starbucks and KRR van together at an event, it will be a unique experience,” said Lee, who holds such an event at his home once a year.

Financially, BFood has a sound balance sheet with cash reserves of RM31.29 million with no borrowings as at end-July.

Lee said the cash reserves will be used to open more stores and pay dividends.

BFood paid its first interim dividend of three sen in FY11 amounting to RM4.26 million, which translates into a payout ratio of 41.8%.

Based on its closing price last Friday at 84 sen, BFood has a dividend yield of 3.6%.

Since its maiden trading day on March 8, BFood’s share price has climbed 65% to 84 sen from its issue price of 51 sen.

According to Bloomberg data, BFood has a PER of 11.65 and market capitalisation of RM119 million. As a comparison, KFC Holdings (M) Bhd has a PER of 16.43 and market capitalisation of RM2.62 billion, while QSR Brands Bhd has a PER of 13.36 and market capitalisation of RM1.62 billion.

The other F&B stock listed this year, Oldtown Bhd, has a PER of 7.74 and market capitalisation of RM303.6 million.

Lee said BFood’s market capitalisation of RM119 million gives it much potential to grow compared with KFCH and QSR.

Buffett Says Berkshire Made $4 Billion of Stock Investments During Quarter

By Andrew Frye and Charles Mead - Oct 1, 2011 1:57 AM GMT+0900

Enlarge image

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., center, attends a ceremony with Cathy Baron Tamraz, chief executive officer of Business Wire, left, to ring the opening bell at the New York Stock Exchange (NYSE) in New York on Sept. 30, 2011. Photographer: Scott Eells/Bloomberg

Play Video

Sept. 30 (Bloomberg) -- Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., talks about his proposal for increasing taxes on ultra-rich Americans, and the European debt crisis. Buffett, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses Berkshire's investment in Bank of America Corp. and share buyback program. Cathy Baron Tamraz, chief executive officer of Berkshire's Business Wire unit, also speaks. (Source: Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) added about $4 billion in common stock to its investments during the third quarter, taking advantage of undervalued equities as stock markets slid.

The net change, described by Buffett today in a Bloomberg Television interview, compares with $3.4 billion in the second quarter. That was the most since Omaha, Nebraska-based Berkshire plowed a net $3.6 billion into stocks during the third quarter of 2008, the height of the global credit crisis.

“We’re ready to buy lots of things,” Buffett, 81, said in the interview with Betty Liu on the floor of the New York Stock Exchange. Berkshire’s program to purchase its own stock, announced earlier this week, “won’t keep us from investing billions and billions and billions in plants and equipment, in new acquisitions.”

Berkshire, which had a $67.6 billion equity portfolio as of June 30, is focusing on stocks after its cash hoard swelled and interest rates remained near record lows. Equities markets around the world fell during the third quarter amid speculation that Europe will fail to contain its sovereign debt crisis and that the U.S. economy will weaken.

Earnings from Berkshire’s businesses have grown to about $1 billion a month, and finding uses for that cash has become more difficult, Buffett said in April. The Standard & Poor’s 500 Index dropped 12 percent from the end of June through yesterday, heading for the worst quarterly performance since the last three months of 2008, while the Stoxx 600 Europe Index tumbled 16 percent.

Buying When ‘Cheap’

Buffett, the company’s chairman and chief executive officer, excluded the firm’s $5 billion purchase of Bank of America Corp. (BAC)’s preferred stock from his $4 billion estimate for common-stock investments. The deal with the Charlotte, North Carolina-based lender pays $300 million in annual dividends and gave Berkshire warrants to purchase 700 million shares of common stock for $7.14 each.

Berkshire, which has shunned buybacks for four decades, said Sept. 26 that it will repurchase shares for as much as 110 percent of their book value because the stock is undervalued. The firm has since started procuring them.

Its Class A shares had slipped below $100,000 in New York Stock Exchange composite trading on Sept. 22 for the first time since January 2009. They traded at $108,400 as of 11:43 a.m. today.

“If the stock is cheap, we will buy it,” Buffett said. “If it isn’t cheap, we won’t buy it.”

Cinta Muka Buku- Nice Song ;p