Spritzer - Worth a look?

Spritzer is rather a small cap company, but i think their growth story is worth to look at. Their latest sales recorded another growth, however earning is slightly lower due to higher capex for new plant near Shah Alam. No need to explain their product range as pretty well known. I do hope they will improve their market distribution since its hard to find their other product (except for the mineral water). Been to Taiping last week, seems like they are doing well at their hometown. At RM0.99 and PE10.7, i dont find the price is attractive, and the balance sheet also rather boring with higher gearing due to their expansion plan. I will consider if ~ RM0.80. Going forward, with new plant i think they can earn due to better economic scale, competitive price point and consistence growth story...slow but steady.

Squeezed CIH ..again

Collected another C.I. Holding at RM2.93 and Padini @ RM1.04. Disposed Mamee @ 4.22. Privatisation going to take another 6 months..>18% is quite ok already for me.

Much goodness in store at F&N, potential M&A?

Fraser & Neave Holdings Bhd
(April 13, RM15.98)
Maintain buy at RM15.96 with revised fair value RM17.40 (from RM17.20): We re-affirm our “buy” rating on Fraser & Neave (F&N) with a higher fair value of RM17.40 (against RM17.20 previously) based on a price-earnings ratio (PER) of 18 times CY11F earnings, after raising our FY11F to FY13F earnings forecasts by 4% to 6%.

We expect F&N to continue to benefit from robust consumption trends, in light of sustained sales volume growth seen thus far. We remain bullish about the group’s earnings prospects for its key soft drinks and dairy businesses, well underpinned by: (i) juice beverages product expansion and; (ii) capacity boost from upcoming RM350 million Pulau Indah dairy plant. The manufacturing hub is set to alleviate supply constraints for the local and export markets upon commencement by end-2011.

Admittedly, we expect some margin normalisation owing to rising raw input costs. As an indication, prices of whey, skim milk, and aluminium have surged 16% to 22% year-to-date. However, the strengthening ringgit and sustained volume expansion should partially mitigate the risk of volatile prices. Alternatively, the group should be able to pass on additional costs, if necessary by leveraging on its market share leadership and strong brand equity.

Core operations aside, we believe potential earnings accretive M&A is a wild card which would provide some excitement over the medium term. We reckon food-based businesses remain a key area of interest as F&N seeks to increase its exposure to other F&B segments, in addition to its 23% stake in Cocoaland Holdings.

Net cash as at Dec 31, 2010 was a strong RM846 million. In the absence of a suitable target, investors can look forward to special dividends. Free cash flow for FY11F is an estimated RM235 million (70 sen per share).

Further ahead, a structural earnings transformation is inevitable as property development in its Petaling Jaya mixed commercial project kicks off, upon relocation of operations to Pulau Indah.

The 12.7-acre (5.1ha) factory land has an estimated gross development value of over RM1 billion, with Phase I comprising commercial and residential properties to commence in 2012. We have yet to factor this into our earnings model.

Our valuation continues to peg the raised CY11F earnings to a PER of 18 times — close to the stock’s three-year historical average of 17 times. We continue to like the stock for its strong fundamentals in a sustainable food industry, as proven by its consistent earnings delivery track record. — AmResearch, April 13

YTL Corp 'ready' for acquisitions: MD

YTL Corp's managing director Francis Yeoh said the group is “ready” for acquisitions and will focus on assets in the water, power, cement and transportation industries.

YTL Corp may bid for power-generation assets in Java, Indonesia, Yeoh told reporters in Kuala Lumpur today.

YTL Power International Bhd, YTL Land Bhd and YTL Cement Bhd will be able to pay “consistent, substantial” dividends starting this financial year, he also said.-- Bloomberg

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collected another ytlp-wb, now my ave ~RM1.19/share and disposed Maybank @ RM8.79 today for a peanut capital gain and good dividend. I believe in Maybank growth potential but at current level, better switch to defensive counter like ytlp.

Btw, fuh had a good dinner today..wow

Mamee surprises with privatisation offer

Written by Insider Asia

Wednesday, 13 April 2011 10:41

Mamee-Double Decker (M) Bhd surprised the market by proposing a selective capital repayment exercise late last week.

Under the proposal, the company will distribute some RM179.8 million or RM4.39 per share to all minority shareholders, after which their shares will be cancelled. This would leave its current controlling shareholders, the Pang family, with a 100% stake in the company. Mamee will then be delisted from the local bourse.

For the privatisation exercise to be successful, the company requires 75% approval from minority shareholders at the extraordinary general meeting to be held soon. If all goes to plan, the entire exercise is targeted for completion by mid-2011.

Offer price at about 14 and 13 times estimated 2011/12 earnings
The offer price of RM4.39 was fixed at a 21.9% premium over Mamee’s last traded price of RM3.60. It is also at the high-end of the stock’s trading range of RM2.80 to RM4.48 in the past one year.

The offer prices Mamee shares at roughly 14.2 and 12.9 times our forecast earnings for 2011/12 respectively.

Prior to the privatisation announcement, the stock was trading at just about 11.7 to 10.6 times our estimated earnings for the two years. Given that this is well below the prevailing average valuations for the broader market — estimated at about 15 times earnings — it may have been a key motivation behind the privatisation move.

One of the benchmarks for consumer-related stocks, Nestle Malaysia Sdn Bhd, currently trades at about 28 times our forward earnings estimates. To be sure, Mamee’s operations and product range are substantially smaller by comparison. Nevertheless, its products are among the best-selling brand names in their respective market segments. For instance, Mister Potato is estimated to hold a 54% share of the domestic potato crisps market, while the Mamee brand of instant noodles has the second largest share of the market behind Maggi (by Nestle). The Mamee Monster Noodle Snack is one of the most enduring brands in the country.

Mamee also has a strong balance sheet. Net cash and short-term investments totalled RM73.1 million as at end-2010. This and the expected cash flow from operations would allow it to comfortably fund the planned expansion and maintain a 50% profit payout. Indeed, we forecast the company will stay in a net cash position, albeit marginally so, after paying for its planned capital expenditure this year. We estimate single-tier dividends totalling 15 sen per share, which translate into a net yield of 4.2% based on its pre-announcement price of RM3.60.

Mamee’s latest privatisation proposal appears to highlight the fact that the market does, at times, fail to fairly value stocks for their underlying fundamentals. This has been one of the factors prompting controlling shareholders to take their companies private in recent years.

Should shareholders accept the offer?
Shareholders should weigh the options of taking profit from the privatisation offer today or betting on the company’s prospects over the longer term.

It should be noted that while the offer represents a smart premium over the pre-announcement price, investors in the stock have fared very well. Its share price has risen steadily from about RM1.10 in April 2008 and may well continue to do so.

Mamee expects its operating environment to remain challenging in the current year, against the backdrop of rising raw material and packaging prices. The industry is also very competitive, which makes it difficult to unilaterally raise selling prices.

Nonetheless, the company is pushing ahead with its multi-pronged approach to drive top line growth. Some of the measures being undertaken include increasing production capacity, the introduction of new products and the strengthening of its distribution network. The company is also working on raising the number of overseas distributors to boost export sales. The targeted increase in volume sales would in turn enhance economies of scale and help offset rising costs.

Double-digit sales growth sustainable
The company’s sales grew 17.3% last year to RM482.5 million, bolstered in part by good demand for its new products. The Mamee Mie Goreng Indonesia and Mister Potato Rice Crisps have been well received by the market since their launches in April 2010, while the Rio Fiesta apple and orange fruit juices were introduced in 4Q10.

Mamee also expanded its distribution network to 73% coverage nationwide — up from 70% in the previous year — including the deployment of its fleet of vans to cater for smaller outlets in suburban areas. Currently, the company is working with about 150 distributors and wholesalers, which account for some 60% of domestic sales. The remaining 40% of sales are channelled directly to major supermarkets, hypermarkets and convenience stores.

The company is banking on the same formula to keep sales growing at a double-digit pace over the next few years. It targets RM1 billion in sales by 2014 with a nationwide distribution network coverage reaching 95%.

More new products in the pipeline
More new products are in the pipeline for the current year. This includes the Mamee Mie Goreng Indonesia Cup, a more convenient packaging variation from the existing packet, and quite possibly an expansion of its noodle range into the premium market segment. Currently, its biggest competitors are the Maggi and Mie Sedaap brands of instant noodles targeted at the mass market.

Capacity expansion to support future growth
The company is planning to spend RM100 million for a new production facility-warehouse in Melaka. Once completed, scheduled for 4Q11, the plant will boost total capacity by 46%. The additional production lines will support expected demand growth for the next few years.

For a start, Mamee estimates there is unmet demand of up to 20% for its instant noodle sales due to existing production constraints. The increased capacity will also boost the production of Mister Potato Rice Crisps for the export market.

Exports to drive growth over the longer term
Export is key area of growth for Mamee, given the limitations of our relatively small population. In this respect, the company has had fairly good success. Export sales, to over 80 countries, rose an outsized 21% last year and contributed to 32% of total sales.

At the moment, some of its biggest overseas markets are Australia, Singapore, Russia, The Netherlands and Maldives. Going forward, Mamee intends to focus on strengthening its distribution network in neighbouring countries such as Thailand and Indonesia. It is also planning increased advertising and promotional activities to support sales in these countries.

Rising costs will weigh on margins in near term
Rising prices for raw materials is the primary challenge. The costs of flour, potatoes and palm oil collectively account for well over one-third of the company’s operating costs (including depreciation) while packaging accounts for another one-third. Both the raw materials and packaging costs are expected to trend higher in the current year.

Raising selling prices is sticky given the intense competition. To maintain market share, Mamee typically moves in lockstep with other key players in the market. It has had to absorb part of the higher costs last year, which resulted in lower profit margins.

In addition, the company was affected by the weakening of the US dollar. It is a net seller of the foreign currency, derived primarily from export sales after netting out payments for imported raw materials, mainly for potatoes.

To partially hedge against future currency fluctuations, Mamee is taking up a US dollar denominated loan to part-finance its expansion plans. The greenback has weakened further in the year-to-date from last year’s average rate, but the trend may start to reverse later in the year if the US economy continues to gain traction.

Mamee has also invested in an oil palm plantation to hedge against crude palm oil price movements over the longer term. Some US$6 million (RM18 million) is allocated to plant up to 2,000ha of land in Central Kalimantan, Indonesia. The transfer of plants from the nursery is expected to commence in May.

If all goes well, the company will expand its planting by up to another 3,000ha and 5,000ha in the second and third stages, after the initial planted acreage matures and starts generating income.

Maybank targets more IPO deals

Malayan Banking Bhd, Malaysia’s biggest lender by assets, is aiming to capture for more international initial stock sales and corporate fund-raising deals in Southeast Asia this year after spending S$1.79 billion (US$1.4 billion) to buy Singapore’s Kim Eng Holdings Ltd.

The purchase will give Maybank the platform to expand its investment banking operations outside Malaysia, Chief Executive Officer Abdul Wahid Omar said. Maybank’s overseas ventures in markets such as Singapore and Indonesia were limited to retail and commercial banking given that it was previously without permits for other services.
“There are a number of Malaysia IPOs that we have missed in the past simply because of the lack of distribution capability within the region,” Abdul Wahid said in an interview yesterday. “There are also customers in Singapore and Indonesia that we have been nurturing and when it came to the time when they want to be listed or to access the capital markets, we were not able to fulfill their requirements.”
The acquisition will also help Malayan Banking, or Maybank, close the gap in investment banking services with local rival CIMB Group Holdings Bhd, which bought stakes in Indonesia, Vietnam and Pakistan lenders in the past three years. In 2005, CIMB acquired the stock-broking business of Singapore’s G.K. Goh Holdings Ltd, giving it access to regional markets and extending its network beyond Malaysia’s 28 million population.

CIMB, which helped arrange Petronas Chemicals Group Bhd’s share sale last year, has a 32.8 per cent market share in underwriting Malaysian equity and rights offerings in 2010, according to data compiled by Bloomberg. Maybank had 10.3 per cent of the market.
Cutting Malaysian Reliance

Maybank relied on Malaysia for 82 percent of its pretax income in the year ended June, according to data compiled by Bloomberg. The Kuala Lumpur-based bank has said it’s aiming to cut the ratio to 60 per cent by 2015.
The shares have risen 2.7 per cent this year, outperforming the 0.2 per cent gain in the benchmark FTSE Bursa Malaysia KLCI Index CIMB lost 4.2 per cent.
The bank, controlled by Malaysian state-owned funds, returned to the acquisition trail this January with the offer to buy Kim Eng, a Singapore-based brokerage. The takeover would give Maybank stock-broking and investment banking operations in Singapore, Thailand, Indonesia, the Philippines and Vietnam.

The Kim Eng acquisition should be completed by the end of May, said Tengku Zafrul Tengku Abdul Aziz, chief executive officer of Maybank’s investment banking arm.

“We are definitely busier than last year,” Tengku Zafrul said in an interview yesterday. “There will be more cross- border transactions. This year we’ll have the opportunity to look at more deals with the regional platform.”

There are a few more share sales that may raise more than RM1 billion each coming to the Malaysian market this year, Tengku Zafrul said, without naming the companies. -- Bloomberg

Mah Sing confident of hitting RM2b goal

KUALA LUMPUR: Mah Sing Group Bhd (8583), having chalked up sales of RM738 million in the first 15 weeks of this year, is optimistic of achieving its RM2 billion target by year-end as housing demand is still strong.

"We're confident of meeting our target as the confluence of strong fundamentals and our branding, location, concept and products will make 2011 another good year," said group managing director and chief executive Tan Sri Leong Hoy Kum.

Last year, the group sold RM1.5 billion worth of properties. Leong was speaking to reporters at Invest Malaysia 2011 held in Kuala Lumpur yesterday. Also present was executive director and chief financial officer Steven Ng Poh Seng.

He said the Economic Transformation Programme has proven to be catalytic and the Greater KL high impact project, like the construction of the Mass Rapid Transport (MRT) was set to generate excitement for the property market.
"Seven of our projects with gross development value of RM2.25 billion should benefit from the MRT development. This is 37 per cent of our unbilled sales of RM12 billion," he said.

With market capitalisation of more than RM2.2 billion, Mah Sing is the sixth largest property developer in the country.

A favourite among investors, Mah Sing since 2006, has been paying out at least 40 per cent of its profits as dividends.

Axiata Group Berhad 6888

12th April 2011, Axiata share price = RM4.70.

I think at current level, Axiata is pretty safe and worth to bet on. Plus, most of the doubtful asset has been written off (the latest was in Q4 for India's division, IDEA). Strong growth, great turnaround and market expansion, plus the quality of leadership and management makes Axiata a good long term bet. Will keep this stock under my radar.

CIMB aims for top 3 spot in Asean by 2015

CIMB's group chief executive sees the group doing more mergers and acquisitions to grow

CIMB Group Holdings Bhd (1023) aims to be among the top three banking groups in Asean by 2015, in terms of market and asset size, its chief says.

This underscores its ambition of becoming "a leading Asean franchise" by that year, group chief executive Datuk Seri Nazir Razak said at a media briefing on its brand streamlining exercise here yesterday.

The group is currently the fifth largest in the region.

"I do foresee over this period to 2015, we'll do more mergers and acquisitions (M&As) to grow," he said, adding, however, that M&As will not be a priority for CIMB this year unless a compelling opportunity arises.
He said the group may not necessarily be in all ten countries within the Asean grouping by 2015, but would eventually like to. It is currently missing only in two, the Philippines and Laos.

"We would certainly like that one day ... we will get there in time," he remarked.

Other broad targets CIMB has outlined for itself to achieve by 2015 include having a market capitalisation of over RM100 billion from some RM61 billion now, and the top three return-on-equity (ROE) among Asean banks.

Its ROE, a measure of profitability, stood at 16.3 per cent last year, while its asset size was about RM300 billion.

The group also aims for its consumer banking operations in the region to constitute more than 60 per cent of its revenue or pre-tax profit by then.

The CIMB group, Malaysia's second largest by asset size after Malayan Banking Bhd, has gone on an acquisition spree since 2005 in its bid to become a universal bank that operates within the region.

Its core markets today are Malaysia, Indonesia, Singapore and Thailand, but it also has a presence in Brunei, Cambodia, Myanmar and Vietnam.

To reflect its move to becoming a unified, leading Asean franchise, CIMB will spend RM8 million this year to convert the different colours of its brands to just a single one - red.

"Our change to red is an important step forward and will further our claim to be the region's most Asean company," Nazir said, adding that red was chosen because it was the dominant colour for the brand across the region.

The banking group, which started on the colour conversion exercise in early March this year, expects to fully complete it - including on its office buildings, signage and advertising material - by the end of June.

The 'blue monster' to go private

The executive chairman and his sons propose to take Mamee-Double Decker private in a deal valued at RM179.81 million

KUALA LUMPUR: Datuk Pang Chin Hin and his sons are proposing to take Mamee-Double Decker (M) Bhd, the country's largest home-grown food & beverage manufacturing company, private in a deal valued at RM179.81 million.
Pang, the executive chairman of Mamee, and his sons Datuk Pang Tee Chew and Datuk Pang Tee Nam collectively own more than 45 per cent of the company.

The trio, and other shareholders who in total own 71.9 per cent of Mamee collectively are offering the remaining stakeholders in the company RM4.39 a share.

The offer is a premium over Mamee's book value of RM1.71 as at end December 31, and over its last traded price of RM3.60 a share.

The parties acting in concert, also said that they have no intention of maintaing the listing status of Mamee in the event the minority shareholders decide to sell out.

Among reasons cited for the privatisation move was because the group may need to incur higher bank borrowings due to high raw material prices (huh,the cash flow and balance sheet still strong, why it is an issue..nvm) and this may eventually affect the dividend payment capability of Mamee and also because Mamee shares have been thinly traded.

OSK Investment Bank Bhd and OCBC Advisers (Malaysia) Sdn Bhd are the principal adviser and the financial ddviser respectively for the proposed capital repayment exercise.

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The company that im in love with and willing to hold for a very long time...now being privatized...sigh. =( .nonetheless i'm still happy for the fair premium offer.

Now, gotta do extra work to find other companies that can offer the same growth potential.

Sozo to explore halal market with MOF unit

Written by Financial Daily

Friday, 08 April 2011 11:49

KUALA LUMPUR: Sozo Global Ltd, a China-based foodstuff manufacturer listed on Bursa Malaysia, may venture into the halal market via cooperation with the Halal Industry Development Corp Sdn Bhd (HDC), a unit of Minister of Finance Inc. This would diversify the company’s markets, which include Japan, to the halal segment.Sozo announced yesterday to Bursa that it had entered into a MoU with HDC to cooperate in “certain activities toward promoting and developing the halal market for both parties, in particular to create investment opportunities, transfer knowledge and business matching.”

Another simple, cute but informative video - Working Dollars (1957)

How the Stock Market Works - Simple yet informative

YTL Power has got the power

Written by The Edge Financial Daily

Friday, 01 April 2011 12:08

YTL Power International Bhd (March 31, RM2.30 Initiate coverage at RM2.29 with buy call and target price RM2.70: We initiate coverage on YTL Power International (YTLP) with a “buy” call and RM2.70 target price. We like its portfolio of steady concession businesses. While we are positive on Yes, YTL Communications’ new 4G mobile Internet service, we expect it to incur start-up losses. That said, we postulate YTLP cash flows are strong enough to maintain net dividend per share (DPS) at 13.1 sen or a 5.7% net dividend yield. More M&A may beckon. YTLP has interests in power generation in three countries (YTL Power Generation in Malaysia, Power Seraya in Singapore and 35%-owned Jawa Power in Indonesia), power transmission in Australia (33.5%-owned Electranet), water and sewerage services in the UK (Wessex Water), telecommunications in Malaysia (60%-owned YTL Communications) and a nascent oil shale joint venture in Jordan (30%-owned). Its power generation assets are multi-fuels (oil, gas and coal) and it operates under different power purchasing agreement (PPA) models (take or pay, liberalised market, and capacity and energy payment), where the skill sets are rare in any independent power producer (IPP) company. Wessex Water is the best water and sewerage company in the UK. YTL Communications’ YES garnered 100,000 subscribers in just 105 days. We estimate FY11 group core net profit to be 10% lower year-on-year on YTL Communications’ start-up losses. Ex-YTL Communications, we estimate 7% compound annual rowth rate over the next three years on steady earnings growth at Power Seraya and Wessex Water. We believe the 50% lower quarter-on-quarter net DPS in 2QFY11 was due to RM1 billion in debt repaid. Based on our cash flow projections, YTLP can maintain FY10 net DPS of 13.1 sen in current FY11 and the next few years. We initiate coverage with a “buy” call and RM2.70 target price (TP). Our sum-of-parts (SOP) TP is largely discounted cash flow-based. Re-rating catalysts are: (i) resumption of quarterly 3.75 sen net DPS; (ii) lower than expected losses at YTL Communications; and (iii) M&A — recall that YTLP was one of two last bidders for the 300MW to 450MW Bibiyana gas IPP in Bangladesh in October 2010. YTLP is likely not done with M&A just yet. —Maybank IB Research, March 31

1 Year Performance Review

Nothing much to update, but luckily managed to outperform the market (66.2% vs 17.4% KLCI) for last Apr'10~Mar'11 financial year. Thanks to Scomi marine, Mahsing, IOI, Hunza and Bonia. :p