MONEY MASTER

Today while reading the book "The Intelligent Investor", it reminded me of the core of investing and the need to filter the noises.  But I think the story regarding IPO just struck me more than the rest today. For those who have no idea what IPO is, it means "initial public offering", or the first sales of a company's stocks to the public. Looking at one of my favourite company, Microsoft, one could find great reasons to invest in IPO.....because if you'd bought 100 shares of Microsoft when it went on public on March 13, 1986, your $2,100 investment would have grown to $720,000 by early 2003.  According to the book, finance professors Jay Ritter and William Schwert have shown that if one had a spread a total of only $1,000 across every IPO in January 1960, at its offering price, sold out at the end of the month, then invested anew in each successive month's crop of IPOs, the portfolio would have been worth more than $533 decillion by year e...

Abu Dhabi’s sovereign wealth fund International Petroleum Investment Co (IPIC) will continue the publicly scrutinized dispute against 1Malaysia Development Bhd (1MDB)...I would call it a round 2, in court.  IPIC vs 1MDB (round 2), in court IPIC  is seeking $6.5 billion from the troubled Malaysian state investment company as it moves the spat into arbitration. The request for arbitration (RFA) is in regard to IPIC's claim that 1MDB and the Ministry of Finance (MoF Inc) have failed to perform their contractual obligations under the binding term sheet (BTS).  The Malaysian investment fund and IPIC are locked in a tussle that spilled over to repayments on bonds issued by 1MDB. That led to a default in April, adding to the financial scandals for the Malaysian company that’s already a target of global probes into alleged money laundering and embezzlement. 1MDB has denied wrongdoing. The dispute between IPIC and 1MDB arose after the Abu Dhabi sovereign wealth fund s...

The D Day is approaching on whether the U.K votes to leave the European Union on June 23.  While to a lot of people, it is something that has to do with the U.K, the impact could hurt the global economy, at least according to U.S. Treasury Secretary Jacob J. Lew. According to a report by Bloomberg, Lew said  “It’s in the best interest of Europe, the U.K. and the global economy and for geopolitical stability for the U.K. to stay in.  “I only see negative economic outcomes if the vote goes the other way.” And the U.S Treasury Secretary wasn't the only who feel that way. Financial markets have been whipsawed in recent days as investors grapple with the possibility of a British exit from the European Union. Sterling fell for a second week in a row as opinion polls suggested the vote is too close to call; the latest Opinium poll conducted for the Observer newspaper and released Saturday had 44 percent of respondents wanting to remain in the EU and 42 perc...

The FBM KLCI index lost 2.77 points or 0.17% on Wednesday.  The Finance Index fell 0.33% to 14330.23 points, the Properties Index dropped 0.06% to 1157.41 points and the Plantation Index down 0.48% to 7604.82 points.  The market traded within a range of 8.92 points between an intra-day high of 1662.17 and a low of 1653.25 during the session. Top gainers were led by Nestle (M) Bhd today, while the biggest loser was British American Tobacco (M) Bhd. M3 Technologies (Asia) Bhd, which received an unusual market activity (UMA) query from the local exchange, was the most actively-traded counter, with 94.58 million shares done. The KLCI extended its midday losses and closed lower at 1657.85 points amid overnight mixed performance in Wall Street. Investors were taking profit following the gains in our local bourse in the past few days. Reuters reported Southeast Asian stocks were trading cautiously on Wednesday, in line with Asian markets, with Indonesia snapping three c...

The Group  announced the early receipt of HKD200m from Zhuhai Holdings, being the final of 4 deferred payments from 2014 to 2017 pursuant to its sale of Lamdeal Consolidated and Lamdeal Golf and Country Club Limited to the latter in a HKD1.65bn (RM681m) cash and share deal. This comes as a pleasant surprise given that the amount is not due till end-2017, though very much welcomed toward the strengthening of its balance sheet, while also according shareholders a special dividend. We see the Group primed for sustained growth in the coming few financial years, underpinned by the on-going launches of its affordably-priced properties. We maintain our  Outperform  call with an unchanged  target price  of RM2.08  based on a 30% discount to its fully-diluted RNAV, the lower discount justifiable in our view given the ability of the Group to easily monetize its land bank in the current market environment, relative to its peers. Recall  that the transaction ...

SP Setia  surprised us with a proposed renounceable rights issue of up to 1,069,686,243 new Islamic redeemable convertible preference shares (“RCPS-i”) on the basis of two RCPS-i for every five existing ordinary shares. The cash call is expected to raise a minimum of RM536.6m to as much as RM1.07bn. We understand that the proceeds will be used for projects and working capital requirements, though some are also earmarked for future property development and expansion plans. With net gearing of 0.2x and unbilled sales of RM8.6bn, this came as a negative surprise for the Group to tap the equity market currently. All told, this cash deal will be dilutive to our RNAV, and hence adjusted our  TP  to  RM3.70  (from RM3.85 previously) to account for the rights issue with c.20% discount to RNAV. Our  Outperform  call is retained. To raise up to RM1.067bn . The rights issue via the issuance of 1,069,686,243 new ICPS-i shares in SP Setia is priced at ...

In the news. According to the STARBIZ week on 4 June, Sendai is assessing a suitable course of action to be taken with regard to its 29.87% stake in Singaporelisted Technics Oil & Gas Ltd, which has lost almost 70% of its value amid downturn in the O&G industry coupled with a string of legal suits . Nevertheless, Sendai’s executive chairman and group managing director Tan Sri A.K. Nathan remains optimistic of its LT prospects given its strong tender book of RM22bn, of which RM10bn is for structural steel and construction projects and RM12bn for O&G jobs. According to HLIB Institutional research (a BUY rating with SOP TP of RM0.91), Sendai managed to amass over RM700m worth of new jobs in 1Q (orderbook now at a record RM2.2bn). This is a commendable sum as it already made up 41% of the full year amount in FY15 which was a record high of RM1.7bn. Some of the notable job wins this year include (i) KL118 tower, (ii) a mixed development in KL, (iii) Al Maryah Central M...

Highlights The absence of pricing premium (as a result of demand weakness), coupled with rising transportation cost to the Middle East (as transportation costs are borne by Evergreen), management has started diverting its marketing efforts from the Middle East back to the Southeast Asian region. Despite the ASP pressure for MDF products, we continue to see strong earnings prospects in the company. Renewed weakness in MYR against the US$ arising from more hawkish Fed and lackluster domestic market outlook is a boon to Evergreen’s earnings. Costs of key inputs (i.e. rubber log wood and glue) continue to trend lower, and these will partly alleviate margin pressure from lower ASP. Evergreen is on track to reap more benefits from its cost rationalization exercise. The new RTA furniture line has commenced commercial operations since May-16. Having convinced about the potential of the RTA furniture business, Evergreen has placed deposits for an additional RTA furniture...

Organization of the Petroleum Exporting Countries (OPEC)  members met in Vienna yesterday, to a much anticipated outcome of once again failing to commit to any production targets (previously collectively 30m bbls/day). OPEC members will thus continue to produce output as they see fit. All is not lost however… we can see that members are beginning to build trust and discussed on issues that could eventually lead to the reinstatement of a production ceiling, coupled with mending their hostilities which were displayed in their previous meetings in December 2015 and April 2016. We retain our Neutral outlook on the O&G sector for the interim as we anticipate continued pressure on oil prices considering last night’s outcome that is expected to flood the market with further supplies yet again. Our average Brent oil price levels are predicted as follows: 2016 – USD44/bbl, 2017 – USD50/bbl and end 2017 – USD60/bbl. Some agreements . i) Appointment of Nigeria’s Mohamme...