Thursday, April 23, 2009

Is Yeo Hiap Seng getting Coca-cola franchise or otherwise?

By Biz Times

Yeo Hiap Seng plans to ride on the opportunity in the isotonic and carbonated drinks, while defending its strong lead in the non-carbonated Asian drinks segment

BEVERAGE maker Yeo Hiap Seng (Malaysia) Bhd (4642) said the "separation" next year between Coca-Cola and Fraser & Neave Holdings Bhd (F&N), a rival, will lead to a major industry shake-up.

"It will usher in a new paradigm, it's a wake-up call to many of us. There'll be new winners and losers," said Owen Ow, managing director of the homegrown company famous for its Yeo's brand of drinks and canned food.

He declined to say if it is eyeing the Coca-Cola franchise once the soft drink giant's distribution contract with F&N ends early next year, nor will he speculate if the deal is up for bid.

"This is extremely price sensitive information, we can't comment. It's hard to say if the franchise will be opened for bidding, the business models are changing everyday now," Ow told reporters after a shareholder meeting in Subang Jaya yesterday.
"We manage our own brands, our own destiny."

The company hopes to deliver better earnings this year, after it swung back to a net profit of RM2.2 million last year, from a net loss of RM13.6 million in 2007.

F&N announced in February that its contract with The Coca-Cola Company, which allows it to distribute Coke and Sprite here, will expire next January after a 74-year union. The development was a major surprise and has caused a stir among the industry.

To help make up the loss, F&N said it has 50 new ready-to-drink products that it can launch by next year, aiming straight at the Asian soft drinks and tea segments - a stronghold of Yeo's.

Yeo's plans to ride on the opportunity in the isotonic and carbonated drinks, while defending its strong lead in the non-carbonated Asian drinks segment. Yeo's is well ahead of competitors in soya drink, tea, and "cooling" beverage segments, Ow said.

"We have an isotonic drink in Singapore under the brand 'H2O', which has a 20 per cent market there. It's an opportunity to address this market once F&N can no longer leverage on a big brand like Coca-Cola," Ow said. F&N's 100PLUS is almost synonymous with isotonic drink.

Yeo's will also revive its carbonated drinks segment under little-known brand "Freedom", which has a range of cola and fruit-flavoured drinks like orange, sarsi and pomelo.

Apart from beverage, it wants to grab a bigger share of the RM200 million market for sauces, of which it has a negligible presence. There is also a plan to enter the halal food market in Indonesia, Ow said, after it successfully ventured into that country.

*With F&N no longer have the rights to distribute Coca cola and sprite, someone has to take up the franchise. If not, we wont have Coca cola drinks in Malaysia. So let's do some analysis on which company would be able to get the franchise? Yeo Hiap Seng is hinting something? Perhaps, you guys have to do some homework and buy the share of Yeo Hiap? hehe..

Monday, April 20, 2009

Making money through undervalue stocks

By The Star

THERE is now a widely-held view that economic growth levels in Asia bottomed in the first quarter, with growth rising a faster clip from the second quarter.

That would mean economic data and company results that are being released for the first quarter would still be weak, with losses even for some of the companies. Most of their profits are now expected to improve, or be back in the black, in the current second quarter.

While the Chinese were convinced since January when their markets started to surge, there is conviction of this only now in the rest of Asia.

For this reason, it is only in the last one month that the other Asian markets, including Malaysia’s, made a swift, speculative rise.

There was a clear speculative tone in the run as many of the stocks that surged were penny stocks or those of companies that made losses.

Besides speculative trading by punters, there is some rhyme and reason for the prices of bombed out stocks to surface. While critics may say that most of the small cap companies are not worth much, prices of their stocks are now viewed as being been suppressed too far.

It can be argued a link house in Petaling Jaya may be worth RM500,000 and that a similar house in the distant suburbs is worth less but it should not be priced at just RM50,000 either, to use an analogy of property.

The announcement on Friday of a proposal to take small cap company SRII Bhd private shows its major shareholders know the stock is under-valued.

The exercise to take the company private will cost RM35mil cash but the company itself has RM40mil cash. So, it’s a straight-forward exercise that will be self-financed. SRII is a supplier of fire-fighting equipment.

All listed property stocks are similarly under-valued relative to their assets, and properties tend to regain their values over time. It’s sometimes speculated they will be taken private, but the critical question that must be answered is how will the exercise be funded.

Last week, as SRII announced the offer for its minority shareholders, Johor Corp made an offer of RM1.55 cash a share for the rest of the shares in its subsidiary Johor Land Bhd.

Johor Land is not cash-rich but it has a large land bank such that its net assets amount to RM5.40 a share. As a large state agency, Johor Corp will not have a problem financing the full takeover.

For most other owners, bank financing for takeover exercises is not available at this time. Hence, to take a company private, there are three criteria of which at least one must be fulfilled.
  1. The company must have cash to self-finance the exercise;
  2. Some of its properties can be pre-sold to finance to the exercise;
  3. It must have a very large or cash-rich offerer.
Like SRII, Plenitude Bhd is an obvious case of a company that can easily be taken private. The company held cash of RM198mil at the end of last year and received RM64mil cash in February from the sale of a piece of land. Together, that amounts to RM262mil cash which coincidentally equalled its total market value.

It would cost a lot less than that since three substantial shareholders already own 72% of Plenitude. That leaves just 28% to be bought to own the entire company. They would then fully own a company with cash and about RM300mil worth of property assets.

Glomac Bhd is a company that some analysts believe might be taken private. Like many property stocks, its share price has dropped to 62 sen against net assets of RM1.85 a share.

It does not have net cash though, and would need to lock in sales of some properties to finance a full takeover.

Inch Kenneth Kajang Rubber plc is in a similar situation, with its share price at 25 sen against net assets of RM1.23 a share, and no net cash.

Its assets, other than properties, are well in excess of its bank borrowings of RM20mil. In addition, it has two large pieces of plantation land which are now close to town due to urban sprawl.

It has expressed an intention to sell 600 acres in Bangi, which it said could fetch RM350mil. If it were willing to lower that to RM200mil, it could quickly find a buyer among the listed property companies. That would still be twice the company’s total market value of RM107mil.

In addition, Inch Kenneth owns 350 acres in Kajang, which it said is planned for a township project with a gross development value of RM1.2bil.

Last week, two brokerages issued reports on the property sector, pointing out it encompasses high beta (volatile) stocks. It makes sense that as property stocks were sold down heavily ahead of a global recession, they’ve a lot of ground to regain in an economic recovery.

The window for taking property companies private, however, is closing fast as the stock market re-rates stocks towards higher price-to-book values and price/earnings ratios. The exercises to take private IOI Properties Bhd and Johor Land was just in time. For the other property companies, it’s now or never.

*Many public companies are trying to privatise as all their stock are under value. So is there any gd performing company that do not have the sufficient cash/fund to take themself private? Or are they any companies that are planning to privatise? Its time to do some research and earn some quick money!

Tuesday, April 07, 2009

Brand New Ikea store in Ampang or Cheras?

By Biz Times

Swedish home furnishing company Ikea has set its sights on densely populated Cheras and Ampang in Kuala Lumpur for a new store.

The 13-year old Ikea Malaysia runs an outlet in Mutiara Damansara, Selangor, and has confirmed the opening of a second in Johor.

General manager Joseph Lau told Business Times that it was scouting for suitable land that will offer ample parking space.

"We need a second store in the Klang Valley. We are looking at the Cheras and Ampang corridor," Lau said.

It is looking at land not less than 6ha - roughly the size of eight and a half football fields - next to a highway.
Since it sells bulky items and thrives on the do-it-yourself model to keep prices low, size does matter for this retailer. It has to provide ample parking for customers to take their purchases home.

"Our Ikea now is on 5.3ha, and that is too small. We will need a larger piece of land. The minimum we want is 6ha. Our bottleneck now is the carpark. There is insufficient parking," Lau said of its existing store.

Lau, who said that the company was eyeing land with room for future expansion, added that it was too premature to say how much it would invest.

One property consultant said that land in Cheras and Ampang could cost about RM150 per sq ft if located next to the main road. This means that Ikea may spend some RM100 million for a 6ha site.

On the size of the land it hopes to acquire, Lau said: "The bigger the better. We do this everywhere in the world."

Lau said that he had received numerous proposals from landowners, many of which were not appealing. While Ikea was looking at a standalone store, the proposals were for it to occupy a portion of a mall as a tenant.

"If we have the land, it should be ready in three years," Lau said of the earliest possible date to open the store.

The second outlet in the Klang Valley is expected to equal the existing store's 360,000 sq ft, or a third of the retail space in Suria KLCC.

On its outlet in Desa Tebrau, Johor, Lau said the Ikano Group is yet to obtain possession of the land it bought from Plenitude for RM64 million.

Various issues on the project have to be resolved, including the design, before a likely operational date can be given.

It is buying 14.97ha to set up an Ikea outlet slightly smaller than that in Mutiara Damasara.

Ikea first opened at the 1Utama shopping mall, but moved to its own site in Mutiara Damansara in 2003.

It was reported that it invested RM180 million in the store and land. An additional RM120 million was pumped into the adjoining building of 45,000 sq ft where the Ikano Power Centre was set up.

Lau said that Ikea's next likely location was Penang, after Johor and a second one in the Klang Valley.

* So felles, its time to predict where is Ikea goin to open the new store in Ampang/Cheras? Property should shoot well ard them! hehe..

Friday, April 03, 2009

Air asia X raising fund again.

By the star

AirAsia X is looking at a capital-raising exercise via an initial public offering (IPO) or a private placement to raise funds for future aircraft purchases.

The airline wants to add the Airbus A350 XWB wide-body aircraft to its fleet but any firm order will only be made after the manufacturer is able to firm up delivery dates.

“This year is a watershed year for us in terms of profitability. Our equity value has increased and so have our intangibles. This opens up avenues for equity funding and, in the long term, an IPO or even a private placement is possible,” chief executive officer Azran Osman-Rani told StarBiz.

“It will be when the equity markets turn around and this could be in 2010. Our equity value gives us more capital-raising capabilities and our audited results will have a very compelling story to tell,’’ he said.

It is learnt that investment bankers are already crunching numbers for the airline’s IPO but Azran laughed it off when asked to elaborate.

The last time AirAsia X placed out shares was at the end of 2007/early 2008, to British billionaire Sir Richard Branson, Japanese leasing firm Orix Corp and Bahrain-based Manara Consortium, to raise funds to start up its operations.

AirAsia X is confident of turning in net profit of RM150mil to RM200mil for the current year ending Dec 31 on revenue of about RM1bil. With this revenue, Azran said, the company would join the ranks of many firms making up the KL Composite Index.

The income will come mainly from its mature routes, such as Gold Coast and Hangzhou, and its profit margins are 20% to 30%. Its cost is low at 2.8 US cents per available seat kilometre and, despite the global slowdown and a slump in air travel, Azran said the airline enjoyed load factors of 75% for the first three months of 2009. For 2008, it was 77%.

Its recently launched London route will only be profitable in a year.

To order new aircraft requires a deposit. “We would be in a position next year (for that). We will have more capital for the deposit,’’ Azran said, adding that he was looking at 25 to 50 A350s as “our’s is an even bigger story going forward’’ and expansion of long and medium-haul routes would be its thrust going forward.

Since flying to London, it has had several US airports knocking on its doors. For Azran, it will be either New York or Los Angeles. The airline would be ready “as early as July’’ to ply the transatlantic route, especially New York, he said, provided it obtained the rights. If not, it should be later this year or 2010.

That should come with a stopover in London but a direct flight is Azran’s dream, which can only be achieved with a long-range aircraft, thus the need for the A350.

A highly-efficient, medium-capacity and long-range aircraft, the A350 is expected to take to the air in 2013. Thus far, Airbus has received over 400 orders.

“We are in extensive discussions with the manufacturer but it is no point placing an order now as the maker cannot firm the delivery dates. We want to see sufficient development to the A350 assembly line, then there will be certainty to commit,’’ he said.

The aircraft will be used to ply the American and African continents, Russia and eastern Europe. The existing A330 and A340 will be used for new routes to Sydney, the Middle East and part of its expansion into Asia.

“This (order of 25 to 50 aircraft) is nothing, look at what other airlines, such as Qatar Airways, are ordering – 100 planes at one go! By going into long-haul markets, AirAsia X will be competing with the bigger boys in the industry and it needs a fleet size to support that route expansion,’’ Azran said.

* With many China's route they are tapping into and with help from our Malaysia transport ministry tapping into India's market. Do u think Air Asia X will make it? What's the PEST or SWOT analysis of Air Asia X? If is viable, i think many ppl will be queuing up to get a share of Air Asia X.