A gem in the Genting family?

By The Star

Datuk Justin Leong Ming Loong, who yesterday emerged as a substantial shareholder of newly-listed Catcha Media Bhd, is confident about the company's ability to thrive in a new media environment.

“We often hear of declining readership figures in the print media. The future is truly in the online media space,” the 33-year old Genting Group head of strategic investments and corporate affairs told StarBiz from China.

He now has a 5.01% stake in Catcha Media. The company, which made its debut on the Ace Market two weeks ago at 15 sen above its 75 sen offer price, jumped from 58 sen at the market opening yesterday to a high of 84 sen.

It closed at 73 sen with 135,838 shares traded.

Leong could not disclose the price he paid, but said his stake was procured through a combination of shares in the open market as well as private placement.

He said Catcha Media had a comeback story to tell.

“Catcha Media's founder and director Patrick Grove, who is the poster boy of catcha.com, survived the dotcom bust of the 90s. The media business is a tough place to be, but he managed to turn around his fledgling company and came back stronger than before,” Leong said.

Leong also clarified in a statement that he had no immediate plans to merge Catcha Media into the Genting Group: “Right now, this investment in Catcha Media is purely a personal one. The Internet sector is of great interest to me look at how the Internet has changed the world, and how it continues to change industries.”

Leong, who is a grandson of Genting founder Tan Sri Lim Goh Tong, was said to be instrumental in Genting's bid for the hotly-contested casino-resort complex in Singapore, now known as the Resorts World Sentosa.

The Oxford-educated businessman left Malaysia in June for a six-month sabbatical to learn Mandarin in Peking University.

He said although the lessons were hard going, he had already picked up over 800 Mandarin characters.

Leong's stake in Catcha Media comes after a series of unrelated investments from companies and individuals, including Star Publications Bhd's acquisition of a 4.99% stake.

* Malaysia Billionaire: So why is this felle that appearing in the limelight for numerous times? Why? Great people which overrated? Afraid not.. Check this

A billionaire story from Indonesia

By The Star

KIKI Barki is veteran Indonesian coal miner and a billionaire.

A friendly and very pleasant gentleman, I had the pleasure of meeting him when he gave a speech to welcome a business delegation organized by Malaysia Chinese Chamber of commerce (ACCCIM/KLSCCCI) and HSBC bank to Jakarta at the end of May.

The most interesting part of his speech was when Barki related how in the late 80s, he signed a long term contract to supply coal from one of his mines to an Asian electric company, when coal prices were less than US$20 per tonne.

The world's coal prices subsequently increased significantly, before his shipments were ready; to add to his misery, cost escalated at the same time. He knew he was in dire straits, even before deliveries begin.

To uphold his reputation as a trusted businessman, Barki said he made his first delivery, and then told the buyer that his losses would mount with every shipment. While he would not renege on his contract, he would nevertheless quickly go bankrupt.

The only way out (for both) was for the buyer to sign another supply contract at the then market price, to give his company an average price that they can survive on. Fortunately, the buyer agreed, the company survived and Kiki Barki persevered.

Today Kiki Barki's stake in coal mining company Tanito Coal group vaulted him to 2011 Forbes magazine list as the 11th richest man in Indonesia with an estimated fortune of US$2bil.

While this may be an interesting snippet from an entrepreneur's success story of perseverance, guts and luck; it is also an amazing story of the phenomenal growth of coal mining in Indonesia, which is electrifying (literally) many parts of Asia.

This amazing story takes off in 1988, when Indonesian coal mining shifted from being predominately a small government owned enterprise (largely in Sumatra) to mainly big privately owned companies with mining concessions, run largely according to international standards (mainly in Kalimantan, with the then untapped rich coal deposits).

During this 23 years period, exports of Indonesian coal increased by an astonishing 30% a year from 4.4 million tonnes in 1988 to 80.8 tonnes in 1999; and then by more than 13% a year from 58.3 tonnes in 2000 to 198.0 tonnes in 2010.

Today, Indonesia is the world's top exporter of thermal coal (Australia is distant second). Exports of mineral fuels (mainly coal) amount to US$18.5bil in 2010 (vs. US$6bil in 2006); contributing to Indonesia's total trade balance of US$22.1bil in 2010.

Indonesia's top two coal export markets are also the world's fastest growing, big and energy hungry economies of China and India; both countries imports 95 tonnes and 58 tonnes of Indonesian coal respectively in 2010, and are expected to increase to 118 tonnes (+24%) and 106 tonnes (+83%) respectively by 2015. Other major export markets are Japan, South Korea, Taiwan and Malaysia.

Indonesia's success of course starts with being blessed with large deposits of high quality thermal coal deposits in Kalimantan and then private investments played crucial roles.

It is fortunate too that the largest Kalimantan coal mines are close to major rivers and ports (so that coal can be barged, railed and transported cheaper to export terminals in the coast), and being geographically closer to major Asian markets by sea makes Kalimantan coal mining viable.

This means Indonesias coal exports to China for example, has a significant price advantage into southern Chinese ports, when compared with the landed costs of domestic coal (for example from Inner Mongolia) into the same southern Chinese ports.

Indonesia's coal mining success story is no doubt also due to Indonesia's improving political and economic stability in the past decade that raised investor confidence.

With investor confidence, many private mining companies could raise more capital to invest in new mines and transport infrastructure such as roads, barges and rails.

The future for Indonesia coal mining will likely become brighter with two major pending improvements.

First, Standard and Poor's signalled it may raise Indonesia's sovereign debt rating to investment grade citing strength in the economy, which the government expects to grow up to 6.5% in 2011, the fastest pace in seven years. More Indonesian companies will then find it relatively easier and cheaper to raise capital.

Second, Indonesia's land acquisition reform bill will likely be passed by lawmakers sometime this year.

This reform bill will resolve difficulties in land acquisitions that have hindered the pace of infrastructure developments vital for industrialization and continued economic growth (Indonesia's 2010-14 development plan has US$220bil in infrastructure development).

In Indonesia, the government is paving the way with the right fundamental changes for businesses to succeed.

In these challenging times, it is easy to be bullish on Indonesia, when you see government policies and private companies move with the same economic imperatives, to the equal benefit of all.

* Malaysian Billionaire :

It's all about Perseverance, Guts and Luck.

Ringgit strenghten against USD/Greenback but no change of purchasing power of malaysian?

By The Star

The increase in the price of sugar signalled the resumption of the subsidy rationalisation programme many thought was put on hold given the inflationary pressures felt by countries globally.

Economists said although prices for selected goods might rise, they expected the key determinant of inflation - the price of RON 95 petrol - to remain stable as efforts to keep a lid on inflation.

“It will be on a gradual basis,” said CIMB Investment Bank Bhd head of economics Lee Heng Guie on the subsidy rationalisation programme.

The price of coarse and fine sugar increased by 20 sen to RM2.30 per kilo yesterday, reducing the Government's subsidy for sugar to RM116.6mil from RM400mil per year.

The increase yesterday was the first for this year but the fourth overall since the Government's subsidy rationalisation programme was put into effect. Sugar prices saw three increases last year of 20 sen in January, 25 sen in July and 20 sen in December.

Economists feel the move to cut subsidies was still needed given the use of such interventionist policy to keep prices and cost low during a time when inflation has become a thorn in the flesh for many countries.

Inflation in Malaysia hit 3% in March but was among the lowest in Asia where it had been the focus of many central banks. Interest rates have been raised in a number of Asian countries in recent months to stave off inflationary pressures.

For Malaysia, the consequence of cutting the subsidy on sugar and letting prices go up is not expected to have a direct impact on inflation.

Sugar is a constituent in the basket of goods which inflation is calculated from but does not have a big weightage.

Economists, however, wondered if the secondary effect from the higher price of sugar would filter through to a larger food segment should retailers and restaurants push up the price of drinks.

Economists said the willingness of the Government to keep RON 95 prices constant was commendable as fuel and energy costs will have a bigger impact on the rate of inflation.

“If the Government maintains the price of RON 95, it will mean it is concerned about inflationary pressure,” said Affin Investment Bank Bhd economist Alan Tan.

The price of RON 95 petrol, which is the preferred choice of fuel among motorists, have been kept steady at RM1.90 a litre in recent months despite global crude oil prices punching well above US$100 per barrel.

The Government has nonetheless matched the price of RON 97 petrol with that of international crude oil prices. The Government raised the price of RON 97 petrol by 20 sen a litre to RM2.90 a litre on May 5.

* I personally think that it is a wise move by the govt to cut the subsidies of food comsuption rather than petrol as said in the above article, it will have a bigger impact of the inflation rate.

* But i recog that our dear Ringgit is getting stronger than the USD, it should not be a problem to maintain the petrol price? I dunno why everything is increasing, since our ringgit is strenghten, our purchasing power should be greater/better and hence goods n services should be cheaper? Why is the govt still cut the subsi? damn.. can someone enlighten me? Mr.KPI guy..

Malaysia is a huge heaven for gold mining?

By The Star

GOLD mining may not be a new activity in Malaysia but it is sad to see minimal efforts being taken to develop the lucrative business on a larger scale.

This is particularly when the country is endowed with huge gold deposits stretching from the major Eastern Gold Belt stretching from Kelantan, Terengganu, Pahang right down to Johor as well as in Sabah all waiting to be fully explored.

What more with gold prices trail blazing since 2011 and currently showing no sign of losing steam. Gold spot price yesterday hit another new record to trade at US$1,517.40 an ounce on weaker US dollar as well as continuing tension in the Middle East and North Africa.

Many traders and research houses have even predicted that the precious metal might hit US$1,600 an ounce before year-end.

As reflected by the surging prices, gold remains a safe haven investment among investors to guard against inflation and geopolitical turmoil.

Given such encouraging developments on the global front for gold, one may wonder whether they will be enough incentives for state governments to issue more exploration licences and mining leases for gold to attract mining investors.

The safest answers could be a small “yes” on the part of some mineral-rich state governments but a big “no” from potential major gold miners.

Pahang, for example, has the largest gold mine in Malaysia at Penjom, Kuala Lipis which contributed almost 95% to total domestic gold production.

There are also five gold mines in Jeli, Kelantan as well as six gold mines in Raub and Kuala Lipis still being excavated for commercial mining. The latest finding for the precious metal is in Mersing, Johor and Lubuk Mandi in Terengganu.

Despite some state governments gradually issuing exploration licences and mining leases in mineral-rich states, there are several impediments among gold miners.

Some quarters maintained that it would not be economical to undertake gold mining activities in Malaysia.

The Eastern Gold Belt, for example, may be rich with gold deposits but it is mostly in “hard rock” formation. In other words, huge capital investment would be needed to undertake prospecting, exploration and mining.

Apart from that, potential miners would also have to deal with other major costs issues.

These include high “tribute” request (payment between the owner of the mining lease and the mining operator) which could reach up to 10%, standard royalty of about 5% paid to the state on the minerals to be produced, corporate tax for the rehabilitation fund and the corporate responsibility (CR) work.

Therefore, it is suffice to say that only major mining groups are capable of undertaking such high risks. On the other hand, mid and small-scale miners might have to take a back seat even though gold mining prospects in Malaysia certainly look promising and lucrative.

* After reading this article by the Star, is that true that Eastern Penisular Malaysia is so rich in gold?

VW to be malaysia No.1 luxury car market?

By The Star

KUALA LUMPUR: Mercedes-Benz Malaysia Sdn Bhd outgoing president and chief executive officer Peter Honegg believes that the local luxury car market will be shaken up by rival and fellow German automaker Volkswagen in the next three to five years.

“They (Volkswagen) will change the automotive landscape in Malaysia,” Honegg said at a briefing yesterday on Mercedes-Benz Malaysia's 2010 sales performance.

“However, they need to do proper analyses. They want to become No. 1 and they need to chase that (goal). They are already chasing,” he added.

Honegg was commenting on the potential impact of DRB-HICOM Bhd's collaboration and licence agreement with Volkswagen AG to manufacture Volkswagen cars at the former's plant in Pekan, Pahang.

Local assembly means prices of the cars will be cheaper. The local manufacture of the first Volkswagen model is scheduled to commence in the final quarter of this year.

Honegg said while Mercedes-Benz Malaysia had successfully maintained its leading position within the local luxury car segment over the past few years, he believed that the entry of Volkswagen's locally assembled vehicles into the market in future would intensify competition.

“So far, we've maintained our market position despite the entry of luxury players such as Lexus. Even Volvo is coming back strong. (But) Volkswagen will make a big, big difference. I'm pretty sure of it. They will change the landscape in three to five years.”

Honegg's sentiment was shared by an analyst from a local bank-backed brokerage.

“The collaboration with DRB-HICOM means Volkswagen cars will be more affordable and more attractive, especially within the local luxury segment.

“However, as production of the cars will only begin at the end of the year, we only expect to see any impact from next year,” he said.

Malaysian Billionaire :

* Hopefully 2yrs down the road, i will driving a Touareg and Scirocco.

Volkswagen VW cars to be assemble in Pahang, Malaysia

By Business Times (Francis Fernandez)

DRB-HICOM Bhd is scheduled to sign a definitive agreement on December 21 with Volkswagen AG, Europe's largest carmaker, to assemble VW cars in Malaysia.

The cars will be assembled in Pekan, Pahang, for local and Southeast Asian markets.

"Tentatively, it is scheduled for December 21 with the signing ceremony being held either in the KLCC area or at DRB-HICOM's (1619) operational headquarters in Glenmarie, Shah Alam," said the source.

It is understood that DRB-HICOM's top officials from its automotive divisions are currently abroad for the final leg of negotiations with VW.

In August, DRB-HICOM signed a memorandum of understanding with Germany's VW to assemble and manufacture Volkswagen vehicles in Malaysia.

An agreement with VW will help boost business and raise its profile among investors further. Although a big chunk of income comes from stable businesses like Islamic banking, insurance and power plant maintenance and plans to expand its property unit, its share price is still well below its net asset value of over RM2.

DRB-HICOM shares closed 9 per cent higher at RM1.80 yesterday.

In August, it was reported that minority shareholders voiced their displeasure at the company's annual general meeting over the undervalued shares.

As a result, the company said it plans to beef up investor relations (IR) activity.

"I do understand the anxiety of the shareholders and the public ... the current share price does not reflect the actual value of the company, which is actually worth more," group managing director Datuk Seri Mohd Khamil Jamil reportedly said after the AGM.

Yesterday, HwangDBS initiated coverage on DRB-HICOM with a RM3.55 target price.

The research house said DRB-HICOM is the cheapest conglomerate in the country with a net gearing of 0.3 times.

"With efforts to be more investor-friendly now, we expect a significant re-rating from its bargain basement valuation of 5.5 times 2012 financial year's earnings per share," Hwang said in the report.

The research house added that a key catalyst for DRB-HICOM is the conversion of a letter of intent from the Ministry of Defence for 257 AV 8x8 armoured wheeled vehicles, worth about RM8 billion.

Malaysian Billionaire :

* With the failure of partnership between Proton and Volkswagen VW, VW is set to get DRB-HICOM to assemble Volkswagen cars in malaysia. So izzit the right time to get some DRB-HICOM shares and a Touareg in a cheaper price tag in the near future?

Cabinet agrees to electricity price increase

By the Star

KUALA LUMPUR: The federal Cabinet has agreed in principle to a revision of electricity tariff but has not decided when it should take place.

Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui said an electricty tariff revision was on the cards but the Government had not decided when.

He said there were many issues that the Government needed to address before a time could be set for the revision.

Under the Government Transformation Plan, we have to roll back the subsidies, which involves so many other things, such as fuel cost and the Government has to make a decision as to when Tenaga Nasional Bhd (TNB) is allowed to make the revision and this has not be confirmed, he said after the launch of TNB Service Charter yesterday.

The TNB Service Charter has the mission to improve TNB's services to its customers.

* I do not understand why the electricity has to be review again? The ringgit has been stronger against the greenback = purchasing power is stronger. Lower prices in all commodities, but WHY everything is increasing? Salary is not increasing. What and where went wrong? Is our dear KPI Minister about to fine tune other things instead of focus on the rising of commodities. All our dearly Malaysian wish/hope that he can contribute somehow and somewhat.

Good news is the former Selangor MG has been arrested. It's a big boost of confidences in our international business as it shows that Malaysia condone corruption and making it a safe haven for investment n business.

Is that true there will be a super bull run in 2010 or 2011 for Malaysia stock market?

By the Star

Although the economic situation now compares with that of 1993, the last push must come from local retail investors

THE recent rally in our local bourse has prompted many seasoned investors, especially those who experienced the super bull run in 1993, to wonder whether the current rally is about to turn into a real bull run. Of course, nobody can tell for sure what will happen next, but we certainly can do some homework, comparing the circumstances back in 1993 against the current situation.

In 1991, Tun Dr Mahathir Mohamad unveiled the philosophy of “Malaysia Incorporated” which was a development strategy for Malaysia to achieve a developed nation by 2020. In the early 1990s, despite slowdown in the global economy, as the third largest economy in South-East Asia, after Indonesia and Thailand, Malaysia was supported by relatively strong macroeconomic fundamentals and resilient financial system. With the real GDP growing at 9.9%, ringgit appreciation, strong export growth and the Government’s measures to hold inflation low at 3.6%, the local stock market became an attractive alternative to foreign investors.

Before 1993, foreign investment in Malaysia was mainly dominated by long-term direct investment in the manufacturing sector. However, as a result of measures taken to develop our domestic equity market, coupled with the strong economic backdrop, we saw a massive influx of foreign capital inflow, which helped fuel the super bull-run in 1993. Within the year, the market increased by 98% to reach an all-time high of 1,275.3 points and foreign investors’ participation accounted for 15% of total trading value of our local bourse. This had also driven the market into a highly speculative one, which lured many retailers into the market, thinking of making fast and easy money.

With the presence of new and unfamiliar players, the market became a huge “casino”. Retail investors bought into stocks based on rumours rather than company fundamentals. Among the hottest topics during that time were the awards of government mega projects, privatisation candidates, sector play and regular news on upward revision of corporate earnings. Examples for the highly speculative stocks were Ekran, Ayer Molek Rubber Co, Berjuntai Tin Dredging and Kramat Tin Dredging.

In 1993, with the economy booming, the Government planned several mega projects, including the KL International Airport (RM8bil), Johor-Singapore Second Link (RM1.6bil) and Kuala Lumpur Light Rail Transit (RM1.1bil). The news of contract awarding immediately sent the market into speculative mood on those potential candidates. Similarly, the news of the Government planning on privatising some of the its own corporations, such as Petronas, KTM and Pos Malaysia had also driven these counters into prime trading targets.

Besides, the ease of accessing bank credit by investors also contributed to the market rally. We noticed that a high percentage of loans was channelled to broad property sector as well as the purchase of securities.

As a result of massive inflow of foreign funds and the super bull run in stock market, Bank Negara introduced a number of selective capital controls in early 1994 to stabilise the financial system,

Recently, our Prime Minister Datuk Seri Najib Tun Razak unveiled the Economic Transformation Programme (ETP) with the aim to boost our gross national income (GNI) to US$523bil in 2020 from US$188bil in 2009. The programme is to attract investment not only from the Government, but also (more importantly) from domestic direct investment as well as foreign direct investment. In view of strong economic growth, our GDP growth is anticipated to increase by 6% this year.

In September, we notice that there was a net inflow of foreign funds again in our equity market. Over the past few weeks, the average stock market daily volume had been hovering above one billion shares per day. Almost every day, the top 10 highly traded stocks were those speculative stocks with poor fundamentals. In addition, we noticed that some retail investors had started to get excited again in the stock market.

According to Andrew Sheng in his book titled From Asian To Global Financial Crisis, there were two main indicators to irrational exuberance during the super bull run in 1993. The first was the amah (domestic maid) syndrome. We need to be careful when amahs got excited about the stock market. This was because they did not know what they were buying and would always be the last to sell. The second indicator was when businessmen began to speculate stocks in the stock market. This was because they might neglect their businesses and use some of their cash for speculation.

Comparing our current market situation with the 1993 bull run, there are certain similarities that we see, such as strong economic growth, ringgit appreciation, inflow of foreign capital and ease of credit. However, our local retailer participation is yet to get boiling, which may be the last push factor towards the bull run. Hence, once the participation of the local investors starts to get heated up, together with more inflow of foreign fund, that may be the signs of the market heading for a ‘mini’ super bull run.

* Article is by Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.