Friday, November 1, 2013

Insas (RM0.645; Target Price: Too undervalued): Super duper cheap, riding on Inari...and potential corporate moves (Just guessing)?

A stock that is too cheap to ignore and huge earnings prospects from its new venture into IT-related business.


Insas is involved in the following segments: 

  • Financial services and credit & leasing: Stock broking and dealing in securities, provision of corporate finance and advisory services, credit and leasing and granting of loans and other related financing activities, provision of share registration services, management services and nominee agents.

  • Property development, property holding and investments and project and property management.

  • Investment holding and trading of quoted securities and other related financial instruments. 

  • Retail trading and car rental: Cars and limousines for hire/rental, wine merchant, retail and trading of high fashion wear, leather goods and other lifestyle-related products and operating food and beverages outlets.

  • Tech: Produce wireless microwave telecommunication products, wireless broadcast card and electronic manufacturing services, design, manufacturing, distribution and sales of smartcards, semi-conductor products and equipment, manufacture and distribution of computer peripherals, design and development of software and web applications and provision of communication and networking services, provision of sales and services for mobile wireless and fixed line broadband solutions and devices and related peripherals, sale of data and multimedia products and services, computer hardware dealers and maintenance, sale of multimedia and electronic products and IT consultancy services. 

Massively undervalued: 
Some of the assets held by Insas: 
  • Net Cash: RM229.73mil
  • Investments (Shares, corporate bonds and other financial instruments): RM277.8mil 
  • Properties: Can easily reach RM200mil. Book value at RM179.335mil (It will be worth much more since around RM50mil worth of properties have not been revalued for more than 15 years and another RM10mil worth of properties not revalued since 8 years ago). 
  • 36.44% stake in Inari: RM226mil 
The total assets listed above is around RM930mil. There are other associate companies which I’ve not included yet such as 20% stake in Gleneagles Medical Center SB and 43.4% Melium Group (Dome cafe and fashion retailer for over 30 world famous brands including Etienne Aigner, Hugo Boss, Christian Lacroix, Cole Haan, Emilio Pucci, Ermenegildo Zegna, Furla, Mauboussin, Stuart Weitzman, Tod’s and +IT). 

Inconsistent earnings but shareholders’ equity keeps rising: 
Earnings were largely determined by Insas’ investment holdings and trading of financial instruments which have volatile earnings. Thus, overall earnings were volatile and inconsistent historically. However, IT-related manufacturing and trading segment (mainly from 36.44% of Inari’s earnings) seems to be increasing q-o-q and will likely provide consistent recurring earnings to the company in the future. 

Thus far, similar to what Intellecpoint mentioned in his blog post on Insas (click here), the boss managed to increase shareholders’ equity over the past years, but maybe not enough to optimize shareholders’ value to the fullest. 

So, now the question is, how will Dato’ Thong Kok Khee help Insas’ share price to rise? Perhaps he could give more consistent & higher dividend payout (It gave out dividends for the first time early this year at 1.3sen per share, ~2% dividend yield), share dividend (One was done early 2010: 1 share for every 25 shares held, equivalent of 4% dividend yield.), making Inari into subsidiary (It has been buying up Inari aggressively over the past few months), consolidating its businesses by selling non-core assets since his assets are so diversified. Perhaps he should just consolidate Insas’ businesses and put its humungous financial resources into expanding into retail, properties and IT which have huge earnings potential.

Inari helped lifting up Insas’ share price: 
Insas has been riding up together with Inari. I’ve done a sensitivity analysis based on Insas’ 36.44% stake in Inari. For each % rise in Inari share price, Insas share price should rise approximately 0.53%.

Looking at Inari’s business of supplying assembled RF chips to Avago Technologies which is a market leader in the RF space and also Inari’s major customer, Inari’s earnings prospects are enormous as RF chips are incorporated into all major smartphones and tablets which are experiencing huge growth. Just look at Avago’s earnings which have doubled since 2010. 

In addition, Avago holds 9.7% direct stake in Inari and is heavily dependent on Inari for its wafer processing as well as assembly and test in the wireless segment (Click here for Inari’s initiating coverage by Affin). I believe Inari’s share price could surge even further (Just look at MyEG, gosh!!! And its market is just Malaysia!!!) as it is exposed to the global tech market and should trade at PER 16x to more than 20x. I will leave Inari for another post. 

  • Severely undervalued: Market cap of Insas is just RM425mil while its NAV is a huge RM1.03bil. There is very limited downside to the share price due to severe undervaluation, but plenty of upside riding on Inari as well as potential corporate moves (Assets sales, consolidation of businesses, declaring cash/share dividend, JV/collaboration between Ho Hup and Insas’ property division?). Dato’ Thong recently bought into Ho Hup, Formis and Inari aggressively via Insas and himself while at the same time Insas was buying back its own shares. What is he up to? Maybe just for trading? Or something more? If he could just start some corporate moves to realize some of its assets, the stock will rerate upwards quite substantially. It has been stuck below 60 sen for the past 10 years, is this the time to break out? 

  • What to buy? Investors could buy both of these shares with Insas being undervalued with a higher margin of safety (acting as a safe base) while Inari could provide higher growth. Currently, both of these stocks are super duper hot. I just feel like there’s something going on, perhaps some big contract wins by Inari OR Insas having some corporate moves or declaring dividends OR big players plus everyone else are entering this counter in view that the fundamentals of this company keeps getting better with its venture into the huge global tablets and smartphones market? Time will tell. 
Happy investing! All the best!

Market Data: 
Share Price: RM0.645
Market Cap: RM425mil
NAV: RM1.03bil

Thursday, September 26, 2013

Scientex: Dividend surprise!! TA was probably too early in its earnings upgrade

Scientex just released earnings results. Earnings at RM110mil for FY2013, below the RM123mil forecasted by TA. I guess TA was too early to upgrade its earnings forecast and would have been accurate if they didn't issue an upgrade :P

Dividend is the real kicker with single-tier 19 sen - Ex-dates on 30 Oct (10 sen) and 2 Jan 2014 (9 sen). Based on full year dividend per share of 26 sen, dividend payout is 51%, way higher than its own guidance of 30%. Dividend yield is at 4.8% based on current price of RM5.40.

Prospects: RM55mil expansion in its stretch film production capacity by 26% by end of 2013 coupled with RM50mil expansion in its blown film lines (50% capacity expansion) catered for consumer packaging to be completed by mid-2014. To be more conservative, earnings could be around RM145mil for FY2014 or EPS of 67 sen. PER 10x-12x would translate to fair value of RM6.70 to RM8.04.  

For results news, click here
For previous posts, click here

Tuesday, September 17, 2013

Scientex (RM5.10; Target (Long-term): Above RM8): TA Research's upgrade precursor to a great quarter? A very good long-term stock to hold

After reading TA research report on 9th Sept 2013, I was very surprised by the upgrades made by TA. They upgraded net profit for FY13 from RM110mil to RM123mil after contacting the management and just 3 weeks away from their quarterly results release. To recap, Scientex made RM80mil for 9MFY13. Thus, for 4QFY13, Scientex's net profit would be RM43mil, based on TA's forecast. That would be a huge increase!! Believable???? We shall see. I will be very happy already if Scientex makes RM35mil net profit for 4QFY13. 

Reasons for upgrade: 
  • USD up, profits up: More than 80% of products are exported overseas and are denominated in USD. Thus, a stronger USD will mean better earnings. 
  • A higher progress billing from Taman Scientex, Mutiara Mas, Skudai due to higher selling prices. The total outstanding GDV reported in 3Q13 was RM5.5bn, mainly attributed to the higher selling prices for most of its land banks especially that of Gardens Residence in Taman Scientex Mutiara Mas. 
  • Higher operating margins from consumer packaging business. Based on my own analysis, consumer packaging products (from GW Plastics which was acquired by Scientex) command much higher selling prices (almost double) as compared to its existing industrial packaging products. Thus, continued expansion into this sector will lift up margins going forward. Currently, its consumer packaging business is very high in demand that current capacity cannot meet the demand.

Valuation: The stock price keeps going up even as I'm writing this. Based on price of RM5.10, assuming it can make RM160mil for FY14, its PER is just 7x. If PER of 12x is attached, the stock should be worth RM8.60!!! Give the stock another 1-2 years, investors could be in for a good harvest. Besides, 30% of its profits will be given to shareholders as dividends, thus dividend yield could be more than 4% for FY14.

Why I like this stock so much? 
  • The boss is a proactive owner owning about 60% stake with proven track record and actively engages with the media and shareholders.
  • A leader in packaging business and its products are in high demand (Top 3 stretched film producers in the world, top bread packaging producer in Asia)
  • USD strength means higher profits.
  • Expansion drive to boost production capacity.
  • Visible earnings prospects
  • Cheap valuation and decent dividend yield.

Thursday, August 22, 2013

Supermax (Current Price: RM2.25; TP: >RM2.70): Super laggard (As described by Maybank today)

After the sell-off over the past two days, I feel more comfortable recommending this stock now. In addition, many stocks have moved up a lot over the past one year but Supermax just managed a paltry 8.3% increase over the past one year. This pales in comparison to Kossan's +83.4%, Hartalega's +52% and Top Glove's +15.7%. Therefore, I think it's quite safe to go in at current levels.

As you all might have already known, one of the main reasons for the poor performance was Stanley Thai's support for Pakatan Rakyat during the recent general elections, coupled with its weaker margins in the previous quarter (1Q13) which raised investors' concern over its ability to pass on higher costs to its customers.

However, I feel Supermax's discount to its peers is unjustified. Maybank correctly stated in today morning's report that Supermax is a super laggard. Just compare Hartalega's PER 2012-13 of 20.5x/19.5x, Top Glove's 17.7x/17.3x and Kossan's 16.2x/14.5x with Supermax's  pathetic 12.2x/10.8x, Supermax is trading at a whopping 35% discount or more to its peers. How can???
With the appreciating USD, raw materials remaining relatively low and stable, its anticipated recovery in its profit margins in 2Q13 coupled with its expansion in the end of this year and  greater automation of its manufacturing processes, Supermax is poised to rerate and catch up with its peers. Stanley's political alignment is a non-issue to me as most of its products are exported to overseas anyway and are not dependent on local demand.

Valuation: Fair value could easily reach above RM2.70 by attaching PER of 12x to its EPS for 2014. And that is still at about 20% discount to its peers. The stock is highly liquid which is favourable among institutional investors. Definitely a stock to watch out for!

Some updates from various research houses:

Nitrile glove expansion:  Growth  is  expected  to  come  from  12  replacement lines and 2 new plants over FY13 and FY14.  The Company has plans to increase nitrile production  capacity  from  6.9  billion  pieces  to  12.3  billion  pieces  per  annum,  52%  of the  total installed capacity. These additional nitrile production lines have  the ability  to switch  between  nitrile glove and  natural  rubber glove  production.  As  of  now,  12  new nitrile  lines  with  1.43b  pieces  additional  capacity  is  already  commercially  operational. The  remaining  planned  production  lines  are  on  track  for  commercial  production gradually, starting  from 4Q 2013 instead of 3Q 2013. Due  to strong demand  for nitrile gloves,  Supermax  is  currently  facing  an  oversold  position  of  two  to  three  months.  In addition, the latest quarterly results by Hartalega (Nitrile glove producer) revealed that global  demand  for  nitrile  gloves  will  be  robust  with  around  20%  growth  annually  in

Strengthening USD will benefit glove manufacturers: Supermax is a beneficiary of  the  weakening  of  the  Ringgit  since  they  do  not  hedge  its  US  dollar  receipts.  Since sales are USD  denominated,  theoretically, a  depreciating  ringgit against  the  dollar will lead to more ringgit revenue receipts. A 1% depreciation of RM against USD is expected to boost net profit by 1-2%.

Margins to improve:  Management  has  guided  that  1QFY13  margin  erosion  is one-off  and  unlikely  to  recur.  Instead,  2QFY13  results  to  be  released  in  Aug  2013  is expected to show margins improvement compared to 1QFY13 as the lag effect in raising ASPs wore off starting from 2QFY13. 1QFY13 margins fell due to higher labor expenses arising  from minimum  wage  policy  and  the  higher  cost  was  not  fully  passed  on  to  its customers. Typically, customers are given two to three month notice before new ASPs can  take effect. As such, margin  recovery will start due  to an estimated 3-5% increase in ASPs, already  notified  to  customers in  Jan  2013, which will kick in  from  the  second quarter onwards.

For previous posts, please click here

Wednesday, July 31, 2013

Perhaps the most seditious post, based on what the crazy Malaysian authorities are thinking now


By the late Yasmin Ahmad

On the 29th of December, 2008, my crew and I shot this commercial in Ipoh. It was a one-day shoot, alhamdulillah.

I had written a script, based on the true story of Encik Shahrul's family, or more specifically, of his youngest child, Adlan.

Adlan was an extreme autistic who, for 7 years, behaved like he was trapped in a bubble, unable to communicate with the outside world, and vice versa.

What finally brought him out of that state is shown in the commercial you see here.

The dog is the most misunderstood animal in this country. Its haters, I'm sad to say, are largely Malays who often don't even know the difference between "haram" and "najis", let alone the finer points and different degrees of najis.

With this little film, I urge my people to read more about the true Islamic rules concerning this beautiful creature of God, and to please refrain from being cruel to it.

Let's do this for Allah.

Tuesday, July 16, 2013

Fight the Smear Campaign against the Oil Palm Industry - Koon Yew Yin

By Koon Yew Yin

A few weeks ago the sky was covered with smoke from the burning of forests in Sumatra to clear land for agriculture. Many in Malaysia and Singapore were affected by the haze. Some observers in the west used it as an occasion to bad-mouth the oil palm oil further. In this article, I will try to share some facts of life in the oil palm industry so that Malaysians will not join the western world in their smear campaign.

Firstly, we must remember that the west had cut down their forests and trees centuries ago to develop their countries. Malaysia and Indonesia are both new comers in the development scene and have been felling our forests for only a few decades now. Of our tropical agricultural crops, oil palm is the most recent cash crop commodity.

Although there has been a rapid rate of exploitation, it still occupies a small proportion of our total land area. The oil palm industry in Malaysia accounts for 15.5 per cent of total land area and only 4.5 per cent of total land area of Indonesia. A large proportion of the oil palm plantations are also not newly felled forest but are old rubber plantations that have been converted to this more lucrative crop.

Many in the public know of my views which are critical of many developments in the country. However, praise needs to be given when it is deserved; and our home grown oil palm industry is one which deserves all our support. This support is important in view of the sustained criticism made against the oil palm industry by lobby groups that have their origin in the west.

Why We Should Support Our Oil Palm Industry

There are many good reasons to support our oil palm industry in Malaysia and Indonesia. These are some of the most important.

1. Firstly it is not only Felda settlers that are dependent on the crop for a livelihood. Malaysia’s annual US$25 billion (RM79.75 billion) palm oil exports support some two million jobs and livelihoods along the sprawling value chain. This means that one in every five working Malaysian is dependent for his or her livelihood on the crop. 

2. Plantations have borne the brunt of the bad publicity. However, the small farmers are also affected. More than 40 per cent of oil palm planters in Indonesia are smallholders whilst in Malaysia they contribute to 38 per cent of the country’s palm oil output.

3. Environmental activist groups such as World Wildlife Fund, Friends of the Earth and Greenpeace have launched many campaigns alleging that the expansion of oil palm plantations have destroyed forests, threatened endangered wildlife and robbed indigenous peoples of their land. Many of their arguments are not based on fact but are sensationalized from a small and atypical number of cases.

4. The anti-oil palm lobby in the west includes pro-soya bean and rape-seed groups who see oil palm as a major competitor and have recruited food lobbyists to play on fears of the health hazards of palm oil consumption. . Together with environmental activists, these well-funded groups have created trade barriers to the global oil palm trade under the pretext of environmental activism. 

5. In a fair contest amongst competing vegetable oils, palm oil will win hands down. The oil palm tree is the world’s most efficient oil crop because one can harvest five tonnes of oil per hectare. This is 10 times more productive than soya bean planted in the West, including United States and five times more productive than rapeseed, Europe’s main oil crop.

6. It is an undeniable fact that palm oil is the cheapest and most popular form of cooking oil for consumers, including many poor families in the west. Should trade barriers to benefit rapeseed farmers who are already heavily subsidised by the European Union (EU) government be successfully implemented, this will hurt consumers all over the world. 

7. Also should alternatives to oil palm be grown, more land would be needed to produce an equivalent volume of oil to replace palm oil, resulting in more deforestation and problems for Mother Earth.

8. Oil palm smallholdings and plantations meet the United Nation’s Framework Convention on Climate Change which defines a forest as an area of 0.5 to one hectare having more than 30 per cent canopy cover and having a potential height of two to five metres. To accuse the industry in Malaysia and Indonesia of contributing to global warming is sheer nonsense. In fact oil palm trees just as with other forest species, produce oxygen for us to breathe and act to counter coal and oil emissions which are the major cause of global warming. 

9. Finally, the western environmental activists’ campaign against oil palm plantation expansion, in the name of “saving rainforests”, is a violation of international norms and Malaysia’s and Indonesia’s sovereignty. 

Appeal to Malaysians 

In a keynote address to over a thousand delegates at a conference organised by the Incorporated Society of Planters (ISP) in Sibu, Sarawak, recently, Datuk Amar Abdul Hamed Sepawi, Chairman of Sarawak Plantation Berhad warned, “We’re at a crossroads. It’s time for oil palm planters to adapt to the fast-changing world of ruthless vegetable oil politics if we want to stay relevant in this market”. 


I trust all Malaysians will circulate this article to all their contacts to fight against the smear campaign against our palm oil industry and eventually I hope consumers, all over the world, will not buy soyabean or rapeseed oil which is more expensive and not really superior to palm oil.

Friday, July 5, 2013

SCMP: China's stock market woeful performance

A phrase from an article by Tom Holland in SCMP today which quite accurately describes the China's stock market performance which is still trading at where it was 13 years ago. 

"China's stock markets did not evolve as places where private companies could raise long-term capital from investors prepared to risk their savings for superior returns. 

Instead they were set up by the Communist Party to further its own political aims of reforming China's state-owned enterprises to ensure their continued dominance over the economy. 

As a result, the listing rules were drawn up explicitly to favour big state-run corporations in sectors considered strategic by Beijing, with private companies in China's fast growing service economy largely excluded."

As for Hong Kong market which is considered a proxy to China, Hong Kong has attached itself so much to China in everything that the Hong Kong market largely follows China's dismal stock performance, unfortunately. This includes Hong Kong's economy which cater much to China's consumers and in a way ignores the rest of the world. Now that China's economy is starting to slow down, owing to its own insatiable appetite which is causing overcapacity, over-leveraging, over-expansion, over-bought overseas resources/assets and over-everything, Hong Kong's economy and stock market have to bear China's slowdown. Many are becoming optimistic about HK/China's markets as they are so dirt cheap, I'm not optimistic on the other hand. 

Tuesday, May 28, 2013

Home is where the heart is

For those who are away from family, go back to see your family more often. For those who are staying with family, you're very blessed. Appreciate them.

Tuesday, May 21, 2013

Scientex (Current Price: RM4.26; Target Price: >RM5.00) – A relook amidst Iskandar fever in play and some packaging companies which have gone through the roof

PS: Scientex's Lim Peng Jin in The Busy Weekly this weekend (Anyone has a chance to read it? I'm in HK unfortunately)

Just a short one. Scientex has two main divisions, namely packaging/polymer manufacturing and property development. 

Packaging: The largest stretch film producer in Asia, with an estimated 33% market share with the consolidation of GW Plastics. Net profit from this division is expected to be around RM50mil (Synergies not imputed yet, will wait for further quarterly results). What’s the value which should be attached to this division? PER of its peers as follow: 

Daibochi: 15x 
Tomypak: 8x 
Cenbond: 11x 

Scientex is a few times larger than these boys. Attaching a PER of 12x, the value of this business should amount to RM600mil. 

Property Development: Since everyone is so gung-ho about Iskandar and using RNAV as a gauge, Scientex’s land value is worth relooking. Scientex’s land from its annual report 2012: 

Mukim Senai, District of Kulaijaya: 10,928,060 sq ft 
Mukim Pulai District of Johor Bahru: 4,419,598 sq ft 
Mukim of Plentong District of Johor Bahru: 4,127,671 sq ft 
Mukim of Plentong District of Johor Bahru: 3,927,646 sq ft 
Mukim of Sedenak District of Johor Bahru: 8,309,144 sq ft 
Mukim of Plentong District of Johor Bahru: 3,346,497 sq ft 
Mukim Bukit Katil, Melaka: 3,224,277 sq ft 

Scientex has a total of 35,058,616 sq ft of land in Johor while another 3,224,277 sq ft in Melaka. The average cost of landbank acquisition was less than RM10/sq.ft. The company’s landbank in Johor could easily fetch RM20/sq ft (very conservatively), thus its land is worth at least RM701mil. Land in Melaka could be worth RM30.2mil assuming RM10/sq ft (iProperty listing RM10-40/sq ft). Therefore, Scientex’s land alone could be worth RM730mil!! Besides, its net profit from property development might be around RM65mil per year. Attaching a PER of 8x to its property profits will give more than RM500mil of market cap. 

Valuation: RNAV will be at least RM1.06bil, based on combination of PER 2013 of 12x and its land value of RM730mil minus its net debt of RM272mil. This translates into RNAV per share of RM4.93. PER 2013 will only be at a paltry 8x with dividend yield of 3.2% at current price. 

In addition, where can you find a growing company earning more than RM100mil trading at PER 8x? Attaching a PER of 10x to its EPS of 53-56 sen can easily send the stock price to above RM5.00. Further confirmation of its synergistic benefits from acquisition of GW Plastics will further rerate the stock (Just like Johore Tin). 

Volume is getting heavier and the closing just now had a buyer buying at one-go almost 100k shares at RM4.26. Looks like this stock is poised for a 'goreng' session. Lim Peng Jin, the Managing Director of Scientex kept accumulating this stock and he currently holds around 51% stake. 

For previous posts, click here.

Friday, May 3, 2013

Difference between BN's ceramahs and PR's ceramahs

Difference between BN's ceramahs and PR's ceramahs:

BN: If you don't give us mandate, there might be chaos or repeat of May 13 after election
PR: If you give us mandate, we will make sure that you will be safe after election.

BN: If we lose, this country will go bankrupt.
PR: If we win, this country will be a better nation as we fight corruption.

BN: If we lose, you will not get development.
PR: If we win, we will curb corruption and use the savings to develop this nation. Look at Penang and Selangor under PR.

BN (UMNO): We need to defend our Malay's right and Muslim (to the Malay)
BN (MCA): We need to defend the Chinese (to the Chinese)
PR: We need to defend MALAYSIANS, regardless if you are Malay, Chinese, Indian, Kadazan, Iban.

BN: If we win, every year you ill get BR1M.
PR: If we win, your children will get free education and we will fight crime.

BN: We cannot lose. We need to defend Putrajaya at all cost.
PR: We need to win to clean up the electoral roll which is full of phantom voters and immigrants who hold blue IC.

One is spreading fear and intimidation.
The other is spreading hope and brighter future.

Who do you prefer to lead this nation?

Sunday, April 21, 2013

UMNO tak perlu undi Cina dan India

UMNO doesn't need Chinese and Indian votes. We don't have to vote BN then. Thanks for making this clear.

Friday, April 19, 2013

Recent ROS issue: By Lim Guan Eng

DAP will use the PAS symbol in Peninsular Malaysia and the PKR symbol in Sabah & Sarawak for the 13th general elections unless the Registrar of Societies (ROS)’s cowardly and dastardly attempt to assassinate the Rocket is withdrawn by revoking its 17 April 2013 letter.

The letter did not recognise the office-bearers of the Central Executive Committee(CEC). By not recognising the office-bearers of the CEC elected by the delegates on 15 December 2012, I have no power to issue authorisation letters in my official capacity as Secretary-General to DAP candidates to use the Rocket symbol.

The DAP CEC in its meeting tonight decided that ROS must revoke its letter not recognising the office-bearers in the CEC by 3pm tomorrow on Friday. 

Failure to do so will result in the DAP directing its 53 parliamentary candidates and 103 state candidates throughout the country to contest in the next general elections under the PAS symbol in Peninsular Malaysia and the PKR symbol in Sabah and Sarawak. There is no point in relying on assurances given by the Election Commission(EC) that DAP can still use our Rocket symbol when the EC possesses a sad record of broken promises that has caused the entire electoral process to be neither free, fair, independent nor neutral.

For the ROS to issue this letter 48 hours before nomination day on 20 April 2013 is clearly intended to kill off DAP’s electoral prospects by forcing all DAP candidates to be independent. Using the ridiculous excuse that no proper notice was sent out resulting in 753 delegates not attending the Party National Congress is illogical and irrational as then all party national conventions that does not have 100% attendance should also be taken action. Why only the DAP but not other political parties in BN?

Clearly ROS intends to assassinate the Rocket to fulfill the grand design of BN to take out the DAP from contending in the general elections. Knowing that BN component parties will be facing a stern challenge from DAP candidates, BN has adopted the shameful and dirty approach of preventing DAP from contesting by using our beloved Rocket symbol. Such desperate attempts to win by BN is victory without honour and makes a mockery of the entire electoral process.

If ROS refuses to withdraw this letter, then the whole electoral process in the 13th General Elections will be both flawed and fraudulent if DAP can not be allowed to use the Rocket. The DAP CEC urges all party leaders, members and supporters to be calm and let the anger of such disgraceful underhand tacticsbe reflected strongly in the ballot box on 5 May 2013.


Wednesday, March 20, 2013

A must-watch on how corruption is committed by Sarawak leaders

MACC mentioned they'll act accordingly. Let me give a very very predictable outcome: MACC will do nothing! No Sarawak leaders will be prosecuted! The emergence of this video is another nail to UMNO's and BN's coffin. Spread this video out! 

From The Malaysian Insider:

MACC to ‘act accordingly’ on new video expose evidence, says director

KUALA LUMPUR, March 20 – Ongoing investigations against Sarawak Chief Minister Tan Sri Abdul Taib Mahmud will continue following new leads that have emerged, the Malaysian Anti Corruption Commission (MACC) said today.

This follows a 16-minute covert video revealed by Global Witness (GW) implicating Taib (picture) and his family with shady land deals, which surfaced in the media yesterday.

“The investigation has been ongoing. With the new evidence that has emerged the MACC will act accordingly,” its director of investigation Datuk Mustafa Ali told The Malaysian Insider by text message here.

The corruption watchdog had two years ago confirmed that they were investigating Taib over allegation of timber corruption.

“We are investigating Taib Mahmud and whatever our action is, we cannot reveal at this moment,” MACC commissioner Datuk Seri Abu Kassim Mohamed was quoted as saying in June 2011.

Civil society groups had earlier today demanded an immediate response from Putrajaya and MACC, which they claimed had been toothless in probing the Sarawak chief minister over his alleged ill-gotten riches.

The group of civil society organisations had also asked for a Royal Commission of Inquiry (RCI) on the matter before the 13th general elections which are expected very soon.

“This is very terrible for Malaysia ... (We need) nothing less than RCI. We call the Yang di-Pertuan Agong to call an RCI to investigate this issue,” Sarajun Hoda, a representative of reform movement Aliran.

Meanwhile, the Advocates Association of Sarawak (AAS) has indicated that they will investigate and act against the lawyer featured in the GW clip.

The Sarawak lawyer, identified as Alvin Chong, allegedly represented sisters Fatimah Abdul Rahman and Norlia Abdul Rahman who were recorded in the video describing potentially illegal deals.

Both are daughters of former state chief minister Tun Abdul Rahman Ya’akub and first cousins with the incumbent CM Taib.

“AAS will take appropriate action after due inquiry. One of the possible courses of action is to refer any complaints received on this matter to the Advocates Inquiry Committee,” a spokesman from AAS told The Malaysian Insider.

The Advocates Inquiry Committee is an independent statutory body separate from AAS, consisting senior lawyers from the state appointed by the Chief Judge of Sabah and Sarawak. The lawyers in both Borneo states are not under the jurisdiction of the Malaysian Bar, which only represents lawyers in the Malay peninsula.

In a 16-minute video clip released yesterday, GW investigators posing as foreign investors recorded snippets of their conversation with Taib’s cousins and lawyers, made under the pretext of purchasing Sarawak land for hefty profit and which the environmental campaigner said would displace thousands of the indigenous people living there.

Taib had suggested yesterday that his cousins and others implicated in the video exposé were promoting themselves to be his agents to solicit favours.

“OK I saw the so-called proof. Could it not be someone who tried to promote themselves to be an agent to get favours from me?

“It has nothing to do with me. I think it is a bit naughty of them. They are using their big powers to blacken my name,” the Sarawak chief minister said when approached by reporters in the state capital Kuching.

Monday, March 18, 2013

Koon Yew Yin: Malaysia's education disaster - time for change

By Koon Yew Yin

As election day comes closer, we will be asked for reasons as to why we should want to change the BN. When the question is put to me, I tell people that there is no need to enumerate three, four or five reasons. One reason alone is sufficient for Malaysians to elect a new government.

The reason is that the BN has ruined our educational system and put us back at least one generation in our educational standards and standing.

When the country became independent in 1957 our educational system was acknowledged to be amongst the best in the region. Today, after the introduction of NEP policies in education, we are scraping the bottom of the barrel in our standards of educational achievement at all levels.

BN's record
Whether it is in primary, secondary or tertiary education, the rot is clear. Half literate primary school products that cannot write or speak properly in either English or Bahasa and drop out early; secondary students with abysmal standards in Mathematics, Science and other core subjects; tertiary students who are provided with university degrees but in fact are unemployable except in the civil service.

This is the disastrous outcome of BN rule. This is the result of the politicisation of the educational system and UMNO's cynical use of it as a political and racial football.

Whether it is with regard to mission schools or vernacular or SRJK schools; teaching of science and mathematics; teaching of English; appointment of administrators and heads of schools; the curriculum; examinations; vocational education; funding and allocations - Umno has inserted its racial and political agenda to debase and corrupt the system.

If readers think that I am overly critical of the BN, let me provide two pieces of evidence on the disaster in our education.

The first is from the government itself. According to the national education blueprint (Preliminary report, Malaysia Education Blueprint 2013-2025, pp, E4-E5), Malaysia was ranked in the bottom third of 74 participating countries of the Programme for International Student Assessment (PISA) 2009+.

60% of the 15-year-old Malaysian students who participated in Pisa failed to meet the minimum proficiency level in Mathematics, while 44% and 43% did not meet the minimum proficiency levels in Reading and Science respectively.

A comparison of scores shows that 15-year-olds in Singapore, South Korea, Hong Kong, and Shanghai are performing as though they have had three or more years of schooling than 15-year-olds in Malaysia.

Low achievement standards in TIMSS (Maths and Science): far behind first tier; now comparable to countries such as Indonesia.

By 2007 (last published cycle) 18% and 20% of our students failed to meet the minimum proficiency standards in Maths and Science.

The conclusion of the blueprint is shocking. Not only are the gaps between Malaysia and other countries in our region growing, international assessments also revealed that Malaysian student performance is declining in absolute terms.

This damning conclusion - that we are going backwards in our education standards and achievement - shows that the problem is not a new one.

It is a long-standing crisis which the BN has successfully concealed from Malaysians thanks to media manipulation and its diversionary focus on language and Chinese school issues.

But it is no longer easy to fool Malaysians thanks to the internet media and the availability of international assessment results.

Hence the latest educational scandal in which the Education Ministry is accused of lowering the Maths and Science standards for the PMR and SPM examinations to artificially increase the pass rate does not shock me in the least.

Such efforts have been taking place for the past thirty years, especially in the public universities.

How else then to account for the hundreds of thousands of graduates who are unemployable?

My personal experience
The second piece of evidence is one derived from personal experience. For several years now, I have been providing scholarships to poor young Malaysians so that they will be able to go to the university to improve their life and career opportunities.

Below are examples of letters I have received from two applicants requesting for financial assistance (details of my scholarship programhere).

What is important to note is that although these are written by pre-university students, the level of English language competency attained is lower than that of a primary student during my time.

Sadly, they are not isolated cases - in fact they are typical of students who have been through our educational system and whose decline in standards has been due to BN rule.

Letter 1


I am ____________,I already take my SPM result~I'm interest on account Can you sponsor me about the study fees at Utar?



This are my SPM result.

Letter 2
Mrs.Koon, i am October Intake UTAR new degree student , my name is ______ from kampar, i am facing financial problem after i successful register Utar degree course, now i am stay at Kampar and open school already.

As i know UTAR can let student to borrow PTPTN loan to complete Degree. But after i successful register Degree course, UTAR stuff just tell me UTAR are not offer student to apply PTPTN loan on this semester, and i need to pay course fee and register fee first.

Sure i come from poor family, my family income below RM 1600 per month. My family never and not able to pay my fee around RM4000 at my first semester, i need to pay the bill before 23 october, if not i
forced to leaving school, i am very anxious now!

Before I am getting news from Mr.__________, may be i can getting financial aid from Mrs.Koon, so the purpose i send the gmail to Mrs.Koon is i requesting for financial aid to start and continue my degree course program in UTAR, i really want to start my study life and dream at UTAR.

At the election booth
In conclusion, private education has become a very profitable business as parents scramble to remedy the damage in the public system and use up their precious savings or mortgage their houses to enable their kids to get a decent education.

For this reason too, private universities and colleges are springing up like mushrooms. All of them are lowering entry requirements to capture more students. As a result, students like the two above were accepted to study in Utar.

Many people have the wrong impression that MCA's Utar is a charitable organisation set up to help the Chinese. In fact if you examine MCA's annual report, you will see that Utar is one of the best profit-making ventures for MCA.

Remember, the power to change the rotting education system is in your hands when you go to vote.

This message is especially directed at all parents and students - Malays, Chinese, Indians and other Malaysians - who have suffered as a result of BN incompetence and bad governance.

The logic and absurdity of voting for the same ruling party

Adapted from one of Salvatore Dali's reply to comments with some modifications.

To those who say the opposition party will be as corrupted when being voted into power and prefer to vote 'the devil you already know' ruling party, please say this to them: "That means you're willing to go with something that is 'proven' that they will continue to corrupt? It's akin to me saying that I will not rob you when I stay in your house but you do not believe me. And yet you allow the robbers who stay in your house to continue to rob you just because you do not believe that I will not rob you." So, the logic of voting the current ruling party just because the opposition party could be as corrupted is PURE FOOLISHNESS! Enough said.

Monday, March 11, 2013

Blessed are the merciful, for they will be shown mercy

Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me. - Jesus

Friday, March 8, 2013

Penang BN supporters: No rule of law, law of the jungle rules?

Transcript of Lim Guan Eng's comments on the violent demonstration shown in the video above: 

They only know the language of hate and acts of violence. They almost broke down the glass door. If this is the type of supporters of Barisan Nasional, how can the people trust Barisan Nasional?

If BN supporters are like these, how can we trust Barisan Nasional?

Why is it that police allowed these people to act with impunity?Why did the police just standby and do nothing when they behaved like this? I think this is a more important question. The police must explain not only to the state government, but also to the rakyat.

They used racist language. The police must explain why they did not take any action.

Look at the way they attacked the glass door, people may be hurt. I think we must have something more solid.

We want to know why the police did not take any action. No arrest made, how can?

If we allow law breakers to threaten law makers, then we don't have rule of law in Malaysia, only the law of the jungle.

In summary, these type of violence, these type of behaviours, typical of BN supporters. The police must explain.

Politically how can the rakyat support BN when their supporters are like gangsters?

If they turn up, the police must be responsible.

The people can see the BN true colours.

Thursday, February 14, 2013

Vote wisely: The reduction of corruption through PR in Putrajaya

Which government will do better in reducing corruption? BN or PR? I believe the answer is obvious. If not PR, I think you need to get your head checked. Watch the video below which BN will not want you to watch:

"With a two party system, then only BN or PR will be sensitive to the wishes of the people as they fear losing power. If BN continues to rule unabated, forget about your needs/wishes as Malaysians, it will all be BN's wishes."

Vote wisely: Why did Lim Guan Eng go to prison?

Righteousness exalts a nation. Vote for leaders such as LGE who suffered for the sake of justice and righteousness. A documentary on why LGE went to prison. Worth watching!

Friday, February 8, 2013

Vote wisely.

“The worst illiterate is the political illiterate, he doesn’t hear, doesn’t speak, nor participates in the political events. He doesn’t know the cost of life, the price of the bean, of the fish, of the flour, of the rent, of the shoes and of the medicine, all depends on political decisions. The political illiterate is so stupid that he is proud and swells his chest saying that he hates politics. The imbecile doesn’t know that, from his political ignorance is born the prostitute, the abandoned child, and the worst thieves of all, the bad politician, corrupted and flunky of the national and multinational companies.” - Bertolt Brecht

Thursday, February 7, 2013

Tianneng Power International - 819 HK (Current Price: HKD5.22; Entry level: Below HKD5.00 perhaps??; Target: HKD7.00): Undervalued market leader with strong growth prospects

Market Data: 
Share price: HKD5.22
Mkt Cap: HKD5,860mil
PER 2012-13: 6.2-5.2x
Dividend yield 2013: 5.5%
Net Gearing: 47.6%
ROE: 24%

Company Profile:
The Company is a major subsidiary of Tianneng Battery Group Co. Ltd, which was founded in 1986 under the name of Changxing Storage Battery Factory. It had since become a leading supplier of motive batteries for electric vehicles in China after two decades of development. 

Currently, the principal activities of the Company are production and sale of electric bike motive batteries, electric car motive batteries and new energy storage batteries sold under its "TIANNENG" brand. The Group has collaboration with several automobile manufacturers to speed up the research and development of motive batteries for pure electric cars. The Company is also implementing a sales and marketing strategy focusing on key new energy areas to accelerate the development of its wind and solar power storage battery business as well as its lead recycling business to support the national policy of energy saving and creating a low carbon economy. 

Since its establishment, "TIANNENG" has been the dominant brand in the China motive battery market and was also one of the renowned brands for all motive batteries. It has captured many awards and certificates, including the "National Well-known Trademark" and the "Zhejiang Prominent Brand Product." The Group was also acknowledged as the “Chinese Best Brand of Motive Battery” by Frost & Sullivan during the period from 2008 to 2011, “The Most Reliable Battery Brand for Electric Vehicles” and “Outstanding Contribution to the Promotion of the Electric Vehicles Industry in China” by 

The Company has six production bases, namely (i) Meishan Tower; (ii) Wushan Town; (iii) Shuyang County; (iv) Wuhu City; (v) Jieshou City; (vi) Puyang City. The annual production capacity of electric bike lead-acid motive battery products was approximately 65 million units in 2011. 

Dr. Zhang Tianren is the founder, president and chairman of the Company and is the key driver of the Company in terms of business strategy and management. He is the major shareholder of this Company with a 36.55% equity stake. 

Business segments: 

Majority of the revenue comes from the electric bike lead-acid battery segment which accounted for more than 90% of the Company’s total revenue. The second largest contributor is pure electric vehicle (EV) battery segment which contributed 5.1% of total revenue in 2011, up from just 0.6% in 2009. The remaining revenue was contributed by Nickel Hydride (NiMH) and Lithium Battery segment coupled with storage battery segment. 

Electric Bike Lead-Acid Battery – Market Leader in China: 
The Company controls the largest market share of 26% in 2011, followed by Chaowei, a listed company which controls 24.5% of the market share. The next three top players accounted for 15% of the market share while the remaining is contributed by other peers. The company plans to expand its production capacity from 65 million units in 2011 to 80 million units in 2012 and 106 million units in 2013 to cater for demand from the primary and secondary markets. 

Defensive secondary (replacement) market the largest revenue contributor: The secondary market for electric bike lead-acid battery is the largest contributor to the Company’s revenue, accounting for 57.6% of total revenue in 2011. Typical lead acid batteries can be recharged 500 times and last about 12-18 months. During the lifespan of E-bike of about 10 years, batteries will be replaced at least 7 times. Thus, demand for replacement batteries will be defensive. This was further evidenced by the secondary market sales which only declined 2.9% as compared to 32.3% decline in the primary market during the economic downturn in 2009. 

Primary market for electric vehicles to benefit from severe road congestions and air pollution: Owing to the severe traffic congestions in major cities in China coupled with serious air pollution which is reaching dangerous levels recently, China is pushing for cleaner vehicles on the road, of which electric bike industry is a major beneficiary. In addition, users are offered cash incentives by the Chinese Government. In 2011, there were around 130 million electric bikes on the roads in China and this number probably increased to 150 million in 2012. According to China Dialogue, China expects 500mil electric bikes on the road and annual production of 75mil by 2020. 

Lead acid technology dominates E-bike battery industry: Lead acid battery technology dominates the E-bike battery market with market share of 91%, while the remaining is held by Li-ion (7%) and NiMH (2%). The popularity of lead acid is attributed to its lower cost, high reliability and recyclability, which more than offset its lower power output and heavier weight. Frost & Sullivan forecasted lead acid battery revenue will grow at CAGR of 20% till 2015. The following table is a comparison among the three battery technologies for E-bikes. 

EV Motive Battery: 
The Company is currently in collaboration with 106 famous auto corporations including some of the big names such as SAIC Motor, Chery Automobile, Wonder Auto, Kandi Auto, Zotye Auto and Shifeng Group for development and sales of motive battery for electric vehicles (EV). Chery is producing low-speed EV in small volume using Tianneng’s lead acid battery whereas Shifeng has a very strong presence in low-speed EV market in Shandong. Consequently, these collaborations make Tianneng the largest low-speed EV battery maker in China. In addition to its existing lead acid battery technology, Tianneng is aggressively embarking on research and development on NiMH and Li-ion batteries. Sales from EV motive batteries accounted for 5.1% of total sales in 2011, an increase of 135% year-on-year. Sales of EV motive batteries are projected to rise with the expansion of the company’s production capacity from 0.8mil units to 1.5mil units in 2012 and 2.0mil units in 2013. Mr Zhang Tianren stated that the success of the electric bike industry might be replicated in the low speed EV segment in the future with the Chinese government’s intention to make China the top electric vehicle producer in the world by 2020. The table below shows Tianneng’s expansion plans for its EV battery production capacity. 

New Energy Storage Battery: 
The Company embarked on development of storage battery for solar and wind power generation and successfully created storage battery with long lifetime and huge capacity. These solar and wind power generation is used in street lamp and traffic light systems equipped with LED lighting and lead gel storage battery. This segment contributed 0.8% of the total revenue or RMB43.5mil in 2011. The Company plans to expand its capacity from 100,000 units in 2011 to 200,000 in 2012 and 500,000 in 2013. 

Investment Case: 
Market leader becoming stronger after industry consolidation: The Chinese government has embarked on inspection and rectification works on the lead battery industry across the whole of China in 2011 and imposed stricter regulations for lead acid battery makers. Consequently, among the 1,930 lead battery makers, over 50% of them were under temporary suspension whereas another 30% were banned, partly owing to the limited resources available to smaller companies to comply with the strict regulations. This would bode well for Tianneng as the market leader as the Company could further advance its market share via organic expansions and potential M&A opportunities coupled with having greater control over the market price of its products. In May 2012, Tianneng acquired Zhejiang Huayi Power Co Ltd for RMB60.78mil to expand its production capacity. In addition, the Company is in the midst of another acquisition of 70% of Target Company at RMB47mil. There is likely to be more M&A acquisitions over the next two to three years owing to small-scale manufacturers being unable to compete with Tianneng’s competitive pricing and economies of scale. 

Recycling business to mitigate lead price fluctuation: Approximately 64% of production costs of lead acid batteries is attributed to electrolyte lead, thus production costs are susceptible to the volatility of lead price. To mitigate this, the Company set up a recycling plant in Wushan Changxing, Zhejiang province, the most advanced recycling plant to date in China which was fully operational in Oct 2012. The plant could process 150,000 tons of used lead acid battery and 100,000 tons of lead. According to management, this plant could generate RMB100mil of net income annually as the recycled products could be used as input to its production. The company is constructing a second recycling plant in Henan which will be completed in 2014. 

Besides, the Company has a strong distribution network over the country to recollect used lead acid batteries. This will bode well for the Company as China’s recycling industry is fragmented and lack of recycling channels. Thus, Tianneng is better positioned than its peers in terms of alleviating lead price volatility. The following graph shows the average selling price of Tianneng’s lead batteries and the average purchasing price of lead. 

Risks of more stringent regulations by the government? The Chinese government seems to be taking a more serious stance towards pollution as evidenced by its introduction of rectification works on lead acid battery makers in 2011. In March 2012, Ministry of Industry and Information Technology together with Ministry of Environmental Protection released “Consultation Paper of Lead Battery Industry Entry Requirements” (“Entry Requirements consultation”) which made clear that the Chinese government shall further uplift the operating threshold of existing and newly-built lead battery projects. This could put further pressure to lead acid battery makers. 

Nonetheless, it is interesting to note that despite the rectification works implemented in 2011, Tianneng’s margins expanded instead. In addition, Tianneng’s board members are part of the committee which created the “Entry Requirements for Lead Acid Battery Industry”. The Management stated that the Company will comply with all the regulations as it is the market leader and will upgrade its production facilities to meet all the requirements by 2013. This should help alleviate some of the policy risks faced by the company. 

Valuation remains attractive: The stock is currently trading at PER 2013 of 5.2x as compared to its 5-year historical average of 8.7x. In addition, the Company is giving out commendable dividend yield estimated at 5.5% in 2013. The share price is still undervalued currently, owing to investors’ skepticism over the long-term growth prospects of lead acid battery and policy risks by the Chinese government. Nonetheless, backed by its strong growth prospects in the electric bike and EV markets, recycling plants which could lower production costs coupled with its low valuation, a PER of at least 7x should be attributed to its 2013 EPS, implying a fair value of HKD7.03, an upside of 34%. Over the past few months, Tianneng’s share price had increased in conjunction with the strong run up in HSI. The stock might have some consolidation if HSI experiences profit taking due to the surge in HSI. HKD4.90 seems to be a good entry level.

Many international funds are into this stock, including Blackrock, Schroders, Vanguard and Lumiere (One of the best performing equity funds in the whole world). It's a stock worth watching.

References: Tianneng, Maybank, OSK, CMB International, UOB Kayhian, Sunwah Kingsway, Frost & Sullivan, Bloomberg etc.