Tong Kooi Ong blogs: Anxious period of uncertainties

From The Edge Malaysia
6th Feb 2014

THIS week, The Edge Malaysia carried a special report, The State of The Nation. It addresses the various issues of what you need to know about the economy, stock market and politics today.

Here are a few highlights:

1. There is no imminent or immediate economic crisis. However, the risk bandwidth has widened substantially.

2. Malaysia has a grace period of up to two years to successfully reform, rejuvenate and implement its transformation policies. These include widening its tax base, reducing subsidies, cutting wastages and leakages in government spending, instilling fiscal discipline, improving its current account surplus and increasing private sector competitiveness by eradicating rent-seeking and monopolistic practices.

Highlight: Genting’s expansion leaves little cash for dividends

From The Edge Malaysia
5th Feb 2014

"If it continues to succeed, the investments put in today could be the seeds for future bumper crops. For now, though, chances are that rich dividends will not be in the horizon for some years to come as the group puts its money to work."

UNLIKE the regular consumer companies with sizeable cash flows, the Genting group has hitherto chosen to return relatively little cash in dividends to its shareholders.

Instead, the billions made by its flagship hilltop casino resort and its four-year-old cash cow in Singapore are channelled to grow other casino resorts.

Billions of ringgit have been spent and committed to expanding the “Resorts World” brand across the globe since the success of Resorts World Sentosa in 2010, and indications are that billions more will be spent in Genting’s bid to make its mark abroad.

Not everyone is complaining, though. In fact, some analysts see opportunity amid the cash needs.

Expectations are that the Genting group would have a local listing for each of its foreign operations — once they are sizeable enough to stand on their own — to realise some value as well as create a new vehicle to tap the capital markets for further expansion. Such was the case for Genting Singapore plc and Genting Hong Kong Ltd’s associates Travellers International Hotel Group Inc (which houses Resorts World Manila) and Norwegian Cruise Line Holdings Ltd (NCL), which listed on Nasdaq last January.

This is why market watchers expect Genting Bhd and its 49.3%-owned Genting Malaysia Bhd to eventually pool their US-based assets for a combined listing.

Investment: REIT attraction for long-term investors

From The Edge Malaysia
28th Jan 2014

A SCALE back of the US Federal Reserve’s bond-buying programme and the possibility of rising interest rates have reversed investor sentiment on real estate investment trusts (REIT), sending prices tumbling. Going ahead however, as yields begin to rise, there could be some decent buying opportunities emerging in the sector for investors willing to take a longer view.

With yields in excess of 6% for some mall REITs and 7% for office REITs, there is only a small opportunity cost from holding REITs while taking a medium-term view. At the same time, there is room for upside through capital gains.

21/1/2014 - GAMUDA,SUNWAY,TOPGLOV

Personal Technical Analysis
21st Jan 2014

GAMUDA

Support: 4.30, 4.13
Resistance: 4.46

SUNWAY

Critical Support: 2.54, 2.60

Resistance: 2.68, 2.79, 2.86

TOPGLOV

Support: 5.45

Resistance: 5.50, 5.75

Dividend yield lowest in five years; loses appeal amid current market rally

From Star Online: Business
6th Jan 2014

PETALING JAYA: The past 12 months have seen a great run for the stock market, with the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) registering more than 10% gain for the year.

But the surge in blue chip stock prices have pushed dividend yield for quality companies down to their lowest level since 2009.

A quick check showed that Malayan Banking Bhd’s dividend yield is the highest at 5.57% among the top 30 counters that make up the FBM KLCI, followed by Maxis Bhd and British American Tobacco (M) Bhd with commendable 4.5% yields for both.

This is higher compared with the index’s dividend yield of 3.28%, according to Bloomberg data.

Yield play has lost some of its appeal, with prices of real estate investment trusts (REITs) taking a hit in recent months amid a switch to the bond market

Homes in KL South, anybody?

From Star Online: Business
14th Dec 2013

Transit home.

That’s one way to view acquiring real estate at the fringe of the Klang Valley or neighbouring suburbs, if you are native to the capital city.

In this case, it’s Southville City in Bangi, Mah Sing Properties Sdn Bhd’s most expansive township yet. Mah Sing Properties is a subsidiary of Mah Sing Group Bhd.

According to Mah Sing Properties Sdn Bhd township residential chief operating officer James A. Bruyns, many buyers are keen on a transit home for the work week.

“We have buyers who live with their families in Seremban and work in Kuala Lumpur. Having this property to go home to would alleviate their travelling. They can put up during the week and return to their families in the weekend,” he tellsStarBizWeek.

Cyberjaya City Centre set for 2014 launch

From Business Times Online
7th Dec 2013

THE RM6 billion Cyberjaya City Centre project is expected to be launched next year, said Cyberview Sdn Bhd managing director Faris Yahaya.

The commercial project over 57ha is developed by Cyberview and SP Setia Bhd and will feature commercial, residential and corporate office units.

Faris said the project will be developed over five phases and will change the landscape of Cyberjaya into a more balanced urban development than it is now.

"Cyberjaya City Centre will be the next big development in Cyberjaya. We are in the process of completing the development plan.

"This project will involve public-private partnerships and a special-purpose company will be established to undertake the development," Faris said at the ground-breaking of a RM1.05 billion housing project at Block 20 here yesterday, which will be jointly undertaken with Gadang Holdings Bhd.

Also present were Finance Ministry secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah, who is also Cyberview chairman, Gadang chairman Datuk Wan Lokman Wan Ibrahim and Gadang group managing director and chief executive officer Tan Sri Kok Onn.

Spread over 50ha in Cyber 9, the mixed-use project is divided into four phases and involve the construction of 2,500 housing units. 

Of those, 794 units will be reserved for 1Malaysia Housing Programme (PR1MA) to cater to the needs of middle-income earners.

Phase One will be open for sale in the third quarter of next year. It will offer 325 units of PR1MA housing and 142 units of two-storey link houses starting from RM500,000 each.

The remaining three phases will offer two-storey link houses, apartment units, government quarters and commercial units.

Faris said apart from the PR1MA houses, all other housing units under this development are also priced more competitively than other similar properties in the market.

"I am confident that with this new development, we can potentially meet the housing requirements of at least another 10,000 people and, at the same time, create new business opportunities," he said.

[Source]

Malaysia's consumption tax collectors seek to dethrone cash

From The Edge Malaysia
31st Oct 2013

KUALA LUMPUR (Oct 31): Malaysia's new consumption tax is a boon to IT companies that stand to win infrastructure contracts and fees - provided they can convince people to switch to electronic payments in a country where 91 percent of transactions are in cash.

The 6 percent goods and services tax (GST) that Prime Minister Najib Razak announced in his annual budget speech on Friday is aimed at narrowing a budget gap that is expected to hit 4 percent of gross domestic product this year.

Cash payments are harder for tax collectors to track, so the government is encouraging e-payments as a way to reduce costs and improve efficiency.

For companies such as Censof Holdings Bhd and GHL Systems Bhd that specialise in creating electronic payment and software systems, the initial benefit will likely come well before the tax is implemented in April 2015.

New property measures to drive away investors

From Business Times
By RHB Research
29th October 2013

"We see downside potential for valuations of some stocks, particularly those that are highly exposed to the Iskandar region and have high proportion of foreign buyers," 

"They include UEM Sunrise Bhd, Sunway Bhd, SP Setia Bhd, Mah Sing Group Bhd, IJM Land Bhd and Eastern & Oriental Bhd."

NEW property cooling measures, such as raising the ceiling price of properties for foreign buyers to RM1 million, will be a big blow to Johor's Iskandar Malaysia region, says RHB Research.

The research house views that the 30 per cent real property gains tax (RPGT) for foreigners, for disposals within the first five years, will wipe out short-term foreign speculators to a certain extent as the minimum five years' holding period will drive them away.

Silver Bird will cease to be syariah-compliant

From The Edge Malaysia
9th October 2013

KUALA LUMPUR: Financially troubled SILVER BIRD GROUP BHD will be categorised as a non-syariah-compliant company beginning next month. It has failed to meet a criterion of the new set of rules for syariah counters set by the Securities Commission Malaysia (SC).

Under the new rules, which take effect on Nov 1, a company’s cash and debts in conventional accounts cannot be more than 33% of its total assets in order to meet syariah standards. In terms of revenue, companies are only allowed to derive 5% to 20% from the various types of businesses which are non-syariah compliant such as gambling and brewers. The SC had announced the new rules in June last year.

More syariah-compliant companies are expected to face the same issue as Silver Bird. Currently, some 801 companies listed on Bursa Malaysia meet the existing standards.

With the new set of rules, syariah-compliant investment funds will be given a six-month grace period to realign their stock portfolios. This sparks concern that those stocks which could be reclassified as non-syariah compliant will succumb to selling pressure as institutional investors rejig their portfolios.