SC does a good job

Rigging, price manipulation, insider trading, accounting fraud and misleading statements are not uncommon evils in the stock market. It is the Securities Commission (SC) to unearth these activities and bring to justice the crooks who are involved. Once they are proven guilty, appropriate sentences must be meted out to fit the crime. If they are allowed to escape unscathed, investors will eventually shy away as more such crimes will occur. The result is that the Capital Market will suffer a severe blow.

Some of the companies that are involved in such crimes are:

Fountain View, Suremax Group Bhd, Actacorp, Kenmark, Granasia, Idris Hydraulic, Ekran Bhd and Aokam Perdana. 

In the case of Kenmark, its Taiwanese CEO is still at large after he gone missing in May, 2010.

Read more here:

http://biz.thestar.com.my/news/story.asp?file=/2012/6/28/business/11562641&sec=business

Buy in May and Hold all the way

The saying: "Buy in May and go away" certainly does not apply to the Malaysian stock market. Since September 2010 to the present day, the lowest point of the FBM KLCI is 1526.60.  It was established on May 18, 2012. At the time of writing this post it is hovering at 1610 with an uptrend bias.
So the saying should be changed to: Buy in May and Hold all the way.

STOCK MARKET INVESTMENT THE WAY TO WEALTH

We must throughly clear our minds of winning easy money through good luck. The stock market is not designed to make money for you through good luck. It is not a lottery game. You want to make money, you have to work for it.

When you see someone makes money by just a few clicks of the button, you may feel that you can easily do that yourself. What you don't know is the amount of work put in before those few clicks.

"Investment is most intelligent when it is most business like."  Remember and follow this adage. Know what it means and know it well.

The stock market is never efficient. This means the price of a stock is not reflexive of its value.  Many people make the mistake of thinking that a low priced stock is cheap, and that a high price stock is expensive. In reality, a $10 stock may be cheap, whereas a 50 cents stock can be expensive. It all depends on what value the stock has.

Savvy investors buy stocks for capital gains and dividends. Thus dividend-yield is of utmost importance to them. A stock that has a high dividend growth will always command a better price than one that has no growth. Dividend growth is dependent on earnings growth. When you look at earnings, always look at earnings per share (EPS).

The quality of the earnings must also be assessed. Ordinary earnings from the business is quite different from extra-ordinary earnings made. The latter is often a "one night stand" and probably will not happen the following year. This, you have to factor in when you value the stock.

Why are some stocks traded at high PERs and some at low PERs? The former is generally thought of as being better than the latter going forward. While this is true in theory, in reality there are many miscalculations. It is these inefficiency that present opportunities for intelligent investors to exploit.

Ill-liquid counters are normally unloved. Analysts often leave them alone. Fund managers leave them alone as well. As a result many remain as undiscovered gems for a long time. These counters are known as "Sleeping Beauties". Unless you have the patience and the cash, you will not care about them. But these beauties can actually make you rich if you have cash and know the ways of dealing with them.

Anyone who sees only the bright side without preparing for the dark side is bound to encounter financial difficulties. In a bullish market, making money is easy. You simply buy and you simply gain. But when the market turns bearish, things are not the same. If you don't know when to get out, you will be trapped. When the water  receded, those swimming naked will be exposed.

When you are overbought and your cost of fund is high, fear alone will cause you to become impetuous and irrational. This will cause you to sell out at the wrong time. To avoid this kind of disaster,  never borrow at high cost to trade or invest.

Every time you trade, you give money to the broker firm and the government. Don't overlook these expenses. They are real and they eat into your profits. Anyone who trades on thin margin will find difficulty to keep afloat over a long period of time.

After you have made some profit, don't imagine the next trade is going to be easy.

If you are not careful, you can easily go back to square one.

Whether you trade or invest, the target is the same, to make money. If you failed to do that, it means you have failed. It pays to review your past actions. If you constantly lose money, you will have to change your strategy. If you can't do that, expect more failures. You can't expect to get a different result doing the same thing the same way all the time.

Big money is only made in the long term. Look around to see if you know of anyone who has consistently made money trading short-term. Chances are that you can find none.

What's Brewing at TDM?

What's brewing at TDM? The stock is among the top ten gainers today. It closed at 4.55 for a nett gain of 54 sen or 13.47 percent. This kind of action has not been seen at TDM for a long time. There must be something in the stock that others know that we don't. Keep a watchful eye on it.

China-based companies at Bursa are dirt cheap?

KStar (5172) 24 sen; PE 2.27

Maxwell (5189) 41.5 sen; PE 2.38

MSports (5150) 38.5 sen; PE 2.47

Sozo (5187) 54 sen; PE 2.24

XDL (5156) 24.5 sen; PE 2.01

Xinquan (5155) 87.5 sen; PE 2.27

The above stocks are all China-based, and they are all being traded at PE of under three. The Chinese should find out why their stocks are being so lowly rated not only at Bursa but in Singapore and America as well. 

Investors do not like stocks that do not pay any dividend. They think that a stock that does not pay any dividend is not worthwhile to invest in. They are doubtful about their accounts and the integrity of the management. So, no matter how good a report is in the media, investors take no notice of it because their mentality is that China-based companies cannot be trusted.

A stock is traded at low PE for many reasons. Never invest in a stock just because its PE is low.

IQ not as important as EQ, MQ & BQ

Intelligence Is Overrated: What You Really Need to Succeed

by KELD JENSEN

Albert Einstein’s was estimated at 160, Madonna’s is 140, and John F. Kennedy’s was only 119, but as it turns out, your IQ score pales in comparison with your EQ, MQ, and BQ scores when it comes to predicting your success and professional achievement.

[More from Forbes.com: 10 Steps You Can Take To Become A Successful Young Leader At Work]

IQ tests are used as an indicator of logical reasoning ability and technical intelligence. A high IQ is often a prerequisite for rising to the top ranks of business today. It is necessary, but it is not adequate to predict executive competence and corporate success. By itself, a high IQ does not guarantee that you will stand out and rise above everyone else.

Research carried out by the Carnegie Institute of Technology shows that 85 percent of your financial success is due to skills in “human engineering,” your personality and ability to communicate, negotiate, and lead. Shockingly, only 15 percent is due to technical knowledge. Additionally, Nobel Prize winning Israeli-American psychologist, Daniel Kahneman, found that people would rather do business with a person they like and trust rather than someone they don’t, even if the likeable person is offering a lower quality product or service at a higher price.

[Related: Habits of Highly Productive People]

With this in mind, instead of exclusively focusing on your conventional intelligence quotient, you should make an investment in strengthening your EQ (Emotional Intelligence), MQ (Moral Intelligence), and BQ (Body Intelligence). These concepts may be elusive and difficult to measure, but their significance is far greater than IQ.

Emotional Intelligence

EQ is the most well known of the three, and in brief it is about: being aware of your own feelings and those of others, regulating these feelings in yourself and others, using emotions that are appropriate to the situation, self-motivation,  and building relationships.

Top Tip for Improvement: First, become aware of your inner dialogue. It helps to keep a journal of what thoughts fill your mind during the day. Stress can be a huge killer of emotional intelligence, so you also need to develop healthy coping techniques that can effectively and quickly reduce stress in a volatile situation.

[More from Forbes.com: How To Change Your Brain For The Better]

Moral Intelligence

MQ directly follows EQ as it deals with your integrity, responsibility, sympathy, and forgiveness. The way you treat yourself is the way other people will treat you. Keeping commitments, maintaining your integrity, and being honest are crucial to moral intelligence.

Top Tip for Improvement: Make fewer excuses and take responsibility for your actions. Avoid little white lies. Show sympathy and communicate respect to others. Practice acceptance and show tolerance of other people’s shortcomings. Forgiveness is not just about how we relate to others; it’s also how you relate to and feel about yourself.

[More from Forbes.com: 10 Worst Body Language Mistakes]

Body Intelligence

Lastly, there is your BQ, or body intelligence, which reflects what you know about your body, how you feel about it, and take care of it. Your body is constantly telling you things; are you listening to the signals or ignoring them? Are you eating energy-giving or energy-draining foods on a daily basis? Are you getting enough rest? Do you exercise and take care of your body? It may seem like these matters are unrelated to business performance, but your body intelligence absolutely affects your work because it largely determines your feelings, thoughts, self-confidence, state of mind, and energy level.

[Related: 6 Millionaire Moms]

Top Tip For Improvement: At least once a day, listen to the messages your body is sending you about your health. Actively monitor these signals instead of going on autopilot. Good nutrition, regular exercise, and adequate rest are all key aspects of having a high BQ. Monitoring your weight, practicing moderation with alcohol, and making sure you have down time can dramatically benefit the functioning of your brain and the way you perform at work.

What You Really Need To Succeed

It doesn’t matter if you did not receive the best academic training from a top university. A person with less education who has fully developed their EQ, MQ, and BQ can be far more successful than a person with an impressive education who falls short in these other categories.

Yes, it is certainly good to be an intelligent, rational thinker and have a high IQ; this is an important asset. But you must realize that it is not enough. Your IQ will help you personally, but EQ, MQ, and BQ will benefit everyone around you as well. If you can master the complexities of these unique and often under-rated forms of intelligence, research tells us you will achieve greater success and be regarded as more professionally competent and capable.

Century Logistics eyes regional tie-up with PepsiCo

Century Logistics eyes regional tie-up with PepsiCo 2012/05/05 For a start, PepsiCo, the food division of Pepsi-Cola (Thai) Trading Co Ltd, had invited Century Logistics to be a strategic partner in the latter's supply chain management in Thailand. AYUTTHAYA: Century Logistics Holdings Bhd is eyeing more cooperation with world's largest snack food company PepsiCo in the Asia-Pacific region, after successfully leasing its warehouse facility in Thailand to the latter. Its deputy managing director Dr Mohamed Amin Kassim said for a start, PepsiCo, the food division of Pepsi-Cola (Thai) Trading Co Ltd, had invited Century Logistics to be a strategic partner in the latter's supply chain management in Thailand. It all began when its wholly-owned subsidiary, Century Resources (Thailand) Ltd, in September last year secured a RM7.6 million contract from PepsiCo for the use of the former's state-of-the-art warehouse facility at the Rojana Industrial Park here. The contract was for two years initially, during which PepsiCo would use the warehouse as its main distribution centre country-wide. "Our company did not merely lease the warehouse to PepsiCo, but also help it solve its supply chain management, prompting it to invite us to be its strategic partner in strategic planning for supply chain management in the Thailand market," Mohamed Amin said. He said the actual physical supply chain would be provided by existing local players as Century Resources would be involved only in strategic planning. "For example, if they (PepsiCo) have problems to hit certain target areas, we will draw a plan and solution for them," he said. PepsiCo has already asked Century Resources to build another warehouse as it wants to expand its distribution centre in the country, and the subsidiary company is studying the matter. Century Resources established its presence in Thailand in 2005, with the inception of a third-party logistics contract from Nestle. In 2009, it invested a RM3.5 million in its own warehousing facility here, in line with its regional growth strategy. Mohamed Amin said since Thailand was PepsiCo's distribution centre for Asia Pacific, Century Resources was eyeing to be its partner in strategic planning for its supply chain management for the region. Century Logistics is Malaysia's leading provider of value-added supply chain solutions and total logistics services. Besides Malaysia and Thailand, the company also operates in China, Singapore, India, Sri Lanka and Dubai, he said. Bernama

Centuary Logistics Holdings Berhad

Century Logistic Holdings Berhad (CLHB) is a total logistic services provider. Its services include: Supply Chain Management, Procurement Logistics Services, Oil & Gas Logistics, Transport Management & Distribution, Warehousing and Shipping, Chartering & Bunker Services.

For the year ended Dec 31, 2011, the key statistics of the company are as follows:
Paid Cap: RM 84,136
Par Value Per Share: RM1
EPS: 37.79 sen (Diluted 32.14 sen)
Dividend: Interim 5 sen s/tier; Final 7 sen s/tier
NTA: RM2.49

The company has a strong balance sheet with cash and bank balances of RM 22.615 million. The company didn't perform satisfactorily in the last quarter of 2011 mainly because of circumstances beyond its control. Its FSUs (Floating Storage Units) operating in Pasir Gudung Johor, have to be cut down to 3 vessels from 8 for a period of 2 months because of a directive from the Marine Department.

The worst flooding inThailand from end-July to mid-January also affected revenue and earnings. These unfortunate incidences are now a thing of the past.

In Feb, 2011, the company bought a piece of freehold land measuring 65,340 square feet in Setia City for RM8,820,900 to be developed into a commercial office building.

In the Port of Tanjong Pelepas, its warehousing capacity of 460,000 square feet is to be expanded by 400,000 square feet.

In the oil & gas logistics activities, a vessel now known as Onsys Century 1 was purchased for RM15 million in October, 2011. The vessel commenced carrying out spot charter voyages in January 2012.

The 3 actions outlined above will bring much growth to the company in 2012 and beyond.

In the business world of today, more and more companies are going global. This means more & more business for logistic companies.

Every year I pick a stock as my best bet for the year. In 2009, it was KPJ; in 2010, it was TDM; in 2011, it was EPIC and now in 2012 it is CLHB.

The stock is last traded at 1.90.
I believe it will be much higher by the third quarter of 2012. A 50% growth should not be ruled out.

As usual, you buy at your own risk.

OIL PALM IS NOT JUST PALM OIL

More to oil palm than just palm oil



2012/03/24

EVERYONE knows that oil palm is grown to produce palm oil. Some 90 per cent of oil palm plantation revenue is derived from the sale of crude palm oil and crude palm kernel oil while the other 10 per cent is derived from other parts of the palm. These figures are expected to be reversed by 2020.
A less well-known fact is that oil only forms about 10 per cent of the total biomass produced by the palm, while the remaining 90 per cent can be further utilised for commercial exploitation in a sustainable manner.

It has been estimated that for every tonne of palm oil produced from fresh fruit bunches, a farmer harvests around six tonnes of waste palm fronds, one tonne of palm trunks, five tonnes of empty fruit bunches, one tonne of press fibre (from the mesocarp of the fruit), half a tonne of palm kernel endocarp, 250kg of palm kernel press cake, and three tonnes of palm oil mill effluent.

Quoting figures from the National Biomass Strategy Blueprint, by 2020, Malaysia's palm oil industry is expected to generate about 100 million dry tonnes of solid biomass.

Currently, a large portion of the biomass from the plantations is left to rot and returned to the field as fertiliser. While this practice is necessary for the healthy growth of young oil palms, there is more than enough biomass that can be used for more lucrative purposes.

The National Biomass Strategy 2020 lays the foundation for Malaysia to capitalise on its biomass by channeling 20 per cent of the solid biomass into higher value downstream uses instead of using it as low value downstream uses like fertiliser. These uses can broadly be divided into energy generation, biochemicals and structural materials.

The biomass from oil palm fronds, palm kernel shells and empty fruit bunches can be used as feedstock for biomass boilers to generate electricity. The renewable energy generated may be used on site or sold to power generation companies, thereby, reducing energy costs and increasing the revenue of mill owners.

According to industry sources, a mill capable of processing 60 tonnes of fresh fruit bunches an hour can also produce 3MW of electricity an hour from the empty fruit bunches once the fruits have been removed.

Furthermore, the anaerobic treatment of palm oil mill effluent produces biogas which can be used as a substitute for natural gas for use in factories and homes.

In contrast to first generation biofuels and bio-based chemicals - using food crops such as sugarcane, cassava or corn as feedstock - emerging second-generation technologies are exploring the use of oil palm biomass. One oil palm trunk produces about 200 to 250 litres of sap which has a sugar content of eight per cent, up to a maximum of 18 per cent with proper ageing. This sugar can be fermented into ethanol which is emerging as an alternative biofuel and bio based chemicals. Further research is also being done to convert the lignocellulosic materials from the oil palm fronds into bio-based chemicals.

Currently, oil palm trunks are used to produce low-grade lumber. Up to 40 per cent of the trunk wood can be peeled for making plywood and about 40 per cent of the frond material can be crushed into dust or smaller particles to make medium-density fibreboard and particleboard.

However, these processes are energy intensive and at FRIM we have found more cost effective processes to convert oil palm trunks into engineered lumber, i.e. MYScrim-OPT which is intended for use in manufacturing furniture, doors, floorboards and interior design accessories.

More intensive research is being conducted to develop the patented MYScrim-OPT technology further to enhance its properties so that the final product is strong enough to be used as building materials. This will not only create added value from by products from the palm oil industry but also reduce our dependence on our fast depleting forests for wood.

Plantation companies with sufficient capital which have invested in downstream activities have benefited from the higher returns gained from moving further up the palm oil value chain. The next step will be to explore and exploit other aspects of the oil palm. The high investment in these large commercial scale technologies will be justified with the right kind of regulatory framework, coupled with incentive packages provided by the government.

Coordination between the plantations and the mills is required to mobilise the commercial part of the oil palm biomass. Biomass utilisation centres will need to be centralised to be closer to the centre of production in order to lower the logistics and handling costs which otherwise can render unprofitable efforts.

While the technology is available, the high investment in these technologies means that only highly capitalised companies, typically, public-listed plantation entities, are able to afford them. The bigger boys with large capital bases and professional management teams like Sime Darby, Felda Holdings and IOI are in a better position to take on the risk and the rest will, hopefully follow.

The writers, Datuk Dr Marzalina Mansor & Dr Wan Tarmeze Wan Ariffin, are from MYScrim Flagship Project, Forest Research Institute of Malaysia.

Foreign investors find gems in Malaysian stocks

By Goh Thean Eu
gohtheaneu@nstp.com.my
2012/04/02

Overseas investors were net buyers of Malaysian stocks for 31 consecutive trading days, a sign that the current stock market rally might still have legs to run, said analysts.
Based on Bursa Malaysia data compiled by Business Times, it was revealed that foreigners were consistent net buyers since February 17 – during which foreign fund managers bought over RM13.72 billion and sold RM9.34 billion worth of stocks, which represented a net buying of about RM4.3 billion.

Last month, foreign fund managers were net buyers of more than RM3.4 billion worth of stocks, making them the net buyers for the
sixth consecutive month.

“This basically means improved risk appetite by foreign investors in anticipation of stronger emerging market economy and stronger ringgit in the second half this year,” said Dr Nazri Khan, vice-president and head of retail research of Affin Investment Bank.

Over the past 31 trading days, overseas investors’ interests have helped to push the stock market by almost three per cent – from the opening of 1,550.49 on February 17 to the alltime high of 1,596.33 point last Friday.

During the period, 195 companies saw their share prices rise to their 52-week high, of which 53 companies had market capitalisation of more than RM500 million. In the same period, 46 stocks were traded at their 52-week low.

Five FTSE Bursa Malaysia Kuala Lumpur Composite Index component companies, namely Maxis Bhd, Telekom Malaysia Bhd, Bumi Armada Bhd, British American Tobacco Bhd and Sime Darby Bhd, also hit their 52-week high over the past 31 trading days.

None of the major banks hit its 52-week high during the period.

The benchmark FBM KLCI has risen by 4.28 per cent so far this year, which is far below what the region has performed.

The stock markets in Singapore, Thailand, Indonesia and the Philippines have rose by between seven per cent and 16 per cent this year. The MSCI Asia ex-Japan Index has gained 12 per cent year-to-date.

“I believe overseas investors are expecting Malaysian stocks to do some catching up after under-performing for some time,” said OSK Research Sdn Bhd head of research Chris Eng.

Although the benchmark index has hit the all-time high, analysts believed that stock prices were still reasonable. Currently, the FBM KLCI is trading at about 16.5 times price earning ratio. It is higher than Singapore’s market of about 10 times PE.

“I think we are still reasonably priced. Indonesia used to trade at about 30 per cent discount to our market, but it is now more expensive than us,” said Eng.

Indonesia’s Jakarta Stock Index is currently trading at about 21 times PE, while Thailand’s benchmark index is trading at about 15 times and the Philippines benchmark index at about 18 times.

Equities The Better Choice

2012 is going to be a great year for equities. Keep cash and not stocks at your own peril. Read more.

SC takes action

Fraud, Fraudulent accounting, misleading statements, criminal breach of trust, and wrongful manipulation of shares can never be completely wiped out in any country.
Malaysia has its fair share of these mischievous activities. Click here to read more.

Lifting the seedlings to promote growth (拨苗助长)

Once upon a time, there was an inexperienced farmer in ancient China who was always impatient. Whenever he did anything he wanted to see result quickly.

One day he planted some rice seedings in his paddy field. He was very eager to see them grow. Day after day he would go to his paddy field to watch how the seedings were doing. Of course there was nothing discernible. He became impetuous. "Why not I do something to promote their growth," he said to himself.

Thinking it was a good idea to lift the seedings a little bit so that they looked taller, he went into the field and lifted all the seedings an inch higher.

He thought he was smart to have done that. He went home happily and bragged to his family about what he had done, little realizing that he had just devastated all the seedings.

The Chinese idiom to this action is called: 拨苗助长.

The stock market is designed to transfer money from the impatient to the patient. So don't become overly impatient or enthusiastic about growing your portfolio and do something as stupid as what the stupid farmer had done.

Mergers & Acquisitions

Mergers And Acquisitions: Understanding Takeovers
June 13, 2010 | Filed Under » Fundamental Analysis , Investing Basics , Investor Relations , Stocks , Venture Capital
Terms like "dawn raid", "poison pill", and "shark repellent" might seem like they belong in James Bond movies, but there's nothing fictional about them - they are part of the world of mergers and acquisitions (M&A). Owning stock in a company means you are part owner, and as we see more and more sector-wide consolidation, mergers and acquisitions are the resultant proceedings. So it is important to know what these terms mean for your holdings.

Mergers, acquisitions and takeovers have been a part of the business world for centuries. In today's dynamic economic environment, companies are often faced with decisions concerning these actions - after all, the job of management is to maximize shareholder value. Through mergers and acquisitions, a company can (at least in theory) develop a competitive advantage and ultimately increase shareholder value.

There are several ways that two or more companies can combine their efforts. They can partner on a project, mutually agree to join forces and merge, or one company can outright acquire another company, taking over all its operations, including its holdings and debt, and sometimes replacing management with their own representatives. It’s this last case of dramatic unfriendly takeovers that is the source of much of M&A’s colorful vocabulary.

Hostile Takeover
This is an unfriendly takeover attempt by a company or raider that is strongly resisted by the management and the board of directors of the target firm. These types of takeovers are usually bad news, affecting employee morale at the targeted firm, which can quickly turn to animosity against the acquiring firm. Grumblings like, “Did you hear they are axing a few dozen people in our finance department…” can be heard by the water cooler. While there are examples of hostile takeovers working, they are generally tougher to pull off than a friendly merger.

Dawn Raid
This is a corporate action more common in the United Kingdom; however it has also occurred in the Unites States. During a dawn raid, a firm or investor aims to buy a substantial holding in the takeover-target company’s equity by instructing brokers to buy the shares as soon as the stock markets open. By getting the brokers to conduct the buying of shares in the target company (the “victim”), the acquirer (the “predator”) masks its identity and thus its intent.

The acquirer then builds up a substantial stake in its target at the current stock market price. Because this is done early in the morning, the target firm usually doesn't get informed about the purchases until it is too late, and the acquirer now has controlling interest. In the U.K., there are now restrictions on this practice.

Saturday Night Special
A Saturday night special is a sudden attempt by one company to take over another by making a public tender offer. The name comes from the fact that these maneuvers used to be done over the weekends. This too has been restricted by the Williams Act in the U.S., whereby acquisitions of 5% or more of equity must be disclosed to the Securities Exchange Commission.

Takeovers are announced practically everyday, but announcing them doesn't necessarily mean everything will go ahead as planned. In many cases the target company does not want to be taken over. What does this mean for investors? Everything! There are many strategies that management can use during M&A activity, and almost all of these strategies are aimed at affecting the value of the target's stock in some way. Let's take a look at some more popular ways that companies can protect themselves from a predator. These are all types of what is referred to as "shark repellent".

Golden Parachute
A golden parachute measure discourages an unwanted takeover by offering lucrative benefits to the current top executives, who may lose their job if their company is taken over by another firm. Benefits written into the executives’ contracts include items such as stock options, bonuses, liberal severance pay and so on. Golden parachutes can be worth millions of dollars and can cost the acquiring firm a lot of money and therefore act as a strong deterrent to proceeding with their takeover bid.

Greenmail
A spin-off of the term "blackmail", greenmail occurs when a large block of stock is held by an unfriendly company or raider, who then forces the target company to repurchase the stock at a substantial premium to destroy any takeover attempt. This is also known as a "bon voyage bonus" or a "goodbye kiss".

Macaroni Defense
This is a tactic by which the target company issues a large number of bonds that come with the guarantee that they will be redeemed at a higher price if the company is taken over. Why is it called macaroni defense? Because if a company is in danger, the redemption price of the bonds expands, kind of like macaroni in a pot! This is a highly useful tactic, but the target company must be careful it doesn't issue so much debt that it cannot make the interest payments.

Takeover-target companies can also use leveraged recapitalization to make themselves less attractive to the bidding firm.

People Pill
Here, management threatens that in the event of a takeover, the management team will resign at the same time en masse. This is especially useful if they are a good management team; losing them could seriously harm the company and make the bidder think twice. On the other hand, hostile takeovers often result in the management being fired anyway, so the effectiveness of a people pill defense really depends on the situation.

Poison Pill
With this strategy, the target company aims at making its own stock less attractive to the acquirer. There are two types of poison pills. The 'flip-in' poison pill allows existing shareholders (except the bidding company) to buy more shares at a discount. This type of poison pill is usually written into the company’s shareholder-rights plan. (To learn more about these and other shareholders’ rights, see Knowing Your Rights as a Shareholder.) The goal of the flip-in poison pill is to dilute the shares held by the bidder and make the takeover bid more difficult and expensive.

The 'flip-over' poison pill allows stockholders to buy the acquirer's shares at a discounted price in the event of a merger. If investors fail to take part in the poison pill by purchasing stock at the discounted price, the outstanding shares will not be diluted enough to ward off a takeover.

An extreme version of the poison pill is the "suicide pill" whereby the takeover-target company may take action that may lead to its ultimate destruction.

Sandbag
With the sandbag tactic the target company stalls with the hope that another, more favorable company (like “a white knight”) will make a takeover attempt. If management sandbags too long, however, they may be getting distracted from their responsibilities of running the company.

White Knight
A white knight is a company (the “good guy”) that gallops in to make a friendly takeover offer to a target company that is facing a hostile takeover from another party (a “black knight”). The white knight offers the target firm a way out with a friendly takeover. (To learn more about white, gray, yellow and black knights, see Bloodletting and Knights: A Medieval Guide to Investing.)

Conclusion
The next time you read a news release that says that your company is using a poison pill to ward off a takeover attempt, you’ll now know what it means. More importantly, you'll know that you have the opportunity to purchase more shares at a cheap price. M&A has an entire vocabulary of its own, expressed through some of the rather creative strategies employed in the process, such as the ones we've touched on above. Hopefully by reading this article you are at least a bit wiser in the wacky world of M&A terminology. By understanding what is happening to your holdings during a takeover or attempted takeover, you may one day even save money.

For more on the basics of mergers and acquisitions, please check out this entire tutorial devoted to the subject: The Basics of Mergers and Acquisitions.

by Investopedia Staff
Investopedia.com believes that individuals can excel at managing their financial affairs. As such, we strive to provide free educational content and tools to empower individual investors, including thousands of original and objective articles and tutorials on a wide variety of financial topics.

Pahang Killer

EPF Takes Profits

The Star Online > Business
Tuesday March 13, 2012
EPF goes on selling spree

It disposes of RM441mil worth of shares on March 7

By CHOONG EN HAN
han@thestar.com.my

PETALING JAYA: The Employees Provident Fund (EPF) sold a whopping RM441.09mil worth of Malaysia-listed equities on March 7 alone, in line with its trend of active disposals over the last two weeks.

Bursa Malaysia filings showed that on March 7, the EPF along with its portfolio managers dumped a total 83.68 million shares on the open market, substantially more than the 7.4 million shares it had acquired the same day.

The number of shares disposed of represents almost half the total volume traded that day, which stood at 173.14 million shares.

Fund managers reckon that the fund was merely taking profit but its aggressive selling had dragged the FBM KLCI down from its all-time high last week.


The FBM KLCI ended 10.47 points lower at 1,574.83 that day from 1,594.74 on Monday.

“It seems that the portfolio managers under EPF are taking a breather after the market climbed to near all-time highs.

“The number is substantial, and definitely the index would be down from the disposal. Filings next week will show whether the fund has continued with its selling spree this week,” said a fund manager.

Under the Companies Act 1965, substantial shareholders need only notify the listed company of the shareholding transaction within seven days.

Among the biggest disposals on March 7 were 11.43 million shares in Telekom Malaysia Bhd, 10.72 million shares in Axiata Group Bhd, and 10.23 million shares in YTL Corp Bhd.

EPF's divestment of shares has been going on for the last two weeks.

Most notably, between Feb 28 and March 1, it had disposed of about 30.3 millions shares in Maybank.

It had also early this month sold 10.7 million shares in UMW Holdings Bhd, 8.5 million shares in CIMB Group, 6.5 million shares in Telekom Bhd, six million shares in DiGi.Com Bhd, 3.7 million shares in IJM Corp Bhd, and 3.2 million shares in IOI Corp Bhd.

Meanwhile, EPF chief executive officer Tan Sri Azlan Zainol is reported to have said that the EPF had not distorted the market.

“It is all unintentional. We transact over three million shares at any one time; of course the market would be distorted,” he said.

In another development, the EPF is expected to start distributing portions of the Rubber Research Institute of Malaysia land in Sungai Buloh by June.

It is leading the development of the proposed prime township development via Kwasa Land Sdn Bhd, a wholly-owned subsidiary of the EPF.

Bullish bets on palm oil

By Ooi Tee Ching
bt@nstp.com.my
2012/03/08

OIL palm planters are smiling again this year as price forecast gurus at the Palm and Lauric Oils Outlook Conference (POC) 2012 placed bullish bets on crude palm oil (CPO) prices.

Hamburg-based ISTA Mielke GmbH executive director Thomas Mielke highlighted that for the first time in history, drought has impacted soy bean output in the United States and Latin America at the same time.

"We're likely to see global soy bean output plunge by 20 million tonnes this year," he said.

Mielke, who is also editor of Oil World journal, said "poor weather is also hurting rapeseed yields in Ukraine and the European Union".

He then said Malaysia's palm oil production could touch 19.3 million tonnes this year compared with 18.9 million tonnes in 2011. As for Indonesia, he foresees output to expand to 25.5 million tonnes.

"I still think these rise in palm oil output will not be enough to offset shortage in soya and rape oils."

He stressed that the oil palm industry must continue its focus on yield improvement as a way to overcome limitations of arable land and water so as to retain world market leadership.

Mielke, a well-respected and authoritative vegetable oil analyst, once again, at this POC series rejected calls by green activists for a moratorium on oil palm plantings and encourage adoption of genetically modified technology.

"In order to satisfy the daily oils and fats need of an increasing global growing population, we need to plant more genetically-modified oil crops that are drought tolerant and disease resistant," he urged the 2,000-odd participants at the POC 2012.

He repeated his message to oil palm planters not to be misled by green activists' lobby to limit expansion of oil palm plantations as the world continues to face shortage of edible oils.

The conference, which traditionally focused on price forecasts for palm and coconut oils, had in the last few years, taken a more holistic approach.

Mielke then concluded that palm oil prices is likely to average at around RM3,500 per tonne this year.

LMC International Ltd chairman Dr James Fry was next to take to the stage. He said 2011 was a year of wonder for planters, which saw excellent prices and close to ideal output conditions.

He reiterated his long-held view that palm oil prices would continue to be highly influenced by petroleum prices.

Yesterday, Brent crude oil rose above US$122 (RM366) a barrel after China said it would boost energy imports this year, while concerns persist over supply risks and Iran's nuclear programme despite the country's offer for talks with major powers.

High petroleum prices translates to more demand for biofuel.

This, in turn, means better demand for CPO. On top of this, there is already strong demand for CPO in emerging markets like China and India as their big population consumes more food.

Fry forecasts the CPO price could rise as high as RM3,310 and fall as low as RM2,590 a tonne if Brent crude oil were to settle to a "realistic level" of US$86 a barrel.

"If, however, Brent crude were to go on hovering at current US$125 a barrel, CPO is likely to trade between RM3,140 and RM3,360 a tonne," he said.

Since October 2011, the Indonesian government has widened the export tax gap between CPO and refined products drastically to boost refining capacity and downstream activities. As a result, CPO and crude palm kernel oil became cheaper for downstream producers there.

Fry noted that Malaysian refiners were starting to concede global palm oil market share to Indonesia. This is pushing more palm oil stocks to Malaysia.

As a stop-gap measure, the Malaysian government has allowed duty-free CPO exports amounting to 3.6 million tonnes this year.

At the industry's leading global conference yesterday, London-based Godrej International director Dorab Mistry said CPO prices, now trading around RM3,200 a tonne, can hit RM4,000 in three months due to the threat of war and geo-political tensions in Iran, specifically at the Gulf of Hormuz.

"I'm assuming that Brent crude oil will go on trading at between US$100 and US$120 a barrel but with the threat of geo-political uncertainty in Middle East and North Africa, vegetable oils prices could climb to higher levels," he said at the POC 2012 here yesterday.

Given the high energy prices, tight palm oil stocks and rising demand, the CPO price is due to reach a new high in the next quarter.

"It is conceivable that CPO prices may test RM4,000 a tonne by June," he said.

He reckons that 2012 is a year of two halves, of which palm oil prices remains bullish on tight supply in the first half. As for the latter part of the year, Dorab said early signs of emerging drought could slash palm oil output.

From Waste to Wealth

From waste to wealth or from trash to cash, both are as good as having the best of two worlds.

Oil palm biomass ( OPB) is formerly burned if not left to rot. This is bad for the environment. Thanks to innovation and technology, OPB has become a valuable asset to the oil palm plantations. No longer is it a concern or something that has to be disposed off with much expenditure.

Nowadays, the product is much sought after as it is capable of being turned into animal feeds, fertilizer, wood products, biofuel, ethanol, biochemical and many other useful goods.

Malaysian oil palm plantations now have zero burning. Everything about the oil palm trees is useful in more ways than one.

Oil palm stocks have been on the rise since the plantation index minor bottom of 6625 formed on 3.10.11. At the time of writing this post, it stands at 8676. The uptrend is likely to continue.

TDM, a Potential Gold Mine

A revaluation exercise of certain assets of TDM has resulted in a surplus of RM286.7m for the group. This means that its NTA per share has ballooned to RM4.93 from RM3.22 a year ago. Its latest quarterly result of 18.69 sen per share is better than anticipated. Its full year result of 66.32 sen per share when compared to its previous year result of 40.66 sen per share is commendable.

The group which is now focused in plantations and hospitals has lots of growth going forward. Its cash and cash equivalents as at 31.12.11 stands at RM224,424,000. As at 31.12.10, it was only RM176,100,000. The group is cash-rich and asset-rich as well.

Hold on to your shares for more upside. A bonus with a split is a likely scenario as the group is under immense pressure to be more liquid.

Spreading Love With Coffee

When spreading love with coffee
Why not try Tongat Ali
Two cups a day, keep you alert for work and play
Economical, good to smell and good to taste
Go, have a cup at your nearest cafe
And buy some for your love on Valentine Day.

Tongkat Ali, now known as Power Root, is presently traded at around 53 sen. I think this is good value for the stock.