Buying more WCE

I have decided to purchase some 13,200 units of WCEHB. In the process, I have sold 5,700 units of Power Root for the fund.

I have held the stock, WCE for a long time since 2014 and this drop largely to do with fear of termination of most tolled highways in Malaysia, I think is overdone. There is no denying that any government of the day can do whatever they like - or could they?

More than 50% of tolled highway assets are owned by government linked organizations such as EPF, PNB, Khazanah. Those examples are PLUS Expressway, AKLEH, LKSA, SILK and several more under Prolintas. Many investors do not differentiate the difference between government linked and government. These highways are not owned by government but by the people. Best example is PLUS which is 51% owned through Khazanah and 49% by EPF. The government does not hold ownership of EPF but run the organization on the people's behalf.

By terminating PLUS without fair compensation towards EPF especially will be bad for the governance and future investment profile of the country.

WCE Sdn Bhd is indirectly semi-private and public, as I call it. 20% of the highway is owned by IJM direct, and the largest shareholder for IJM is EPF (yet again). Although it is professionally run by a set of managers, its 2nd and 3rd largest shareholders are Amanah Saham Bumiputera and Tabung Haji respectively. Besides that IJM also holds 26% of WCE Holdings, the listed company which I am buying.

In the event the government is exercising its pitch of eliminating toll highways, it will hugely impact the stock market - and not just tolled highway stocks.

At the price of RM0.75, I think the market is already putting the company on the huge assumption that the highway will not continue. Todate, WCE is 51% completed and it seems that they are continuing with the project without stopping.

On the other hand, as it seems MWE - the other 26% shareholder is picking up its shares of the additional funds - through rights - that is to be raised for the company in the next few months. If the project is affected, usually no one will inject more money. MWE is actually going private which means its company's largest shareholder is now having a larger effective stake of WCEHB.

On the merit of the highway, I do not think there is much change. The government could hold back on price toll increases in the long run which may affect WCE. I still think at RM750 million valuation, it is compensated for whatever that may be negative.

Teguran ke atas Khazanah...

On Malaysiakini today,

"Perdana Menteri Tun Dr Mahathir Mohamad mendakwa syarikat pelaburan negara Khazanah Nasional telah menyimpang daripada matlamat asalnya untuk membantu bumiputera.

Dalam wawancara dengan laman web perniagaan Investvine, Mahathir turut berkata mahu memotong gaji tinggi bos syarikat-syarikat berkaitan kerajaan (GLC)

Bercakap mengenai Khazanah yang ditubuhkan pada 1993 ketika kali pertama pentadbirannya, Mahathir berkata firma pelaburan itu ditubuhkan untuk memegang saham bumiputera, sehingga mereka mempunyai keupayaan untuk membeli saham tersebut.

"Tetapi dalam proses itu, Khazanah memutuskan ia perlu mengambil semua saham itu untuk syarikat itu dan jika ia suatu saham yang baik mengapa tidak mendapatkan saham berkenaan semasa penyenaraiannya ketika harga saham itu masih sangat rendah dan lantaran itu mereka lupa sepenuhnya tentang memegang saham untuk bumiputera.

Kecenderungan jual saham

"Mereka memutuskan perlu memegang saham berkenaan untuk selama-lamanya menjadi sebahagian daripada syarikat-syarikat kerajaan yang dimiliki oleh kerajaan," katanya.

Ini menurut beliau kerana bumiputera yang mendapat saham berkenaan memiliki kecenderungan untuk menjual saham itu dan memperkayakan diri mereka sendiri.

Beliau berkata Putrajaya kini sedang meneliti pegangan saham Khazanah dalam syarikat-syarikat tersebut dan akan menyusunnya mengikut kategori keuntungan serta mengembalikan tujuan asal penubuhan Khazanah.

"Kami perlu bersetuju untuk beberapa syarikat ini mengurangkan bilangan (saham yang dipegang oleh Khazanah) dan setakat ini kembali ke niat asal untuk memegang saham yang diperuntukkan kepada bumiputera sehingga tiba masa apabila mereka boleh membelinya," katanya.

Era lantikan politik bergaji besar telah tamat

Sementara itu mengulas syarikat berkaitan kerajaan (GLC), Mahathir berkata zaman pemegang jawatan lantikan politik mengetuai firma tersebut dan meraih gaji besar telah berakhir.

"Gaji orang-orang ini (dilantik politik) sangat tinggi dan mereka menikmati gaji tinggi tanpa ambil peduli sama ada syarikat itu membuat keuntungan atau tidak.

"Di sisi lain, kami mahu meletakkan profesional dan gaji mereka tidaklah terlalu tinggi, ia mungkin sedikit lebih tinggi daripada gaji perkhidmatan awam, tetapi jika prestasi mereka bagus maka kami akan membayar mereka bonus.

"Sekiranya mereka tidak bagus, mereka tidak akan mendapat pendapatan tinggi yang mereka dapatkan sekarang dan kami akan mengubah pengurusan supaya kami dapat melantik golongan profesional (tidak kira) sama ada mereka orang parti atau tidak, itu semua tidak penting, tetapi mereka mestilah profesional yang mahir dalam urusan perniagaan syarikat itu," katanya.

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My comment

1. I did not know that Khazanah was meant to hold shares on behalf of bumiputra's. Has always thought that it is meant to be a sovereign fund which is the country's wealth.

2. Since this is mentioned, we have to be mindful of the past days of Halim Saad, Tajuddin Ramli, Samsudin Abu Hassan whose businesses were rescued by government eventually. They did not just get millions in salaries but many people know what they did. MAS, Renong, Time, UEM. Where do these companies ended up today?

3. Khazanah's dividend currently goes to the government which is used for development, operational expenses of the government. We as a country could do more with entrepreneurship but threading this is a fine balancing act between good and bad.

4. At the very least when the new government takes over today, those under Khazanah need not be rescued. Maybe except for MAS and Silterra. The Renongs and UEMs of those days were ripped apart - by business people.

5. Hence, while promoting entrepreneurs is important, we have to thread this very carefully. Many people are on the high over the new government - me included. But when "rubber hits the road", we have to be also be mindful of what we wish for.