Some part of SC's site down

I have been trying to get data on unit trusts - just to understand the growth (or decline) of public's investments.

For Jan 2017, I have managed to get this as below (part of it shown).

However, as I clicked through for 2016 data and even prior to those years, all I got is this. I gave it benefit of doubt for past one week as it was down then, but tried for several times, still down today. Think SC can do better than this.

Cronyism still key

Sometimes cronyism is important to certain business - basically see where YTL Power is now. It had done nothing much since. Government changed contracts changes. TNB is not going to give any more new projects to YTL - if yes, there are not going to be as sweet anymore.

The new project as mentioned in the below structure seems very much like JAKS in my previous article - isn't it surprising - a RM500 million company against a RM11 billion company. Both uses China's route.

JAKS: Great idea but is it great execution?

I have to give it to Mr Koon Yew Yin. He sees a good company with a very good project. Basically, Jaks Resources without the power plant project is an average company but with the IPP project it is a more than an average company with an attractive price.

What has it gotten with the IPP in Vietnam? Basically as below, a BOT (transfer - after 25 years) project and its partner CPECC has bought into the project by funding a huge portion of it.

What JAKS has to do now (which it has done) is to fulfill its portion by coming out with USD140.14 million while CPECC will come out with the other portion. In addition, CPECC will build the bulk of the project and come out with Redeemable Convertible Preference Shares (RCPS) to fulfill the equity portion. (On top of that, the RCPS comes with zero dividend costs) CPECC has also gotten the financing for the project as well with its corporate guarantee. It should be noted that CPECC is huge power plant consulting company in China. Its parent, China Energy Engineering is a HKD43B company, which means and says a lot.

The structure is as per below:

Ultimately, JAKS can own up to 40% of the project and it now has a partner whom can deliver. On top of that, it gets a substantial portion of work which can be translated into construction profits from this project.

Do I have reason to believe it can be delivered? Yes.
Do I have reason to trust the project has decent to good return? I should think so considering the interest from CPECC. It has country risks obviously, but this one sounds to be more secure.

Now, all that is good as if it is able to secure good IRR, this basically is a great investment with Jaks trading at about RM535 million valuation. (Jaks has mentioned of it eyeing at least a 10% IRR.)

With that, it is definitely not wrong for a person who understands construction to wallop - and wallop he did. Another point to note is that the controlling shareholder - Mr Ang Lam Poah only owns around 8% to 9% of the company on paper. (I would tend to think he definitely has supports from his other friendly shareholders.) What Mr Ang did wrong was that he took a long time to accumulate the shares, probably thinking of getting them at cheap - below RM1.

Seeing opportunities (probably), Mr Koon Yew Yin bought the shares in a very quick manner and in the process, accumulated more than 11% over a short period of time. (Mr Koon is now, the single largest shareholder) At the point of him becoming a substantial shareholder, it triggered the attention of Ang's group, I believe. Jaks announced an unusual quarterly 31 Dec 2016 loss and at the same time, announced that it is to do a 10% private placement.

KYY's holding has increased to 11.7% by 1 March 2017

Does Jaks has enough bullets to defend the onslaught? I should think so. It has many defensive tools to do that - and it has already done so by announcing a private placements. Private placements as we know can go to friendly parties. Basically, Jaks can do many more of private placements and as long as Koon does not acquire enough to take control - he can't do much. (That has been proven in the case where QL was unable to takeover Lay Hong, and QL I would think is even deeper pockets, but they can't do much.)

Can Mr Koon do much? We shall see. And I do not think he is keen to takeover anyway - as the project is for Mr Ang to lose (he is the person, whom have worked hard to pull everything together), moreover Koon is not in the right age to do that. A new management could jeopardize the project.

Mr Koon's past records have been more of a short to medium term investor - come in - make a kill and go. With that, (I would think) Mr Ang has reasons to be afraid and not to entertain much requests. The ball is in Ang's court to play and decide how to play.

(You see, if I have Warren Buffett as my shareholder, I should feel proud. But, if I have Carl Icahn as my shareholder - I would put on more defences surrounding me, because of animal instincts. In this case though, activists investing may not work well.)

Will someone like Mr Koon ask for a favourable return from the shares? Almost a surety. Why would he invests into Jaks anyway? - and this manner of buying.

The biggest question is - if Jaks current controlling shareholders do not want to play ball - the shares can be stuck at RM1.10 to RM1.30 for a long time - something that a shorter term shareholder would not want! It could end up being you buy to push up your own share price. You can buy but you cannot sell at a profit.

One thing for sure (unless with a deal being made, the private placements may not be that cheap - at least not the type of price which Ang and his group have been buying at i.e. around RM1 - and the way Mr Koon has been buying.)

This is quite interesting turns out and a lesson to note in the long term.

DRB has the tendency of not getting deal done

Despite them needing the deal to be completed, this company has the tendency of dragging and over-negotiate. I should know this, for some reasons.

Just to give one example, in the deal where Proton was to be acquired by DRB-Hicom back in 2012, they were required to reduce their stake in Bank Muamalat to an associate stake. Where is that deal now?

The below statement could be a plan by Geely, but I am not too surprised. For Geely to come out and mention this, there are many hiccups it seems in this deal. One must remember for Geely to come into Malaysia and get a deal done, it has to be FRIENDLY. This is a marriage, not a forced takeover. DRB has appeared many times to say that they will continue to have substantial stake in Proton - hence Geely will still need DRB as a partner.

Geely knows. Because they need to get the support to survive in a tough environment. But does DRB thinks and acts that way? Although, they will know as well.

It now goes back to who needs who more. DRB needs to get rid of Proton as it is bleeding more than RM1 billion a year and getting to a 'path of no return' i.e. oblivion. The only way is for it to survive is to do a deal or government to impose taxes which is even higher than the ones during Mahathir days.

With Proton, DRB will be in trouble although it is a separate subsidiary and can be left to rot. Does it want to do that?

If there is a deal which is fair to DRB, then possibly the group could be worth much more than today - but that is still far from the case.

Perhaps, it needs a "Lim Kang Hoo" to show the way...

IWCITY's deal seems scary but it may not be an Ekovest

There seems to have a chance where IWCITY will be selling its land for over RM2 billion as it has announced a suspension of its stocks. I think it is a 99% chance it will be a done deal.

This is very good for all IWCITY shareholders as the land that has book value of less than RM150 million will be sold for RM2.37 billion (that's a B). Overall, as mentioned in the accounts (subject to change of this new announcement), the profit will be RM1.2billion.

IWCITY's share had run up to RM1.64. Coincidentally, it is going to include another 87 million shares on 6 March 2017 (that day it will be suspended) which was issued for 90 sen (mind boggling) for land in 2 different deals. (For people who wants to know why it is not right, please read Warren Buffett's latest 2016 letter where he mentioned his mistakes of issuing shares for some of his deals)

Hence, the total shares that IWCITY will have is 823,699,857. With that, IWCITY's new market cap will be RM1.35 billion.

Just look at below announcement.

At RM1.35 billion, despite the deal at RM2.37 billion, it is not that cheap as a share. In the sale, if there are not major change, IWCITY is also to spend some RM500 million for the transfer i.e. conversion etc. Unless of course IWCITY decides to issue a huge dividend in the form of around RM1.00 per share. That I will take it.

In all the deals, it looks like IWCITY is a land trader than a real business concern. Ekovest on the other hand, has built itself to have a long runway for it to grow - i.e. from its concession businesses and to a certain extent building into a much bigger construction outfit.

Additionally, there are a substantial number of property companies that are trading well below their book value - among them Sime Darby (especially Sime Properties after the split), Tropicana and many more small companies.

I would like to highlight that IWCITY has issued a 10% placement last year at RM0.90 as below. It certainly diluted its shares at cheap.

Well, until the full announcement is made, I am not going to make much assumptions.