之后，在98.8 BFM， 听过电台的访问----不过，觉得没有什么。。。。。。
今天看到一个博客（部落客）对这个股票，也就是本地第一个上市挂牌的CLOSED-END FUND提出了意见。那是关于SWEE JOO--这个曾经被唱好的公司。如今，就要除牌了。。。。。
我到SEARCH ENGINE 找到这个博客（部落客）的文章，转载让大家看看。
这是一个值得探讨的问题。。。。大众基金，。OSK 的基金。。。MAA， 其他银行的基金。。。。。。股票行（现在叫投资银行了) 的基金。。。。很多重叠。。。。特别是大众信托基金。。。。
就像BFM 电台访问那些挂牌公司老板，和那些即将上市的公司。。。。这包括XOX，OLDTOWN， SENDAI。。之前的MASTERSKILL。。。。我一个都不相信。能够告诉公众的资料，很多都是有其目的。。。。。
Thursday, August 19, 2010
ICAP's 6th Annual General Meeting (Part 1)
Last Saturday (14-Aug-2010), I went together with a friend to attend the icapital.biz Berhad’s 6th Annual General Meeting (“AGM”) at KLCC Convention Centre. We reached at the said location at 8.30 a.m. After the shareholder registration, we were given a door gift voucher and subsequently we went to a counter to claim the door gift. Later we realised that there was no refreshment being served before the commencement of the AGM, though we were provided with the afternoon lunch voucher anyway, but you would find out later WTF was the lunch then. I think icapital.biz (“ICAP” or “the Company”) is becoming more ‘thrifty’ nowadays despite it is making profit…^_^!!
The AGM started at around 9 a.m. As usual, the chairman of ICAP hold the speaking of the proposal for the 6 agenda to be approved by the shareholders. The chairman and fund manager were tried to reply any inquiries about the agenda and the ICAP’s annual report for year 2010 from shareholders. However, I felt that the quality of the questions asked by shareholders was deteriorating year by year and this year the AGM would have the dumbest Q&A session from shareholders!
An uncle who looks like in his 60’s coming to ask few questions and those questions were so stupid that I didn’t want to hear his voice. Anyway, I still remembered clearly his first questions was related to the sources of the amount of the “Others Expenses” for year 2010. He seemed not happy that the Company was spending RM39,300 on this “Others Expenses”. The fund manager of ICAP, Tan Teng Boo (“fund manager” or “TTB”), patiently replied to the fellow that the “Others Expenses” contain few category of expenses of which he cannot remember the exact detail of the categories. Anyway, he later address this query that the “Others Expenses” do contain advertisement fees, printing fees, the cost of holding the AGM and other small small miscellaneous expenses. I was afraid later the uncle would then further inquired what is the ‘miscellaneous expenses’ and fortunately he didn’t do so or else I would stand out to stop him to waste our time.
The other 2 questions raised by this old uncle were related to those stocks that the fund manager has invested in. For the detail of the question I can’t recall exactly, but I still remember TTB mentioned that he would revert back to the old uncle with the 2 questions during the presentation of investment portfolio of the Company. However the old uncle not satisfied that TTB not addressing his questions and keep raising his voice to emphasise his questions need to be answered immediately. But TTB insist he would only mention those questions that related to the stocks the fund invested during the presentation. The old uncle who felt not happy with that TTB’s reply and grumble all the way during the meeting.
(to be continue)
Friday, August 20, 2010
ICAP's 6th Annual General Meeting (Part 2)
The shareholders continually stood out to inquire more questions during the agenda session. One of the shareholders asked what is the rational that the fund is holding so much of cash as reported by the annual report. TTB was not pleased that the shareholder was asking this question due to he not reading the annual report of which at page 3 has stated that “…your Fund sold all of them before 15 April 2010 as it wanted to raise its cash holdings It was extremely worried over a full-scale currency and trade war breaking out between the US and China. Such an outbreak would be extremely harmful to the global economy.” He asked the shareholder goes to read the page himself about the reason why the fund is holding cash.
Another shareholder further request TTB should reduce the cash holding at a high level at RM103million, and he wants the fund to utilise the cash efficiently rather sitting it in the fixed deposit account. TTB then said as the US unemployment is still high at around 9% and he is troubled by the US politicians might try to convince the US voters that the high unemployment rate is caused by the Chinese’s manipulation of the yuan currency and thus the threat of trade war due to the friction in between the US and China still exists, especially during the period that the US is going to have a state election at end of this year. Anyhow, TTB mentioned that if the threat of the trade war fades away, he will try to seek opportunities with good bargain prices and invest the excessive cash.
One of the interesting questions being raised by the shareholders was that why the Company hires Harun Bin Halim Rasip (“Harun”), who is the co-chief executive officer of Integrax Berhad (“Integrax”), as the independent non-executive director. As the shareholders are concerned about the conflict of interest in between Integrax and ICAP since ICAP has substantial investment at Integrax. The shareholder further pointed out that to have an Integrax’s CEO in the board of ICAP, it may cause a perception that ICAP could be using insider news of Integrax to trade. For my opinion, conflict of interest happens not only possible that ICAP to take advantage of Integrax by using insider news to trade, it could happen the other way that the related party to Integrax might also try to influence ICAP to invest more into Intregrax. Though TTB and Harun tried to explain that the fund manager’s investment decision would not be affected by the Board of ICAP and they further provided other reasons to justify the conflict of interest is minimal, I was not convinced by the justification. Anyway, it’s a norm that a person can be directors for multiple companies due to Bursa Listing Requirement of which allows him to do so. Hope Bursa can amend such requirement to curb the conflict of interest incident.
Before the agenda session was going to through the voting process, there were 3 more issues being raised by shareholders of which I was also quite interested to. The 3 issues were the update of the approval of the relevant authorities to ICAP’s proposal to invest overseas, the discount of market price to net asset value and the dividend policy.
(to be continue)
Monday, August 23, 2010
ICAP's 6th Annual General Meeting (Part 3)
I still recalled the ICAP’s extraordinary general meeting holding at last year of which the motion of investing overseas was rejected by most of the shareholders. In view of this, the management of ICAP mentioned that the board and fund manager was proposing another plan to invest overseas and they were waiting for the approval from the relevant authorities. However, after so many months, there is no any feedback from the relevant authorities as told by the Board. Though they kept telling us that once they received any new update from the authorities, they will let the shareholders know about the latest update via announcement. Even TTB once almost want to tell the shareholders what is the proposal they are working on hardly to get the authorities approve, as TTB told us his hair growing grayer and grayer during these few months as a result of this issue, but he just stopped telling almost us more due to the confidential of the proposal and probably the company is barred from disclosing any immaterialised proposal to the public.Anyway, TTB said there are still a lot of opportunities in Bursa as the fund is still able to achieve a remarkable return by just investing in Bursa. He pointed out that investing overseas is no rocket science that can guarantee us a higher return. He further provided more evidence to prove that even investing in Bursa can have a return that equal or bit a lot of overseas counters such as DBS, Cheong Kong and even Berkshire Harthaway. The return of the fund of also at least equal or more than a lot of local famous stocks like Genting and Maybank (interesting to know that Maybank’s share price still lower than its pre-Lehman crisis price) of which a lot of investors might not aware of.
The next issue to be discussed is the share price of ICAP is traded in discount to its net asset value (“NAV”). As a shareholder stated that ICAP’s share price has traded in discount since the Lehman crisis. He hoped the management can take the discount seriously and make some effort to close the gap in between share price and NAV. Because his concern was that if he invests ICAP for short term and would like to dispose it in the nearcoming future, he might just liquidate the position in ICAP for a loss. TTB immediately rebuff that he would not take a short term investment decision into consideration to solve the discount issue, as he explained the fund ‘s objective has stated clearly in the IPO prospectus that it is a fund aims to achieve capital appreciation in long-term period. So he will not let any individual short term investors to influence the fund not to comply with its mandate. So I interpreted that TTB just indirectly told the shareholder that it is his own mistake to make losses by investing ICAP due to his short-term tenure, instead he should not have invested into the fund from the beginning.
Some shareholders also proposed that the fund to distribute dividend with a yield rate to be par with the fixed deposit rate or the fund can initiate a share buy back scheme and distribute those treasury shares as share dividend. While I’m quite interesting to the proposal of share buy back, I totally object the distribution of dividend. As I have mentioned in many elsewhere before that the objective of setting up the ICAP fund is to make capital appreciation in long run. So what is the purpose of distributing cash back to shareholers? What is the purpose we invest capital into a fund and later want to take back the cash before it is long enough for the capital to appreciate, and end up need to put the cash back to the fund again?
Don’t forget that ICAP is a close-end (“CE”) fund, it is not like the open-end Unit Trust (“UT”) fund that can issue new units to get fresh proceed if those unit holders re-invest the dividend. For a CE fund, once it distributed cash, it has less proceed to invest and whatever the re-investment decision made by unit holders has nothing to do with the CE fund, and thus the dividend policy greatly reduce the speed to accumulate wealth through the fund and thus defeat the objective of setting up the fund. ICAP’s another objective is to implement value investing strategy, which means it always need to sits with a lot of cash and wait to buy stocks at a price that discount to their valuation at a right time. So after distribute cash back to shareholders, then how the hell ICAP going to buy cheap stocks? Sometimes I just dislike why there are lot of old man buying ICAP shares (as I observed that a lot of aged fellows who attended the AGM and year by year keep asking the fund the pay dividend) and not the young people be the majority shareholders of ICAP? So old people with age retiring mind please leave ICAP alone and pick other dividend stocks instead (for those people who are old but with young mind you are still welcome). And as usual, TTB just took the dividend proposal back to the shareholders that it is up to the shareholders to decide. If in the next AGM the shareholders decide to have dividend to be distributed, the fund will then deviate from its long term value investing objective, I’m sure I’ll be the first one to dispose its shares and other value investors may follow so, then we will see if the price discount issue will be solved or becoming wider.
Regarding the share buy back scheme, TTB mentioned that he will consider to advise the fund to work on the scheme if the market price of ICAP is deeply traded discount to its NAV, for example a 50% discount. Whereby my opinion is not to reject share buy back scheme, but we first need to consider some of its disadvantages and whether could it really solve the discount issue. First, share buy back will reduce the free-float number of ICAP shares and liquidity will reduce subsequently, thus it may not narrow the discount and instead it could make an even wider discount. Second, ICAP may use the cash to invest some potential investments that give a very attractive return which could outperform the discount. Currently the discount of ICAP’s price to its NAV range from a 10% to 19%, so we assume as ICAP could buy back its own shares at an average price of 15% to its NAV, however it can also invest the cash to buy other more potential stocks that achieve a return that higher than 15%, so which one is a better choice?
(to be continued)
Wednesday, August 25, 2010
ICAP's 6th Annual General Meeting (Part 4)
Finally it came to the voting session to approve those proposed agenda. However, there was an incident happened during the voting process. The company secretary wanted voters to raise their hand with the ‘shareholder card’ given in order to indicate they approve the said agenda. However, we were confused at that moment because we did not receive any ‘shareholder card’ from the organiser. So the voting process was becoming chaos and shareholders inquired why we need to show the ‘shareholder card’ then only we can vote and we were not given with the card. The company secretary explained to us that some shareholders might assign proxies to attend the AGM, and it was possible a shareholder could assign two proxies. In order to limit one shareholder only have 1 vote, so one of the two proxies, who were assigned from the same delegation, can vote if he has the card. Later the company secretary apologised to us that she made a mistake because the rule of voting with the card had been cancelled and thus every shareholders or proxies can vote. I was not quite pleasure to this announcement made by the lady because she should not make this kind of mistake and confuse the shareholders. Some more she was doing a right move initially because there was only one proxy can vote with the delegation of voting right from the shareholder. And now everyone can votes will lead to a situation that two proxies can vote from the same delegation and thus it is unfair to those shareholders who do not assign two proxies to vote. Luckily the shareholders had no different opinion or dispute over the 6 agenda and approved the agenda unanimously or else the voting result can be challenged in the court. I hope this kind of mistake will not repeat in the next AGM.
The second half of the AGM was the presentation of investment portfolio of ICAP by TTB. I divide the presentation into two parts: presentations of the investment portfolio and of the economic outlooks.
The following information is the listed companies that the fund held as at 16-June-2010 (refer to the 2010 annual report):-
1) Parkson Holdings;
2) F & N Holdings;
4) Petronas Dagangan;
5) Padini Holdings Bhd;
7) Suria Capital;
9) Tong Herr Resources;
10) Malaysia Smelting Corp;
11) Mieco Chipboard; and
12) Hai-O Enterprise.
TTB also explained to shareholders why the fund disposed the share of the following companies as stated below:-
1) Astro All Asia Network plc;
2) Kuala Lumpur Kepong Berhad;
3) Lion Diversified Holdings Berhad;
4) Poh Kong Holdings Berhad;
5) Swee Joo Berhad;
6) Telekom Malaysia Berhad; and
7) Hai-O Enterprise.
(to be continued)
Thursday, September 2, 2010
ICAP's 6th Annual General Meeting (Part 5)
About the discussion of the discount to NAV, I have missed one very important part that mentioned by TTB. TTB said in the AGM that he was puzzled about the discounting situation in ICAP. He suggested that the discount could be due to investors in Bursa Malaysia still has long way to pick up their confidence to invest in the share market, and thus there are still quite a number of companies traded in discount to their net asset values or net book values and ICAP is one of them. Moreover, majority of close-end funds are typically traded in discount, either be those funds are local fund or foreign fund. However, according to TTB’s view, he believes that ICAP would be back to trade in premium due to cost awareness, no derivatives, no leveraging and more important is value investing philosophy.
TTB further argued that why investors should not take the share price too heavily when making investment decision. Indeed he always encourages investors to look into value, and for the case of ICAP, the yardstick to evaluate its value is to refer to its NAV. Since ICAP is currently trading in discount, it’s a very good period for investors to buy ICAP now. Because TTB believes that ICAP is well managed and thus its future NAV will be higher than the current NAV. So it’s better to have a discount to a rising NAV rather than to have an NAV that is falling. He further provided an example at February 2009, ICAP’s NAV was about RM1.5 and it was then traded in a huge discount at a price roughly of RM1.2. Subsequently the ICAP’s NAV recovered during the share market rally and stand at about RM2.2, the market price of ICAP also increased along side with the NAV as well to RM1.9. He further told the shareholders if any investor who bought ICAP shares at February 2009 and hold those shares until today, the investor would have made more than 50% of return within 1.5 years even thought the share price is still traded in discount to its NAV today.
Anyway, TTB stressed that he is working his best efforts to close the gap of the share price and NAV. Holding the “Investor Day” seminar after the ICAP’s AGM is one of the efforts that he is taking. The share buy back scheme would be another solution to solve the discount issue, though TTB mentioned he will only consider share buy back if the discount is deep enough.
(to be continued)
CONFLICT OF INTERESTS IN INVESTMENT ADVISORY
Yesterday I had questioned: How To Expect Proper Governance With All These Conflict Of Interests?
When Swee Joo announced that it is to be delisted on 26 Sep 2011, this reminded me of a conflict of interest between iCapital And Swee Joo that I had written back on July 2009.
I had always disliked the the conflict of interest between iCapital the fund management and iCapital the investment advisor.
As a fund manager, iCapital was already making money. Why the need to be an investment advisor at the same time? Why?
How can one trust the integrity when the same said company manages fund and gives investment advice at the same time? Fund buys, investment advisor gives advice to buy the stock at the very same time. A rather tacky issue, yes? How can one trust if the company is giving a pure independent and trustworthy investment advice?
Let's look back at iCapital And Swee Joo incident once more and the said conflict of interest.
Now let's look at iCapital.biz 2008 annual report announced on 11th July 2008, Annual Report 2008.
In the year ending 31 May 2008, your Fund made a number of purchases. New investments were Boustead, Hai-O Enterprise, Suria Capital, Swee Joo, Telekom Malaysia and TM International.
And here is the snapshot of the portfolio as at 11 June 2008.
iCapital.biz had purchased some 2,083,100 million shares worth some 2,858,552 million. This works out to 1.37.
Now iCapital's 2008 fiscal year runs from 1st June 2007 to 31st May 2008. Somewhere in between these dates, iCapital is said to have invested in Swee Joo at an average cost of 1.37.
Here now is the chart. The top section with all the foot prints denotes the time frame between 31st May 2007 and 30th May 2008. This is where iCapital 'might' have purchased Swee Joo at an average cost of 1.37.
Now Swee Joo was listed in Oct 2006.
First yet of earnings I would use is what Swee Joo reported on Feb 2007. Quarterly rpt on consolidated results for the financial period ended 31/12/2006. Swee Joo made 12.571 million.
May 2007. Quarterly rpt on consolidated results for the financial period ended 31/3/2007 Swee Joo made only 5.043 million. Less than more than half of what it made the previous quarter.
Only these 2 set of earnings and the second set of earnings reported on May 2007, showed a drastic decrease in its earnings.
Would that be considered a 'value' investment'?
Nonetheless, 2 months later, on 20th July 2007, iCapital investment advisory makes a buy for longer term call! And yes, it openly declared the vested interests in the investment report.
Let me reproduce it in full once more.
[Updated on 20/07/2007 15:41:00]
Principal activities: Shipping & related businesses
Major shareholder/s: Leonard Linggi Anak Jugah,Goodlink S/B, Limar Management Services S/B
The principal activities of Swee Joo Bhd (SJB), an East Malaysian group that is fast catching the headlines, comprise mainly shipping services, shipping agencies and shipping-related services like haulage, distribution, warehousing, container handling and repairs.
The shipping services provided by SJB are mainly domestic and some regional routes. Domestic refers to routes between East, Peninsular Malaysia and Brunei and coast to coast refers to Sarawak while the regional shipping liner covers Bangkok, Ho Chi Minh City, Jakarta, Surabaya, and Singapore. Currently, one of the strengths of SJB lies in its comprehensive coverage of the East Malaysian ports. Domestic shipping services contribute the bulk of the group's revenue and earnings. In 2001, SJB formed an alliance with a large global shipper, Evergreen Marine Corp. The tie-up with Evergreen increases its revenue with the trans-shipment of goods from international to domestic routes. SJB is allowed free use of Evergreen's containers for 30 days. Presently, the feeder freight revenue contribution from Evergreen makes up 4.3% of SJB's sales. The group's revenue is primarily denominated in Ringgit, while a substantial portion of its cost is in US$. Unfortunately, the group does not undertake currency hedging. Due to the rise in oil price, bunker costs have been rising but this event affects all shippers.
The two main 100% owned subsidiaries of the group are, Johan Shipping Sdn Bhd (Johan) and Swee Joo Coastal Shipping S/B (SJ Coastal). Johan, which provides domestic container shipping services, started business in 1983. It offers scheduled shipping services between west Malaysia and Singapore to East Malaysia and Brunei. In addition, Johan also provides regional shipping services to Indonesia, Bangkok, and Ho Chi Minh City. Johan expanded its shipping services to Ho Chi Minh City and Bangkok in 2003. In 2006, Johan recorded a turnover of RM206.5 mln with a net profit of RM20.3 mln. On the other hand, SJ Coastal provides scheduled services between the various towns in Sarawak. In 2006, it recorded revenue of RM36.5 mln with net profit of RM2.33 mln.
SJB also provides services such as warehousing, container depot, consolidation and deconsolidation of cargoes at Port Klang, Pasir Gudang, and in the major parts of Sarawak. Repair and maintenance of container services are done at Port Klang. The group has 54 prime movers and 189 trailers. The haulage business had sales of RM8 mln in 2006 and net profit of RM0.11 mln.
Presently, SJB operates a fleet of 14 container vessels, 10 general cargo ships and backed by 7 support vessels. No single client, market segment or industry dominates in terms of revenue or profit contribution to the group. In 2007, Johan is adding one 713-TEU container vessel, 1 dual-purpose CPO/container barge and 1 general cargo vessel for transporting rice and is entering the Myanmar and East India markets. SJ Coastal would be adding one 2,400-tonne CPO barge in 2008. Asia Bulkers Sdn Bhd, which mainly transports palm oil products and logs, will be adding one 7,000-tonne product tanker, and 2 sets of tug and CPO barge in 2008.
Conclusion & Advice
Imagine a company that has proven management, earnings that have grown rapidly and are expected to continue growing rapidly and with some of its businesses enjoying strong market positions, how much would you be willing to pay for such a company? Although the shipping business is capital intensive and the company has high borrowings, the current market valuation of RM278 mln for SJB seems to be on the low side. Hence, i Capital rates Swee Joo a Buy for the longer-term.
Disclosure of interest (required under the Securities Industry Act) : The publisher and associates have an interest in Swee Joo.
The key issue for me is the disclaimer.
The publisher and associates have an interest in Swee Joo.
With just two set of quarterly earnings. with the second set of quarterly earnings showing a huge decline in earnings, iCapital investment advisory makes a bold buy call on Swee Joo.
Was the buy call from the investment advisory really justifiable, was it a truly independent investment advisory or was it influenced by the fact that the publisher and its associates have vested interests in the stock?
Think about it... iCapital.biz the stock, purchased the stock between 31st May 2007 and 20th July 2007 then the investment advisory quickly issues the buy call!
With Swee Joo announcing it would be delisted next Monday, one would be wondering what happened to iCapital.biz's stake in this stock.
Their cost of purchase was rm 2,858,552. (Bought sometimne between May-Jul 2007)
They reported they dispoed the stock in their Annual Report 2010.
Disposal value was rm 1,005,659.
Loss from disposal was rm 1,852,893.
This posting is not to make a mockery of iCapital's loss but to stress on the conflict of interest between an independent investment advisory and its fund managing business.
Like I said, I dislike such conflict of interest. I do not like to see an investment advisor making a buy call while its own fund management had already bought a substantial stake in the stock.
In Swee Joo's case, the buy call made on July 2007 was so questionable. It was a newly listed stock and there wasn't much financial evidence that suggested it was worth an investment. All it had was two set of quarterly earnings, with the second showing decline in earnings. But yet iCapital's investment advisory deemed it fit to issue a buy call. Was the call influenced by the fact its publisher and associates had vested interest in the stock?
And what about the research reports we read daily? All the buy calls. Are the calls truly independent or do they also carry the same conflict of interests?
Thursday, September 22, 2011
AND SWEE JOO IS TO BE DELISTED ON 26 SEP 2011
On today's Edge: Swee Joo to be delisted on Monday
KUALA LUMPUR: SWEE JOO BHD  will be delisted with effect from 9am on Monday, Sept 26.
The company said on Thursday, Sept 22 that it was informed of Bursa Malaysia Securities Bhd’s decision on Wednesday.
It said it was advised by Bursa Malaysia that this action was in pursuant to paragraph 16.11(2)(C) of the Main Market Listing Requirement.
Trading in the shares was suspended since July 19
This brings an end to these postings.
1 Sep 2010: And Swee Joo Comes Crashing Down
12 Aug 2010: Swee Joo In Deep Water
Feb 2010: More Losses Recorded By Swee Joo!
Dec 2009: Review of Swee Joo's Earnings
Aug 2009: Featured Report: KN on Swee Joo **
Aug 2009: A Quick Look At Swee Joo's Earnings
Jul 2009: iCapital And Swee Joo
Feb 2009:Update On Swee Joo's Earnings
Nov 2008: Shipper Swee Joo Announces Losses