The takeover of Ramunia Holdings Bhd by national carrier MISC Bhd took the market by surprise. One industry observer aptly put it when he said that such a level of secrecy had not been seen since the early days of the Cosa Nostra.
Judging by the swift leap in Ramunia's share price (it has gained some 33% since the announcement), the market seems to have taken a positive view of the deal, for the fabricator at least.
MISC has remained relatively unchanged since the announcement and closed at RM9.65 on Friday. Despite the lack of enthusiasm, the deal seems to be a sweet one for MISC as well.
To recap, MISC via its wholly owned unit MSE Holdings Sdn Bhd is taking up the reins at Ramunia Holdings Bhd, via the injection of Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) at a deal valued at RM3.2 billion. MMHE is a wholly owned unit of MSE Holdings.
Ramunia is issuing as many as RM1.4 billion worth of shares at RM1 each, and RM1.8 billion worth of 3.7%, 7—year irredeemable convertible preference shares of 50 sen each at par value.
A second part of the deal involves MSE Holdings making a renounceable offer for sale of 82 million of its shares in Ramunia at RM1 each, to minorities of the latter.
Effectively, the deal values MMHE at RM3.2 billion and Ramunia's stock at RM1 per share. At a price tag of RM3.2 billion, most analysts say MISC was offered a good price for MMHE.
On the RM3.2 billion price tag, OSK Investment Bank's analyst Chris Eng says, "The pricing of MMHE at RM3.2 billion is at a historical price—earnings ratio (PER) of 19.5 times and prospective PER of 14.6 times, which is cheap as oil and gas companies go."
It is also worth noting that some 18 months ago, MISC acquired 35% of MMHE off Kuok Brothers Sdn Bhd and IMC Enterprises Inc, the vehicles of billionaire tycoons Robert Kuok and Tan Sri Frank Tsao Wen King, for some RM181.6 million. After this acquisition, MISC wholly owned MMHE.
Industry sources say MISC made a massive gain as its setting up of MMHE, including the acquiring of equity held by Kuok and Tsao, amounted to slightly more than RM400 million, which means the RM3.2 billion price tag translates to a valuation gain of some RM2.8 billion.
An industry observer quips that if anyone should feel slighted, it should not be the shareholders of Ramunia or MISC, but rather Kuok and Tsao who now seem to have sold the company for a song.
The sale of 82 million shares at RM1 each will also net MISC an additional RM82 million. But the sale also gives Ramunia's minorities a chance to buy Ramunia shares at a significant discount to its current market price. Ramunia closed at RM1.61 on Friday.
Certain quarters argue that the valuation of Ramunia at RM1 a share is too low, considering that it is the only fabricator with unutilised yard space.
RHB Investment Bank Bhd's managing director Chay Wai Leong in an emailed response to The Edge, however, says, "The issue price of RM1 per share was arrived at after considering the 5—day volume weighted average market price of Ramunia's shares of RM1.16 up to Jan 17 this year, that being the last market day prior to the suspension of trading, and the audited consolidated net asset per Ramunia share of RM1.01 as at Oct 31, 2006." RHB Investment Bank is the merchant banker advising Ramunia.
Chay adds that the potential earnings of the fabrication yard had been taken into account, and the size, utilisation and potential increase in the growth potential of the yard as well.
"The acquisition will allow Ramunia to expand its fabrication facilities from 170 to 260 acres and increase its operational capacity to undertake more complex, larger scale, multiple and value—added projects such as deepwater fabrication contracts. The combined order book will be beneficial to the existing shareholders of Ramunia in terms of potential future earnings and prospects," he says.
There could be quite a number of benefits for Ramunia's shareholders. HLG Research's Jason Saw says with MISC at the helm of Ramunia, investor perception of management risks at Ramunia is eliminated. He adds that it is also likely that investors will be willing to place a premium on the company due to the merged entity's strong parentage, that is, oil major Petronas.
Saw also says the merged entity will be able to absorb an additional RM3 billion to RM4 billion worth of work on top of the existing order book of RM3.8 billion.
Management perception of Ramunia hit a snag in the middle of last year, when the company and Petronas were at loggerheads.
Ramunia was thrust into the limelight in—mid 2007, over a dispute with Carigali—PTTPEPI Operating Company Sdn Bhd, which is a 50%—owned unit of Petronas.
The oil fabricator had been awarded a contract for JDA Block B—17 in the Thai—Malaysia Joint Development Area, but had issues with pricing. The dispute was, however, settled out of court.
This issue is now in the past, with Ramunia likely to be an indirect unit of Petronas, after MISC emerges as a 72% stakeholder, after the reverse takeover. However, the company will reduce its shareholding to 68%, after hiving off 82 million shares.
Ramunia's jewel in the crown is its yard in Johor, which spans some 170 acres. Combining the two yards, the merged entity will have some 260 acres of prime yard space, fronting deepwater which will enable large—scale fabrication works to be carried out.
It is also worth noting that the lion's share of Ramunia's contracts come from Petronas, which is MISC's parent, controlling 62.4% of the shipping company's equity.
The enlarged entity would stand to benefit as Petronas is likely to award some RM10 billion worth of fabrication jobs this year, and Ramunia, being the only fabricator with available yard space, seems set to gain handsomely.
Aseambankers, in a research reports, says, "We are positive on this deal, as the merger of Ramunia and MMHE is a symbiotic fit, allowing both parties to leverage on their respective strengths. Firstly, this exercise will result in Ramunia emerging as the largest offshore fabricator in Malaysia with a yard size of 260 acres. This deal also allows MISC to unlock value in MMHE, which enhances value in both sides. We believe MMHE's capabilities can optimise Ramunia's operations, and expect a gradual but progressive transformation in efficiencies."
(taken from www.theedgedaily.com by Jose Barrock)
Thursday, January 31, 2008
Friday, January 25, 2008
SocGen Uncovers Massive Frauds Commited by Trader
PARIS (Reuters) - French bank Societe Generale (SOGN.PA) disclosed one of the biggest alleged frauds in financial history on Thursday, adding to a wave of gloom surrounding world markets battered by credit market losses.
SocGen, France's second-biggest listed bank, said it had uncovered an "exceptional fraud" by one of its traders.
It said this would cost the group 4.9 billion euros ($7.16 billion) and announced plans to raise 5.5 billion euros through a capital increase to shore up its balance sheet, also reeling from a crisis in global credit markets.
The fraud disclosure brought back memories of Nick Leeson, the British trader who in 1995 brought down blue-blooded merchant bank Barings after racking up huge losses.
SocGen said it was in the process of dismissing the Paris-based trader, who it did not name, and added that the trader's managers would leave the company.
It added that its board had rejected an offer by Chairman and Chief Executive Daniel Bouton to resign.
SocGen shares were suspended.
The Bank of France announced an inquiry by the Banking Commission and said no further comment was necessary after Societe Generale took steps to strengthen its balance sheet.
French Economy Minister Christine Lagarde will make a statement during the day on the issue, her office said.
"The most serious thing is that this puts into doubt the risk management systems at some banks," said Fortis analyst Carlos Garcia.
A source at SocGen said the trader was "not one of its stars" and was relatively young. SocGen said the trader had been handling plain vanilla futures contracts on European stock market indices, betting on broad share market movements.
It was not immediately clear what role French police were taking in the investigation. The French prosecutor's office was not available for comment.
FURTHER WRITEDOWNS AT SOCGEN
Analysts said the episode would have a major impact on the reputation of SocGen, which was founded in 1864 and is one of France's most prestigious blue-chip companies.
UBS said in a research note that the fraud would impact the credibility of its derivatives business, which has been one of its fastest-growing units and has a world leading reputation.
Shares in rivals like BNP (BNPP.PA) rose. The fraud could rekindle BNP's ambitions to take control of SocGen, analysts said.
The losses also echo a similar blow on a much smaller scale last year to France's biggest retail bank, Credit Agricole (CAGR.PA), which in September announced a 250 million euro charge related to an unauthorized trading position.
SocGen also announced further writedowns of 2.05 billion euros related to the global credit crunch.
Banks around the world have been hit by credit market losses related to U.S. subprime mortgages. These mortgages are the riskiest property loans, often extended to people who have payment difficulties or a bad credit history.
SocGen said it expected a 2007 net profit of between 600 and 800 million euros -- well below its 2006 profit figure.
SocGen shares closed down 4.15 percent at 79.08 euros on Wednesday. The stock has fallen around 20 percent since the start of 2008.
Tuesday, January 22, 2008
This is the good time to trade options & CFD
The world financial markets continue to plunge because of the rising probability of U.S. recession. Of course, if you only trade conventional equity in stock market, you may wonder -- are there still any opportunities to make money in the stock market right now? Well, what i can tell you is - if you are still trading conventional stock market, whether it's the US, Europe, Japan, or Asian markets, the probability of losing money is greater than ever. Of course you can still gain. But with the effort and time required, the stress of monitoring a downtrend market is not worth it at all.
You may say, we could short-selling the stocks. But don't forget, you need to pay daily interest for that. So, the best strategy these days in this volatile market is of course trading options. In particular put options where you gain a great deal when the market is plunging. The more it plunges, the more you gain. Added in the volatility, you could gain much more than you could expect.
For short term, the sure fire strategy is continue to buy put options on all the financial stocks in the US market, selective technology stocks and retail stocks. ISM index as the leading indicator early this month had already shown 47.70, it's already in the contraction level. If it does not show any improvements early next month, the financial stocks could plunge much more because of the rising concern of US recession.
In a mature market, you must be able to make money whether market is up or down. So, at this point, the best instrument available is of course options. Another good alternative is Contract for Difference (CFD), where you could also profit from falling market. See my previous article on CFD.
There are two advantages of trading CFD over options. One is the guaranteed stop loss which you can place on all trade, provided it is available from your CFD provider. Another advantage is the money is only allocated to trade CFD, not committed like in options. For instance, let say you have USD1000 to trade. If you buy options, let say you buy USD800 worth of options, unless you sell it, if not you only have USD200 available for your next trade. But not in CFD, let say you place a trade worth USD800 with a guaranteed stop loss at USD720, you still have USD720 + USD200 = USD920 confidently available for your next trade. This is the power of CFD trading combined with guaranteed stop loss. Of course, the disadvantage is it don't have volatility counted in like in options, where you could gain a bit more in both call or put options if there is huge volatility.
You may say, we could short-selling the stocks. But don't forget, you need to pay daily interest for that. So, the best strategy these days in this volatile market is of course trading options. In particular put options where you gain a great deal when the market is plunging. The more it plunges, the more you gain. Added in the volatility, you could gain much more than you could expect.
For short term, the sure fire strategy is continue to buy put options on all the financial stocks in the US market, selective technology stocks and retail stocks. ISM index as the leading indicator early this month had already shown 47.70, it's already in the contraction level. If it does not show any improvements early next month, the financial stocks could plunge much more because of the rising concern of US recession.
In a mature market, you must be able to make money whether market is up or down. So, at this point, the best instrument available is of course options. Another good alternative is Contract for Difference (CFD), where you could also profit from falling market. See my previous article on CFD.
There are two advantages of trading CFD over options. One is the guaranteed stop loss which you can place on all trade, provided it is available from your CFD provider. Another advantage is the money is only allocated to trade CFD, not committed like in options. For instance, let say you have USD1000 to trade. If you buy options, let say you buy USD800 worth of options, unless you sell it, if not you only have USD200 available for your next trade. But not in CFD, let say you place a trade worth USD800 with a guaranteed stop loss at USD720, you still have USD720 + USD200 = USD920 confidently available for your next trade. This is the power of CFD trading combined with guaranteed stop loss. Of course, the disadvantage is it don't have volatility counted in like in options, where you could gain a bit more in both call or put options if there is huge volatility.
Saturday, January 19, 2008
Banh Xeo at Dinh Cong Trang, District 1 at Saigon
Saigon, this city serves a nostalgic and peculiar sense to me. Not that i have been here. Just that i feel the name Saigon in itself is of something special. It was late in the evening. The familiar hustle and bustle scene of the traffic was back. Just returned from exploring the lively Mekong River Delta was certainly one of the highlights during my stay in Saigon. Well, this would be my last night staying in Saigon before i headed to Dalat.
So, i decided on going to 46A, Dinh Cong Trang Street for the famous and delicious Banh Xeo, a kind of Vietnamese pancake fried on pans with some shrimps, pork and bean sprouts. The motorbike journey to the place was one helluva ride. I mean, really, it was one hell of a ride for those who have not yet experienced the infamous Saigon motorbikes invasion first hand. The traffic light is of no use. Hey, it's like going into battle with you charging into a formation of motorbike-soldiers head on--in and out, in and out, without fail until you reach your destination every time when there is traffic light. That of course, provided you come out in one piece beforehand.
I ordered one Banh Xeo, some Cha Gio (fried spring rolls) and Goi Cuon (fresh spring rolls). Since this is my first time being served on this Vietnamese cuisine, i was obliviously in the dark on how to savor this delicacy. Of course, you could just eat it like normal pancake in itself. But i observed. The locals definitely not eating their Banh Xeo just like that. They prepared the vegetable leafs, put one Cha Gio in it, grabbed some pieces of Banh Xeo, with a little of every ingredients in it, rolled together and dipped into the ever tasty Nuoc Nam (fish sauce). That's how the locals eat it. And, that's how i ate it. Perfect! Bon appetit!
Banh Xeo
Cha Gio (fried spring rolls with nuoc nam)
How the Banh Xeo is prepared
Fried over a hot charcoal stove
The place to be for Banh Xeo
So, i decided on going to 46A, Dinh Cong Trang Street for the famous and delicious Banh Xeo, a kind of Vietnamese pancake fried on pans with some shrimps, pork and bean sprouts. The motorbike journey to the place was one helluva ride. I mean, really, it was one hell of a ride for those who have not yet experienced the infamous Saigon motorbikes invasion first hand. The traffic light is of no use. Hey, it's like going into battle with you charging into a formation of motorbike-soldiers head on--in and out, in and out, without fail until you reach your destination every time when there is traffic light. That of course, provided you come out in one piece beforehand.
I ordered one Banh Xeo, some Cha Gio (fried spring rolls) and Goi Cuon (fresh spring rolls). Since this is my first time being served on this Vietnamese cuisine, i was obliviously in the dark on how to savor this delicacy. Of course, you could just eat it like normal pancake in itself. But i observed. The locals definitely not eating their Banh Xeo just like that. They prepared the vegetable leafs, put one Cha Gio in it, grabbed some pieces of Banh Xeo, with a little of every ingredients in it, rolled together and dipped into the ever tasty Nuoc Nam (fish sauce). That's how the locals eat it. And, that's how i ate it. Perfect! Bon appetit!
Banh Xeo
Cha Gio (fried spring rolls with nuoc nam)
How the Banh Xeo is prepared
Fried over a hot charcoal stove
The place to be for Banh Xeo
Wednesday, January 16, 2008
MacBook Air - The World's Thinnest Notebook
Apple introduced MacBook Air - The world's thinnest notebook at the MacWorld this morning. Check out the specs at http://www.apple.com/macbookair/specs.html
Most Watched Economic Indicators
For financial market participants, the most watched economic indicators are the ones with very high market sensitivity. There are:
1. Employment situation (http://stats.bls.gov/news.release/empsit.toc.htm)
Release time: 8.30am(ET); generally announced on the first Friday of each month and covers the month just concluded
Remark: Pay attention to unemployment rate
2. ISM Index on Manufacturing (http://www.ism.ws/ISMReport/index.cfm)
Release time: 10.00am(ET); released on the first business day after the reporting month
Remark: less than 43 (recession); 43~50 (contracting); 50~60 (expanding); greater than 60 (economy is booming)
3. CPI (http://www.bls.gov/cpi)
Release time: 8.30am(ET); released on the second or third week following the month being covered
Remark: Pay attention to CPI-U
4. PPI (http://www.bls.gov/ppi)
Release time: 8.30am(ET); released on the second or third week following the month being covered
Remark: Pay attention to finished goods index
Last, and perhaps the most important of all is the Federal Open Market Committee (FOMC) statement. Normally release at 2.15pm on the day FOMC concludes its meeting. Decision on the target fed funds rate will be made. The whole financial market virtually comes to a standstill eagerly awaiting the target fed funds rate. Any deviations from market expectation will undoubtedly moves the financial market accordingly and sometimes substantially.
1. Employment situation (http://stats.bls.gov/news.release/empsit.toc.htm)
Release time: 8.30am(ET); generally announced on the first Friday of each month and covers the month just concluded
Remark: Pay attention to unemployment rate
2. ISM Index on Manufacturing (http://www.ism.ws/ISMReport/index.cfm)
Release time: 10.00am(ET); released on the first business day after the reporting month
Remark: less than 43 (recession); 43~50 (contracting); 50~60 (expanding); greater than 60 (economy is booming)
3. CPI (http://www.bls.gov/cpi)
Release time: 8.30am(ET); released on the second or third week following the month being covered
Remark: Pay attention to CPI-U
4. PPI (http://www.bls.gov/ppi)
Release time: 8.30am(ET); released on the second or third week following the month being covered
Remark: Pay attention to finished goods index
Last, and perhaps the most important of all is the Federal Open Market Committee (FOMC) statement. Normally release at 2.15pm on the day FOMC concludes its meeting. Decision on the target fed funds rate will be made. The whole financial market virtually comes to a standstill eagerly awaiting the target fed funds rate. Any deviations from market expectation will undoubtedly moves the financial market accordingly and sometimes substantially.
Monday, January 14, 2008
Friendly 2 Pub and Restaurant in Hue, Vietnam
One of the restaurants that i think should be recommended to the readers is Friendly 2 Pub and Restaurant in Hue, Vietnam. The specialty of the restaurant is local Hue cuisine. The address of this restaurant is 27, Vo Thi Sau Street, Hue, Vietnam. Telephone no. is 054-240506. The whole restaurant is run by the family members, notably the dishes are all prepared by the sisters.
Recommended dishes are:
Banh Beo (20,000 VND) - This used to be a favorite of past kings. Always a treat during Vietnamese parties. Quarter sized rice cakes topped with crispy chopped shrimps and pork melt in your mouth.
Banh Loc (15,000 VND) - Banana leaf wrapped Loc cake. This dish is hard to prepare. Clear chewy tapioca is wrapped around pieces of pork and shrimp. The flour must be just right so that the right consistency is reached.
Ca Basa Kho To (35,000 VND) - Basa fish (belongs to catfish family found in Mekong River) cooked in the hot pot. The sauce is particularly tasty and the texture of the fish is just right.
Beef Grilled Over Charcoals (30,000 VND)
Other dishes on the menu are:
1. Banh Khoai (10,000 VND) - Vietnamese pancake. A crunchy yellow shell folded over bean sprouts, eggs, tofu and pork. This is delicious when combined with locally grown lettuce.
2. Banh Nam (15,000 VND) - Leaf wrapped with Nam cake. Open up the steamy leaf and scoop out the mixture of rice flour, shrimp and herbs. Dip in the spicy sauce and enjoy.
3. Muc Chien Nhoi Thit (35,000 VND) - Squid stuffed with spiced ground pork.
Recommended dishes are:
Banh Beo (20,000 VND) - This used to be a favorite of past kings. Always a treat during Vietnamese parties. Quarter sized rice cakes topped with crispy chopped shrimps and pork melt in your mouth.
Banh Loc (15,000 VND) - Banana leaf wrapped Loc cake. This dish is hard to prepare. Clear chewy tapioca is wrapped around pieces of pork and shrimp. The flour must be just right so that the right consistency is reached.
Ca Basa Kho To (35,000 VND) - Basa fish (belongs to catfish family found in Mekong River) cooked in the hot pot. The sauce is particularly tasty and the texture of the fish is just right.
Beef Grilled Over Charcoals (30,000 VND)
Other dishes on the menu are:
1. Banh Khoai (10,000 VND) - Vietnamese pancake. A crunchy yellow shell folded over bean sprouts, eggs, tofu and pork. This is delicious when combined with locally grown lettuce.
2. Banh Nam (15,000 VND) - Leaf wrapped with Nam cake. Open up the steamy leaf and scoop out the mixture of rice flour, shrimp and herbs. Dip in the spicy sauce and enjoy.
3. Muc Chien Nhoi Thit (35,000 VND) - Squid stuffed with spiced ground pork.
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