What's wrong with Malaysia in terms of GDP per Capita? (2012)

Addressing the issue, which Finance Malaysia thinks was critical at a time of globalization heats up, Malaysia needs to formulate and take action immediately without much hesitation. But, before we jump into action, we need to know the root of the problem. Right?

Exactly, we must find out the reason why we left behind other countries in terms of GDP per capita, which refers to the country's gross domestic products at purchasing power parity (PPP) per capita. According to Wikipedia, it was the value of all final goods and services produced within a country in a given year divided by the average population for the same year.

Why not using nominal GDP to measure national wealth?

Comparison of national wealth are also frequently made on the basis of nominal GDP, which does not reflect differences in the cost of living. Using a PPP basis is arguably more useful when comparing generalized differences in living standards on the whole between nations because PPP takes into account the relative cost of living and the inflation rates of the countries, rather than using just exchange rates which may distort the real differences in income.

Singapore is now the richest country in the world.
Where is Malaysia?

According to sources, some of the factors contributing to Singapore's forecast performance are its 'human capital' -- a skilled and educated labour force, the dynamic business environment, openness to trade, capital mobility and foreign direct investment. Also, it is worth noting that there is a global eastwards shift in economic activity -- Singapore is perfectly positioned to take advantage of this.

However, everything is not going well for Malaysia, although we are Singapore's closest neighbour. In terms of GDP, we moving nowhere for past few years amid competitive global environment. But, in terms of population, we believe we accelerated for past one year after government legalized some 1.6million foreign unskilled labourers. Please noted that they are non-taxpayers who consume all the benefits funded by us Tax payers.

On the other side, our brightest and brilliant are forced to mass migrate to other countries. This is a fact which is dampening the future of our country. It's sad because Malaysia supposedly was high on the list in terms of GDP per capita, given the plenty of natural resources that we had and strategic position we located in. Why?

The main reason lies within us, Malaysians. Don't blame the government. Don't blame other countries. Don't blame the statistic. Just blame ourself, Malaysians. A government was formed by its own people, and elected by us. All the while, we have this wrong mentality that we are blessed with valuable resources which can last us for a long long time. Does that mean that we do not need to compete?

Facebooking is a new norm in workplace now.

If you were to ask, Finance Malaysia would take the blame on our mindset, especially youngsters nowadays. Most of them didn't bother about the country and their future. These people go to work for the sake of working only. They follow instructions, without reinventing the way we work. How are we going to excel? Don't even think about competing. It's about time to change for a better tomorrow.

Should State Government involve in Business?

In Malaysia, we can see a lot of businesses being conducted by state government. Should there be a limit to the extent that state government should involved in? Yes, we know that the state also need money to run their administrations daily operations expenses. But, would it be wise to collect revenue generated by businesses in the state, instead of relying of its own businesses?

Well, doing businesses by state government itself can generate more revenue. This is the case only if the businesses were run successfully and making profits. Otherwise, the businesses' losses were barred by rakyat themselves.

Why we only highlight State Government?

Simply because most of the state government is making losses. In fact, only one state is making profit and still it is highly indebted. By going back to history, we know how that state wrest control of one reputable fast-food chain business, which became its cash-cow now. Then, the money from this cash-cow is spinning around within the group. Is this what we called successful?

Recently, another state government intend to open cafes, convenient shops, and even hardware. There's nothing wrong with that as long as the following criteria was fulfilled:

1. The right person was being installed into the business


2. Good governance was being conducted regularly and strictly


3. Not in conflict with the current and future business owners within the same industry

All Malaysians know that, when businesses were blended with politics, anything can happen (the ugly way). Corruptions, frauds, bureaucracy, is all we already learn from the past. In business, it's very hard to sleep with competitors. To eliminate competition, can I limit the issuance of permit for certain businesses? Can I withdrew the licenses given? Can I stop renewing the licenses when due? Ordinary folks like us cannot, but state government can.

Bush visiting a hardware shops

Fair and Open market is all we want. For me, all the three criteria mentioned above are difficult to abide. If failed, votes will swing the other side. State government should facilitate, understand, and help rakyat to set up their businesses. If all businesses were conducted by governments, we are moving backward to be a communist country.

Berjaya Food: Testing Investors' Appetite?

Listing tomorrow (March 8), Berjaya Food (BFood), through its subsidiary Berjaya Roasters, is principally involved in the development and operation of the Kenny Rogers Roasters (KRR) chain of restaurants in Malaysia. All started when Berjaya Group acquired KRR in 1993, and being the exclusive franchisee in Malaysia, operating 52 outlets nationwide.

Kenny Rogers Roasters

What's in BFood mind?

• Open 8-10 outlets per annum
• Emphasizes healthy food targeting increasingly heath conscious consumers

What Analysts say?

The IPO price was set at RM0.51, and Berjaya Group will still be the largest shareholders after IPO with 70.91% shareholdings. OSK Research value BFood with a RM0.57 target price, based on 7.5x PE, which represents a 30% discount to its closest peer in Malaysia, QSR Brands due to its smaller revenue and earnings base. BFood intends to distribute up to 50% dividend payout.

Past and projected revenue. Source: OSK, Prospectus

More "food" for BFood? 

Berjaya Group does not discount the possibility of injecting its other food businesses into BFood once they turn more profitable. I believe this is just the beginning for Berjaya Group to unlock its value in food and beverages businesses. Potential businesses that may injected includes:

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Stock Watch: Benalec Holdings Bhd (5190)

Being one of the most successful new listing this year, Benalec is consistently closing higher than its IPO price of RM1.00. Listed on the main board of Bursa Malaysia, Benalec was categorized as a construction counter with more than RM1 billion market capitalization.

Company Info

• Incorporated since 1978
• Principally involved in the provision of marine construction services mainly in the area of land reclamation and dredging, rock revetment works, shore protection works, beach nourishment, marine piling, and construction of marine structures.
• Providing vessel chartering on time and voyage charters as well as tow-age services to third parties.
• Owning a full-service shipyard to carry out any ship repair, ship maintenance, shipbuilding or fabrication works.
• Owning a large and diversified fleet of 91 vessels

Expertise?

Benalec strength lies in their ability to operate a 1-stop centre offering Total Service and Complete In-House expertise, ranging from marine construction, marine transportation and support services, shipyard and shipbuilding, and vessels maintenance, refurbishment and modification and steel fabrication.

In 2010, Benalec achieved another key milestone when it expanded to Singapore and subsequently obtained ISO 9001:2008 and OHSAS 18001:2007.

Currently, Benalec is bidding for marine construction projects worth RM 5.7bn in Melaka, Penang, Selangor and Johor, and expects contracts to be awarded within 1-2 years time. Being an integrated marine construction specialist, Benalec enjoys healthy profit margins due to its ability to maintain cost efficiency in its marine construction projects. The company achieved a high core net profit margin averaging at about 20.3% over the past 3 years, excluding gain on disposal of land and vessels. (RHB Research)

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Analyzing Latexx Partners' takeover offer

Just before CNY, Latexx surprisingly announcing that the company had accepted a non-binding takeover offer by two private equity funds. However, the deal looks unattractive with limited upside given the offer price of RM3.10 only. For your information, it is only 10.7% above the last trading price of RM2.80 only.

About the offer:

• The offer values Latexx at 8.2x P/E only versus sector's average of 11.7x
• The takeover offer needs to secure a 75% shareholders' approval as lay out by the new rules
• With RM3.10 per share, the offer was valued as RM 852.03 million (inclusive of 55.03 million warrants)

Would the deal materialize?

Finance Malaysia doubt the deal will go through, given the unattractive valuations attached. Please take note that Latexx was one of the largest medical examinations gloves producers globally. By taking over at a mere 8.2x P/E, it would be a very good buy, but not a good sell at all. Another issue which sparks our interest was that the background of the two private equity funds being the acquirers.

Navis Asia VI Management Company Limited (Navis), a wholly owned unit of Navis Capital Partners, a US$ 3bn investment firm. Meanwhile, Mettiz, a holding company owned by Michael Tang Vee Mun, was the provider of equity financing for KNM Group's failed management buyout early last year. (CIMB research)

Would it be another "failed" buyout by Mettiz? A repeat of the dramatic KNM's tumbling version? Finance Malaysia really can't predict the outcome from the EGM to be convened soon on the offer. It's all depends on Latexx's shareholders to decide.

But, judging from the "not so performing" share price the day after the said announcement, most probably the outcome is already been factor-in... which was "failed". Anyway, we may heed the advise from the independent adviser appointed by Latexx's board of directors -- Hong Leong Investment Bank -- before voting.

After all, I like Supermax and Kossan for its lower P/E and larger players in the same industry.

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Sunway Nexis... Connect. Work. Play

To capture the feel-good sentiment of local property market, Sunway City Bhd launched its latest integrated mixed development, Sunway Nexis, located at Dataran Sunway, Petaling Jaya. It was launched following the success of Sunway Giza, which open its doors recently.

The development is being undertaken by Sunway Damansara Sdn Bhd, with a gross development value (GDV) of RM500 million.

• A mixed commercial development sprawling over 5.83 acres
• Situated at the junction of Persiaran Surian and Jalan PJU 5/1A
• Located within the main commercial hub in Dataran Sunway
• Well serviced by a number of highways including NKVE, LDP and SPRINT
• Modern 3 storey retail shops priced at RM4million and above
• A 13-storey office suites block, priced more than RM 700,000 each unit
• A 20-storey flexi office block

Source: Sunway City Bhd, Business Times

Broad-Ban in Malaysia?

Forget about the old fixed line internet connections anymore. We have the on-the-go broadband services, which provide almost unlimited boundaries for internet lover to surf anytime anywhere. However, you may not know a very unpleasant scenario is happening in Malaysia (at least I found out now).

Although I comment about TM's monopoly status in fixed line internet connection previously, I still prefer Streamyx for its unlimited surfing, lower monthly charges, and stable connectivity. Most importantly, more than one people can online at the same time, without extra fees. Whereas, broadband cannot.

Don't know #1

Recently, I moved to a new area, and hopes to subscribe for Streamyx (fixed line internet service provided by TM). However, I was shock to found out that I cannot subscribe for Streamyx, because my area was under Maxis territory. Wow… Sounds like I am living in the battle-field, where Maxis won the game!!!


The reason given was that my area's telephone line is bought over by Maxis, and Streamyx needs the telephone line to connect. Since this was the only fixed line internet service you can find in Malaysia, and again thanks to TM's monopoly status, I have no choice, but to look for broadband service.


Don't know #2

Then, I subscribe for a broadband service, but, the connection is slow (running at below 100kbps during peak hours). Can you imagine how slow 100kbps is? It's like opening a single website until you felt asleep. So, I went to another service provider to en-quire  theirs. Thanks for his honesty, he told me that if you are staying near the mountain, and in an apartment unit above 5 storey, you can't expect to get a good connection.


Conclusions… Broad-Ban

Are we living in a business friendly society, in the expense of public's freedom of choice? 
First, Maxis is wrong by conquering certain areas, which undermine the choice of citizen there. 
Second, why TM agreed to let go some of its assets?


Finance Malaysia thinks that Rakyat should be given to freedom to choose for their preferred service. Business owners should cares about the difficulties faced by Rakyat. And, government should monitor the latest development which could affect the welfare of Rakyat. Internet services are very important our daily lives now. Oh my dear Malaysians.


*The telecommunication company is expanding its territory now. Would your area be the next battle-field?

UnEthical "Ipoh Bean Sprout Chicken Rice" Restaurant... Beware!!!

Beware, especially KL people. There is a famous "Ipoh bean sprout chicken rice" which do business in its own way - unethical. And, for your information, this restaurant have many outlets in KL. I am wondering how it can expand so rapid with the experience of mine as below:-

The story...

Last night, I went for dinner at this outlet in Puchong. Here is my order:

• One white chicken rice. And, I stressed that I want the "normal" one.
• One Ipoh chicken Hor Fun.

However, it turned out as following:

• One famous "farm chicken" which cost RM1 more.
• One Ipoh chicken Hor Fun with beef balls (sure more expensive la...).

When I confront with the waitress, who took my order. She said: "Oh... We have changed the menu , and we only have Ipoh chicken Hor Fun with beef-balls or fish-balls. Since we do not have fish balls already, I just give you beef-balls today."

Picture by Rasa Malaysia

After charging the bill, I complain to the manager. Because, this is not the first-time I visit the restaurant, and I know the price and what is available on the menu quiet clearly. And, this is not the first-time I order the "normal" white chicken rice, but they gave me the specially more expensive one.

As expected, the manager said there is normal white chicken rice and pure Ipoh chicken Hor Fun available in the menu. Then, she gave me back RM1 for the extra white chicken rice charged. Since then, they lost a few customers like me.

Back to financial-related angle, does it mean that ethical business would not make money?

After analyzing, I believe the said restaurant teaches their server to do it the "more profitable" way, to add-value, and to squeeze customers. Because, I have been served for 3 times before, and they are acting the same. Why can't we do business in a more ethical way? If the food is in good taste, customers sure will return. If the service is good, customers sure will be loyal. Correct?

Finance Malaysia sure will boycott those unethical business. Don't you?