Nirvana Asia (1438 HK) - Tracker - 18 May 2015

For those who has been following my blog, I have made a recommendation previously on Nirvana Asia (1438 HK) and now I would like to update the result of my recommendation from time to time.

Please refer to this link for my previous recommendation on Nirvana Asia.

Capital Gain from My Recommendation on Nirvana Asia

14 April 2015 @ HKD2.46

16 May 2015 @ HKD2.65

Return = 7.7% over 1 month period

Bloomberg: Nirvana Asia Ltd - 16 May 2015

Personal Story (I bought Nirvana even before I recommended it!)

10 February 2015 @ HKD2.25

16 May 2015 @ HKD2.65

Return = 17.8% over 3 months period

News of the Day - 18 May 2015 - Get an independent audit or quit, Nazir tells 1MDB directors

CIMB Group Bhd Chairman Datuk Seri Nazir Razak

• Datuk Seri Nazir took 1MDB board to task for not addressing rising concerns 

Chairman of CIMB Group Bhd Datuk Seri Nazir Razak took the board of 1Malaysia Development Bhd (1MDB) to task for not addressing the growing concerns on the fund and its financials. He said that a responsible board should appoint an independent auditor to verify the accounts immediately and deal with the mistrust pertaining to the financial position of 1MDB instead of waiting for the Auditor General (AG) to do the job. 

• SapKen secured six contracts installation offshore structures worth US$269m 

SapuraKencana has secured six contracts that call for the installation of various offshore structures in Mexico, Indonesia, Vietnam and India. The contracts are worth a combined US$269m (RM969m). 

• Genting Malaysia sells 17.8% stake in Genting HK for at least RM1.69bn cash 

Genting Malaysia Bhd, via indirect unit Resorts World Ltd, has proposed to sell its entire 17.81% stake in Genting Hong Kong Ltd for at least RM1.69bn cash or 33 US cents (RM1.18) per share. Genting Malaysia told Bursa Malaysia on Monday that the shares were considered “non-core investments” and were treated as “available-for-sale financial assets” in the group’s financial statements. 

• Sunway buying 17 acres near its Sunway township for RM286m

Conglomerate Sunway Bhd is boosting its land bank close to its flagship development Sunway township by buying 17 acres worth RM286m. The parcel, which is situated next to Western Digital in the Sungei Way Free Trade Zone, works out to about RM386psf. With the acquisition, the company plans to roll out a mixed project that entails service apartments and retail shops, with a total gross development value of RM1.8bn. 

• Brahim’s Holdings in new catering contract with MAS, contract 25% lower 

Brahim’s Holdings Bhd has entered into a new catering contract with Malaysia Airlines Bhd (MAB) that comes with a shorter term and lower in price by up to 25%. The new catering agreement (NCA) is for a period of five years with an option for additional five years renewal, subject to Brahim’s 70% subsidiary, Brahim’s Airlines Catering Sdn Bhd (BAC) meeting several conditions with regards to its service levels.

• KWAP confirms no investment commitment has been made on TRX 

Kumpulan Wang Persaraan (KWAP) confirms no investment commitment has been made on Tun Razak Exchange (TRX). The pension fund said it will continue to look at domestic property investments that meet the Fund’s mandate of delivering sustainable returns over the long term. “All investments would have to meet KWAP's minimum investment returns and risk parameters as governed by its Board, it said, “KWAP reviews the investment opportunity in TRX as it would with any other property investments and the decision to review the project was commercially driven based on its prime strategic location as the next Kuala Lumpur financial district."

• TNB discussion with 1MDB on Project 3B power plant

Tenaga Nasional Bhd (TNB) is in discussion with 1Malaysia Development Bhd (1MDB) over acquiring the biggest equity in the 2000MW coal-fired power plant, known as Project 3B. Energy, Green Technology and Water Minister, Datuk Seri Maximus Ongkili, said the ministry was made aware of the discussion, but it had not been told of any decisions yet.

• Prepaid mobile reloads will cost RM10 for RM10 worth of call credit

Prepaid mobile reloads will cost RM10 for RM10 worth of call credit, said Datuk Seri Ahmad Shabery Cheek. The Communication and Multimedia Minister said the 6% Goods and Service Tax (GST) will be usage-based and will only be imposed when the call is made. 

• Details of MRT2 project will start to go on public display from tomorrow 

Details of the Klang Valley Mass Rapid Transit Line 2 (MRT2) project will start to go on public display from tomorrow. The public can visit the SPAD office and 23 roadshow locations in the Klang Valley for information on the proposed MRT2, also known as the Sungai Buloh-Serdang-Putrajaya (SSP Line). The display will run until August 17, 2015 for public inspection, which is part of the requirement of the Land Public Transport Act 2010. Mass Rapid Transit Corporation Sdn Bhd (MRT Corp) Chief Executive Officer Datuk Seri Shahril Mokhtar said the main purpose of the display is to provide a platform for the public to give feedback on the proposed alignment.

News of the Day - 11 May 2015

• Lembaga Tabung Haji-1MDB Controversy

PAS wants Putrajaya to explain whether Lembaga Tabung Haji (TH) had bought RM1.6bn of sukuk bonds issued by 1Malaysia Development Bhd's (1MDB) Bandar Malaysia, before buying a plot of land at the Tun Razak Exchange (TRX). Party vice president Datuk Tuan Ibrahim Tuan Man said that closer scrutiny of the leaked documents posted on the anonymous blog "The Benchmark" about Tabung Haji's land buy from 1MDB, showed that the pilgrims' fund had also made the sukuk investment. 

• Edra Global listing to exclude Project 3B? 

The latest twist in the plans to list Edra Global Energy is that it will likely exclude the not-so-lucrative Project 3B (a 2,000MW coal-fired power plant project) and entail an earlier start of the 2,400MW power plant in Malacca that had been awarded to Edra’s parent 1Malaysia Development Bhd (1MDB) last year, source say. Project 3B is being handed to Tenaga Nasional, something which had been speculated for some time, while Edra is fast tracking the 2,400MW plant in Malacca by working with its consultants to churn out the request for proposals for parties to work on building the new plant. The move does make sense. Project 3B, in which Edra has a 70% stake, has an indicative internal rate of return of only 6%, while the Malacca plant carries a project IRR of 10%, sources say. 

• EcoWorld completes last leg of corporate exercise 

Eco World Development Group has completed the last leg of its corporate exercise following a 20% placement of shares to institutional investors which has raised proceeds of RM638.4m. The property developer said the order book was subscribed 1.41 times with significant orders from long-term institutional investors. The exercise has attracted a strong demand from local and foreign investors, it added. President and CEO Datuk Chang Khim Wah said with the completion of the corporate exercise, the group is well-placed to forge ahead with its growth and expansion plans to achieve its RM7bn sales target for its financial year 2015 and 2016. 

• Italian O&G company to inject an additional US$300m in Malaysia 

A major Italian oil & gas company will inject an additional US$300m (about RM1bn) in Malaysia, says Deputy Prime Minister Tan Sri Muhyiddin Yassin. He said this was mentioned by the investor during a meeting between him and Italian captains of industry. The Italian company currently has a JV project with Petronas in Malaysia, he told Malaysian journalists at the end of his three-day working visit in Milan. He also said Agusta, an Italian aerospace company, has agreed to set up their maintenance-repair-overhaul base in Subang as a hub to service their helicopters used in the region. "During the meeting, some investors showed their interest in expanding their investments in Malaysia," he said. 

• My EG acquires property for new HQ

My EG Services Bhd (MyEG) is acquiring 22 storeys of stratified parcels in the 45-storey Iconic Office (Block N) at Empire City @ Damansara, for RM155.3m.

News of the Day - 08 May 2015

• BNM maintains the Overnight Policy Rate at 3.25%. 

Bank Negara Malaysia will maintain the Overnight Policy Rate (OPR) at 3.25% as the current level remains accommodative and supportive of economic activity. The OPR was last revised in July 2014 to 3.25% from 3.00%.

• Malaysia’s Mar exports rose 2.3% yoy, spurred by electronic products demand. 

Exports in March rose 2.3% from a year earlier, confounding expectations for a third month of decline, as demand for electronics products boosted exports to its key markets China and the United States.

• Top Glove is acquiring a 1.5 acre commercial land in Selangor for RM20.3m.

Top Glove Corp is acquiring a 1.5 acre commercial land plot in Bukit Raja, Selangor, from Century Logistics Holdings for RM20.3m cash. It said the purchase consideration which is not inclusive of the 6% goods and services tax (GST), will be funded by internally-generated funds.

• Wah Seong was ordered by international court to pay Socotherm RM40m. 

Wah Seong Corp has been ordered by an international court of arbitration in Paris to pay RM40.3m to Socotherm SpA for breaches to a joint-venture agreement and supplemental agreement. The company will also have to pay Socotherm about RM4.7m for costs and expenses.

• Brahim Holdings is in talks with MAS to extend the catering agreement. 

Brahim's Holdings’ subsidiary is in talks with Malaysian Airline System Bhd (MAS) to extend the new catering agreement, which expired on 30 Apr 15. The in-flight caterer said on Thursday its 70% owned Brahim’s Airline Catering Sdn Bhd “is still engaged in discussions to mutually extend” the cut-off date for the new agreement. To recap, the parties had on April 1 inked an extension agreement to allow the negotiations for the new catering deal to be executed. The agreement was extended from March 31 to April 30.  

News of the Day - 07 May 2015

• Genting breaks ground in Resorts World Las Vegas 

Genting Group today conducted the groundbreaking ceremony of its Chinese-themed Resorts World Las Vegas (RWLV) -- the first Las Vegas Strip development project in nearly a decade -- witnessed by Nevada Governor Brian Sandoval and Clark County Commissioners. "After 50 years of developing integrated resorts all around the globe, we are thrilled to be breaking ground on the Las Vegas Strip in the great state of Nevada," Chairman and Chief Executive Officer of the Genting Group, KT Lim said in a statement here today. Lim said Las Vegas is known for its world-renowned resorts, and the Genting Group looks forward to being a part of the city's continued growth by creating a huge national and international draw with this Chinese-themed world-class resort

• Palm oil exports from Indonesia will be subjected to levy starting end-May 

Palm oil exports from Indonesia will be subject to a levy at the end of this month after President Joko Widodo signed rules for implementation of the new tax. “The funds will be solely used for development of palm oil industry, including for biodiesel” subsidies, said Sofyan Djalil, coordinating minister for economic affairs. The government expects to raise about US$700m in revenue from the levy every year, he said.

• SapuraKencana to land two jobs in India and Mexico worth RM5.4bn? 

SapuraKencana Petroleum Bhd (SapKen) is poised to land two international jobs in India and Mexico respectively totalling about US$1.5bn (RM5.35bn), according to a source close to the deals. This development comes when the crude oil price has crossed US$60 per barrel two days ago, the first time in nearly five months. For the India job, SapKen may even edge out local-based Larsen & Toubro Ltd, as it has put in the lowest bid among the four contenders interested in a portion of the Oil & Natural Gas Corp’s Mumbai High South (MHS) phase three redevelopment project to the tune of US$200m-US$300m.

• Felda Global Ventures to complete disposal of non-core business by 3Q15 

Felda Global Ventures Holdings Bhd (FGV) will complete the disposal of its non-core businesses by the third quarter of 2015, said group president and chief executive officer Datuk Mohd Emir Mavani Abdullah. The disposal, which includes Felda Travel, Felda Property and Felda Prodata Systems, will be carried out through open tender process. 

• AirAsia X mulls switching orders from Airbus A350-900 to A330neos 

AirAsia X Bhd, the long haul budget carrier in Tan Sri Tony Fernandes's AirAsia group, is exploring switching its orders for Airbus Group NV A350-900 aircraft for more fuel-efficient A330neos. The carrier would rather have A330s that match the other aircraft in its fleet, chief executive office Benyamin Ismail said in an interview in Sydney yesterday. AirAsia X has firm orders for 10 A350-900s and options for another five, according to its latest annual report. The planes are worth about US$4.6bn (RM16.42bn) at the current list price of US$304.8m each. 

News of the Day - 06 May 2015

• Sime Darby postpone IPO of its automotive business?

Sime Darby, the world's largest listed palm oil firm, has indefinitely postponed an initial public offering of its automotive business that bankers had said could raise up to US$500m (RM1.8bn). The company had in February deferred the IPO of Sime Darby Motors to the second half of this year but three people with direct knowledge of the matter said the deal had been put off for now. A Sime Darby spokesman also said the IPO had been deferred "until the market is conducive for the exercise". He declined to give further details.

• Tune Ins acquired 23.3% equity in PT Asuransi Staco Mandiri for IDR26.8bn

Tune Ins Holdings (TIH) had on 5 May 15 executed a Conditional Binding Offer Letter to acquire 31.8% stake (or 23.3% of the enlarged share capital) in PT Asuransi Staco Mandiri (ASM) for a purchase consideration of IDR26.8bn. TIH will also subscribe for the 43,707 new issued shares in ASM for IDR30.6bn. The new shares represent 26.7% of the enlarged share capital in ASM.

• MAS to stop flights to major cities under new CEO?

Malaysia Airlines (MAS) is said to stop flights to major cities under new CEO Christoph Mueller as he attempts to turn the ailing national carrier to profitability. According to sources, international routes that may be axed include Dubai, Brisbane, Auckland, Amterdam, Kunming, Istanbul and Osaka. Last month the national carrier had announced its withdrawal from the Frankfurt route effective May 29. This was part of the overall strategy to turn the carrier into a regional airline but with strong global connectivity through its OneWorld alliance.

• The Pavilion Suites is selling at record high, starting from RM3,000psf?

The Pavilion group is setting a record of sorts as it has priced its high-rise serviced residential units of its latest project – the Pavilion Suites – along Jalan Bukit Bintang starting from RM3,000 per sq ft. The 51-storey project comprises 383 one and two-bedroom service residentials and offers 450,000 sq ft of retail space on a gross floor area basis. On a net basis, this is expected to be about 240,000 sq ft. The record price for the residential units comes as no surprise to some as it is being built on a half-acre parcel that created a buzz in the property sector in 2010. That year, Urusharta Cemerlang Sdn Bhd, a company controlled by property magnate Tan Sri Desmond Lim, purchased the tiny strip of land from Singapore billionaire Kwek Leng Beng for a record price of RM7,209 per sq ft

• CIMB Bank completes issuance of US$130M 30 years callable zero coupon notes

CIMB Bank Bhd (CIMB Bank), in which CIMB Group Bhd holds a 99.9% equity stake, has successfully completed the inaugural issuance of US$313m (approximately RM1.129bn) 30 years callable zero coupon notes yesterday. In a press statement, CIMB Bank said the landmark issuance is to be listed on the Taipei Exchange (GreTai Securities Market) and the Bursa Malaysia (Exchange Regime). It was CIMB Bank's maiden issuance in the Taiwanese market, also known as the Formosa Bond Markets According to the banking group, the deal saw healthy demand from onshore investors across multiple accounts, culminating in a peak of total orders exceeding US$480m (RM1.73bn), allowing the deal to eventually be priced at 4.50%.

Strategy in Stock Selection

Which stock to choose?

If we could not make decision in stock picking, we would definitely love to invest in all the stocks out there. Unfortunately, with the limited capital that we have, it is a mission impossible. Hence, we need to make decision in stock selection in order to maximize our returns on the capital invested.

Now here comes the big question.......... is there a systematic rationale to follow in stock picking?

The answer is YES but it requires quite a bit of research to draw a conclusion in the end. Let's follow through my thought process in this.

Research using Bloomberg Terminal

Overall, there are 3 stages in my strategy. Firstly, we look into the country, then industry and finally individual stock. The first 2 stages are to screen and narrow down the choices left in the final stage.

Stage 1: Country

Generally, we look into the country risk. To put up an example of extreme comparison, we prefer to invest in a stock that operates in USA over another that operates in a middle eastern country that is in the middle of a war for obvious reasons.

For the purpose of my article, I will skip this stage because my blog has been using Malaysia as a base all this while. 

Note: If you wish to invest in an overseas stock, you might want to look into the emerging countries that offer good potential returns.

Map of Emerging Countries

Stage 2: Industry

Generally, a particular market can be segregated into the following industries. The recommendations for respective industry are as per CIMB's recommendation as at March 2015.

Source: CIMB Research

Logically, we should eliminate those which are "underweight" and perhaps "neutral". Hence, we only look into stocks in the industries with "overweight" recommendation.

Note: Apart from CIMB, other research houses would have similar kind of segregation.

Stage 3: Individual Stock

Finally, we have arrived at the stage which we can drawn conclusion in stock picking. 

For us to gain on our investment, the stock can be rated as "market performing", i.e. the industry overall is doing well (hence, we need Stage 2) and "stock performing", i.e. the stock individually outperform its peers regardless of the market condition.

Hence, the aim in Stage 3 is to identify "stock performing" shares. A short cut method is to refer to reports issued by research houses (e.g. CIMB Research) and identify those top picks and perhaps select from the list itself.

Source: CIMB Research

Otherwise, we will need to perform fundamental analysis on potential stocks. Fundamental analysis would be a whole new chapter by itself. For now, you may refer to my fundamental analysis column via this link.

Thanks for reading!

News of the Day - 05 May 2015

• IJM Corp board to meet to deliberate on buying 1MDB's power assets? 

Sources said that IJM's board is set to meet this week to deliberate on the proposed acquisition of 1MDB's power assets. The power assets are held under Edra Global Energy Bhd. Edra is at its final stage of resubmitting its IPO application. IJM is also expected to seek clearance from its institutional shareholders, including the EDF (11.8% stake), Amanah Raya (8.4% stake), and KWAP (5% stake). Both IJM and 1MDB's management declined to comment to Edge Weekly on this matter. 

Industry sources say that IJM may be looking for a partner than can lend a financial muscle for the acquisition. This could include government-linked funds. This is not the first time that IJM has reportedly shown interest in Edra Global. 

The Ministry of Finance (MOF) which wholly owns 1MDB, had, through its formerly appointed banker, identified several buyers, including IJM. IJM isn't the only party interested in Edra Global. It was reported that Edra had recently identified a consortium in the Middle East. 

• Malakoff Corp interested in acquiring new power generation projects? 

Malakoff Corp Bhd, which is scheduled to be re-listed on Bursa Malaysia, is believed to be interested in acquiring new power generation projects including the 2,000 MW project 3B that was awarded to 1Malaysia Development Bhd (1MDB). According to sources, the independent power producer (IPP) is not merely interested in Project 3B but also any other Edra Global Energy Bhd's (1MDB's power arm) assets as long as the price is fair

• Main focus by MRCB’s new management was group's deleveraging exercise 

MRCB's MD Tan Sri Mohamad Salim Fateh and ED Imran Salim said the main focus from the start of MRCB's new management was the group's deleveraging exercise which took its gearing from a high of 1.8x two years ago to 1.5x, and could drop further to 1.2x from the completion of a REIT exercise for Platinum Sentral. MRCB has been actively acquiring land over the past 12 months. "We do not want to come to a point where suddenly we do not have any more land to develop." Tan Sri said. 

• 11th Malaysia Plan to be tabled in Parliament will focus on HR development 

The 11th Malaysia Plan to be tabled in Parliament will focus on human resources development, said Prime Minister Datuk Seri Najib Tun Razak “We will emphasise on productivity-led growth. The future of this country, its rate of growth, must be based on improvements in productivity,” he said. Presently, only about a quarter of the country’s workforce are considered skilled workers, he said, adding that the percentage was at least 40% in developed countries.