Saturday, January 24, 2015


Making the REIT Investment

By SHAREN - 19 December 2014 @ 12:00 AM 
STRONG UPSIDE: Those with quality commercial, industrial and healthcare assets to do well
KUALA LUMPUR: It will not be all doom and gloom for Malaysian real estate investment trusts (REITs) next year, with potential upside from the injection of new assets and extensive refurbishment of existing portfolio assets in the past 12 months.
There are currently 16 REITs listed on Bursa Malaysia and the largest player is KLCC Stapled Group, which has property assets in excess of RM12 billion.
MIDF Research head Zulkifli Hamzah expected select REIT players to continue to do well, particularly those with quality properties in the commercial, industrial and healthcare space.
He is recommending REITs with strong assets, such as Sunway REIT, Al-Aqar Healthcare REIT, IGB REIT, KLCC Property Stapled REIT and Pavilion REIT.
Quill Capita REIT can also be considered as it has opened the Kampung Baru mall, which will contribute 100 per cent to its earnings next year.
Zulkifli said judging from the condition of the property market, there could be some easing in prices, given the softer market condition.
“Hence, we do not expect the REIT players to rush into buying as they would rather keep a wait-and-see stance. The gestation period for new acquisitions could be lengthy due to the purchasing process, further enhancement that might be needed, as well as ensuring the right tenant mix,” he said.
Zulkifli said depending on the capital requirement and the location of each REIT players’ existing assets, taking the enhancement route going forward might be less capital-intensive and have faster turnaround time.
On the other hand, RHB Research Institute Sdn Bhd expects Quill Capita Trust and Axis REIT to wrap up their respective asset acquisitions towards the end of this year or early next year.
It also expects Sunway REIT, CapitaMalls Malaysia Trust and Hektar REIT to start reaping the fruits of their labour as the extensive refurbishments of their malls are due to be completed by the end of next year.
On future acquisitions, RHB Research said it might be more challenging after the implementation of the six per cent Goods and Services Tax on April 1 next year.
It expected all purchases of commercial assets to be subject to the six per cent GST and, hence, could potentially cause the assets’ yields to become less attractive.
However, it expects no significant changes on the sector’s organic growth.
“We believe even if the electricity tariff were to increase again during the next review in mid-2015, the impact will be largely manageable as some REITs, such as Pavilion REIT and KLCC Stapled Group, have started raising their service charges and, hence, cushioning the impact of higher tariffs.
“At the same time, we also think that the GST is unlikely to dampen the REITs’ organic growth,” RHB Research said in its Malaysia Strategy 2015 report released this week.
It opined that retail REITs would outperform its peers, given their relatively stable average annual rental rate growth of five to seven per cent, compared with the two to three per cent growth in the industrial segment and flattish annual growth for the office segment.
Meanwhile, RHB Research thinks REITs could take a breather next year as the risk of further hike in the Overnight Policy Rate (OPR) has been reduced following the fall of crude palm oil and crude oil prices.
“As the decline in commodity prices is expected to adversely affect the economic outlook, the focus has, therefore, been switched to stimulating growth rather than containing inflation. As a result, we believe the OPR will likely remain stable next year. This should be favourable to the REITs, given the steady yield spread and also stable interest cost on borrowings,” it said.
Meanwhile, Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng Tiong Lip said it was a challenge for REIT players to acquire yield-accretive assets.
He said there were good assets in the market but the owners were selling at an expensive price, making the yields unattractive
“We will continue to look for assets, but more importantly, making acquisition in the current market condition is not easy as people want to sell them at a very high price. This means the yields would be lower. For REIT like us, we can’t acquire properties with low yields as it will be dividend per unit dilutive,” Ng told Property Times.
Sunway REIT Management is the manager for Sunway Real Estate Investment Trust (Sunway REIT), which has 12 assets in its portfolio.
Sunway REIT’s market capitalisation is RM4.4 billion as at December 5 and its total portfolio assets are valued at RM5.56 billion as at September 30.
Sunway REIT Management is buying Sunway Hotel Georgetown in Penang and Wisma Sunway in Shah Alam for RM134 million from its parent, Sunway Bhd, to provide stable cash distributions to unitholders.
These assets will be injected into Sunway REIT and raise its value to almost RM5.7 billion when both acquisitions are completed over the next 18 months.
Its last asset acquisition was in 2012 when it bought Putra Place in Kuala Lumpur.
The four-star hotel in Penang, which has a gross floor area of 192,383 sq ft, completed its refurbishment exercise in April last year and is said to have a market value of RM74 million as at July this year.
The hotel will be leased back to the vendor, Sunway Biz Hotel Sdn Bhd, for a 10-year term with the option to renew for another 10 years.
Wisma Sunway, a newly refurbished office building, is located within a captive office market in Shah Alam and more than 90 per cent of its tenants are government agencies.
The acquisition of the hotel and Wisma Sunway will be funded through Sunway REIT Management’s existing debt facility, which will increase its gearing ratio from 32 per cent as at September 30 to 33.5 per cent.
On the outlook for next year, Ng said the performance for Malaysian REITs in general was expected to be flattish.
“There is no question that the market is looking quite volatile. We are now seeing fluctuations of the ringgit and that may have an impact on interest rates. There is also government subsidy rationalisation. The Goods and Services Tax (GST) is coming up, too. There are also a lot of external factors we are going to face next year. All these will definitely affect consumer sentiments or business confidence. So it is definitely going to be a very volatile year.”
He also said the market for commercial assets such as retail malls, offices and hotels was in a soft competitive situation by virtue of the number of new properties of the various asset classes that are coming into the market.
“There are more hotels, malls and offices... it is very apparent that the supply is there and, therefore, the situation will continue to be very competitive,” Ng said.
Sunway REIT was listed on the Main Market of Bursa Malaysia on July 8 2010 and, with a RM5.7 billion portfolio, is the country’s second-largest REIT in terms of assets size as at December 5, behind KLCC Stapled Group.


Friday, January 16, 2015

Beware of the fake doctors

LATELY, there is a trend among marketers of health and beauty products to include over the top claims of how their products can cure certain medical diseases.
Most of these claims can’t be substantiated by any scientific methods. These claims are merely from testimonials of their clients after using their products.
Any inquiries made regarding these claims will be answered with accusations of the enquirer being an agent of anti-religious sentiments and Western beliefs.
Furthermore, some of these marketers claims to have titles such as “Doctor” and “Professor” from questionable universities. Some even have the title of “Sir”! Some of the professor titles are even conferred by certain companies instead of universities.
While they deny that they are deceiving the public by portraying themselves as medical doctors, their pamphlets seem to depict the contrary.
To the public, does a person wearing a white coat with a stethoscope around their neck look like a medical doctor? This is what is happening today.
Some might say that these people are not doing any wrong as they are merely helping to create a healthy lifestyle among Malaysians. But I have encountered some of these non-medical doctors giving disturbing advice to the public. Among them are:
> Diabetics should stop taking their medicine as diabetes mellitus is a disease of the mind and can be cured by a special water. All medicines prescribed by medical doctors cause hypoglycaemia and it will only do more harm;
> Hypertensive patients need not take any anti-hypertensives even though their blood pressure is 200/100 mmHg; and
> A thalassemic patient with haemoglobin of 4g/dl (severely anaemic) does not need a blood transfusion.
These dangerous types of advice are making it hard for doctors to manage patients adequately. There have been countless patients who have not come for follow-up treatment after listening to their advice. They only turn up later at the emergency department with fatal consequences.
In my short service history, I have seen countless patients with haemorrhagic stroke, diabetic ketoacidosis and acute renal failure due to non-compliance of treatment.
On questioning, it was found that these patients had been seeking advice from these non-medical doctors.
Despite this, I have yet to see any one of these “doctors” claiming responsibility for their mistakes. I have not seen any case of litigation against these “doctors”.
I have no interest here. I am just a normal medical doctor. I can easily say “these patients are looking for trouble themselves and I shouldn’t care” and wash my hands.
But as a medical professional, my job is not only to treat but also to prevent the population from getting sick. Prevention includes managing chronic diseases adequately.

Tuesday, January 13, 2015

Mega bank merger off, announcement expected this week

Mega bank merger off, announcement expected this week

By Adeline Paul Raj & Joyce Goh / The Edge Financial Daily | January 13, 2015 : 10:05 AM MYT

KUALA LUMPUR: The proposed mega merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) is off and an announcement is expected before the end of the week, sources said.

“The respective boards are supposed to meet on Wednesday, [tomorrow] when it will be formally expressed that the deal is off,” one source close to the negotiations told The Edge Financial Daily.
The move comes six months after the proposed merger was first announced in July 2014.

The Edge weekly on Jan 10 reported there was a strong possibility the merger could be called off due to several factors, including that the economic landscape has become tougher. Another factor was that RHBCap was seeking a revision of the terms, after the substantial fall in CIMB’s share price.

Sources said instead of an all-share deal in its merger with CIMB, RHBCap now wants a cash portion to be included, making the deal potentially more expensive for CIMB.

Some fund managers said news that the deal is off will be positive for CIMB and RHBCap. This is because their share prices have underperformed due to uncertainties and concerns arising from the protracted negotiations.

“Both have been underperfoming — CIMB more so than RHBCap — because of the uncertainties surrounding the merger, coupled with the tougher operating landscape. Many investors are concerned that a merger of this size, at this time, could turn out negative for the parties if they go ahead with it,” said a fund manager.

CIMB’s stock shed 14 sen or 2.6% to close at RM5.18 yesterday, while RHBCap gained seven sen to RM7.73. MBSB’s stock plunged 22 sen to RM2.19.

CIMB’s stock has shed 25.8% since the structure of the mega merger was first announced on Oct 9, while RHBCap’s share price has declined by 11.1%. MBSB’s stock has gained 1.7% prior to the sharp fall yesterday.

The proposed merger has been structured such that RHBCap would acquire CIMB’s assets and liabilities via a share swap at an exchange ratio of one RHBCap share for 1.38 CIMB shares. This was based on a benchmark price of RM7.27 per CIMB share and RM10.03 per RHBCap share, translating into a price-to-book value (P/BV) ratio of 1.7 times and 1.44 times for CIMB and RHBCap, respectively.

Their Islamic operations, which would then come under CIMB Islamic Bank Bhd, would then acquire MBSB to form a mega Islamic bank at a price of RM7.77 billion or RM2.82 per share. This translates into a P/BV of 1.32 times and MBSB shareholders have a choice to either accept cash or new shares in the unlisted CIMB Islamic group.

This article first appeared in The Edge Financial Daily, on January 13, 2015.

both cimb and rhbcap rallying up to celebrate the cancellation while mbsb plunged further.

Monday, January 5, 2015

Doctor, the no.1 job in Malaysia

Doctor, the no.1 job in Malaysia

 | January 5, 2015
A survey revealed that Malaysian students would rather practice medicine than fly a plane.
doctor professionPETALING JAYA: Doctor, teacher, pilot, police officer and businessman, are the top five career choices of Malaysian children, revealed a survey.
The survey conducted last year by Adecco Malaysia showed that the children, aged between seven to 14, thought that being a doctor was a “noble profession” with one eager nine-year-old hopeful at finding a cure for Ebola.
While some kids thought they could earn RM2 million a month as a doctor, others were happy to settle for a RM250 salary.
In contrast, Malaysian children chose actor or actress as their favourite job in the same survey carried out the previous year.
The recent findings indicated a shift in the childrens’ career choices, as this year’s list emphasised jobs that were more helpful and caring such as teachers, environmentalists, police officers and fire-fighters.
A total of 82 per cent children also appeared to value “spending time with their family” over “making lots of money” as they felt that money could only bring them temporary happiness whereas their family was “eternal happiness”.
The survey results also revealed that some children weren’t interested in “safe” jobs and wanted to explore more exciting careers like constructing a chocolate factory a la fictional character, Willy Wonka, or following their role model, British celebrity chef, Jamie Oliver.
Dancer, singer, actor and TV personalities remained popular choices because they provided opportunities to travel and become famous.
But the children felt that the best or coolest jobs fell in the more “serious” category of doctor, pilot and private investigator, as well as the unusual job of a ribbon producer, fireworks specialist or wildlife photographer.
While only one 12-year-old boy aspired to be the next Prime Minister of Malaysia, the rest had much to say about the first three things they would do if they were PM.
Among their answers were, “meet One Direction (a British boy band)”, “ban smoking”, “stop the use of uniforms in school”, “plant more trees”, and “protect the country from tornadoes”.
While the children responded that the top three countries to live in were Australia, US and the UK, the majority of them chose Malaysia as their country of choice.

Friday, January 2, 2015

2015 investing tips for the rational investor by GERRGE SISTI

2015 investing tips for the rational investor
Published: Jan 1, 2015 11:12 a.m. ET

Now is the time of year when pundits put forth their market prognostications for the coming year, ballyhoo their favorite stocks and dazzle readers with can’t-miss strategies and trends.

So here are a few words to the wise, some random thoughts to keep in the back of your head as you ring in the New Year with the cornucopia of 2015 investment “know-how” flooding the media:

  • Markets can stay irrational longer than most people can maintain their composure, so divide your assets among many baskets. You might get rich quick owning a concentrated, under-diversified portfolio — but it’s almost impossible to stay rich by doing so.
  • There are smart sounding foolish ideas, just like there are smart sounding fools. It is easier to come up with a new idea than it is to evaluate its prudence. Your latest “can’t–miss” investment idea has likely been considered and rejected by someone far smarter than you.
  • The future will be full of surprises — count on it. No one can see through the curtain that separates today from tomorrow so avoid those who predict the future without divine inspiration.
  • Hard times lie ahead, so do good times. This should not frighten you but it’s why your financial planning and investment strategy must be flexible enough to accommodate both outcomes.
  • Speculation is the sport of fools. The success of a fool doesn’t prove that his course was wise or guarantee that his success will continue. Luck can bring temporary success but time is the ultimate judge of all speculations.
  • Doomsayers thrive because most Americans are historically challenged. Many prophecies of economic doom are often just clever sales pitches.
  • Suckers aren’t born, they are enticed. Never forget that a large commission, a bad investment and a small conscience are often found in close proximity to one another.
  • Past performance is a perishable product with an expiration date of ... today.
  • Many investors are confused about what their financial adviser is doing with their portfolio. This isn’t surprising because adviser tinkering is often just motion masquerading as action.
  • Don’t invest your retirement assets based on your worst fears — it’s a sure recipe for failure. Rather, focus on what is probable and move forward. Distinguishing between what is possible and what is probable will eliminate many investment mistakes.
  • More money has been lost chasing yield than at the point of a gun. I’m changing my mind. More money has been lost trying to beat the market than at the point of a gun. I’m changing my mind again. More money has been lost when greed and wishful thinking overrode clear judgment than at the point of a gun.
  • There is no bigger financial trap than the lure of easy money. All financial bubbles have these things in common — unrealistic optimism, rapidly rising prices, people shouting “This time it’s different!” and the lure of easy money.
  • Anything that happens today on Wall Street that doesn’t make it into tomorrow’s history books isn’t worth your time or attention.
  • The wealth of a nation lies in the minds of the citizens, not in its natural resources or the gold in its vaults.
  • You can make lots of money and pay lots of taxes. You can make no money and pay no taxes. Be wary of any scheme promising lots of tax-free money.
  • Beware of shortsighted acts of investing folly that can ruin the fruits of many years of labor. This way, you will keep your financial life from acting as a warning to others.
  • The dominant emotion in investing is fear. It can overcome the weight of the historical evidence and all intelligent analysis.
  • Your investment life should be boring — make the rest of your life exciting.
  • Patience is the most important ingredient in wealth accumulation. This, sadly to say, is one reason why so few people are wealthy.
  • We live in an age of information overload. None of the cacophony emitted by the financial media will give you an edge in the market because all the information is already factored into asset prices.
  • After subtracting the costs of management fees, trading expenses and taxes; most mutual fund managers don’t add value — which explains why their average tenure is about five years. They’ll never admit that most of what they do is just speculating with shareholders’ money.
  • Wall Street’s big names will continue with business as usual in 2015, efficiently transferring client wealth to their own accounts.
  • Don’t be fooled by Wall Street’s new products that promise greater return than a traditional stock/bond mix. It’s never mentioned that the track record of these offerings is often theoretical and their risks unknown.
  • The beneficiaries of all those What to buy in 2015” articles in financial publications are more likely to be advertisers, not readers. If you come across an article entitled “2015– Another Good Year to Buy Index Funds,” you’ll know things have changed.
  • In 2015, investors will once again have the opportunity to receive the market's return with little effort and almost no cost. Don't pass up this golden opportunity.

  • The ending value of a continuously funded, globally diversified, annually rebalanced indexed portfolio over an investing lifetime will be greater than most investors can imagine and which few stock pickers or market timers will ever achieve
Related Posts with Thumbnails