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S&M Show Podcast

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Today's topics: Eastland Bhd, MBSB symptomatic on our country's problems with personal loans, the need to revamp our archaic Insolvency laws.

http://www.bfm.my/snm-show.html

Today's song pick:  You'll Never Get To Heaven, written by one of the top 3 songwriters of the modern era, Burt Bacharach ... sung inimitably by Dionne Warwick.



Get Tough On Personal Loans & Property Loans ... PLUS Revamp Insolvency Laws Please

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Bank Negara Malaysia�s (BNM) move last Friday to tighten consumer lending will be negative for loan growth but the impact will not be significant, CIMB said, as it urged investors to hold on to their holdings in banks. The three measures the central bank announced were 1) a maximum tenure of 10 years for personal loans, 2) a maximum tenure of 35 years for property loans, and 3) a ban on pre-approved personal financing products.
In a kind of related newsbite, Nancy Shukri has indicated that changes will be made soon to Insolvency laws, a promise made by Najib back in 2012. Its about time to change these laws as it is not befitting of a developing economy like ours.
While I strongly agree that our personal and property debt should be reined in further, ... we also need to know that there is a highly inequitable treatment of those who fall under bankruptcy in the Malaysian system.
Vivian Hsu no67167


I have written before on the dire need to revamp Malaysia's archaic bankruptcy laws. Let's look at hard facts:

a) Inland Revenue Board CEO Dr Mohd Shukor Mahfar is 'embarrassed' to explain clearer the issue of why five million people in the country who are eligible to pay taxes but only 1.7 million are active taxpayers.

b) As of October 2011, there were 235,908 (probably closer to 300,000 now) individuals who were still declared bankrupt, according to Insolvency Department's Datuk Abdul Karim Abdul Jalil. On average 51 new ones are added everyday.

Take the two together, this is to say that nearly 5% of those working are bankrupts. Yes, I know some are not working. So we are still looking at 1 in 20 of our workforce.
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The trouble with our system is that bankruptcy runs in perpetuity (i.e. almost never ending till you die). Unlike in HK, Singapore and many forward thinking economies where you only have 4 or 5 years to pay down your debt and after that you are free from the debts.


Why is it so important to implement a limited period for bankruptcy?


1) Being bankrupt means you are also literally removing 5% of the working public and 5% of households from participating in the real economy. Cannot do business, cannot get loans, even job hunting may be a problem every now and then.


2) The Malaysian archaic system overly favours the banks and financial lending institutions. When its in perpetuity, the banks can clamp down on you for the rest of your life. We have to make banks and other lenders also responsible for their part in giving out the loans. Look, even creditors to EU give haircut once Greece is in trouble. That is why banks in Malaysia can be so bloody aggressive with credit cards, they know they have a very long recourse to make your life a living hell.


3) The 250,000 figure will jump exponentially soon. Why? Just look at the way they are dishing out the study loans under PTPTN. Look at the surge in personal loans by non bank institutions, look at the aggressive credit card schemes. When you give out RM30,000 or RM40,000 or RM50,000 to someone and their job is only likely to pay them RM2,000 when they graduate, if they graduate, and if they can find a job then, ... you are going to have huge problems. Plus, we haven't got to the credit card users yet.
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4) Even fuckers who end up in jail for a few years and come out, they are free ... not if you are a bankrupt, man, they will drag you till you go to your grave.


5) The onus needs to shift back to the banks and other institutional lenders for a more balanced and equitable solution. For far too long have the banks been operating giddily under such a protective umbrella in their favour. There has to be a fairer distribution of risk for lending and borrowing. I am not suggesting that debtors need not pay, I am saying you need to give them a limited timeline.


6) When you take out 5% of the household from the real economy in perpetuity, it has a lot of indirect repercussions: cannot get study loans for children, making it very difficult to reverse their position as their job prospects may be affected as some companies frown on their status, etc. Needless to say, these 5% will also NOT play a part in the real economy in an effective manner - talk about dropping an anchor on the economy, it weighs heavily especially if its in perpetuity.


7) We have NO UNEMPLOYMENT INSURANCE or other similar SAFETY NETS. If our economy tanks, or the industry we are in tanks, and we are suddenly out of a job ... it becomes very easy for us to spiral swiftly to bankruptcy if you have car loans, housing loans, etc... and no job.


8) Our current laws stifle entrepreneurship. When they try to start businesses, they usually have to take loans, sometimes they will fail, you do not want to punish a risk taker too much by literally barring him/her from ever being an entrepreneur again. We all know that to have a vibrant economy, we need more risk takers, not shut them down the moment they fail. Many successful entrepreneurs will tell you they needed to fail a few times before striking it.


9) It is also precisely these laws that causes many to go for the "ah longs" to make ends meet. No one will resort to these avenues if we have a saner approach to this mess.


10) In HK its automatic discharge after 4 years, in Singapore its 5 years. There are just as many genuine cases as there are people who deliberately do not pay there as in Malaysia. Taking away 5% of the working population from participating in the real economy is a travesty - it has enormous multiplier effects, each person probably affects the livelihood of around 4-8 other younger and older people dependent on that person for financial well being. 

And this is the most important reason of all, we need a KINDER, GENTLER society and government, that embraces all and not excessively punishes some.





p/s I know there will be many who will harp on bigwigs and connected individuals amassing huge loans from government linked banks and government linked financial institutions, and not paying back. That is a separate issue altogether, and should NOT be lumped into what I have written above. Heck, most of these connected people do NOT EVEN EVER get slapped with a bankruptcy notice, so they really do not count - theirs is a matter of poor government governance, lack of accountability, poor or no enforcement, running circles around regulations, the lack of political will to enforce or do the right thing, no checks and balances. So these are TWO related BUT almost entirely separate issues.

A Different Burger Story - Wallop Pork Burgers

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The whole of KL have been inundated with premium burgers, mainly beef burgers. We have My Burger Lab, Burgartory, etc... But everyone should know that pork burgers beat beef burgers anytime of the day. We have Ninja Joe, it is good but there are many things they could do better.

There is another decent pork burger place called Wallop, find KAYU Nasi Kandar and its in one of the shops. Again, they may not be as cool or spend heavily in design for the place, but they are sincere about their burgers.



Get the extra bacon ....

Verdict:
Bun 7/10
Pork patty 8/10
Condiments  6/10
Chips  6/10

There are a few things they could certainly improve on ... the cheese, get better cheeses. Besides normal bacon, provide crispy bacon as well. Must have french and english mustard on the side. Love the raw onions but should also have caramelised onions. To be fair, its more a mom and pop shop and they try hard. Give it a go.

















This Must Have Happened To All Of Us When We Were Young .....

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Koon Yew Yin On Jaya Tiasa

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Dear XXXXX (a senior analyst),

I attached herewith JayaTiasa Chairman's opening statement for its annual report for year ending June 2012. The following are my comment:

1. It has one of the largest, if not the largest plywood and logging business in Malaysia

2. The started planting oil palms in 2002 aggressively and the report showed that it had planted nearly 60,000 ha. Looking at the age profile and FFB/ha production at various palm ages, this company has sustainable profit growth for the next 10 or more years. 

3. Just before the bonus issue of 2 for everyone held, the share price was nearly Rm 10 and the company placed out 15% of the total issued shares at Rm 7.90. After the bonus issue, the financial institution would have paid Rm 2.63 per share and it closed at Rm 2.09 yesterday. 

4. Reforestation or replanting trees is viable long term business. Please see the 2 attachments. The company must have spent quite a large amount for planting trees. As a result the NTA is more than RM 4.00 per share. 

I wrote to the company secretary to enquire why the Chairman said that the trees will take 12-15 years to grow while according these attached reports the trees can be harvested in about 7 years. She replied that they need the trees to have a minimum of 35 cm diameter for the production of veneer. For chip boards manufacture the trees can be any size. 

5. I like the way they keeping planting oil palms aggressively. They planted about 60,000 ha in 10 years. I expect to see more planted area in its annual report for year ending June 2013. 

I have been buying this share for the last few months and there were lots of sellers because the company is currently showing poor profit. I think I have mopped up all the tired holders' shares. I am beginning to find less sellers. My family members and I have accumulated more than 23 million shares. 

I have not seen any analyst report on Jaya Tiasa? Why are you not interested in this share with sustainable profit growth in the next 10 years? 

I consider this is the most undervalued plantation share in the market. Fortunately or unfortunately it is not listed under plantation and that is why it is not so obvious and glaring at investors. 

Best wishes
Yew Yin          
--------------------------------------------------------------
Just Out - report On JT by CIMB
Jaya Tiasa Holdings   | PDF
Beneficiary of higher log prices
JT MK / JTIA.KL | TRADING BUY - Maintained | RM2.00 - Tgt. RM2.36
Mkt.Cap: US$608.00m | Avg.Daily Vol: US$0.52m | Free Float: 38.50%
Plantations | Author(s): Xiao Jun SAW,
? Our more positive view on Jaya Tiasa's timber business was reinforced during a recent non-deal roadshow with the group. Management thinks that the higher log prices could last till March next year. This will lift timber earnings of the group in the coming quarters. We maintain our Trading Buy call on Jaya Tiasa. The stock is not an Outperform as we expect it to be re-rated only in the short term, driven mainly by stronger timber earnings in the next few quarters. Also unchanged are our earnings forecasts and our target price of RM2.36, which is based on sum-of-parts. Key re-rating catalysts include a potential positive earnings surprise relative to consensus.
 
What Happened
We took Jaya Tiasa's CEO and senior management team on a one-day NDR in Kuala Lumpur last week to meet with 11 institutional funds. During the meetings, management provided updates on its plantation and timber divisions. Most investors were keen to know whether the current strong log prices were sustainable as they were concerned that the recent decline in the rupee against the US$ may impact future timber demand from India. Management indicated that demand for Sarawak logs from India is fairly inelastic given the country�s preference for Sarawak logs, which are comprised mainly of the Meranti species. The group believes the current high log prices will be sustained until March next year as it expects log supply to remain tight given that the rainy season in Sarawak is due to start in September. The group also expects plywood prices to trend higher in 2H13, driven by improved housing activities in Japan and the impending imposition of anti-dumping duties on Chinese plywood that are made from hardwood by the US in Sep 13. 
 
What We Think
Management broadly concurs with our view that current log prices could stay high till the end of the year and that plywood prices could rise as a result of stronger housing activity in Japan. We expect Jaya Tiasa to report better timber earnings in its 4QFY13 this coming Aug due to higher selling prices for its logs. We also expect the higher plywood prices to further boost its timber profitability in FY14. 
 
What You Should Do
We believe there is upside to its current share price as the rising timber prices have not been fully appreciated by the market. 

Websites I Frequent Most

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Internet radio is a blast ... and one of the best free sites is SHOUTCAST, whatever your fancy. Mine is always tuned to JAZZ category, sub category VOCAL, and my favourite station is The Penthouse (nothing to do with the magazine ... errr, I think), I think I should have been born in the 40-50s.

http://www.shoutcast.com/
http://www.shoutcast.com/radio/Vocal%20Jazz


Needless to say, one of the best daily papers. The biz section is actually very much Dealbook.
New York Times
http://www.nytimes.com/


Next favourite online paper.


http://www.smh.com.au/


Best site for soccer highlights as I will always miss the games.

http://www.soccer-blogger.com/

A most wonderful site to watch the many incredible works, all the conspiracy theories, real life re-enactment stories, thorough analytical pieces on important issues.
FreeDocumentaries.org
http://www.freedocumentaries.org/

My go to site to learn more about fine wines and cigars.

http://www.jamessuckling.com/asia-hong-kong/
http://www.jamessuckling.com/cigars/

A great time waster, not really, ... great site for the humanities and social sciences put together in a very attention grabbing way.
TwistedSifter Logo
http://twistedsifter.com/

Christianity based magazine, but you wouldn't know it from the way they lay out the content. Excellent articles on life issues and living well without sounding preachy.

http://www.relevantmagazine.com/

Easily the best food site for home cooks, Malaysians & Singaporeans in particular. 
The Food Canon - Inspiring Home Cooks
http://www.foodcanon.com/

Revolutionary and evolutionary ideas and discussions, a bit high brow and academic at times but worth a visit a month.

http://bigthink.com/



S&M Show Wednesday Podcast

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The Unbearable Lightness of Being Syed Mokhtar ... Ewein ... etc..

http://www.bfm.my/snm-show.html

Song pick: Ballroom Blitz by The Sweet

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