Tuesday, May 30, 2017

Sold Insas and Bought Airasia

Market has been correcting. I am hence taking the opportunity to move my portfolio from Insas to Airasia.

Insas is cheap, but I guess the company is not much transparent which I do not like. On the other hand, Airasia is transparent to an extent that many shareholders would have not been comfortable with it.

There are not many companies that have tried as hard to sell its business to investors as much as Airasia to a degree where some people are not comfortable.

Anyhow, I see where Tony Fernandes has been selling. He is aggressive. The company is growing.

When I bought the shares at RM1.12 for this fund 1-1/2 years ago, Airasia was on the verge of turning around as competition loosened up. This time around, that observation really happens.

I can see that the price competition has not gone as hard as few years ago. The new MAS CEO is concentrating on what MAS is supposed to concentrate on.

Malindo is getting into becoming a full-fledged airline. I am now questioning, if that is the case would they serve food on board? Now Lion Air owns both full fledged and low costs.

I can also see, things are already probably getting easier for Tony and his crew members. He is selling hard but probably not as hard as previously. His delivery and model is being appreciated, but still I do not see it being appreciated by Malaysian stock market.

The low costs airline model is very fine. What we see is that Asian airlines are now facing the brunt. For the matter of local tourism, countries have to embrace airlines that are willing to bring traffic into their countries. You can see Cambodia is offering Airasia to have a hub. They probably can see things clearer than many countries as that country is smaller. Small guys tend to do things that is different from the rest.

I think there is a long runway for companies like Airasia - in the mold of 10 or more years. Whenever I say Airasia is like Ryanair in Europe, I sometimes get shot down. Not 100% similar but there is this similar good trend.

Imagine, 20 years ago, low costs was not even in existent in Asia. Now, Singapore saw that and scrambled to buy up Tiger.

Airline is a high capex business but yet again things are changing as there are more leasing companies whom are willing to provide competitive rates. Hence, there increasingly is a model where there will be company that holds assets, do leasing. Then there are companies doing the operations i.e. negotiating with airports, selling price competitive tickets etc.

I see things are getting clearer now.

By the way, this is a very good account from its AGM. One can see that things are so fresh where 2 years ago, we do not see initiatives in Airasia, coming on board.

Thursday, May 4, 2017

Changing Ekovest-WB to Ekovest

I am not here to proof a point but purely taking a position that Ekovest-WB's pricing is 20 cents different to Ekovest (the warrant exercise price is RM0.48). Hence, with all these fluctuations, I have decided to sell Ekovest-WB and buy Ekovest. Let's call it I decided to do my exercise this morning at a 28 sen discount.

On whether Ekovest can be purchased as at now fresh from the news of Bandar Malaysia's termination, I actually do not know.

It is true that Ekovest has many ongoing projects and there are higher likelihoods that they may not be terminated. In fact, the SPE has already commenced and DUKE 2 is completing soon.

In this debacle, one will also see the benefits of EPF being a project shareholder for DUKE 1 and 2, as it is harder for government to terminate a contract with EPF as shareholder.

The reason I am also sticking to the share is that I do not see enough details to sell the shares especially fresh from my earlier article last month. This I want to proof a point. Fundamentally, there are not much difference. I am not here to share with you that I am a good trader, which I am not. In fact, in writing this blog, I have some responsibility to share my experience in evaluating situations and businesses. I may be right - I may be wrong in some situations - but hopefully there are much more rights than wrongs.

Physically the group which also include IWCITY, there may be some impact which I cannot deliberate too much. It all depends on the owners and management as some may take a different approach like expanding overseas rather than locally. Some may take it with stride and move on with another project.

Definitely, I do not know what's behind the scene. However, in my opinion a large scale project such as Bandar Malaysia, there sure are many challenges. I do not see money as the largest concern especially for the purchase of the land which costs more than RM7.4 billion. It is a huge sum but with a partner which involves CREC, it is doable. Let's just say, as a government, there are many ways to kill a project.


Anyway, I do not have the clout to comment much on this but to continue looking for good investments.

Wednesday, May 3, 2017

My thoughts on the terminated Bandar Malaysia deal

Something that I learn today. In this current government which has been around for 8 years - a contract can still be terminated. No matter how foolish it was when one signed them during then. It is probably the only deal that one government should not make - and they had to do it as it was under immense pressure. I actually would like Malaysia to own Bandar Malaysia rather than a consortium which comprise of a tycoon, Chinese state company and Johor state.
There is no other better land left other than Bandar Malaysia which has immense value. This is a 486 acre land in the city - or near the golden triangle. In any case, if we have sold the controlling rights - I have also made to believe that the government still has a lot of says in the development order.
I was also being brought to think that the current government would not terminate a deal. One thing I thought (until today) that the current government has been doing well is its consistency - consistent in making good promises as well as consistent in making mistakes. Whatever it is, one has to be consistent - so that there are no surprises. Trustworthiness is worth many tens of billions (to a country), if you know what I mean. And it is priceless in fact.
What I have liked before (so far) is in the present government - A deal is a deal, that's what I was brought to have thought on. But yes today, things changed - a contract can be terminated as well. Yes, there has been statements that the other party have yet to fulfil its promises, but we investment public is caught unaware. 
Doesn't matter that the investment involves a Chinese party. How then would it impact say other projects that China's investment parties are involved in? Forest City? ECRL? Port projects? What about other countries? such as the recent deal between Saudi and Petronas in Pengerang?
Decisions are decisions - once a promise been made, we have to live by it.
No matter what, I have always been brought up and later telling the story (to convince other people ) that the Malaysian government would make promise on what it signs on. Why? This is because we are an open economy that has always been open to investment - since the 1970s. We are different compared to many African government. We are different compared to India. We are also among the more trustworthy countries and commit to its agreement.
This I have to take back - for the moment.
This lesson will make me readjust on my investment too, as would it happen to any other projects that the government has signed on?
Well, we are also living in a times where US is also considering pulling back NAFTA. But yet again, Malaysia and US are different - right? One has an immensely large local economy. Another has a much interdependent economy.