MyEg and MyGirl Friday

Zana is a busy professional working in a prestigious organisation known for employing only the best in their fields. To keep up with the organisation's well known performance, the staff there have little time to dabble in shares market. They may have the money to invest but not the time to keep track. So many of them just confine themselves to mutual funds. Slow and steady alright but the fun is in the market.

Early this year Zana had a bonus bounty and had asked me to invest as I like for her. So I acted as her fund manager so to speak. She apparently has been impressed with the little success I've made over the years in the market despite my busy practice.

I told Zana to stick to my decisions and not to ask too many questions ( not the normal fund manager I must say! After all I am not paid for this task so could afford to be dictatorial :)

And with Zana's fund I went to the market and after some general research I chose to invest her fund in MyEg, the company which provides tax collection services system to the Custom Departments. I bought the shares at 2.93 and for awhile due to some delays in system implementation, had gone down quite badly. But I persisted telling Zana that the shares would rise once everything is in place. At times though, I was regretting putting all her fund in one basket!

Today MyEg hits 3.95 and hopefully will continue ascending

But as expected today MyEg has soared beautifully. Zana has made a tremendous capital appreciation well over her investment on those slow and steady funds. A real joy to see such investment rise and rise. I wish I had put my own fund in the stock and ride with it.

In the meantime, I have yet to inform Zana of her fortune. She would doubtlessly be pleasantly surprised if she happened to read my blog today.

 I must however disclose that Zana has helped me with a lot of tasks without taking the credit. Thanks Zana,  my Girl Friday!

ASN2 - Unit split : Time to invest more.

Last week PNB through ASNB announced on the share split of 1 to 1 for ASN2. This is the first time since the unit's launch in 1999 that such an exercise is undertaken. The split is based on the number of units held on 18 July 2014. So if you have 50k units on that date, you would now have 100k units but the values will remain the same as the unit's price (NAV) from 1.3576 ( the one recorded on 17 July) was adjusted by half to 0.6745 on 21 July.

Encouraging growth performance

PNB stated that as at June 30, ASN2 ( a variably priced equity growth fund), has consistently outperformed its benchmark consisting of Bursa Malaysia Top 100 index and three-month KLIBOR. ASN2 apparently has managed to record 89.72% of cumulative return, higher than the total cumulative return of 66.51% recorded by its benchmark during the five-year period until 30 June.

Moreover, PNB maintained that the annualised returns of ASN2 have shown encouraging growth rates during the three-year, five-year and 10-year period of 10.01%, 13.66% AND 10.86% respectively.

The split offers an opportunity for new investors to invest in the unit trust and for existing investors to buy more units at a lower price. For those eligible to purchase these units, this is the right time to do so. I notice the price since last Monday 21 July is declining as is the case for this product following the dividend distribution on 30 June. It was 1.4135 on 24 June before it was suspended for dividend calculation and distribution at 6.90 per unit; 0.02 sen lower than last year's rate at 7.10.

According to ASNB, the income distribution portion involved  a total payout of RM18.77 million, an increase of 48.9% compared to the RM12.61 million paid out last year.The payment has benefited 9,822 unit holders which currently hold a total of 272.04 million units of ASN 2.

For those of you who are averse to risk-taking at the stock market, products such as ASN2 will give you a good dividend yield along with your capital appreciation as the dividend is automatically reinvested into your account. In another word, make money while you sleep.

IPO - ICON Offshore

Coming up fast on my IPO radar is Icon Offshore, an oil and gas support service company which launched its prospectus last Friday 30 May 2014. It is a pure-play OSV (Offshore support vehicle) company with a fleet of ships used for transporting people, goods and equipment to offshore rigs. 

The company was formed in 2012 through the merger of  Tanjung Kapal Services Sdn Bhd and Omni Petromaritime Sdn Bhd. It is the first of the spin-off companies under government-linked private equity, Ekuinas, to list on the main market. It is reported to have the youngest fleet of ships compared to its competitors.

Though its valuation is high at RM1.85 (trading at 17-18 times its estimated earnings in 2014), investors however, are not deterred by it. So far it has managed to rope in cornerstone investors such as Permodalan Nasional, Tabung Haji, AIA Bhd and several major funds. Together they have taken up more than 50% of the offered units. These investors will be subject to a lock up period of six months.

According to its prospectus about 35m shares are made available (compared to 64m shares by BPB) to the public via balloting. Applications are being accepted till 6 June at 5pm and balloting on 10 June, allotment of shares to successful applicants on 23 June and listing on 25 June, a day before Boustead Plantation Berhad (BPB).

I don't know about you all, but I think any stock related to  an oil and gas (O&G) industry has always been investors' darling irrespective of analysts' reports. 

 I missed out on UMW IPO last year as I was not happy that they were raising capital to pay off their mammoth debt. I advised some relatives not to apply as well: it was at an IPO of 2.80 (listed on Nov 1 2013) and look at it now, last closing price on Monday June 2 2014 was 10.80! And this fantastic rise is recorded slightly over six months. 

On the other hand, I thought the port operator; Westports was a better choice as they did not issue new shares to pay off any debt at their listing around the same time as UMW. And look at the performance of the two stocks: Westports hardly moved from its IPO of 2.50 over the six months' period from the date of its listing.

Needless to say, I have not been popular ever since. My relatives have stopped asking for my opinion. Well, it's okay as I won't ever get blamed again :)

By the way, there are risks in this O&G industry as it is a cyclical industry coming in waves of five to seven years and an analyst has opined that local OSV market could currently be at the top end of the cycle but did not see a downtrend any time soon.

Other risks are well spelt out in its prospectus which includes business related factors such as governmental regulations, high gearing, Petronas policies towards the oil and gas industry, stiff competition and its dependency on limited customers.

Unlike Boustead Plantation, it doesn't have any fixed dividend policy.

And so for Icon Offshore IPO, I have chosen to review my decision on the amount of fund to be used in my application for BPB IPO as I am going to also try my luck for this O&G related stock. 

To all of you it's "Caveat Emptor", good luck and happy investing!

TM- Advantages of Dividend Reinvestment Scheme (DRS)

I have been with TM for a long time. A fairly long time. I have gone through the company from the time it still had the international component that is now AXIATA. I like it because it is a defensive stock which has been giving generous dividends of about 22%. It's capital repayment exercises, every two to three years also allow the investors to lock up gains and reinvest at a lower stock price. I must say TM has been creating wealth for me all these years.

For the financial year of 2013, I received the first dividends of 9.8 % and the second declared value is 16.3% which in all constitutes 26.1%, slightly higher than that in FY2012, at 22%.

Four days ago I received a message on my phone that the new policy of the company is to give an option for all eligible shareholders to reinvest the dividend units, an entire electable portion or part of it. I have yet to get the DRS form from the share registrar, Tricor.

 I have no problem about this policy because most of the time I have not used the dividends but instead invest it into another unit trust. I have noted TM's EGM resolutions which have all been approved recently and downloaded the TM DRS proposal . 

I have also looked at the Maybank write-up on their dividend reinvestment plan or DRP which is similar to  dividend reinvestment scheme or DRS by TM and have some ideas on how this policy operates. Maybank is among the first to implement DRS or DRP in Malaysia and have prepared an excellent FAQs.

From my understanding, following each dividend declaration, you will be asked whether to reinvest 100% of the electable portion of the dividend or part of it or you would rather accept cash. So your decision is based on a particular dividend.

Dividend Reinvestment Scheme (DRS)
is a form of Forced Savings

Why reinvestment of dividends? To me it shows that the company is confident in giving long-term value to its investors. Moreover the reinvested shares will be calculated at a discount of not more than 10% of the market price and bypassing brokerage fees. Thus I am getting more for my money.

 This is also a form of forced saving, making you more disciplined in handling your dividend payments. Apart from that you would be buying the shares regularly regardless of the price at the time and in the end the cost would average out and as your overall number of shares appreciates so does your wealth in the longer term.

I think it's a good scheme for me as I am not really able to monitor the daily stock prices and have much earlier on made a decision to stay with TM for the long term.

IPO - Boustead Plantation Bhd

Here I go again, salivating at an IPO. Since the announcement of the proposed listing of this pure plantation stock following the privatisation of the Al-Hadharah Boustead Real Estate Investment Trust ( BSDReit)  last year, I have made up my mind to apply for this new kid on the block in the plantation counter.

I have a thing about this stock as I had had shares of BSDReit since 2007 purchased at 1.04 and made a substantial gain when I sold all off at 2.06 just before the company's exercise in late 2013. I kept it very long because I was enjoying an annual  dividend rate of about 9%. I had calculated that I would make much more by clearing my position than staying on and be given Boustead Plantation Bhd shares at a given ratio of  three Boustead Plantations shares for every five Boustead REIT units held - without balloting.

And now I am going after its plantation IPO.

The name Boustead itself gives a sense of confidence for me when looking at how the company Boustead Holdings Berhad (Bstead) stock has risen in values over the years. The last closing price on Friday 25 April was 5.56 and currently volatile due to the impending removal of its plantation arm for the new listing.

Lembaga  Tabung Angkatan Tentera (LTAT)-linked Boustead Holdings Berhad, listed on Bursa is involved in businesses of the following sectors: Plantation ,property pharmaceutical,heavy industries, trading & industrial and finance and investment.

To unlock the value of its plantation business, Boustead has decided to list it separately (removing 18 plantation companies from Boustead Holdings Berhad). The indicative price is said to be 1.60 subject to bookbuilding by  AffinBank. So far I am made to understand that the majority of its 580 million new offers of shares are allocated to existing Bstead's shareholders and directors and those of the delisted BDSReit. There are no cornerstone investors as yet. A small proportion (64 million) is allocated to the Malaysian public via balloting.

I used to have several plantation stocks during their heydays before the global financial crisis in 2008: THPlant,Sarawak Plantation,Kwantas,MHC and Unico. I held them for far too long and  as a result made great losses on all those except for THPlant in 2009. It's water under the bridge now. I had wanted to purchase one plantation stock to add excitement to  my portfolio last year but missed the opportunity due to packed commitments. By that time, my target stock (giving generous dividend) THPlant has risen from 1.60 to 2.00.

And so I thought this is another opportunity to own a plantation stock and ride with the current good crude palm oil prices.

The Boustead Plantation Bhd IPO is not launched yet but I would not like to miss the opportunity to compensate for my previous specific losses on those plantation stocks and this time I have to be more aware of factors affecting the crude palm oil (CPO) prices such as rating agency's evaluation of the industry,  production, consumption, "greenie" attacks and competition from other vegetable oil like soya.

Even if I am not successful in my IPO application, I will buy the shares on the open market. And this is when you have to gauge the stock performance on post-listing. A lot may have to do with luck, though, beside good knowledge on the company: one way is through reading its prospectus. And of course, the CPO price factor, which even if it's high may not be reflected in the stock price.

All said, stock market is a playground for people who are not averse to taking risks, and either way, will take it in their stride and move on.

An Update on Boustead Plantation (BPLANT) IPO timetable:

Last day of IPO application : 11 June 2014 at 5pm
Balloting date : 16 June
Allotment of shares to successful applicants : 24 June
Tentative Listing : 26 June, Thursday

PRTASCO : The Slow and Steady Tortoise

I invested in PRTASCO about three years ago when its share was priced at about 99 to 1.05 sen. The good thing about this construction company is it gives a steady dividend between 5 to 8 sen a year and last year it gave a special dividend of 6 sen making the annual total of 14 sen.

As I was looking for a short term gain, I was not patient enough to ride this slow tortoise.  For almost two years its unit price hovered between 1.00 to 1.05 and so I cleared my position after a couple of dividend issues.

This company which traditionally has a contract on road maintenance and later migrated to construction. It has consistently been issuing an annual dividend for more than seven years. Another feature I like about this construction company is its wealth sharing with employees. I suppose many big companies have already been doing this through Employee Sharing Scheme (ESS). I know Westports has such an arrangement.

Late last year (2013) I reviewed my portfolio and in the process decided to re-purchase PRTASCO shares at 1.42 much to the the mirth of my better half. Well, he is no longer laughing at me now as PRTASCO has climbed up to 1.84  as at 1pm today.

PRTASCO_The Turtle seems to be sprinting
Source:BURSA MALAYSIA

I invested all my 2013 dividend from AS1M and a hefty loan from Jeff (already paid up with no interest) on this stock and the capital appreciation is now about 26.8% in less than six months, albeit unrealised gain. Last January 2014, I received its dividend at 4 sen a unit. I was quite pleased with it.

A dig at my better half ;)

I bought PRTASCO for two reasons; firstly I like its dividend policy , secondly I have been following its development, diversification activities and looking at its fundamentals generally. It's now into oil and gas as well.

I should have bought the stock much earlier but was mulling over it a long time and eventually forgot about it till last October 2013 when the tortoise has traversed so far ahead and now is crawling fast steadily.

I am glad I made a considered choice as far as investing in PRTASCO is concerned but really it's not always like this though. Take it from me, a small time investor who has gone through the up and down of the market, at times gritting my teeth.

ASN, ASN2 and ASN3 - The Three Musketeers

Apart from the fixed priced PNB-Unit Trusts such as ASB,AS1M,ASW,ASM and ASD, PNB through its outfit, ASNB, also offers variably priced unit trusts whose prices are subject to market performance.

 I would like to focus on the three funds designated as ASN (1981- equity growth), ASN2 (1999-equity growth) and ASN3 (2001- equity balanced) : the Three Musketeers known for their risky adventures in 17th century France but in our funds' case, without the motto " All for one, one for all".

ASN, ASN2 and ASN3

Variable priced- Unit Trusts entail a fee of 5% (less if invested through EPF) at the point of every purchase and none at redemption.

Just before Christmas last year, PNB declared a dividend of 6.45 sen for ASN for the financial year ending 31 Dec 2013, which is the highest in 13 years. In fact if you look at the trend, the dividend for ASN has been rising annually. ASN is allocated for Bumiputras only.  And you can own as many units as you can afford as there is no set limit.

According to PNB Chairman, the total  income distribution with the total payout of 100.27 million benefited 1.25 million unitholders who hold a combined 1.55 billion units of ASN.

 And so if you bought 10k at 0.8624 ( price on 9 Jan 2013), you would end up with 10000/0.8624 = 11595 - 575 (sales charge) =  11020  units instead of 10,000 units for a fixed price unit trust at 1.00 with no sales charge per net asset value (NAV).

The advantage of this type of unit trust is that its price can appreciate (also depreciate) over times.  Should it increase to, say, 90 sen per unit, you would get 11020 x 0.90 = 9918 and at 6.45 sen dividend, your total will be 710.79 + 9918 =10,628 . An increase of roughly 628. And Should you redeem your investment at this point, you would roughly get 628+400 (NAV appreciation) = 1,028.00 which is a percentage return  of 10.28%  compared to 6.5% for AS1M as calculated below.

If you were to put in AS1M 10k and keep it for 12 months with a dividend of 6.5 sen you would get 650.00 on redemption (plus your initial capital of 10k) , without NAV appreciation or depreciation, a return of 6.5%.  The return, in the above case,would be higher still  if  you had bought ASN at a much lower price than 0.8624 sen.

As for ASN2 ( equity growth fund) which is also only for Bumiputra, the price has appreciated to 1.35 at the beginning of 2014 and is slowly, like ASN, coming down. The dividend for ASN2 will be declared in June of each year.

The third ASN Musketeer in the ASNB stable of variable priced Unit Trust is ASN3 (equity balanced fund) which is open to non-Bumiputra as well. Its dividend is annually declared end of November. Its price at the beginning of this year was 1.16.

The three - year (2011 -2013) performance of the three Musketeers is seen in the table below:

Unit Trust		ASN				ASN2				ASN3
Financial Year		2011	2012	2013		2011	2012	2013		2011	2012	2013
Dividend per unit (sen)		6.05	6.30	6.45		5.50	6.50	7.10		6.00	6.30	6.40
Yield (%)		7.39	7.42	NA		4.65	5.44	5.49		5.70	5.66	NA
Highest NAV		0.8841	0.9046	0.9213		1.2350	1.2588	1.3783		1.1510	1.2010	1.2231
Lowest NAV		0.7703	0.8127	0.8225		1.0192	1.0504	1.1948		1.0522	1.0495	1.1124

 Source : ASNB

The elements of risks are always there with variably-priced Unit Trusts. The opportunity to create  ( or lose ) wealth is what keeping investors on their toes. Stay invested so that you don't have to whine over missed opportunities. And needless to say, those who want to sleep well, you can always put your money in the bank at 2-3% interest per annum.

Over the years, I note that putting your money in any of the three Musketeers for people who are adapt at monitoring the respective NAV and stick to the principle of "Buy low and sell high", is a more effective method of growing your hard-earned money as seen by the above corresponding dividend rates compared to the fixed price Unit Trusts.

Swashbucklers- Athos,Porthos and Aramis
 ( Alexander Dumas Novel)

Smart buying and selling is the way to go as when you buy at lower NAV, the higher is your dividend yield.

If the rising dividend trends are sustained, you might just firstly check on the respective NAV and put more of your money in any of these three Musketeers and ride with them for more swashbuckling adventures in investing!

ASB Unitholders - 2013 Dividend and Lowest Bonus in Five Years and PNB's Lack of Appreciation for Loyal Investors

As the sunset of 2013 is fast approaching, the last of the dividend of the fixed-price PNB unit trust fund that is ASB was timely declared on Thursday 19 Dec for financial year ending on 31 Dec. The unitholders (Bumiputra) will receive a dividend of 7.70 sen per unit and a bonus of 1 sen per unit.The rates are noted to have declined by 0.05 sen and 0.15 sen in dividend and bonus respectively from 2012

There are 8.26 million unit holders who collectively hold 127.2 billion ASB units with the income distribution amounting to a total payout of RM9.38 billion and bonus accounted for RM 706.88 million.

As usual the Chairman of PNB, Tun Ahmad Sarji said that the dividend was competitive amid the global economic uncertainties and that, according to him, the fund could have declared a dividend of 10.54 sen per unit but it decided to bring forward 2.71 sen per unit to help the fund's portfolio to become more competitive in future.

It does look like the fund is forever under declaring its dividend and may,as a result, not really looking after those long-term loyal investors many of whom are elderly and would benefit from a higher dividend in the current financial year. Some have invested since the launching of the fund in 1981 as ASN and later migrated to ASB in 1990, a good 32 years and are now expected to keep looking to the future! Lamented one of my elderly ASB- investor acquaintances. Many of these investors are in the twilight years of their lives.

ASB should have rewarded the above such investors by giving a bonus at least at 1.25 sen per unit to offset a little the lower dividend rate. In short, PNB should value loyalty.

Bursa Malaysia: FBM KLCI Index gaining 200 points
from 1600 over a period of one year , 
Jan-Dec 2013 ( STAR online)

While our stock market is doing reasonably well with FBM KLCI index going from 1600 points to 1800 in the last 12 months, it does not reflect in tandem with the PNB income generation possibly partly due to its portfolio contents.

The fact is 2013's ASB income distribution is lower than in 2012 and the bonus is the lowest in the five year period as seen in the following table. Of particular concern is the performance of its overseas' investments and how they are presented in its annual report. Unlike banks which are regulated by BNM (Central Bank), which body is regulating the mammoth PNB?

ASB Dividend and Bonus 2009 - 2013

Year	Dividend	Bonus
*2009	7.30	1.25
*2010	7.50	1.25
*2011	7.65	1.15
*2012	7.75	1.15
2013	7.70	1.00

* Source: ASB Scheme Annual Reports

Granted that many ASB investors are grateful for the dividend and bonus rate for 2013 and that historically, PNB has never declared income generation inclusive of bonus lower than 8.50 sen per unit, a number is also unhappy with the lack of caring displayed by PNB for its loyal investors, putting them at the same level with new ones who are mostly the y generation who could still keep looking to the future.

On top of this rate reduction, the investors and other Malaysians are being burdened by higher cost of living starting with the removal of subsidy for sugar ( though most of us doctors welcome it), an increased electricity tariff, introduction of GST and now talks of toll rates being hiked as well, all coming in one go. Look like 2014 is not really going to be a happy new year for many low income groups.

In deciding on the dividend and bonus rates for ASB (many investors are low income group Bumiputras), PNB should take into account the current economic situation where cost of living is increasing and the need to reward its long-term loyal investors. 

By the way, is PNB's decision on income distribution and bonus declaration being influenced by external non-market forces? Just thinking aloud.

And curiously, for the first time, I am hard pressed trying to find one -for- the album photo of PNB's CEO appearing with the Chairman at the ceremony for ASB  dividend and bonus declaration for financial year 2013.

Westports' IPO Applicants - The Joyous and The Crestfallen

Balloting for Westports' IPO was conducted on Wednesday October 2 2013. By midday Thursday October 3, Jeff sent an SMS to inform that a full refund of his application had been credited into his bank account at HSBC. In short he failed to get the shares. What a disappointment!

I went online at 4.30pm the same day to check on my status but there was no indication that my application was successful or not. In the meantime I alerted a couple of relatives who also applied to check online. Early on Friday October 4  I received SMS from the two telling me that they were also not successful, not even a single lot! Almost audible sighs of  lack of luck.

I was thinking that I might be in the same boat as three out of three had so far failed to get the IPO. I knew I would be crestfallen if I didn't get it as well especially after my frantic and  almost last-minute effort to scramble a substantial fund to apply for these coveted shares.

 I only managed to check online late Friday afternoon. What I saw in my account made me gasp, there, in front of me, only 33% of my application was refunded and that means I managed to get about 66%. What good luck! Yes, it's nothing guys but my luck for being balloted. Of course I cannot hide my joy but have to restrain it as none of my dear relatives have the same luck.

Luck is seldom recurrent

But I suggested that they buy the shares in the open market upon its listing on October 18 2013. It is  advisable to avoid big price fluctuation on the first two to five Bursa days before acquiring them. I myself will purchase additional shares with my refund.

Though the market is still kind of volatile and the negative effects of a prolonged US government partial shutdown are hovering over us, value investors will ride this period out and be with the company to enjoy its business growth in services and ultimately in profit. I am looking at the dividend proposal of not less than 75% of the company's profit as stated in the prospectus. I am also one of those who look for a longer term investment on this stock due to the nature of its economy-promoting business for Malaysia.

Congratulation those successful Westports IPO applicants and now the exciting time waiting for its debut in the market in less than two weeks time. Apparently the institutional portion was 10 times oversubscribed and that of the retail portion 30 times. Those who are not successful can buy it following the listing or could wait after six months when the cornerstone investors may want to unlock their profit and send the shares price downward? One word of caution though, do not try to time the market because it is known to be highly efficient on most occasions.

Whatever happens, as far as the stock price is concerned, on October 18 when Westports is listed on Bursa, I will take it in my stride and have fun watching the ride.

TM and PChem : The Joy of Receiving Dividends

I cannot help but smile when Zana messaged me that she had just received her dividend payments for TM (9.8 sen per unit) and PChem (8 sen per unit ).

The total amount is sufficient to settle her monthly car loan payment for a few months. There is a big  at the end of her message. I responded by saying that was how it should be, making her money work for her while she is asleep so to speak. She was able to make the initial investments from the salary she earned and saved while studying and later working in London for five years.

I can feel her joy as she has just been working for three years and is already saving up whatever she can for her future needs, already planning for her retirement in more than 30 years time! She has also set up a portfolio for her investing activities. Mostly consisting of dividend-paying equities, PNB unit trusts, mutual funds and a hedge fund, courtesy of her Dad. For her age, the portfolio should be more adventurous to capitalise on opportunity and growth stocks. She can afford to venture on this route since she has a steady monthly income and working in a great organisation.

BAT - British American Tobacco is a top dividend-paying stock
but its price at RM65 per unit is prohibitive for most retail investors!

This is the way to go for young people, planning financially at the beginning of their career. I also advise her to read a lot on investing, the market conditions/factors affecting them, the world economy and commodities prices to understand market volatility and to act accordingly.

For example, she may have to sell off her PetChem shares soon as the company is involved in a cyclical business where work and profit will be affected and the share price will also decline on the cycle's trough and she needs to short her position well before that and repurchase them on the next cycle.

And now that TM's share price has tumbled due to in part by Fitch Rating downgrade announced on 25 September 2013, this is the time to buy the shares as TM despite the outlook being negative currently will not be greatly impacted as it has solid business fundamentals and that its expanded broadband service will be able to maintain its strong position among the telcos.

I for one will continue to support TM and ride with its fortune. It is an excellent defensive stock which prides itself with giant anchor shareholders such as PNB and EPF. I plan on buying more TM shares at this present beaten down price using my dividend proceeds from AS1M paid out on this coming October 1 2013.

I had some PetChem shares acquired through its IPO and had cleared them all after 18 months on price upside but Zana has been keeping them for dividend purposes.

Many top dividend paying stocks like Dutch Lady,Nestle and of course BAT are expensive and not worth buying due to the low yield on your investment. A wise choice of dividend stocks will make your money grow over time.

Westports IPO - Fund Scrambling and Anxious Application

I don't know about you, but my experience with IPOs has been both positive and negative. I have  yet to find time to blog specifically on my encounters with IPOs including my recent disaster with ASTRO. Needless to say, one needs to be very selective when applying for an IPO.

 I was late in finding out about Westport's. I quickly read the prospectus and have a look at their website and note who are the people owning and managing this business and the reasons they are going public. My utmost concern is when a company is raising fund from the public to pay for their debt. I will keep away from such an IPO unless their fundamentals are strong. I will also keep away from an IPO of a newly established company whose business has too many competitors and risks: the main reason I gave AirAsia X a Big X.

I like the first two words: PROVEN and TRUSTED

I have a different feel though about Westports. This is a company which has a good track record of growth and corporate governance. They are not issuing new shares instead releasing portions of the main shareholders' existing units for this IPO exercise. No indication that they are out to enrich themselves. And I also like that father and son.

Some people are worried about the above point simply because we have been told umpteenth time if the company's insiders are disposing their shares, we should be aware as the business might not be doing well.

I am taking a contrarian view with regards to this company and have decided to apply for their IPO. I am also comfortable with the cornerstones investors and their lock-up period of six months.

As I only knew about this IPO on 19 September the date of its launching, I was hard pressed trying to scramble the fund as the bulk of it is in Unit Trusts and as luck would have it, my HSBC ATM card has just been changed to a new one which is yet to be linked to my CDS account! And the closing date of this IPO application is on 27 September which effectively only left me with five banking days and it takes three days to activate my new ATM card to enable its ESA (electronic share application) function.

To complicate matters, the ASNB agent informed me that if I were to redeem my requested units she needed to issue a cheque which could only be cleared by the bank in three days. And on top of all this, I don't really have much time to go to all these places to complete the required transactions.

Then I thought of my banker at Maybank, good old Agnes. My SMS to her was simple: could I transfer some fund from PNB unit trusts directly into my account at the bank? Her reply was a relief: yes, no problem! And so I proceeded to Maybank at midday Friday to deposit some cash for topping up and then performed the PNB-Maybank transfers and in less than 15 minutes I was ready to apply for the IPO online through Maybank's internet banking facilities. How is that for a fast solution? No need for the inconvenient ESA and I could apply after-hours at my leisure at home.

Of all the time, I decided to go online just before midnight to perform the online application. It's another experience for me as this was my first time to do so because all my other IPO applications were through ESA. The five steps are easy enough and when you wrongly type in the number of applied units there is always the "go back" alert. Just after I printed my "successful" receipt at 11.57pm, the system automatically shutdown with a busy signal screen coming up! Then I realised that there must be a system which automatically checks the internet banking facilities just around midnight before the next day's operation.

And so it is not advisable to do internet banking especially when you are transferring fund around midnight as you might wonder whether your transaction is successful or not because you cannot immediately login again after that sudden shutdown, to find out.

Well, I managed to apply for Westports' IPO but am under no illusion that I can easily get it because the portion for retail investors is rather small. My better half has also applied and so we are waiting to see whose luck is better. While I went through an anxious time, Jeff applied his through ESA in less than two minutes at HSBC. Come to think of it, I will now transfer most of my liquid fund to Maybank to facilitate my e-share activities as I prefer an online application as it can be done anytime (except around midnight!), at home and definitely is time-sparing for a busy professional.

We all need it!

Good luck to my blog readers who are in the same shoes as I am for Westports IPO!

AS1M 2013 - Fourth Dividend Declaration at 6.7 Sen

Today Permodalan Nasional Berhad (PNB) through its subsidiary, ASNB (Amanah Saham Nasional Berhad) has declared a 6.7 sen dividend per unit of AS1M for financial year ending on 30 September 2013. According to PNB Chairman, Tun Ahmad Sarji Abdul Hamid, RM593.06million, an increase of 30.9% over last year's RM453.03million will be distributed to 365,355 unitholders who have subscribed to 9.28 billion units of AS1M. The dividend will automatically be credited into unitholders' accounts on 1 October and will be based on the average monthly minimum balance held.

The Chairman of PNB, Tun Ahmad Sarji (L) and CEO  Tan Sri Hamad
at the dividend declaration for AS1M 2013
 (Photo by BERNAMA)

Though it is higher by 0.10 sen compared to last financial year 2012 at 6.60 sen, I am rather disappointed that the income distribution is less than those of ASD and ASM at 6.8 sen per unit declared in June and February respectively.

I note that the BURSA counters held by AS1M are on the whole the same as those in ASD and ASM the only thing I could think of is the timing of the income distribution. For those two unit trusts, the counters were profitable before the Feds gave hints of ceasing their quantitative easing activities. Then stock markets the world over started reacting the middle of year causing volatility. For example, TM one of the common counters for PNB investments for all its unit trusts started to decline. This appears to indicate that foreign investors are beginning to withdraw their funds from our market putting pressure on selective stock prices.

The difference in the rate of distribution is substantial when a unitholder owns, say more than one million units of AS1M. Anyway, this 10 billion fixed price unit trust has a quota of 50%, 30%,15% and 5% for Bumiputeras,Chinese,Indians and other Malaysians respectively. Only the Bumi's portion is still available for subscription and that also look like only 0.72 billion units are left at current figures of unit holdings underscoring the high demand for this PNB unit trust.

Notwithstanding the lower comparative income distribution rate, historically for AS1M, this year's dividend is the highest since its launching in 2009 as follows:

YEAR                  DIVIDEND RATE
2010                             6.38
2011                             6.50
2012                             6.60
2013                             6.70

And so this is the final dividend declaration for PNB unit trusts for 2013. The next one will be in January 2014 for ASB and ASN and I would like to reserve my prediction on their income distribution rates!

Sources: BERNAMA, Businesstimes