Friday, 7 June 2013

Throwing good money after bad!

MIDF Reseach downgrades MAS to "Sell", target price 27 sen
Friday June 7, 2013 MYT 2:45:01 PM

KUALA LUMPUR: MIDF Research has downgraded Malaysian Airline System Bhd (MAS) to “Sell” from “Neutral” and reduced its target price to 27 sen from 34 sen due to its weak prospects.

“Due to the worsening market yields and sticky high operating expenses, we opine that it is improbable for MAS to be able to turn around its business by financial year 2013-2014 as we had earlier expected,” it said on Friday.

It also revised its financial year 2013 and 2014 forecast to a net loss of RM762.5mil and RM187.5 4 respectively and expects the turnaround to happen only in 2015.

MIDF said international “headwinds” will continue to weigh down MAS business turnaround plan despite its recent membership into the Oneworld alliance and ongoing fleet renewal plan.

“In the domestic market, MAS also faces intensifying competitions from accelerated capacity expansion by AirAsia and the launch of Malindo Air,” it said.

It noted MAS regional full service carriers are pursuing the strategy of sacrificing yield in return for a higher load factor.

“Thus under immense international competitions and yield pressure, MAS fare yield dropped by 4.7% on-year to 24.2 sen in 1Q13 despite a leap in passenger load factor by 3.6% points to 76.6%,” it said.

MIDF added MAS have already replaced its entire fleet of B747 and a large portion of its B737-400 with the newly acquired A380 and B737-800 models respectively.

“Nonetheless, there is still a fleet of 17 near aging B777-200ER with an average age of 13.6 years. The management is considering either Airbus A350 or Boeing B787 Dreamliners to replace these long-haul aircrafts,” it said.

Friday, 31 May 2013

STOP SPINNING,

GET BACK TO WORK AND FIX MAS!

"Sementara itu, BN pada hakikatnya mendahului pencapaian undi popular berbanding tiga parti pembangkang iaitu DAP, PKR dan Pas yang bertanding atas tiket masing-masing."

Hakikat sebenar tentang undi popular yang dijaja pembangkang bagi mengelirukan rakyat hanyalah diperoleh melalui pengundi-pengundi Cina dari empat buah negeri yang mempunyai ramai penduduk kaum itu.

Memetik blog http://syedsoutsidethebox.blogspot.com/2013/05/pakatan-rakyat-lost-popular-vote-in-9. pembangkang hanya memperoleh kelebihan undi di lima buah negeri yang mana empat daripadanya iaitu Perak, Pulau Pinang, Selangor dan Kuala Lumpur merupakan negeri-negeri yang mempunyai populasi kaum Cina terbesar.

Satu lagi negeri yang turut memihak kepada pembangkang ialah Kelantan, hanya memperoleh kelebihan 57,332 undi yang dianggap sangat tipis.
"Di mana-mana negeri yang mana orang Melayu adalah dominan seperti di Kelantan, Barisan Nasional (BN) sebenarnya telah memenangi undi mereka.
"Sebaliknya di empat negeri tersebut, kelebihan undi yang mereka peroleh daripada kaum Cina begitu ketara, contohnya Perak dengan 111,893 undi, Pulau Pinang (263,004), Selangor (359,256) dan Kuala Lumpur (198,084)," kata blog itu yang membuat analisis melalui jadual undi popular yang dikeluarkan oleh portal propembangkang, Malaysiakini.

Menurut blog itu, jumlah kesemua lebihan undi yang memihak kepada pembangkang di kelima-lima negeri tersebut adalah 989,569 sedangkan undi popular yang mengatasi BN di seluruh negara hanya 361,101.

"Jelas di sini, 989,569 undi majoriti yang pembangkang peroleh telah disusutkan oleh BN dengan kelebihan undi di sembilan negeri lain, menyebabkan undi majoriti akhirnya hanya tinggal 361,101.
"Dengan majoriti 989,569, mereka sepatutnya boleh menang besar. Tetapi kenapa mereka masih juga tidak menang? Ini kerana sebahagian besar undi itu hanya diperoleh daripada pengundi Cina dari keempat-empat negeri tersebut," kata blog itu.
Daripada analisis tersebut, blog itu menyimpulkan bahawa pembangkang tidak mewakili undi majoriti daripada pengundi Melayu.
"Sebab itu pembangkang tidak boleh menang pilihan raya umum ini, mereka tiada undi daripada orang Melayu," kata blog itu.


Sementara itu, BN pada hakikatnya mendahului pencapaian undi popular berbanding tiga parti pembangkang iaitu DAP, PKR dan Pas yang bertanding atas tiket masing-masing.

Saturday, 1 December 2012

FOOLS NEVER LEARN Part 2


MAS stock falls 16%, analysts doubt financing capabilities
Presenna Nambiar 

PETALING JAYA (Nov 29, 2012): 

"We were taken by surprise on the rights issue proposal. It indicates that MAS may have issues securing financing to meet the group's huge near-term capital requirement amounting to RM9 billion," Alliance Research Sdn Bhd said in a report yesterday.
"We believe investors will be jittery of such a large cash call amid continued operating losses.
"While the cash call will help to address the short-term funding requirement and liquidity needs, it does little to address the losses at the operating level."


Malaysia Airlines' (MAS) stock fell more than 16% on news that it is yet again seeking capital injection from major shareholder, Khazanah Nasional Bhd and cancelling 90 sen of its par value.
The national airline, which was the most actively traded counter yesterday, saw more than RM560 million of its market capitalisation wiped out at the end of trading activities.
The stock closed 17 sen down at 84 sen, with some 77.2 million shares done.
MAS had on Tuesday announced plans to have a rights issue to raise up to RM3.1 billion for working capital (RM1.3 billion), capital expenditure (RM987 million) and repay borrowings (RM777 million).
It also plans to shave off its share premium account in a bid to cut its accumulated losses, buy back 10 Boeing 737-400s originally on lease for RM64 million to meet network requirements prior to the delivery of its new 737-800 fleet and to save on high maintenance costs it would need to incur to deliver the planes back to its lessor in mint condition.
Analysts are still cautious on the MAS turnaround story, despite it beating the consensus target on core losses, overshadowed by another rights issue and a reduction in par value of its shares from RM1 per share to 10 sen a share.
The airline registered a small operating profit of RM3.9 million on revenue of RM3.3 billion for the third quarter ended Sept 30 2012 due to lower jet fuel prices and fuel consumption as a result of a 7% year-on-year reduction in capacity available-seat-kilometre (ASK) and better utilisation of newer and more fuel-efficient aircraft.
"We were taken by surprise on the rights issue proposal. It indicates that MAS may have issues securing financing to meet the group's huge near-term capital requirement amounting to RM9 billion," Alliance Research Sdn Bhd said in a report yesterday.
"We believe investors will be jittery of such a large cash call amid continued operating losses.
"While the cash call will help to address the short-term funding requirement and liquidity needs, it does little to address the losses at the operating level."
Alliance opined that based on the indicative issue price of 60 sen as disclosed in the company's announcement, the proposed rights issue will be at a steep discount to current price, while the dilution is enormous given its expectation of a 3-for-2 rights issue in order to raise RM3.1 billion.
The cash call is the third by MAS since 2007.
MAS raised RM1.55 billion and RM2.67 billion from its rights issue in 2007 and 2009 respectively, to finance new aircraft and pare down debts.
HwangDBS Vickers Research Sdn Bhd said there is execution risk in MAS trying to turn around its business, and the aviation landscape in Malaysia will become more competitive with the emergence of Malindo Airways next year.
The research firm has trimmed its FY12 core net loss forecast to RM567 million from RM961 million previously, after raising MAS' passenger load factor from 70% to 75%.
HwangDBS is expecting MAS to register stronger performance in the fourth quarter of 2012 due to the year-end holidays.
Kenanga Research said with the new fleet in operation, MAS will be able to make a meaningful turnaround.
The airline is to receive 12 new 737-800s and three new A330-300s in 2013. It has already added 14 737-800s, eight A330-300s and four A380s to its fleet since 2010.
Kenanga is raising its FY12 estimate higher by 30% from a RM764 million net loss and RM1.2 billion revenue previously, with a new RM482 million core net profit target for FY13 estimate, as it expects MAS to be able to recover its yield and get a higher load via the new fleet.
"In the near term, any positive share price movement is likely to be muted due to the negative sentiment on its proposed capital reduction and rights issue announcement," it added.
Related article:

Tuesday, 30 October 2012

BINGO, BUNG!


Bung Mokhtar hits out at Syed Mokhtar, Zeti

G Vinod
 | October 23, 2012
The Kinabatangan MP urges the government to stop Syed Mokhtar from monopolising business in the country and get someone to replace Bank Negara governor Zeti Akhtar Aziz.
KUALA LUMPUR: Kinabatangan MP Bung Mokhtar Radin launched a broadside against business tycoon Syed Mokhtar Al-Bukhary and Bank Negara governor Zeti Akhtar Aziz at the Parliament today.
In his criticism against Syed Mokhtar, Bung Mokhtar questioned the Finance Ministry’s rationale in allowing the billionaire to control mega businesses in the country at the expense of other businessmen.
“He wants Keretapi Tanah Melayu, he wants Mass Rapid Transit. He wants everything on land, sea and air. Given a chance, he will even do business in the graveyard,” said the outspoken MP.
He also said that it was not fair for other businessmen and pointed out that there were other capable bumiputeras out there who could work on projects as effectively.
“Even open tenders for small businesses, Syed Mokhtar will be there. Don’t let one man control everything,” said Bung Mokhtar.
He also said that the government should be mindful as the people were watching and urged the relevent authorities to come up with a mechanism to keep tabs on monopolistic system.
“This thing keeps happening. Last time we had Tajuddin Ramli controlling MAS but what happened? At the end, government had to take responsibility for its losses.
“That’s why I object to monopoly. Don’t depend on one person to control our economy,” said Bung Mokhtar.

Sack the governor
On Zeti, Bung Mokhtar urged the Finance Ministry to probe the Bank Negara governor for allegedly being negligent in monitoring the rising numbers of gold trading companies in Malaysia.
He was referring to the recent raid by Bank Negara on four gold trading companies for allegedly being involved in various malpractises.
The companies raided were Genneva Malaysia Sdn Bhd, Pageantry Gold Bhd, Caesar Gold Sdn Bhd and Worldwide Far East Bhd.
“There were complaints made against some of the companies in the past five years but no action was taken. Why did Bank Negara raid and freeze their assets only after they have grown big?
“Looks like governor was sleeping on the job. If that’s the case, it’s time for the government to find someone who can really monitor our financial system better,” said Bung Mokhtar.
The Sabah MP also urged Bank Negara not to penalise the investors for the wrongdoings of the companies. His statement received the support of Sri Gading MP Mohamad Aziz.
He added that it was only fair for the central bank to return money to investors first before freezing the companies assets.
“People are worried whether they will get their money back or not. Next time, return their money first before taking action against errant companies,” he said.

Friday, 17 August 2012

MAS SPINNING PLAN

MAS’ BONDS ARE NOT DEEMED AS BORROWINGS : LEAVING THE PENSION FUNDS SEEMINGLY CONNED?

August 17, 2012, 9:13 am


"The government is using the retirement savings of the people to keep afloat a company that is struggling to compete with its foreign competitors (note: the local market has been lost to Air Asia)."

It was not really surprising when MAS announced its second quarter results with another loss in the region of RM350m.

It’s still bleeding and there is no sign of it stopping in the foreseeable future.

One of the main reason is the fixed overheads including maintaining over 20,000 employees without corresponding returns in terms of revenue generated or value add provided to the organisation.

It therefore begs the question as to what kind of returns MAS’ management expects in the following year or so……with the RM2.5 billion worth of ‘perpetual bonds’ it has issued or plans to issue.

To date RM1.0 billion has been issued based on its second quarter results.

The worry (I’ll tell you later why  we should worry) is that the monies raised from the bonds will only be used to keep the company afloat i.e. without investing it to generate profits for MAS.

Hey, don’t try to kid us with the A380 super jumbo jets which MAS had taken delivery of……as the saviour for MAS!

They were ordered years ago premised on projections based on a wish and a hope…..and may find utilisation of these planes scarce compared to its more efficient competitors!

Which brings me back to the point of the bonds – if the proceeds are just to pay for its abnormally high overheads (in order to evade the political repercussions of not paying!), it may explain why the bonds have features that do not oblige MAS to pay interest on the bonds NOR to repay the principal!!

What kind of bond is this, you may ask?

Well, as long MAS gets the money, who cares?

The one who cares will be the one coming out with the money!

And who are they?

The country’ pension funds!

The bonds’ special features of not being obliged to pay interests or principal may also explain why the bonds are NOT deemed borrowings in MAS’ books.

It may also ‘justify’ the bonds not requiring any rating!

They are effectively deemed to be share capital in  nature.

Why the obsession not to have the bond classified as borrowings?

Well, there is this indicator used by financial analysts the world over called “Gearing Ratio” which effectively measures the level of borrowings compared to your shareholders funds.

The higher the ratio, the higher the risk to the company.

Therefore, what is supposed to be part of the numerator (read: borrowings) now becomes part of the denominator (read: share capital)!

That way, the gearing ratio of MAS looks better than it really is…….through this window dressing exercise vide the use of fancy words in the Terms of Reference when issuing this bond.

Which comes to why we should worry about this whole exercise.

Granted, this kind of bond has been issued in other countries…….but the companies that issue them are financially strong and investors queue up to invest in their shares and financial instruments.

This is inspite of the remote risk of these ‘blue chips’ not paying interest or repaying principal … the investors are prepared to take that risk to enable these companies to add a few more brownie points to their existing AAA status!

Not so for MAS, our dear old Malaysian Airlines!

Many have claimed that MAS is technically insolvent……and it’s financials seem to support such an assertion.

So the question is why would anyone want to invest in the kind of bonds that a struggling company like MAS has issued……knowing full well that MAS is not obliged to pay interests nor are they obliged to repay the principal?

That’s because the common factor here is the government which effectively controls MAS and also the pension funds!

The government is using the retirement savings of the people to keep afloat a company that is struggling to compete with its foreign competitors (note: the local market has been lost to Air Asia).

And the decision to do so appear purely political……i.e. to enhance standing of UMNO…..the costs of which are borne by the people’s savings in the pension funds!

Is this acceptable?

Shouldn’t the bonds issued by MAS be subscribed by Tajuddin Ramli and his cohorts?

Tuesday, 24 July 2012

Press Statement


Press Statement By Tan Sri Abdul Aziz Bin Abdul Rahman,
Former Managing Director of Malaysia Airline System
23 July 2012


"In the interest of the good name of our National Carrier and also the Nation, I suggest that colours of the Logo and livery on the A380 aircraft be reverted to the airline’s original colours as soon as possible, before it is too late."

The colours of the Logo and the Livery of the MAS A380 aircraft are outrageously wrong. They are wrong for at least two main reasons.

Firstly, the new colours have deviated from the original tradition and objective of the official colours of the national carrier. The colour of the logo has ignored the original tradition and history of the creation of the logo.

The original colour of the logo was red depicting one of the prominent colours of our Flag – the Jalur Gemilang as MAS is the country’s Flag Carrier. Later, dark blue colour was added as one of the main colours of our flag. All these were chosen and approved by the government and in particular YAB Tun Abdul Razak. The airline operated throughout the periods of all the Prime Ministers in those colours.

The latest Prime Minister that approved the logo was Tun Mahathir Mohamad. I remember going to see him with the designer Encik Johan to get his blessing. He was the one who suggested that the Logo on the tail of the aircraft be tilted slightly to give the aerodynamic look.

Secondly, the new different colour of the Logo is in conflict with the basic principle of branding in business. It portrays the image of confusion among the consumers and reflects badly on the management. No business organization would do such a thing.

Furthermore, in this case the A380 aircraft will be flying all over the world. It will create a bad image for our National Carrier.

In the interest of the good name of our National Carrier and also the Nation, I suggest that colours of the Logo and livery on the A380 aircraft be reverted to the airline’s original colours as soon as possible, before it is too late.

In this regard, I think the government should investigate to find out as to who had decided on the new colours without sound reasoning and direct the management accordingly.


Signed,

Tan Sri Abdul Aziz Bin Abdul Rahman

Saturday, 21 July 2012

CAN WE HEAL THESE?



Salam Ramadhan al-Mubarak!

AIDA – Awareness > Interest > Desire > ACTION!




On July 21, 2012 at 5:22 pm, GE Man wrote at  http://weechookeong.wordpress.com/2012/07/18/conspiracy-or-sabotage/                                                                                        



"With 18 on the list above , My dear PM and BOD of MAS and Tan Sri chairman, YB YB , you must not stand still while MAS being screwed to death. MAS is BLEEDING ok!"

xxxxxxxxxxx The finale on conspiracy and sabotages in MAS xxxxxxx


The share suap is a very well planned conspiracy and sabotage mission’s to destroy MAS slowly if not immediately to kill off AA only competitors in Malaysia.

The Pariah parachuted his armies (A.., Danny Rashy, Azhari, Rozman, Amin, Zakiah, Shane Nolan etc etc ) on search and destroy missions, forcing MAS to swallow poison’s pill after a poison’s pill so that MAS is so sick that MAS won’t be competitive to operate for at least the next 10-20 years.

The list of conspiracy and sabotages that bleed’s MAS to death:

1) Killing off Fire Fly B737-400/800 Jet Services since it is directly  competing with AA as a low cost community carrier and taking over some of its routes.

2) Cut/Stop MAS profitable routes ( Bandung , Surabaya , Sydney etc etc ) so AA can take over the routes and mount additional flight.The rakyat had no choice but to pay what ever price AA put since they are monopolizing this routes.

3) Re schedule / re timed MAS flight to odd hours ( Hong Kong ,  Beijing etc etc ) so that AA take the prime slot. MAS seat’s load factors dived.

4) Signed the so called an AAX’s 35,000 passengers re-accommodation at  a very low fare. MAS loosing money at least MYR 1000 per AAX’s passengers carried and lost of sale able seats to would be full paying MAS passengers.

5) Logo and re-branding, con-sultan fee’s paid , re-painting of more then 115 aircraft which will cost at least MYR 900,000.00 per aircraft that requires down time of at least 10 days.
It will cost a whooping MYR 100 millions. Lost of aircraft utilization will cost money too to MAS. Luckily the change of logo and re-branding were restricted to A380. Even that will cost money for the respraying of the 6 A380!

6) QPR sponsor worth MYR 10 million when AJ is crying MAS is bleeding.

7) A380 seat re-configuration at the wimp and fancy of the Pariah which cost MAS at least MYR 4 million per ship set . With 6 unit A380 ordered , this will add an additional cost of MYR 24 million to MAS and the “old seats” to be scrap.

8) The A380 ferry (joy rides) flight from Toulouse to Kuala Lumpur with some joy riders on board who are not related at all to the ferry flight formalities, incurring additional cost of sending them to Toulouse , hotels , daily allowances and lost of sale-able commercial seats, Kuala Lumpur – London and Kuala Lumpur – Paris .

9) Lost of UN UNIFIL Lebanon lucrative charter flight to AAX. Giving an excuse of MAS don’t have any aircraft available to do it where’s else many aircraft laying idle due to routes cut and excess cabin crews had to be deployed to Golden Lounge to work.

10) Lost of Fire Fly ATR 75-200 maintenance contract to SAE.

11) Lost of Batavia Air and Lion Air B737-300/400 maintenance contract to AIROD.

12) The would be B777 seat and IFE retrofit worth at least MYR 150 million for all 15 unit MAS B777. This B777 will be phased out in 3 years time yet a retrofit is initiated and as it is the seat and IFE served its purpose well.

13) B737-800 steel brakes changes to carbon brakes which cost millions. AJ had issued a direct LOI/LA to one of carbon brakes manufacturer without going thru’ a normal company procurement procedure and WITHOUT Board approvals !!
Using a carbon brakes is only economical if you use it since day one you buy the aircraft. Now MAS got to buy the new carbon brakes and discard/throw away/scrap the steel brakes inventory worth millions and MAS got to change tyre type from radial to bias tyre !!

14) Two weeks ago in London Farnborough airshow,  AJ signed a MYR 5 billion contract for A380 Trent 900 Engine Total Care Maintenance Program with RR for as long as MAS is flying this A380 aircraft . No engineering and financial evaluation was carried out and NO BOARD approval sought. All decide by the TRIO , AJ , Azhari and Amin.

15) Approximately 3 years ago MAS/PMB had sold 17 unit of their B737-400 classic aircraft to AAR and MAS leased it back (Sale and Leased Back ) from AAR until such time that all MAS new B737-800NG is delivered as replacement.

Two weeks ago , during Farnborough Air show in London too, MAS Airlines Engineering Group (AEG) and someone had signed an agreement with AAR to purchase back 6 unit of this B737-400 classics.

The surprising deal is that the purchase price per aircraft is MYR 19.8 million (USD 6.4 mil). The market price is only USD 2.5 million (MYR 7.75 mill) each . (Pls refer www.speednews.com for aircraft prices)

MAS is paying 2.5 times more then the market price !!!
AND what is the logical explanation buying back this junk ??

MAS will be milked by a whooping MYR 118.8 millions for this deal.

As usual no engineering and financial evaluation was carried out and NO BOARD approval sought. All decide only by two persons and one of whom is an ex GE Man.

16) Early this month (July), against all MAS procurement procedure and the first one in MAS history, Azhari had issued an LOI (Letter Of Intent) to LHT a contract worth MYR 500 million for the A330 Aircraft Component Support PBTH (Power By The Hour) , knowing that there is other bidders who had offered a lower price then LHT .

Azhari is the first CEO of MAE (MAS Aerospace Engineering) history who issue LOI without Board Approval.

He doesn’t have such authority, only tender department who can issue LOI/LA after BOD had approved it.

A wrong procurement procedure, Azhari will bull doze this A330 LHT contract during this coming BTC (Board Tender Meeting) on Wednesday / 25 July 2012. He will try to shove it to the BOD throat.

17) In the making, Azhari and Amin is now trying to do something about the B737-400 engine CFM56-7 PBTH (Power By The Hour) contract worth at least MYR 1.5 billion (minimum 10 years contract)( more then 200 engines) and source said it may be a direct nego again. One can expect where it will go. Just think who is maker!

18) In the making think,Azhari and Amin is trying to figure out who will get the B737-800 / B777 / A380 / B747-400 APU maintenance contract worth more then a 1 billion ringgit . A total of more then 150 units of APU (Auxillary Power Unit) is to be contract out for maintenance soon.

With 18 on the list above , My dear PM and BOD of MAS and Tan Sri chairman, YB YB , you must not stand still while MAS being screwed to death. MAS is BLEEDING ok!

This will be the way to kill MAS as MAS be will be liable and inherit a long term high engineering operating cost, too high to sustain the business for at least the next 10-20 next years from now , how MAS will survive like this ?

A procurement manual is there to be followed so the tender and bidding is carried out in a transparent manner,how come one person or a TRIO are allowed to decide on this multi billion ringgit contract.

At least least 3 bidders must participate to make the bidding process to be an advantage to MAS bottom line. Direct nego is a suicide !!

The remaining parachuted fellows are the share suap parasites and should leave MAS, so much damaged done in the last 11 months..