Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Haier, Tokyo Dome, Cowell, Infratil, Link Admin, Sapporo/Asahi, Mcdonald's

On the 1 November 2011, <a href="https://www.smartkarma.com/entities/fgv-holdings-bhd" target="_blank" data-smartkarma-citation="entities:2200:1" rel="noopener">FGV Holdings Bhd (FGV MK)</a> signed a Land Lease (LLA) Agreement with Federal Land Development Authority (FELDA), whereby 351,000 ha of FELDA’s land was leased to FGV for 99 years.
On the <a href="https://www.fgvholdings.com/press_release/official-statement-of-fgv-holdings-berhad-on-felda-land-lease-agreement/?pagen=2" target="_blank" rel="noopener">20 October</a> this year, FGV sought to clarify the LLA agreement following various ongoing news reports about the possible termination of the LLA.  FGV said FELDA had yet to contact FGV to negotiate matters regarding the LLA.
Under the terms of the agreement, termination of the LLA is allowed. However, it is understood FGV’s compensation would be assessed on the average profit/mature hectare for the entire leased land, multiplied by the loss of FGV’s future profits.
FGV currently manages 493,750 ha of land, therefore the LLA accounts for ~70% of FGV's plantation.
FGV followed up on the <a href="https://www.fgvholdings.com/press_release/official-statement-of-fgv-holdings-berhad-on-feldas-recovery-plan-termination-of-land-lease-agreement-lla/?pagen=1" target="_blank" rel="noopener">29 October</a> reiterating it had yet to receive a written notice from FELDA regarding the termination.
Led by Tan Sri Abdul Wahid Omar, who headed a special task-force - and who is also chairman of Bursa Malaysia - FELDA <a href="https://www.astroawani.com/berita-bisnes/felda-akan-ambil-tanah-dan-beli-kilang-dari-fgv-266002?fbclid=IwAR1M9Hmap92N5Tq_64AlsI-od2N1DZ6nOGOmKcooPzOLj-0chhwR_p0oMZo" target="_blank" rel="noopener">announced</a> on the 30 October the termination of the LLA. Two days prior, Datuk Sri Mustapa Mohamed - Minister in the Prime Minister Department for Economic Affairs - announced that the Cabinet had agreed to the recommendation (tabled by the task-force on the 14 October) to the termination of FELDA’s LLA with FGV.
<h3>The New News</h3>
FELDA announced a possible <a href="https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3112207" target="_blank" rel="noopener">mandatory takeover</a> of FGV at RM1.30/share. 
FELDA, which currently owns a 21.24% stake in FGV, entered into conditional sale and purchase agreements (SPAs) to buy the 6.1% and 7.78% stakes held by Kumpulan Wang Persaraan (Diperbadankan) and Urusharta Jamaah Sdn Bhd for RM658mn. Upon completion,  FELDA would hold 35.12%, which is above the 33% mandatory takeover offer threshold.
FELDA added that in conjunction with parties acting in converts (PACs), it would hold more than 50%. The names of these PACs were not made public. The conditions to the agreements are primarily one of funding and are expected to be completed within 3 months. 
FELDA intends to serve the mandatory offer notice on FGV once the SPAs have completed.
More below the fold.

On the 1 November 2011, FGV Holdings Bhd (FGV MK) signed a Land Lease (LLA) Agreement with Federal Land Development Authority (FELDA), whereby 351,000 ha of FELDA’s land was leased to FGV for 99 years.
On the 20 October this year, FGV sought to clarify the LLA agreement following various ongoing news reports about the possible termination of the LLA.  FGV said FELDA had yet to contact FGV to negotiate matters regarding the LLA.
Under the terms of the agreement, termination of the LLA is allowed. However, it is understood FGV’s compensation would be assessed on the average profit/mature hectare for the entire leased land, multiplied by the loss of FGV’s future profits.
FGV currently manages 493,750 ha of land, therefore the LLA accounts for ~70% of FGV's plantation.
FGV followed up on the 29 October reiterating it had yet to receive a written notice from FELDA regarding the termination.
Led by Tan Sri Abdul Wahid Omar, who headed a special task-force - and who is also chairman of Bursa Malaysia - FELDA announced on the 30 October the termination of the LLA. Two days prior, Datuk Sri Mustapa Mohamed - Minister in the Prime Minister Department for Economic Affairs - announced that the Cabinet had agreed to the recommendation (tabled by the task-force on the 14 October) to the termination of FELDA’s LLA with FGV.
The New News
FELDA announced a possible mandatory takeover of FGV at RM1.30/share. 
FELDA, which currently owns a 21.24% stake in FGV, entered into conditional sale and purchase agreements (SPAs) to buy the 6.1% and 7.78% stakes held by Kumpulan Wang Persaraan (Diperbadankan) and Urusharta Jamaah Sdn Bhd for RM658mn. Upon completion,  FELDA would hold 35.12%, which is above the 33% mandatory takeover offer threshold.
FELDA added that in conjunction with parties acting in converts (PACs), it would hold more than 50%. The names of these PACs were not made public. The conditions to the agreements are primarily one of funding and are expected to be completed within 3 months. 
FELDA intends to serve the mandatory offer notice on FGV once the SPAs have completed.
More below the fold.

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.

We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
​
More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

<h2>Philippines (overweight): a likely outperformer if tech and commodities correct</h2>Main ConclusionsThe Philippines appears to be the most expensive among the four ASEAN equity markets, but also boasts the highest rate of GDP growth. We remain overweight, mainly due to the sectoral composition, which is very light in terms of materials and energy plays where we expect pricing to come under further pressure and in terms of technology stocks which look distinctly frothy on a global basis. Market…

Philippines (overweight): a likely outperformer if tech and commodities correctMain ConclusionsThe Philippines appears to be the most expensive among the four ASEAN equity markets, but also boasts the highest rate of GDP growth. We remain overweight, mainly due to the sectoral composition, which is very light in terms of materials and energy plays where we expect pricing to come under further pressure and in terms of technology stocks which look distinctly frothy on a global basis. Market…

Emerging ASEAN: Sideshow to North Asia but More Limted Downside

APAC Ex-Japan & China Corporates Analyst, Finsights Research

Nandini Vijayaraghavan, CFA

APAC Ex-Japan & China Corporates Analyst

An analysis of the ten largest palm oil companies - <a href="https://www.smartkarma.com/entities/172" target="_blank" data-smartkarma-citation="entities:172:1">Wilmar International Ltd (WIL SP)</a>, <a href="https://www.smartkarma.com/entities/20523" target="_blank" data-smartkarma-citation="entities:20523:1">Sime Darby Berhad (SIME MK)</a>, <a href="https://www.smartkarma.com/entities/17039" target="_blank" data-smartkarma-citation="entities:17039:1">Kuala Lumpur Kepong Bhd (KLK MK)</a>, <a href="https://www.smartkarma.com/entities/1142" target="_blank" data-smartkarma-citation="entities:1142:1">Golden Agri Resources Ltd (GGR SP)</a>, <a href="https://www.smartkarma.com/entities/4050" target="_blank" data-smartkarma-citation="entities:4050:1">Astra Agro Lestari Tbk Pt (AALI IJ)</a>, <a href="https://www.smartkarma.com/entities/11313" target="_blank" data-smartkarma-citation="entities:11313:1">Genting Plantations Bhd (GENP MK)</a>, <a href="https://www.smartkarma.com/entities/2200" target="_blank" data-smartkarma-citation="entities:2200:1">Felda Global Ventures (FGV MK)</a>, <a href="https://www.smartkarma.com/entities/11341" target="_blank" data-smartkarma-citation="entities:11341:1">Boustead Holdings Bhd (BOUS MK)</a>, <a href="https://www.smartkarma.com/entities/1140" target="_blank" data-smartkarma-citation="entities:1140:1">Indofood Agri Resources Ltd (IFAR SP)</a> - indicates that<ul><li>The operating metrics of IOI Corp, Golden Agri Resources, Kuala Lumpur Kepong and Astra Agro Lestari are quite strong,</li><li>The financial profiles of Kuala Lumpur Kepong, Astra Agro Lestari, Genting Plantations and Indofood Agri are stable, characterised by robust EBITDA and CFO margins, financial leverage of less than 2.5x and ample fixed charge cover,</li><li>Though the stocks of Felda Global Ventures and Sime Darby have generated the maximum YTD USD total return, the upside potential to these stocks are limited, and</li><li>When the companies’ performance and stock valuation metrics are viewed against the backdrop of range bound palm oil prices for the rest of 2017, Astra Agro Lestari, and Indofood Agri stocks appear to be attractively valued.</li></ul>

An analysis of the ten largest palm oil companies - Wilmar International Ltd (WIL SP), Sime Darby Berhad (SIME MK), Kuala Lumpur Kepong Bhd (KLK MK), Golden Agri Resources Ltd (GGR SP), Astra Agro Lestari Tbk Pt (AALI IJ), Genting Plantations Bhd (GENP MK), Felda Global Ventures (FGV MK), Boustead Holdings Bhd (BOUS MK), Indofood Agri Resources Ltd (IFAR SP) - indicates thatThe operating metrics of IOI Corp, Golden Agri Resources, Kuala Lumpur Kepong and Astra Agro Lestari are quite strong,The financial profiles of Kuala Lumpur Kepong, Astra Agro Lestari, Genting Plantations and Indofood Agri are stable, characterised by robust EBITDA and CFO margins, financial leverage of less than 2.5x and ample fixed charge cover,Though the stocks of Felda Global Ventures and Sime Darby have generated the maximum YTD USD total return, the upside potential to these stocks are limited, andWhen the companies’ performance and stock valuation metrics are viewed against the backdrop of range bound palm oil prices for the rest of 2017, Astra Agro Lestari, and Indofood Agri stocks appear to be attractively valued.

Astra Agro Lestari and Indofood Agri – Attractive Palm Oil Buys

Malaysia

FGV Holdings Bhd is an agricultural and agri-commodities company. The Company owns and operates an oil palm plantation producing oil palm and rubber plantation products, soybean and canola products, oleochemial products and sugar products.

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FGV Holdings Bhd (FGV MK)

Last Week in Event SPACE: Haier, Tokyo Dome, Cowell, Infratil, Link Admin, Sapporo/Asahi, Mcdonald's

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

FGV Holdings: Reading the Palm Fronds

The government has agreed that the financial position of FELDA is untenable and that the terms of the LLA are unsatisfactory. I don't see how the...

David Blennerhassett

The Stocks to Own in ASEAN – Vol. 33

The Stocks to Own in ASEAN – Vol. 33. We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology.

A. Stotz Investment Research

Emerging ASEAN: Sideshow to North Asia but More Limted Downside

Philippines (overweight): a likely outperformer if tech and commodities correctMain ConclusionsThe Philippines appears to be the most expensive...

John-Paul Smith

Astra Agro Lestari and Indofood Agri – Attractive Palm Oil Buys

An analysis of the ten largest palm oil companies - Wilmar International Ltd (WIL SP), Sime Darby Berhad (SIME MK), Kuala Lumpur Kepong Bhd (KLK...

Nandini Vijayaraghavan, CFA

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