Tuesday, 27 December 2011

kisah kaki lutu dan IPO Felda Global


Mengapakah ada tentangan kepada penyenaraian FGV global? Bukankah para peneroka yang berjumlah 220,000 itu akan mendapat durian runtuh? Isa Samad telah janji- peneroka mesti bergembira. Kerajaan UMNO sentiasa menjaga kebajikan para peneroka….dan kebajikan warga korporat. Soldadu perkasa pun kesana kemari menakutkan sesiapa yang menetang agenda kaki lutu Isa bin Samad.
Berapa nilai durian runtuh tersebut? Barang di ingat durian runtuh ini sekali sahaja. Dan peneroka akan menikmati nya jika mereka menjual saham free yang mereka terima. Free dari mana? Tentulah FGV yang akan beri. Jika tidak, maka tidak ada galakan atau insentif untuk peneroka menyerah jiwa dan raga mereka bukan?
Setelah di IPO kan, pegangan FGV ialah sekitar 28%. ( 39% dari 70% perniagaan). Pegangan KPF ialah 42%.  FGV akan set aside sebahagian dari saham mereka untuk di agihkan kepada 220,000 peneroka. Berapa banyak yang akan di agihkan? Katalah 10%. 10% itu berapa nilai nya dalam sebutan mutlak? Saya tidak tahu macam mana mereka buat perhitungan, tapi target FGV ialah mencatat nilai 7 billion apabila di IPO. Jadi kalau mereka set aside 10%, maka nilai mutlak nya ialah 700 juta. Bahagikan 700 juta ini dengan 220,000, maka seoang peneroka akan mendapat lebih kurang RM3200 seorang.
Terpulanglah kepada peneroka untuk berfikir adakah premium 3200 seorang ini setimpal dengan penyerahan segala yang mereka miliki secara lansung melalui KPF dalam FH berbaloi. 3200 di bahagikan dengan 12 bulan, tidak sampai 300 Ringgit sebulan.
Tapi siapa mahu kasi 3000-4000 setahun kepada setiap peneroka? Anwar Ibrahim? Kit Siang? Nik Aziz? Semua tak boleh. Hanya Isa bin Samad sahaja yang boleh. Siapa tentang akan kena lutu. Sebab Isa Samad kata kalau dia jumpa orang itu, dia akan lutu. Hoho. Dalam dunia ini Isa bin Samad sahaja yang boleh lutu. Dan Isa Samad sudah pun lutu Zulkifli Wahab. Sehingga Isa Samad hantar gerombolan perkasa supaya menakutkan Zul Wahab.
PM telah beri tugas kepada Isa Samad, Isa- you jayakan IPO ini by any means necessary. Maka, tentangan terhadap penyenaraian akan di pandang serong dan di anggap suatu sikap yang anti peneroka. Sedangkan jika di kaji, bukankah penyenarian tersebut akan meninggikan harga saham koperasi permodalan FELDA?
Tapi kita serius sikit. Apakah yang merisaukan atau boleh merisaukan peneroka? Kepentingan peneroka terletak pada pegangan KPF dalam FELDA Holdings. Peneroka menguasai 51% daripada saham dalam FH. Ini bermakna mereka mempunyai penguasaan lansung atau direct control keatas tanah2 dan asset dalam FH. Bila penyenaraian berlaku, semua tanah dan asset di pajak kepada syarikat FGV yang disenaraikan. Sebagai balasan peneroka memiliki saham melalui KPF. Mereka tidak lagi menguasai secara lansung tanah dan asset.
Apabila penstrukturan berlaku, kepentingan peneroka akan meningkat kepada 61%. Kan itu lebih banyak? Tapi 61% daripada berapa? Jika 30% saham di resebkan untuk orang awam, maka baki perniagaan yang tinggal ialah 70%. 61% dari 70% hanya sekitar 42% sahaja. Jadi pegangan kepentingan peneroka mengecil dan bukan membesar. Tapi business nya besar kata pihak FELDA. Ianya besar setelah IPO. Betul, tapi nilai pegangan peneroka akan hanya bertambah jika modal yang di perolehi oleh FGV di laburkan semula kedalam bisnes FGV. Tapi kita tidak pasti ini akan berlaku. Rekod FGV tidak menyokong optimism seperti ini.
Soalan yang paling penting ialah- setelah penyenaraian itu, boleh kah FGV jamin pulangan keatas saham tinggi? Ianya bergantung kepada banyak angkubah dan pihak FELDA mampu memberi 1001 alasan jika pulangan tidak menentu. Tapi yang paling meresahkan ialah samaada FGV mempunyai kapasiti pengurusan untuk unlock value saham FELDA?
Kenapa FELDA merasakan perlu membuat IPO melalui penyenraian FGV? Bukankah IPO penrniagaan gula nya telah medatangkan modal kewangan yang ok kepada FELDA? Dan FELDA kata dia banyak reseb. Ahmad Maslan pun telah menyaman orang2 yang tidak bertanggung jawab yang menuduh FELDA bengkrap.
Jika FELDA merasakan FGV mesti disenaraikan, maka ini bukti secara tidak lansung bahaw FELDA dalam keadaan teruk. Reseb nya memang merudum. IPO bertujuan mendapatkan modal bagi mengembangkan pendapatan dan perniagaan. Untuk menjustifikasi tujuan mendapatkan modal kewangan, FGV boleh buat macam macam cerita. Termasuklah pengkisahan bahawa perniagaan buat masa ini tidak memaksimakan nilai. FGV merasakan mereka boleh melakukan yang lebih baik. Ini termasuklahL- (1) meleraikan sekatan supaya nilai saham FELDA lagi tinggi ( (2) menjalankan pengurusan yang lebih baik( 3) meningkatkan produktiviti FELDA dan lain. Ini janji2 FGV.
Itu bukan perkara yang luar biasa. Orang yang hendak memujuk orang awam berbelanja keatas saham mereka tentu melakukan cerita yang baik baik. Penceritaan yang mengasyikkan tidak lah sukar di buat. Jika kita mengupah penulis yang ada sedikit ilmu corporate finance dan accounting, mereka akan menghasilkan cerita ajaib yang menyeronokkan.
Namun demikian, kita tidak dapat menipu apabila berdepan dengan fakta dan hard numbers. Rekod perniagaan FGV tidak lah baik. Ia telah mengalami kerugian sebanyak RM 500 juta. Dan FGV tdia mempunyai sumber kawangan dan harta sendirian yang boleh menyokong penyenraraian nya. Mereka tidak ada fundamentals.
Jadi bagaimana mahu mengelak kesangsian yang menyelubungi cadangan membuat IPO ini?

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Monday, 26 December 2011

FGV listing: Corporate vs. Peasant Settler


2 upcoming events are waited upon with great anticipation. (1) The outcome of an injunction application by a few settlers to stop the FELDA FGV listing and (2) the 5th January EGM of Koperasi Permodalan FELDA.
The outcome of the second event is a foregone conclusion. Chairman Isa will get elected as the KPF chairman despite not having the qualifications to become an office bearer. He is not a settler nor is he a FELDA employee. But the Minister in Charge of FELDA has given his approval, what can people do. The Minister is also the PM. He is lord over whoever lives in this land.
We must not be sidetracked by this sideshow involving the two bit actor Isa Samad. The more pressing matter concerns the listing exercise.
Why the injunction? Why should 4 people extend energy and time and assume the risks of being called traitors and all that, want to apply an injunction? Greed can’t be the overriding objective? If it is, its more profitable for the 4 people to side with Chairman Isa who can be generous as he is pleased.
The object of the injunction is to stop FGV taking over assets and shares belonging to KPF in FELDA Holdings. These people believed that the 350,000 hectares of land which FELDA took was actually meant for settlers. All the assets owned by KPF in FELDA Holdings will be leased to FGV for the next 99 years. They will no longer exercise control over the assets as their interests are all converted into shares. FELDA Holdings is 51% owned by settlers and 49% owned by FELDA Global.
They are willing to risk it all, because they believe settlers are being sold out.
This listing is the ultimate shortchanging of settlers. The first occurred when FELDA withheld more than 300,000 hectares of land from being given to settlers.  By assuming ownership of the land, FELDA was able to become a planter itself. So we have the peasant settler and the corporate settler. The corporate settlers have moved on to becoming fabulously rich while the peasant settler ( Tun Razak’s regimented landless and jobless) have remained relatively behind. They get to enjoy the trickle down effects defined and determined by FELDA who practically run the business on behalf and for the benefit of settlers.
The corporate settler sells CPO and busies itself in a wide range of downstream manufacturing and marketing activities. They were even able to go into various businesses out of the capital created from ownership of the land which was supposed to go to the landless and jobless.
The second took place, when FELDA listed its sugar refining business. It made over RM 800 million out of that IPO. How much did KPF make by virtue of owning 20% of the business? On paper it made 300 million?  How did Sabri Ahmad cull this figure? If KPF makes a paper gain of 300 million and the 300m is 20%, then the whole gain is 1.5 billion. But Sabri says, FELDA made 800 million. Maybe it’s just a figure of speech- the point is, he wanted to say KPF made money albeit on paper.  Does that raise the share value of KPF in FELDA Holdings now that it made 300m paper gain?
If the injunction is successful, the proposed listing of FELDA Global will be delayed. The listing will see the merger of FELDA Holdings with FELDA Global. The smaller partner in terms of equity, FELDA Global is buying out KPF who has 51%.
How is the nature of the transaction? Does it involve and offer by FGV to buy out KPF at a certain price or will it involve just a share swap? You priced it with premium fella- that’s why KPF is getting 61%.
But the share price of the new listed entity is also at a premium. You can easily inflate the price of the would be listed entity, paint glossy pictures, introduce exotic phrase such as unlocking value and so forth- you will probably induce KPF representatives to believe they are getting a good deal. KPF will get 61%. That’s good you say. Isa Samad goes around berating ungrateful settlers- apa lagi awak semua mahu- dari 51% jadi 61%?
But we ask in return- 61% of how much? If 30% of the shares are sold to the public, the settlers end up with 61% of 70% of the business.  That’s not all. 30% is held by the public- the interests of settlers are converted into shares which are tradable in the market place. As with the track record of bumiputera held equities, you can bet that chances are, the shares will be sold.
We have to go back to the primary source of dissatisfaction. The peasant settler has remained more or less the same. The corporate settler has made it big. The peasant settlers get palliatives- bonuses here and there. RM 1200 as yearly bonus translates into RM 100 per month. 400 per year translate into 30 Ringgit per month- not even enough to buy a T-bone steak at Meatworks. The peasant settler gets MRSM colleges, indoor stadiums, futsal stadiums and other social amenities but the value of these, pale in comparison with the amenities and wealth enhancing resources obtained by the corporate settler. The corporate settler has moved on into oleo chemicals, downstream activities, hotels, sugar business etc. why can’t the peasant settler be organized that same way?
The fundamental reason why this listing is vehemently opposed is that people believed it’s a sellout and it’s the culmination of unconscionable acts by FELDA.

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Saturday, 24 December 2011

FGV listing and the interests of settlers


In this contentious issue of FGV listing, this question has never been answered. Do FELDA settlers have any standing whatsoever to dispute the listing of businesses run by FELDA at all? FELDA Holdings is managed by FELDA employees. FELDA global is operated by FELDA professionals. So why should FELDA settlers and others siding with settlers be irksome busybodies?
So, we have to establish whether settlers have a standing in the first place to even question the listing. If they don’t, they should shut up for as long as they get free benefits and are taken care of.
If we do indeed establish that settlers have standing and deemed interests, then we move on to ask, is the FGV listing a sellout to FELDA? So the second of our attention should be directed to the question whether the listing is a sellout.  
Let’s face it- the interest of settlers is indirect here and is of little consequence. It should be a non-issue. As long as they get whatever form of benefits- bonuses, end of year cash handouts, futsal fields, indoor stadiums, hockey turfs, MRSM College, FELDA University- they should be thankful. Just on account of being a settler- they get all these. Where else can they get this kind of preferential treatment of being cared for from cradle to grave?
FELDA can continue giving all these, if it makes money as a whole. If it has the reserves from which they appropriate and apply as in the above examples we gave. And FELDA does indeed have the reserves. They even sued those who accused FELDA of being bankrupt. At its height, its reserves were RM 40 billion, then RM 4 billion and today- we don’t know how much. Maybe this listing will top up the depleting reserves. We don’t really know.
Hence the government which owns FELDA is greatly disturbed when people question the proposed listing of FELDA’s businesses not directly owned by settlers nor operated by them. Settlers tend their 10 acre lots- that are all they do. It’s FELDA- through FELDA Holdings and FGV that does business. Settlers have no business to interfere in these organizations run professionally.
Settlers derive direct benefits via ownership of the FELDA plots they have on which they worked on. They get benefits when they sell their FFB at FELDA owned mills at specific price level. Their interests are looked after better if they get good price for FFB, if the extraction rate of the oil is done truthfully, if their planting operations costs have been good. Their interests are better off, if the output per hectare is as good as estates operated by United Plantations, KLK, IOI and so forth.
Otherwise, the other benefits derived from being automatic members of FELDA Cooperative, or other extension organizations are indirect. Settlers are excluded from the management of these organizations. FELDA places professionals to run Koperasi Peermodalan FELDA for example, professional managers run FELDA Holdings and so forth. Settlers benefit by virtue of being settlers and are recipient of gratuitous benefits arising from businesses run by FELDA employees. In other words, they get free benefits, so why bother?
Do settlers even have a standing even to question the listing?
The answer is an emphatic yes. They do have standing because they are the real stakeholders in any of the businesses run by FELDA. Because they are the real stakeholders- because the businesses that are run by FELDA and the assets FELDA acquires, all spring and are derived from property rights of FELDA settlers. They are derived from the land owned by FELDA settlers or should have been owned by FELDA settlers. More important, because that was the reason why FELDA came into being in the first place. States gave FELDA the authority land- to be given to settlers. FELDA was only an authority vested with specific duties. It has no business withholding the land with which they were entrusted to give out. If the land was supposed to be given out to settlers and FELDA did not, then it has always been under an implied duty to operate the land for the benefits of the settlers.

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Thursday, 22 December 2011

Listing of FGV- looking out for settlers interests.

I am more interested in establishing credibility in a proposition, idea or plan. Accordingly I am not fixated over an idea nor feel xenophobic on having to change my position if necessary, in the interest of achieving credibility. For example, while I am not immediately taken in by the idea of listing Felda Global, the rational economist in me accepts that it makes good business and economic sense to restructure Felda’s business to unlock value. I think, even while some of us differ in our views, this principle of restructuring, reorganizing, changing in order to arrive at better value, is acceptable. Also I am not averse to having experts run and operate the business. Example- KPF is the investment entity in Felda Holdings. The members of KPF get dividends, handouts, charity, assistance etc. they are able to enjoy because the commercial entity, Felda Global Ventures Sdn Bhd does the business for them. KPF’s and the interests of others- public spirited individuals, minders (paid or unpaid) are to ensure the managers of the business do their work efficiently and create shareholder value.
Except that, I will always be circumspect about the term ‘unlocking value’. Translate that into action and practice, what does the term mean? This term ‘unlocking value’ has taken different meanings in the context of business in Malaysia. It can mean anything. In the sad case of MAS for example, unlocking value has meant the sale of assets and the management of balance sheet bypassing managing the operations of the business.  The truth is, a business depends more on managing its operations.
My understanding in unlocking value is however somewhat more basic- it means you produce more per acre if you are in the business of planting something, you get better price, you produce better quality, produce new products, become more productive, keep costs down. It’s a bricks and mortar view of how an economic enterprise operates. You operate the real economy. Goods and services. It’s the business operations.
As an analyst or investor I will look at these variables and parameters. At the same time, I have this cynical bias- no business unit can sustain profit on paper shuffling and share manipulations without the support of the business fundamentals. I am always suspicious at the managing balance sheet approach. You want to arrive at a clean balance sheet; you manage the assets and liabilities. You are fixated at the over consuming idea of having more value at assets over liabilities.
In felda’s case that means to me, making sure plantations produce more and high quality yields, marketing, managing more efficiently and so forth. Creating prosperity through share manipulations, IPO and the stuff are initial spurts. What comes later- working on the fundamentals is what sustains long term benefits.
A close friend sent me a text. He says he doesn’t understand why I oppose the FELDA Global ventures (FGV) listing. Don’t I empathize with FELDA settlers? The indirect owners of the 880,000 hectares of palm oil trees are going to enjoy a windfall and you are objecting?  Settlers are passive investors through their cooperative. The business and commercial aspects of the business has always been handled by Felda Global Ventures SB. That is the organization that operates and manages the business. Doesn’t it make good business and economic sense to restructure the business into a single entity and create upstream and downstream business entities?
The most important element of this business in my mind is the land area. Now, these 880,000 hectares comprise of what? The land already owned by settlers or land not already owned by settlers or both? Since 1990, Felda doesn’t enlist settlers anymore. Land not already owned by settlers or were not given out were all placed under Felda Plantations. These are not operated by settlers. They are run directly by Felda through their plantation business units.
Now, that itself was a contentious position. Land was set aside by the various states to be given to settlers. Felda serves as the authority in selecting settlers in order to give individuals land to cultivate. That was the original intention of Tun Razak when he established Felda in 1956. Of course we are not going to be sticky about his original intention. He is dead anyway and his idea is opened to improvements and even revision. The infallibility and absolute completeness and un-changeability of an idea do not appeal to me and I believe that should apply to others too. There must be reasons for not giving out land to would be settlers.  I don’t think not doing so, renders the whole idea of Felda into total disrepute.
But it will be prudent to keep a look out where we can go wrong. A less than spirited board representation for example can put a damper on good business operations. Look at what happened to Sime Darby for example. Clearly on an overall basis, the board hasn’t played a good oversight and supervisory role. The business operations must be run by quality managers and staff. The organization needs to be nimble in spirit. Maybe the idea of concentration of authority and power needs to be relooked. Power and resources need to be dispersed in order to unlock value.
My other worry is this. After the IPO, FGV becomes a behemoth. It will be bigger than Sime Darby I think. Where lies the danger? The danger lies in it becoming a large bureaucratic held-back business organization.  It becomes a government unto itself. That may turn FGV into an unwieldy centrally planned business. This possibility is fraught with dangers. Central planning is not good for business. Concentration of power, monopoly and similar ideas are antagonistic to free enterprise, competition, acquisitive tendencies and this idea of limited interference. The age of big government or government knows best must be given its real meaning in practice. If FGV is to succeed, ideas supportive of power dispersion, free enterprise, competition will have to be enhanced not curtailed. We don’t need a commissar mentality to run FGV. We will talk about this at other times.

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Wednesday, 21 December 2011

Masa depan kepentingan peneroka felda- FGV


Kebimbangan yang paling mendesak ialah adakah kepentingan peneroka dalam FH akan terjamin, sebaik sahaja kepentingan tersebut di urus oleh FGV? Ini yang kita kena tanya. Jangan mudah terpedaya dan ternganga dengan presentation graphicals, warna warni dan powerpoint effects. Cuba soal-apa yang FGV akan lakukan yang bebeza daripada yang sedang mereka lakukan? Jika mereka ada ‘senjata ajaib’ baru, kenapa mereka tidak amalkan untuk menguntungkan FGV dalam perniagaan mereka sendiri? Kenapa rugi?
Kepakaran baru? Bakat pimpinan baru? Ilmu baru? Ada cara luar biasa dan ajaib?
Jika mereka boleh menjanjikan kaedah luar biasa lagi ajaib, kenapa perkara tersebut tidak di lakukan keatas perniagaan nya sekarang? Bukankah dengan melakukan apa yang di janjikan untuk IPO, FGV boleh menghasilkan keuntungan keatas perniagaan mereka sekarang? Kenapa tidak di lakukan? Adakah itu punca FGV kerugian 500 juta?
Ini yang puzzling. FGV says it will bring the listed vehicle to new hieghts and make profits. So how come, it hasn’t applied those profit enhancing strategies on its current business? Surely, kita expect, if they have done that, the track record of FGV would have been very assuring.
Cerita kelentong sana sini- bagaimana produktiviti boleh meningkat dan karut marut- semua cerita tersebut boleh di reka reka. Kita kena match dengan realities. Lagi pun, kalau kita cerita tentang produkviti dalam bisnes perladangan dengan buat tabulation dan graphs sana sini- bukan kah itu semua bisness yang sedang di lakukan oleh FH holding sendiri? Itu bidang bisnes mereka yang mereka tentu ada lebih kepakaran daripada FGV. Kita hendak lihat apa FGV boleh lakukan kepada bidang bisnes mereka sendiri. Bidang orang lain yang orang lain lebih pakar dari kita, jangan lah kita sibuk hendak cerita.
Kita kena tanya, apa tujuan IPO? Ianya bertujuan untuk raise capital dari langganan pembeli awam. Bila orang beli, wang masuk dan harga saham naik. Selalu nya mula mula naik. Ramai orang bikin wang. Tapi selepas masa seronok?
Dalam kes ini siapa yang hendakkan modal? Jawab nya FGV. Kenapa FGV mahu modal dari pasaran saham? Kos nya berapa? Adakah kos itu( dalam bentuk jaminan kadar pulangan) lebih baik atau buruk, jika FGV pinjam sahaja duit dari pasaran bank? Atau pinjam sahaja dari Felda yang di katakan banyak duit. Atau pinjam dari EPF kerana EPF pun selalu beri pinjam dan wang nya di pinjamkan pada kadar yang baik. Jika FGV dapat pinjam pada kadar 2% tidak kah ini pada kadar yang terbaik?
Apa FGV mahu buat? FGV akan labur dalam portfolio yang macam macam. Gerenti untung kata mereka.
Apa rekod untung FGV? Takde. Sebab dalam pelaburan yang mereka urus dan lakukan sendiri- mereka rugi. Tapi pelaburan yang mereka lakukan dalam Felda Holdings untung. Tapi itu is a different matter. Itu cerita Felda Holdings bukan cerita FGV. Sebab FH di bawah pengurusan nya sendiri mencatat keuntungan. Jadi FGV nak leverage atas keuntungan yang orang lain buat untuk mereka sebagai asas buat IPO. Binawe punya orang. Kita ingat dia mahu tunjukkan intrinsic record dia sendiri- rupa rupa nya, menumpang atas rekod orang lain- FH.
Jadi apa isiu nya? Isiu nya ialah dalam FGVH nanti, siapa yang mengurus portfolio bisnes? FGV yang ada rekod rugi kah yang akan urus? Jika ya, maka masa depan kepentingan peneroka dalam FH akan muram. Perlu kita ingat, sekarang FH diserapkan dalam perniagaan FGV. Dan ingat- FGV punya rekod- buruk. 
Ini yang mendatangkan keresahan. Bukan kita suka suka tentang. Ada asas untuk rasa gelisah dan waswas. FGV leverage atas kekuatan orang lain . jadi mana mungkin ia mendatangkan keyakinan kepada kita dan peneroka bahawa perniagaan yang mereka akan urus akan untung? Rekod mereka tak bagus.
Jadi jangan kita sentimental dalam kes penyenaraian Felda. Ada keluarga yang datang dari kalangan peneroka. Kita identify dengan harapan dan kesusahan peneroka. Itu sikap politically correct. Takkan kita hendak menyebelahi kapitalis. Tentu kita sokong rakyat marhaen- para pak tani. Tendensi kita ialah menyerang sesiapa yang kita rasa mengacau kepentingan peneroka felda.
Tapi kepentingan peneroka is best served dengan strateji pelaburan yang betul. Kepentingan mereka selama ini, elok di bawah FH. Mulai sekarang, ia di letakkan di bawah pengurusan FGV yang kerugian. Beritahu kepada kita, adaakh kepentingan peneroka di perlakukan dengan tanggung jawab?

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