The Star Online: Business
The Star Online: Business |
- Investing community divided on Astro
- Up close and personal with Mansoor Ahmed
- Making Asean trade more accessible
| Investing community divided on Astro Posted: 21 Sep 2012 11:34 PM PDT PETALING JAYA: Few recent initial public offerings (IPO) have stirred quite as much polemics as the return of Astro Malaysia Holdings Bhd. While industry observers say the new RM3 retail price for the comeback listing of Malaysia's largest pay-TV operator is "fairer" compared to the indicative RM3.60 set for bumiputra investors, the investment community is still largely divided on the stock. One fund manager told StarBizWeek that despite Astro's historical price-to-earnings ratio (PER) shrinking slightly to 24 times based on the retail price and net earnings of RM629.6mil for the financial year (FY) ended Jan 31, 2012 he remained unconvinced and would not be subscribing for the shares. "The cornerstone investors have their own agenda. There could be other reasons. Maybe they think there is a possibility of someone coming in to buy them out later at a higher price," he said. He believed the funds who showed an interest might be doing so for indexing purposes. "This is especially true for funds who track the benchmark KL Composite Index. They are buying into Astro for that and not so much for the growth of the company." Another fund manager who spoke on condition of anonymity said he would stay out of the IPO as his fund did not need to have a position in indexed stocks. "Astro will likely be a substantial component of the index so fund managers who follow it will hold out for a stake," he explained. According to industry executives, Astro's management has guided for lower earnings and margins for FY13 and FY14 as the company converts the current batch decoders to high-definition, the cost of which is borne by Astro. This earnings erosion is, however, expected to recover by FY15. Based on Maybank IB Research's net profit forecast of RM408.9mil for FY13 for Astro, the stock has an estimated forward PER of 37.5 times and dividend yield of 2%. StarBiz reported yesterday that 22 cornerstone investors had been secured for Astro's RM4.5bil listing slated for Oct 13. They include tycoon Chua Ma Yu, Kencana Capital Libra Investment Sdn Bhd, Great Eastern Life Assurance, Myriad Opportunities Masterfund, Nomura Asset Management, Antell Holdings Ltd, Azentus Global Opportunities Masterfund Ltd, Caprice Capital International Ltd, Corston-Smith Asset Management, Gordel Capital, Ochis-Ziff, TPG-Axon International, TPG Axon Partners, and Universities Superannuation Scheme. The biggest of these was said to be state investment firm Permodalan Nasional Bhd. As one analyst put it: "There was never much doubt about demand for the IPO despite concerns about its rich valuations. "The naysayers may disagree with how T. Ananda Krishnan lists and relists his companies, but the market is used to this." Asked to comment on the strong institutional interest garnered by Astro, a head of research said: "This is the classic case of too much money chasing too few assets. Malaysian institutional investors are deprived of investment ideas for their domestic portfolio." Ananda, the country's second-richest man, took the satellite TV operator private in 2009 in a deal worth RM8.5bil. The company is being relisted at RM18.7bil without its Indian and Indonesian operations, or 125% higher than when it was delisted three years ago at RM4.30. Another head of research at a local bank-backed brokerage considers Astro a longer-term growth story. "If you invest now, you are buying into a long-term story. Shareholders will have to wait it out," he said. He added that margins were likely to see compression for the time being as Astro worked to switch some 1.5 million of its subscribers to high-definition. However, he said Astro's management was confident it could bundle both TV as well as broadband offerings once the conversions were complete. "They believe customers who today pay RM300 a month for both UniFi and Astro will trade that for a better price." Related Story: |
| Up close and personal with Mansoor Ahmed Posted: 21 Sep 2012 11:30 PM PDT STUBBORNNESS is a trait that has served Volvo Malaysia managing director Mansoor Ahmed well. As a rebellious young man, Mansoor was against his parent's wishes for him to pursue medicine or engineering. "I never wanted to do either of them," the 51-year old tells StarBizWeek. "Those two were the most sought-after professions in India. Most parents wanted this for their children, and with good intentions. As a child, you don't understand that." Worn down by his father's persistent nagging about the other children being accepted into this or that college, Mansoor exclaimed: "If this is just about qualifying for college, I will do that, but I won't go." It was this same willfulness that would later spur him to take the path less travelled. "One day my father returned home with a glum face and told me there was a letter on the table," Mansoor recalls. He did not get into medicine, his father said. "Good. I would not have gone anyway," was Mansoor's retort. "He asked me to read the telegram. And it said, Congratulations, Mansoor selected for engineering'." Still defiant, Mansoor asked his father to frame the letter and that would be the end of that. "I told my father to tell his friends I wasn't going. Then I spent a few months unsure about what I wanted to do." The Delhi native actually had a different passion in mind: the arts. He knew, however, that acting and directing plays hardly made for respectable careers back then. But after much counsel from family and friends, Mansoor relented. College beckoned. Varsity days At university, which was 150km from home, Mansoor says he learnt to fend for himself. He studied mechanical engineering in Aligarh University in the northern Indian state of Uttar Pradesh, where diversity was part of daily life. "It was an amazing mix. Aligarh did not separate us by disciplines, so there were Mauritian, Iraqi, Palestinian students in my wing," he explains. Mansoor claims he did "reasonably well" in college despite not putting in so many hours. "There were those who were envious that I was spending a lot more time socialising than studying." Then came the time for work placements, an activity facilitated by the university. "When Tata did their selection at the campus, I was one of the three chosen," Mansoor says, adding that he bagged the job seven months before graduation. "Those days you retired in Tata. They were much respected in terms of their human resource practices. But there was another option." Mansoor explains that his father, an economics lecturer, was at the time attached to the International Monetary Fund (IMF). "He was in IMF when I graduated, so I could have furthered my education in the United States. I chose Tata." Revolving door Mansoor got his start in the 1980s in Tata Motors, the automotive arm of the Tata group, as a sort of management trainee. Knowing from his research that all the new products were made in a manufacturing facility Poona, he decided early on that was where he wanted to be. "I joined the plant, which was a fantastic rotational learning opportunity as we experienced different functions every three months. Then we would meet HR to negotiate our next assignment depending on our interest." One spot Mansoor was keen on was maintenance. The chief there, however, had other ideas, saying he should first try his hand at manufacturing. "He threw me a challenge: complete the manufacturing assignment and he would let me into maintenance. I did that in about five weeks. Then he wrote me a letter to maintenance." Internal audit was another position he benefited a lot from. "As an investigator, you view people with suspicion and start smelling a rat everywhere," he points out. "That happens when you are doing your work unilaterally and coming to your own conclusions without really listening to anyone. "It was a humbling experience that taught me to listen to the other perspectives because otherwise you don't see the whole picture." At each juncture, Mansoor felt the need to up his game and seek new challenges. Was he ever intimidated about leaving his comfort zone? "Unless you take risks, how do you stretch yourself and get what you want to achieve? Taking manageable risks is good," is his reply. So what led him to leave Tata after 12 years? Starting anew "It came to a point where everything seemed perfect," Mansoor answers. "The concern was becoming complacent." An opportunity then arrived for a senior role in Tata overseeing marketing for the Mercedes brand, which he applied for. "HR intervened and said I was growing too fast and making it difficult for them to manage my batch mates," Mansoor says exasperatedly. "It was not meritocracy. I was pissed off. A year later the national head of dealer position opened up. I told HR I didn't want to hear the same thing and applied for it. Again, I was the best candidate but was denied the job," he explains, adding that he became disillusioned. It was around this time that Mansoor was headhunted by Sweden-based AB Volvo, the world's third largest maker of heavy duty trucks. The Stockholm-listed multinational used to produce cars as well as commercial vehicles but hived off its car division to Ford in 1999 for US$6.45bil. This was later sold to China's Zhejiang Geely Holdings in 2009 for US$1.8bil, making it then the largest overseas acquisition by a Chinese automaker. Both Volvo and Geely share the Volvo trademark, the former for its heavy vehicles and the latter for Volvo automobiles. Mansoor still remembers heading out at 4am for the interview to make his way across the 250km between Delhi and Chandigarh where he was working. Sufficiently impressed with what he saw and the executives he met, he took a leap of faith and agreed to join Volvo. "Tata tried to convince me to stay. But I had made my decision," Mansoor remarks. In 1997, he moved over to Volvo as its regional head for India, initially working out of the Swedish embassy as the company had yet to set up an office. "I was coming from an influential job in Tata and making huge sales. Now I had to begin from scratch," he emphasises. The obstacles, he shares, were many and varied. "We had to sell vehicles that were much more expensive, craft the value proposition, communication strategy, shelf life, efficiency. "We bundled in cashless insurance, the first of its kind in India, assisted customers with financing their vehicles and operated 24-hour maintenance services. Even the car industry had not attempted that before." In Volvo, a project Mansoor helped pioneer was the Asia trucks organisation, an assignment which posted him to Beijing, China for four years. "Earlier, our brands (Volvo, Renault, Nissan, and Mack) were run vertically and competing with each other," he observes. "We created the organisation to centralise operations and make decisions on group strategy for all the brands. It was the first time we did something like this and it was very successful, so much so that the US market followed suit later." Local leadership Having come on board in September last year, Mansoor has helmed Volvo's Malaysian business for about a year now. Elaborating on his plans, Mansoor says he intends for the firm to be no.1 in terms of brand, sales as well as customer satisfaction. "We want to be a dominant player in the truck business. There is a lot infrastructure development going on and we want piece of the pie. Despite the threat of a recession and stagnant growth in the US and Europe, Volvo's local operations have done commendably, selling some 200 units in the year to July, exceeding what it sold for the whole of last year. Mansoor adds that the company's market share had improved to 32% from 27% a year earlier, against a 25% rise in total industry volume. Asked to describe his leadership style, Mansoor says he is consensual rather than dictatorial. "Singularly I cannot think of all the solutions. Alone I am nothing," he explains, guru-like. Something Mansoor stopped doing a long time ago was writing poetry. He assures, nonetheless, that he has no regrets leaving it behind. "I still found ways to channel my creative impulses, for example in marketing," he quips. On the management lessons gleaned throughout his 25-year career, the one that has stuck with him is to do right by the customer. "It is when you least feel like meeting your customer that you should meet him the most," Mansoor says. "If he is angry, you are giving him an opportunity to scream at you so he can empty himself. Then he will listen to your viewpoint. That is how you create a better relationship." Next to that, Mansoor adds, is to tell the truth. "I once told a buyer his truck would not come for four months, although my boss told me to do otherwise. It is pointless to lie knowing full well you can't deliver. "Be honest and let the customer know the real situation. If I lie and tell him the truck will be ready in two months, and I fail to deliver, he will come every day to curse me until I give him the vehicle. At the end of it, you would have lost a customer." BORN: 1961, India PERSONAL: Married with daughter and son HIGHEST QUALIFICATION: Degree in mechanical engineering, diploma in marketing management NOTEWORTHY: A change agent FAVOURITE FOOD: Mughlai cuisine FAVOURITE PLACE: US west coast, Malaysia, Beijing, and Bangalore HOBBY: Reading about a wide range of subjects VALUES: Integrity, loyalty, honesty, and spiritually awakened INSPIRATION: My father, who rose from an extremely humble background to a senior bureaucrat advising various finance ministers, some of whom became prime ministers and presidents of India. |
| Making Asean trade more accessible Posted: 21 Sep 2012 10:38 PM PDT THE establishment of the Asean Trading Link plays quite a large role in facilitating and increasing the accessibility of inter-Asean trade. The link provides the connection on a single platform for seven different exchanges in six different countries to create more investment alternatives for investors. Bursa Malaysia, Hanoi Stock Exchange, Hochiminh Stock Exchange, Indonesia Stock Exchange, The Philippine Stock Exchange, Singapore Stock Exchange and the Stock Exchange of Thailand had decided to collaborated under Asean Exchanges to drive Asean investment opportunities to other countries and to build Asean to have a world benchmarked asset class. However, the connected exchanges would not be able to function well if not for a technologically advanced platform that would enable the connection in the first place. Software and technology company SunGard, took on the onus of creating a trading platform for the purposes of the link. In June, the company announced that it had been selected for the task. Now, SunGard in Singapore supplies the infrastructure for the link via its trading solution suite Valdi. Investors are now able to route orders to the two exchanges that have joined the link, namely the Singapore and Malaysia exchanges, and receive market data from each via the central point of connection. Account director for South-East Asia and India for SunGard's capital markets business Mathias Bellancourt tells StarBizWeek that the link would enable larger brokerage firms to have access to multiple trading platforms but this may require a significant investment from the brokerages to have ease of facilitating trades. "The Asean Trading Link enables access through existing infrastructure to the respective exchanges, thus allowing brokers to focus on business and building key relationships, reducing the need to focus on connectivity," he says. He adds that the smaller brokerages that tend to focus on domestic markets are now able to immediately broaden their products and services to their clients. The trading link provides Asean exchanges, which are currently the Malaysian, Singaporean and soon-to-join Thailand exchanges with the ability to electronically facilitate cross-border trades. Bellancourt says the system has been designed to match the standard of the exchanges. Should a higher capacity be required in future, the link can easily be upgraded. "It has been through rigorous testing to ensure that it is on par with the standards set by the exchanges and compliant with local regulatory requirements," he says. He adds that the measure of the infrastructure's complexity is relative to the different geographical areas, in view that the link connects exchanges and multiple brokers in different Asean countries. "The link has been designed to be an "out-of-the-box" solution where an institutional investor already connected to one of the participating exchanges, can start accessing the link using their existing setup (with the necessary commercial arrangements with the exchanges in place)," he says. With trading solutions that have been used worldwide by brokers, investors need not worry as much, and have peace of mind in terms of the security and effectiveness of the link. Participants of the exchange will have to wait-it-out to see if the system proves to be sufficient and effective enough. In a statement that was released earlier in June, SunGard president of global trading business Raj Mahajan says: "SunGard's strategy is to help broker-dealers generate new revenue by helping them navigate the global trading environment cost-effectively." It is worth noting that the link will also be connected to the SunGard Global Network, so that brokers and investors alike can send orders to other participating Asean members. SunGard via its trade automation and activity solution system SunGard Global Network, and its trading solutions suite Valdi has supported accessibility into the Asean markets for many years. "We will now work with the Asean exchanges to tailor these technologies to their requirements," Mahajan says. The suite will provide global, multi-asset class order management, market access, liquidity and compliance management, as well as hosted services. "The challenges would relate more to managing the growth of our business with larger client bases in an efficient manner, which is a "good problem" to have, if anything," Mercury's Chew says. The trading link is promoting the Asean Stars, which feature a total of 180 blue-chip stocks representing 30 companies from each Asean country. These 30 companies are ranked by their investability in terms of market capitalisation and liquidity. "With the promotion of the Asean Stars from the exchanges now available through a single platform, it is also an important first step in introducing new investment opportunities to local investors," Bellancourt says. Related Stories: |
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