Double Disclosure - Better Than None At All
Journalism is alive and well in Singapore. At least, going by the number of companies that have made disclosures to the SGX about what transpired in an interview with the newswires.
Ezra is the latest example. This morning it said in a brief disclosure
"Ezra Holdings Limited ("company") wishes to elaborate on the circumstances of the interview between Mr Ovais Subhani of Reuters and Mr Lionel Lee, Ezra's Managing Director, leading to the attached article released by Reuters on 29 June 2006. The profit-related figures of 45% and S$52.3 million appeared in an analysts' forecasts compilation of Reuters, on which he was asked for his view or opinion; Mr Lionel Lee did not give the figures, neither were the figures generated by the company nor were these figures forecasts or prospective statements by the company. The statements relating to these figures should be viewed in these circumstances and the public is advised that they should adopt a holistic approach to decisions involving shares of the company."
The folks at Reuters are bound to be getting smug about the fact that their name keeps cropping up in corporate disclosures. I'd like to know how come we're not seeing this when Bloomberg and Dow Jones reporters go out and interview chief executives? Knowing the "eager beavers" at Bloomberg – many of them personally – the mere fact Reuters are conducting interviews gets them into the news will trigger a few patronising sniggers in Capital Square.
Leaving that aside, the point I am particularly pleased about is that CEOs are at least still talking. Eversince Henn Tan, CEO of Trek2000, paid S$75,000 in a civial penalty on April 4, 2006, for telling a Reuters journalist on January 19 that he expected sales and earnings to grow by 20% to 25% over the next three to five years, my fear was that corporate chiefs would just stop giving interviews. It's difficult enough to get answers out of many of them because they are too scared to run foul of the regulator.
Don’t get me wrong – the market should be the first to be informed of any guidance or other significant developments or material announcements. It's good these companies are overdisclosing. It shows the regulatory regime in Singapore is respected. I don't think anyone disputes that.
But for companies to simply zip up their lips and refuse to talk for fear of saying something wrong would have been – in my opinion – the wrong decision for the companies involved, bad for the news business, and worst of all a bad decision for investors who rely on reporters to fossick out interesting snippets of information (pardon the pun, my friends at DJ). It's often these snippets, insights and colour that make the difference between investors paying attention or not.
So, kudos to you, Lionel Lee and the corporate communications people at Ezra, for not only taking part in the interview, but also making the story available to the rest of the market in keeping with timely disclosure.
Ezra is the latest example. This morning it said in a brief disclosure
"Ezra Holdings Limited ("company") wishes to elaborate on the circumstances of the interview between Mr Ovais Subhani of Reuters and Mr Lionel Lee, Ezra's Managing Director, leading to the attached article released by Reuters on 29 June 2006. The profit-related figures of 45% and S$52.3 million appeared in an analysts' forecasts compilation of Reuters, on which he was asked for his view or opinion; Mr Lionel Lee did not give the figures, neither were the figures generated by the company nor were these figures forecasts or prospective statements by the company. The statements relating to these figures should be viewed in these circumstances and the public is advised that they should adopt a holistic approach to decisions involving shares of the company."
The folks at Reuters are bound to be getting smug about the fact that their name keeps cropping up in corporate disclosures. I'd like to know how come we're not seeing this when Bloomberg and Dow Jones reporters go out and interview chief executives? Knowing the "eager beavers" at Bloomberg – many of them personally – the mere fact Reuters are conducting interviews gets them into the news will trigger a few patronising sniggers in Capital Square.
Leaving that aside, the point I am particularly pleased about is that CEOs are at least still talking. Eversince Henn Tan, CEO of Trek2000, paid S$75,000 in a civial penalty on April 4, 2006, for telling a Reuters journalist on January 19 that he expected sales and earnings to grow by 20% to 25% over the next three to five years, my fear was that corporate chiefs would just stop giving interviews. It's difficult enough to get answers out of many of them because they are too scared to run foul of the regulator.
Don’t get me wrong – the market should be the first to be informed of any guidance or other significant developments or material announcements. It's good these companies are overdisclosing. It shows the regulatory regime in Singapore is respected. I don't think anyone disputes that.
But for companies to simply zip up their lips and refuse to talk for fear of saying something wrong would have been – in my opinion – the wrong decision for the companies involved, bad for the news business, and worst of all a bad decision for investors who rely on reporters to fossick out interesting snippets of information (pardon the pun, my friends at DJ). It's often these snippets, insights and colour that make the difference between investors paying attention or not.
So, kudos to you, Lionel Lee and the corporate communications people at Ezra, for not only taking part in the interview, but also making the story available to the rest of the market in keeping with timely disclosure.
Is Lee Hsien Yang Getting Paid Enough?
I know I'm not going to win any friends by saying this, but I don't think Lee Hsien Yang is getting paid enough, as CEO of Singapore Telecom.
The latest annual report shows he got paid 4.2% more at S$2.22 mln in cash for the year ending March 31, 2006. He also got 1.64 million performance shares, which are worth far more than the cash salary.
So why don't you come out now with your comments, about how he's just there because he is Lee Kuan Yew's son and Lee Hsien Loong's brother. Or that it's all his underlings who do all the real work. Let's get that out of the way, so I can tell you what I see is really going on.
Having interviewed Lee Hsien Yang many times for CNBC and MediaCorp Radio, my assessment is this:
It was Lee Hsien Yang who put SingTel on the map. His strategy of buying or buying stakes in Bharti, Advanced Info Service, Telkomsel, Optus and others was brilliant.
Arguably, it should have been the other way around in many of these cases. Given the size of the Australian and Thai populations, it should have been Optus or AIS that should have bought out SingTel!
But they didn’t.
Few other telcos have the same bragging rights as SingTel does.
Look at the shambles Telstra got itself into with its ill-fated PCCW deals six years ago!
What pan-Asian strategy do the players have which SingTel has invested in?
And meantime, where is Telekom Malaysia? A near-30% stake in MobileOne isn't going to give them a pan-Asian strategy.
Granted, they have larger domestic markets to contend with and in some cases, such as Telekom New Zealand and Telstra, pretty onerous obligations to look after their domestic customer base first – particularly in rural areas.
SingTel had to go out and invest in telcos around the region.
But SingTel is the only one that has really made a go of it.
All that means that shareholders got paid more, too.
There's the proposed S$2.3 bln capital return and a hike in the dividend.
That should be good compensation for investors who bought at the five year high of S$2.84 set eleven months ago, and analysts surveyed by Reuters are predicting the stock will rise to S$3.
So I say: good on him, and he deserves every cent of the money he got!
The latest annual report shows he got paid 4.2% more at S$2.22 mln in cash for the year ending March 31, 2006. He also got 1.64 million performance shares, which are worth far more than the cash salary.
So why don't you come out now with your comments, about how he's just there because he is Lee Kuan Yew's son and Lee Hsien Loong's brother. Or that it's all his underlings who do all the real work. Let's get that out of the way, so I can tell you what I see is really going on.
Having interviewed Lee Hsien Yang many times for CNBC and MediaCorp Radio, my assessment is this:
It was Lee Hsien Yang who put SingTel on the map. His strategy of buying or buying stakes in Bharti, Advanced Info Service, Telkomsel, Optus and others was brilliant.
Arguably, it should have been the other way around in many of these cases. Given the size of the Australian and Thai populations, it should have been Optus or AIS that should have bought out SingTel!
But they didn’t.
Few other telcos have the same bragging rights as SingTel does.
Look at the shambles Telstra got itself into with its ill-fated PCCW deals six years ago!
What pan-Asian strategy do the players have which SingTel has invested in?
And meantime, where is Telekom Malaysia? A near-30% stake in MobileOne isn't going to give them a pan-Asian strategy.
Granted, they have larger domestic markets to contend with and in some cases, such as Telekom New Zealand and Telstra, pretty onerous obligations to look after their domestic customer base first – particularly in rural areas.
SingTel had to go out and invest in telcos around the region.
But SingTel is the only one that has really made a go of it.
All that means that shareholders got paid more, too.
There's the proposed S$2.3 bln capital return and a hike in the dividend.
That should be good compensation for investors who bought at the five year high of S$2.84 set eleven months ago, and analysts surveyed by Reuters are predicting the stock will rise to S$3.
So I say: good on him, and he deserves every cent of the money he got!
Give it up, PacNet
Everyone loves a good takeover battle, but the sparring over Pacific Internet is getting a little tedious – largely because so little has happened.
The reason for this is largely that PacNet does not seem to have any strategy other than to wait for a higher price to be offered. And as we’ve seen, that strategy is coming to its inevitable end.
Consider the facts.
MediaRing announced on February 27 that it was going to make an offer for PacNet, but not until it got the relevant regulatory and shareholder approval.
Those didn’t come through until April 26 – two months later!
If PacNet talked to potential counterbidders during that time, they seemingly weren’t prepared to pay US$8.25 – otherwise such a rival bid would have already been forthcoming before MediaRing even officially launched its bid.
Another month passed before, on May 24, MediaRing’s formal offer arrived in the letter boxes of the shareholders. Vantage Corp, for one, took another week to confirm their rejection of the offer.
Another three weeks passed before MediaRing finally raised its offer price to S$9.50, valid until July 10.
Critically, it declared that offer final – meaning it cannot now raise its bid again if PacNet shareholders to continue to reject it.
The problem for those shareholders is that US$9.50 is below the US$10-US$12 per share valuation KPMG gave it.
I have no reason to doubt KPMG’s methodology or impartiality. It would be as impartial as any of the big financial advisory houses, when advising paying clients how much their company is worth.
But the fact is that no matter what anyone says PacNet is worth – if the market says that PacNet is only worth so-and-so much, then that is all the stock is worth.
That’s the difference between value and price.
We all like to think we, our houses, our cars and our stocks are worth a lot.
But if the market disagrees we can either take what’s on offer or leave it.
In the absence of a higher offer from a rival bidder, PacNet will face the same choice. But increasingly, that choice is being made for it.
Look at the current stockprice: US$9.37! In other words, the market last Friday night priced it 13 cents below the offer price.
The last time the market priced it at these levels was two years ago, and until MediaRing’s offer came around seemed to be stuck between US$6 and US$7 for at least a year.
In the aftermath of the tech bubble it was worth less than US$2.
Tan Tong Hai – now at Singapore Computer Systems – has done an excellent job of turning PacNet around, but how much more could he do with the company?!
As an observer, it seems to make a lot of sense to merge with MediaRing, given their seemingly complementary offerings.
My personal prediction is the shareholders who will turn up to the annual general meeting on June 30 at 3pm at the Singapore Science Park will agree with me.
Like management, they might also prefer to hold out to a higher price.
But like me, they might also come to the realisation that a similar offer might be at least another year away, if not longer.
As for management, my prediction is that come July 10 PacNet will either have accepted the offer (most likely scenario, in my opinion) or the following Monday the stock is going to plunge back to its earlier pre-MediaRing price.
If there are any white nights coming to the rescue, they’d better have a fast horse and bags of gold in the saddle.
Mark Laudi
The reason for this is largely that PacNet does not seem to have any strategy other than to wait for a higher price to be offered. And as we’ve seen, that strategy is coming to its inevitable end.
Consider the facts.
MediaRing announced on February 27 that it was going to make an offer for PacNet, but not until it got the relevant regulatory and shareholder approval.
Those didn’t come through until April 26 – two months later!
If PacNet talked to potential counterbidders during that time, they seemingly weren’t prepared to pay US$8.25 – otherwise such a rival bid would have already been forthcoming before MediaRing even officially launched its bid.
Another month passed before, on May 24, MediaRing’s formal offer arrived in the letter boxes of the shareholders. Vantage Corp, for one, took another week to confirm their rejection of the offer.
Another three weeks passed before MediaRing finally raised its offer price to S$9.50, valid until July 10.
Critically, it declared that offer final – meaning it cannot now raise its bid again if PacNet shareholders to continue to reject it.
The problem for those shareholders is that US$9.50 is below the US$10-US$12 per share valuation KPMG gave it.
I have no reason to doubt KPMG’s methodology or impartiality. It would be as impartial as any of the big financial advisory houses, when advising paying clients how much their company is worth.
But the fact is that no matter what anyone says PacNet is worth – if the market says that PacNet is only worth so-and-so much, then that is all the stock is worth.
That’s the difference between value and price.
We all like to think we, our houses, our cars and our stocks are worth a lot.
But if the market disagrees we can either take what’s on offer or leave it.
In the absence of a higher offer from a rival bidder, PacNet will face the same choice. But increasingly, that choice is being made for it.
Look at the current stockprice: US$9.37! In other words, the market last Friday night priced it 13 cents below the offer price.
The last time the market priced it at these levels was two years ago, and until MediaRing’s offer came around seemed to be stuck between US$6 and US$7 for at least a year.
In the aftermath of the tech bubble it was worth less than US$2.
Tan Tong Hai – now at Singapore Computer Systems – has done an excellent job of turning PacNet around, but how much more could he do with the company?!
As an observer, it seems to make a lot of sense to merge with MediaRing, given their seemingly complementary offerings.
My personal prediction is the shareholders who will turn up to the annual general meeting on June 30 at 3pm at the Singapore Science Park will agree with me.
Like management, they might also prefer to hold out to a higher price.
But like me, they might also come to the realisation that a similar offer might be at least another year away, if not longer.
As for management, my prediction is that come July 10 PacNet will either have accepted the offer (most likely scenario, in my opinion) or the following Monday the stock is going to plunge back to its earlier pre-MediaRing price.
If there are any white nights coming to the rescue, they’d better have a fast horse and bags of gold in the saddle.
Mark Laudi
Should property developers give special discounts to family members and business associates?
That's the question I'm asking, prompted by two announcements in the last week.
First, City Developments' Chairman Kwek Leng Beng sold a unit in the new St. Regis development - the one in which a serviced apartment was recently sold for S$3,000 per square foot - to his wife, and another to his sister.
They received discounts of 17% and 15% respectively.
Second, Fraser Centerpoint sold a unit in its Jervois development at a 15% discount to a person connected to the company.
How fair is this?
Well, personally I don't think this should be an issue in these two cases.
First, because it was properly disclosed. The sales we need to worry about are those we read about in the press. By making the correct disclosure to the Singapore Exchange these companies have laid themselves bare to scrutiny and comment from people like me.
Second, the buyers of these units are not politicians, public servants, or other people who the company is potentially trying to curry favour with.
Third, the people who bought the properties got discounts no greater - according to the companies, at least - than members of the public. That said, an additional loyalty discount or directors discount were applied in these two cases, and there could be an argument that they shouldn't have got any additional discounts. Afterall, they already got 15% discounts!
ArchivesFirst, City Developments' Chairman Kwek Leng Beng sold a unit in the new St. Regis development - the one in which a serviced apartment was recently sold for S$3,000 per square foot - to his wife, and another to his sister.
They received discounts of 17% and 15% respectively.
Second, Fraser Centerpoint sold a unit in its Jervois development at a 15% discount to a person connected to the company.
How fair is this?
Well, personally I don't think this should be an issue in these two cases.
First, because it was properly disclosed. The sales we need to worry about are those we read about in the press. By making the correct disclosure to the Singapore Exchange these companies have laid themselves bare to scrutiny and comment from people like me.
Second, the buyers of these units are not politicians, public servants, or other people who the company is potentially trying to curry favour with.
Third, the people who bought the properties got discounts no greater - according to the companies, at least - than members of the public. That said, an additional loyalty discount or directors discount were applied in these two cases, and there could be an argument that they shouldn't have got any additional discounts. Afterall, they already got 15% discounts!
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