(13-04-2012, 12:17 PM)shanrui_91 Wrote: [ -> ]i remember reading somewhere that he will be staying on in this company and intending to let his son takeover or something like that.
As far as I am aware, his two sons are in senior roles within Boustead but not on the BOD or making any Group strategic decisions. But I guess in time to come, he should groom them towards that, assuming they have the aptitude and the attitude!
It is true that Boustead has many high profile failures during the last ten years.
However, has anyone objectively asked a very important question - how is it that its cash pile and investment property holdings have been swelling even after (i) writing off some of these failures (ii) consistently paying shareholders growing stream of dividends?
Sometimes, I also wonder why did Boustead walk away from obvious deals - such as the big box deal that is driving TT Int'l in the last week. Anyway, I am just happy to be a shareholder in a business that is modelled to well proven Buffet philosophy.
(13-04-2012, 03:57 PM)greengiraffe Wrote: [ -> ]Sometimes, I also wonder why did Boustead walk away from obvious deals - such as the big box deal that is driving TT Int'l in the last week. Anyway, I am just happy to be a shareholder in a business that is modelled to well proven Buffet philosophy.
Hi greengiraffe,
Not sure if you were present at last year’s AGM, but FF Wong did talk about the Big Box issue as one of the shareholder had asked them why they dropped the deal. Apparently, the Terms and Conditions which Boustead were subject to were kind of onerous and Boustead found that it was tough to make a decent case for investing in the project. Hence, FF Wong walked away from it after trying several times to re-negotiate it. Apparently, it was rather futile and I was glad the Group decided to make the decision to walk away instead of trying to worm its way in just because it was a high-profile project. No point being in the limelight while quietly bleeding cash.
Hi MW,
Thanks for your rewind. I missed the AGM due to my commitments.
I have uncovered some historical info on WRS:
http://www.ura.gov.sg/circulars/text/edb-press.pdf
After the initial 3 projects - Courts, Ikea and Giant in Tampines, WRS seemed to have stalled in the tracks with TT Int'l being the remaining one that has been licensed but yet to commence.
My own guess could be as follows:
Courts, Ikea and Giant are successful business that have little problems meeting the stringent requirements by 5th yr of the business.
Whereas TT Int'l's Akira - seriously i dun even know if it is in existence now. While it is true that following years of asset inflation, the site could be more valuable but with WRS restrictions (not exactly clear by the historical release), the site may not really be so valuable.
Layman usually gets excited and carried away by newsflow. While it is true that TT may have finally secured the much needed $, they are racing against time to finish the project with the 30 yr lease on the land running out since being 1st award in 2007. Following which, they must have a good flagship product to keep the entire complex buzzling. With TT's current product range, I honestly think that it is a big risks especially if authorities remained uptight with the usage of the land given the low cost of the land that was being transacted.
In summary, one should never use a straight comparison of asset value in the vicinity to assess the worth of TT's big box. Glad that Boustead walked away as Indian owned Sembcorb Engineers also walked away subsequently.
(13-04-2012, 05:37 PM)Musicwhiz Wrote: [ -> ] (13-04-2012, 03:57 PM)greengiraffe Wrote: [ -> ]Sometimes, I also wonder why did Boustead walk away from obvious deals - such as the big box deal that is driving TT Int'l in the last week. Anyway, I am just happy to be a shareholder in a business that is modelled to well proven Buffet philosophy.
Hi greengiraffe,
Not sure if you were present at last year’s AGM, but FF Wong did talk about the Big Box issue as one of the shareholder had asked them why they dropped the deal. Apparently, the Terms and Conditions which Boustead were subject to were kind of onerous and Boustead found that it was tough to make a decent case for investing in the project. Hence, FF Wong walked away from it after trying several times to re-negotiate it. Apparently, it was rather futile and I was glad the Group decided to make the decision to walk away instead of trying to worm its way in just because it was a high-profile project. No point being in the limelight while quietly bleeding cash.
I think the crux is that WRS requires TT to be the main lessee, resulting in any partner for the BigBox project to have < 50% stake.
TT, with its shaky finances, could come under the control of its creditors. So, if Boustead were to go to bed with TT, it could find itself with many other different ladies in the morning when he wakes up. What's worse is that the ladies call the shots with their aggregate majority stake!
(17-04-2012, 07:35 AM)greengiraffe Wrote: [ -> ]http://asx.com.au/asxpdf/20120417/pdf/42...x4fgyc.pdf
manganese price seems to have bottomed out... bottom fishing for Boustead?
Share price have held up well above A$0.40 against Boustead's placement purchase of A$0.35.
I was seriously conisdering starting a new thread just for OM Holdings!
What with the amount of news, numbers and statistics being churned out from the Company.
I hadn't looked at the report in full detail. Does it say Manganese prices have bottomed?
(17-04-2012, 07:43 AM)Musicwhiz Wrote: [ -> ] (17-04-2012, 07:35 AM)greengiraffe Wrote: [ -> ]http://asx.com.au/asxpdf/20120417/pdf/42...x4fgyc.pdf
manganese price seems to have bottomed out... bottom fishing for Boustead?
Share price have held up well above A$0.40 against Boustead's placement purchase of A$0.35.
I was seriously conisdering starting a new thread just for OM Holdings! What with the amount of news, numbers and statistics being churned out from the Company.
I hadn't looked at the report in full detail. Does it say Manganese prices have bottomed?
FF Wong is working hard for Boustead. As shareholders, its only fair that we as shareholders worked equally hard where information permits.
With the high profile interview that was done with Edge on both Boustead and OMH, it is worth tracking OMH as it may turn out to be a potentially big venture for Boustead.
As OMH may be considering a dual listing back in an Asean bourse, you may have a chance to start a new thread for OMH postings.
On Manganese prices, if the May spot price is indicative, then manganese prices may have bottomed out. However one swallow may not represent the arrival of summer.
Free site for commodity prices:
http://www.mineralprices.com/default.aspx
Omh is a big venture that is highly lucrative if there is no intervention from the government. To start off, the main purpose of manganese is as part of a raw material required in the steelmaking process where iron is turn into steel. Thus, demand for it is driven by demand for steel (94% of manganese are used for this purpose). 8-10 kg of manganese is required for every single ton of steel produced. Steel is used in the production of infrastructure and some other goods like automobile, which means that it is highly reliant on the economic condition. Other than steel, it is also used dry cell batteries and aluminum can.
For the supply side, big companies like BHP and Samancor have been cutting down on the production as the selling price is currently lower than the production cost. China has always been the largest supplier of manganese metal but the problem lies in that China’s ore are of a lousier grade. The trend continues that china’s manganese grade is dropping by 0.5% per year after having dropped 30% since 2002. High grade manganese ore are need in the production of refined Ferro manganese (1 of 3 grades of ferro manganese). One interesting thing regarding manganese is that, unlike other metals there is no economical way to recycle it from scrap metal which means this is a finite metal resources though there is still plenty of reserve around the world.
For manganese to be added to the steel-making process, it has to be turned into ferroalloy. During the production process, 40% of the cost lies in the manganese ore while another 25% lies in the electricity. This is why this Sarawak project can be so lucrative. They are promised 500 MW of competitively priced electricity for 20 years as well 5 years of tax holiday without any import or export taxes. This will make them the lowest cost producer of ferro manganese globally where many others are suffering from electrical and trade tariff. China, the largest producer of manganese imposed a 20% export tariff as it seeks to control outflow of natural resources as part of its energy and resources security policy. Other than this, half of the smelting production will be dedicated to ferro silicon where the electricity cost is as high as 45% of the production cost.
I believe that this is the competitive advantage that FF Wong sees in OMH which is its ability to be the lowest cost producer of ferro manganese and silicon in a commoditized business. Being a vertically integrated producer, it will be able to keep the cost of manganese ore (40% of production cost) low while enjoying low electricity cost (25% of production cost) at the same time. And while production will start in 2015, it has already signed a contract with JFE Shoji Trade Corporation to provide them with 100,000 tonnes of ferro silicon annually (total production of the plant is 600,000 tonnes pa).
The only caveat is that no one can be assured that environmental or nationalistic issue will not destroy the deal. This is part of the SCORE project where they are making use of the comparative advantage of Sarawak with its 28000 MW renewable supply of energy. Risk is mitigated by the fact that there are 2 other aluminum smelter plants and that it is stationed in an industrial park far away from the urban area. Singapore is a 710 square km piece of land with a population of 5m people. Sarawak is a 124,450 square km piece of land (175 x of Singapore) with 2.31 million people. Thus, even if it were to conduct pollutive activity in a land size of 50x Singapore, there will still be sufficient safe land for the purpose of accommodation.
For manganese price to resume its uptrend, global steel production needs to ramp up though supply has already begun to cut. Prices seemed to have bottomed due to the ability of the mining companies to cut production as a result of a highly concentrated industry.
(vested)
Shanrui,
Thanks for your thoughts and observations. Nice summary for Managnese and OM Holdings.
I guess only time will tell if this is a good investment decision on the part of FF Wong. He mentioned 5 years time horizon, but it seems many are already judging him based on 5 months LOL!
Jokes aside, I guess he is betting on the Sarawak Project being massively profitable and also having a deep competitive moat. These, plus the upswing in prices in the years to come, would benefit once Bootu maximises output and Tshipi Borwa comes on-stream.
Since you are vested, perhaps you will be attending the upcoming AGM? It's really refreshing to speak to the man himself as well as the very friendly IR Mr. Keith Chu.
