Short Position; Magnum, Gojek, YNH Property,


Competition in ride hailing welcomed

Magnum’s jackpot against illegal operators

THE effect of having a cascading jackpot by Magnum Bhd is proving to be a recipe for its fight against illegal operators.

In its latest set of results, Magnum stated that the numbers improved due to the prolonged run on its jackpot, higher sales from the classic 4D games and stricter enforcement on illegal operators.

The improved set of results came even though the company had two fewer draws. In the first quarter, Magnum had four fewer draws but the numbers were beefed up due to the Chinese New Year festivities.

In the second quarter, the jackpot prize-money hit RM33.2mil as of July before a punter from Melaka claimed the scalp. The jackpot amount is the second highest for Magnum, with the highest amount standing at RM33.8mil.

Now that the jackpot has already been claimed, the pressure could be on Magnum’s earnings next quarter. Unless, punters find the prize money attractive in the other games the numbers forecast operator (NFO) offers.

The fight against illegal operators has been a long drawn-out battle for not only Magnum but the other NFOs as well. And the NFOs have been at the losing end most of the time due to various reasons.

Based on numbers, the attraction for NFOs gained momentum as the size of the jackpot increases.

Going forward, it looks like the number of draws that the NFOs are permitted to hold is on a reducing trend. Fewer number of draws means less revenue for the companies.

Fortunately, enforcement has stepped up. However only a sustained enforcement action will be effective in keeping the illegal operators at bay. On this score, it is highly doubtful if the authorities are able to combat the illegal operators on a sustained basis.

Hence, a longer-term solution appears to be a bigger pay out in the prize money such as the RM32mil jackpot. It seems to have paid off for Magnum, at least based on the second quarter results.

Competition in ride hailing welcomed



THE recent planned entry of motorcycle e-hailing app Gojek has caused a fair bit of excitement and even consternation.

E-hailing took the limelight this week when Youth and Sports Minister Syed Saddiq Syed Abdul Rahman arranged a meeting between Gojek founder, Nadiem Makarim, and Prime Minister Tun Dr Mahathir Mohamad and Transport Minister Anthony Loke.

When Syed Saddiq broached the subject of Gojek’s entry into the country, the matter drew some criticisms, with some accusing the minister of aiding the expansion of a foreign company rather than supporting homegrown start-ups.

However most people are missing the point. Gojek is not just about motorcycles. It is a ride hailing and last mile company, so its services will be tailored to the local market.

For example in Singapore, Gojek is only offering ride hailing for cars at the moment, via Go Car.

If Gojek could offer ride hailing for cars in Malaysia, it would be a worthy competitor for Grab.

What is absent now in the Malaysian market is a good competitor for Grab.

Following the Uber-Grab merger in Malaysia, there has been a dramatic rise in the number of complaints lodged against Grab services, namely price hikes and unsatisfactory service.

Grab is such a dominant player now, and there aren’t any local start-ups that can really compete with it.

Should Gojek’s car e-hailing become a reality here, consumers can expect Grab and Gojek, which is backed by Google, Tencent and Visa, among others, to fight it out toe-to-toe, just like what they are currently doing in Indonesia.

Furthermore, while Gojek’s journey began in 2010 as a motorcycle ride-hailing call centre in Indonesia, the app has evolved to offer more than 20 services today other than just carrying passengers.

In Gojek’s other markets such as Indonesia, Vietnam and Thailand, passengers have an array of services from food delivery, grocery shopping, beauty services, bill payments, purchasing movie tickets, house cleaning services and many more.

Thus, Malaysian consumers should welcome the entry of Gojek. If you thought that Gojek only does low end bike rides, think again.

Irrational exuberance

SHARES of YNH Property Bhd have been riding high since April, peculiar considering the property sector is in the doldrums, and market conditions aren’t anywhere near conducive. Bursa Malaysia is down some 5% on a year-to-date basis.

YNH’s shares are up some 98% on a year-to-date basis, at its last traded price of RM2.57. At YNH’s net tangible asset of RM1.73, this means that the stock is trading at a price-to-book ratio of 1.98 times.

While price earnings ratio (PER) is not a good valuation indicator for property companies considering their earnings tend to be lumpy, YNH is presently trading at a PER of 76.76 times.

In the last 30 days, YNH’s daily trading volume has averaged 1.73 million shares, which means, that trading has not been that heavy.

So just why have the shares spiked up so much?

As most people know, the major shareholder of YNH is Datuk Yu Kuan Chon, who owns a direct stake and indirect stake of 24.4% and 8.17% respectively in the company.

Filings in Bursa Malaysia show that Yu has been actively buying and disposing of YNH shares over the last few months. The volumes that he buys and sells aren’t that big too.

For instance on Aug 16, he sold 1.8 million YNH shares. Yu’s trading in his shares is nothing new. He does this for the other companies that he has strategic stakes too, for example in IMASPRO Corp Bhd and RAPID SYNERGY BHD.

One reason for YNH’s rise could be the fact that Aberdeen Asset Management ceased to be a substantial shareholder since Feb 25. Aberdeen has been a shareholder in YNH roughly since 2010.

For the last few years prior to this, shares of YNH have more or less been moving sideways. Perhaps Aberdeen’s exit finally allowed the overhang in the shares to clear.

In recent years, Yu has made a name for himself by taking up strategic stakes in little-known companies. In March 2015, he emerged in little-known-but-cash-rich Imaspro with slightly more than 5%.

He subsequently raised his stake in the pesticide and fertiliser maker, now owning 15.5%. He is also a substantial shareholder of semiconductor firm Rapid Synergy with a direct and indirect stake of 24.3% and 6.96% respectively.

Results wise, YNH’s first quarter results for March 31,2019 showed growth but was nothing out of the ordinary. Net profit rose to RM7.28mil from RM5.19mil in the same quarter of the previous year.

Revenue was slightly down at RM74.8mil from RM79.35mil previously. YNH is set to announce its second quarter results ended June 30,2019 come Aug 29.

Numbers and quotes:

The Alter​tnative view:

One of the reasons why some households among the middle and lower class are able to do better is because of the gig economy. Nowadays, it’s quite common to see middle class and lower income people driving a grab or riding a motorcycle to deliver food. — M. Shanmugam

‘The current range of Proton models is highly competitive and technologically advanced with features that appeal to the new generation of car buyers.’ — Fook Loi Corp (Sabah) Sdn Bhd executive director Thomas Chiu

Tourist receipts up:

Malaysia welcomed a whopping 13.35 million international tourists and recorded a 6.8% growth in tourist receipts, thus contributing RM41.69bil to the country’s revenue during the first half this year.

How one plans the space in a house – every little spark of an idea — has an impact on the design and the people who live in that house. says <a href='/business/marketwatch/stocks/?qcounter=MAHSING' target='_blank'>MAH SING GROUP BHD</a><a href='http://charts.thestar.com.my/?s=MAHSING' target='_blank'><img class='go-chart' src='https://cdn.thestar.com.my/Themes/img/chart.png' /></a> group strategy and operations director Lionel LeongHow one plans the space in a house – every little spark of an idea — has an impact on the design and the people who live in that house. says Mah Sing Group Bhd group strategy and operations director Lionel Leong

Lionel Leong


   

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