'Reading' faces of Asia's most prominent tycoons

This is the first of a three-part series featuring extracts and information from Faces Of Fortune, a new book that ‘reads’ the faces of 20 of Asia’s most prominent tycoons.

DO you know that simply by looking at a person’s face, you can tell his character and where he’s headed – that is, if you know the Chinese art of face reading, or Mian Xiang.

In ancient times, Mian Xiang was used by the emperors to choose imperial officers and masters, their disciples.

In Faces Of Fortune, author Tee Lin Say uses Mian Xiang to pick out 20 of Asia’s most prominent tycoons, and then explain why investors should place money on their companies over the next 10 years.

Datuk Seri Nazir Razak, CIMB Group

Datuk Seri Nazir Razak’s cheekbones pack willpower.

Nazir Razak is the youngest son of Malaysia’s second Prime Minister, and the brother of Datuk Seri Najib Tun Razak, the current PM. He is also the brainy group chief executive officer of the country’s premier investment bank, CIMB Group Holdings Bhd.

Early this month, speculation was rife that CIMB was thinking of acquiring RHB Capital Bhd. Now that this has come to an premature end, does this mean CIMB will be wedged in its consolidation phase, or are there bigger things in store from Nazir?

Looking at Nazir’s features, it’s pretty obvious that the best is yet to come for CIMB. We would safely say that the stock is a screaming buy at this point.

In 2012, Nazir will be 45 years old, or 46 in Chinese years. In Mian Xiang, this age point is represented by the left cheekbone.

The cheekbones represent not just Nazir’s age luck, but also his willpower and ability to wield power. And he sure has loads of that.

A major part of Nazir’s success at CIMB was achieved during his thirties, when the age points were in his eyes. But his eyes cannot quite compare with the width and size of his mouth.

In Mian Xiang, a big mouth signifies influence, power and lots of clout. Have you ever seen a tycoon with a small mouth? Rarely.

When Nazir turns 52, the age point will go to his superior mouth. So don’t be surprised if CIMB is an entirely different entity six years from now. It might even own an American bank by then!

We do not foresee organic growth for CIMB. Based on Nazir’s face, the company’s sensational ride will continue right into his fifties.

Tan Sri Quek Leng Chan’s most outstanding feature is his lips.

Tan Sri Quek Leng Chan, Hong Leong Group

Hong Leong’s Tan Sri Quek Leng Chan is famed for buying low and then selling for a tidy profit, a skill he has mastered over the years.

Investors may recall that in 2001, he pocketed RM11.bil – the highest price ever paid for an Asian bank – when he sold his controlling stake in Dao Heng Bank of Hong Kong to Singapore’s DBS Bank.

It certainly looks like the elusive Quek is coasting on second wind at the age of 71: Hong Leong recently acquired EON Capital Bhd for RM5.06bil, a move that makes it the fourth largest bank in Malaysia.

What is in his face that tells us this “master dealmaker” still has the appetite and drive for acquisitions and opportunities?

His triangle-shaped eyes burn with Sha-qi a fire that reveals “ambitions that need to be achieved”. Such eyes reflect a person whose mind is alert. He is hardly naïve and is unlikely to be swindled in the game of business.

Quek’s most outstanding feature is the corners of his lips. This area, known as the Jin Lu (meaning Gold Point), represents the ability to persuade or influence others, be it with words or sheer physical presence.

Quek’s Jin Lu is well-defined and long, a strong sign that we are looking at a man who is adept at making deals.

On top of that, his lips are flagged. A flagged mouth is one where the middle indentation on the upper lip forms the letter ‘M’. This denotes that Quek is very skilful in negotiation and has the gift of persuasion. What he says has a big impact on others.

Watch his moves as things are about to get very interesting for the Hong Leong Group.

Tan Sri Lee Shin Cheng has unique ‘killer eyes’.

Tan Sri Lee Shin Cheng, IOI Corp Group

Plantation conglomerate IOI Corp Bhd is currently involved in a tangle with The Roundtable On Sustainable Palm Oil (RSPO) over land disputes and illegal deforestation.

Some analysts say IOI’s reputation will be dented, and as a result, there will be downside pressure on the stock in the short-term.

Well, if only these analysts knew Mian Xiang. Then they would say that the dispute is merely a glitch when viewed alongside the grand slam that chairman Tan Sri Lee Shin Cheng is poised to deliver.

In fact, now is the best time to participate in the company’s growth because when Lee turns 73 in 2012, his luck cycle will improve substantially.

If you know face reading, you’ll see that Lee’s Mian Xiang is an open book of triumph because his face qi is glowing.

The easiest way to evaluate whether a person is experiencing good luck is to look at the qi of his face and eyes. Lee’s eyes are extremely sharp and alert. This signifies a strong spirit and hunger for more. The tips slant upwards, which shows that no detail escapes him. With such eyes, you can be sure that he’s still calling the shots in IOI.

Lee has one feature that is quite unique. Look closely and you will see a line that cuts into his Life Palace, that is, the space between the eyebrows. In Mian Xiang, this is called the Needle Piercing into the Life Palace.

You have to be pretty accomplished to handle the Needle. It pinpoints intelligence and shows that Lee is ahead of the game. Here is someone who is able to pick up cues before others even realise they are there.

Consensus on IOI’s stocks may be neutral now, but looking at Lee’s “killer” eyes, it’s obvious he will not be satisfied with rewarding shareholders with mere dividends.

‘Faces of Fortune: The 20 Tycoons To Bet On Over The Next 10 Years’ will be available at Joey Yap’s ‘Wealth & Destiny’ seminar in Kuala Lumpur on July 31, and leading bookstores from August. Visit masteryacademy.com or call 03-2284 8080.

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Parent firm gives IOI Properties the edge

Tuesday, June 23, 2009

Artist’s impression of Pinnacle Collection. Datuk Lee Yeow Chor (inset) says the company is closely monitoring the Singapore property market to ensure the timely launch of the projects

IOI Properties Bhd will be leveraging on the financial strength of its parent, IOI Corp Bhd, to build a greater presence in the Klang Valley and Singapore property markets.

Since being taken private in April, the 95.33% subsidiary of IOI Corp has greater liberty to plan and decide on the direction and projects it wants to undertake.

IOI Corp group executive director Datuk Lee Yeow Chor said although the level of activities would not change much from what the company had done previously, it was in a better position to leverage on the group’s financial strength to facilitate funding requirements for land acquisitions and move projects ahead.

According to Lee, property is all about holding power and having the financial strength to hold out and mitigate against the prevailing challenging market conditions, including slow sales; are important for property companies.

Despite the severe market crunch in Singapore since February last year, IOI Properties proceeded with the construction of its Seascape Collection residences on Sentosa Cove. The construction of the project has reached 40% to-date.

The 1.44-ha Seascape project is a 50:50 joint venture between IOI Properties and its Singapore partner, Ho Bee Investment Ltd.

It comprises two eight-storey condominium blocks of 151 units of various sizes, tentatively priced from S$2,500 to S$2,800 per sq ft.

IOI’s second project in Singapore, the Pinnacle Collection – which is 65%-owned by IOI Properties and 35% by Ho Bee – will be undertaken by Pinnacle (Sentosa) Pte Ltd. The 2.12-ha site was tendered for S$1.1bil.

The 99-year leasehold land is the final piece of condominium land to be launched by Sentosa Cove and has a maximum permissible gross plot ratio of 2.6.

The site will have seven 18-storey blocks and one 20-storey block of luxurious condominiums. It is one of the two condominium parcels flanking the entrance of the marina leading into Sentosa Cove.

Lee said the launch of The Pinnacle would depend on the take-up for the Seascape residences.

IOI has plans for a third project in the city state, comprising medium to medium high-end residences on a 1.44-ha site near Novena Square and Orchard Road.

He said the company was closely monitoring the Singapore property market to ensure the timely launch of the projects to optimise their value.

“The completion of the two integrated resorts in Singapore later this year will be the catalyst for further economic growth and market upturn in the city state,” Lee said.

In the last two months, the market for medium to mid-high end property in Singapore had shown encouraging signs of an upturn, he added.

Things are also looking up for the Klang Valley property market and demand is expected to recover by year-end.

For the financial year ending June 30, 2010 (FY10), project launches worth RM580mil have been lined up in the Klang Valley, including in Bandar Puteri, Bandar Puchong Jaya and IOI Resort.

A new greenfield development, Sierra Puteri, a mixed housing development on 194ha in the Seri Kembangan-Cyberjaya area, is also in the pipeline for launch in the first quarter of next year. There will also be a 22-ha commercial precinct in the RM2bil development. Lee expects the company’s property sales to bounce back from RM630mil recorded last year to RM650mil next year. This year, it expects to turn in sales of RM610mil.

“We will also be placing more focus on investment properties. For FY10, we expect more than 15% of the company’s earnings to come from property investment and the balance from property development,” he said.

Last year, income from property investment contributed 10% to the bottomline of IOI Properties and about 22% to 25% of IOI Corp’s earnings.

General manager for group operations Lee Yoke Har said besides leveraging on the good location of the company’s land bank and strong branding, it also emphasised on good community relations and programmes to promote wholesome living and safe communities in all its townships.

It set up a dedicated community website, Myioi.com, in 2000 that has become a popular communication tool for residents of its projects.

Other initiatives include the IOI Privilege card, which is a discount card offered to residents when they patronise any of the participating outlets in the townships.

“The next project to be rolled out will be free WiFi within our townships and ‘intercom connection’ for residents via the 015 IP phone,” she added.

By The Star (by Angie NG) (Posted on 22 June 2009)
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Malaysia IOI says worst is over for palm oil planters

July 2, 2009.

IOI Corp, Malaysia’s No 2 planter, said on Thursday that the worst was over for the plantation sector as palm oil prices have recovered from last year’s slump although M&A activity would be muted.

Earnings of Malaysian palm oil producers plunged in the first quarter as crude palm oil prices more than halved from a year ago.

IOI, valued at $8.37 billion, saw net profit nearly wiped out during January-March due to weak crude palm oil prices and large foreign translation losses on its U.S. dollar borrowings.

Sime Darby , Malaysia’s top planter, reported a 85 percent drop in net profit while third-ranked Kuala Lumpur Kepong saw net profit down 52 percent in the same period. “It’s quite obvious it will be better. The industry including ourselves expects to see much better fourth quarter (April-June) operating results,” IOI Executive Director Lee Yeow Chor told Reuters at the company’s headquarters in the administrative capital of Putrajaya.

Malaysia is the world’s second-largest palm oil producer after Indonesia.

Crude palm oil prices hit a record 4,486 ringgit a tonne in March 2008 before collapsing at the height of the global financial meltdown and triggering speculation that distressed plantation firms starting out would sell.

But Lee said the opportunities for merger and acquisition in the sector are hard to find now as the palm oil price recovery helped smaller firms hold out for better deals.

“Because the sharp price drop has not really been for a long time, the pressures on them (smaller planters), in terms of cashflow or repayment of bank borrowings is not so great.”

BRIGTHER OUTLOOK

IOI, which owns oil palm estates in Malaysia and Indonesia, saw net profit for the third-quarter to March plunge 94 percent to 37.36 million ringgit from a year ago on an unrealised forex translation loss of 232.4 million ringgit. [ID:nKLR496786]

The sharp drop in third-quarter earnings was due mainly to “a lot of translation adjustments” on its U.S. dollar debt, said Lee, adding that IOI expects the forex losses to reverse in the upcoming quarterly results.

“For fourth quarter with the weakening of the U.S. dollar, from end-March of around 3.63 ringgit, we expect to have some gains in currency translation for U.S. dollar borrowings,” said Lee.

“We borrow U.S. dollars, because it corresponds with our palm oil revenue, so that is a natural hedge between our borrowings and receipt of revenue,” he added.

BANKING ON ASIAN DEMAND

Palm oil prices have now recovered more than 60 percent from a low of 1,331 ringgit ($378.8) per tonne in October on surging Asian demand as well as tight Malaysian palm oil stock levels in the first few months of 2009.

“We have always thought that the low price level in the first quarter of this year was not a sustainable level to begin with. We have always expected the price to move up,” said Lee.

“The major consuming countries, China and India, their economies have not been that badly affected by the prevailing global downturn,” he said.

Lee said Malaysian palm oil production should pick up in the second half of the year due to the seasonal uptick in output as yield stress fades. He pegged June palm oil stocks at 1.5 million tonnes, an increase of 9.5 percent from a month earlier.

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Backers Don't Buy 'Friendly' Palm Oil

July 15, 2009

KUALA LUMPUR, Malaysia -- European consumer groups and nongovernmental organizations have said they want environmentally friendly palm oil. Malaysian producers of palm oil that have made the switch are discovering that it is still a hard sell.

The price premium for palm oil certified as produced through sustainable plantation practices has been shrinking since the first eco-friendly palm oil was shipped to European markets last November, and producers say it may need to disappear if they are to regain business in the key European Union market.

Producers say the difficulty in selling higher-priced sustainable palm oils highlights the double standards of those who criticize the industry but buy the cheaper, uncertified oil that they say is harming the environment.

"We [plantation firms] have complied with the strictest criteria on sustainability. The multinational companies, which also are end-users of palm oil, should not preach wine and drink water," said Carl Bek-Nielsen, vice chairman of United Plantations Bhd., the first Malaysian company certified as a sustainable producer.

Palm oil is a vegetable oil used in products ranging from margarine and cosmetics to feedstock for biofuel. It competes with soybean oil. Premiums for sustainable palm oil have shrunk to between $10 and $15 a ton, from $45 to $50 a ton before the global financial crisis took a toll on European economies late last year and demand waned, said Roy Lim, group plantations director of Kuala Lumpur Kepong Bhd., Malaysia's third-largest listed palm-oil producer by stock-market value. Noncertified palm oil currently sells for about $565 a ton, he said, already down more than 50% from last year's peak.

Consumer-goods companies like Unilever PLC, Nestlé SA and Kraft Foods Inc. repeatedly have said they would seek to buy palm oil produced with minimal harm to the environment. All support the goals and efforts of the Roundtable for Sustainable Palm Oil, formed by World Wildlife Fund and Unilever, which is adopting stringent and sustainable practices for palm-oil cultivation.

Although the combined annual production capacity of RSPO-certified producers in Malaysia, Indonesia and Papua New Guinea exceeded 1.57 million tons of certified palm oil and palm-kernel oil at the end of May, only 15,000 tons of certified oil has been sold since certification started late last year.

"At the moment, demand for certified palm oil is only 1% of the [produced] volume, so this has been disappointing for the growers and we feel the food companies should keep their end of the promise," said Lee Yeow Chor, executive director of Malaysia's second-largest palm oil producer, IOI Corp. Bhd.

IOI, KLK and United Plantations say they are committed to producing sustainable palm oil, even if the price premium disappears.

Nestlé remains committed to sustainable sourcing and only buys products derived from crude palm oil from reputable manufacturers, spokeswoman Nina Backes said.

Kraft spokesman Richard D. Buino said that while the company supports the RSPO's efforts, "it is clear more work is needed to consolidate standards, enforce principles, verify traceability along the supply chain and ensure competitive pricing to bring certified palm oil to market. We're monitoring the RSPO process and actively engaging our suppliers to monitor their certification efforts to find viable options for sourcing sustainable palm oil."

Neither Nestlé nor Kraft directly addressed purchases of Malaysia's certified palm oil.

Officials from Unilever, which purchases between 1.3 million and 1.5 million tons of palm oil annually, couldn't be reached for comments. The Anglo-Dutch consumer-goods giant announced in 2008 that it was committed to completely switch to certified palm oil by 2015.

Write to Shie-Lynn Lim at shie-lynn.lim@dowjones.com

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#3 Lee Shin Cheng

Net Worth $3.2 billion
Age 70
Marital Status Married, 6 children
Source palm oil

Former plantation field supervisor heads ioi Group, one of world's leading operators of palm oil plantations, refineries. Took its IOI Properties private in April. IOI's stock has doubled since November but still down a third since last year amid falling commodity prices.

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IOI's Strategic Shuffling Of Results

IOI Corp Bhd posted a 93.8% drop in net profit to RM37.36mil in the third quarter of its financial year ending June 30, compared with RM601.64mil in the corresponding period last year. The decline was mainly due to unrealised forex losses and lower contribution from its manufacturing and property business.

The company’s revenue dropped 12.2% to RM3.096bil in the third quarter compared with RM3.525bil a year earlier. Earnings per share was 0.63 sen versus 9.89 sen previously. The company declared a dividend of three sen for the quarter. IOI Corp said overall, the group’s results for the current financial year were expected to be lower than the previous year’s record but still satisfactory in the light of current conditions.

In a filing with Bursa Malaysia yesterday, the company said its plantation segment reported a 6% increase in operating profit to RM1.38bil for the nine months of the current financial year, compared with RM1.3bil in the same period a year ago. “The better performance is due mainly to higher CPO prices realised from the forward sales entered into during the second half of financial year 2008,” the company said. Its resource-based manufacturing operating profit was significantly lower at RM169.1mil for the nine months of the current financial year compared with RM457.4mil in the same period last year.

“The lower profit is attributable mainly to realised foreign exchange losses and customer defaults on high priced contracts incurred during the first half of the financial year and lower sales volume due to the unfavourable global economic conditions,” the company said. The property segment’s operating profit of RM200.5mil for the nine months of the current financial year was 35% lower than in the same period last year. It added that the decrease was mainly due to the soft property market conditions and lower margins.

Overview - The principal activities of IOICORP consist of investment holding and the cultivation of oil palm and processing of palm oil. The principal activities of the subsidiaries are cultivation of oil palm, processing of palm oil, trading in commodities, property development, property investment and investment holding.

Oil palm plantation is one of IOICORP's core businesses as it contributes over 40% to the company's profit. IOICORP manages about 100,000 ha of oil palm plantation with approximately 65% of the plantation in Sabah and the rest in the peninsular.

The company also owns ten crude palm oil mills to produce crude palm oil and palm kennel. Through its 65% owned subsidiary, IOI Properties Berhad, IOICORP is involved in property development and investment, which is another major profit contributor to the company. The company has undertaken several mixed development township projects, which include Bandar Puchong Jaya and Bandar Puteri Puchong in the Klang Valley and Bandar Putra Senai in Johor Bahru. In addition, IOICORP owns 1.7mn sq ft of lettable retail and office space. Meanwhile, the company is also involved in the manufacture and trading of fatty acids, glycerine, soap noodles and metallic stearates through its 59% owned subsidiary Palmco Holdings Berhad.

Ratings Downgrade - Moody's Investors Service has changed IOI Corporation Bhd's outlook to negative from stable for its Baa1 issuer rating. At the same time, the outlook for the Baa1 senior unsecured bonds and loans issued by IOI Ventures (L) Bhd, which are guaranteed by IOI, have been revised to negative from stable. "The rating action has been driven by IOI's recently reported weaker profitability which is mainly the result of higher than expected foreign exchange losses and customer defaults amid declining crude palm oil prices," said a Moody's Vice President.

"These losses have prompted Moody's concerns over weakness in the company's internal management system especially in effectively controlling its foreign exchange exposure. In addition, the outlook for IOI's two major business lines --- resource based manufacturing and real estate development -- are expected to remain challenging over the next 12 months which may continue to pressure its profitability," he said.

IOI's current ratings are supported by the favourable long-term outlook for palm oil demand; position as a global top-tier palm oil producer and efficient operations; good access to capital and bank markets as well as the management's good track record in managing the palm oil business throughout the business cycle. IOI's strong liquidity is also supportive of its current rating.

Downgrade pressure on IOI could emerge if pressure on its downstream operation margin continues resulting in protracted weakness in profitability, such that earnings before interest, tax, depreciation and amortisation (EBITDA) margin remains below 19 percent; and weaker palm oil production from some of its aging plantations results in a material reduction in the profitability of its plantation segment, Moody's said.

The outlook could return to stable if IOI can demonstrate effective internal measures to minimize its foreign exchange risks and bad debt losses, as well as generate positive free cash flow to reduce its debt leverage such that its Debt/EBITDA is not exceeding 2.5-2.75 times. The last rating action with regard to IOI was taken on Dec 2, 2008, when the company's issuer and debt ratings were downgraded from A3 to Baa1.

Verdict: No big deal. The stock is still some 40% off its 12 month high. Its a good sign that they are whacking all the losses onto this quarter. This will get rid of all the bad news in one shot. Expect a good showing in the coming quarters. Operations wise the company has already sold forward 80% of its FY09 CPO production at an average price of RM2,700 (till June 2009). Now they are selling FY2010 production but the company seems to think that there is a good chance that they can get RM3,000 in 2H of 2009. Operating cost is still just RM1,100 and may actually average closer to RM1,000 for the rest of the year. This represents a good pick up level.

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Raw deal for IOI Prop’s minority shareholders

Analysts believe they deserve better offer

PETALING JAYA: There is little doubt about IOI Corp Bhd’s Tan Sri Lee Shin Cheng’s ability to seize an opportunity when he sees it.

The plantation group’s executive chairman and CEO’s move to buy out its property arm may not surprise many, but some analysts feel IOI Properties Bhd’s minority shareholders deserve a better deal.

“We advise investors to sell the stock (IOI Prop) into strength,’’ CIMB Research said in a note to clients yesterday. The firm was “not keen” to swap IOI Prop’s shares for IOI Corp, but noted that the “alternative may be even less palatable.’’

IOI Corp late Wednesday offered to buy the remaining 199.7 million shares from IOI Prop minority shareholders at 0.6 share in IOI Corp at market price plus 33 sen cash per IOI Prop share.

This means that the offer price will fluctuate with IOI Corp’s share price movement. Shares in IOI Corp plunged 24 sen yesterday to RM3.68, while IOI Prop shot up 27 sen to RM2.49.

CIMB has a target price of RM3.20 for IOI Corp.

It opined that IOI Corp was “overvalued” at Wednesday’s closing price of RM3.92. It also argued that based on CIMB’s target price, the offer would equal RM1.92 worth of IOI Corp’s share plus 33 sen cash.

This works out to RM2.25 per IOI Prop share.

Maybank Investment Bank analyst Ong Chee Ting believed IOI Corp risked “low take-up rate” for its offer. Ong has a target price of RM2.90 for IOI Corp.

“Although it is unlikely to go down well with IOI Prop’s minority shareholders, the delisting would encouraged them to sell’’ as they won’t risk holding shares in an unlisted company, he said.

The deal breaker, however, are the government-linked funds Valuecap, Permodalan Nasional Bhd and the Employees Provident Fund, which collectively hold an estimated 10% stake in IOI Prop.

“If they act in concert and reject the offer, IOI Corp won’t be able to get the 90% acceptance,’’ said Tan Ting Min, an analyst at Credit Suisse Securities Malaysia wrote in a note yesterday.

He believed, however, that the market would see the privitisation as “marginally positive” for IOI Corp as it was value enhancing.

Credit Suisse upped its target price for IOI Corp from RM3.27 to RM3.31 yesterday.

IOI Corp needs to increase its stake in IOI Prop to above 90% to take the company private. Even if it failed to get the required number, IOI Corp said on Wednesday, it intended to take the requisite steps to delist IOI Prop from Bursa Malaysia.

“We believe the offer is fair, if not favourable, bearing in mind that IOI Prop may need to provide for impairment charges for its Sentosa Cove projects (in Singapore).’’ HwangDBS Vickers Research said in a report yesterday.

Based on Bloomberg’s consensus estimates, the IOI Corp offer was 36% below IOI Prop’s book value of RM3.63 and valued the company 8.9 times its forecast earnings for the year ending June 30, 2009.

Historical data showed that IOI Prop shares had been consistently traded above its book value since early 2000 until the middle of last year when equity prices worldwide collapsed.

“We lament the privatisation or delisting of IOI Prop as the company is one of the largest and most profitable developers in Malaysia and has been a benchmark and role model to many,’’ CIMB said.

The firm said IOI Prop’s revised net asset value stood at RM6.15 per share, or RM5.2bil. At yesterday’s close, its market value was RM2.07bil.

If the deal goes through, IOI Corp will fork out about RM64mil cash and issue some 116.9 million new shares at market price for the additional 24% stake in IOI Prop.

The deal, pending approvals from shareholders of both companies, is targeted for completion by end-June.

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