MEGB update no. 2

Is MEGB marching into the light with its newly approved programmes?

(credit: Dreamstime)

Since my last post on MEGB more than a month back, a lot has happened.

A Concerned Investor sends in some queries to MEGB's Investor Relations (IR) Another concerned MEGB shareholder, Zuuk has been sharing some info with me via email and these were his concerns:

1) An updated list of the shareholders - this was updated on 9.03.2011 - which shows that Fidelity and Smallcap World Fund were still shareholders to a total of 8.5%. But of course, this was 3 weeks ago and the composition may have changed and we can only wait and find out whether they have further shed their ownership of Masterskill's shares.

2) Zuuk also had concerns as MEGB's bursa announcement that it had obtained approval from the Education Ministry to run its Kuching campus which conflicted with the Kenanga report on MEGB saying that the Diploma in Nursing for Kuching was facing some delay in obtaining approval. Management's reply to this was that the two things are not the same thing as the former as to do with the campus and the latter with the programme. Hence, they were not conflicting. Nevertheless, good on Zuuk for spotting these things and being an active investor and of course, sharing this info with us

Catalysts for Higher Prices? MEGB now has hit around the average price I bought it - RM1.9 and the fact it has been in the news may have something to do with it:

March 23 - Approval for its Cheras Campus to conduct BSC (hons) Nursing programme - This is obviously good news as well, if all goes well, a recognised certificate is almost as good as printing money.

March 29 - Masterskill then announced it was to collobarate with Kinta Medical Centre to set up a physiotherapy centre - This again is a plus as it states that KMC will bear the costs and share the profits with Masterskill and this may give Masterskill the 'unique selling point' it needs to get more students into Masterskill as the healthcare education industry gets more crowded with more players entering into this space.

What about Dividends? Share Buy Back? Of course the two pieces of news I cannot wait for is the share buyback and the payout of dividends.

And guess what - they recommend a dividends payout of 7.9 cents per share payable on 15 June so if my maths is right - a 4.1% return for the shares at the price of RM1.89 (closing price today). Read about it on the Edge.

Yet, when I think about it, can MEGB afford to also do a share buyback? Can they fund both while expanding aggresively as they are opening its new campuses or do they have to settle for one option? To me, I would prefer a dividends payout as I am holding long on to MEGB. Perhaps, it's time to write into their IR to find out...

Update 31/03 : OSK research maintains MEGB as a trading buy with unchanged fair value of RM 3.44 citing the current PER at 6.4 the cheapest in its covergae. Read it on the Edge.

Full disclosure: Yes, I do have shares in MEGB.

Bargain Hunting in Malaysia or Should I use Groupon-clone sites for my Business?

Love cutting coupons? There's a better way! Check out these websites... I've listed a few in my previous posts - Groupsmore, Milkadeal, Mydeal to name a few.

Rather than reinvent the wheel - There are actually nearly 40 over such sites listed here (check out the comments area too)- http://groupon2u.com/groupon-malaysia-navigation-list-all-groupon-clone-sites-in-malaysia

How do these works?

These sites offer discounts up to 90% for SPA treatements, mani/pedi, meals, food stuff, etc.. Some of them offer free credit for the first purchase and for referring friends so do take advantage of them.

You agree to a deal and once enough people sign up, you pay and you get a coupon to claim your discount. That's why it's called a groupon (group+coupon!)

What does this mean for the consumer?

Great news! You can go looking for the next bargain and stick with it if you really like the service/the product. Or you can always wait for the next bargain!

What does this mean for the business?

Not so great news. Such websites can be great publicity but they must be able to deal with extra demand for their services/goods and wow, they have do be really good to make sure that customers keep coming back for more even without those massive discounts. You see the business will have to pay the website a cut of the remaining % and offer the service/product at really low margins or even at a loss!

Example : My burger is RM10. I ask groupon clone site to offer 50% off. So I get RM 5 for every coupon sold. Maybe.. every RM 2 goes to the groupon clone site for offering it.

If you gain yourself a loyal customer, great! But the biggest danger is that this may spark a price war and the smaller business cannot afford to do so and will close shop eventually and also generally, may cause business to lower their prices and accordingly, their margins suffer.

So,if you're a business, think carefully!

In fact, you must do the math - http://boss.blogs.nytimes.com/2010/11/23/doing-the-math-on-a-groupon-deal/ -Ask youself - can my business afford this and also take in this huge sudden demand because of my promotion?

But hey, if you're a consumer, rock on and enjoy all the sweet deals and save some money!

Quick Post: Warren isn't perfect? Goldman Sachs

Morgan Housel of Motley Fool Questions Whether Warren Buffet's Investment into Goldman Sachs (GS) during the 2008 Credit Crunch was all that Profitable.. with the benefit of 20/20 vision of course...

20/20?

Warren's returns in his preferential stocks of GS wasn't all that great after all including the warrants he got for 'sacrificing' his professional image for an 'all-evil' investment bank if you compare it to market returns from 2008 to today.

Read on here: http://www.fool.com/investing/general/2011/03/21/how-goldman-treated-warren-buffett.aspx

Maybe the Sage of Omaha isn't that great after all or is it fair to look back with the benefit of hindsight? That said, he has been known to have a few mistakes/failures in the past. Netjets and General Re are to name a few.

One thing's for sure. If you're as successful as Buffet, you have a tough reputation to keep!

More on YTL's Tan Sri Francis Yeoh - YES broadband

A Follow-up on the post I had on Tan Sri Francis Yeoh's(TSFY) Interview I had Posted Earlier - Why Maxis, Digi, Celcom should sit up and listen.

YTL's latest Offering - YES BROADBAND

The podcast is available here to listen/download.


Other podcasts of BFM are here. There's some really good stuff to check it out.


First thing, is he used very 'hip' language - repeated the word 'awesome' and 'cool' quite a few times which leads me to think this was a trained interview and perhaps, he is trying to hard to appeal to the younger crowd? He did not answer directly to the Interviewer's questions but rather was marketing YES broadband. He was asked what were his internal targets for subscribers (currently 100k) but he didn't give a straight answer.


Then again, I do not know Tan Sri personally so maybe that is how he talks naturally...

Another thing to clarify is that 4G is not strictly 4G but more like.. 3.5G. From my understanding, 4G would use different technology rather than the current tech used by YTL. Read here WIMAX is not really 4G.



Ok, those out of the way... It was quite insightful to pick the brains of one of the most admirable captains of industry in Malaysia. In fact, family owned firms do better in the hard times - as reported in Newsweek.

YES BROADBAND

YTL's YES broadband is a very, very powerful idea and I am in fact sold on the idea. In fact, I have put money where my mouth in and I do have some YTL Power shares which own part of the YTL Communications that is running the show.

Why am I sold? Well, for my HTC wildfire on 18 month contract - I have to spend roughly RM 100 a month - RM50 for my calls and RM 50 for internet (500mb). Now, imagine if I could not have a phone and just use the internet for all my calls and messages. Impossible you say? No, but that's what I am ALREADY doing. I am saving soo much of my line costs but using Gmail, Gtalk, Whatsapp and if I had Skype, I don't have to use my line at all ! Imagine, how much I will save. If I was Maxis, Digi, Celcom, hey, I'll be shaking in my boots.

If YES can give me the speeds it promises, why do you have to make calls and text on a 'traditional' mobile phone line? There was one day where I asked my friend: If I have internet, why do I need my phone? For texts, I can message my friends with Whatsapp and Gchat. For phone calls, I can call using Skype!

I think alot of people don't get it about YES broadband. It's not for the high end users and I don't think it is fair to compare it to say TM's UniFy. Why the coverage along the NS highway and the ERL? Why the coverage in main areas in West Malaysia? It's supposed to work more like a phone line than strictly internet usage to surf, download and play.

MMS and SMS are so, like, yesterday!

Tan Sri was spot on when he mentioned the power of apps. For RM 30 a month, I can use 3.5 Gigg as opposed to the RM 50 of my RM 100 for my HTC for 500 mb only! (which mind you, is already the cheapest monthly payment with Maxis) With all that RM 30, I don't need a line. I can keep in touch with friend with Skype and Whatsapp... theorectically speaking of course.

The savings are huge - RM70 a month - RM 840 by year's end! Almost enough to pay for this budget smartphone of mine!

I think there can be revolution here if YTL plays their cards right. At the moment, I believe YES still has many nagging problems right from its launch (site crashed!) and it needs to increase its distribution reach by setting up more booths. IMHO, it lacks the presence and awareness of its plans and the power of the internet its offers.

There is alot more discussed by Tan Sri but I shall keep focused on my opinion of YES. I believe if it does well, it will prove a challenge to exisiting telco companies and even Astro. With the bandwith, they can transmit shows/films to your computer/home. As Tan Sri says, "You don't know it but we have built pipes to each one of us"(liberally paraphrasing)

It will take time but this is a very brave bold move in the right direction. YES may one day be the platform for YTL to provide services provided by Netflix in the West and I think the hybrid TV is a move in that direction.

Malaysia watch out, YES may help re-define the way Malaysia works, play and learn this decade!

Taking advantage of this crisis.

Remember BP + Transocean and the Gulf Oil Spill. Those stocks took a beating then but are up, beating market returns today. Does the same apply to the crisis in Japan? Does Crisis = Opportunity?

Read on:

Warren Buffet thinks so

Motley Fool has Three ways to Profit from the Japan crisis - Toyota, Uranium producers and Nuclear Energy Producers (good dividends)