Wednesday, June 24, 2009

Khazanah : Venture here, venture there...even for kids too?

At first glance, there is nothing wrong with the announcement. On second and subsequent glance also reveals nothing unusual. Until,

  1. MSM never fails to amuse me. Last night, in business section, TV3 reported that Rakan Riang sdn bhd has signed a licensing agreement with Kidzania. Rakan Riang is expected to construct a RM 50 m theme park scheduled to be open by 2012.
  2. Kidzania started in Mexico. It is based on family entertainment centre where children from 3 to 16 years old play adult roles in child-sized replica of an actual city with streets, buildings as well as vehicles. The idea has caught on in Japan, Indonesia and will be opening soon in Dubai, India and other parts of the world.
  3. At first glance, there is nothing wrong with the announcement. On second and subsequent glances also reveals nothing unusual. Until, Bernama's biztime revealed that Rakan Riang Sdn Bhd is a joint venture between Khazanah Nasional Berhad and Boustead Holdings Bhd. Khazanah Nasional ? The Khazanah Nasional? The Malaysian Khazanah Nasional? In Khazanah Nasional's webpage, it is so written that:-
    "Khazanah Nasional is the investment holding arm of the Government of Malaysia and is empowered as the Government's strategic investor in new industries and markets. As trustees to the nation's commercial assets, our main objective is to promote economic growth and make strategic investments on behalf of the Government which would contribute towards nation building."
  4. Khazanah's list of investment holding structures include automotive, basic materials, financial institution, healthcare, infrastructure & construction, media & communication, property, technology & bio-tech, transportation & logistics, utilities and last but not least others.
  5. Khazanah has stakes in more than 50 companies with combined assets of RM 60B whilst Boustead's major stakeholder is Lembaga Tabung Angkatan Tentera (LTAT).
  6. LTAT owns 57.5 % of Boustead holdings which has a combined assets of RM 8 B. Now, comes the questions. If Boustead holdings has assets in excess of RM 8B, what is RM 50M to them? Why do Boustead needs to team up with Khazanah to do the theme park? Boustead with its investment in plantation, heavy industries, financial & investment, trading, property, manufacturing & services should have more than enough expertise to run the theme park.
  7. Further, Boustead holdings developed Mutiara Damansara where the theme park is going to be located. So do Boustead really needs Khazanah?
  8. Another question is on the project costing. The report mentioned that the 60,000 sq ft theme park is going to cost RM 50M. That is roughly RM 830 per sq ft or RM 8,930 per sq m. Is that figure correct?
  9. Back to Khazanah Nasional. Why is Khazanah going into theme park? Is this a new strategy? Is Khazanah investing in hospitality and theme park business now? Is Khazanah muscling into small players' industry? Has Khazanah lost track that they are Malaysia's investment arm? Are the returns worth Khazanah's involvement?
  10. STAR datelined 24th June 2009 reported that Khazanah will be holding 80 % of Rakan Riang Sdn Bhd whilst Boustead group hold the balance 20 %.
  11. Rakan riang projected 500,000 visitor per annum paying at RM 50/pax. That works out to RM 25M per year. It also works out to 1,400 paying visitors per day or 700 paying visitors per session in the theme park (assuming that the theme park will run 2 session daily). Is it possible to have 1,400 paying customers daily? For the time being, this scribe doubts it because Mutiara Damansara do not have friendly public transportation service. If that is so, then the theme park will be relying more on private transportation. Can the theme park attract them?
  12. On top of that, the price of RM 50/pax is quite stiff for Malaysians (at this time). As this is a children based theme park, its main target market are families. Assuming that a family of 4 going to the theme park, they will need to cough up minimum of RM 200 for a family per session. How many Malaysian families can afford to spend RM 200 for a session of 4 hours? And how many of these families can make regular return trips to the theme park?
  13. What about the staffs? The news reported that approximately 400 staffs will be employed for the theme park. Taking an average salary of RM 1,000 per employee per month, the compnay shall reserve RM 4.8 M for salary.
  14. What about the yearly licensing fee? How much must the company pay to the franchise holder? What about the amenities, the business license and the likes? Rakan riang may need to raedies approximately RM 6 M yearly for overheads cost. It may not be so "riang (happy)" after all.
  15. With that, why is Khazanah going for peanuts now? Is Khazanah banking away from its strategic investment? Is Khazanah pouring in money to domestic industry to generate economic growth? Is Khazanah going cold to invest overseas? Maybe the economists outside can give a glimpse of what's going on...
  16. It is not wrong to venture in theme park. In fact, Kidzania is good investment for private companies. Khazanah should stay out of the deal and let the local players take the lead and the risks. Companies like YTL, Berjaya, UEM, Gamuda, Sunway are more than able to construct and manage the RM 50M theme park and they have ample land to choose.
  17. Are we going against the direction? Is Khazanah contracting instead of expanding? Is the returns on investment good enough for Khazanah? Are we paying high premium grade salary for this kind of Khazanah's investment? Are we suckered by Khazanah's decision?
  18. As I see it, Boustead can go alone on this deal. It is a feather in the cap for Boustead. But for Khazanah? I think those Khazanah's execs should go and fly kite!! We pay them top salary and is this the best they can do? No wonder Vietnam is fast catching up and will be overtaking us soon...Khazanah is too engrossed in theme parks instead of generating money using the country's wealth.
  19. 2012 is not that far away. By then, maybe we will see all the top khazanah execs playing role models in the theme park, competing with the 3 to 16 year old children...Oh, what a day it is going to be...
Till then...G'nite M'sia...wherever u are...

13 comments:

Wenger J Khairy said...

Solid analysis. I am quite impressed especially how you managed to take apart the projections.

From Legoland to Kiddy Entertainment, strange investment to say the least. I think itll start strong and then fade out as is the case.

But I do share the sentiment what the heck is Khazanah doing? But then again, knowing the capability of the staff, I say, just buy the crumiest over inflated debt security out there, see it implode to 0 and close the fund.

At least that way, we'd get peace of mind.

nightcaller said...

Welcome back WJ

I thought that you will never land with your Boeing shortcall...:)

At the rate Khazanah is going, I wonder..won't it be better if they start to follow your share and trading analysis more seriously? That way, they can start making money when your are spot on with your call.

Thks for your comments...

Wenger J Khairy said...

Hi Mr Nightcaller
Good one :-)

As to the question of Manek Urai, whilst I still believe that UMNO would win, it would be a hollow victory. There are far too many mistakes being done right now especially in managing the economy, so you and I as common folk will still be screwed even though UMNO wins.

And if PAS wins instead, it will be a case of double disaster.

Dato Sak says the issue is with UMNO not reforming itself. Actually the issue is much deeper and includes both private and public sector. Its a very very deep problem and at the root is that we are just not competitive enough. Period.

Actually Malaysia would have been in much better shape had Tun relinquised power in 1998. Right now, sad to say, we are in such a bad shape both currently and moving forward, people will have to adjust to a lower standard of living.

Thats why I follow US Companies. Even though lets say for Boeing, they screw up, but end of the day these are due to the random occurences i.e. operating in a challenging market and trying to produce an airplane (as opposed to going to Mitsubhi and ciplak), and in the end they will hire the right people to fix the job.

nightcaller said...

WJ

Despite public's warning, there are too many BN screw ups now. As if BN is thumping their nose saying "what can the people do?". I would rather see PAS wins in Manek Urai to serve another warning to the waning BN.

Dato' Sak is correct in saying that UMNO is not reforming. It is not for lack of trying but is more of lack of knowing. UMNO has been too long in power that they do not know how to reform anymore. All they know is how to maximise profit whilst there's still sunshine.

Even if Mahathir wants to retire in 1998, UMNO is not ready. If Mahathir left in 1998. things will be worse. However. Mahathir's successor is too weak to arrest the problem. He started with a bang and promises but left with a whimper and unfulfilled promises.

US companies are working on capitalistic module of "supply and demand". Even then, US also have GLCs' which operates on open book concept. On the other hand, Malaysians are closer to favouritism and protection. Have you ever notice how seasonal our main players are? If a company is on a run, than the coampany will have opporunities after opportunities knocking their door to such an extent it became unreal. That need to be change. On your preference to follow US companies, at least in US companies you can make the call, based on its portfolio and capability whilst Malaysian companies are based on "insider" tips for quick buck cash in. In a sentence " a man's meat is another man's poison"...

ahoo said...

Very good analysis ! The idea of development is for future, long term returns. Without any development, the people and the state will suffer too.

The idea of venturing into something that we are not knowledgeable is just too risky. Furthermore, the numbers don't add up (daily visitor's projection). Even places like Sunway Pyramid and Resort World which are fully developed, have yet to find that given numbers as projected.

What more with this new site. In my humble opinion, Boustead should in fact be thinking of such a development in JB, where lands are easily available and with Singaporeans just across the border on condition that " they don't get mugged too easily " ha! ha! ha !

In any case, the con-sultants are laughing to the banks with such a huge project. Also many cronies are in planning stage to buy large bungalows, change cars and maybe new " home affair minister " if you get my drift.

As usual thank you for taking the time and trouble to research and to penned many interesting pieces that are unknown to many readers of standard MSMs.

nightcaller said...

Ahoo

Thks. I don't think Boustead is thinking of JB since Khazanah is also building a RM 110 M project in the form of lego land. However, Boustead is reliably learn is also the license holder in Singapore for Kidzania. So the necessity of building 1 theme park may not be feasible for Boustead.

Anonymous said...

Nightcaller,
Read the quote below from malaysiakini.......like it or not, PAS especially Azizan must do something. It's not just a park in Subang Jaya. It's the entire PAS administration.
See any political parties are not spared including PAS. Remember Terengganu! Don't be one term government

looes74


I quote from Malaysiakini :

James Wong: I am one of the non-Malays who voted for PAS in the last general election in 2008. Like everyone else, I was just frustrated with Umno’s style in BN.

The vote for PAS is not because I like PAS, but was intended to teach BN a lesson.

I remember PAS used the slogan ‘PAS for All’ and I was happy to hear that PAS, DAP and PKR formed Pakatan Rakyat.

But after one and a half years, I realise that PAS has betrayed the non-Malays in Kedah and their team members of Pakatan Rakyat.

Maybe it is the fault of DAP and PKR for not standing up against PAS’ racist policies such as the increase of bumi quota for housing to 50% and the recent pig slaughterhouse issue.

The price of pork is increasing and PAS is making things worse. I agree with the above headline and the idea by Gerakan Youth leader Tan Keng Liang for PKR and DAP to work with BN.

I still don't like Umno but now, I hate PAS. PAS is like an Umno in Pakatan Rakyat only worse. PAS is betraying the non-Malays in Kedah and treating us like fools with all their policies.

P Dev Anand Pillai: To an extent, I do agree with what the writers had said as I am a frequent visitor to Alor Setar and I find that the town can do with some cleaning up.

The PAS government has to be able to come up with solutions that the people of Kedah have been looking forward to all this while.

One of the main things which they should learn is to attract investment into the state. If the PAS- led government is not able to do this, then they should be shown the door come the next general elections.

One should take as a guide the short stint which the Pakatan government of Perak had before it was ousted ecause the PAS-DAP collaboration there worked well.

They managed to reduce the state's debts and forged collaborations with interested foreign parties who wanted to invest if red tape and corruption could be reduced.

Besides stressing on religion, PAS should start putting its efforts on building an economic think- tank that will be able to advise them on the economy when they govern states.

Extreme policies and measures will ensure that the people will react by booting them out of office the next time around. The power of the vote is now more better valued.

nightcaller said...

Looes74

Thks for the highlight.

Agreed that Azizan should do something fast in Kedah. No doubt that Kedah is not as ash rich as Terenganu, Penang and Selangor but Azizan can learn a thing or two from Nik Aziz on prudent spending.

One of the bloggers, Nobisha, pictured Azizan as a very stern (cenggeh) person to both PR and non Pr alike (that means PAS too). He may need to relax a bit but still sending the message across.

Azizan should use the strength of the next Agung will be from Kedah to get the development going. As for all the rubbish, Azizan should take a first hand account on the state of the matter.

PAS could no longer live in a hypothetical situation. The rakyat giveth and the rakyat can also taketh. If PAS (or PR) did not perform, they may find themselves walking out of Kedah in GE13 and stay out for the next 50 years...

nightcaller said...

Looes74

On the Azizan issue, hope that this link will clarify things http://www2.themalaysianinsider.com/index.php/malaysia/30537-kedah-mb-scoffs-at-gerakn-effort-to-lure-pakatan-members

Azizan has clarified that the 50 % Bumiputra quota is only apploicable for malay reserve land. The rest still maintains.

Anonymous said...

Nightcaller,
That's why I mention in another topic under your blog, I barely accepted Azizan's explanation. Actually, I got to correct Azizan's statement, it's 30% not 20%
Why I mention I barely accept Azizan's explanation is because it does not really resolve poverty issues. If poor folks especially majority of them are malay too poor to buy land, even if you have 100% quote for malay reserve, it would be useless. I can have long discussion on this
My real point of having critical on Azizan is his way of handling Press & the way Kedah administration is projecting themselves. Seriously, Azizan & his team have problems of bringing their messages across to the ground or grassroots & the public.
Perception is important in politics. People must be felt that they are taken care of. That's why I say if publicity is an issue, do something about. Seriously.
It does not matter if you are efficient and competent administrator. One got to know how to carry oneself. Nizar has done one hell of a good job.
Must engage people on the ground. Inform them that things are under control & well taken care of

looes74

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Anonymous said...

It is removed (has mixed topic)

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