Archive for May, 2013

Miri, Miri…Mee Sapi

I was in Miri to meet up with Sarawak Oil Palms Bhd (SOP) to get an update of their estate and refinery business.

One of the highlights of the visit was Rosela (my colleague) and I got to savour the lip-smacking hawker delights there like Kolo Mee, Kampua Mee and Mee Sapi.

Rosela and I will cherish the warm hospitality extended by SOP corporate communications team who are, none other than the dynamic duo Judy and Abel.

Kolo Mee is made of egg noodle, blanched in water that looks like instant noodle and served in a light sauce with some condiments like chicken cutlets, minced meat or sometimes shredded beef .

The difference between Kolo Mee and Wanton Mee, which is popular in West Malaysia, is that Kolo Mee is not drenched in dark soy sauce and water is not added to the noodles when served.

Mee Sapi is the gravy version of Kolo Mee with a more curly type of noodle similar to that of angelhair spaghetti.

These scrumptious hawker dishes are prepared with palm cooking oil, a nutritious and affordable kitchen staple in most eateries.


Global Malaysia Series #1: The Business Of Palm Oil


Watch 17.13 ….”for our industry, we need to be detailed because as you might have heard… If you don’t walk the fields, if you don’t talk to the trees, I think the trees are not going to produce. Ha! Ha! Ha!” Kuala Lumpur Kepong Bhd (KLK) chief executive officer Tan Sri Lee Oi Hian was actually making a reference to the article I wrote 8 years ago about the legend of IOI Group’s Tan Sri Lee Shin Cheng singing to his trees. 



It all started with that fateful field trip to Sagil Estate, Johor in 2005. Back then, I was still new to the palm oil sector and I had no idea what to report from field trips. I went up to one of my editors then, Shahriman Johari and asked for his advice.

Shahriman looked up from his computer screen and told me in a straight face, “People have said Tan Sri Lee talks to his trees. See if this is true…”

And so I went along to the field trip with this unusual mission at the back of my mind. Throughout the 2-day trip, journalists and stock analysts asked IOI Group Tan Sri Lee questions on crude palm oil price trend, soya oil price trend, oil extraction rates, acquisition plans, company borrowings and forecast results.

When all ‘serious’ questions were asked, senior journalists and stock analysts made their way to the buffet tables, leaving younger and inexperienced reporters, like me, to face the stern looking Lee in awkward silence.

After what seemed like five minutes of polite smiles and nods, I took a gamble and asked Lee if he loved his oil palm trees. He hesitated and looked around. I held my breath and thought to myself, “Oh uh… I’m in big trouble now.”

To my surprise, he replied, “Yes, of course. My trees are my girlfriends. Each one has her own characteristics. If one produces well, I will tell her ‘I love you’,” he grins, adding that if a tree is not productive he would tell her that he will give her six to nine months to bear the quota of fruits. “Surprisingly, they tend to bloom to expectation,” he said.

Three years later in 2008, Sime Darby chairman Tun Musa Hitam acknowledged IOI Group Tan Sri Lee’s singing of Tamil songs has worked wonders on oil palm yields. He then said he was seriously thinking of “asking the boys at Sime Darby to sing Indonesian songs to the trees too.”

More funds needed for Vit E trials

CUT RED TAPE: Malaysia is the first in the world to carry out human trials on the effectiveness of palm oil vitamin E in treating stroke and heart attack. Experts tell Ooi Tee Ching that faster flow of public money for clinical trials could mean hope for dying patients.

MANY who attended the recent “Palm Oil Nutrition Week” lecture presented by Universiti Sains Malaysia (USM) Professor Dr Yuen Kah Hay were surprised when he revealed he was a stroke victim.

He showed no signs of mental regression or physical disability. Indeed, seeing is believing.

The spritely 59-year-old is a living proof that with proper supplementation of palm oil vitamin E and blood thinning medication, one can reduce the risk of contracting stroke that plagues 15 per cent of Malaysia’s population.

On top of proper supplementation, one must also refrain from choosing a lifestyle that contributes to early death. This includes eating too much junk food, not exercising, smoking and over-indulging in alcohol.

Heart attack and stroke are deadly diseases caused by a blockage of bloodflow to the heart or brain. The most common reason for this is a build-up of fatty deposits on the inner walls of the vessels that supply blood to the heart and brain.

The World Health Organisation (WHO) statistics show that globally, more people die of stroke and heart disease than all cancers combined. By 2030, WHO estimates the death toll to jump as high as 23 million.

Although the numbers look depressing, there is increasing medical evidence that palm oil vitamin E can reduce the risks of cardiovascular diseases.

Vitamin E is an oil soluble nutrient that is made up of eight siblings, namely four tocopherols and four tocotrienols. Soft oils like olive, soya, canola and sunflower only contain tocopherols. Tropical oils such as palm and rice bran, however, have both tocopherols and tocotrienols.

Over the last 30 years, scientific studies have shown that palm oil vitamin E, particularly the tocotrienol variants, is a far more potent antioxidant than tocopherols.

Tocotrienols are usually extracted from palm oil because the oil palm tree is able to produce the highest concentrate compared with other oil crops. Every year, Malaysia exports some RM50 million worth of palm oil health supplements, mainly to Europe, the United States, Canada and Japan. A kilogramme of palm oil vitamin E sells for US$500 (RM1,515).

In an interview with Business Time recently, Yuen explained that the difference between tocotrienols and tocopherols is the ‘tail’ on the vitamin E molecule. 

“Tocopherols have long saturated tails while tocotrienols have unsaturated tails.”

The unique structure of tocotrienols enables them to do many things that tocopherols cannot do. This includes more powerful anti-oxidative function in cells, the ability to penetrate internal organs and activation of gene signals.

Since 2009, Yuen and his team have run brain scans on 200 volunteers before and after the administration of the tocotrienol supplements and placebo in a randomised, double-blind study.

After one year, those on tocotrienol supplements showed only a little increase in the amount of white matter lesions, compared with the group on placebo which saw a seven-fold increment.

By the second year, the placebo group continued to show a bigger area of cell degeneration while those on tocotrienols showed slower brain cell death.

What the preliminary findings showed, Yuen said, is that palm oil vitamin E is able to stop human brain cells from dying in the event of a stroke. “They work by suppressing two key signals in the cells to prevent them from dying. So, if people were to take tocotrienols as a supplement, it can prevent brain cells from dying in the event of a stroke and also stimulate the reconstruction of blood vessels thereafter.” 

In view of such promising findings, Yuen said it is imperative that the administrative momentum of clinical trials is accelerated. 

As Malaysia’s population starts to age, the government needs to steadfastly support clinical trials for deadly diseases. With better public awareness and timely administration of government money, many lives can be saved from degenerative diseases.

“We cannot afford to have start-and-stops in government funding to clinical trials. There has got to be a steady momentum to this quest in order to reach any significantly meaningful outcome that can benefit so many lives,” Yuen said.

In a separate interview held in Petaling Jaya, Selangor, Dr Chandan K. Sen, professor of surgery at the Ohio State University Medical Center concurred with Yuen. In the US, the government readily commits deserving funds for the long term to ensure research talent are expeditiously optimised. 

Having dealt with Vitamin E since the start of his career almost 20 years ago, he reiterated that tocotrienols are the better half in the Vitamin E family.

Last year, for the first time in the US, Sen and his team reported a human trial proving palm tocotrienols are potent neuroprotective agents. This is after having studied stroke prevention effects of tocotrienols, using animal and cellular models for the last 13 years. 

Sen said his team’s initial findings matched that of Yuen in that tocotrienols help recovery from stroke by inducing growth of new brain arteries that bypass stroke-affected areas.

Following this assessment, Sen said tocotrienols can be orally consumed with blood-thinning drugs like aspirin to prevent a brain attack. “If I had a mini stroke, I would want to take something that would minimise my damage should I suffer from a full-blown stroke. We are testing this in clinical trials now.” 

Next year, Sen and his colleagues plan to have a much larger clinical trial to assess the safety and effectiveness of tocotrienols against stroke and end stage liver diseases.

“If palm tocotrienols are established in fighting serious liver diseases, it would benefit the bulk of dying patients in developing nations who cannot afford costly liver transplants,” he added.

IOI investors to gain from unit’s lower entry price

This is written by my colleague Lim Cian Yai.

KUALA LUMPUR: IOI CORP Bhd shareholders are poised to benefit from lower entry price in its property division, which will be relisted under a new listing company (ListCo) by year-end.

Analysts said the ListCo is well positioned for steady earnings growth underpinned by booming property sales in the Klang Valley, Johor, Singapore and China.

They pointed out that IOI Corp shareholders may gain more than RM1.49 per share from the ListCo listing.

With the ListCo’s indicative issue price to be at least RM4.46, each IOI Corp shareholder will pay 30 per cent less of the price, or a discount of RM1.49.

“The gain will be greater if the actual listing price turns out to be higher than RM4.46,” said JF Apex Securities, which has upgraded IOI Corp from “hold” to “buy” with a target price of RM6.57.

The ListCo is set to be listed on Bursa Malaysia’s Main Market via distribution in specie of about 2.16 billion shares (one ListCo share for three IOI Corp shares held) and non-renounceable restricted offer for sale of 1.08 billion ListCo shares (one ListCo share for six IOI Corp shares held) to IOI Corp shareholders.

Public Investment Bank believes the ListCo’s valuation will not come cheap based on several factors including its strong earnings growth for the next three years and market value of appraised properties at RM18 billion.

The ListCo also has one of the industry’s highest operating profit margin of 50 per cent and international exposure across Malaysia, Singapore and China.

Kenanga Research analyst Alan Lim Seong Chun has a “neutral” view on the relisting plan. “The positive side of the deal is the unlocking of the value of IOI Corp’s property division and a higher rerating of its plantation business.”

The bad aspect is that IOI Corp’s earnings are expected to plunge by about 28 per cent in 2014 due to the absence of property contribution.

“Due to lower crude palm oil (CPO) prices, IOI Corp’s financial year 2014 core earnings will slide 17 per cent to RM1.5 billion. Besides, its net gearing will also soar to 0.5 times from the current 0.3 times as equity portion decreases,” Lim told Business Times yesterday.

He said IOI Corp may therefore need to expand plantation lands to offset the potential significant losses. 

IOI Corp executive chairman Tan Sri Lee Shin Cheng, however, maintained on Tuesday that its joint venture with Indonesian plantation companies will help sustain its performance in the absence of property business.

“Our yields are improving, our trees are also matured and surely our profit will go up. Hopefully, this can cover potential losses from property,” he said.

On Bursa Malaysia yesterday, IOI Corp was the third top loser, easing 3.3 per cent, or 18 sen, to close at RM5.28.

IOI’s Lee set to be nation’s 3rd richest

This is written by my colleague Lim Cian Yai.

PUTRAJAYA: MALAYSIA’S sixth richest man, Tan Sri Lee Shin Cheng will be the biggest winner upon the relisting of IOI Corp Bhd’s unit, IOI Properties Bhd.

With a stake of 45.77 per cent, Lee is currently the single largest shareholder in the plantation and property conglomerate IOI Corp.

From a wealth creation perspective, the deal will generate billions of ringgit for Lee and his family.

According to Forbes magazine, Lee has a net worth of US$4.5 billion (RM13.4 billion) as of March 2013. 

Based on the current RM18.6 billion market value of IOI Properties, it could bring in an additional RM8.55 billion (about US$2.85 billion) for Lee, bringing his net worth to about US$7.36 billion.

Likewise, Lee will also surpass Tan Sri Lim Kok Thay of Genting Group (net worth of US$6.6 billion) and emerge as the third richest person in Malaysia.

IOI Corp privatised IOI Properties in 2009 in a deal valued at RM1.3 billion. Upon the relisting, the property unit’s asset value will balloon to RM14.6 million, a huge jump of 1,076 per cent.

“We privatised IOI Properties in 2009. At that time, the price was too low and that’s why we privatised it. And now that it has matured, we are going to demerge and relist it.” 

Lee disagreed that the privatisation and relisting are tricks of tycoons to make personal gains. “This is not true at all. We are relisting to enhance the value for shareholders. I am working very hard for the shareholders, not for myself.”

Upon the relisting exercise, Lee will control 46.19 per cent of the shareholding in the new entity, IOI Properties Group Sdn Bhd, maintaining the company in the Lee family’s tight grip.

IOI Properties’ image has gradually changed since it ventured into the Singapore and China markets. From a township developer, it has transformed into a high-end condominium and commercial property developer. 

So far, its overseas projects have received encouraging response from buyers, especially the Cityscape and Jalan Lempeng projects in Singapore.

“The project in Xiamen, China, will be launched soon. Once it is launched, you can collect 100 per cent payment from the purchasers,” Lee said yesterday.

While contribution from Xiamen will begin to come on stream, earnings for the next three financial years are anticipated to spike.

IOI Properties relisting by year-end

This is written by my colleague Lim Cian Yai.

PUTRAJAYA: IOI Corp Bhd will relist its property business on Bursa Malaysia under a RM12.8 billion deal by the year-end, adding to a post-election flurry of stock debuts. 

IOI Corp, the country’s fourth largest plantation company, privatised IOI Properties Bhd in 2009 in a RM1.3 billion deal, or RM2.60 per share.

“If everything goes right, the targeted relisting will be in December 2013,” said IOI Corp executive chairman Tan Sri Lee Shin Cheng at a briefing yesterday. Also present were his sons Datuk Lee Yeow Chor and Lee Yeow Seng, who are also directors in the company.

IOI Corp shares were suspended from May 9 till yesterday afternoon to facilitate the announcement of this exercise.

Once trading resumed at 2pm, IOI Corp’s shares jumped almost 7 per cent to a twoyear high of RM5.70. It gained 13 sen to close at RM5.46.

Under the relisting plan, IOI Corp will dispose of its entire 99.8 per cent stake in IOI Properties Bhd to a new entity for RM9.77 billion. This is in exchange for 2.8 billion shares in the new listing company called IOI Properties Group Sdn Bhd (ListCo).

The group will also sell other subsidiaries involved in property development to ListCo for RM2.63 billion in exchange for 589.27 million new ListCo shares.

IOI Corp will also sell 202ha of agriculture land in Rompin, Pahang, and 517ha in Segamat, Johor, to ListCo for RM276 million in return for 61.89 million new shares.

ListCo will also buy a 10 per cent stake in Property Village Bhd and another 10 per cent in Property Skyline Sdn Bhd from Summervest Sdn Bhd, which is controlled by Lee.

IOI Corp will also distribute one ListCo share for every three IOI Corp shares to eligible shareholders.

The exercise followed a proposed nonrenounceable restricted offer for sale (ROS) of 1.08 billion ListCo shares to selected shareholders on the basis of one ListCo share for every six IOI Corp shares at an offer price to be determined later.

The restricted offer of shares is expected to raise as much as RM1.8 billion to pare down the company’s borrowing.

“Barisan Nasional won in the general election, and everything is stabilising. That’s why during the last week, share prices have gone up. It’s a good sign,” Lee said. “I believe this is a good time for relisting. The property business is on a stronger footing now. We have built our landbank in strategic locations, so it is about time we unlock its value.”

Upon relisting, ListCo’s net asset value will grow from RM1.3 billion to RM14 billion, indicating more than a 10-fold leap.

Lee said the move is to streamline IOI Corp into two separate listed entities. “The relisting of IOI Properties on the Main Market will make it one of the largest listed property companies in the country,” he said.

Lee reassured that he will continue to be executive chairman of the two entities, although there will be a chief executive officer for each of them.

As at January 2013, IOI Properties’ market value stood at RM18.1 billion. As the underlying value of its property assets is unlocked, Lee is confident that ListCo will achieve operating profit of not less than RM1 billion per year in the coming three years.

In the year ended June 30 2012, IOI Corp’s property segment registered RM704 million operating profit. “We project 50 per cent of income to come from domestic market and while another 50 per cent from overseas business,” Lee added.

The property division has a total of 4,046ha here and overseas.

In the next three years, ListCo is expected to manage development projects with a total gross development value of RM16 billion.

It aims to achieve a more balanced ratio of 40:60 for property investment and development business in the coming five years. Currently, real estate investment business contributes 10 per cent to the overall property income.

Meanwhile, Lee expects palm oil prices to rebound to RM2,800 per tonne by year-end. Currently, it is trading at around RM2,300 per tonne at the Malaysian Derivatives Exchange.

“Fundamentals have been improving since last December. We have already seen the bottom and the only way is to go up,” he said.

Malaysia’s CPO inventory was high at 2.6 million tonnes last December. However, the stock level improved to 1.93 million tonnes as at last Friday.

Hospital that goes the extra mile

Seeing a doctor for the first time is like going on a blind date — there’s no  guarantee that even a doctor with the best credentials would be right. Sime Darby Healthcare Group tells Ooi Tee Ching that patients are increasingly requesting for clever doctors who are just as compassionate.

A JAPANESE woman was chatting nervously in her mother tongue with her school-going son when she walked into the newly-built Sime Darby Medical Centre ParkCity. 

Her eyes lit up as a staff member at the hospital counter welcomed her cheerfully in Japanese. The worry lines on her face vanished in an instant as they engaged in an animated banter. Soon after, they were bowing politely to each other. 

As she made her way to the lift, she pointed to the “breast clinic” signage on the wall to her young son and commented that the hospital places high importance on its treatment for breast cancer patients.

When told of this incident, Sime Darby Healthcare Sdn Bhd managing director Raja Azlan Shah Raja Azwa smiled and noted that there are many expatriates living in Desa ParkCity and its neighbouring enclave, Mont Kiara. 

“We see it fit to have interpreters for our clients’ convenience. Among other non-traditional services we offer at our International Patients Centre are facilitation of visa-on-arrival and its extension, currency exchange, shuttle services and short-stay accommodation,” he said.

“Our flagship hospital at Subang Jaya started off as a community healthcare centre catering to the needs of the people staying there. Similarly, we’re doing the same with our latest addition at ParkCity,” he told Business Times in an interview here recently.

Also present were Sime Darby Healthcare chief executive officer Elaine Cheong and Sime Darby Medical Centre ParkCity hospital director Ch’ng Lin Ling.

Sime Darby Medical Centre ParkCity is located at the juncture of Bandar Manjalara Kepong and Desa ParkCity. Manned by about 40 doctors and 160 nurses, it is a 300-bed hospital offering the full suite of medical and rehabilitative services, and a 24-hour emergency unit.

At Sime Darby, Raja Azlan said hospital administrators and doctors hail the adoption of an integrated electronic medical records infrastructure as it supports a patient-centric approach to healthcare. 

The ease of typing a few keywords to retrieve a patient’s record as opposed to ploughing through thousands of folders, filing and refiling them saves the doctor and the hospital millions of dollars, even after taking the cost of the electronic system into account. 

He then listed down intangible benefits such as a reduction in potential medical errors, instant communication of laboratory tests and improvements in the quality of data for clinical research.

While the electronic medical record system gives easy access to patients’ medical information, Raja Azlan gave the assurance that the group adheres to strict confidentiality of patients’ medical records as mandated by the laws of the country, provided under the Personal Data Protection Act.

To date Sime Darby Bhd is among the top 10 listed companies on Bursa Malaysia with a market capitalisation of some RM57 billion. Apart from healthcare, the conglomerate’s core businesses are in plantations, property, motors, industrial equipment, and energy and utilities.

Although the healthcare division accounts for less than one per cent of the conglomerate’s earnings, Raja Azlan is hopeful of doubling earnings contribution in the mid-term.

“Hopefully, as we seek to improve our margins by leveraging the expertise of our partner Ramsay, our earnings contribution could grow to two to three per cent of Sime Darby’s earnings,” he says.

Sime Darby and Australia’s largest private hospital operator Ramsay Health Care Ltd are joining hands to expand their healthcare businesses in Southeast Asia.

Sime Darby is combining its entire healthcare assets with Ramsay’s three hospitals in Indonesia, under a new joint venture company to be known as Ramsay Sime Darby Healthcare. Under this deal, Sime will receive RM390 million for transferring 25.7 per cent of the joint venture company to Ramsay’s subsidiary to allow both parties to own equal stakes in the merged entity.

Raja Azlan noted that the group will leverage on Ramsay’s clinical expertise and global procurement programme to manage costs and improve margins. 

Moving on to the importance of nurturing close working rapport between hospital administrators and doctors, Cheong upheld the importance of a consultative approach that usually leads to joint decisions. “We practise an inclusive culture that is built on trust and mutual respect.”

She went on to explain that loyalty to Sime Darby Healthcare is driven by the patient’s sense that the hospital and its physicians are united in ensuring their medical needs are met.

A doctor who goes the extra mile usually demonstrates empathy and is at ease with patients while involving them in health decisions. On the flip side, poor bedside manners reflect aloofness, curt replies, inadequate listening skills and a somewhat disregard for patients’ worries and fears.

Cheong acknowledged that some doctors and nurses are not naturally engaging in their communication but this soft skill is necessary for the hospital to ensure satisfactory healthcare is given to patients in the most economical and responsible way.

“It is only reasonable for patients to be given options for the most up-to-date treatment and that their doctor knows everything about their case, and that their pain would be adequately controlled.

“The upfront time a doctor spends attentively with patients usually saves time later in the form of phone calls, questions and complaints,” she said.

“For example, when a patient is dealing with a difficult diagnosis or chronic condition like cancer, a doctor or a nurse’s ability to talk respectfully and perhaps more importantly, listen empathetically, is among the most valuable assets for healthcare providers like us,” she said. 

Service delivery, building and sustaining patient and community loyalty, branding an unassailable market reputation – all of this boils down to good old-fashioned teamwork, she added.

In recruiting doctors at Sime Darby Medical Centre ParkCity, Ch’ng said, “We make sure they have the tools they need – the supporting services, the equipment and the personnel they need to effectively do their job.”

Indeed, she is well aware of what motivates physicians to bring their time, effort and skills to the operations and efficient use of healthcare facilities.

She acknowledged that doctors are concerned about the prospects of losing autonomy, rising malpractice costs, increased paperwork, competition, regulatory requirements and tighter reimbursement.

“The ultimate achievement is creating a working environment where doctors would place their loyalty to a hospital where they would send their own families for care without hesitation,” Ch’ng added.