Alibaba

Alibaba.com Ltd., owner of China’s largest online-commerce site, has been the go-to marketplace for Western companies seeking gaskets, garden gnomes and gelatin. Disclosures that its salespeople helped defraud buyers may send business to rivals Google Inc. and Global Sources Ltd.


Since Alibaba announced the scam Feb. 21, its chief executive officer and chief operating officer resigned, and the Hangzhou, China-based company has lost about $1 billion in market value. The flagship of Alibaba Group Holding Ltd., which counts Yahoo! Inc. as its biggest shareholder, also may struggle to sign up new clients, analysts said.

Alibaba.com shares have fallen 14 percent in Hong Kong trading since the announcement, and three analysts downgraded their recommendations from buy to hold. Wuh, the top Alibaba analyst over the past year according to Bloomberg Absolute Return Rank, maintained his sell recommendation.
Alibaba fell 4.8 percent to HK$14.40 at the 12:30 p.m. trading break in Hong Kong after dropping as much as 6.5 percent earlier in the day.

Alibaba.com, founded in 1999 by Jack Ma, is a business-to- business, or B2B, website. Its target audience is companies in the U.S. and Europe buying from low-cost manufacturers in China, Vietnam and Pakistan, among others. The buyers typically are too small to travel thousands of miles to meet suppliers and inspect factories.
The company operates marketplaces in Chinese, English and Japanese. Buyers use the services for free while suppliers pay an annual fee of 29,800 yuan ($4,500) to appear on the English- language website as a “Gold Supplier” for a year, Spelich said.

The site offers tips for avoiding fraud and hosts a forum where users can notify each other of potential scammers. Alibaba also posts the names of suppliers who have been banned.
Alibaba.com may have been victimized by its own success, Wuh said. Sales more than tripled to $567.2 million in 2009 from $171.1 million in 2006, according to data compiled by Bloomberg.
That growth was fueled by company claims a third party verifies the credibility of all suppliers with paid memberships. Its database of registered suppliers almost tripled to 108,000 last year from about 30,000 in 2008, Wuh said.
The frauds recently disclosed involved vendors offering small quantities of electronics at attractive prices, with payments settled using “less reliable” methods, Spelich has said. Alibaba employees either intentionally or negligently allowed the vendors to evade authentication and verification measures, the company said.

Google Benefits

Google Inc., the Mountain View, California-based operator of the Internet’s most-used search engine, may benefit from sellers setting up their own websites and paying to show up on Internet queries, said Muzhi Li, an analyst at Mizuho Securities Asia Ltd. in Hong Kong.

Caroline Hsu, a spokeswoman for Google in Hong Kong and Taiwan, declined to comment on how the company’s business might benefit from the Alibaba fraud.
Another beneficiary may be Global Sources, a Shenzhen, China-based organizer of trade shows where buyers meet sellers of electronics, toys and lingerie, among other products, analysts said. It organizes 56 shows a year in locations including India, China, South Africa, Dubai and Miami.

Third-Party Checks
The company also operates a B2B site the competes against Alibaba. Online and other media services accounted for about 66 percent of Global Source’s $174.5 million in revenue in 2009, the last full year reported. Its stock is up 19 percent this year in New York trading.

Like Alibaba, Global Sources uses contractors to vet suppliers through factory visits and checks of business registrations and credit, Chief Executive Officer Merle Hinrichs said. The company has about 260,000 sellers, primarily in Asia, and about 970,000 buyers worldwide.
The strength of Alibaba’s model has been called into doubt, said Dane Chamorro, managing director for North Asia at Control Risks Group in Shanghai. His firm does background checks for companies.

‘Lost Their Way’

Although Alibaba tries to minimize the risks to buyers by vetting sellers, the system broke down because staff colluded with fraudulent sellers to bypass that verification process, said Elinor Leung, head of Internet research at CLSA Ltd. in Hong Kong. More than 2,300 vendors were involved, Alibaba said.

Alibaba CEO David Wei and COO Elvis Lee, who weren’t accused of wrongdoing, resigned to take responsibility for the “systemic breakdown” of integrity, the company said in a statement. About 100 salespeople were involved, the company said.

Jonathan Lu, 41, who heads the Taobao.com online retailing affiliate, China’s Ebay, replaced Wei.

That’s no small task, Li said. As many as 35 percent of Alibaba’s registered sellers don’t renew their one-year contracts, meaning the company needs to add about 35,000 new suppliers a year to maintain current sales.
The turnover rate at Global Sources is about the same, Hinrichs said.
The entire B2B industry will suffer from the Alibaba scam, he said.

Mid Valley Megamall market value @ RM1.92b

KUALA LUMPUR: The Mid Valley Megamall, which is owned by KRISASSETS HOLDINGS BHD ’s unit Mid Valley Megamall, has a market value of RM1.92 billion as at Dec 31, 2010 following a revaluation. The company said on Feb 11, 2011, this was a 3.78% increase over the RM1.85 billion when it was revalued on Sept 30.

KrisAssets said the net surplus of RM52.5 million (deferred tax at 25%) was recognised in statement of comprehensive income of KrisAssets group for the three months ended Dec 31, 2010.
“The total net surplus for the financial year ended Dec 31, 2010 is RM90 million, an increase of 6.67% compared with the preceding year. Based on the ordinary share capital and treasury shares as at Dec 31, 2010, the consolidated net assets per share of KrisAssets is RM3.52 per share,” it said.
It announced for the quarter ended Dec 31, 2010, the company recorded a 5.4% increase in revenue to RM61.79 million from RM58.63 million mainly due to higher total rental income.
Net profit rose 61.7% to RM80.11 million from RM49.54 million. It proposed a dividend of 7.5 sen a share, similar to a year ago.
Pre-tax profit rose 72.6% to RM107.4 million compared with RM62.2 million a year ago. This was mainly due to recognition of revaluation surplus of RM70 million as fair value gain on investment property in the current quarter compared with RM30 million in the corresponding quarter in 2009.
“Excluding the fair value gains on investment property, the group recorded pre-tax profit of RM37.4 million, representing 16.15% increase, compared with pre-tax profit of RM32.2 million in the corresponding period in 2009. This was mainly due to higher total rental income and lower maintenance and utility costs in the current quarter,” it said.
For the financial year ended Dec 31, 2010, earnings rose 47% to RM200.01 million from RM136.02 million while revenue increased by 5% to RM239.39 million from RM227.88 million.

Malaysia Oil and Gas Companies in 2011

KUALA LUMPUR:
2011 Prospect : M&A
This year is poised to be an exciting one for local oil and gas (O&G) players on the back of improving prospects as crude oil prices continue to rise, with observers saying this could also mean more mergers and acquisitions (M&A) within the sector.
Local analysts have been forecasting that this year will see several major trends, including bigger orderbooks and tenders in the pipeline, strategic partnerships being announced and more corporate exercises including mergers, take-overs and capital-raising activities taking place.
News of oil major Petroliam Nasional Bhd (Petronas) opening up marginal oilfields to niche players, as well as five new tax incentives to encourage domestic exploration activities created some excitement in the market, with many O&G counters seeing increased investor attention.

The exploration activities are set to benefit hook-up and commissioning (HUC) job players such as SapuraCrest Petroleum Bhd, Kencana Petroleum Bhd and Petra Energy Bhd, as well as fabrication yard operators who are also poised for a consolidation, according to UOBKayHian.
“Malaysia Marine and Heavy Engineering Holdings Bhd’s (MMHE) yard in Johor is currently operating at full capacity, and additional yard capacity and size would fuel its growth,” it said in its January 2011 strategy report.
“MMHE could be looking into Sime Darby’s assets or even other Petronas-licensed smaller fabrication yards that are less well run, such as Oilcorp Bhd which is facing solvency issues.”
Maybank Investment Bank Research reiterated the view, saying it expected the number of offshore fabricators to contract to two from six at present.
“We think MMHE, 65% held by MISC Bhd and ultimately Petronas, will be an acquirer. Ramunia and Sime Engineering, 100%-owned by Sime Darby are the likely targets,” it said.
“In addition, we foresee new assets/businesses being injected into Ramunia and Scomi Marine, both PN 17 counters (i.e. cash rich, but without a core business).”

Potential target M&A
In addition to fabricators, Maybank IB Research also highlighted several marine vessel operators as potential acquisition targets, namely Alam Maritim Resources Bhd, Petra Perdana Bhd and Tanjung Offshore Bhd, as well as private limited offshore support vessel provider Jasa Merin (M) Sdn Bhd, whose parent company is SILK Holdings Bhd.
“These operators have undemanding valuations but stretched balance sheets with high gearing levels, which complicate their growth prospects,” it said in a Jan 7, 2011 note.
The brokerage firm also highlighted that cash-rich SapuraCrest could be keen on acquiring marine vessels as a strategic asset to complement its installation of pipeline and facilities (IPF) operations.
UOBKayHian had also highlighted SapuraCrest’s eligibility as a potential M&A target, due to its ability to fund its expansion plans easily across the entire O&G upstream value chain.

Another possible acquirer could be Ekuiti Nasional Bhd (Ekuinas), as it may be looking to accelerate consolidation among bumiputera marine vessel owners, according to Maybank IB Research, saying it is likely to start with Tanjung Offshore, in which it has a 24% equity interest.
“The key driver of consolidation in this sector by Ekuinas is to create a stronger entity both in terms of size and financials,” an analyst told The Edge Financial Daily. “At present, most vessel players are highly geared with limited room for expansion.”

Meanwhile, market speculation had also recently surfaced that Alam Maritim Resources Bhd could be in the preliminary stages of exploring a working relationship with Coastal Contracts Bhd.
An industry source told The Edge Financial Daily that the partnership could prove promising as there did not appear to be an overlap in their businesses.
Alam Maritim is primarily involved in the supply of offshore supply vessels for the O&G sector as well as underwater services. Meanwhile, Coastal is a Sandakan-based company whose areas of business include vessels manufacturing and chartering.
“Catalysts for cooperation include Coastal’s fabrication shipyard and the Sabah connection, while Alam Maritim has been said to be game for strategic tie-ups,” the source said. “Main issues would be pricing and control of management.”
Maybank IB Research also highlighted upcoming high-impact projects in Sabah, including the Sabah Oil and Gas Terminal, Sabah-Sarawak Gas Pipeline, Sipitang O&G Industrial Park as well as Petronas Chemicals Group Bhd’s ammonia and urea plants.
It is worth noting that pilgrim fund Lembaga Tabung Haji (LTH) is a common shareholder in both Coastal and Alam Maritim, albeit with non-controlling stakes.
LTH has 72.56 million shares in Alam Maritim, representing a 9.29% stake, while it has 18.2 million shares in Coastal, representing a 5.02% equity interest.

(Source : The Edge Financial Daily, January 10, 2011)

The World's Biggest Gold Reserves

15. Venezuela
Value of Reserves: $17.33 billion
Holdings Total: 401.1 tons
Banco Central de Venezuela manages the 401.1 tons of gold in the country’s reserves, which amount to approximately $17.33 billion, representing 52.4 percent of the country's foreign reserves.
Although Venezuela currently has the fifteenth on the list, it has been increasing its holdings since 2009, when president Hugo Chavez introduced new policies to promote gold extraction and boost the country's ranking

14. Portugal
Value of Reserves: $18.21 billion
Holdings Total: 421.6 tons
The westernmost nation in mainland Europe is home to the fourteenth largest gold reserve in the world. At 421.6 tons, Portugal’s holdings are overseen by Banco de Portugal and are worth roughly $18.21 billion, accounting for 81.1 percent of the country’s foreign reserves.

13. Taiwan
Value of Reserves: $20.17 billion
Holdings Total: 466.9 tons
Renowned for its technology industry and robust economic growth, Taiwan also boasts one of the largest gold reserves in the world.
The Central Bank of the Republic of China (Taiwan) manages the island nation’s foreign reserves, which have been reported at 466.9 tons. These holdings are worth $20.17 billion at today's prices and comprise approximately 4.6 percent of the country's foreign reserves


12. European Central Bank (ECB)
Value of Reserves: $23.88 billion
Holdings Total: 522.7 tons
Established in 1998 by the European Union, the European Central Bank is responsible for the monetary policy of the member nations of the Eurozone and is headquartered in Frankfurt, Germany.
The ECB's 522.7 tons of gold accounts for 25.2 percent of the bank's foreign reserves and would be worth $23.88 billion in today's market.

11. India
Value of Reserves: $26.56 billion
Holdings Total: 614.8 tons
Shooting up in the rankings in the past years is India. The second most populous nation in the world maintains the eleventh largest gold reserves. The size of India's holdings were bolstered in November 2009 by a $6.9 billion purchase of 200 tons of gold from the IMF.
The Reserve Bank of India oversees the country’s 614.8 tons of gold, which are valued at $26.56 billion, comprising 8.1% of its foreign reserves. India’s current ranking may also continue to move upwards, as the government has asked the Geological Survey of India to mine the previously untapped gold reserves in many of its states.

10. Netherlands
Value of Reserves: $29.67 billion
Holdings Total: 675.2 tons
The Netherlands has the tenth largest reserve on the list with 675.2 tons of gold. The Netherland Bank manages the country’s national finances, including the gold reserves, which amount to approximately $26.67 billion and account for 57.5 percent of the country's foreign reserves.

9. Japan
Value of Reserves: $36.43 billion
Holdings Total: 843.5 tons
Although Japan is ninth on the list, its 843.5 tons of gold account for only 3 percent of total foreign reserves. On the open market, Japan's gold reserves are worth around $36.43 billion, and are overseen by the Bank of Japan.

8. Russia
Value of Reserves: $36.91 billion
Holdings Total: 854.5 tons
The Central Bank of the Russian Federation is in charge of the country’s 854.5 tons of gold, which are valued at $36.91 billion and comprise 6.7% of the country’s foreign reserves.
In 2009 Russia increased its gold production by 21%, due in part to the launch of several new mines, and this past year overcame Japan in total holdings, adding over 140 tons to its stockpile in 2010 alone.

7. Switzerland
Value of Reserves: $49.53 billion
Holdings Total: 1,146.5 tons
The Swiss National Bank conducts Switzerland's monetary policy and manages the country's 1,146.5 tons of gold.
With the world's seventh largest reserve of the precious metal, Switzerland's supply is worth approximately $49.53 billion in today's gold market, accounting for 16.4 percent of the country's foreign reserves. This proportion is down significantly from a year earlier.

6. China
Value of Reserves: $50.19 billion
Holdings Total: 1,161.9 tons
At 1,161.9 tons, the world's most heavily populated country has the world's sixth largest gold reserve. Expect it to be higher? Well, bear in mind that China's gold only accounts for 1.7 percent of its foreign reserves. With a population of 1.34 billion, the country holds about $37.45 worth of gold per person, totaling $50.19 billion.

5. France
Value of Reserves: $115.97 billion
Holdings Total: 2,684.6 tons
The French National Bank, Banque De France, is home to the country's gold holdings, which comprise 67.2 percent of its foreign reserves. With 2,684.6 tons of gold in reserve, France's holdings are worth approximately $115.97 billion.

4. Italy
Value of Reserves: $116.75 billion
Holdings Total: 2,702.6 tons
The Banca D'Italia manages Italy's foreign reserves, which have been reported at 2,702.6 tons by the World Gold Council and comprise the fourth largest gold reserve in the world.
These holdings are worth $116.75 billion and account for 68.6 percent of the country's foreign reserves.

3. International Monetary Fund (IMF)
Value of Reserves: $135.56 billion
Holdings Total: 3,137.9 tons
The IMF oversees international economic operations of 185 member countries. Its gold policies have changed in the last 25 years, but the reserves remain to stabilize international markets and aid national economies.
In one such instance, it sold a portion of its reserves in December 1999 to aid the Heavily Indebted Poor Countries (HIPC) Initiative. The 3,137.9 tons of IMF Gold would fetch roughly $135.5 billion in today's market.

2. Germany
Value of Reserves: $161.99 billion
Holdings Total: 3,749.8 tons
The Deutsche Bundesbank, Germany's central bank, has 3,749.8 tons of gold reserves, which are valued at about $161.99 billion. According to the World Gold Council, Germany’s gold coffers account for 70.3 percent of total foreign reserves.

1. United States
Value of Reserves: $387.32 billion
Holdings Total: 8,965.6 tons
The United States Bullion Depository in Kentucky — otherwise known as Fort Knox — is the most famous gold stockpile in the world. It holds the majority of the nation’s gold reserves, the remainder of which is held at the Philadelphia Mint, the Denver Mint, the West Point Bullion Depository and the San Francisco Assay Office.
Altogether, the total gold reserves of the United States equal 8,965.6 tons and would be valued at approximately $387.32 billion in today's market.

(Source : CNBC)

Stop Press : US Debt to GDP and The Euro ..

Jan 24, 2011 5:00 PM GMT+0800
U.S. federal government debt will climb to 99 percent of gross domestic product this year from 93 percent in 2010, while the euro region will total 87 percent, according to International Monetary Fund forecasts ..

The EU has already agreed to bail out Greece and Ireland, and bond investors are concerned Portugal, and possibly Belgium and Spain may be next. Portugal 10-year yields have reached the 7 percent mark that preceded Ireland and Greece’s aid requests.

Bonds yields are still sending danger signals to some of the most-accurate forecasters, who say the rebound won’t last. Wells Fargo & Co., the best foreign-exchange predictor in the 18 months ended Dec. 31, expects a drop to $1.25 by year- end. John Taylor, chairman of the world’s largest currency hedge-fund firm, FX Concepts LLC, said on Jan. 5 the euro may fall below parity with the dollar this year.

Finance ministers from Europe’s top-rated countries, Germany, France, Austria, the Netherlands, Finland and Luxembourg, met on Jan. 17 to discuss strengthening the rescue fund. A “comprehensive package” will be assembled by March, Finance Minister Wolfgang Schaeuble said Jan. 13.

China, which has the world’s largest foreign-currency reserves, said this month it plans to buy securities from the region’s most-indebted countries. Japan said on Jan. 11 it will purchase bonds issued by one of Europe’s bailout funds, while Russia, holder of almost $500 billion of reserves, said it may do the same on Jan. 18

Euro-dollar three-month risk reversals, which measure demand for options to sell the single currency relative to those that allow for purchases, declined to 1.325 on Jan. 13 from 2.150 on Jan. 7, the fastest drop since the three days ended Sept. 16, according to data compiled by Bloomberg. The euro rallied from $1.2644 on Sept. 10 to about a 10-month high of $1.4282 on Nov. 4.
(Source : Bloomberg)