ECM Libra 'underweight' on property counters

ECM Libra Investment Research has kept its "underweight" call on property stocks as rising construction costs erode developers' margins. The recent fuel hike may dampen property sales and add further pressures on builders.

"We are cautiously calling an underweight now in view of negative outlook in the near term due to escalating construction costs," the broker said in a report.

Although there is bargain-hunting opportunity now, it warns that both earnings and share prices of property companies may drop further.

However, in the mid to long term, developers with prime land bank that focus on upper middle class to high-end properties will be able to pass on cost to home buyers, it said.

ECM Libra said investors can consider buying shares of selected property players, as their share prices have fallen significantly so far this year and very much at distressed levels as compared with the intrinsic value of their landbank.

The broker has YNH Property as its stock pick, saying that its high development margin and prime landbank will put it in a better position to overcome cost escalation.

Despite weakening market, property prices may continue to rise especially for the higher end products as developers seek to defray higher construction costs. However, developers that locked in sales value by pre-selling their properties may face margin erosion even when fixed price building contracts have been given out earlier, ECM Libra said.

Developers may be "forced" to re-negotiate building contracts to avoid contractors delay or abandon the projects because of the high building material prices.

"We expect developers to scale down or defer launches in order not to 'over-expose' themselves to the spiralling construction costs," the report said.

CASE FOR INTEGRITY: Shahrir, ECM Libra years later...

Old ECM Libra:

item no 1:-

JOHOR BAHRU 23 Julai – Jawatankuasa Kira-Kira Wang Negara (PAC) mahu kerajaan menjelaskan beberapa persoalan berhubung penggabungan syarikat Avenue Capital Resource Berhad dengan ECM Libra.

Pengerusi PAC, Datuk Sharir Abd. Samad berkata, soal penggabungan kedua-dua syarikat itu menimbulkan tanda tanya sama ada pengambilalihan itu menguntungkan kerajaan yang merupakan pemegang saham terbesar dalam Avenue Capital Resource.

Menurut beliau, kerajaan memiliki pegangan saham dalam Avenue Capital melalui MOF Incorporated iaitu salah satu syarikat diperbadankan oleh Kementerian Kewangan.... Utusan Malaysia Online - Berita Utama 24 Julai 2006

item no 2:-

Merujuk perkara di atas, Datuk telah berkata demikian: Public Accounts Committee (PAC) Chairman Datuk Shahrir Samad conceded after the PAC meeting on Thursday that the merger between ECM Libra and Avenue raised troubling questions.Shahrir said: " In principle, there is a conflict of interest if the minister's family member is involved. But here, maybe there was no minister's consent because the matter was not brought to the cabinet - it was decided between the ministry's officials and the party which made the offer." Ibnu Hakeem .... [harakahdaily] PERINGATAN KEPADA DATO SHAHRIR SAMAD CHAIRMAN PAC

Public Accounts

item no 3:-

As the Parliament's Public Audit Committee convenes its investigation into the ECM-Libra/Avenue Capital Resources merger today, the media spotlight is trained on how the famous Son-in-Law funded his RM9.2 million purchase of a minority share in ECM-Libra, which was first revealed in December 2005.

On December 27 last year, the three founding members of ECM Libra -- Lim Kian Onn, Kalimullah Masheerul Hassan and David Chua -- announced that they were each selling 1% of their shareholding in the company to Khairy Jamaluddin. The deal was transacted at 71 sen per share, or a total of RM9.2 million. .... Screenshots: How Khairy funded his ECM-Libra shares

item no 4

KUALA LUMPUR, Aug 12 (Bernama) -- Umno Youth deputy head Khairy Jamaluddin has sold his entire stake of 10.2 million shares representing 1.23 per cent of ECM Libra Avenue Bhd, an investment and stockbroking-based company, it was announced Saturday.

Khairy sold his shares for 65 sen a share yesterday. He had bought them at 71 sen a share in December last year.

ECM Libra Avenue chairman Datuk Kalimullah Hassan Masheerul Hassan has also reduced his stake in the company to 40 million shares or 4.8 per cent in the company and is now no longer deemed a substantial shareholder, The Edge business weekly reported. ... The Malaysian Bar - Khairy Jamaluddin sells entire stake in ECM ...

New ECM Libra:

Ibrahim (Pasir Mas-Ind) brought up the issue of the connection between ECM-Libra and Pos Malaysia and whether Pos Malaysia stood to gain RM6 for every RM625 rebate for car disbursed.

On the issue regarding Pos Malaysia, he said: “I asked the Second Finance Minister and he said Pos Malaysia was paid according to actual costs. It has already explained to the Public Accounts Committee (PAC) that during the restructuring of Avenue Capital and its connection with ECM-Libra, Pos Malaysia has gone on to become a GLC (government-linked company).” ...24-06-2008: A big aye for government
The Edge Daily, Malaysia

BERITADARIGUNUNG: After all, we are human, not angels, Shahrir included.

Case on Shahrir Samad, revisit. July 2008

CASE 1 : MRR2, the flyover in Kepong.

The Star 17 Oktober 2005

KUALA LUMPUR: The flyover in Kepong which had to be closed for four months last year because of cracks is in danger of collapsing within two years unless remedial work is carried out.

This finding by one of the consultants on the Middle Ring Road Two flyover was passed to the Public Works Department in Mac, but remedial work has yet to start, which has irked the Public Accounts Committee (PAC). “The consultants (the Halcrow Group of Britain) had advised the PWD on the steps to take to solve the problem in Mac. “It is now Oktober and we like to know why it is taking so long,” said PAC chairman Datuk Shahrir Samad at a press conference after meeting the consultants in Parliament yesterday.

He said contractors for remedial works had not been appointed as no tender had been called. “I feel this can be seen as extremely dangerous behaviour,” he said. He said PAC would meet the PWD next Jumaat. According to Shahrir, the consultants said the problem affecting the flyover was known as delayed ettringite formation (DEF). DEF, which is said to be a recently discovered phenomenon, is caused by a substance found in cement which expands when it comes into contact with water, causing the concrete to crack.

“If nothing is done, the flyover might have to be closed in two years because of the risk of collapse,” Shahrir said. Last year, the flyover had to be closed from Ogos to Disember after cracks appeared on the horizontal beam of its support structures. At present, only four of the six lanes on the flyover are open to traffic.

Shahrir said Halcrow had suggested that the beam and crossbar of the flyover’s support be waterproofed. As the support structures had been affected by DEF, they would have to be strengthened. Asked how such a situation could happen, Shahrir said the answer was still not known. A total of eight consultants had been hired to look into the MRR2 problem. “That is probably the highest number ever hired for such a situation,” he said. ...SHAHRIR-UMNO.com
Shahrir

CASE 2: ECM Libra, with big names, Kalimullah and Khairy.

2.1 I was astounded by Shahrir Samad’s assertion that the PAC investigations on the ECM-Libra hit an unexpected snag, because when Second Finance Minister Nor Mohamed Yakcop came before PAC to answer the committee’s questions, no PAC member asked any question.I commented that while I could understand BN members of PAC maintaining UMNO's practice of elegant silence, I wonder what happened to those opposition parliamentarians like DAP’s Tan Seng Giaw who is a PAC member....KTemoc Konsiders ........: Shahrir Samad naughty on PAC questions ...2 Oct 2007

2.2 The Public Accounts Committee (PAC) today said it is satisfied that the merger between ECM Libra Bhd and Avenue Capital Resources Bhd was done legally and in accordance with the relevant procedures.
PAC chairman Shahrir Samad said the Securities Commission (SC) had provided a thorough explanation on the issue, but the committee was concerned with the "policy and strategy" adopted ... Screenshots: ECM-Libra/Avenue 'merger': Conflict of interest? 10 Aug 2006

2.3 A most controversial merger revisited. The last time the Public Accounts Committee (PAC) touched on the merger was in August last year. PAC chairman Shahrir Samad was then quoted as saying that the merger had raised troubling questions.At 9.30am tomorrow at the Parliament House, Shahrir may square off with the second most powerful person in the country, Nor Mohamed Yakcop, who is the 2nd Finance Minister, to try and get down to the bottom of the issue. ... rocky's bru: Shahrir Samad vs Nor Mohamed Yakcop 25 Feb 2007

BERITADARIGUNUNG: Life isnt perfect. Integrity at times is seen as commodity, thus can be traded, trade-in and disposed. And of course commodity can be bought not necessarily in cash because it can also be in the form of borrowed power. And thats is LEGAL.......