Monday, August 29, 2011

What's up Vincent Tan?

I was once told by a friend to avoid investing in companies own by Vincent Tan. He said chances of you get screwed is high. Take this injection of Starbucks into Berjaya Food for an example. Read this one first.

So, Vincent Tan will get RM 79 million by unloading his 50% equity in Starbucks to the rest of us. That 79 million he said was very fair because he sells to us for 13.5 X PE. It is very fair because when you want to buy Starbucks directly from the US market, you will have to pay for US $ 37.92 for estimated 2011 EPS of US $ 1.52 and that is translated to about 24X PE.

Starbucks operate about 115 stores throughout Malaysia with revenue of RM 140 million sales for FY 2011 ended 30 April. The revenue has been growing at 10% plus for the last 3 years and I seriously doubt the growth can continue as I believe the saturation is setting in. That is the reason why he wants to unload this to the rest of us????

Second point: the dilution if people exercise their rights.

Let's jump straight to the last page of their proposal. Under this scenario, equity will jump from 50 million to 162 million. I think the earning will increase from 7.9 million to about 12.9 million. ROE before taking Starbucks is 15.8% and post Starbucks injection is 7.96%. Thank you Vincent Tan for being so kind by destroying shareholder value. I don't argue the brand value that Starbucks bringing in but he makes Berjaya Food shareholder overpaid is something difficult to swallow.

EPS before Starbucks injection is 7.9/141=0.056 and post is 12.9/386 = 0.0334. You do the rest of the math on the multiple.

What if he decided to inject McDonald? Will the shareholders get screwed further? Let me borrow this from Patrick Teoh.



KAI said...

Is McDonald under him?

I thought its under Golden Arches which is a subsidiary of McD Corp?

Turtleinvestor said...


Check this out.$FILE/BJLand-Cover-CorpInfo-Directors'Profile-CorpStructure-FinancialHighlights%20(380KB).pdf

You can see the details under profile. I extracted out it here:

49 years of age
Chief Executive Officer
He was appointed as First Director of Berjaya Land Berhad upon incorporation and
was subsequently appointed as the Chief Executive Officer (“CEO”) on 1 January 1991.
He is a businessman and entrepreneur with varied interests in property development,
telecommunications, gaming, stockbroking, insurance, manufacturing, trading,
hospitality and Internet-related businesses and utilities through various public
and private companies including Intan Utilities Berhad, Berjaya Times Square Sdn Bhd
and Golden Arches Restaurant Sdn Bhd, the local franchisee of the McDonald's
fast food chain of restaurants. Currently he is also the Chairman and CEO of
Berjaya Group Berhad and Berjaya Sports Toto Berhad and, Chairman of DiGi.Com
Berhad, Berhad and Prudential Assurance Malaysia Berhad. He also holds
directorships in Unza Holdings Berhad, Berjaya Vacation Club Berhad, Bukit Tinggi
Resort Berhad and other private limited companies in the Berjaya Group of Companies.

KAI said...

I thought Golden Arches is directly under McD Corp because anyone could apply(from the website) to be a franchisee of McD in Malaysia. Unlike KFC and pizza hut which are solely under QSR(masterfranchise) in Malaysia, Cambodia and few other countries.

I'm baffled. Anyway thanks for your reply =)

Ivan said...

wao. bravo and great analysis!

Ivan said...

wao. bravo and great analysis!