When Cash is King
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Topping the list is YTL Corporation, founded by the Yeoh family. The conglomerate has both the biggest cash pile, at RM11.72 billion, and highest cash per share, at RM6.85. In 2008, while many companies were bracing for the impact from the global financial crisis, YTL purchased a 26% stake in Macquarie Prime Real Estate Investment Trust, now called Starhill Global REIT. The REIT, valued at some RM5.3 billion, holds prime properties in Singapore, Japan and China. Shortly after, YTL's power arm bought into Singapore's second biggest power producer, PowerSeraya Ltd, for S$3.8 billion from Temasek Holdings. The deal will spur the group's regional utility business and give it an edge when the Malaysian electricity market liberalises.
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Malaysian Business, June 26, 2009
Without cash a company cannot last long. Companies with strong cash positions and low debt levels are said to have an edge in riding out a slowdown. They can capitalise on buying opportunities that crop up. Alternatively, they can expand organically when others are cutting back.
In our cash analysis, we have ranked Kuala Lumpur Composite Index-linked companies based on their cash per share, apart from giving the total cash figure. For a fair assessment we have omitted financial institutions.
Topping the list is YTL Corporation, founded by the Yeoh family. The conglomerate has both the biggest cash pile, at RM11.72 billion, and highest cash per share, at RM6.85.
In recent years, YTL has intensified its regional search for opportunities to diversify its revenue base. In 2008, while many companies were bracing for the impact from the global financial crisis, YTL purchased a 26% stake in Macquarie Prime Real Estate Investment Trust, now called Starhill Global REIT. The REIT, valued at some RM5.3 billion, holds prime properties in Singapore, Japan and China.
Shortly after, YTL's power arm bought into Singapore's second biggest power producer, PowerSeraya Ltd, for S$3.8 billion from Temasek Holdings. The deal will spur the group's regional utility business and give it an edge when the Malaysian electricity market liberalises.
Penang-based Oriental Holdings, which is well known for its monopoly of the Honda range of vehicles, is second with a cash per share of RM3.71. Third is the restructured DRB-Hicom, followed by Tanjong, which is noted for its strong cashflow from its power and gaming operations.
Gaming giant Genting, which sits on cash estimated at close to RM7 billion, will need all the money it can lay its hands on, for its second casino project in Singapore via subsidiary Resorts World Bhd. Recently the family of the late Tan Sri Lim Goh Tong, the group's founder, sold their direct stakes in Genting Singapore. The move raised another RM1.47 billion cash for the family.
Like YTL, many on the cash-rich list are family-run companies. Another group with huge cash piles are the government-linked companies (GLCs).
Among this group, Bursa Malaysia takes the lead with a cash holding of RM1.11 billion, which works out to a cash per share of RM2.11, followed by Malaysian Airline System, with RM2.94 billion and RM1.76 respectively.
As for Proton Holdings Bhd, while its balance sheet remains healthy with cash totaling RM1.23 billion, some analysts warn that if the national carmaker is unable to sell its cars fast enough, it may one day run out of cash. Proton's long-term survival hinges on its ability to secure a strategic alliance with a foreign partner.
At Tenaga Nasional, forex losses, debts and falling demand pose challenges for the utility giant. However, a Tariff adjustment process which is indirectly a fuel cost pass-through mechanism speculated for sometime in the middle of this year may shift Tenaga's risk-reward profile towards the positive.
Sime Darby, which has a huge cash hoard of close to RM6 billion, is on the radar of many analysts who await the synergies promised from its mega merger, two years ago. Its stock has underperformed the rising market, with many analysts preferring competitors IOI Corporation and Kulim (M).
Two multinationals are on the list Carlsberg Brewery (M) and Digi.Com. Carlsberg is burdened by high raw material costs which is reflected in its first-quarter results. On the upside, it may be poised for a potential acquisition venture sometime this year following its decision to hold back dividends last year.
DiGi.Com, whose innovative marketing strategies make the stock a favourite with many analysts, is turning its focus on growing usage to counter its slowing subscriber growth. This may take time, though. The launch of its broadband services will help provide new revenue streams. However, at RM22.80, DiGi.Com is now trading close to the fair value of RM23.20 estimated by RHB in a report recently.
In the final analysis, there is no guarantee that a cash-rich company will outperform the market. But at least, the chances of it going bust are lower.
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Topping the list is YTL Corporation, founded by the Yeoh family. The conglomerate has both the biggest cash pile, at RM11.72 billion, and highest cash per share, at RM6.85. In 2008, while many companies were bracing for the impact from the global financial crisis, YTL purchased a 26% stake in Macquarie Prime Real Estate Investment Trust, now called Starhill Global REIT. The REIT, valued at some RM5.3 billion, holds prime properties in Singapore, Japan and China. Shortly after, YTL's power arm bought into Singapore's second biggest power producer, PowerSeraya Ltd, for S$3.8 billion from Temasek Holdings. The deal will spur the group's regional utility business and give it an edge when the Malaysian electricity market liberalises.
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Malaysian Business, June 26, 2009
Without cash a company cannot last long. Companies with strong cash positions and low debt levels are said to have an edge in riding out a slowdown. They can capitalise on buying opportunities that crop up. Alternatively, they can expand organically when others are cutting back.
In our cash analysis, we have ranked Kuala Lumpur Composite Index-linked companies based on their cash per share, apart from giving the total cash figure. For a fair assessment we have omitted financial institutions.
Topping the list is YTL Corporation, founded by the Yeoh family. The conglomerate has both the biggest cash pile, at RM11.72 billion, and highest cash per share, at RM6.85.
In recent years, YTL has intensified its regional search for opportunities to diversify its revenue base. In 2008, while many companies were bracing for the impact from the global financial crisis, YTL purchased a 26% stake in Macquarie Prime Real Estate Investment Trust, now called Starhill Global REIT. The REIT, valued at some RM5.3 billion, holds prime properties in Singapore, Japan and China.
Shortly after, YTL's power arm bought into Singapore's second biggest power producer, PowerSeraya Ltd, for S$3.8 billion from Temasek Holdings. The deal will spur the group's regional utility business and give it an edge when the Malaysian electricity market liberalises.
Penang-based Oriental Holdings, which is well known for its monopoly of the Honda range of vehicles, is second with a cash per share of RM3.71. Third is the restructured DRB-Hicom, followed by Tanjong, which is noted for its strong cashflow from its power and gaming operations.
Gaming giant Genting, which sits on cash estimated at close to RM7 billion, will need all the money it can lay its hands on, for its second casino project in Singapore via subsidiary Resorts World Bhd. Recently the family of the late Tan Sri Lim Goh Tong, the group's founder, sold their direct stakes in Genting Singapore. The move raised another RM1.47 billion cash for the family.
Like YTL, many on the cash-rich list are family-run companies. Another group with huge cash piles are the government-linked companies (GLCs).
Among this group, Bursa Malaysia takes the lead with a cash holding of RM1.11 billion, which works out to a cash per share of RM2.11, followed by Malaysian Airline System, with RM2.94 billion and RM1.76 respectively.
As for Proton Holdings Bhd, while its balance sheet remains healthy with cash totaling RM1.23 billion, some analysts warn that if the national carmaker is unable to sell its cars fast enough, it may one day run out of cash. Proton's long-term survival hinges on its ability to secure a strategic alliance with a foreign partner.
At Tenaga Nasional, forex losses, debts and falling demand pose challenges for the utility giant. However, a Tariff adjustment process which is indirectly a fuel cost pass-through mechanism speculated for sometime in the middle of this year may shift Tenaga's risk-reward profile towards the positive.
Sime Darby, which has a huge cash hoard of close to RM6 billion, is on the radar of many analysts who await the synergies promised from its mega merger, two years ago. Its stock has underperformed the rising market, with many analysts preferring competitors IOI Corporation and Kulim (M).
Two multinationals are on the list Carlsberg Brewery (M) and Digi.Com. Carlsberg is burdened by high raw material costs which is reflected in its first-quarter results. On the upside, it may be poised for a potential acquisition venture sometime this year following its decision to hold back dividends last year.
DiGi.Com, whose innovative marketing strategies make the stock a favourite with many analysts, is turning its focus on growing usage to counter its slowing subscriber growth. This may take time, though. The launch of its broadband services will help provide new revenue streams. However, at RM22.80, DiGi.Com is now trading close to the fair value of RM23.20 estimated by RHB in a report recently.
In the final analysis, there is no guarantee that a cash-rich company will outperform the market. But at least, the chances of it going bust are lower.