NCB - No Claim Bonus

NCB - No Claim Bonus

NCB or No Claim Bonus is one of the features of a medical plan by one insurance company in Malaysia introduced in November 2009. Known as Takaful Health, the medical plan also pays its customers to stay healthy through its innovative NCB feature of up to RM500 per year, depending on the package. Basically, it means that if the policy holder doesn’t make a claim, they will receive money that comes from the NCB.

However when it comes to the auto accident policy in Malaysia, motorists or vehicles owners would be quite familiar with another similar feature. Called NCD, short for No Claim Discount, it is a discount given to the policyholders upon renewal of their motor insurance if no claim is made or arises from the policy for a continuous coverage of 12 months. The discount given is based on a fixed rate provided by Persatuan Insurans Am Malaysia (PIAM) Motor Tariff.

In Bursa Malaysia, there is also one company called NCB, a short abbreviation for NCB Holdings Bhd, formerly known as Northport Corporation Bhd (NCB). Formed in January 1999 and was restructured in August 2000 under Section 176 and 64 of the Companies Act 1965 involving Klang Container Terminal Bhd (KCT), Klang Port Management Sdn Bhd (KPM) and Kontena Nasional Berhad (KN). Under this exercise, KCT and KN became wholly owned subsidiaries of NCB while KPM became a wholly owned subsidiary of KCT.

The company changed its name from Northport Corporation Bhd to NCB Holdings Bhd in 2001. The major subsidiaries of the group was placed under Northport (Malaysia) Bhd, which also had a name change from its original name Klang Container Terminal Bhd and Klang Port Management Sdn Bhd (KPM). NCB Holdings Bhd’s business activities is undertaken by its two port subsidiaries, namely KPM and KCT and KN, its haulage/logistics operations.

During the last decade, NCB has been paying generous dividends to its shareholders in tandem with its consistent profits earnings. But during the last one year, its good earnings has been dragged down by one of its units, Kontena Nasional Berhad (KN) which has been sinking deeper and deeper into the red.

This has effected its dividends payout for financial year 2013. A final dividend of 4.5 sen payable on July 3, 2014 (interim of 3.5 sen paid on Oct 10, 2013) means only a total dividend of 8 sen which must be the lowest ever payout compared to the last ten years!

NCB’s recent 1st Qtr results for Financial year 2014 did not seen very encouraging if one is to have a close look at its unaudited condensed consolidated statement of financial position as at Mar 31, 2014.

Cash and bank balances is now only RM127 million compared to the preceding quarter of RM156 million.

Trade and other receivables is RM183 million compared to Trade and other payable of RM278 million.

Borrowings (current) and (non-current) is RM165 million and RM44 million respectively.

Am I right to say that NCB is actually in a negative cash position which is quiet a shock to me. Years back, NCB’s balance sheet is one to envy amongst the several port operators’ listed companies in Malaysia.

Prior to paying out that two generous bumper dividends in 2011 (76 sen) and 2012 (65.6 sen), NCB’s has cash of around RM800 million. Why it paid out so much dividends is something of a mystery to me because that was unusual of NCB’s normally reasonable dividend of 30 sen plus range. Nevertheless after such bumper dividends payout, NCB has seen its cash dwindling to lower and lower position.

Its main bread and butter business, the Port Operations suffered a very severe decrease of 62.8% (profit before taxation or PBT) for its 1st Qtr 2014. PBT dropped to RM18.2 million compared to RM48.9 million as compared to last quarter of previous year due to (1) higher operating expenditure (2) lower container throughput handled and (3) Kontena Nasional Berhad (KN)'s continuous rationalization exercise. NCB merely reported that KN's operations registered revenue of RM67.3 million which was a decrease of 13.1% over the same quarter the previous year.

As a result, NCB earned merely a sen only for its 1st Qtr 2014. How will NCB fares in the last three quarters is still anybody's guess. How much dividends will NCB be declaring for this 2014 is seriously not a comfortable thought for dividends lover like me. Hence, I decided to sell off my 2,000 shares of NCB at RM2.99 on June 2 for a loss of RM416.89. (Purchase price RM6,348.89 minus Selling price RM5,932.00 = RM416.89 - LOSS). The proceeds were used to purchase 4,500 shares of Mercury at RM1.59 on the same day.

The dilemmna of investor is that one is always in the mind of to sell or not to sell at a loss or to take profit or not to take or to just hang on. In this instance, my conviction is that NCB will not likely sees an uptrend in the share price provided there is recovery in earnings and thence, the share price (already at 52-week low) is likely to continue to remain at this depressed point.

Mercury on the other hand offers a more likely upswing in its share price based on its consistent earnings and higher dividends payout (normally, I see this as a good sign of the company getting stronger over the times).

With the additional 4,500 shares purchased, I now hold a total 36,000 shares of Mercury. Most probably, I believed that my stakes are bigger than any of my followers or readers (who choose to join me).

Last day today June 10 to qualify

for Mercury's 10 sen dividend (interim)

Today is the last day to qualify for the 10 sen dividend. You can trust me that I will be holding on to my 36,000 shares and qualify for the RM3,600 dividends and many more years to come unless the fundamental of Mercury changes dramatically in the futures. But if Mercury continues to "just maintain its consistent earnings" every quarterly, I would be more than pleased to be just a shareholder and enjoy the dividends year after year!

World Cup Soccer 2014 - International Friendly Match

between England and Ecuador. - Really friendly?

They called it "International Friendly", but do you think it is really "friendly?" Look what happened in the so-called international friendly match between England and Ecuador last week? England's Raheem Sterling and Ecuador captain Antonio Valencia were both sent off the field. Sterling was booked for a violent challenge on Valencia who himself was punished for grabbing the neck of the Liverpool youngster.

I wonder why those players would still want to play "all-out" in this type of international friendly match when there is actually no medal to be won other than some national pride. But then why play with such tough and hard tacklings which do not result in win-win situation for both sides. The end result is that some unfortunate talented players suffered injuries which will rule them out of the World Cup.

Look what happened to Alex Oxlade-Chamberlain. His right knee is hurt as a result of a clash with Ecuador's Carlo Gruezo. He is racing against time. Hope he will recover.

But for some, there is no chance at all. Italy midfielder Riccardo Montolivo's World Cup dream came to an end when he broke his leg during the friendly match against Ireland.  Germany's Marco Reus is also a doubtful starter after an ankle injury during the international friendly match against Armenia.

I see no benefit for such so-called international friendly match when the outcome produces such disastrous consequence to the players only.

World Cup Soccer 2014 - Two Great Players Missing are ...

France attacker Frank Ribery will also miss the World Cup through injury. The Bayern Munich player, 31, has been ruled out after injuring his lower back in a training session. Ribery pulled out of the training session after complaining of pain and was later taken for an MRI scan, which confirmed the extent of the injury.

Another great striked, Colombia's Radamel Falcao will not be playing in the World Cup after failing to recover from a serious knee injury.

Falcao, who is a key player for Colombia and scored nine goals in 13 matches in qualifying, damaged an anterior cruciate ligament in January while playing for Monaco in the French Cup. He had surgery but a recovery in time for the finals was always likely to be a long shot and medical staff have decided he is not fit enough to play any meaningful part in the tournament.

Congratulations Mr Kumaresh on your Big Day!

One of my readers Mr Kumaresh recently got married to a beautiful lady. Kumaresh is also an avid soccer player and is one of my regular football players during our every Saturday and Sunday evening games. He is quiet a good nippy player and has scored some good memorable goals in some matches. It was through soccer that we became good friends and share common interest in investing in Bursa Malaysia. He would be celebrating his honeymoon in Bali and I wish him and his new bride "all the best of the best always!"