So Good is So Awesome

So Good is So Awesome

The people who created advertisements must be some kind of a genius. Sometimes their "master-piece" is really a so tempting and awesome. I came across this KFC's advertisement in an English newspaper recently that offers a BIG MEAL for an awesome PRICE for this awesome meal. Why not awesome when you take a closer look at the "size" of the drum stick. Awesome size! Isn't it? The awesome size of the drum stick is almost touching the width of the whole plate!

In all my life as an occasional customer of KFC, I swear I have never come across such a awesome drum stick fried chicken at any KFC restaurant when I have my meal there. Yet very frequently I have come across such awesome drum stick fried chicken in KFC's advertisements.

 

That is why there is usually a very small print at the bottom of advertisements which stated that this is for illustration purpose only. Anyway, KFC remains my favourite choice when my urge for fried chicken is there. KFC, are you listening?

"So Good" is now the official slogan of KFC today. But do you know that KFC's slogans have several many times over the years. Early official slogans included “North America’s Hospitality Dish” (1956 - 1966) and “We fix Sunday dinner seven nights a week” from 1957 until 1968. The two slogans were phased out in order to concentrate on the “finger lickin’ good” slogan.

The “finger lickin’ good” slogan was trademarked in 1956. After a local KFC television advertisement had featured Arizona franchisee Dave Harman licking his fingers in the background. Then a viewer phoned the station to complain. The main actor in the advertisement, a KFC manager named Ken Harbough, upon hearing of this, responded: “Well, it’s finger lickin’ good.” The phrase was adopted nationally by the company by the 1960s, and went on to become one of the best-known slogans of the twentieth century.The trademark expired in the US in 2006, and was replaced in that market with “Follow your taste” until 2010. In 2011, the “finger lickin’ good” slogan was dropped in favor of “So good,” to be rolled out worldwide. A Yum! executive said that the new slogan was more holistic, applying to staff and service, as well as food.

Malaysian really love KFC. According to a website, in 2012, KFC Malaysia's revenue jumped to RM1,787.0 million, 8% up on the RM1,655.3 million recorded the year before. KFC has retained its market dominance, and remains as Malaysia's largest restaurant chain. By now, it is believed that there are close to 600 KFC restaurants in Malaysia.

Anyway, my main purpose of writing this blog is to share about some of my experience with KFC when it was a listed entity. But it is just that I do not just want to start my blog directly, instead to inject some sense of good entertaining humour by beginning my blog with one of KFC's recent advertisement. In this way, perhaps readers reading my comment would not find my blog too boring and too direct. In short, I am just trying to inject some creativity into my blog and I hope my efforts will somehow make some readers smiling easily as they continue to read on.

KFC has a very rich saga of corporate stories since those early days. But in the early 2000, "veteran" investors would always look forward to its printed hard copy annual report every  year with joy. Why? Attached inside the annual report is a page that contains 12 detachable coupons (one for each month and for exchanging a food item at KFC restaurant). As my spouse and myself both each bought a 1,000 shares in KFC respectively, there would be a "double" coupons for us. Some of my friends were also shareholders of KFC  for long time keeping the shares - just to receive this annual report and the coupons.

Similarly, KFC's then-parent company Ayamas (later changed to QSR Brands) also practised the coupon system in its annual report. At that time, I owned a 1,000 shares of Ayamas and the annual report would have a page of 6 detachable coupons (one for every two months and for exchanging a food item at Ayamas restaurant).

Later, Ayamas coupons included exchanging for food items at Pizza Hut Restaurant. Eventually these "free-coupons" were not attached in the annual reports of KFC and QSR Brands later (I believed in the mid 2000, sorry if I am wrong).

Because of these "no-more coupons" incentives, we sold off our KFC shares at around RM4 (almost the same price as we bought years earlier) and my Ayamas at RM2 plus almost the same as my purchase price).

Had we held on to our KFC shares until it was delisted effective Feb 7, 2013, my spouse and I would have made at least more then RM10,000 plus. In late-2011, Johor Corp Bhd (JCorp), the Employees Provident Fund (EPF) and UK-based CVC Capital Partners teamed up in a US1.65 bil (RM5.12 bil) offer to buy the business of KFC and QSR.

Massive Equity Sdn Bhd, the vehicle of the buyout, bought KFC and parent QSR Brands at RM4 for each KFC share and RM6.80 for each QSR share, which also include RM1 for each KFC warrant and RM3.79 for each warrant. (Prior to the buyout, there was a bonus adjustment for KFC shares).

It has been more than some 14 months since the delisting of KFC and QSR Brands. Will the "Colonel" makes a comeback to Bursa some days later? I believe the "Colonel" will, but this time it would be on a bigger merged entity (the chicken and pizza business together) and at a rather high premium. After all, who doesn't want to be a shareowner of Malaysia's favourite fried chicken business?

So the next time you are enjoying a "so good" meal of KFC, spare a silent moment and be thankful of one person : the late "Colonel" Harland David Sanders (Sept 9, 1980 to Dec 16, 1980), an American businessman, best known for founding Kentucky Fried Chicken (KFC), and later acting as the company's goodwill ambassador and symbol.

To all our Muslims,

May your home and heart be blessed with joy and peace. Wishing prosperity and happiness to all loved ones on the holy occasion of Hari Raya.

Selamat Hari Raya Aidilfitri 2014.

Maaf Zahir dan Batin.

From Kassim

Fimacor Is Running Faster Than Kfima

Fimacor Is Running

Faster Than Kfima

For those minority shareholders (including yours truly) of Fima Corporation Berhad (Fimacor) who happened not to scroll through the announcements website of Bursa Malaysia after the closing on June 26, 2014 must have waken up to a very pleasant surprise morning the very next day when trading started again.

The usually quiet counter, Fimacor sprang to action with a massive surge in its share price to close at RM9.12 (up by a walloping RM1.02 or 13 %). Fimacor was the day's No. 1 top gainer.

The reason must be due to an announcement on June 26 evening that Fimacor is going for a share split and bonus issue. (The exercise entails that one share is split into 2 shares and then a bonus for every two split shares. To make it unconfusing, if you have 1,000 shares of Fimacor, after the share split and bonus exercise, you will effectively be holding 3,000 shares).

Closing at RM9.12 on June 27 was the highest close since 1987. And if you think enough is enough, Fimacor continued to record even higher close again on June 30 at RM9.20 and eventually closed at RM9.21 on July 4.

Shareholders of Fimacor must be jumping with joys of these sudden massive price appreciation. Suddenly these shareholders are sitting on additional thousand of RM profits (paper profits assuming they are still holding on the shares).

Guess Hari Raya bonus comes early for them!

But while shareholders of Fimacor are in euphoria, the same could not be felt by  those minorities of Fimacor's mother company, Kumpulan Fima Bhd. (Kfima). Kfima's share price merely rose 6 sen to close at RM2.28 on June 27. The mother's share price obviously did not move in tandem with its runaway son's surging charge.

Why?

Kfima owned 60.9% of Fimacor, therefore as there are 80,479,710 shares of Fimacor, Kfima holds about 49 million shares. At the current price of RM9.21 on July 4, this investment is alone worth RM451 million. Divided by the number of Kfima's shares of 274.7 million shares and each Kfima shares is worth RM1.65! This does not include the assets and the logistic, food and other businesses Kfima owns. Kfima also has about RM100 million in investment properties and interest in associates.

Fimacor earned 83.74 sen for Financial Year ending March 2014. (FYM 2014) Kfima's should earned at least 18 sen based on its 60.9% stakes (83.74 sen x 60.9% = 51 sen divided by 274 million Kfima shares = 18 sen). But Kfima only reported an eps of 21.81 sen for FYM 2014. This indicated that after stripping out the 18 sen contribution from Fimacor, Kfima's other businesses only generated 3.81 sen!

Fimacor paid out a total dividend of 38 sen for FYM 2014. Kfima would have pocketed RM18,620,000 in dividends. Divided by its 274 million shares and each Kfima share would be entitled to almost 7 sen dividend.  Not surprisingly, Kfima only declared a final dividend of 8 sen for FYM 2014.

But if Fimacor continues its surging share price, will its mother follows in tandem eventually? The gap between the mother and its son's shares price is getting wider and wider especially since the annoucement during the last several days.

Here is a chart from Dec 2009 to July 4, 2014. The purpose of the chart is to show that the ratio of 1 Fimacor share to 1 Kfima share (meaning how many 1 Fimacor share can buy how many Kfima shares since Dec 2009).

From the chart, it is obvious that the son, Fimacor is simply running ahead in terms of share price's performance compared to Kfima. Although both have seen their share price appreciated, the widening gap is very much favourable for Fimacor shareholders. So there are two pertinent questions. Should Fimacor shareholders sell their shares and switch to Kfima? Afterall, one Fimacor share is able to buy more than 4 Kfima shares, at the moment. Or should Kfima shareholders sell their shares and switch to Fimacor before the latter runs further ahead in its share price?

Understandable, normally the parent company trades at a discount to its subsidiary. In this case it is true for Kfima and Fimacor.

During one of my previous blog on Jan 20, I wrote about Fimacor : One rich generous printing and plantation son. I mentioned that now and then, Kfima and Fimacor would  be mentioned in write-up articles from time to time. And it really happened.

Incidentally, after Fimacor's announcement about the share split and bonus issue was released on June 26 evening, a big write up on Kfima (titled : Kfima a cheaper entry than Fima Corp) was published in the latest Focus Malaysia weekly issue (June 298 - July 4, 2014) issue.

So for those who wish to invest, would it better to invest directly into Fimacor or the mother company Kfima? I do not have a crystal ball to help me. But common sense prevails that if this widening gap share price persists, it would be a matter of times that there would be a major corporate exercise that would entail a privatisation exercise or a merger between the two listed companies. Should that happens, you can bet that by then that the controlling company would be at a great advantage to plan and execute a move that would result in a win-win situation for both companies.

Christophe Yap emailed me this on June 12, 2014 :

Thanks for sharing your thoughts on investment. Your points of view and articles give me some useful hints on investment. Do you mind sharing any other useful or interesting blogs discussing or commenting on investment like what you are doing?

Dear Christophe Yap,

I am most glad that my efforts to share my simple thoughts in my blog can be of some help to you when it comes to investment. Investing is not difficult if we try not to be too smart to think we know everything. Tell you a secret, I do not know a lot of things and my knowledge in a lot of other subjects is rather poor, but perhaps when it comes to investing, I pride myself in knowing that I know this best, apply it to the fullest and hopefully to reap the sow of my rewards.

There are also several bloggers writing interesting blogs with good ideas. The point is what is interesting may not be interesting to you. Similarly what is interesting to you may not be interesting to me.

So read more but do not believe in all, some are just trying to promote certain stocks of their interest. It is easy to promote one own's stock if one has some flair in writing. But my style is different. I stand by my conviction. I dare to challenge readers to be with me by buying shares (example Mercury Industries Berhad) at current market prices not once, but three times! I provide proof with my purchase contract notes every time).

Dear OS,

Sorry for not replying to your two questions. Sometimes I do overlooked this and that. After all, when you are over the fifties, the memory system is not that good anymore.

No, Harrisons is not going to be a 10-bagger stock. But I believe that Harrisons will continue to be just as it is doing "fine" right now for more years to come. It will be business as usual.

Definitely, Harrsions' profits for 2014 will all go towards paying off the payment to Kastam DiRaja Malaysia. Whether it might be enough or not depends on the last three quarters. But rest assured based on Harrisons' paying records, it is unlikely that the company will not pay any dividends for Financial year 2014 at all. Perhaps at a lower range. As long as Harrisons continues to earn 30 to 35 eps (earnings per share), Harrsions should be trading in the tight range of RM3 to RM4 levels. At this levels, Harrisons is considered not expensive and trading at a PE of 10 plus which is very undemanding.

This month July, also marked a milestone for me to be able to complete sharing my humble thoughts for one whole year i.e.  from July 2013 to the beginning of July 2014.  When I first thought of starting to pen my thoughts in Kassimsthoughts.blogspot.com, I asked myself if I am able to last for one year. Although my blog appears usually twice a month with the rare occasion of three times a month, I have always strived to create an unusually style by wording my headlines with more curious catching titles.

Actually I also surprised myself with all those curious catching headlines. Who could have thought a headline that reads as : One Good "Seng" of Bursa Malaysia? Who could have thought that the comment started by mentioning that the word "Seng" is a very famous Chinese names in those early days and then related unexpected to several "Seng" of Bursa Malaysia, ultimately Hup Seng Industries Berhad.

For those who have been faithfully reading my blogs (this is the 27th blog) and find it enjoying and entertaining and perhaps useful, I say "Arigato" to you. I look forward to share more of my thoughts again in the coming period.

For those who emailed to me comments and enquiries, thanks a lot. My humble apology if I did not reply to everyone because sometimes there are certain stocks I am not familiar with and hence, am not in the right position to comment on it.

Seriously, it has been a wonderful year for me to be able to pen my thoughts. My wish is that I would be able to deliver another year of interesting blogs that will brighten your moment with joys when you are reading my blogs.

Cheers to you!