Price is stabilizing and new base is forming. As PH's 100 days approaching, good news keep on coming in - delay toll abolishment & tax exempt on construction materials. Should see blue sky soon. Time for me to average up!

These few months Eko had been dropping for no reasons. So, why should there be good news for Eko to go up? Now that the sentiment had improve a little. I think no news is good news. Eko had been a lagger so far, I have not surprise at all of the run up. As sentiment improves further, prices should recover.

@tokti, haha, that's call opportunity cost! I'm sure everyone has a slice of it in their lifetime.

Why tortured yourself with this thinking? If you know in advance (which people called 'gold finger'), you won't be here anymore. You probably will be in TV show earning millions per show, or having seminars which would also earning millions. Or enjoying life anywhere in the world! haha

Exclude LKH, Lim family now controls ~59% stake to vote in favor of IWcity take over.

Wow! Lim family now controls >74% stake in Eko. Will this becomes value trap if no more sharks to push up the price?

Please be cautious before you brought into position!
Be prepared for the winter, at least until the 2019 budget announcement. Most likely, the winter will drag till next year! But good news may be developing, as yen credits may help fulfill some of the PH's 100 days pledge. Only gods know!

OH!! Someone is panicking! Luckily yesterday didn't buy. hehe. Tq for the cheap sales.

Correction: Ekovest Holdings's 12% stake as listed in AR2017's Substantial Shareholders is not belong to Eko's treasury (or Share Buy Back scheme). It is actually part of LKH's indirect holding!

I was mislead by the name "Ekovest Holdings." But it is a different entity from Ekovest Berhad (8877).

Please take note.

Anyone has any idea how SPE is progressing? Last known status is 13% complete on early June 2017.

Duke 1&2 valuation is pretty much there already, so nothing much to talk about. Its next toll hike likely due 2019, I think government won't wait till then for its take over.

But SPE is the meat on the mouth already, the management should NOT let it goes so easily without the fight for its fair valuation! If it can be completed and operational before sold, that would be ideal!

SPE toll concession can easily worth another $1/share for Eko. The management should full steam ahead to build SPE expressway till its completion ahead of schedule!

The SPE even if not completed, should have gain a minimum 5%-10% valuation extra from its concession agreement, or else Eko is actually making a loss for building SPE because of the high debt costs incurred.

So assuming a 20% work completion now, 20% x $5,000m x 5% = $50m (hehe..... another 2.5c/share at least!)

If SPE (or Duke 3) can cut down travel time by more than half, the traffic for SPE should be even more than Duke 1&2. So, the valuation for SPE toll concession would be even much higher than Duke 1&2.

Management should sell Duke 1&2 first, and use the proceed to acquire IWcity and complete SPE before sell it back to government. That should maximize profits for shareholders!

Forget about 2A, the contract should be immediately renegotiated with current PH administration, be it need to re-open tender or proceed as planned. After all, Eko is still the strategic contractor for 2A as it is the extension of Duke! Since it still haven't start, Eko loss nothing!

Don't worry! At time like this, CASH is KING!
Mr. LKH & Mr. LKC know exactly where to put the money!

Recall that Eko the still have about $16.5b ongoing and future RoL projects to go with!

Those concession asset supporters for Eko should not have back down now because it will soon be the pay day!

The value of concession asset that you are cheering about for months/years, now it will soon be liquidated! What's more? The share price is so much undervalue now!

It is time to 'sailang' before the actual take over value announce. Because by then, it will be too late!

Eko's NOSH is 2,139.2m shares. But also note that Eko has 9.38% of its own shares. So, the effective NOSH is now 1,938.54m shares.

Eko's AR2017 valued its 60% stake of Duke 1&2 at $1,695m. Its latest Q3 report valued this 60% above $2,000m. So, I guesses the worst case is $1,695m (note that this is same as EPF's 40% stake's cost price bought in Dec2016. Would government let EPF making a loss?).

So, the government should paid Eko at least $1,695m for Duke 1&2 take over.
Duke 3 although not yet completed, its cost already absorped fully by Eko at about $5,000m. If concession agreement is effective, although Duke 3 is not completed and not yet started operation, the government should still pay a little more than the cost price. However, we take it as government only paid the cost price on Duke 3. So, no gain and no loss for Duke 3.

In conclusion, we are talking about Eko's concession asset liquidation here which will be the main theme for Eko within the next 3 years. The net effect is Eko get at least $1,695m cash from government, or effectively 87.4c/share. Now this is cash (at its present value), do you still want to discount the cash from its norminal value!??

So, any valuation below 90c/share is utterly nonsense!

IWcity's NOSH = 837m (5% = 41.85m)
41.85m x $0.555 = $23.2m (saving = ~$39m vs @1.50)

Eko's Q3 showed about $259m cash or bank deposits. Take ~16% of this cash to buy IWcity shares from open market (~5% float). It can actually save about $39m if future acquisition of IWcity @1.50 materialized later.

Looks like the review of all government projects will drag until next year. The whole construction sector is doomed this year!

Please at least hits one! Then I'll feel better.
Been down for nothing! That's very stressful!

Just realizes that Eko owns about 10% of its own shares (in treasury?). does that mean we have to multiply the earning by a factor of 11%?

There are more than 10% foreign holding in Eko's shares. I don't all had been sold. So, I'm expecting there will be some more downward pressure.

The irony is that so far PH's bombs that hit are not even close to Duke, but Eko had already taken all the punches!

No problem guys. Sama-sama. We share all useful information, and earn money together.

In other words, Eko can bring government to court if a "fair compensation" is not reached! If this is still not enough, you still can try the international arbitration.

page 113

"Dispute settlement
Dispute settlement clauses are a key element of international investment agreements as they make effective the enforcement of the obligations provided for by the agreement. Therefore, they enhance the level of legal certainty given to foreign investors in a given host state. Investment disputes comprise disputes arising between contracting state parties, or between the host state and a foreign investor. With one notable exception, all of Malaysia’s agreements contain provisions for the settlement of disputes between the states parties to the agreement and additionally provide investors with access to international arbitration in various fora."

page 111-112

As for the conditions for lawful expropriation, the language is fairly consistent and conforms to the customary international law requirement that the host state’s right to expropriate must be taken under due process of law, for a public purpose, in a non-discriminatory manner and against the payment of compensation.

The standard of compensation is expressed, with some variations in drafting, in terms of the Hull Rule: it must be prompt, adequate and effective. This protection standard adds to the constitutional obligation not to expropriate private property without fair compensation. Detailed provisions regulate the details of expropriation procedures and use market valuation as a standard for valuation, which must be determined “in accordance with internationally acknowledged practices and methods” (as found in the BIT with Indonesia). An additional requirement found in two FTAs is that the compensation must be “effectively realisable” (AANZFTA), or “fully realisable” (MAFTA).

page 86

In the event of a dispute between the investor and the government over the amount of compensation, the issue is referred to Malaysian courts. If the government and the other party have agreed to submit their dispute to arbitration, the injured investor may bring the case to international arbitration. The arbitral tribunal will then have to decide whether the measure taken by the government is lawful.

I've quoted some relevant paragraphs here.

page 85

"Expropriation procedures
Clear and predictable legal provisions on expropriation, ensuring that it can only be done for public purposes, in a non-discriminatory manner, on payment of compensation, and in accordance with due process of law, are key protections for investors. Such rules, when clearly provided for, minimise the risk of arbitrary government action to expropriate established investments and ensure that expropriation is appropriately compensated when it occurs.

The Federal Constitution of Malaysia protects both domestic and foreign investors against expropriation of property without fair compensation. Under Article 13 of the Constitution, no person may be deprived of property in accordance with the law and no law may provide for compulsory acquisition or for the use of property without adequate compensation. "

For those who are in great worry and fear, and to those who are on the blink of break down and intend to sell their shares, and especially to those pessimists who envied Eko as hidden gems but chicken-out,

you can be 101% assured that Eko will get its fair compensation for Duke expropriation!


Refers to "OECD Investment Policy Reviews Malaysia 2013"

Even with good result also can't stand, market shorting mood is too strong!

Offer, offer, offer, offer....
Sell, sell, sell, sell....
Buy, buy, buy, buy....

Haha More and more cut-throat discount!!!

I think the PH's intention is now very clear. They want to take over the concessionaires, and then slowly abolish tolls in stages.

But they are very careful right now as they need to tackle a few BIG issues at the same time, i.e. 1MDB, GST, tolls, etc.

Toll income can more than cover bond debts' annual obligation.

They already budgeted 50 bil for this exercise. But I think they try to ensure if that 50 bil really exists and if it is enough to cover the cash portion of toll concessionaires as valuation likely had increased from last year.

Without toll concession in future, I guess the cost structure for Duke 2A will also be changed. That means Eko will likely needs less cash from its own pocket, but more grant from government to build expressway. It means less debt, and more capital for growing other businesses.

Government take over of concessionaires is CONFIRM! Just a matter of time only. Anyway, there is still plenty of time. They have 4 years to do this. But any seconds delay, government needs to pay more later. So, there is a push to this execution.

Right now, I'm thinking those who vote no for Eko take over of IWcity is because of the love for concession assets. With that gone, I think people will likely vote YES to the take over now.

Without concession income, Eko needs to get land banks to grow its property business. It should be a good time to start the take over deal again, then can eyeing for Bandar Malaysia contract.

If valuation based on the 10% IRR, Eko likely gets more than its current market value of 2137 mil for its 60% stake.

If government took over, it means government needs to deal with the guarantee as well. That should be covered in the government's compensation package.

Sorry! Goods sold, no return!

So, I predicts the announcement will be not pay cut for all, but just how the retrenchment will be carried out, i.e. who got to go first.

For Eko, the later it gets the package the better. If it gets after 2020 when SPE completed, that's the best, as evaluation will get another 25% boost in value!

Just imagine, 7 bil boost by 25%!!! I can only see $$$$$$$$$$$$$$$$$$.

What about toll price revise down?

Any toll price revise down will immediately cut into concessionaires' profit margin!
I don't think any concessionaire will agree to a voluntarily pay cut, unless there is any form of government compensation. So, the effect if any, will be neutralized.

Actually, the best time for government to takeover is now!
Toll concessionaires are all profit making businesses! Why wait?
But the toll fee abolition can be carried out in stages.

And don't forget the valuation keeps ticking every seconds! Government is losing money for every seconds delay!

@Jon Choivo, yeah, You're right. I got a little carry away. Zero down money, with capital gain plus extra cash! Why not!?? haha

If Duke value at 2137mil, that's $1 per share!

Wow! Eko will fly when the decision to take over announce next week!

As you can see, the cash flow is very low for Duke.

The actual value is actually locked in Duke's valuation! As evident from its initial startup of millions to now billions valuation!
As traffic improved, Duke's valuation increases. The only way to unlock this value is to SELL IT!

So, Duke sell off will bags 1695.7 mil (minimum). That's 79c per share.

Haha... those sell @66c. Good luck!

In Eko's case, why it is win-win for government to takeover Duke toll concessionaire?

Assume current traffic, Duke 1&2 revenue at 43m/qtr. (note: traffic keep increase as more links/exits added.)
Toll Revenue for full year 172.000 mil
Profit margin 76%
-------------------
Earnings 130.720 mil
vs Duke 1&2's pending Debt 2,001.000 mil
Earning/Debt ratio 6.53%
Debt interest charges 5.00% (annual)
=> Net Earning = 1.53% (That's very poor ROI)

Judging from Eko's latest financial result, Duke's traffic had increase around 30%. So, its valuation likely will increased. So, I think that explains 2.137/1.695 = ~26% appreciation as of 31st Dec 2017.

PH's 50bil budget is for cash compensation (30% of cost value). The remaining 70% of cost value (i,e, bond debt), government takeover. Cash compensation likely has to include concessionaires' appreciation in value due to higher traffic volume.

"as noted by CIMB Research, Pakatan Harapan had earlier estimated that the takeover of all highways via the expropriation clause would only cost the government about RM50bil."

Note: It mentioned "takeover". PH government had budgeted 50bil for this exercise!

For the 22 expressways above, the annual maintenance costs is ~5% (~2.8bil).

https://www.thestar.com.my/business/business-news/2018/05/18/toll-dilemma/

The case for tolls abolition by government This Year:
There were 31 tolled expressways in Malaysia as at end of 2017.
22 expressways: 70% debt (55.29bil) vs 30% cash (23.7bil)
Government pays 23.7bil cash and take over 55.29bil bond debt at 5% annual servicing (~2.77bil).
22 expressways tolls abolished. 9 more to go.

Eko gets 5.2bil for Duke 3.
3.64 bil bond debt eliminated + 1.56 bil cash advance for Duke 3 construction.
Left only 2.137bil cash payment (1.695bil Duke 1&2 + 0.442bil ???) to go.

Eko's concession assets value at 7.3bil. If fully compensated, wow!. That's a lots of $$$$$
LKH should start thinking about how to use this $$$$$!
Continue his plan to swallow IWcity (1.255bil only @1.50) and start dreaming about Bandar Malaysia again?