Friday, December 19, 2008
Najib Statement On IJN Doesn't Jive
Dato Seri Najib said Government has no objection to sell TDM's initiative, Institut Jantung Negara (IJN) as long as the need of the poor is taken care. He state that it is advantageous for IJN to stem human resource outflow from staff pinching and potential source of funding for expansion.
For comfort, President and Group CEO of Sime Darby Bhd, Datuk Seri Ahmad Zubir Murshid gave assurance that fee structure will not rise. He said the offer is at a premium of 16 times Price Earning (PE) ratio. Sime Darby still has to undertake due dilligence.
A corporate man giving verbal assurance? Until he put that on paper and release all the fine prints, that statement is as good as any lawyer's words. Its plain lie. By him merely citing usage of SJMC's operating theater by IJN, it does not indicate he has any clear plans for IJN.
Straits Times, Reme Ahmad has the two press report on their statements in his blog here. All those statements doesn't jive.
Khairy's presence in IJN today adds to the curiosity. If he was there to visit Ismail Sabri, why was he seen in serious conversation with IJN Chairman Dato Dr Mohammed Salleh Ismail, aka Salleh Budu, husband of Dato Shahrizat Jalil, and one Dr Mohd Ezani Md Taib, a Cardiothorasic Consultant Surgeon and Clinical Director of Heart and Lung Transplant, during the press conference given by the Minister of Health there today?
What is Najib not telling?
I had just got off the telephone with my insider. We were amazed and wondered where did this come from?
Why is Najib saying in a roundabout and less than enthusiastic manner about the sales? Instead of saying "no objection to sell", why not just announce affirmatively that Government has agreed to sell IJN to Sime Darby and so and so?
Najib's tacitly expressed rationale to sell and our understanding of the situation doesn't jive. Is this Abdullah forcing Najib or Sime Darby Adviser, Nazir advising Najib?
My insider told me that only less than 5 doctors and specialist had left. One left due to death in well publicised road accident at Karak last year. Another famous name that left for greener pasture was Tan Sri Dr Yahya who left for Damansara Specialist hospital but is still doing work at IJN. Remember Dr Mahathir last year?
The insider claimed that surgeons and specialists are well paid and the older established batch are quite happy with their work there. IJN doctors are known to be social and community activists. It seems, as I was told, the average estimated income is too staggering good to divulge but in conclusion, they are okay.
Why would Government wish to sell IJN when MoH had plans to build some 5 new cardiac centres in the country? They would need the support of IJN in terms of medical expertise training, personnel, management and operations.
In addition, I was informed that IJN is flush with about RM400 million cash reserves after netting for the RM250 million spent for new wing. The new wing provide for an additional 250 beds to its 150 beds.
IJN caters to 3,000 patienst a day and some 70% are from the low income. As a public institution that has been a centre of excellence, it has been receiving substantial donations to maintain its healthcare program for the people. Will a corporate takeover continue to encourage such donations?
With Sime Darby yet to do a due dilligence, how could they be so confident to maintain that fee structure?
It seemed, as told by my insider, IJN generated profits of about RM100 miiion annually on its paid-up capital of about RM200 millian.
Is Najib reluctant to sell and is trying to stall? Is this another of Omar Ong potentially failed and unimaginative advise, just like his failed Khazanah plans, Proton downsizing, and Airline rationalisation program?
Deciphering Corporate Bullshit
When Zubir promise fee structure will not change, the question to be asked is not whether it will not change but for how many years is the promise good for?
To pun this old joke against Indian, "Kalau jumpa ular, orang India dan orang korporat, bunuh siapa dulu? Jawabnya, bunuh orang korparat. Mereka kuat menipu dan takde moral standing."
Will it be possible to maintain fee structure with promises of higher pay for the personnel? What happens two years down the road and profitability is not sustainable? Perhasp, fee straucture is maintained, but quality of service is downgraded and accessibility to service is connivingly curtailed?
Will there be a guarantee buyback arrangement with prifit guarantee imposed? This clause is the one found in Khazanah-Parkway shareholders agreement for the Pantai Medical Centre. This is an upcoming expose from this blog.
One condition set for the takeover is for Sime Darby to present their business plan. Can Sime Darby, with single branch SJMC and its not even well run and profitable outfit, conceive a business plan? Can their plan be also better than the "medical tourism" idea planned by IJN?
Or was there leakage in information?
I am justified in my suspicion by the presence of Salleh "Budu" at IJN. He was the former autocratic CEO of Technology Park Malaysia.
Salleh was widely known to be undertaking ridiculously expensive and irrelevent research works like his Budu fascination, feeding chicken shit to fish (RM100 million spent), and growing chempedak tree on cemented earth. He is suspect for channeling Government research grant as kickback from contractors. Note their website here does not boost of any achievement.
Lets ponder the bullshit of Zubir 16 times PE offer. That is definately historical PE ratio. It sounds expensive but it hides the better value in usung forecasted Earning Per Share (EPS).
With the extra bed, the number of patients can double for 2009 and its PE ratio is effectively 6-7 times for 2009 earning. The subsequent years has not been taken into account. If cost of a major operation can takeup to say RM100,000 and the same operation could cost RM350,000 in the Middle East, thats a big hint of what is to come.
What about its NTA or Net Tangible Asset per share value? IJN has got 10 acres of prime land on its site in Jalan Tun Abdul Razak. There is also the Enterprise Value that could be considered. Its brand value, goodwill as an on-going concern, clientele base, and replacement cost.
Monitor progress of this Sime Darby bullshit on Sime Darby Watch blog. Infos exposed relied solely from deep throat.
The troubling question on my mind now: Is the Finance Ministry on an asset sales to raise funds now? This suspicion has been probing my mind since the new supplementary budget presented by Najib had expressed intention to sell prime lands belonging to Lembaga Getah Malaysia.
Then, there is that claim by Tan Sri Nor Mohamad Yakcop that Petronas increase its revenue of RM100 million annually (after netting for subsidy) for every increase of US$1 rise per barrel in oil revenue.
Why is the oil reduction not up to expectation i.e. at least, back to the level before the recent 78 sen and 2006 30 sen increase? The latest is oil has fallen below US$40 per barrel. Didn't I say before Abdullah Badawi acted like a novice in facing up to the oil crisis fulfilling the criteria of last full theory?
My brewing suspicion is that the Government state of finance is in total disarray since an Economic faculty dropout cum Islamic Study graduate headed MoF. With dropout still at the helm of Khazanah, is this deal to pre-empt something brewing within Sime Darby?
I am aware that Sime Engineering lost tons in their Bakun deal. Sime Darby has a bad history in any merger or acquisition. Its mergers are usually followed by major loses. Remember Sime Bank which they end up selling later for a lost. I can still remember of a UK-based refrigerator manufacturing company.
Thus far, the presence of this new generation of claimed brainy young man into the political-economic scene with such brands as Tingkat 4, Binafikir, Ethos Consulting, etc. has been a string of failures and non deliverables.
Most of their work is generic and brought no new innovation to the ones the lesser predecessor had done. Using the example of Binafikir's WAU on MAS which is basically sell and leaseback, they are all merely rebranding past work! Omar Ong's Khazanah modelling is a copycat work on Singgapore's Temasek.
Omar Ong is already a busy body in Najib's office, hawking his name locally and abroad, denying his failure with excuses, and playing politics to conjure labels on his rivals, from Mahathirism to cousins. Are we to expect another major failure in the making?
* Updated 19/12/2008 10:30 am
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