MST Golf's is a one-of-a-kind listing and therefore would enjoy a scarcity premium.
THERE is a joke in the golfing community, ask a man to wake up before sunrise, there will be a million excuses.
Ask a man to tee off at dawn, he will be right on time. In the years I have played the game, I have witnessed the laziest people putting the utmost effort into improving their golf swing.
The amount of money spent on equipment, coaching, practice rounds in the driving range, club membership fees, travel and flight expenses to overseas golfing trips is mind-boggling.
This sport is by no means cheap and compared to other equipment sports like ping pong, it is incomparable.
However, once you start the game, you will be hooked for life. Every single round of golf is different.
The experience of playing with different people and courses makes it even more interesting.
So, what has all this got to do with business or the stock market?
Well, we have a highly anticipated
Main Market initial public offering (IPO) coming soon, which is the MST Golf Group Bhd listing.
For those who play the game, MST is a household name for golfers. It has been around for as long as I was born.
Over the years, MST has grown from a single retail store to controlling more than 51% of the local golf equipment retail and distribution market in Malaysia.
It is also the second largest golf retailer in Singapore. Although some older establishments such as RGT Golf, Desa Golf House, Transview Golf and others still exist in the market, none of them have seen the growth rate and expansion the way MST has done through the years.
A game of passion
Golf as a sport has been growing tremendously in the past century since its founding in Scotland in the 1860s. Today, there are over 80 million golfers and 30,000 golf courses globally.
The United States, Japan and South Korea are the top three countries which dominate global golf participation.
Based on the World Golf Report 2023 data, worldwide golf equipment and apparel market hit Us$20bil (Rm93bil) in 2022 of which Us$11.1bil (Rm51bil) was in equipment sales and Us$8.9bil (Rm41bil) in apparel sales.
There was also a major surge in worldwide sales in 2021 with an annual increase of more than Us$5bil (Rm23bil).
The sport is so popular that a seismic change in the golfing landscape occurred in 2022 when a new professional golf tour funded by the Public Investment Fund (sovereign wealth fund of Saudi Arabia) known as LIV Golf started and challenged the historic PGA Tour.
The prize fund up for grabs for a single season tournament reached a staggering Us$400mil (Rm1.8bil). Top-ranked golfers were offered hundreds of millions just to join LIV.
The PGA Tour reacted by banning professional golfers who played on the LIV golf circuit and multiple legal suits were filed between the two organisations.
Ultimately, a resolution appeared to be in sight following the news that a potential merger will go ahead between the two franchises. A Netflix documentary on golf, called Full Swing, depicts the sport’s evolution.
Golf as a sport has a huge market not only in terms of the annual growth rate of the number of players, but it remains the most lucrative sport in terms of the prize money and sponsorship deals.
We can see the continuous sponsorship of Rolex and other premium brands plastered all over golfing events.
Market leadership
MST’S IPO was oversubscribed by 5.28 times. This is a good performance considering it is a Main Market listing looking to raise Rm130mil for expansion.
At the IPO price of 81 sen, the market cap upon listing is expected to be Rm665mil. This is a rather huge IPO and not comparable to smaller ACE Market listings.
The question on some retail investors’ minds is that recent Main Market listings have been disappointing such as DXN Holdings Bhd, Radium Development Bhd and more recently Skyworld Development Bhd.
Some are concerned that the sentiment may impact this IPO as well. I am of lesser concern because the true value of the company lies not only in which market it lists but also its business itself.
Apart from the clear market leadership position of MST, many from the investment fraternity have used MR DIY as a peer comparison. I have also seen some other commentary using other retailers such as Innature, Senheng, Padini and others which are in the consumer retail space.
This led to the misconception that MST is listing at a very steep valuation. MST in fact is a specialty retailer and distributor of equipment for a global sport catering to the segment of consumers with the highest disposable income.
MST is very different from the other above-mentioned consumer retail companies which target the masses.
Furthermore, due to its track record and entrenched market share, we are unlikely to come across another golf equipment retailer and distributor company listing on Bursa Malaysia in the years to come. This is a one-of-a-kind listing and therefore, would enjoy a scarcity premium.
Ideally, I would like to see MST perform as well as MR DIY on listing day and the weeks to come.
However, the distinguishing factor that I believe would see MST sustain and do better for the longer horizon is because the MR DIY listing does not include the businesses in its other foreign markets which it expanded to such as Indonesia and the Philippines, etc.
For MST, the listing of the group includes all markets and MST is only starting to venture into Indonesia and Thailand; both are huge golfing markets by the sheer number of their population, popularity of golf tourism and burgeoning middle class.
A better peer comparison in terms of the valuation for MST would be Us-listed Topgolf Callaway Brand Corp.
It is one of the most popular golf equipment brands with a long history of being golfers’ favourite. Callaway has historically traded at an average forward price earnings (PE) valuation of 31 times. The immediate forward PE valuation is 23 times.
On the premise of the same valuation metrics, the likely intrinsic fair value for MST in 2024 is not too far off from TA Research’s recent report.
I often likened investing in the stock market to playing the game of golf. It is a game of patience, prudence and strategy.
A lot of practice and dedication is required to be good at the game.
Additionally, this is one sport where the biggest competitor is yourself and not your opponents. Consistency is the key, and one swallow does not make a summer. It is a long game.
Investing in the right company within a short span of time is meaningless if you cannot maintain the performance over a long duration of time.
Ultimately, the one who is regarded as a good investor, like a good golfer, is someone who consistently beats the market and surpasses their own performance over a long duration.
Golf is one sport that has a long-life span. It is a game that one can play until a ripe old age. Unlike badminton, football or basketball, the cardio element and companion requirements limit the longevity of the sport.
If your elderly parents are still insisting on playing badminton on a regular basis at the age of 70 and above, I would recommend you asking them to slow down.
Golf, on the other hand, would be one that requires little concern. If anything, the long outdoor session followed by the after-game chit chat session bodes well for the elderly who enjoy companionship.
Now, for those who have subscribed to the MST Golf IPO or are planning to invest on “Gong” day, I hope my article is able to shed some light on the economics of golf both for the uninitiated and for those who enjoy the game as much as I do.
But I must put forth a disclaimer; as an avid golfer myself, my views may be coloured by an inherent bias and lack the objectivity required for a fund manager.
Whether my love for the game would help with my investment or otherwise, we shall find out on July 20.
My best wishes to all fellow golfing aficionados, hopefully we can all reap the rewards of the long game. In the event this IPO goes out of bounds at tee off, we can always try asking Bursa for a Mulligan.
Michelle Wie practicing at the Ko Oina Golf Club. This is before she began to have her problems off the tee. Notice the smooth but powerful transition and follow through. She started to jump at the ball for awhile, but now is back to a real good move. Notice BJ Wie, her ever-present father...
https://youtu.be/GMPCrQE7KSw
Golf has been fortunate enough to continue in the Covid climate.
The one-buggy one-player recommendation not enforced everywhere
AS the Covid-19 pandemic continues to afflict golf clubs across the length and breadth of the nation, one or two have resorted to giving the buggies recommendation a miss.
Almost all the local clubs have embraced the one-buggy oneplayer policy set in the guidelines of the Malaysian Golf Association (MGA). However, a quick check by TeeUp has revealed that there was one or two who chose not to follow suit and have opted to continue as before (the pandemic).
It is understood that the MGA “guidelines” are recommendations and the clubs are not bound by law to carry them out, unless they are those incorporated from the standard operating procedures (SOPs) of the health authorities.
Not surprisingly, the said clubs contacted for comment on the matter declined to offer any response.
It must be mentioned also that at one of the clubs (where twoper-buggy is still practiced), the players must be husband and wife, or from the same family and/ or the same Covid bubble.
All the other leading clubs in the Klang Valley that TeeUp spoke to about the buggy policy said they had initiated the MGA’s guidelines in full.
Speaking to TeeUp in an earlier interview, MGA president Admiral Tan Sri Mohd Anwar Mohd Nor (R) said they would issue updates as when these became applicable and added that they too were being guided by the Health Ministry.
“These SOPs and guidelines have been put in place to help curb the spread of the coronavirus and we will continue to work with the health authorities in their efforts to flatten the curve,” he said.
“It is our sincere hope that the golf clubs and other industry stakeholders will join forces and adhere to the SOPs without exception. This is most important in the fight to curb the spread of this virus.”
Mohd Anwar added that the national association’s annual general meeting, which was scheduled for last month, will be held at a date to be determined when “all is safe to do so.
“We had no option but to postpone the annual general meeting because of Covid-19. The safety and well-being of our members and all others in the related fields of golf, is our priority and we will not detour from this approach,” added Mohd Anwar.
“Once things improve and we get the nod from the health authorities, we will host the annual meeting – but not before then.”
At this year’s annual general meeting (if indeed it does go ahead) there will be no elections for the top positions within the organisation, given that they are in the middle of their terms.
The Professional Golf Association of Malaysia (PGAM) were also expected to have staged their annual meeting by now, but failed to do so because of the pandemic. And they are, likewise, waiting to set a new date when the circumstances allow them to.
Golf is one of the few sports that has been fortunate enough to continue in the present Covid climate, but with strict standard operating procedures set down by the Health Ministry. Among these are:
Pre-Game SOPs
> Golfers with any colds or coughs or any symptoms of Covid 19 shall be prohibited from entering the golf club.
> Bookings shall be made in advance.
> Enforce one golfer per buggy.
> Golf competitions suspended until further notice.
> Use MySejahtera to record golfers and employees entry to the golf club.
> Accept only online payment or bank transfer. Registration counter shall not accept any cash payment.
> Golfers shall register 20 minutes before tee time. Registration staff to be equipped with face masks/gloves. Hand sanitiser readily available at registration counter and disposable pencils made available.
> Temperature check for each golfer before entering the golf club and to sanitise their hands by security guard.
> One golfer to register for each flight.
> Social distancing markers to be clearly outlined at the registration counter.
> Interaction shall be limited between golfers and staff.
> Each golfer to complete and submit a Health/ Travel Declaration form prior registration.
80% of financial help will be additional wage subsidies for employees
PETALING JAYA: Small and medium enterprises (SMEs) and their employees will benefit from a RM10bil financial lifeline.
This is the second stimulus package that the government has announced within 10 days.
The first addresses the plight of the underprivileged and the middle class caught in dire straits due to the coronavirus pandemic.
The latest package of measures, dubbed the Additional Prihatin, is aimed at assisting SMEs in riding out the Covid-19 storm.
Of the RM10bil, almost 80% will be for additional wage subsidies for those drawing RM4,000 and below monthly.
This is in response to the pleas from many businesses and commerce groups who asked for more financial help.
This is an addition to the RM5.9bil wage subsidy in the RM250bil Prihatin package announced on March 27.
The remaining RM2.1bil in the second package will be in the form of special grants for eligible micro SMEs, with 700,000 of them expected to each receive RM3,000.
Prime Minister Tan Sri Muhyiddin Yassin (pic) hoped that the additional RM10bil would assist in easing the financial burden of the SMEs and ensure that all their workers remain employed.
“SMEs are the backbone of Malaysia’s economy and the sector accounts for more than two-thirds of the number of jobs in the country and close to 40% of the economy.
“It is therefore vital for us to ensure that SMEs continue to be resilient and sustainable in facing the economic stress and challenges that we all experiencing now,” he said in a televised address yesterday.
The wage subsidy is expected to benefit about 4.8 million SME workers who earn up to RM4,000 a month.
Companies with more than 200 employees will be eligible for a RM600 wage subsidy for each worker, while those that have between 76 and 200 employees will receive the RM800 subsidy.
Companies that employ between one and 75 employees will receive RM1,200 for every worker.
The wage subsidy is for three months and is meant for employers whose companies have registered with the Companies Commission of Malaysia (CCM) or the local authorities before Jan 1 and are registered with the Social Security Organisation (Socso).
It also comes with a condition that employers must retain their staff for at least six months – the three months during which the subsidy is paid and the three months after that.
The government has also abolished the 2% interest under the RM500mil microcredit schemes offered by Bank Simpanan Nasional.
The easy loan scheme for micro-companies is extended to Tekun Nasional with a maximum loan limit of RM10,000 per company at 0%. A funding of RM200mil has been prepared for this purpose.
Businesses can only apply for either one.
Muhyiddin also announced that landlords of private premises who reduce their rental rates by at least 30% from April to June this year will qualify for tax deductions.
He made a plea to landlords to reduce their rental rates during the period and for three months after it ends.
The tax deductions are equivalent to the amount of rent they reduce for three months, subject to the condition that the reductions are at least 30% during the period.
Muhyiddin added that SMEs in premises owned by government-linked companies (GLCs) will have their rental waived or they will enjoy discounts on the rental.
He thanked GLCs such as Mara, Petronas, Permodalan Nasional Bhd, PLUS, UDA and several state-owned companies that have agreed to give these concessions.
“We are also allowing a 25% reduction in the foreign worker levy to all companies whose worker permits end between April 1 and Dec 31. However, this is not applicable for domestic helpers,” he said.
Muhyiddin also urged licensed moneylenders to emulate banks by offering a moratorium for SME instalment payments for six months beginning April.
In another win-win measure, the government is encouraging consultations to be held between employers and employees on employment terms, including the options of pay cuts and unpaid leave during the enhanced movement control order (MCO) period.
“Employers and employees can now refer to the Labour Department for advice to resolve any issues,” he said.
There is also an automatic 30-day moratorium from the last day of the enhanced MCO for companies to submit statutory documents to CCM.The deadline for companies to submit their financial statements has been extended for three months from the last day of the enhanced MCO.
This applies to companies whose previous financial years ended between Sept 30 and Dec 31 last year.
The companies must apply for the extension and no late submission fees will be imposed.
PETALING JAYA: While the additional stimulus for small and medium enterprises (SMES) is a welcomed relief, response from the industry has been somewhat tepid as these additional measures will likely only be sufficient to help soothe the pain until the end of the movement control order (MCO) in mid-april.
If the MCO is extended, the supplemental stimulus will not be enough to keep businesses going and the likelihood of them shuttering their operations will still be on the cards as they brace for a recession.
In an announcement yesterday, the Prime Minister presented an additional stimulus of Rm10bil to ease the financial burdens of the SMES following calls from the industry to provide greater support for the business community.
SME Association of Malaysia president Datuk Michael Kang took the stimulus positively but noted that there were other issues not addressed in yesterday’s announcement.
“We welcome these measures. But the measures are not really enough. They should allow SMES to do business to get their income and cashflow during this MCO period. But if the MCO is extended, these measures are definitely not enough,” he said.
For now, though, Kang is just grateful that the industry, at the very least, “got something”.
“This shows that the government is understanding and they are trying to help so that the SMES can survive and can retain as many jobs as possible.
“It didn’t fully meet our expectations. But of course, we proposed a lot of things,” he added.
One of the important issues which was not addressed in the stimulus is statutory payments, which many employers have said are among the main burdens on their monthly cashflow. Many business associations had asked for a waiver on EPF contributions – or a deferment till year end – and a deferment of monthly tax deductions to the end of the year.
“We hope this will be addressed later,” said Kang.
He also pointed out that there is a lack of impetus to stimulate the economy, moving forward, and this would continue to affect market demand post-mco, making it even more difficult for businesses to get back on their feet.
The new package saw an increase in allocation for the wage subsidy programme to Rm13.8bil from Rm5.9bil previously, with changes made to the payout amount based on the number of workers in a company.
For companies with more than 200 employees, a subsidy of RM600 per employee is maintained and the maximum number of workers eligible for subsidies will be increased from 100 to 200 workers.
For companies with 76 to 200 employees, the company will receive a subsidy of RM800 per employee while companies with up to 75 employees will receive a subsidy of RM1,200 per employee.
The expanded initiative is expected to benefit 4.8 million workers.
Special grants have also been doled out to micro businesses, which make up the largest portion of SMES and are the hardest hit.
The government has also incentivised owners of private premises to reduce rental rates for the duration of the MCO plus, three months after, with tax deductions. While this will help businesses in the services industry, particularly those in food and beverage, retail and accommodation – which make up about 63.9% of the services-based SMES – it remains to be seen if landlords will indeed take the bait.
Meanwhile, Ambank Group chief economist Anthony Dass said the additional stimulus measures supporting the SMES is positive, given that many are experiencing tight cashflow due to no or minimal sales revenue.
“However, the tight cashflow is not just because of the MCO. Businesses were also affected by the poor implementation and policy inconsistencies in the past. Besides, they were affected by the trade war and other domestic challenges.
“Even if the MCO is lifted by midapril or end April, demand is expected to be weak for some time due to travel aversion and social distancing.
“The drop in consumer and corporate spending will intensify the adverse chain reaction that will fuel the collapse of micro businesses, especially the younger and smaller businesses, due to their highly vulnerable situation,” he said.
Not every small business is equipped to survive this downturn, said Dass. And because small businesses contribute disproportionately to job loss during recessions, policy responses are necessary.
“Many SMES have been forced to close their doors and some may not reopen. Apart from revenue loss, they will be impacted by poor credit standings,” he added.
The additional measures will more likely help reduce bankruptcies and bad loans but job losses will remain a major concern.
Apart from rolling out effective measures to help SMES, another crucial point that policymakers will have to take note of is fast and smooth delivery of these measures. With most companies’ cashflow lasting only for two months or so, they cannot afford to weave through a mountain of red tape for a meagre sum.
A few companies that have tried to apply for aid under the Special Relief Facility announced last month said that not all banks are offering the loan and many of those that were, imposed a lot of conditions such as they have to be existing customers to qualify. Additionally, most bankers are unsure about how to handle the applications.
“The procedures and documents are proving to be quite a challenge,” said one food manufacturer.
These loans will also take time to be approved and are further subjected to the approval of Bank Negara and Credit Guarantee Corp Malaysia.
The Prime Minister has assured that the initiatives under the stimulus package will be monitored and implemented quickly and efficiently under a new implementation unit set up in the Finance Ministry. The unit will report directly to the Finance Minister and the Prime Minister.
“Most SMES in Malaysia employ fewer than 76 people. So actually, about 75% of companies qualify for this RM1,200 per employee.” Koong Lin Loong
PETALING JAYA: About 75% of companies in Malaysia are expected to benefit from the RM1,200 payout per employee under the expanded wage subsidy programme.
Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) SMES committee chairman Koong Lin Loong said the majority of companies in Malaysia, especially small and medium enterprises (SMES), employ fewer than 76 people and would be entitled to this subsidy.
In the Prihatin SME+ stimulus package announcement on Monday, the government increased the allocation for the programme to Rm13.8bil from Rm5.9bil previously.
Under the programme, companies with more than 200 workers will receive a subsidy of RM600 per employee and the maximum number of workers eligible for the subsidy is 200 workers.
For companies with 76 to 200 workers, the company will receive a subsidy of RM800 per employee and companies with up to 75 workers will receive a subsidy of RM1,200 per employee.
“The main objective of the wage subsidy is to help employers retain employees. It should also help the bigger players.
“That was why we asked for the programme to be expanded to all companies, but we need to help the smaller ones more.
“And if you look at most SMES in Malaysia, they employ fewer than 76 people.
“So actually, about 75% of companies in Malaysia qualify for this RM1,200 per employee,” he said.
Koong also clarified that companies with up to 75 workers did not need to prove that there was a 50% drop in sales since January to apply for this subsidy.
Only those with 76 workers and above will need to provide supporting documents to show that sales have declined by at least 50% since January.
“People think that every company needs to prove the 50% drop in sales.
“Actually if you look at the criteria, companies that have up to 75 employees don’t need to prove that sales dropped by more than 50%.
“They are exempted,” he said.
He added that the criteria to prove a 50% or more drop in sales was imposed on companies with 76 workers and above, as they are likely bigger players and would have slightly more reserves to last a little longer.
“If you are a bigger company and you have more than 200 employees, that is a total of RM120,000 that you can get in a month.
“And this programme is for three months. That is quite a bit.
“I think companies are receptive of this. I think that this is actually something significant from the government to help our businesses.
“We have to be fair to the government. Although it can’t subsidise 75% of wages like Singapore because of limited resources, this up-to-75-people criteria covers most companies already,” said Koong.
Prihatin Plus Stimulus Package
BELOW are some frequently asked questions relating to the Prihatin Plus Stimulus Package.
Q : I am a micro-sme, is there a specific initiative for me?
A: Under the Prihatin SME+ stimulus
Package, a special Prihatin Grant worth Rm2.1bil will be established for eligible micro enterprises. A grant of RM3,000 will be provided to each company. The micro SMES must be registered with LHDN.
The government has also abolished the 2% interest rate to 0% under the Micro Credit Scheme amounting to Rm500mil under Bank Simpanan Nasional (BSN). The soft loan scheme for micro enterprises is also extended to TEKUN Nasional with a maximum loan limit of RM10,000 at 0% for each enterprise.
Q: What is a micro-sme?
A: According to SME Corp, a micro-sme is defined as a company with sales turnover of less than RM300,000 or employs less than five people.
Q : How can I obtain financing from the Rm5bil Special Relief Facility (SRF) at an interest rate of 3.5% for SMES?
A: Information and application for the SRF can be made through participating banks or online through the / imsme.com.my/ portal. The IMSME portal is Malaysia’s online SME financing/loan referral platform managed by Credit Guarantee Corp Malaysia Bhd (CGC) and is supported by Bank Negara.
Financing of up to RM300,000 is also available for SMES in operation for less than 4 years under the Bizmula-i and Bizwanita-i Scheme on the IMSME portal.
Q : Can I make adjustments to my workers’ employment terms to cope with the MCO?
A: The government has agreed to encourage negotiations between employers and employees on the terms of their employment, including the option to deduct salaries and allow unpaid leave during the MCO.
Employers and employees can refer to the Labour Department to obtain advice in regards to any problems arising from a resolution.
Negotiations have to be based on employment laws of the country.
Q :What is the wage subsidy programme?
A: The wage subsidy programme is a financial assistance paid to employers for every worker who earns up to RM4,000 a month. It is intended to help employers with more than 50% drop in sales since January with headcount costs to continue operating and prevent employees from losing their jobs.
Companies with more than 200 employees will receive a subsidy of RM600 per employee for up to 200 workers. Companies with 76 to 200 employees will receive a subsidy of RM800 per employee while companies with up to 75 employees will receive a subsidy of RM1,200 per employee.
Employers can submit their applications for the subsidy at prihatin.perkeso.gov.my/ and further information can be obtained at perkeso.gov.my/ index.php/en/wage-subsidyprogramme
Q :How can a company with 76 employees and above prove that it is suffering a decline in revenue or sales of 50% or more?
A: Employers can prove a decrease of 50% or more with supporting documents showing the total sales revenue or income in January 2020 compared with the other months.
Q :When does the wage subsidy programme come into effect and end?
A: The wage subsidy programme goes into effect on April 1, 2020 and is for a duration of three months. The deadline for application is Sept 15, 2020.
Q :What documents are needed to apply for the wage subsidy programme?
A: i. List of employee that the subsidy is being applied for
ii. Employer’s bank account statement (front page only)
iii. Employer’s bank registration information
iv. Copy of the company’s registration documents
v. Copy of declaration form PSU50
vi. Supporting documents such as financial statements or sales reports to prove loss of revenue that has been verified by management or other related documents
Q :My company has various departments / branches. Can I select only part of the staff from the different departments / branches for the wage subsidy programme?
A: Yes. An employer can choose any local employee with a salary of up to RM4,000 to qualify for the wage subsidy programme.
Q :Who is NOT eligible for the wage subsidy programme?
A: i. Company that registers and operates on or after Jan 1, 2020;
ii. Employers and employees who are not registered with and/ or have not contributed to SOCSO
iii. Employees who are financially supported by the Employment Retention Programme (ERP) in the same month
iv. Employees with monthly salary of over RM4,000
v. Employees who have already been dismissed
vi. Employees of the public sector, federal and state statutory bodies, local authorities and those self-employed
There are great uncertainties ahead, but China has
brought the coronavirus under control and proven the strength of its
capacity for national mobilization. The country also possesses the
world's most comprehensive national industrial base. China is completely
able to overcome any challenge it meets, safeguard its strategic
security, and protect its people's interests.
The spread of the coronavirus in the US has become a
disaster and a tragedy for urban and rural low-income groups. Income
inequality and the unbalanced distribution of health system
Schoolboy shines in history as youngest golf Masters
