Wednesday, 27 January 2016

Bonia - Leather Weapon

Bonia Corporation Berhad (Bonia - 9288) is better known for it's high end apparel designing, manufacturing and retailing business.

From a range of leather wear, footwear and apparels, the groups also own SEMBONIA and Carlo Rino, whilst holding license to distribute international labels such as Santa Barbara Polo & Racquet Club, Austin Reed, Valentino Rudy, Jeep, Braun Buffel, Pierre Cardin, Bruno Magli, Enrico Coveri and Renoma.

The implementation of the GST in April 2015 had definitely bring certain drawbacks towards the retailing industry. Bonia had been deriving more than 60% of revenue from within Malaysia. However, as the retail environment continue to be tougher, what are the direction that the management of Bonia can implement in order to continue enhancing shareholder return?


Grabbing On Emerging Opportunity

Bonia's primary target market is middle to high class working individuals. While Malaysia is a good country to see such target market, it is imperative for Bonia to penetrate to new emerging market in order to see the continuation of growth in the company.

The best destination to explore will be the rising up South East Asian countries, namely Vietnam and Myammar which had been seeing influx of foreign investment towards both the nation. The latest major political change in Myammar had also open up ample of opportunity for more foreign investment to pour into the emerging nation.

According to the director's of Bonia, the group will be looking to see more bring more outlet to cater towards the demand for high range apparel in the growing emerging market.

Till date, Bonia had 2 outlet in Myammar, 4 in Vietnam and 1 in Cambodia.


El-Nino - Of Destruction and Opportunity

It is imperative to know that El-Nino had started to take it's effect into the global climate situation. The "East Asia Cold Snap", caused sudden drop of temperature in the southern and south-eastern part of China as well as Taiwan and Hong Kong, had took many individuals unprepared for the extreme weather.

In January 2016, both Taiwan and Hong Kong had recorded their coldest temperature in 60 years history. The Cold Wave from China is traveling south bound, hitting country such as Vietnam and Thailand. On 26th January 2016, Chiang Rai recorded a 8.6 degree Celsius after day break.

Leather wear will be the preference wear during a cold/snow environment. For this cause, it had opened up massive opportunity for Bonia to see it's product snapped up in the affected countries, especially Taiwan. The cold season will also push consumer in purchasing more quality wearable to keep themselves warm.

Companies which are involves in apparel manufacturing, trading and retailing had also seen great interest in the recent days despite the headwinds from equity market, marking a strong demand from this opportunity that had been created by El-Nino.

Padini

PCCS

YEN Global


Back to Bonia, we can see that Bonia had broken away from the continuous down trend line started since April 2015. The share price had normalized and consolidated in a well manner at the range of RM 0.70.

Apart from the consolidation, Mr Chiang Sam Seng had increased in direct holdings by more than 3 million shares to the current 4.1 million direct holding from the open market, with an average price at approx RM 0.80. The latest buy back is seen at the price range of RM 0.67.

Interestingly, the share had also on 2 occasion saw solid accumulation of the share in the end of September 2015, with more than 12 million shares transacted on a solid white candle, as well as the recent 7 million shares transacted on a bullish candle in the middle of January 2016.


Bonia will be a good lookout for the current theme, considering that it had not make a break out run for the time yet. Breaking out RM 0.75 in a convincing manner will see Bonia putting a challenge at RM 0.80 easily.


Wednesday, 20 January 2016

GPharos - Plying Upwards

Golden Pharos Berhad (GPharos - 5649) is primarily involved in harvesting. saw milling, klin drying of timber as well as glass manufacturing. The company had recently announced on a joint venture agreement between it's wholly owned subsidiary Permint Plywood Sdn Bhd and Cymao Plywood Sdn Bhd.

The joint venture will see Gpharos restarting it's plywood manufacturing operation that had been ceased previously during 2005. The joint venture will allow Gpharos to once again emerge as a plywood manufacturer, joining the ranks of Mieco and Evergreen that had been seeing massive demand from exporting to overseas.



Evergreen had see capital appreciation of 500% from a lowly RM 0.50 to a peak of RM 2.50 in a period of 1 year.

Mieco is also great with approximate 325% in capital appreciation from a price of RM 0.40 to a peak of RM 1.30 within a period of 1 year.

Both Evergreen and Mieco had been enjoying the bullish demand as well as better forex gain due to a continuous weaker MYR against the USD.


How would the JV works?

According to the joint venture agreement, the newly incorporated JV company will see 60% ownership from Permint Plywood Sdn Bhd, with balance 40% by Cymao Plywood Sdn Bhd.

The JV will bring value to Gpharos by:
- Recognizing a income from disposal of depreciated asset to the JV company.
- Consistent buyer for log harvesting from JV company.
- Rental income from JV company on the usage of the land, building and other infrastructure.


Fundamental Outlook

The latest quarterly had saw Gpharos capturing higher revenue, which is mostly contributed from it's timber harvesting, saw milling and klin drying.
Currently, Gpharos is sitting on a net cash position of approximately RM 11 million based on latest quarterly result.

While it is too fast to annualized the next 3 quarters with the same EPS that will see a 8 cents EPS for 4 quarters, the demand in timber, especially raw log is reflected by established player in the market such as FLBHD, WTK and Taann.

Focus Lumber Berhad


Ta Ann Holdings Berhad


WTK Holdings Berhad

Technical Outlook

The current technical outlook for Gpharos is very interesting, as it had been resting on the former resistant line at the range of RM 0.49 to RM 0.50. Currently, the resistant line had become a base support line for Gpharos. With the growing volume in sight, Gpharos could be trending higher along with the latest corporate development that will favor a better financial for Gpharos in the coming days

On a short term outlook, Gpharos will be looking to challenge previous resistance at RM 0.63.


Cheers and have a nice day

Regards,
Bone

Tuesday, 19 January 2016

Bina Puri - Bricks of Power

Bina Puri Holdings Berhad (BPuri - 5932) is principally involves in construction and properties and quarry operation. The group also had recurring income business model such as highway concessionary, diesel powered power plants and mall management.

Bina Puri history can be dated back into 1975 when construction and development is robust and highly in demand. Throughout the journey, Bina Puri had diversify into different stream of revenue in order to enhance shareholder return.

The past couple of years had been challenging for Bina Puri, especially on the delivery of KLIA 2. Albeit the hiccups and delay, Bina Puri had managed to pull over the challenges. Looking forward, Bina Puri will set to develop more recurring income business in the future. Bina Puri will be looking to see a strong recurring revenue on 2018 by growing it's existing recurring income business portfolio.


According to the chart, Bina Puri had started to come off from a long term down trend line. The successful break out from the downtrend line will indicate a new reversal to the uptrend on Bina Puri. Bina Puri will be looking to trade higher with greater volume participation with the first resistant line at RM 0.55.

Bina Puri had been consolidating at the range of RM 0.45 for 4 months. Prior to that, Bina Puri had underwent successful private placement at the price of RM 0.50 during the earlier months of 2015. The current technical outlook for Bina Puri will be very attractive for technical trader to take early position on a possible uptrend drive.


Driving Up Recurring Income Business

Bina Puri derives most of its revenue from it's construction outfit. The construction arm contributed more than RM 1billion in revenue for the year 2010, 2011 and 2012. While doing so, Bina Puri had started ventured into mini diesel power plant in Indonesia and had saw steady streams of revenue since 2010, growing from RM 1.6million to the current contribution of RM 10.38 million as of FYE 2014.

Currently, there are 7 mini diesel power plant totaling 28 MW that is up and running. The latest 4.2 MW mini hydro power plant in the south of Sulawesi will start to see contribution starting February 2016, putting Bina Puri total power generation to 32.2 MW.  The 4.2 MW mini hydro power plant is expected to contributed at least RM 5million a year in revenue.

The demand of power plant in Indonesia continue to be robust. Beside Bina Puri, Scable (Sarawak Cable) had also ventured into the power plant business in Indonesia as demand for energy in Indonesia continue to pick up in a quick pace.

With the current low crude oil prices, this will ultimately give Bina Puri 80% owned PT Megapower Makmur a better profit margin considering the lower input cost. The continuation of low crude oil prices will continue to help fossil fueled power plant in their bottom line, considering their power purchase price is fixed.

Bina Puri will also be building another 4 to 5 more mini power plant (combination of diesel and hydro) in the next 3 to 4 years. The group will be spinning off it's PT Megapower Makmur for a public listing in the Indonesian Stock Exchange (IDX) by this year, with a target to raise USD 4 million in order to drive up the expansion process through public funding. The listing which is targeted to be completed during the 3Q of 2016 will be one of the major rerating catalyst for Bina Puri in the coming days.

With the rising up Indonesian market for more industrial and commercialization, Indonesia will be seeing great demand in the sector of power generation for the next 5 years, putting up bright prospectus for Bina Puri in it's power asset business in Indonesia.


Fired Up on More Construction Projects

Albeit the diversification towards more recurring income based business, there is no slow down in filling up with more construction projects for 2016. Current to date, Bina Puri remaining balance of book order still stands at a healthy RM 1.9 billion that can keep the group busy for the next 3 years. Amongst them, the Melawati Mall, Kompleks LKIM Kuching, Bunus Sewerage Treatment Plant, Medini Building and UIO Facilities Pengerang made up RM 1.1 billion.

Bina Puri is confident in replenishing book order by RM 1 billion in 2016. Key government projects such as the RM 27 billion Pan Borneo Highway, RM 1.6 billion Krai Highway, RM 9 billion LRT 3, RM 40 billion HSR, RM 28 billion MRT II and RM 2.5 billion BRT projects in KL & Kota Kinabalu will put construction company busy for the next 5 years.

Close sources had indicated that Bina Puri will be involved in several high profile construction, consisting of Pan Borneo Highway packages, LRT 3 packages, DASH highway packages as well as BRT KK projects, which will easily sum up more than RM 4 billion. Bina Puri remains a favorable contractor in Sarawak for being one of the panel contractor for CMSB.


Summary
Bina Puri remains an interesting company to be vested in based on
- Growing recurring income business from Power Plant and Mall Management
- PT Megapower Makmur to be spin off for Public Listing in IDX (Indonesia Stock Exchange), raising USD 4 million
- Lower Crude Oil to contribute a better profit margin in diesel power plant
- Bina Puri to see order book replenished by at least RM 1 billion in 2016.
- Existing Order Book at RM 1.9 billion.
- LATAR highway to see profit generation by end of 2018.
- Current price of RM 0.45 resemble a 10% discount from private placement price of RM 0.50
- Current chart showing technical break out from long term downtrend.
- Trading at more than 50% discount from NTA of RM 0.96


Charge along with Bina Puri? Don't miss out
Bone's TP : RM 0.60

Cheers and have a nice day

Regards,
Bone