Wednesday, 19 July 2017

This Pekan Company can really fry up when time's come

"Market theme" is a proven key factor that will influence the share market. When "market theme" start to play in, companies that falls within that theme will see heavy trading interest, or in direct - speculation. Usually, this kind of market theme movement will disregard the underlying company fundamental and past financial records.

For example, if FCPO contract suddenly shot up to more than RM 3000, the next thing you will see is that plantation company will be speculated upwards. Or when the media hype up the news of USD getting stronger against the local MYR, then you will see certain sector like the furniture and gloves sector being speculated upwards.

There is no right or wrong is such speculation. However, one of the main concern is - whether you are in it before the market theme kicks in, or you are only starting to go into it when the market theme already kicked in. Of course, both will yield very different sets of result, and the early birds, for this case, always get the best money.

Earlier this year, there are lots of market theme. Starting from Lim Kang Hoo theme (IWCITY and Ekovest), Jack Ma theme, packaging and logistic theme, then e-commerce, then banking and so on. All these are good if you can forecast it coming, and the main thing moving forward is to forecast which theme is coming next.

As for this, allow me to tell you that our nation will be having the next big event - 14th General Election. Since we did not really experience the election frenzy yet, I think it will be a good to look out for potential targets now.

This time around, I will like to point at some hot election seats. Since we are saying hot hot seats, then Pekan seat should be hot enough, right ? So what is happening over at Pekan ?



Lately, there was a company by the name of Merge Energy Berhad (Merge) which was awarded a RM 158 million construction project in Pekan in March.


Subsequently, Merge went on rampaging upwards as per shown in the chart.

Now, I think this company which is also involved in intensive project in Pekan should not be missed, especially when it is still at it's low level now. Of course, this company is BHS Industries Berhad (BHS - 7241)


As you can see, the technical chart highlights that BHS is currently resting at it's long term support line, which is at the range of RM 0.40. Moreover, it had also started to broke away from it's mid-term down trend line, highlighted in red color. Technically speaking, BHS can be viewed as bullish biased, with good upward potential as volume kicks in.

So what does BHS got to do with election ?

Firstly, BHS is planning a mega township in Pekan, dubbed as GTP (Green Technology Park), whereby energy supplied is created from renewable energy, which used biomass energy from waste products of palm oil plantation, such as empty fruit bunches. Secondly, this GTP will also be housing several factory such as paper mill, corrugated box manufacturing as well as tissue paper and box. The total GDV will be more approx RM 2 billion.

While the above plans are parts of the diversification plan, the original business of BHS is actually printing and publishing. Now with the new printing factory ready, BHS is expecting to kick in more revenue.
Excerpt taken from the 3rd quarter financial result of BHS also highlight that the group will be expect to deliver higher sales in the 4th quarter.

As for me, I caught interest in the line highlighted in green where it says - "the government print order which were absent in previous 2 years have now been revived and tenders were called."

I will interpret it as because the general election is drawing very near, hence the demand of print media will rise. Aside from the electronic media, the need of printing such as political magazine, leaflet, and other print media is still an important source for spread of information. For this, I can be expecting millions being poured into it, which will be very beneficial for BHS.

Now BHS can be still considered as a sleeping giant, consolidating at the range of RM 0.40. Will it get awaken by a in the later stage by some election theme speculation ? I don't know, but if it does, make sure you are in it before the big run.

Thursday, 6 July 2017

Gdex is a successful story, but missing this company will be your successful sorry!

In life, when you want to be respected, it is not given just like this, you have to earn it. However, it is the process of earning it - many quit halfway, and thus, did not get the respect from others.

For the same comparison and applying this to the share market, I have to tell you that everyone that started to venture into the share market do not become an instant market genius in a short period of time, and the same had to be applied to me as well.

Many see me as a big master sifu in the Malaysian share market, but is that really who I am ?

There are 3 kind of sifu. The first kind is very simple, and can be defined as - When you are right, you are sifu, when you are wrong, then you will instantly become another piece of seafood. The fine line of become sifu and seafood, is just a thread away.

The second kind of sifu is made after having track record of a long term consistent result. This is more of a real sifu, which can juggle with facts, and very patiently prey on the target. This kind of sifu usually eyes upon fundamental stock only, hence cutting off the large excitement of sitting the roller coaster of the market, and the feeling of switching stock in a frequent manner.

The third kind of sifu is a more complex kind of sifu. Beside having the traits of the second kind of sifu, he will also dabble in non fundamental stock and turnaround stock, and can uncover real gems from dirt. The important element to be this kind of sifu is by having a strong sense of prediction of the particular company, both in corporate action, and also share price movement.

As for me - I am Bonescythe, and I will let you choose which kind of sifu I am. I am totally alright to be called seafood, at least I know very well that if I am a seafood, I will by far taste better than many other seafood that is in the cooking pot. Hahaha



But if I am your highly respect sifu, today, I have to tell you that I am going to put my respectable name in the ring once again, and make a gamble on my name in this one corporate event that is happening in KLSE.

As you know, one of the latest most happening event in the Malaysian market have to be in the logistic/warehousing arena. In fact, the battle had just began to tense up lately as heavyweight player continue to get arm up in order to secure and increase their market share.

For this reason, CJ Korea had came all the way from Korea, and hitch on Century Logistic Holdings Berhad by purchasing 31.44% of controlling stake in Century at a price tag of RM 175 million for it's expansion in the South East Asia region. RM 175 million might sound big to you, but that could just be a pie for CJ Korea.

One of the attractive reason is that Century are having the strategic infrastructure to sync on with CJ Korea objectives. That is the strategic multi storey warehouse from Century, and the intention of CJ Korea to expand into parcel delivery in Malaysia.

So, the latest new is that Century is planning to acquire a mid size logistic firm with parcel delivery with presence in major town. Wow, this is a big big news, and missing it could be very expensive.

To put it in a more objective manner, there will be 2 main question here. The first question is which is the most potential target ? And secondly, how much will CJ Korea / Century be willing to splash in for that.

For that, I am willing to put my name to bet on this - Century will be heading for Nationwide Express Holdings Berhad (Natwide - 9806). For instant, Gdex will be out of the list, because Gdex is being cornered by bunch of Alibaba related investor, and the valuation is too high now, which is probably trading at PER x 150, x10 the NTA value. There will be no other better candidate other than Natwide. Natwide also met most of the important requirement by Century, which is having presence in most of the major town.

Now, how much is Century willing to fork out for Nationwide ?

According to the latest event in the logistic arena, Tasco Berhad had bought Gold Cold Transport Sdn Bhd for RM 186 million. Now that is quite a huge sum I can tell you. And for this, I can surely tell you that the money that Century is going to fork out will be definitely in the hundreds of million.


Now, here comes my prediction.

In my opinion, I think Century will not be privatizing Natwide, however, the deal will be good enough to see a mandatory take over offer being offered to all the minority shareholder. This is because the best possible stake sell out will be BHR Enterprise Sdn Bhd, with 54.78% stake in Natwide. The is very similar to what CJ Korea did when they came into Century, which is to take a controlling stake in the company without needing to privatize it. Therefore, there is a very high chance that this technique will be repeated in Natwide.

Now the tricky part is to know how much Century offer to BHR Enterprise Sdn Bhd until it is so sweet not to reject the deal. Honestly, I had no idea, but I can come out with the best possible scenario for comparison based on revenue and market capitalization with Gdex.

As you can see, Gdex is currently having a quarterly revenue of approximate RM 60 million, while Natwide is running at RM 20 million, which is one third of the revenue size. If we use this simple comparison, Natwide should command a market capitalization of RM 1 billion, right? As you can see, Gdex earning is so tiny, hence trading at a PER x 150 is almost as good as nothing. If Century director is able to overhaul Natwide's  whole operation, and putting it back into the black, Natwide is just as good as a Gdex in making, just smaller by two third in Gdex revenue scale.

After seeing the potential, so I will put it simple. Let's say Century will be throwing RM 100 million for 54.78% stake, ok ? Too high ? Ok, we discount 30% from RM 100 million, we talk about RM 70 million for 54.78% stake (65,863,090 shares), this will work out at around RM 1.06 per share, so let's discount another 6%, and make it a RM 1.00 offer. Now fair and good? Discount and discount many times already.

Since the purchase involve more than 33%, then it will be mandatory to offer a take over exercise to all at the same price, RM 1.00. But, if Gdex can be hype up until PER x 150, why would Century want to privatize Natwide ? Might as well let it float like a Cadillac and put up a good fight with Gdex.

If that comes true, RM 1.00 take over offer will see the share price becoming RM 2.00 based on my theory.

Wow, amazing amazing amazing. I must be dreaming in deep blue sea.

I remember the time when I recommended Rex at RM 1.83, some naysayer come cursing me and as me to go fxxx myself when the share when to RM 2.00 and fell down. Today Rex is standing at RM 2.30, with an occasion hitting RM 2.38 ! Now, I am taking this opportunity to send back those word you gave me.. Go xxxx youself. And for those who ask me to xxxx myself at Natwide when I first mentioned at 30th June in a forum, you gotta watch and see who will have the last laugh!!!

Friday, 30 June 2017

This company will be doing big things in China

The Malaysian market continue to remain strong amidst the continuous prepping of the market due to domestic influence such as incoming general election that is expected to happen in the next 7 months. Such an event continue see foreign funds coming into the local market in anticipation that the local government will be dishing out more infrastructure projects to GLC linked conglomerate.

Analyst are looking at month of Nov-Dec if the election is going to happen this year. This is partially due to ann important event happening in October 2017, where China's President Xi JinPing will visit Malaysia to witness the official opening of Xiamen University's Malaysian campus in Bandar Sunsuria, Sepang. For this reason, it is quite reasonable for you to believe that the local market will continue to be supported until then.


While Malaysia continue to see big investment from China in some core infrastructural area, it is also important to note that some Malaysian counterparts too have big influential development in China. If you still do not know what are the big developments in China that is owned by Malaysian businessman, then you should open up your eyes once again to know this company potential involvement in China and it's big development in the tourism sector.

So this company, is none other than the sensational hit of 2017 - Dataprep.

By now, I will not go about what is Dataprep doing, what will Dataprep will doing and where will it be doing. I think I had gave out more than enough data concerning Dataprep, and the rest is up to you to do your own reading and research.

All I can tell you that at the crucial point where I had identify and share with you about Dataprep, it is lingering at a lowly 12 cents. Yes!!! It is just a freaking 12 cents!!! And I continue to inform interested investor to take position at anything below 30 cents back then.

Lo and behold, I don't know what happened to Dataprep until it hit a high of 70 cents, and I have to tell you that I had nothing to do with that - seriously. But one of the thing I did is, I did not ask anyone to run towards Dataprep and grab it when it is flying too overly high at that point of time. I only recall me telling you about the potential and goodness of Dataprep when it is 12 cents, 20 cents, and the last being 30 cents.

Now, as the price of Dataprep consolidate, I am here again to share with you that this might be a good price to take position in Dataprep.


Today, I will talk more about technical charting of Dataprep. Here, I will look into 4 important points, - a long term support line
- a mid/short term support line
- a resistant line
- consolidation in terms of price and volume.

The red color line is a long term support line. I had drawn it from the start, touching the base of the whole up trending chart. Today is the defining moment, where the long term support line had finally touch another upper base of the price chart. If the uptrend continue to be intact, then Dataprep will be continue to trend upwards, and not violating the long term support line.

Now, I will support my chart with another mid/short term support line, which is highlighted in blue. As you can see, the blue line is formed at the higher region, after the major spike. This mid term support is important to show that the entity holding substantial stake is still in the game, and not selling out.

Then, as I already form a good judgment on the support base of Dataprep, looking for a good entry into Dataprep will have to see the intersection of a resistant line and a support line, which I had highlighted in Green Color. The intersection point resemble the best potential point of entry into Dataprep as there will be heavy interest in technical traders looking for big rebounds when there is a strong breakout.

Finally, in order to confirm your decision, it is important to know if the consolidation is ripe or not. A good consolidation will see a price holding at a certain price level without much volume being transacted. For this case, Dataprep at the price range of RM 0.40 is proven to be well consolidated technically.


Putting all of this fantastic 4 factor together, I could be able to sum up that Dataprep might be in a good position for you to invest, trade, or increase your stake. As you see, I am not someone that will ask people to buy when stock are flying up, but I will ask you to take note when the stock is sleeping, consolidated with low volume but still with greater potential. For this case of Dataprep, I will let you decide on your course again.

As you can see, despite the flat financial performance by Dataprep in the latest quarterly result, the company share price had been holding good. If by any chances Xi Jinping will touch on Genting Secret Garden during his visit in October 2017 at the official opening of Xiamen University, then you will know what is going to happen.


For this case, like what Bono sings - With or Without You.