Thursday, 24 July 2014

LIONFIB - A Dragon's Awakening

The market had been recently bogged down with airlines fatal accident. Just not long after the shot down of MH17, another Taiwanese local flight had to fight against the rough weather and succumbed on an emergency landing, putting up more numbers of airlines casualties for the year 2014. However, the overall outlook for the market had been trying to remain on a strong outlook as global leader are marching towards the same direction of encouraging an economy recovery by putting up incentives from a loose monetary policy with a believe on the continuation of the quantitative easing.

While the global outlook had remained strong although with minor hiccups in some region, our local KLSE market had continue to remain a bullish outlook in several sector after the government had plans to continue to boost the country infrastructure and public amenities. Wawasan 2020, which is just 5.5 years away, will be seeing more and more complex mega infrastructure being laid out, with prime focus in the Klang Valley, Penang and then Johor as a major oil and gas hub. The recent talks had been the approval of LRT 3 that will be increasing the coverage in PJ area, further upgrading the construction sector which had been bullish after a series of KVMRT Line 1, Line 2, Line 3 and highways jobs ranging from WCE, EKVE, SUKE, DASH, Kidex and so on.

Following on the bullish construction outlook, we believe that the building and construction material supplier in Malaysia will be looking to see an increase revenue. While there are quite a number of building and construction material supplier, one of them that had caught my attention is Lion Forest Industry Berhad (LIONFIB - 8486)

Let's have a quick look at LIONFIB recent price chart.
LIONFIB had been trading at a low range of volume for the past 2 years with volume hardly coming more than 500,000 of shares exchanging hand in a single day. However, LIONFIB had been seeing more interest as of lately, suggesting that a fresh flow of volume will be coming to visit the counter soon. LIONFIB will be looking to see a larger break out on it's volume after it had been trading at a seemingly super grossly undervalued price for it's assets in hand, and almost a negligible debts in the company.


LIONFIB - Is it just too grossly undervalue

Lion Forest Industry Berhad is primarily involves in
- Building and construction material supplier ranging from steel, cement, tiles, bricks and roofing.
- Automotive spare parts, lubricant and petroleum products.
- Provision of transportation and forwarding services.

LIONFIB can be considered as the best amongst all the other listed entity of Lion Groups. While most of the Lion's group had suffered largely due to the Asian Financial Crisis which had brought a lot of company down, LIONFIB is 1 of the company that had weathered better than the other groups and had not entered into special attention status (PN1, PN17 etc).

A large portion of revenue that LIONFIB is having is mainly from the steel trade. However, 2013 had been a challenging year for most of the Steel player in Malaysia due to the dumping of steels from China. But with more huge mega infrastructure in the line up in Malaysia, the steel industry will be looking to see a better turn around soon.

While LIONFIB had been recording a lower revenue for 3Q FYE 2014, the company is liken to just another sleeping dragon that will wake up with a mighty roar in the coming days.

LIONFIB had been trading at a very grossly undervalue price. At RM 1.04, LIONFIB is trading at an incredibly huge stunning discount of 80% to it's NTA of RM 5.32. To put it sweeter, LIONFIB is also sitting at a huge cash pile of approximately RM 240m, translating to approximately RM 1.03 of cash worth per share while LIONFIB do not have any significant debts at the time being, putting the company in a very strong foothold.

To add up the sweetener, most of the properties that is sitting at LIONFIB had not been revalued to it's recent valuation, with the longest being from 1991.

As of the annual report 2013, the prized asset that LIONFIB is sitting on will be the 2.02 hectare (which is 217432 square feet) of freehold industrial land at Persiaran Jubli Perak. The latest pricing for the land around that area will be around RM 200 to RM 230 per square feet. Should the land be revalued at a skeptical price of RM 215 per square feet, the piece of land will be seeing a RM35million gain, which is bringing another RM 0.20 in value for each of the shares in LIONFIB.

Just based on the cash and revaluation reserved that LIONFIB is sitting on, LIONFIB is already worth RM 1.23 per share (Outstanding share as of now is 231,571,732 shares).


Coming up outlook
Malaysia will be seeing a bullish robust growth in the construction sector which is mainly fueled up by mega infrastructure project from the government, and the bullish properties construction from the developer. The construction sector will be looking to be fully booked until the at least 2018, putting a bright prospect for the building and construction material supplier in the market. Due to the large exposure of LIONFIB in the industry, covering steel, tiles, cement and roofing, LIONFIB will be looking to see a better outlook in the 2H of 2014 and 2015.


LIONFIB will be a good company to be invested into based on
- Strong fundamental backing of the company which is in net cash position, and negligible debts.
- Cash worth of RM 1.03 per share
- Prized asset at Persiaran Jubli Perak which is worth RM 46million in current valuation, an appreciation of RM35 million from the last valuation at 1991.
- LIONFIB being "The Best Lion" amongst all the other lion packs.
- Huge exposure to the bullish building and construction sector for the coming years.
- Trading at a incredible huge discount of 80% from it's current NTA of RM 5.32. Should we factor the latest valuation of all the properties, LIONFIB could be looking at a RNAV of RM 5.55.


I believe LIONFIB will be a looking to challenge above RM 1.15 in a short term outlook. A longer term outlook will put LIONFIB trading above RM 1.50, which is still more than 70% discount from it's NTA of RM 5.32.

Game in or out? You decide.
Bone's short term TP : RM 1.30

Cheers and happy trading

Regards,
Bone

Tuesday, 22 July 2014

EURO - On A Dragon Roar

The market had been reeling in a mixed emotion as of lately, with a bull that had been charging for quite sometime, and a bear that had been putting up guerrillas attack on the market on and off. The recent shot down of MH17 had added much anxiety on the market after the Ukraine Russia standoff had started to attract international attention that might result see them interfering to solve the tension before getting more innocent civilians lives. However, the US market is still hanging above 17000, a critical support level to show that the bullish ball is still in game. While market is always full of surprises, the local KLSE market hottest talk had been on MAS which had been bogged down from financial blues, MH370 and now, MH17.

The recent equity run up had featured a strong rise in Penang's property sector. This sector had been seeing increasing coverage, with E&O leading the spot light. Penang property is set to see their largest GDV in the coming days, with STP 2 alone accounting more than RM 25b in GDV.






The recent strong rally display by Tambun and E&O had been a strong indicator on the strong demand for Penang's prime land.


While both Tambun and E&O might be looking near to be fully valued, another huge coming up potential that will definitely blow your mind away will be - EURO 7208.

Let's have a quick look at the recent price of EURO.
Euro had been consolidating at the range of RM 0.45 for the past 3 months. The consolidation had saw saturation in it's stage, hence looking to see a series of fresh volume to bring the share price higher above RM 0.50 in the coming days. EURO will be looking to tap strongly into the uncharted territory above RM 0.50, which might be seeing it testing RM 0.60 to RM 0.70 in the coming days.


EURO - Brewing with Oxley

EURO had been involved in the manufacturing and trading of office furniture in Malaysia. The Company distributes its products under the brand name of EURO. While most of the furniture maker had been seeing handsome gain, or looking set to gain big in the recover of economy in the West, this had not left Euro out of the pie.
EURO had been able to see a growing revenue for the 1Q of FYE 2014 after raking in more than RM30m, putting the company financial into a good launch for the year 2014. The coming up quarter will be likely to see a strong growth in sales which is likely to see sales penetrate above RM 40m for 2Q 2014, possibly putting up a 2 cents EPS.

While EURO had been looking set to see their financial turning back into the black for FYE 2014, EURO currently had been trading at a 38% discount from it's NTA of RM 0.83. However, EURO RNAV might be looking at anything above RM 1.00 should the latest agricultural land be converted into a mixed residential and commercial development land.


While a lot of company had been diversifying into property development, this had not been a shy move for EURO as well. In fact, EURO will be going into the property market with the loudest bang they can.

The Deafening Catalyst

2 years back, Beverly Heights Properties Sdn Bhd had bought 30 acres of freehold land at the northeast side of Penang, which includes 19 acres of land in the Pepper Estate. The Pepper Estate is a very strategic piece of land that is highly sought after due to it's proximity to prime location.

Currently, the land value for area near Tanjung Bungah and Tanjung Tokong had been ranging from RM 500 to RM 1000 per square feet after the reclamation work at STP1 had set a new benchmark in the land at the northeast of Penang.
30 acre of land, which is 1,306,800 square feet, putting a price tag of RM 800 per sq ft will be ballooning to RM 1.045 billion worth of land value. Now, the question is how does EURO related itself to Beverly Heights Properties Sdn Bhd?

In 2013, Oxley Star Sdn Bhd, a wholly owned subsidiary of Oxley Holdings Limited had entered in a joint venture agreement with Beverly Heights Properties Sdn Bhd to develop the piece of land, which will consist of multi billions worth of high end residential and commercial units. Given the hot demand and strategic area at Pepper Estate, the project will be seeing a big number of purchaser, especially foreigners.

However, the big development had been lacking a listing market entity, which had put a big question mark on which listed entity will be slated to benefit from this huge project.

Let's have a quick look between the relationship of Oxley and EURO


The relationship between EURO and Oxley is further highlighted on their movement in share price dated back to November 2013, where buying interest had appear at the same time frame. Furthermore, both owner of Beverly Heights Properties Sdn Bhd, Dato Tong Yun Mong and Dato Choong Yuen Keong had been on a buying spree on EURO shares. Till date, Dato Choong Yuen Keong command 16,910,000 shares, while Dato Tong Yun Mong is controlling, 8,500,000 shares, both totaling more than 31% of the company shares.

Shall Beverly Height Properties Sdn Bhd be injected into EURO, at the current outstanding shares of 81 million units, EURO might be looking to worth RM 12 per share based on the land value that is worth more than RM 1 billion.


EURO will be a very attractive company to be look into in the coming term and long term outlook. EURO attractiveness is highlighted in:
- Current business improvement with increase revenue chalked at 1Q 2014, and growing EPS
- Trading at almost 50% discount based on RNAV of more than RM 1.00, and 38% discount based on NTA of RM 0.83
- EURO being the closest listed entity to be benefited from the huge development in northeast Penang after bearing common shareholder in Beverly Heights Properties Sdn Bhd.
- EURO highly linked close proximity with Oxley in similar share price movement, in which Oxley Star, a wholly owned subsidiary of Oxley, will be developing the Northeast corridor of Penang.
- First parcel of approximate 5 acre land is ready for development.
- EURO will be worth RM 12, based on the RM 1b land worth in Beverly Heights Properties, shall it be injected into EURO.
- Acquirement of EURO shares made by Dato Tong Yun Mong and Dato Choong Yue Keong lately, highlighting a high chance of possibility for Beverly Heights Properties to be injected into EURO.


EURO will be a possible candidate to break sky high limits in the coming days. At RM 1.00, EURO is just commanding a market capitalization of RM 81 million, which is carrying a development that is value more than RM 1billion in GDV. EURO will be on high chance to hit the limit. A short term outlook could see EURO putting it's step at RM 0.70, which a longer term outlook will suggest EURO trading above RM 1.00 once Beverly Heights Properties got injected into the company.

Are you game in or out? You decide.

Bone's short term TP: RM 0.75 (Potential limit up candidate)

Cheers and have a nice day

Regards,
Bone

Friday, 18 July 2014

EWEIN - Golden Tunnel

Ewein Berhad, a little known company to the public which is primarily involved in the business of precision sheet metal fabrication had came into the lime light after their affliction with Consortium Zenith BUCG Sdn Bhd to develop a 3.73 acre land in STP1. Ewein, under their wholly owned subsidiary, Ewein Land, will be heading a 60:40 joint venture with Zenith BUCG Sdn Bhd under Ewein Zenith Sdn Bhd, which will be developing the land which carries an estimated GDV of RM 700m to RM 1billion.

Before we look into further details, let's have a quick look at Ewein's share price.


Ewein had been trading at the range of RM 0.60 after the bonus issue. Currently, the total outstanding shares in the company stands at 210,925,192 units of shares after the bonus issue. At the current price of RM 0.60, Ewein is commanding a total market capitalization of RM 126.55 million.

Ewein had not seen any heavy traded volume for the past 3 months. However as of lately, Ewein had been seeing some interest which had saw growing volume in the recent trading days. Ewein could be looking set to penetrate past RM 0.60 in a convincing manner in the coming days, backed by the strong participation of volume.


Ewein - A Path of Golden Tunnel

To recap back on the event, Consortium Zenith BUCG Sdn Bhd is awarded with the Penang Tunneling project which is carrying a tag of RM 6.3 billion in value. Penang state government had swap a 9 acre land in STP1 to Zenith BUCG for them to finance for the FSDD (Feasibility studies & Detailed design) study for the project, which carries a land worth of RM 305million. Previously, Zenith BUCG is being promised of 110 acre from the STP2, however, due to the delay in STP2, the Penang Government had taken 9 acre from STP1 in order for Zenith BUCG to kick start on the work, which means, Zenith BUCG will be only allocated for 100 acre in STP2. Consortium Zenith BUCG Sdn Bhd is chaired by Dato Zarul Ahmad Mohd Zulkifli.

To make thing hot and interesting, Dato Zarul had been appointed as the Director of Ewein Land, putting the company in a hot roll for a series of huge mega project with the likes of sub contracting work from the Tunneling, and development of land in the STP2 after completion.

According to insider sources, the feasibility study that had conducted earlier this year had been finalized and came to a conclusion. While the study had outlined some of the core challenges that might be highlighted, the overall conclusion is in a favorable state to see the kick off for the Tunnel. The study will be looking set to be updated to the public in the coming days.

While most of the mega project that had been dished out usually involved a listed company, the only closest listed entity that will be looking set to benefit the most in the whole development will not be shy of Ewein Berhad. According to sources, Ewein Berhad will be slated to see a significant portion of contract in at least more than RM 1 billion from Zenith Construction Sdn Bhd in the whole project, which stretches from Tanjung Bungah to Teluk Bahang (12km), Lebuhraya Tun Dr Lim Chong Eu to Ayer Itam (5km), Lebuhraya Tun Dr Lim Chong Eu to Persiaran Gurney Highway (4.2km) and the final phase which is the 7.2km George Town Butterworth link, of which 6.5km is undersea tunnel.


I believe Ewein Berhad will be an interesting company to look into in the coming days based on
- RM 1billion GDV project value development above 3.73 acre in STP1 in a 60:40 joint venture with Zenith BUCG under Ewein Zenith Sdn Bhd
- Dato Zarul Ahmad Mohd Zulkifli being the same shareholder/director/chairman in Ewein Berhad, Ewein Land, Consortium Zenith BUCG Sdn Bhd, Zenith Construction Sdn Bhd.
- Ewein Berhad being the only listed company in KLSE that is in close proximity for the RM 6.3 billion road and tunneling project, putting a high chance for Ewein Berhad to secure more contracts in the long run.
- Sources indicating Ewein involvement in the tunneling project worth more than RM 1 billion in value
- Ewein currently trading at 23% discount from it's NTA of RM 0.78, of which most of the properties are not revalued. RNAV estimated at RM 0.90 or higher.
- Favorable feasibility study that will be soon seeing the kicking off of the project, putting great chances of Ewein benefiting from new project orders.


Ewein will be a good company to be traded or invested into based on it's high exposure to the RM 6.3 billion Penang Tunneling project. Currently, Ewein is already in a joint venture property development program with Zenith BUCG which is slated to be worth around RM 1b in GDV, as they are looking to sell units at around RM 1300 psf. Should Ewein get another RM 1 billion of contract from Zenith BUCG in the coming days of the road and tunnel construction, Ewein will be looking set to benefit big time.

A quick outlook will see Ewein trading above RM 0.60. While a longer term outlook might suggest Ewein trading at the range of RM 1.00.

Bone's short term TP: RM 0.75

Cheers and have a nice day

Regards,
Bone

Wednesday, 16 July 2014

Dolmite - On a Diamond Mine

The equities market is still looking good to remain in an upbeat manner, however, sentiment still remain cautious in this fragile state of stability with the Europe financial worries as well as on going tension between the US and Iraq. However, the global outlook still remain bright as most of the leaders of the world are still pushing towards a greater economy recovery and activities.

The 2H of 2014 will be possibly seeing a higher focus on building material supplier for both public infrastructure, properties and Oil & Gas industry as developers and contractor will be pushing for more orders and delivery before the GST that will be kicking in 2015, resulting in a higher cost of goods.

One of the core component in the construction segment - limestone, will be a heavily demanded ingredient in the robust outlook for the construction segment in Malaysia. Below is an example on LaFarge Malaysia Berhad on it's up trending price since January 2014, signalling the bullish demand on the cement industry.
 
While the industry will be looking to be handsomely rewarded in the coming days due to their overloaded demand, Dolomite Corporation Berhad (Dolmite 5835) had came to my great attention on their coming bright prospect that might put a diamond knot in their coming up financial year.

Let's have a quick look at Dolomite share price.
Dolomite had been consolidating at the range of RM 0.35 for more than 6 months without much significant participation of volume. A fresh surge of volume had suggested that Dolomite will be looking to tap into a higher region in the coming days after seeing a saturation below RM 0.40. Dolomite will be looking set to challenge above RM 0.50 to see itself penetrating into the uncharted territory. Dolomite might be looking to land into the RM 0.60 region.


Dolomite - A Prospect Brighter than Stars

Dolomite Corporation Berhad mainly operates in two segments
- Manufacturing, which include the manufacture and sale of hot mixes, concrete piles and ready-mixed concrete.
- Construction and property development, which include the piling and precast concrete construction contracts, earthworks, buildings and expressways contracts.

Dolomite prospectus for the 2H of 2014 will be very great which is back by the strong robust demand in the cement, fueled by the hot rolling infrastructural projects and mega mixed development around the Klang Valley. Dolomite favorable quarry location is one of the prime factor for any reason for a contractor to get supplies from them.

Dolomite quarry in Hulu Langat is one of the single largest granite quarries in Malaysia, with a span of 838 acres of land, covering bountiful of rock reserves for the Klang Valley demand.


According to internal sources, Dolomite book order for the natural resources had been seeing a stunning growth over the past 1 year, underlining the huge demand in the resources.

The huge demand in the cement had been fueling up the quarrying sector which had been displayed by other bigger players like IJM, MFCB, HapSeng and recent rising star, WZSATU.



Dolomite, compared to it's peer which had displayed huge upside, is carrying a huge amount of explosive which could possibly see it's share price sky rockets towards the ceiling once this beautiful gem is uncovered.

The Huge Catalyst

The recent quarry license issues in Selangor had been playing a role of an angel and a devil. A total of 8 quarry operator out of the 28 operator in Selangor had been facing short term operating license issues, which had saw their operation being suspended due to the non renewal of their short term operating license. This had lead to a higher demand squeeze towards those remainder operators in the Selangor state, putting them to work almost non stop over the clock to cater for the huge demand. Amongst them had saw Dolomite in the line up for the beneficial of the suspension of license for those affected 8 quarry operators.

While hot stuffs usually go rampage and overheat further, one of the substantial shareholder of Dolomite Corporation Holding is Tan Sri Abu Sahid Bin Mohamed, the recent limit up factor behind IPMUDA Berhad surge from RM 1.10 to RM 1.43 on 3rd July 2014. Tan Sri Abu Sahid is commanding a notable stake in Dolomite, with a total of 15,725,500 of shares, or 5.97% in hand. Dolomite could be on a hot rail to see it's share price on a possible route of hitting limit up as market hype had been strong on the recent action on Tan Sri Abu Sahid Bin Mohamed open market purchase on IPMUDA.


Dolomite will be a very attractive company to be traded and invested into based on their involvement in the quarry industry, and the huge demand of limestone which is fueled up by the robust demand in the mega infrastructure development in the nation.

A summary outlook for Dolomite Corporation Berhad
- Huge demand for limestone/cement back by the robust huge infrastructural and mixed residential and commercial development in Klang valley.
- Suspension of short term quarry operating license in 8 of the 28 operators in Selangor since January 2014, putting Dolomite in a bright position to see a higher order in it's product.
- Prime location of the quarry site which is situated in Hulu Langat, making them favorable for contractor to order because of lower logistic cost
- Increasing order throughout the 2H of 2014 to avoid higher cost after the implementation of GST in 2015.
- Trading at 25% discount based on the NTA of RM 0.572. However, RNAV could be hitting more than RM 2.00 after the 838 acre of quarry land in Hulu Langat can be turned into a land for development.
- Tan Sri Abu Sahid as a substantial share holder with 6% holding in Dolomite. Tan Sri Abu Sahid is the recent person behind the limit up of IPMUDA. Tan Sri Abu Sahid had been increasing his stake in Dolomite in a gradual manner as of recent.

Dolomite will be looking to challenge above RM 0.50 in the short term outlook. A strong penetration above RM 0.50 will see Dolomite moving towards the uncharted territory, which could possibly see a visit at RM 0.60, and subsequently RM 0.70 to RM 1.00.  A long term outlook will put Dolomite at RM 1.00.


Bone's short term TP: RM 0.65

Cheers and have a nice day.

Regards,
Bone

Friday, 11 July 2014

CAB - Fiery Chicken

The market is looking set to come back in a strong manner despite the current temporary correction after a bullish surge that had saw the DJIA penetrate above 17000 in the past few days. The equity market is unlikely to see slow down until the next set of economical data release, or when it is nearing the next coming quarterly result which will be subjected in the month of August.

While market had been in the correction manner, putting a right foot hold in the correct market theme might be able to see a better risk-reward return. The 2H of 2014 had saw a quick focus on Properties and Construction Building Material supplier being the focus as the market had anticipated more kick start on the huge major public infrastructure, and also to dish out some huge projects. However, one of the rising trend in the 2H 2014 will not be anyhow being shy in the Food category - Consumer Products (FMCG).

The strong rising trend in the poultry had been denying negative market sentiment. We had saw strong inflow of capital in the likes of PW (7134), LayHong (9385), QL Resources (7084), TeoSeng (7252) and CCK (7035).





The above charts had shown a strong rising trend in the poultry industry that had been challenging new high after another high.

While most of the poultry stock had been moving for quite sometime, the recent poultry that had just geared on will be CCK Consolidated Holdings Berhad (CCK - 7035) and CAB Cakaran Corporation Berhad (CAB - 7174). While both are interesting at their primary stage of booming, CAB had caught my deeper interest based on it's current undervalued position, better business diversification and a larger room for appreciation, another qualified candidate for a potential limit up target.

Let's have a quick look at CAB latest share price movement.
CAB had not saw any active trading for the past 3 years.  In fact, share price had been remaining in a greatly depressed manner for a long time. However, the latest outlook in the poultry industry had bought some light into CAB, in which CAB had saw a all time record breaking volume that had saw more than 3.5m of share exchange hand. CAB had started to challenge above an uncharted territory above RM 0.70, which might be seeing the share price locking horn at the biggest psychological barrier at RM 1.00.


CAB - A Hyper Bright Outlook
CAB, lead by group managing director Chuah Hong Pong, is primarily involved in the following:
- Integrated Poultry Farming and Processing
- Marine Product Manufacturing
- Marketing and Food Processing
- Restaurant and Franchising

Starting from 2013, CAB had been growing in a very aggressive manner. CAB continue to cater to the growing market demand which had saw them pumping their broilers output to 4million a month, underlying the increasing demand for the source of protein from the poultry meat. Resident in Malaysia are consuming an approximate of 45 million of broilers every month.

The growing population in the nation had been one of the major rising factor behind pushing for more source of protein. The influx of foreign worker in the labor forces had been another strong underlying factor to push the demand for the poultry meat further.

As of 2Q 2014, CAB had recorded a strong rising revenue for the 1H FYE 2014, an increased of 12.14% compared to the previous year. CAB will be looking to break above RM 700m in revenue for FYE 2014, marking a new chapter in their business history. CAB will be looking for a double digit growth in the 2H of 2014 which will be mainly fuel by more festival celebration ahead. CAB will be expecting to see EPS soaring as high as 3 cents for the next 2 quarters, putting a total estimation of 10 cents in EPS for FYE 2014. Should CAB hit an EPS of 10 cents, trading at a PER x10 will see CAB being valued at RM 1.00.

At the current price of RM 0.69, CAB is traded at a 38% discount from it's NTA of RM 1.11. However, due to it's diversified nature of business, and a global presence and exposure, CAB could be easily being valued more than RM 1.50, putting it trading at more than 50% slash discount.

CAB will be seeing a better cost management after streamlining it's processing to a Sungai Petani, a 120,000 sq ft facilities located on a 8.9 acre site, enabling it's economy of scale in production and processing. The processing plant started operation in the end of 2013, which will be reflecting positively in the FYE 2014 result.


To put it more interesting, Kyros Kebab, a fully owned franchise arm of CAB is another rising star in the latest fast food industry. With more coming up shopping malls in the Klang Valley, the exposure of Kyros Kebab in the presence of the public will be looking set to see another big hit in the market. The higher consumption in the fast food outlet had also been outline by BJFood lately.


Current Catalyst
The Hari Raya Celebration that is around the corner had been the rising factor for the huge demand for the poultry meat. While the current dry and hazy weather outlook had been hampering growth of the broilers, the huge demand fueled by the Hari Raya Celebration is chalking up the prices of the broilers for 3Q 2014. During the 3Q of 2013, the searing heat waves that hampers the production of broilers had been a major factor for the increase of the prices.


CAB will be another big hit in the market in the coming days ahead. CAB diversified business outlook within the industry itself had position itself on a different level compared to it's peers. CAB will be a great trading or investment vehicle based on:
- Rising strong demand on poultry meat as a cheap source of protein.
- Strong demand fueled by more festival season in 2H 2014, lower output due to hot and hazy weather, pushing the increase of the prices of broilers.
- CAB strong exposure in local and international market presence (US, Europe, UAE, India, China, Indonesia, Philippines, Brunei and Singapore)
- Streamlined processing plant in Sungai Petani at 2013 to achieve a better economy of scale which will benefit the company starting FYE 2014.
- Diversified business portfolio which involved in Food Franchising - Kyros Kebab.
- Diversified business portfolio which involved in Supermarket - Pasar Raya Jaya Gading.
- Diversified business portfolio which involved in marine meat processing.
- Price revision on the poultry meat in 2H 2014.
- Trading at 38% discount on NTA of RM 1.11.
- Estimated EPS for FYE 2014 to be at 10 cents, PER x 10, valued at RM 1.00

CAB will be very attractive in the coming days. CAB challenge above RM 0.70, while a huge strong volume might be able to send CAB to the roof of RM 1.00. A longer term outlook might be seeing CAB trading at RM 1.30.

Are you ready for the run? You decide.

Bone's short term TP: RM 0.90 (Potential Limit Up target)

Cheers and have a nice day.

Regards,
Bone

Tuesday, 8 July 2014

SAPRES - The Upward Spiral

The month of July had been a great moment for the equities market as global sentiment had been encouraging for retailer to see a worthy participation. DJIA had started to see some healthy adjustment to the recent huge climb above 17000, which might be seeing the huge foreign fund starting to visit Asia once they start to cash out the US market.

The recent market movement had saw a revisit in the properties segment. The recent hike had saw the properties index break above the 1450 mark, marking a 2nd revisit in the 2H of 2014.

While the notable counter that had saw much participation in the trading which includes E&O, EUPE, Malton, GOB, HUAYANG, KSL, MAGNA, MENANG, MRCB, MUIPROP and some others, it had came to my attention on SAPRES (Sapura Resources Berhad - 4596).

Let's have a quick look at SAPRES latest chart movement.
Sapura Resources had been consolidating for the past 6 months at the range of RM 1.00. The consolidation had seen a level of saturation and will be looking to break into a new level for a fresh level of volume. Currently, SAPRES will be looking to see better volume participation in a property trending market as it poise itself to challenge above RM 1.10 in the coming days ahead.


SAPRES primarily engaged in property investments and education. The property investments segment is engaged in the rental of investment properties. The education segment is engaged in the provision of higher education. APIIT, UCTI is amongst the few of the tertiary education hub under SAPRES arm.

SAPRES had been enjoying a steady flow of investment properties rental return due to the anchor tenant that is mostly consist of Sapura group of companies which is dealing in the energy sector. As of FYE 2014, the rental income had been attributable for 55% of the group income. SAPRES had also saw a better revenue after a better enrollment rate in their university, as well as the power cabling subsidiary which had turn the table around from a deficit of 9m to a positive of 2m in 2014.


SAPRES is current very attractive due to it's current huge discount position from it's NTA. At RM 1.07, SAPRES is current trading at a huge discount of 57% based on it's latest NTA of RM 2.49.

Based on it's current properties, SAPRES office building which is situated at Mines Resort City could be worth much more after as it's valued is last recognized at year 1999, putting a possible 30% increase to it's current valuation.

SAPRES another prime asset might not come short of the warehouse office and store that is at Jalan Tandang, Petaling Jaya, bolstering a huge area of 49,927 sq meter (537,409 sq ft / 12.33 acre). However, the only hampering effect that is suppressing the value of the land is because of it's leasehold status that is very near to expiry. However, SAPRES might be able to see a huge appreciation in it's NTA should the land leased be renewed, or to be converted back to FREEHOLD status which had been an ongoing issue within the Petaling Estate residents. SAPRES might be easily seeing at least RM 160m gain from the conversion.


Current Catalyst
SAPRES had finally got ready to inch the Joint Venture with KLCC Holdings Sdn Bhd to develop a plot of land in front of the current KLCC to cater for more office spaces and a retail podium. This will be one of the maiden flagship project that SAPRES will going to undertake. SAPRES will be managing a total of 70% of net letable area.

While the joint venture is huge, SAPRES might be going to undertake a corporate exercise to raise fund in order to fund for the scale of the project.


 SAPRES will be an interesting company to be invested in based on:
- Strong director background which is involved in energy division.
- Current huge discount position of 57% to it's NTA of RM 2.49.
- All properties carrying a tag price which is before year 2000.
- No. 10, Jalan Tandung Warehouse/Office land which could be worth RM 150m once lease renewed or converted to be freehold.
- Strong growing education market, underlying a stronger revenue contribution in FYE 2014.
- Cabling business had come back into the black with net proft of approx 2m compared to previous losses of 9m.
- Maiden JV project that is to be kick start in the 2H of 2014 with KLCC Holdings Sdn Bhd.
- Current properties revisit market trend in the 2H of 2014.

SAPRES will be looking to challenge above RM 1.10 in the coming days.  A short term outlook might be able to see SAPRES trading at the range of RM 1.20, while a longer tenure outlook will see SAPRES trading at RM 1,50.

Bone's short term TP: RM 1.25

Cheers and have a nice day

Regards,
Bone
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