Tuesday, 28 January 2014

HIL - On a Hill of Cash

The bear had come out in a red raging manner in the corners of the Chinese New Year. The KLCI had not been spared since the first trading day of 2014 which had been sliding off the mark and breaking below 1800 as of today when the US had plunge due to the change of president in the Feds and the tapering of the USD in reducing the bond buying had push the green back stronger against the MYR.

While the market heads to uncertainty, it would also be a time where bosses would be lurking out to look at good offers in the market, which presumably will favor company that is rich in asset and cash. On my list, I had came and bump at HIL - HIL Industries Bhd (8443).

Probably not many would know about HIL, a company which is owned by Dato Ng Thian Hock, which is also the owner for A&M Realty Berhad. While A&M Realty had shot to the business headline in the recent weeks due to it's gold mine land in Pulau Carey, A&M Realty had rallied strongly from RM 0.50 to a peaking price of RM 1.20 in the recent run. Similarly, what are we going to see in HIL?

HIL had garnered some buying interest lately accompanied with some attractive volume. While HIL is consolidating off the mark at RM 0.50, the next upcoming high volume day will definitely be bringing HIL to greater level.

What could be so interesting in HIL? Let's have a look at HIL.

HIL provide plastic injection services such as, Mold & Die Fabrication, Injection Molding, In Mold Decoration, Spray Painting, UV & EMI Shielding, Silk Screen & Tempo Printing, Ultra Sonic & Vibration Welding, Direct Digital Printing, Surface Decoration Technology, Assembly Services, Assembly Machine Fabrication, Blow Molding and Weld Lineless & High Gloss Injection Molding.

While their business had been running consistently, their financial losses is mostly attributed by the depreciation of machinery and plants. As of current, HIL is sitting at a NETT CASH position of RM88m with a list of undervalued properties under their belt.
Most of the asset of HIL had not been revalued and had been sitting at the valuation from as old as Year 1989. Their properties will easily look at 200% to 300% gain from their purchase price based on 2014 valuation.

While Dato Ng family had a direct and indirect controlling stake as high as 68.37% on a company that had RM88m cash position which is translating to approximate of RM 0.315 cash worth per share, while not taking into consideration the asset and business that HIL is sitting on. At the current position of HIL below 50 cents will be a very lucrative target for Dato Ng to launch a take over/privatization offer for the rest of the 30% shares that is not owned by him as to get the ultimate control on the cash pile. The current NTA for HIL is RM 0.98 (property and land not revalued).

In my opinion, HIL will be liken to see more upwards movement with it's asset sitting under it's belt. I believe HIL will challenge RM 0.55 once again, and a successful break on RM 0.55 will see HIL putting a foot hold at RM 0.60 in the coming days.

Bone's short term TP: RM 0.60

Cheers and have a nice day.


Wednesday, 22 January 2014

GUH - Galloping A Stronger Horse

While our local index had suffered from a series of rolling bears, KLCI had put a temporary kick on the bear today with a green ending at 1815 (+7.75). The once hot topic about the new year effect had went off course as January 2014 had been shedding off hard for some stock due to the cashing out from the foreign fund.

As index related counter started to get trimmed off stage by stage, the removal of UEMS as one of the KLCI Component stock had seen UEMS breaking off the support at RM 2.30 as it is replaced by IOI Properties Group Berhad which is not looking too good either as they are not able to maintain a market cap more than RM 10b.

While the Year of 2014 weights heavier on the negative side with the government increasing the prices of electricity tariffs and essential products such as removal of petrol subsidy, the public are expecting a tighter budget from the consumer for this year as they try to adjust to make end meets.

However, despite all this sentiment, I would tend to believe that there could be some lights in the darkness, that is when GUH had caught my attention.

A diversified company with core activities being on the manufacturing of layered PCB (Printed Circuit Board), Plantation, Properties development, GUH might be looking for a better 2014 in the coming days.

Electronic board - PCB
With their electronic manufacturing plant situated in Penang, GUH had recently underwent an expansion that would see their capacity increase from 592000 square feet to 807000 square feet from a joint production center at Penang and Suzhou, China. In this high tech digital era, the high demand on electronic gadgets such as tablets, tabs and smart phones with a short product life cycle had been the major contributor towards the demand on the semi-con industry. The rising demand of PCB in larger electrical goods such as air conditioner, TV display, digital electronic goods had been a pulling factor from the properties segment whereby a lot of new project handover are expected to take place in 2014 and 2015. With most of the developers mostly playing on fully furnished units, I am looking to see a greater appetite towards the PCB demand in the coming days. While the local market might be able to keep GUH busy, GUH had secured major contracts from Korea and Japan in the supplying of PCB that is ranging at RM 70m to RM 100m.

Plantation - Rising CPO
To put things better, GUH ventured into the plantation sector had started off with a small scale of 385 acre of oil palm land at Kedah. As CPO had been picking up in the recent days after a series of correction, the demand of CPO will be bright and strong with the latter implementation of B10 biodiesel in Malaysia, projected to kick in at Q2 of 2014. At the current set up, B5 biodiesel had been powering vehicle in Kuala Lumpur, Putrajaya, Selangor, Negri Sembilan and Malacca. Should Malaysia be able to implement this on a Nationwide scale, we are looking at erasing huge supplies of CPO into the biodiesel program.

Properties - Seremban township, Taman Bukit Kepayang
While properties are look set to take a dip, many major players are setting their mark further off the congested Kuala Lumpur such as Semenyih, Bangi, Nilai and Seremban. GUH, a prominent player in the Seremban market, sitting on at 549,774 square feet land (last valued at RM27m in 2004) that is just beside the KL-Seremban highway, their projects had been looking at a mixed GDV of RM 185m. While projects had been looking at setting up township, GUH position in Taman Bukit Kepayang township is an excellent boost towards their properties sector.

After going through a bonus issue, GUH at RM 1.05 is currently trading at around 40% discount from it's NTA of approximate RM 1.70 after adjustment. With their earning looking to be greater this year, GUH might be poising for another bullish run up in the coming days, with a short term TP looking at RM 1.20, while a longer tenure will see GUH touching RM 1.50. A technical outlook will see GUH consolidating off the mark of RM 1.05 to RM 1.10. A breaking up volume that will bring the price into penetrating RM 1.10 will see GUH continue to be lifted higher soon.

Bone's short term TP : RM 1.20

Cheers and have a nice day.


Friday, 10 January 2014

SBCCorp - Unvealing the Golden Gem

As the Chinese Lunar New Year is around the corner, the Malaysian market had been in a rather bullish manner despite the shed off from KLCI that had continue to inch lower towards 1800 as a resting point. While market had seemingly get immune to bad news despite the taper talks that will be coming back soon, demand on certain sectors continued to be bullish and increasing.

While the public would tend to view the property sector in a bearish mode, despite the outlook, certain property counter that had been undervalue due to their land bank that had been acquire long ago and yet to be revalued had been the current theme for the time being after trend leader such as BREM and MKH had started to set the pace.

For this, probably I would like to point out SBCCorp for your attention which could be another deeply undervalued company due to their strategic land bank in the Klang Valley.

SBCCorp had recently saw a major uptrend from a low of RM 1.20 despite it's land bank that had yet to be revalued for sometime. The company had recently saw huge buying interest from the public and institution as the negative outlook in the property segment will be a good chance to grab some good undervalued stocks.

Looking at it's recent financial statement at 1H FYE 2014, SBCCorp had continue to record a stronger profit at the back of RM35m. With only 156m shares issued, SBCCorp had recorded an increase in the Q2 EPS that is 10.48 cents and a cumulative of 18.17 cents just based on 2 quarters action.

While SBCCorp had been prudent and careful in all their undertaking, their growing NTA at the price of RM 3.69 which had not been revalued had put SBCCorp under huge discount for the time being and will be a possible target for other bigger corporate for a take over should as land bank in the Klang Valley had been getting scarce.

Based on the current EPS from 2 quarter, SBCCorp is trading at a PER of 7.42. While many projects are finishing, I am expecting their progressive claim for the coming 2 quarters (Q3 and Q4) will be looking at 15 cents which might give a projection of 32 cents EPS for FYE 2014.

Putting 32 cents and a skeptical PER of x7 for the property segment, SBCCorp will be easily trading at RM 2.24 in the coming longer terms. While looking at the current price, SBCCorp at RM 1.35 is trading at a 63% discount from NTA of RM 3.69 which had yet to be revalued. On a quick valuation on SBCCorp land bank, SBCCorp land bank will be easily be sitting at a NTA of RM 5.00 after revaluation.

In my opinion, SBCCorp will be heading for a strong uptrend in the coming days after the consolidation at RM 1.35 range. A short term outlook will place SBCCorp at RM 1.50 in the coming days, while a longer tenure mid-long term outlook will see SBCCorp trading at near RM 2.00.

Bone's short term TP: RM 1.50

Cheers and have a nice day.


Wednesday, 8 January 2014

Perisai - From Rigs to Drills

While the DJIA is looking forward to challenge higher as they extend their gain above 16500, KLCI had continue to extend further losses from the new year day where the composite index had ended sourly at 1825. The market looks positioned for a last run before Yellen takes the seat from Ben in the coming February which will certainly sparked some concern over the change of leader in the world most influential financial house. Despite the reduce in QE from the Feds, the market had taken many by surprise with yet another bullish note.

As the global financial market had their version of story, our local market too had our own market trends which swung from GST, timber, furniture, gloves and the latest property revaluation. However, what could be the upcoming latest focus for this coming week?

One of the ETP sector for Malaysia is the precious oil and gas industry. This lucrative sector which involved high capex had been an eye for many company to get a hand into it, where we can see the likes of Puncak and UMWOG diversifying themselves into this sector as well. What had came interesting to my attention lately is none other than Perisai Petroleum Teknologi Berhad.

Perisai had dwindled down from it's peak at RM 1.70 to a low of RM 1.25 before the surge continue again where Perisai had been consolidation off the mark of RM 1.50 to RM 1.60 recently. While consolidating, Perisai had saw buying interest from EPF that had been accumulating it's stake at Perisai in a gradually manner whereby it is currently holding a total of 5.7% of Perisai total shares issued.

I believe that many are concerned over the expiry of contracts in both MOPU and E3, however, Perisai had been destined for another greater projects in the coming days which is the drilling contracts that will soon be announced. Perisai is almost certain and considered favored to make appear in the list of the company that will bag in the drilling contract in the coming days.

While Perisai is on a good progress in delivering the 1st jack up rig in 2Q of 2014 that will see the remainder 80% payment to cash into their book, Perisai had a 3rd rig order by Sembcorp from Singapore which had a tag of USD211.5m, signaled out the intensity of the drilling contract that will appear under their belt in the coming days as Malaysia will move forward towards seeing more locally owned jack up rigs. There will be 14 foreign owned jack up rigs that will be expiry soon where the local player will see more awards and contracts soon from Petronas.

The upcoming drilling contract will definitely reposition Perisai for a re-rating for it's financial year 2014. While a drilling contract daily charter rate might range from USD130k to USD800k a day, Perisai will be looking to bag in a drilling contract which might be carrying a tag of USD250k a day which will see a 30% operating profit margin.

As we come back to the technical chart of Perisai, Perisai had seen a saturated consolidation at RM 1.60 and will be looking to break forward in the coming days. A short term outlook at Perisai will see Perisai reaching RM 1.80, while a longer tenure might see Perisai testing RM 2.00 when MOPU and E3 started to work and the delivery of the 1st rig.

Bone's short term TP: RM 1.80.

Cheers and have a nice day.


Tuesday, 7 January 2014

CHHB - Landing on New Heights

The 2014 New Year in KLSE was celebrated with a series of shed of from the KLCI from a high of 1882 to the current 1829 as KLCI extended is losses to a 4 days streak at more than 50 points shed off. While the New Year had taped off some news of tapering from the West, the Greenback had continue to strengthened against the MYR while DJIA had been setting base at 16500 points. A bullish market?

The Year of Horse had been largely received in a negative manner as Malaysian citizen will feel the pinch from the removal of subsidy and the increase in electricity tariffs. As BNM continue to tighten the lending policy, the government had step in to intervene in the real estate industry to curb speculation with the implementation of RPGT and minimal of RM1m purchase compared to the previous RM500k for foreigners purchase. However, is this good or bad for a property developer?

While property segment had been positioned to see a slump that could affect their share prices, market players are seemingly ready to welcome this with their vast reserve of lands that had not been revalued for a long time. The trend that had sparked off by L&G, followed by BREM, MKH is not going to leave out a once glorious company - Country Heights Holding Berhad, CHHB (5738)

Country Heights Holding Berhad had been laying rather lowly for the past 2 years with literally no convincing volume trading in the market. However, CHHB had not until lately where approx 25millions of shares had exchanged hands on 31st December 2013. The extraordinary volume had sparked off like a bomb that had been set by pace setter - BREM, who had recently hit a limit up position as investor find it's strategic land in Klang Valley had not been revalued for more than 10 years, and yet still sitting at a NTA of RM 2.79.

What could be for Country Heights Holding Berhad?
Based on the latest quarterly report, Country Heights Holding Berhad had been sitting at a NTA of RM 2.81 per share where a large portion of it's land had been purchase back then during the 1990s and early 2000. As land bank in Klang Valley had continued to see greater demand and interest, Country Heights had been sitting on some diamond lands at Kajang and Damansara, as well as the rising Seremban and Cyberjaya with a total of 6000 acres.

While many of the other properties companies had been trading at a 10 to 20% discount from their NTA, Country Heights had been sitting undervalued of more than 50% from it's NTA of RM2.81 which had not been revalued for more than 10 years. A skeptical of 100% increase in it's land bank value will reflect Country Heights trading at 80% discount from RM 5.60 (derived from 100% increase in NTA of RM 2.80) at current price of RM 1.30.

The significant discount of 80% on NTA will definitely put CHHB into the limelight of a take over target by many bigger player as land bank is getting lesser and lesser in prime area.

As good things never comes alone, CHHB had in line for the upcoming ETP project introduced by prime minister Najib in emphasizing the health and wellness theme. The development of a 120 acre Mines Wellness City will be targeting to reposition Malaysia as a wellness landmark in the South East Asia region where Tan Sri Lee Kim Yew will be looking for a RM6b GDV between 2014 and 2019.

As hot as the discount is with the current trend, CHHB will be poised for a greater soar for the following reason
- Huge 80% discount in current price from NTA
- Sitting on prime land area
- Hot target for take over with public spread of 20%
- ETP theme on Health and Wellness

I believe CHHB will soar higher with their latest development on the 120 acre Mines Wellness City.
While sitting at a largely discounted price from the NTA, CHHB might be looking to trade higher at RM 1.50 for a short term outlook, while RM 1.80 on a longer term outlook.

Bone's short term TP: RM 1.50

Cheers and have a nice day


Wednesday, 1 January 2014

Furnweb - From Fabrics To Fair Bricks

First of all, would like to take this opportunity to wish you a Happy New Year for 2014. It had been a challenging year for 2013, and I would believe that 2014 will be even challenging as the public will need to adjust their lifestyle to make end meets. With the rising cost in essential material and services, the nation is staged for a challenging 2014 with consumer changing their lifestyle and habits to journey through the life.

While the property sector had been downgraded as government imposed rules and regulation, taxes and limitation in borrowing, many onlookers are expecting a slow down in the property sector. However, despite the negative outlook in property sector, a lot of property company that are sitting on golden land banks are looking more attractive as bigger company are hunting down golden pieces of land bank around the congested city of Kuala Lumpur as the scarcity of land in Kuala Lumpur had continued to be the pushing factor for more and more expensive property launches.

Furniweb Industrial Product, or Furnweb (7168) had recently entered into a JV with Almaharta Sdn Bhd to develop a 15,294 sq meter in the heart of Kuala Lumpur, within 2km radius of KLCC.
A project that will consist of 2 blocks of condominium that is 38 storey high with 202 units and 270 units and 4 level of parking to house more than 1000 parking in this joint venture is looking to rake a GDV of RM 560m back by the estimated cost of RM 380m. Furnweb, with their subsidiary Premier Gesture Sdn Bhd is entitled for 60% of the profit, which will interpret to an estimated earning of RM108m.

At RM 108m, Furnweb, with 90,742,400 shares issued will be looking at an EPS of RM 1.19  for the whole project which is anticipated to be completed in 4 years starting from 3rd quarter of 2014. That will be interpreting an average of 29 cents contribution towards the financial statement for Furnweb for the coming 4 years.

With their already steady flow of business in the supplying of furniture material, the recent demand on furniture had been contributing positively to Furnweb with their 3rd quarter financial recording a higher EPS at 4.07 cents compared to the previous cumulative quarter at 3.16 cents. As many property projects comes with fully furnished packages, the demand for furniture will continue to see a rising trend as property owner start to furnish their home.

Should we take Furnweb current business operation that generates 5 cents and the projected 29 cents from the JV project, we might be looking at an EPS of 34 cents in Furnweb for the next 4 years to come. At RM 0.34 trading at PER x7, Furnweb could be trading at RM 2.38 in the coming days.

In my opinion, the project should be able to see a positive take up rate as land become lesser in Kuala Lumpur. Sitting within 2km from KLCC will still be able to see demand especially when Petronas had prepared for a RM500b capex spending in the coming 4 to 5 years to increase their upstream production. With KLCC housing many O&G company and vendors, I believe that the appetite will still be strong.

On a technical outlook, Furnweb will be poised to challenge RM 1.00 in the short term outlook while a break out on RM1.00 will definitely see Furnweb lingering at RM 1.30 range in the mid term.

Bone's short term TP: RM 1.00

Cheers and happy new year