Thursday, 27 February 2014

Eksons - Erasing Resistance

The market had seen some profit taking from the previous rally that had rebounded from a recent dip. At the current outlook, probably you would be thinking if the market is still strong enough to launch another wave upwards? Probably you would need to think, had the fundamental of the economy change?

While the major market had it's play, I believe that the local equities isn't too bad to see some deep potential target that could be shining off soon. I would like to highlight to you - Eksons Corporation Berhad.

Eksons had been involved in timber in the tiny town of Tawau had caught many off guard with it's ultra modern 55 acre commercial development in Sri Kembangan called The Atmosphere. While their timber business had been shining good lately, contributed by the stronger USD against MYR, as only 79% of it's sales are exported internationally.

Let's have a quick technical outlook at Eksons.

Technically looking, Eksons had saw interest after announcement of land sale. The share had been seen consolidating at RM 1.40 region. A saturation at Rm 1.40 region will see Eksons penetrating to RM 1.50 soon with higher volume.

Eksons had been doing exceptionally good for the last 2 quarters, recording a cumulative EPS of 10.41 cents for the 2 quarters had put Eksons into the eyes of investor as well as traders. Eksons had been sitting in a nett cash position with it's prudent management.

Recently, Eksons had entered into a land sale agreement of which it's 60% owned subsidiary will be disposing a piece of land in the prime area of Atmosphere in Sri Kembangan, netting a profit of RM 52.3m, or RM 0.31 per share.

With the current outlook in the robust demand of furniture industry, Eksons will be most likely to see a strong quarter on high demand in plywood (timber). I believe Eksons will be able to deliver a consistent quarter which will be looking at a EPS of 20 to 22 cents for FYE 2014. Trading at skeptical PER x 8 for a nett cash company, it's FYE 2014 result will valued the company at RM 1.76 (based on 22 cents EPS for FYE 2014). The land sale profit per share of RM 0.31 will continue to top up on the existing RM 1.76, putting Eksons to a value of RM 2.07.

I strongly believe that Ekson will continue to soar higher in the coming days with major contribution outlined below
- Strong 1H 2014 EPS at 10.41 cents.
- NTA of RM 2.56 per share
- Strong USD against MYR, currency gain
- Strong demand in furniture business, increasing plywood demand
- One off land sale profit at estimation of RM 0.31 per share
- Nett cash company

Eksons will be look set to challenge RM 1.50 in the coming days, while a short term outlook will position Ekson into RM 1.60, with a longer term outlook at RM 1.75.

Bone's short term TP: RM 1.60

Cheers and have a nice day


Sunday, 23 February 2014

TRC - Realigning Pace Moving Forward

The overall market looks set to remain in it's bullishness over the February, probably to compensate the January New Year effect that suppose to happen on January. Our local market regain it's pace after rebounding from 1780 sitting at 1830 now.

While CPO had been seeing an forward outburst which had led to a minor rally on plantation sector where Kulim had regained it's pace to set down at RM 3.50 range, there are still some plantation counter which had been remaining at their own comfort zone.

However, I believe the coming up market trend will be non other than the highly anticipated mega infrastructure project in Malaysia, which KVMRT leading the pace with mega projects that are worth billions of ringgit.

As of current, the KVMRT line 1 had been progressing well under the JV of Gamuda-MMC partnership. While most of the contracts had been owned, KVMRT Line 1 still had 17 contracts that had yet to be announced ownership, of which 11 contracts of car park base worth more than RM2b and 6 furnishing contracts that is worth more than RM1b. At the mean time, KVMRT Line 2 will be look set to be announced in 1Q 2014 to spur the nation infrastructure development.

While the construction and infrastructure theme play will look set to be the next coming theme play, TRC Synergy Bhd, known as TRC (5054), had been looking to make a come back this time after slumping from it's glorious season where it's share had been traded at more than RM1.00 back then at 2008. A bumi status company which had been look set to set their pace right this time had under their belt more than RM2b worth of projects, primarily contributed from the KVMRT line 1 projects, SCORE and Ara Damansara mixed development project.

Let's have a close look at TRC price movement.
Technically looking at TRC, the share price had been lying rather low without much active volume seen traded across the market. However, the share had saw more participation lately as TRC began to get more revenue from the existing LRT extension project and the KVMRT line 1 project. Although some accident had shove TRC into the hole, however, TRC is currently back on track again as they are poise to see more revenue from the previous delay billing. The recent volume had been encouraging to see a better 4Q 2013 and year end result for TRC.

On a fundamental outlook, TRC had been laying low this few years despite having a promising outlook where they had bagged in KVMRT projects that is worth a combined RM 745m for the construction and completion of Sungai Buloh  Maintenance Depot, Administration Building, External works and construction and completion of elevated stations and other associated works at Sungai Buloh, Kg Baru Sungai and Kota Damansara.

While KVMRT projects had been progressing well, TRC continue to bag in new projects from the latest SCORE in Sarawak. TRC has secured a new project from Jabatan Kerja Raya Sarawak known as "Jalan Akses Awam dari Sangan ke Kapit melalui Kawasan Perlombongan Arang Batu Nanga Merit, Bahagian Kapit, Sarawak (Pakej A: Dari Sangan ke Sungai Anap) - Section 1A: From KM0 to KM18.2)" for a contract sum of RM169,898,000. This project is part of the Sarawak Corridor of Renewable Energy (SCORE) infrastructure development projects announced by the Government earlier.
At the mean time, TRC continue to add weight to their book order with Samalaju interim port facility package that is worth RM194mil while some light weight project dealing with Kompleks Dayabumi is carrying RM36m tagline.

While good things doesn't stop just here, TRC, under ADS Projek Sdn Bhd, a wholly owned subsidiary had on 11 March 2013 enter into a JV with SPNB for a mixed development in Ara Damansara for a GDV of approx RM700m. TRC will be seeing a high margin in their property development based on their past record.

The 3rd quarter earning at TRC had now picked up some steams after series of accident that had delay payment. Currently, TRC is back on the progress and with approx half billion to be billed from the backlog, TRC will be look set to see a significant increase in the coming quarters.

I believe TRC will be a good stock to be traded based on
- Well progressing LRT extension line
- KVMRT line 1 projects worth RM745m
- Ara Damansara Mixed Development worth RM700m
- SCORE project worth RM 170m
- Samalaju Interim port facilities worth RM194m
- Dayabumi project worth RM36m

Possible projects on the line
- 17 unannounced project for KVMRT Line 1 worth RM3b
- KVMRT Line 2 projects
- SCORE projects
- JV 26% owned PetroBru project worth USD 3b

I believe TRC will be looking set to see more volume in line with it's 4th quarter and FYE 2013 report card. A short term outlook will place TRC in reaching RM 0.65, while a longer term outlook might see TRC trading above RM 0.70 in the coming days.

Bone's short term TP: RM 0.65

Cheers and have a nice day


Sunday, 16 February 2014

AHB - Rewriting Glorious Episode

The market had continue to rallied after president Obama had signed legislation on 15th February 2015 to increase the U.S debt limit through March 2014, putting back the bears into the holes as the bulls ramped out to party as DJIA ended strong at 16154 on Friday.

While some business had suffered from a stronger dollar against MYR, there are also light for some other company in different industry that had been trading largely in USD, which would translate on a forex gain. Furniture businesses is one of them that will benefit from a stronger USD against MYR.

While companies like Homeritze and Latitud had been bullish on a stronger order book and stronger USD, it is not too late for AHB to rewrite it's glorious history this time around after a long slump when Dexx Technologies Sdn Bhd came into the picture to acquire 19.43% of shares in AHB, spearheaded by a local successful businessman which had been well known of his capabilities, Dato Tiong Kwing Hee.

Let's have a very quick look on AHB Berhad on it's latest share price performance.

A quick note will reflect that the share had been heavily accumulated on 16th and 17th December 2013 with around 12million of shares change hand on the 2 days. While the current share price had been sidelining at RM 0.20 for 2 months, volume had been consolidating with the price as awaiting for a next up leg in the share price that is to be looked out for in the coming days that will see AHB volume resume and possibly revisit RM 0.23 and break forward to move up.

Dato Tiong, a popular businessman in the market for it's prudent management style and company transformation had started out with Mercury (8192) back then while Mercury had been in the slump of mess. While Dato Tiong is able to see the niche market of "people care more for their cars then their own", he had used 6 months to restructure the loss making company into a profitable company that pays a generous dividend back to their shareholder. Currently, Mercury is trading at RM 1.38 under the lead of Dato Tiong.

Now, Dato Tiong is look set to restructure another 2 company into the darling of the market, which is non other than:
- Ecofirst Consolidated Berhad (Ecofirs - 3557)
- AHB Berhad (AHB - 7315)

Dato Tiong had describe to me that on the day he took Ecofirs, Ecofirs is liken to a patient that is living on life support system with all organs, failed. Today, Ecofirs is drawing his successful story, where major shareholder had saw confidence under Dato Tiong management.

After seeing Mercury and Ecofirs - What do you think about AHB, where Dato Tiong had a substantial stake at 19.43%?

AHB had been running in dark moment, particularly after the Asian Financial Crisis which had struck AHB with pile of debts. To make thing worst, while trying to turn the situation around, AHB had failed in a business investment that had saw AHB leaving on a cliff of the mountain with debt soaring as high as RM80m.

However, the directors and management team in AHB had worked their way out from the massive debts - by working hard. At the current situation, AHB debts is standing at approximate RM4.5m. AHB will be look set to do a capital raising exercise which will set AHB out of debt, and thus look set in rewriting it's glorious moment again.

While the furniture business grossing around RM100 billion annually, the growing emerging Asean market is look set to put in more weight into the global market. AHB, through Artwright, had been focusing on foreign market while local market consist of clients from Public Bank and Petronas.

In my opinion, I believe in Dato Tiong management and his leading will be another breakthrough point for AHB. With Mercury and Ecofirs as an example, AHB will be coming back from it's ashes to reignite the ember in the coal. With the capital raising exercise that is going to nullify AHB debts, AHB is look set to embark on a glorious journey and will be aiming to start paying dividend to the stakeholder at 2014. With the current market share of 50.68m, AHB will set it's mark on making RM10m net profit a year, which will translate to an earning of RM 0.19 per share. Slashing 30% off the expectation of target, which translate to RM 0.13 EPS, and at PER x6, AHB will be easily looking at RM 0.78 in the coming days.

Bone's short term TP: RM 0.30

Cheers and have a nice weekend


Thursday, 13 February 2014

TDM - Thundering Cats Lightning Dogs

While the DJIA is look set to revisit above 16000 again, our local market had been catching up again from what it had shed off in the past couples of weeks. Currently putting up a 5 days green streak on the index had saw the index juggling between 1820 and 1830 before deciding for another trend. However, with Malaysia 4Q 2013 reporting a 5.1% in GDP, the upcoming quarterly result for most of the company should be looking in good form.

As CPO had been recovering from a slumber, rebounding from a lowly 2500 to a 2632 as of today, marking the highest price for the past 2 weeks. While the traded volume seems to be weaker, CPO had been look set to trend higher after consolidating above 2600. With this in hand, plantation counter is not going to be sitting in a shy corner anymore as 2014 will be looking good for plantation counter.

Some stock that move quite in tandem with the CPO price is TSH Resources Berhad, while another following closely is TDM.

TDM berhad, managing 12 oil palm estates with a total planted area of approx 35k hectares in Malaysia, and another 2,000 hectares in Kalimantan, Indonesia, is another superstar in the plantation theme play.

TDM liquidity had got better after the share split, with 1,481,661,680 shares in the market. A quick outlook in TDM will reflect on the recent huge volume purchase made on 1st Nov 2013 with more than 25m shares traded and on 18th Nov 2013 with 33m shares exchange hand. While consolidating off the mark at RM 0.95, the share price had been hit down lower than RM 0.90, however rebounded back to RM 0.90 as of recent. TDM is look set to see a huge volume that will be flooding into the counter in the coming days that will surely bring the price above RM 0.95 and possibly hitting RM 1.00 as well.

Most of the CPO contracts in November and December had been trading around RM 2600, which is a very good figure for the next upcoming quarterly report. With B10 biodiesel on the line, the plantation stock in 2014 will definitely get benefit as palm oil will become a very sought after commodities in the coming days.

At the current outlook, TDM previously consolidation at RM 0.95 and the current price which is below RM 0.95 had definitely resemble an opportunity for TDM to be equipped with more strong uptrend power is all set to break free from RM 0.90 and will be revisiting RM 0.95 before looking above RM 1.00 in a longer tenure.

Bone's short term TP: RM 0.95

Cheers and have a nice day trading.0.965


Wednesday, 12 February 2014

Ulicorp - Towards An Ultimate Front

The season is heading towards the FYE 2013 report card for most of the company. Many companies that had a direct and indirect link with the properties development in Malaysia are expected to see a better result for their FYE 2013 from the huge combined GDV. As most of the properties are heading towards their completion stage, it might be a good time to see what could be the next beneficial from the properties development.

United U-LI Corporation Berhad, or known as Ulicorp (7133) had came to my attention as a good contender for the properties booming era. Ulicorp focused in manufacturing of cable support system, cable management system, integrated ceiling system and light fitting system.

Let's have a quick look at Ulicorp price.

Ulicorp had been moving on a range of RM 1.00 to RM 1.05, not until the recent spike that had saw Ulicorp fired up to near RM 1.20 before meeting the bearish season that brought him down back to RM 1.00 again. A quick look will suggest that Ulicorp had been consolidating at RM 1.00 to RM 1.05 for around 3 months. Ulicorp is looking to see a resume in volume once it is nearing it's FYE 2013 report card as Ulicorp will be looking forward to hit the RM 1.20 bar with the larger volume.

The increase in 3Q FYE 2013 result had been hugely contributed by the cabling business which had saw a rising demand in this sector due to the completion of residential projects, commercial buildings and shop lots. While more development are heading for project completion, Ulicorp will be looking for a growing revenue in their cabling management system for at least the next 2 years.

Currently trading below the NTA of RM 1.44 per share at RM 1.06, Ulicorp 3 quarters consolidated earning had seen big improvement from the previous cumulative quarter of at EPS of 10.34 cents compared to 7.54 cents.

Ulicorp, with 132million shares issued and market cap of RM139.9m is look set to see a higher growth this year as more projects and contracts start to kick in the revenue. Should Ulicorp be able to rake approx 6 cents for 4th Quarter 2013 (based on their previous 4th quarter higher EPS at 5.38 cents for FYE 2012), Ulicorp could be look set to set a record of FYE 2013 EPS on 16 cents. Riding on 16 cents EPS, should Ulicorp trade at a PER x10, Ulicorp will be looking to trade at RM 1.60 in the long run.

With an increasing growth for their cabling business, a prudent management team and dividend oriented, sitting on a healthy working cash flow, good business prospectus, trading below NTA, Ulicorp will be a star selection for both investor and trader.

Are you ready to ride on the ultimate front with Ulicorp - You decide.

Bone's short term TP: RM 1.20

Cheers and happy trading.


Tuesday, 11 February 2014

Hiaptek - Leaping Stallion Galloping Gelding

While the Chinese New Year mark the entry of the Year of Horse for 2014, KLCI had seen reflecting the power of the leaping stallion and galloping gelding where the bullishness of the market had resume despite the major selling from the foreign fund for the past 1 month, amounting to a sum of an estimated value of RM5b. Local institution had been taking this chance as a golden opportunity to rake some sell down stocks into their portfolio as they prepare for another bullish run in the coming days.

As the market fluctuate wildly, it had came to my attention for Hiap Teck Venture Berhad, known as Hiaptek (5072) to remain resilient towards the movement of the market. Let's have a quick look on Hiaptek price movement.

Hiaptek had been seen consolidating within the range of RM 0.70 and RM 0.75 for a period of 3 months. Their 1Q FYE 2014 result had shown the growth and increasing demand in the sector as the country looks set to see more major construction works with leading infrastructural work and the bullish oil and gas industry.

Hiaptek, with 713million shares issue, and at a market capitalization of RM535m, is a comparatively top steel player in the Malaysia market. With the current development that the government is willing to spent, Hiaptek is on the verge of seeing a accelerated growth in the industry as steel component is one of the core component that is consist easily up to 30% to 40% in any construction.

As Hiaptek is working on the back of a RM 270m revenue for 1Q 2014, Hiaptek had seen a significant increase in EPS at 1.99 cents which is largely contributed from it's manufacturing division that had a larger profit margin. The 1Q of 2014 will mark a significant event for Hiaptek that will see their business ready to propel to the next level, which is the completion of it's blast furnace plant which will see more revenue pouring in in the coming days.

Hiaptek had secure pipe replacement project for it's incoming days which is enough to keep them busy for the coming 3 years as the country pipe replacement market could be worth up to RM5b in total. Last year had seen a spending of near to RM1b in water pipe replacement, while 2014 will probably be looking at RM 1b to RM 1.5b. Hiaptek, a highly politically linked company will be seeing no issue in securing more projects from the government.

Trading at RM 0.75 with a hovering NTA of RM 1.30 which resemble a 42% discount, Hiaptek diversify business from supplying and manufacturing of steel pipes is also a company that is full of lands and properties under their belt, mainly in Selangor for their daily business operation.

I believe that the electricity tariffs will be partially cushion and pass on to customer. Hiaptek could be looking forward for a EPS of 3 to 4 cents per quarter once their blast furnace is operational and securing more water pipe replacement contracts, primarily contributed from the new Langat 2 water treatment plant.

At the current pace of 2 cents a quarter based on their book order, Hiaptek will be looking for a 8 cents EPS for FYE 2014, trading at PE of x10 will see a reflective price of RM 0.80 in their share price. On a growing note, should Hiaptek be able to secure another RM500m worth of contracts, with a 10% margin at RM50m on the back of 713m shares, Hiaptek could be looking to add another 7 cents into their FYE 2014 earnings, propelling it to 15 cents for FYE 2014, which could reflect a possible RM 1.50 (trading at PER x10) in the coming days.

In my opinion, Hiaptek will be a good trading buy as it had been consolidating at RM 0.70 to RM 0.75 for 3 months, while pending for 1H 2014 result, and a successful break at RM 0.75 accompanied with good volume will definitely bring Hiaptek to visit RM 0.80 soon, while a longer tenure will suggest Hiaptek to linger at RM 0.95 to RM 1.00.

Bone's short term TP: RM 0.80

Cheers and have a good day.


Monday, 10 February 2014

Kulim - From Palm To Oil

While the market had been juggling to see a equilibrium level after the recent shot down, it seems that the market sentiment might be regaining back it pace to pack the bear attack on the bull's back. While DJIA close on a positive note at 15794 on the Friday, the market might be still strong for a better higher challenge in the coming days.

As CPO had been laying in the dark from it's glorious days when it is traded above RM3000/ metric tonne, the recent movement on the CPO that saw price shot above RM 2600/ metric tonne had again spark speculation that Palm Oil will be the hot topic for the year 2014, majorly fueled by the rising demand in population in the earth, and a possible replacement for the black gold - Crude Oil.

While many plantation stock had been seeing more activities in their stock price as the volume had seen an increase appetite, Kulim had definitely got my attention on it's current price that had been looking set to burst upward on a reversal point that.

Let's have a quick glance at Kulim's price chart.

Kulim had fell off from a peak of RM 3.83 to a low of RM 3.12 recently. The stock had been accumulated by Tan Sri Dato Sri Utama Arshad recently at the level of RM 3.30 as well as KWAP interest in taking the unit from open market in a gradually manner after the slip from the top.

A quick look at Kulim chart will suggest that a support was generally form at RM 3.30, however, hit down on the negative market sentiment on a lower volume basis. While lingering at RM 3.20 had seen some scuffle, the volume is look set to come back with a bang on the improve price of CPO.

While Kulim 3Q FYE 2013 is affected largely by the rainy season especially in Papua New Guinea and forex losses, the local unit had been performing better with an increase output to counter off the drop of the CPO prices. However, the last quarter for FYE 2013 will still have it's surprise after seeing Kulim disposing off it's fast food business to shift it's concentration to a better plantation focused player in the market. In line with this, Kulim had been aggressively looking for expansion of their business with the buying of plantation in Kalimantan, Indonesia through 75% of PT WIN for a consideration of RM 141.6m.

With extensive research in palm oil, palm oil might be a future "green gold" as the current mix of palm oil into diesel had been seeing European country using B10 (10% biodiesel, 90% diesel) or above mixture into their diesel, and Indonesia being a net importer for crude oil had been seeing the Indonesia government pushing more biodiesel into the diesel to reduce oil imports.

Malaysia is very likely to implement a B10 biodiesel program throughout the whole Malaysia as speculation are looking at Q2 of 2014. There are current 4 states in the Peninsula Malaysia using B5 biodiesel. An implementation in whole Malaysia will definitely see a strong demand in palm oil soon.

In my opinion, Kulim is currently situated in a good position for a trading buy on the base of:
- Rising CPO
- B5/B10 biodiesel program in whole Malaysia in 2014
- Better output of supplies after rainy season
- Higher demand of edible oil as dry spell hits Brazil and lower soy oil output
- Special dividend from fast food sale proceed
- Future venture in Oil and Gas (Natural Gas) in Indonesia
- Lowest point for 52 weeks with substantial shareholder increasing stake

Kulim - You decide. Game in or game out.

Bone's short term TP: RM 3.35

Cheers and have a nice day