Tuesday, 29 April 2014

LCTH - Revamping Profit

The market had took a rather drastic turn from the DJIA after challenging above 16500 to mark a new leg of bullishness, however, just to witness a tired fighting bull collapsing from the level as DJIA tumbled lower. The tension at 16500 is very high, and can the bull charge forward to test it again? Or it is starting of a bear party now? At the time right now, DJIA is sitting on a +43 points at 16404 currently.

The local market had seen heavy profit taking sessions, especially from the property counters that had rallied quite a lot where some of the counters appreciated more than 100% from their starting point. While the market turn to a cautious outlook, I would like to highlight LCTH which had caught my attention. What can be so attractive in LCTH Corporation Berhad?

Let's have a look at LCTH recent price chart

LCTH had seen active trading recently where the share price had appreciated almost more than 20% from RM 0.22. Which the price look set to be consolidating around the range of RM 0.25, LCTH is looking set to break forward into the 30 cents region once the consolidation is done. LCTH will be position to see some interesting volume, possibly more than 5m a day as it prepares to break forward.

What could be so interesting in LCTH ?
LCTH is involved in plastic precision technology, supplying engineering parts and components that are vital  in telecommunication, consumer electrics and electrically supply industry.

LCTH had been laying in their blues for the past couples of years after their business had seen slow down from the market after a series of changes made in procurement by their major customer. The changes had forced LCTH to do restructure their business, in which LCTH fully owned subsidiary - Classic Advantage Sdn Bhd, had entered into a sales & purchase agreement to dispose of its asset to Flextronic Technology(Penang) Sdn Bhd that is worth around RM17.31 millions.

Currently, LCTH sitting on a cash pile of around RM90m (after deducting debts notes)

With approximately RM90m spread over 360m shares issued, the cash value of each share is currently standing at RM 0.25 per share, which is a fairly high amount of cash reserve. The company still had another business arm under Fu Hao Manufacturing (M) Sdn Bhd which is generating profits.

LCTH had underwent a major restructuring exercise and come towards the conclusion to dispose off Classic Advantage Sdn Bhd after the changes in procurement method by the customer which had saw their factory running on over capacity, which will be a long term business losing subsidiary if LCTH had not disposed off the unit. The disposal will see LCTH focusing on Fu Hao Mannufacturing (M) Sdn Bhd which is currently situated at Penang.

LCTH started to look out for better business opportunities now after started to realign their business focus towards the robust industry of Automotive, Medical and Solar Power industry as they start to kick off 2014 into the glorious moment once again. LCTH will target to secure contracts that will worth of at least RM300m in revenue for 2014.

In my opinion, LCTH will be in a very solid good position with their strong cash position at the moment. As the management team look set to realign their business structure, LCTH will be focusing on their profitable arm and look set to turn around the financial in FYE 2014. Based on the current cash value of RM 0.25 per share and their still on going business in Penang, LCTH is a deeply undervalued company whereby the current market price is just reflecting of a cash value of the shares itself (NTA RM 0.48). A short term outlook will see LCTH breaching RM 0.30, while a longer term outlook will see LCTH trading at around RM 0.40.

Bone's short term TP: RM 0.325

Cheers and regards,

Friday, 25 April 2014

Comcorp - On a Green Turn

The US market had finally conquer above 16500 and could possibly mark a new leg of the bull for the coming few weeks. As of current, the DJIA is trending at 16518, marking a successful penetration above the resistant as analyst are looking forward for a better employment data in the coming week. Overall global market had bullish, however, still in a cautious manner.

While the local market had been in a strong hype in property counters and palm oil related counters during the year 2014, Comintel Corporation Berhad (Comcorp - 7195) had certainly not left away from my sight after seeing this company starting to turning in a green loop.

Let's have a quick look on Comcorp latest chart.

It can be seen that Comcorp had recently saw attractive volume starting to flood into the company after recording a breaking volume of 4.5m on 11th April 2014, the highest volume recorded in the past 3 year. The recent consolidation at the range of RM 0.20 to RM 0.22 should be seeing saturation and will be ready to see a new break out in the coming days along with a stronger volume that will be sending Comcorp shares above RM 0.22.

Comcorp turning into green

While Comcorp financial might still be laying in the blues of red sea, however, it could be heading for a better turn in the coming days as Comcorp is refocusing their asset and resources into green renewable energy as the global market starts to see demand in green technology, especially green renewable energy.

The motion is further motivated by the government by setting up a RM200m fund through MDV to disburse a maximum of RM 10m for 20 successful applicant that comes out with green solution in Energy, Water & Waste water, Air & Environment, Advanced Material, Transportation, Manufacturing & Industrial, Agricultural & Nutrition, and Recycling waste.

Comintel Green Technologies Sdn Bhd had on last year December 2013 secured the financing from MDV to pattern and roll out their Biomass process which will be the turnkey for the company this year.

In order to strengthen their financial ratio for the project, Comcorp had recently entered into an agreement to sell their existing land and building to AmanahRaya Reit for a consideration of RM 30m which will immediately pare down their debts by half. The selling of the property will also be directly reflecting into a EPS of 21 cents (RM30m / 140m shares) gain for the FYE 2014 result.

Comcorp will be looking to turnaround the company this year after looking set to eye some projects tie up in the robust ICT environment. Comcorp might be getting some lucrative projects in the coming days.

I believe Comcorp will be an interesting company to look upon. With a NTA of RM 0.6835, the current price of RM 0.205 is around 70% discount to the NTA. Shall Comcorp starts to deliver from their green technologies sector, we will be looking out for Comcorp in delivering a better result in the coming days. A short term outlook might see Comcorp looking to challenge RM 0.25, while a longer term will see RM 0.30.

Bone's short term TP : RM 0.25

Cheers and regards,

Thursday, 24 April 2014

Cresbld - Storming Forward

Market continue to be bullish after seeing DJIA landing above 16500, however, still struggling to find an equilibrium level at this point. The resistance at 16500 had been giving quite some challenge for the bull to move forward in a powerful manner. However, looking at the way it is, a set of bullish economy data might be ready to send the bull forward.

While the local property index had been getting hot and hotter, that doesn't leave out the siblings as well as Construction sector had set out to challenge 295 points, a point that had been challenge a few time back then since May 2013. The current run up in construction sector is looking to be solid and strong, backed with the government mega projects that had been given out, bullish enough to keep the construction player busy for the next 3 to 5 years.
The construction index had been greatly lifted up by Gadang, Muhibah, Prtasco, Hohup, just to name a few. I believe the index will continue to be lifted up with more major contract to be announced in the 2Q and 3Q of 2014 with the talks of Kidex highway, WCE sub contractor, KVMRT Line 1 (remainder projects) and Pengerang Oil and Gas sector.

While many properties had been strong and bullish, many construction counter which had also diversified into properties development are not neglected too. As highlighted earlier, I will still find Cresbld (Crest Builder Holdings Berhad - 8591) attractive.

Let's have an update on the share price.

Cresbld had been setting out for a 2 months consolidation right after reaching to RM 1.55. The latest spike in Cresbld had been signalling a saturation of accumulation in the region of RM 1.50 to RM 1.55 as Cresbld is positioned for a further run up in the coming days. I am anticipating a strong surge of volume that will be bringing Cresbld further towards challenging RM 1.60 in the short term.

Cresbld, founded by Mr Yong Soon Chow as a construction company in 1983 started out with small construction project, not until they present themselves a competent and reputable contractor in 1995, where Cresbld had completed the Ampang Puteri Specialist Hospital and Damansara Specialist hospital in the subsequently few years.

In 2007, Cresbld completed it's RM 300m in GDV flagship development - 3 Two Square at PJ.

Subsequently, Crest Builder continue to build their name with several other reputable projects such as The Residence at TTDI, The Meritz at KLCC, Amcorp Serviced Suites, Kiara 1888 at Mont' Kiara, DBKL Commercial Complex, Verticas Residensi, Twins, Menara Binjai at KLCC, Menara Wakaf, Menara Worldwide and The Northshore Gardens, blending up to a total completed GDV of more than RM2b in their profile.

While the current book order had saw rooms to take in more projects, Cresbld will start to kick off it's own projects that will better profit as the current had been involved with:

- Affordable housing project with a GDV of RM300m at Alam Sanjung, Batu Tiga Phase 2.
- Dang Wangi Transit Oriented Development dubbed The Bank @ Jalan Ampang. A JV mixed development with SPN for a GDV of more than RM 1b that consist of service residence suites and offices, marking first billion ringgit property development project for Cresbld.
- A RM63.9m contract from Naza Engineering & Construction Sdn Bhd for the construction of super-structure works of a 36-storey serviced apartment in Jalan Damansara, Kuala Lumpur
- The Galleria @ Jalan Ampang with a GDV of more than RM 1.33b, a mixed development project with over 500,000 square feet of retail area with a 28 storey office tower and 3 blocks of luxury residences. This mixed development will bring the combination of Singapore's Vivo City and Marina Bay Sands" to the heart of Kuala Lumpur.

- Kelana Jaya LRT station mixed development project with a GDV of more than RM1b.

Cresbld had been doing great under the helm of Mr Yong. Currently, Eric Yong, the son of Yong Soon Chow is looking even more dynamic and vibrant as they continue to tap into more government projects, inking joint venture with SPN with great ideas and more importantly, winning the projects. Eric is confident in grabbing a couple of projects that will be dished out by SPN in 2014, with the latest being a piece of development land at Ampang LRT line that will be looking to see a GDV of more than RM1.5b.

There are around 50s of this mixed development projects joint with LRT stations, and Cresbld will be aiming to take as much as possible of all the projects that is being dished out by SPN. Eric believes that the demand for a place which is near to transportation hub / infrastructure (LRT, MRT) will always see demand, and it will only grow and continuing growing. This very strong factor is very important for Cresbld in seeing quick hot crazy sales and snatch up in their projects. A good example could be the launch of Tropicana Garden that had been rumored to be linking directly with the Kota Damansara KVMRT station had saw internal member snatching up all the units in 3 days before public launches despite the high tag price of more than RM 850 psf.

I believe Cresbld will be a very good company to be invested in based on 
- Strong ties and good link with the government agencies in securing projects
- Prime location projects near to transportation infrastructure 
- Good and strong management team
- Current projects of more than RM 3.5b in hand

Crest Builder might be looking to dispose off Tierra Crest in Kelana Jaya, currently occupied by UniTAR, for a possible value of more than RM200m should the group need to free up some of it's debt to finance the upcoming huge projects. The disposal at RM200m will see Crest Builder netting around RM60m and freeing up a huge sum of debts in the balance sheet.

A short term outlook will see Cresbld challenging RM 1.60, while a longer term outlook will see Cresbld putting a foot hold at RM 1.80 to RM 2.00

Bone's short term TP : RM 1.65 (Maintain)

Cheers and have a nice day


Tuesday, 22 April 2014

CBSA - Throttling Sky High

The market had finally settle down for a 3 months consolidation and everything is look set to be bullish for the next couple of weeks. With the Federal Reserve continue to pledge on loose monetary policy and low interest rates in encouraging more economy activities and transaction, the recovery had been in good pace. Currently, DJIA is still looking set to challenge 16500 where the previous few occasions had been unsuccessful. Many believe that breaking above 16500 will mark a bullish come back in the equity market. Our local market had been doing great with KLCI inching above 1860, closing at 1862.93 with a +10.24, lead by the 3 biggest financier in Malaysia, namely Maybank, CIMB and PBBank.

As the days of GST inching nearer, many will be thinking who will benefit from this implementation from software to hardware. The contenders ranging from Ghlsys, N2N, Censof, Cuscapi, MYEG had saw many participation in the past couple of weeks, this is where CBSA had start to catch my attention after trying to remain invisible.

Let's have a quick look at CBSA.

CBSA had saw a single day high volume transaction that had saw more than 15m shares changed hand, currently consolidating before looking set for a next upcoming surge in the coming days. CBSA will be looking to challenge RM 0.40 in the coming term with a strong healthy volume.

CBSA is a company with full of potential with global strategic huge partners namely Google and Alibaba. CBSA is not shy of local government projects as well with it's current services provided to the Malaysian Government in data storage and warehousing, including data upload in the Inland Revenue Board (LHDN).

CBSA had been providing critical services in the government sector (LHDN) through PayMate e-Vault system. PayMate e-Vault solves many of the LHDN data upload issues by

- Enhancing security by being able to encrypt data at user workstation (ensuring data privacy)
- Reduce human error by providing user interface and data validation function
- Automating data processing/transmission
- Minimizing user/software supports as no client installation is required
- Providing full audit trial. All transaction is recorded in an audit log
- Providing real time notification of errors and abused.

Currently, LHDN is using PayMate e-Vault to upload data to the data center, which will ensure the data is secured and accurate. PayMate e-Vault will be an important point of contact in the whole implementation of GST which will be taking place in next year 2015.

CBSA had been running it's RFID business under the tag of Solmate, which is currently being used in Asset Management System and Evidence Management System. RFID been widely used in a lot of foreign country in their asset and inventory management. The opportunities of RFID in Malaysia is still very vast and yet to be tapped into.

CBSA and PanPages
CBSA presence in the South East Asia is better known as PanPages, which is currently boasting over 8 million of SMEs business listing in their portfolio. CBSA partnering with Google in the tabulation of Google Maps in countries like Malaysia, Singapore, Indonesia, Thailand, Philippines and Vietnam. CBSA embarked on a partnership with Google to include business listing from its Superpages (now PanPages) into Google Maps. CBSA will receive license fees for the licensed content provided and annual update fees for a period of 5 years from 2011 which will be renewable after the expiry of the initial term. South East Asia will be one of the upcoming focus from Google as they are looking at the huge potential of the booming region.

CBSA had been nearly locking for a deal at RM 120m for it's search and advertising arm from Majujaya. However the deal did not materialized after unable to reach to an agreeable terms from both parties. Interestingly, the fall out of the deal had been seeing CBSA 2 major shareholders, Lau Kok Fui and Tan Tian Sin, increasing their stake at the company with Lau currently holding 31.3m and Tan holding 56.79m shares.

Panpages, sitting on more than 8 millions business listing from SME to MNC corporates, the numbers are still growing at an astounding rate. CBSA search and advertising unit which was then labeled RM120m is currently looking to be valued at more than RM150m with their strong presence in the search and advertising unit and strong database in the South East Asia region. With the strong partnership with Google on the developing of Google Maps for the nation in South East Asia, CBSA presence will continue to be stronger in the coming days.

Currently open market purchase of shares by major shareholder had saw the underlying value of CBSA in the coming future. CBSA search and advertising arms valued at RM150m will be looking at RM 0.62 per share under 241.35m shares issued.

I believe CBSA will be a good company to be invested in based on:
- Core player for the GST implementation in 2015.
- RM150m search and advertising arm, valued at RM 0.62 per share
- Strong presence in South East Asia with more than 8million business listing
- Partnering with Google in developing the Google Map
- RFID potential market in Malaysia

At RM 0.355, CBSA is quite undervalue looking at the potential of their business growth, involvement in GST and their strong tied up partnership with giants corporation like Google and Alibaba. A short term outlook will put CBSA at RM 0.40, while a long term outlook maybe looking at RM 0.60 with more projects revenue from GST and their S&A unit.

Bone's short term TP: RM 0.40

Cheers and have a nice day

Friday, 18 April 2014

Orna - Dancing the Oji way

The year of 2014 had not seen much in take over / merger / acquisition exercise, except for a few companies that had been RTO for a back door listing. Amongst them are non other than Ecoworld RTO of Focal Aims, and the upcoming will be Ranhill listing through Symphony.

While foreign sharks are hungry for expansion, could Orna be another target in the coming days?

Let's have a peek on Orna.

Orna had been traded heavily earlier February this year, where the share price sky rocket before hitting a limit up and triggering a UMA from Bursa Malaysia. Currently, Orna had been consolidating at the range of RM 1.20. Orna might be looking forward for a surge in the coming days after consolidation at RM 1.20 is saturated, seeking for a higher ground soon.

Orna had been in the spot light recently where it's earning had started to show strong increase while it is trading below it's NTA of RM 1.60. With just 74m shares with a public float of around 48%, Orna is definitely a very interesting target for Oji Paper.

The Melaka based Orna Paper engages in the manufacture and sale of corrugated boards and carton boxes for the manufacturing sector in Malaysia. The company also provides corrugated flutes in single, double and triple walls, as well as in single face.

While Orna had been doing great lately, Orna financials had saw great improvement, where revenue had climbed steadily from 2009 to 2013, with FYE 2013 raking a net profit of RM 8.27m behind a revenue of RM 245.6m. EPS stand out at 11.2 cents for FYE 2013. Orna will be looking to perform better in FYE 2014 based on the market robust outlook for the year 2014.

What is even more interesting is that Oji Paper had been under some corporate pressure after failing to seal a deal with Muda Paper. As the cash rich Oji Paper is expanding, putting a price tag of RM 110m for Orna (Approximately RM 1.40 a share) doesn't seems to be a big problem for them as their previous heist had saw Oji offering more than RM200m for HPI privatization. Could Orna be the next target for Oji Paper?

While speculation is rife, Orna major shareholder is Instisari Delima Sdn Bhd (18.63 million shares or 25.1%) could be looking into a deal with Oji Paper for a buy out at around RM 1.50 per shares, putting Orna for a price tag at approx RM 110m. Currently, market insider could be looking set to see the deal going through before 2014.

I believe Orna will be a good company to be invested in, given the growing business in revenue and earnings, as well as the much anticipated take over by Oji Paper which could realized the share holder value in a faster pace.

Bone's short term TP: RM 1.30

Cheers and have a nice day

Thursday, 17 April 2014

Symlife - The Symphony Of Life

The market as volatile as its character is, had saw DJIA rebounding back from a last week tech slam, where a series of technology rated stock took steep plunge, sending DJIA down below. However as of now, DJIA staged a strong come back with +121 at this time, looking to challenge 16500 again in the coming few days.

On a local outlook, while a lot of measure had been implemented to curb speculation on property, despite doing so, the new launches of properties are still looking strong with good rate of take up, and Malaysia properties are still deemed cheap by foreigners.
The properties index had shown a strong uptrend which had been ongoing for 3 months, where a lot of properties counter are highly hunted down for their undervalued land as well as their prestigious launches as well. One of the remarkable gainer is Ecoworld (Formerly known as Focal Aims), after seeing Tan Sri Liew's son heading the company with a team of experts from SP Setia. Ecoworld, from a lowly 30 cents 1 year ago, it is now sitting above RM 5.00, approximately 1600% gain in 1 year.

Will the property counter still be hot? I bet so it will continue to be as hot as it could for the next coming few weeks.

While most of the prominent counters had went from ground to sky, it had never left my attention away from Symphony Life Berhad (Symlife - 1538), a fully geared potential hit in the coming days. Let's have a look at Symlife.

Symlife had trading around the range of RM 0.95 to RM 1.15 for the past 6 months. The recent volume had been marking a bullish start for Symlife as they positioned to challenge above RM 1.15 in the coming days. I am anticipating a larger volume, as much as 5m shares transacted in the coming days as Symlife challenge forward.

Probably, you might want to wonder, what could be so interesting in Symlife. Let's have a quick look at their 3Q FYE 2014 result.
Symlife is currently trading at RM 1.06 is a 45% discount from it's NTA of RM 1.93. And to put things more interesting, a large portion of prime land held by Symlife is hugely undervalued as it had not been revalued from purchase.

Symlife NTA will be easily throttle above RM 3.50 once all the land had been revalued, with the Sungai Long land being the largest contributor after Symlife had paid a premium recently to convert the piece of land into a residential and commercial title for upcoming development.

The Symphony of Life

Symphony Life Berhad, previously known as Bolton Berhad, had went through difficult times when the company had expanded into various of business. Currently under the helm of Tan Sri Azman Yahya, he had reduced Bolton (now Symlife) from a more than half a billion debt into less than a quarter billion now after refocusing the company direction into a focusing on it's property division while disposing off it's other non core assets. Tan Sri Azman Yahya, a white knight for Symlife, was the man appointed by government in 1998 to set up and head the Pengurusan Danaharta Nasional Berhad, and he was the chairman for Corporate Debt Restructuring Committee, set up by BNM to assist debt restructuring of viable companies.
Restructuring a heavy indebted company had been always not easy. Tan Sri Azman had took 3.5 years to reposition the company, which is now starting to bloom after a long hard work. And April 2013, Tan Sri Azman Yahya had send a strong message to the market that he is going to bring the company into higher ground by changing the name of the company from Bolton to Symphony Life Berhad.

Symphony Life, a BCI Asia Top 10 developer is currently heading several projects.
- Elevia Residences, Taman Tasik Prima, Puchong with a GDV of RM100m
- Summer Homes, Taman Tasik Prima, Puchong with a GDV of  approx RM100m
- Tower 28 of Wharf Residences, with a GDV of approx RM200m
- TWY Duplex Condo, Moont Kiara with a GDV of RM 250m
- Tijani Ukay, Ukay Perdana with a GDV of RM 300m (70% balance)
- Amanjaya, Sungai Petani, Kedah with a GDV approx RM200m
- Lavender Heights, Senawang at Seremban with a GDV of approx 100m
- 6 Ceylon condominium at Bukit Ceylon, GDV approx RM150m

Symphony Life coming up mega projects will be looking at
- 625 acres mixed township development in Sungai Long with RM6b GDV (With New MRR2 access)
- Signal Hill, Kota Kinabalu with a GDV of RM 520m
- Star Residence, high end mixed development project between Jalan Mayang and Jalan Yap Kwan Seng for a GDV of RM2b
- 51G at Jalan Gurney, Kuala Lumpur for a GDV of RM 360m
- Taman Desiran Bayu at Wangsa Maju for a GDV of RM100m

Symphony Life is one of the oldest developer in Malaysia, known for it's quality in delivering the best in their products. With more than RM500m of unbilled sales that is going to be reflected possibly in the last quarter of FYE 2014, this will be sending Symlife share price above the sky as the current EPS for 3 cumulative quarter is standing at 12.70 cents, where trading at PER x10 will be valuing the company at RM 1.27 already. Taking a skeptical 10% from the RM500m unbilled sales turning into profit will be seeing a contribution of RM50m to 310m shares, effectively boosting an EPS of RM 0.16, totaling a FYE 2014 EPS at RM 0.287, which can be possibly looking at RM 2.50 at that kind of earnings.

I believe Symlife will be a good company to be invested in due to it's huge discount in NTA, huge prime land location, solid management team, huge upcoming projects and attractive earnings. Symlife will be looking to see a short term target at RM 1.15, while a long term will see Symlife putting above RM 1.50.

Decided on your investment? Don't be too late.

Bone's short term TP: RM 1.15

Cheers and regards,

Thursday, 10 April 2014

Pantech - Powering Pengerang

The global market sentiment had started back to pick up it's paces again as most of the negativity in the market had disappeared. While the DJIA index had challenged 16500 a couple of time, it could be taken down in the coming days by a strong bullish market as KLSE aim towards setting base at 1900 with contributions from the local oil and gas industry and government infrastructural projects.

The latest major business event that had taken place is none other than the announcement of the Pengerang Integrated Complex (PIC) in south Johor that will bring a whopping GDV of USD 27b (RM 88.56b) whereby the Refinery Petrochemical Integrated Development (RAPID) will be sitting on USD 16b (RM 52.48b) while the associated facilities, USD 11b (RM36.08b).

This is one of the mega project that is announced by Malaysia this year, which is a core component for Malaysia to transform into a developed country by 2020. The PIC will be sitting on a 6242 acre site that will be a host for about 70,000 people during it's construction, and more than 4,000 employees when operating, which is capable of producing 300,000 barrels per day of various grades of products from synthetic rubbers to high grade polymers.

With the huge amount of money placed on the line, who could be the beneficial? It had came to my attention on Pantech, the one-stop center for oil and gas industry.

Let's have a quick look out on Pantech.

Pantech had saw a recent plunge below RM 0.95 and consolidate around RM 0.90 prior to the weaker financial quarterly that had saw earning putting a step behind. However, Pantech still keep up with it's dividend with the previous quarter which sums up to a cumulative of 3.2 cents on the 3rd Quarter of FYE 2013. Recently, Pantech had risen actively after announcement of the approval on the Final Investment Decision on Pengerang Integrated Complex, Johor.

A portion of Pengerang had started development back then since 2011 for the deep water petroleum terminal. Pengerang currently has more than  RM70bil worth of projects in the pipeline, which is 33% of all investment costs of all our entry point projects in Malaysia. While looking at a sector view, Pengerang's total projects value is a whopping of 70% of those in the oil, gas and energy sector, highlighting the massiveness of the project.

While the PIC carries a massive weight, Pantech had came along the way to be another massive supplier for this mega project.

Pantech had been in the oil and gas industry for more than 2 decades, serving in :
  1. Oil & Gas both onshore and offshore.
  2. Marine & Shipbuilding industries(Including Oil Rig, Jackets, FPSO and more)
  3. Petrochemical & Chemical Plants
  4. Palm Oil Mills
  5. Palm Oil Refineries
  6. Oleo Chemical Plants
  7. Bio-fuel & Bio-diesel Plants
  8. Sea Water Desalination Plants
  9. Power Plants
  10. Refinery & Process Plants
  11. All type of piping system
  12. Flow Control System for Piping
  13. Storage Terminals.
Pantech had built its name from the quality of material, and is the certified material supplier for major clients like Shell, Petronas and Exxon Mobil. Pantech also had a solid clientele with heavy weights oil and gas constructor such as SKPetrol, Dialog and MHB.

Pantech and Pengerang
How does Pantech and Pengerang rings a bomb?

Pengerang top beneficial during the construction and development period will be looking at Dialog as it's fore runner. While the development is looking at a massive scale of supplies in construction material as well as oil and gas pipes, While numbers are still unknown for the time being, a wild guess of 5% on the pipes and valves will be sounding a crazy RM2.5b allocation over a period of 4 years will be seeing an average of RM 1.09 revenue per share on Pantech. (Pantech issued share 570m). Putting a margin of 30%, we are probably going to see a wild increase towards an EPS of RM 0.30 on Pantech, which might possibly put Pantech above RM 2.00 based on a PER x7, not including it's current and future book orders from other projects or overseas.

While competition is hot on the supplying, Pantech competitive advantage is that it is based in Johor with supplies readily on the move. In fact, they are actually positioned for this top notch job as we had solid internal news confirming on the supplying contract, which had basically covered 70% of most of the contracts.

In conclusion, I would conclude that Pantech will be one of the golden pick in 2014 with the following reasons:
- Backed by major GDV of RM 88b from Pengerang Integrated Complex.
- Certified material supplier from Petronas, Shell, Exxon Mobil
- Proximity on development site
- Established player in the industry
- Unofficial confirmation on supplying contract

A short term outlook will position Pantech above RM 1.00, while a longer term outlook might put Pantech at RM 1.50 as the project revenue starts to kick in stage by stage.

Are you decided yet now? Game in or out - You decide.

Bone's short term TP : RM 1.10


Tuesday, 8 April 2014

Cuscapi - Revamping Business Trend

The DJIA had been shedding off it gains again after trying for the 3rd time to break above the 16500 mark in the recent 3 months. Is the bull still strong enough to push the DJIA index over 16500 in the coming few weeks as it retested for 3 times? Or it is a sign of a weakening bull? What we can be assure of is that the Feds will continue to reduce its quantitative easing in a gradually manner, while Yellen loose monetary policy will continue to be in force to continue encouraging more growth as US continue its recovery.

One of the latest major event that will be taking place is the opening of the new KLIA 2 Terminal in the coming month. The controversial airport had been delayed for a few times on it's grand opening, and had finally saw 2nd May 2014 being fixed in for the opening.

The KLIA 2 is a joint venture between UEMS and Bina Puri on the building and structure, while KUB had been on the runways, and Cuscapi will be seen handling the POS (Point of Sales) System in the new low cost carrier terminal - KLIA 2.

Let's have a look at Cuscapi latest movement.

Cuscapi had recently saw some active volume back then at the middle of February 2014, where the price had sniffed above RM 0.45, while consolidation took place at the range of RM 0.38 to RM 0.40.
Cuscapi could be looking set to break above RM 0.40 with some good participative volume in the coming days.

What is on Cuscapi
Cuscapi got it's presence felt in the market through its POS system offered throughout Malaysia, with notable chain restaurant like KFC, McDonalds, Pizza Hut, Kenny Rogers. While their POS system is a cash cow to the company, the latest evolutionary product that Cuscapi had ventured into its the latest REV (Revenue Enhancement Platform) for the F&B industries. While the development of the software and hardware had been intensive and costly, Cuscapi is finally ready to rev up it's latest product to the local and global market presence.

Currently, Cuscapi had been targetting China and Philippines to expand it's presence overseas, especially with it's new product where they are targeting to see revenue doubling up in the beginning of 2015.

While REV is still a new product that had yet to run on a full scale, the long awaited RM 21 million, 5 years contract from KLIA 2 had finally able to show some light on Cuscapi as the new terminal is to go live on 2 May 2014. Cuscapi handling the POS system for KLIA 2 will be looking to see the new contract finally being able to contribute to the earnings soon.

The larger catalyst that we will be looking at Cuscapi should be the latest M&A that Cuscapi is in talk with in China that will probably see Cuscapi potential earning to increase by 50% to 100% by end of 2015. The M&A that will be able to boost Cuscapi presence in China by a much shorter time frame is looking at 90% completion, while 10% left on some minor terms to be laid out. China market presence will definitely be a game changer for Cuscapi in their business, as there are more mid range chain restaurant, estimated at 300 to 500.

REV is a high potential market trend product in the F&B industry. In a IT savvy era, more and more traditional method are being replaced with new technology. REV could be a potential hit in the market as the current population, largely dominated by youth and young adults, had a high taste on IT related products. Should the market flow with the trend, a initial subscription of 5000 REV will be looking set to inject more than RM10million into their revenue soon. A saturated trend might be looking more than 10000 subscription, which will be channeling a very good source of income for Cuscapi in the future.

In my opinion, I would see Cuscapi as a good trading buy with the following points highlighted
- Opening of KLIA 2 theme play (Bpuri, KUB, Cuscapi)
- M&A with China based technology solution providers in penetrating China market in a faster pace
- High potential market trend maker product - REV (Targeting IT savvy young generation patrons - the majority population of the world)
- Beneficial in upcoming GST implementation

Bone's short term TP: RM 0.425

Cheers and have a nice day.

Monday, 7 April 2014

Farmbes - Deep Frying Chicken

The global market forecast had see market continue being bullish in the coming days. As the the recent jobs data last month in the US had saw 192,000 jobs added into the market, it is however still trailing behind the median forecast of 200,000 jobs, hence analyst suggested that the US market is actually still far from being seeing a tightening policy to be implemented at anytime. US analyst believe that they will continue to see a lower interest rate by the Feds for the time being. The stronger economy in the US had also continue to see a stronger USD against the MYR, with the current being RM 3.28 to 1 USD. With the rate it is rising, it is foreseeable that 1 USD will soon be looking at RM 3.35 in the coming days.

As the global and local economy continue to grow, human population continue to increase. Currently, the Malaysian population in 2014 stand up to more than 30million people. Along with this increase, it had definitely attracted my attention towards some FMCG industries, and for this time around - Farmbes.

Let's have a quick glance at the latest movement of Farmbes.

Farmbes, a Melaka based poultry farm, had been in a wild swing recently, with latest corporate action that saw F.C.H Holdings Sdn Bhd under the Fong family taking up private placement of 555,300 shares in Farmbes with a price of RM 1.22. The price of the share had seen some consolidation at RM 0.70 after for the past 3 weeks as it will be looking set to see a break out in that region after saturation of volume in that region. I anticipated that volume will be breaking above 5m transaction in a single day with a powerful break upwards, penetrating above RM 0.75.

What is frying the chicken?
The poultry industry had recently came into the limelight with consumer complaining about the rising price of the broiler since July 2013. However, the rise is literally inevitable for broiler farm because of some of the following reason :
- A minimum wage policy of RM900 per month, which is 50% increased (excluding allowance)
- Rising feeding cost in poultry (higher price for Corn and Soybeans, which is largely affected by stronger USD against MYR)
- Increase in electricity tariffs, hence higher operational cost
- Increase in logistic cost

Amongst all, the rising feeding cost, which attributes to 60% of the total cost, is the major factor to see a higher production cost in each bird.

While a higher cost structure over a priced controlled item doesn't sound appealing to any of the broiler farm, however, the recent move by the government is indirectly channeling more sales towards the legalized broiler operators, such as Farmbes.

The government had been actively closing down operation of unlicensed broiler operator in Johor, of which most of them are contract farmers. The reason for the closure is due to the poor waste management and manure management. Agriculture and agro-based industry Minister, Datuk Seri Ismail Sabri Yaakob, wants all state governments to enforce the Poultry Farming Enactment to ensure that all slaughterhouses are licensed and registered to enable the authorities to monitor their operations.

A golden opportunity for Farmbes
Farmbes, with 61,083,263 shares issued in the KLSE is currently sitting on a market capitalization of RM41.84m while PW had RM52.69m and Layhong, RM 90.6m, putting Farmbes as the smallest of all.

However, with the current seizure of operation from unlicensed and illegal broiler operators, Farmbes is taking this as a golden opportunity to expand in order to meet the market demand. Farmbes had recorded strong revenue in FYE 2013, mainly due to the improved price of the broilers and larger sales quantity, attributable from the increasing demand from the population, and the lack of supplies.

Sales revenue jumped 17.5% to RM 470m for FYE 2013, while EPS for FYE2013 stand at 7.33 cents. The current price of Farmbes (RM 0.70) is sitting on a 73.68% discount behind the NTA of RM 2.66 for FYE 2013.

Farmbes will continue to see a strong growth in 2014 from the increasing population in Malaysia, and the people's preference in consuming chicken as a cheaper source of protein compared to other meats.

Poultry prices to go up by 1H 2014
Poultry price will position to be revised by 1H 2014 after strong pressure from the broiler operators as a higher cost structure is eating into the margin hugely. In fact, the government had basically consented on the raise which will be pending to be announced soon. Wholesale price will be projected to raise above RM 6/kg in the coming days. The poultry industry is already showing a strong and significant signs of an upcoming price hike in the poultry meat with LayHong leading on the charge.

Previously, the announcement of a 30% increase in stationary prices back then on November 2013 had saw Pelikan revival after it's business recording critical losses from quarter after quarter. Pelikan took a shot above from a lowly RM 0.35 to the current RM 0.87 as of last Friday after recording better profit since the increase, which is a stunning 148% capital appreciation.

In my opinion, Farmbes will be a good trading buy due to
- Upcoming price increase in the poultry meat
- Business expansion seen from private placement of shares from F.C.H Holdings
- Increasing demand on the popular meat as a cheap source of protein
- Higher demand after seizure of unlicensed operators/contract farmers, channeling more sales
- Business product is resistive towards a downtrend market
- High growth opportunity and high margin for capital appreciation (small cap with 61m shares)

Farmbes will be looking set to break above RM 0.75 in the coming days after consolidating well at RM 0.70, while a longer term outlook will position Farmbes into touching RM 1.00 soon, mainly attributed by the upcoming announcement of price hike in poultry.

Had you decided your venture into Farmbes? Your call, don't be too late.

Bone's short term TP : RM 0.80

Cheers and have a nice day



Wednesday, 2 April 2014

Prestar - Railing on Hot Roads

The market had been undecided for the past couple of weeks with anxiety from the Fed Meeting and the on going tension between Russia and Ukraine, as well as the worries of China, from the collapse of shadow banking to weak Chinese data and slowing down. However, the bull might had set in its course after the backing from Yellen to continue to support the current loose monetary policy and also China forecasting a strong PMI in the coming month. Locally, we had so far seen a significant market theme play on undervalued properties counter, furniture/timber, oil & gas, plantation, and the latest being consumer products.

The current market theme play should be focusing on GST implementation as the bill is finally ready to be tabled out in the next upcoming parliament. Yesterday, we had saw bullish run up on Ghlsys, Cuscapi, Censof, N2N, Scicom, Mpay, while some other like Opensys, SMRT had tried riding along as well.

While the GST theme play is going strong, I believe it will also be a good time to accumulate some undervalued industrial material player for the time being - Prestar.

Let's take a look at Prestar.

Prestar during their glorious moment back then when projects is coming from everywhere and they are doing great. Prestar is involved in the following:

- Slitting & shearing of carbon & stainless steel mother coils into slitted coils / sheets for automotive, electrical & electronic, office equipment, metal stamping indsutries
- Roll forming of carbon steel pipes and hollow sections
- Roll forming of stainless steel pipes & hollow sections
- Manufacturing of steel flat bars, steel purlines
- Manufacturing of wheelbarrows and platform hand trucks
- Manufacturing of steel shelving & pallet racking and other storage equipment
- Manufacturing of highway guardrails

The recent massive construction on both infrastructural, residential and commercial properties had contributed to the positive growth towards the company income.

The company had recorded a 58% growth in the EPS in FYE 2013 compared to 2012 of 4.42 cents, Prestar ended FYE 2013 with EPS of 7.01 cents with an upcoming dividend of 2 cents that is to be announced soon. Their NTA increase relatively to RM 1.11 while the company had a quite a number of land and properties reserved that had yet to be revalued.

Upcoming catalyst

 I believe Prestar will continue to see good growth in their quarterly result as the company had been look set to bag in more lucrative projects, especially highway guardrails from
- West Coast Expressway, 273km (40km linking Ipoh to WCE to be built later)
- DASH Highway 20.1km
- Kidex Highway 14.9km
- SCORE corridor (320km stretch from Tanjung Manis to Samalaju), extension to Mukah, Baram and Tunoh.

Rumor had it that Prestar had already bagged in the WCE project for guardrails that is worth more than RM400m for the 273km stretch. Taking a 15% profit margin, this project will be easily contributing a net earning of RM 0.33 per shares (Based on RM60m profit / 180.98m shares) on top of it's current business and operation. The WCE carries a GDV of RM6b will see actual job fully dished out on 2H 2014.

Beside that, the on going KVMRT Line 1 and KVMRT Line 2 in the coming days, and the future KVMRT Line 3 will continue to see demand in the steel industry for the upcoming years.

Currently price at RM 0.54 with 2 cents dividend in hand with prospective future growth ahead, Prestar will be deemed lucrative at the current price trading at a PER x7.5. With the earning from the WCE highway project, Prestar will be easily price above RM1.00. Short term outlook will position Prestar into challenging RM 0.60, while a longer tenure outlook will be looking at RM 0.70.

Bone's short term TP: RM 0.60

Cheers and have a nice day