Thursday, 30 October 2014

Nicorp - Throttle Forward

The recent strong hit back of the bulls had definitely send the bears packing back into the caves. The global equity market had started to regain back it's confidence as investor starts to pour down their cash into some bargain hunt as the DJIA started to rechallenging the psychological 17000 again. Is the market too big to be crashed? Had the fundamentals of the economy change? Probably, these are some of the self asking questions for your to determine whether you are prepared to be fully vested in the equity market or not.

While the market outlook continue to be volatile, I would be my interest to look into company that will be going through corporate restructuring exercise, or is in the midst of restructuring. While the development in Euro continue to be my favorite research, the latest development in Nicorp might be another big hit in the market.

Let's have a quick look on the latest price chart on Nicorp

Nicorp had been trading below the price of RM 0.14 for around 1 year as it is pending for a restructure in the company. Previously, Dato Raymond Chan had been rumored to be restructuring the company with asset injection of 1Borneo Complex, however, had gone awry. With the price chart showing a syndicated accumulation within the price range of RM 0.115 to RM 0.13 in Nicorp, a convincing break above RM 0.14 with a good supporting volume will definitely mark a new journey for Nicorp.

Nicorp - Changing Trends of Wind

The latest corporate action that had rifled across the market had saw Dato Raymond Chan being relinquish of his position of being the CEO of Nicorp, and subsequently ceased to be a substantial shareholder in Nicorp as he had disposed his entire stake of 38,836,600 shares to Dato Siaw Swee Hin (acquire 28,836,600 shares) and Quantum Discovery Sdn Bhd (acquire 10,000,000 shares).

To recap back, few months back, Nicorp had underwent a private placement of 10% (70,203,000 shares) at the price of RM 0.12. Prior to the absence of CEO due to the redesignation of Dato Raymond Chan, a new face emerge as Dato Abdel Aziz @ Abdul Aziz Bin Abu Bakar is appointed as the Chairman of the company and acquired 9,434,000 shares, representing 1.22% of the company total shares issued. Dato Abdel Aziz @ Abdul Aziz Bin Abu Bakar is a former executive director of AirAsia. Currently, he is a non exec non independent director of AirAsia with a position as a member of the audit, nomination and remuneration committee.

Dato Abdel Aziz is also an executive chairman for VDSL Technology Sdn Bhd, which provides internet coverage for corporate tower and government offices blocks.

The whole development of Nicorp became more interesting when Dato Siaw Swee Hin raised his stake, acquiring a total of 39,172,600 shares representing 5.07% of the total share issued of the company from the open market and off market direct business dealing. Dato Siaw Swee Hin is a low profile businessman that had venture into Singapore during his earlier days as a marketing executive. Currently, he is the Managing Director of Alltrust International Group.

Alltrust Internation Berhad is a partner with NamHai JSC, which is dealing with the marketing and distribution of Vietnam Long Grain White Rice. Currently, NamHai JSC is the top 10 domestic rice player in Vietnam, and is able to hold a production of more than 1.5 million metric ton a year.

Alltrust Internation Pte Ltd is dealing with Interior Fit-Out & Mixed Construction Services, Oil & Gas, Chemical and Pharmaceutical equipments and will be expanding into providing mining technology and general import and export services.

Alltrust International Group had been growing steadily under the management of Dato Siaw, which saw the company enormous growth into different sectors of trades. With the coming up expansion, Alltrust International will need to more working capital to expand further and faster.

Speculation had been rife in what will happen to Nicorp in the coming days after much changes in the management of Nicorp and a significant stake up from Dato Siaw Swee Hin. Nicorp had been plagued in the red for the past years, and it is the desire of the company's directors to turnaround Nicorp after a series of red inks in the financial statement.

Will Dato Abdel Aziz through his corporate experience and connection be giving Nicorp a turnaround, or will be heroic Dato Siaw Swee Hin be putting a huge restructure in Nicorp in the coming days with his almighty Alltrust International Group.

Nicorp, currently with a market capitalization of RM 96 million and 772 million shares issued will definitely be a good vehicle to be RTO for a quick listing and business expansion through raising funds from the public. A similar example will see Symphony House Berhad (Symphny -0016) which had 660 millions of shares and a market capitalization of RM 125 million is a RTO target by Ranhill.

While Nicorp foray directly into the oil and gas sector might still be vague now, the possibilities of Nicorp being linked up with Alltrust International Group to provide services or equipment that caters to the oil and gas sector is still a good possibility to be eyed upon after seeing a huge stake up by Dato Siaw Swee Hin.

Nicorp will be a good company to be looked at for the time being as more corporate exercise, restructuring is going to unfold. The current entry of Nicorp is deem attractive due to
- Private placement at RM 0.12 fully subsribed
- Increase of stakes by Dato Siaw Swee Hin, with majority purchase price at RM 0.125
- Ceasing of Dato Raymond Chan as the substantial shareholder and CEO of Nicorp
- Appointment of Dato Abdel Aziz as the Chairman of Nicorp
- Appointment of Cheang Soon Siang as the executive director of the company. Mr Cheang is experienced in handling cash flow, working capital management and restructuring and recovery of credit facilities for corporate.
- High Speculation of Nicorp as a RTO target, with Alltrust International Group as potential target.

Nicorp should be looking to trade stronger in the coming days with more corporate development unfolding one by one. A quick outlook will place Nicorp testing at RM 0.15, while a longer term outlook might suggest Nicorp putting RM 0.30 to test.

Thrust in? You decide.
Bone's short term TP: RM 0.20.

Cheers and have a nice day


Monday, 27 October 2014

October Feature - Destini - Golden Destination

Many would had been in a puzzle on whether this is actually a start of the crisis, or just another mere correction in the market. The global equity took a severe beating in the last couple of weeks after seeing huge sell off with the DJIA testing on 16000 in one occasion. While in the local KLSE market, there are severe selling down, particularly in the Oil & Gas industry after the WTI Crude Oil and Brent Crude Oil slide into the border line of production cost. Currently, the WTI Crude is hovering at $81 per barrel while Brent Crude stood at $86. With this lowered crude oil prices, will it be a good opportunity to take on some position in battled down Oil & Gas stock?

Of course, for me, it would be definitely a great opportunity to scourge for good deal now, which is why Destini Berhad had caught my very attention.

Let's have a quick look on the latest chart of Destini Berhad - 7212
Destini had been trading at the range of RM 0.65 before the triggered panic selling that had caused it to plummet into the range of RM 0.50. Destini did saw a good range of support at the price level of RM 0.50, particularly with the share buy backs from the Datuk Rozabil Abdul Rahman. At the range of RM 0.50, Destini would be looking to climb back higher into the range of RM 0.60 after a quick consolidation at RM 0.50.

Destini - Turning Around, Moving Forward

Destini Berhad, formerly known as Satang Holdings Berhad, had came out from it's suspension with a series of corporate exercise including the entrance of white knight - Datuk Rozabil Abdul Rahman in turning over the company to become the one stop center for the supply of safety equipment and MRO services in the aviation, marine, oil & gas and defense sector.

- Defense division
The entry of Datuk Rozabil had definitely transform Destini Berhad into a very powerful vehicle in the marketplace after seeing major government contracts being secured by Destini's subsidiary company. More than 80% of Destini's revenue is from government contracts. The latest contracts that is secured from the Ministry of Defense Malaysia (MINDEF) consist of:

- 7th November 2013, Destini Prima Sdn Bhd accepted a letter of award from the MINDEF to provide the first line and above maintenance services for the safety and survival equipment for Royal Malaysia Air Force (RMAF) for a total sum of RM 95,027,217 for a period of 3 years commencing 3rd October 2013 to 2nd October 2016.

- 4th December 2013, Destini Prima Sdn Bhd accepted a letter of award from MINDEF to supply defense equipment for the RMAF for a total contract sum of RM 46,317,000 for  3 years.

- 6th April 2014, Destini Prima Sdn Bhd accepted letter of award from MINDEF for the appointment as one of the panels to supply the spare parts for "Non-Proprietary" aircraft to RMAF for a total contract sum of RM 98.85 million for 3 years.

While the government contracts is a coming in handy, Datuk Rozabil had been vying to push Destini's future revenue further into providing specialized services in the Oil & Gas industry by acquiring Samudra Oil Services and tapping into the MRO services.

- Oil and Gas division
With the shrinking down crude oil production in Malaysia and the gradual rising consumption, Malaysia will be ending up importing oil should there be no counter measure to increase the production of the crude oil.

This will definitely drive for a higher demand to see more exploration activities in finding more oil reserves, which will include deep water exploration in the coming days.

Samudra Oil Services, specialized in providing tubular handling equipment and running services which are vital to the overall process of the production of oil and gas. The services which involved the handling and installation of multiple joints of pipes to establish a cased wellbore and the installation of smaller diameter tubing inside a cased wellbore to provide a conduit for oil and gas to reach the surface. With Malaysia driven to see more drilling activities, well construction which require the increased complexity of tubular services coupled with a limited number of companies that provide tubular handling equipment and running services in both domestic and global markets shall open up a bright prospectus to Samudra Oil in the coming days.

Samudra Oil Services, which is a licensed Petronas contractor had recently bagged in a 2+1 year contract from Lundin Malaysia B.V to provide hammer services and equipment for it's drilling campaign, pushing Samudra Oil's order book to more than RM 600million.

- Maintenance, Repair and Overhaul (MRO) division
Destini is will be looking to see more MRO contracts in the aviation, marine and oil & gas industry. The recent acquirement of Techno Fibre Group and the 51% stake at Vanguard Composite Engineering is a significant move to see Destini's thirst to make it big in this sector, which comes in time with the new regulation that is set by the International Maritime Organization that all ship operators and owners need to abide by the ruling and change the on/off load hook release systems for lifeboats, which is mandatory from July 1, 2014.  (Source - ETP Pemandu)
Currently, Destini is receiving income from overseas operations which had stretched to Dubai, Australia, China, Singapore, Brazil and North Sea.

With Datuk Kamarudin Meranun as top 20 shareholder in Destini, Destini will be looking to bag in MRO projects from AirAsia Berhad, which is pending it's EASA (European Aviation Safety Agency) certification in order to expand it's services to the commercial aviation.

Destini will be looking to acquire the remaining 49% in Vanguard by the end of 2014.

Destini had recently saw massive open market purchases from Datuk Rozabil as well as direct business transaction from Datuk Lim Nyuk Sang @ Freddy Lim.

Datuk Rozabil had been actively purchasing huge tranche of shares in open market and direct business dealing at the price range of RM 0.60 to RM 0.65 through his privately owned vehicle BPH CAPITAL SDN BHD. Currently, Datuk Rozabil is holding 256,308,800 (32.06%) of stake in Destini.

The recent massive stake up of Datuk Lim Nyuk Sang had definitely put the whole development of Destini more exciting. Recently, the entry and exit Datuk Lim Nyuk Sang in Bornoil had saw a series of interesting development with the emergence of HapSeng as the substantial shareholder of Bornoil. Bornoil had since broke above RM 0.80.
Topping the shareholder list in Destini had saw several identical shareholder of Kretam Holdings Berhad, which is owned by Datuk Lim Nyuk Sang @ Freddy Lim. They are Wong Len Kee, Chua Peng Boon and BPH Capital Sdn Bhd.

Besides that, the infamous Datuk Ambrose Lee which had then swap SugarBun and NBT (North Borneo Timber) with Warisan Harta Sabah Sdn Bhd back then at 1997 had been sitting in the 5th position of the top shareholder with 30 million shares with his low profile vehicle - Victoria Capital Sdn Bhd.

With a huge stakes in hand from high rank political linked businessman in Destini, the game might just be going to get more interesting in the coming days.

With much great prospect laid infront and huge stakes from high rank political linked businessman in
Destini, I believe that it would be a great chance to lock in a position with Destini when it is below RM 0.60, considering it's previous private placement with institution being placed at RM 0.60, and employee share option scheme (ESOS) being priced at RM 0.53, and massive open market purchase from Datuk Rozabil at the range of RM 0.65.

Destini will be looking to challenge a short term target of RM 0.60, and as more development starts to unfold within it, Destini will be potentially trading above RM 1.00 in the coming days.

Golden Destination? You decide.
Bone's short term TP : RM 0.65

Cheers and have a nice day.


Friday, 24 October 2014

Euro - Writing A New Chapter

The global equity market had saw some hit back from the bull after seeing a strong sell off from the bear that had triggered panic selling across the board last week. The sell down featured a strong selling from oil and gas related counters as crude oil dipped lower, putting up a bearish outlook for the sector as the price will not encourage risky exploration, while some operator will tend to increase output to make up the losses with a greater volume, putting the crude oil lower with oversupply. Currently, WTI Crude Oil is traded at $80.52 and Brent Crude Oil at $ 84.71.

While waiting for the next event to unfold in the coming up Feds meeting, Euro had started to unfold with more solid news lining up in the corporate ladder.

As of the latest announcement, Euro had went through a corporate reshuffling in top management level, marking it's first major move to reshuffle the company directions into focusing on properties development from it's current business operation that had been dealing with corporate furniture and fittings.

Major changes that had taken place will be the appointment of Dato Sri Choong Yuen Keong@Tong Yuen Keong as the Managing Director of Euro Holdings Berhad. As a businessman by profession and owns several businesses involving in property development management and aluminium recycling, Dato Choong had a 30 years of extensive working experiences in the construction and the property development industry, which includes 11 years in construction site management and 19 years in the management of property development. He was involved in a few housing and commercial development projects including Taman Maju Jaya, Wisma Cheong Hin, Pusat Perdagangan Tasik Perdana and the most recent being Beverly Heights which is located at Ulu Kelang, Gombak.

The appointment of Dato Choong as the Managing Director in Euro will earmark the new beginning of Euro Holdings Berhad in their property venture.

Dato Tong Yun Mong (brother of Dato Sri Choong Yuen Keong) had also been appointed as an executive director in Euro. Dato Tong Yun Mong had more than 20 years of experience in property development and building construction, ranging from civil engineering works, earthworks and transportation for ready mixed concrete plant. He is the founder and director of Beverly Heights Group.

The board level reshuffling includes Mr Teh Hock Toh (pic) being appointed as the CEO for the manufacturing division which will continue on the manufacturing and marketing of office furniture and equipment with the Ms Foong Yein Teng as the CFO.

New comer appointed to the board will be Kevin Sathiaseelan A/L Ramakrishnan being a non-executive director, being a member of the audit committee.

Amongst those relegated from their executive position will be Lew Fatt Sin and his wife Law Sim Shee, Ng Wai Pin, Pua Kah Ho, and Lew Hin.

Let's have a quick look in the technical chart.
Euro had been seeing a strong support above RM 0.60, weathering the global equity sell down last week. Should Euro penetrate above RM 0.70 with a convincing volume, this will earmark a new stage for Euro. While the consolidation had seen saturation, Euro is on a high stake to pierce further upwards after a series of corporate ladder reshuffling that took place, strengthening the investor confidence in the coming up direction for Euro Holdings Berhad.

Coming Up
A series of corporate exercise will be certain to take place as it will be anticipated that Beverly Heights Properties Sdn Bhd will be injected into Euro to form a new division - Property Division. However, the injection will definitely comes with a price that is to be paid from Euro to Beverly Heights Properties Sdn Bhd, suggesting a capital restructure then private placement, or a right issue with free warrants. Euro will definitely need to go through a series of corporate exercise in order to inject Beverly Heights Properties Sdn Bhd which is carrying 30 acres of freehold land in the northeast of Penang Island, carrying a potential value of RM 1billion, and a GDV of more than RM 10billion in bag.

With the solid performance of Euro's share price recently, I would like to reaffirm on the potential of Euro in the coming days which will be coming in a stronger note.

Meanwhile, congratulation to the newly appointed management team in Euro as we believe they will drive the company into greater heights.

Bone's short term TP : RM 0.88 (Maintained)

Cheers and have a nice day.


Tuesday, 14 October 2014

Mieco - Riding on Typhoon

The latest world calamities definitely had Typhoon Phanfone and Typhoon VongFong on the headlines, especially when Typhoon VongFong had been categorized as a super typhoon, reaching a breaking speed that is greater than 257 kph (160mph), putting it as the greatest and strongest typhoon on earth for 2014's record.

Japan had been a country that is plagued with typhoons, however, typhoon that is of this quarter of the year had been seemingly more destructive and more dangerous than the previous typhoons that Japan had encountered this year. With Typhoon Phanfone just sweep through Japan, Typhoon VongFong had made is debut in Okinawa, and will be looking to visit Tokyo in Tuesday.

While the gloves sector had been seeing as a beneficial sector due to the ebola widespread, with Japan stricken with a couple of destructive typhoons, it will never be too late to look into the timber chipboard that will be an imminent ingredient in the reconstruction of the typhoon stricken area.

Topping the chipboard manufacturer will be Mieco Chipboard Berhad (Mieco - 5001)
Mieco had been trading at the range of RM 0.45 before seeing a strong breakout, leading the stock to hit a high of RM 0.60 in the middle of September 2014. Mieco had been seen as well supported with convincing volume being transacted at the range of RM 0.45 to RM 0.60 with the outlined vertical lines in red. While the recent correction had send Mieco lower towards the range of RM 0.45, Mieco should be able to see a strong rebound in the coming days at the back of an increasing order and turnaround year which is backed by the rebuilding and reconstruction of Japan.

Mieco - Roaring with Typhoon

Mieco, incorporated 41 years back then, had been envisioned to see it as a world leader in the manufacturing of particleboards with a special emphasis in high quality and value added wood based products. Till date, Mieco had one of the single largest particleboards line in the Asia Pacific region, located at Kechau Tul which had started operations in 2005. The plant had attained the MS ISO 9001:2008 Quality Management System and had it's product marketed to more than 20 different countries around the world.

On 2009, Mieco put another breakthrough after it's product had been certified the Japanese Industrial Standards, JIS 5908 on April 2009, putting a strong confidence on the quality and reliability of products. Then Mieco went further to be certified with California Air Resource Board (CARB) Phase II in January 2011, demonstrating the compliance of Mieco's composite wood products with California Code of Regulations for the US Market.

As of the 2Q of 2014, Mieco's revenue shot up to RM 88million, which is a RM12 million increase from the previous corresponding quarter. Mieco had netted an EPS of 1.44 cents, and will be looking to return into the black for FYE 2014 soon. With Mieco trading at a 62% discount from it's NTA of RM 1.21, Mieco definitely had a great prospects for a row of capital growth.

Mieco's fortune came when weather forecast analysis had predicted on a destructive typhoon that could be visiting Japan after a deadly Typhoon Haiyan that had stormed parts of Philippines into a wreck. The forecast had sparked the higher orders of chipboard that will be needed in the wake of the reconstruction after the aftermath.

While Typhoon Phanfone had done it's damage, another follow up by Typhoon VongFong had definitely added salt into the wounds as more than 200,000 citizen staying at Okinawa island had been ordered to evacuate their houses as the huge storm rip the roofs and walls of the houses. Although the storm had seen a reduce in speed, it is still destructive enough to uproot trees and put more than 60,000 homes without power supply.

A space view on the Typhoon VongFong heading towards Tokyo which will be landing on Tuesday.

I believe that Mieco will be an interesting counter to be look at currently before the mass media starts to unveil the damage that had brought to Japan from Typhoon Phanfone and Typhoon VongFong. Japan is prepared and ready to rebuild their cities after the aftermath from the typhoons.

Mieco will be of a good outlook with the following pointers
- Strong beneficiaries of the reconstruction of typhoon stricken cities and town.
- Certified industrial products by Japanese Industrial Standard - JIS 5908.
- Stronger revenue on 2Q 2014 with higher book orders, Mieco looking to turn into the black for FYE 2014.
- Trading at 62% discount from NTA of RM 1.21.

Mieco will be looking to see a quick challenge at RM 0.50, and a short term price will see Mieco looking at RM 0.55 to RM 0.60. Should Mieco being able to maintain and continue to grow it's sales, Mieco will be looking to settle at the range of RM 0.80 in a longer term outlook.

Join the typhoon? You decide.
Bone's short term TP: RM 0.55

Cheers and have a nice day


Tuesday, 7 October 2014

Euro - Time's Up

The latest development that had been happening in Euro Holdings Berhad should by now resembled a known and informed issue by a group of traders and investor in the KLSE market.

Let's have a quick outlook at the latest price chart of Euro.
Euro had been consolidating in a healthy manner after the spike up in the middle of July 2014. While the highest transacted price is RM 0.70, Euro's consolidation for the past 3 months had been in a convincing manner after seeing a lower volume consolidation, signalling a sign of saturation. Euro will be looking to challenge further above RM 0.70 with a series of corporate exercise that will be coming in with possibilities of private placement, bonus issues and asset injection that is worth more than RM 1billion in the coming days.

Euro - Playing On Tight Cards

The latest corporate event is on the RM 0.44 take over offer that is offered by the consortium of Dato Sri Choong Yuen Keong @ Tong Yuen Keong, Dato Tong Yun Mong and new emerging shareholder Tee Wee Sien. Let's look at a few important highlights that the public should be aware of in the take over offer circular.

Little known Tee Wee Sien had been involving in property development in 2009 after joining up with his best friend and partner, Mr Eric Low See Ching (current deputy CEO of Oxley) to team up with Mr Ching Chiat Kwong in Oxley. Mr Tee Wee Sien had been snapping up Oxley shares in the SGX market lately, upping his stake to 12.05%, a 0.02% up from his previous substantial stake of 12.03% as recorded in Oxley's 2013 Annual Report

With this in line, what could be possibly brewing in Euro in the coming days?

An extract from the circular had highlighted the future plans and direction of Euro, which is to focus on growing its property development business. This will ultimately place Euro as an upcoming property developer from it's current position as a furniture maker.

While Euro is on the verge of becoming a property player, the consortium of Dato Sri Choong Yuen Keong, Dato Tong Yun Mong and Tee Wee Sien may rationalize and/or restructure Euro towards the readiness of becoming a property player.

Currently Euro with only 81million shares and at the price of RM 0.66, Euro total market capitalization is just a mere RM 52.65 million, which will be paving way for a series of corporate exercise which will be seeing a high possibilities of Capital Reduction, Private Placement and Bonus Issue to enhance the liquidity of the share.

To recap back, Beverly Heights Properties Sdn Bhd had acquired 30 acres of freehold land in the northeast side of the Penang Island, which includes 19 acres of the Pepper Estate land. The current land value at Tanjung Bungah and Tanjung Tokong had been earmarked at a range of RM 500 to RM 1000 per square feet after the reclamation work that is done in the STP 1 which had shot up the land prices at that area. Based on the strategic location of the 30 acres of freehold land in a prime area of Penang Island, a skeptical estimation of RM 800 per square feet will be reflecting a booming value of more than RM 1billion in asset.

With all the solid happening in Euro, from shareholder buying huge stakes, and an official circular, notifying the new direction of Euro in the property market, and the emergence of Oxley substantial stakeholder Mr Tee Wee Sien as the director of Euro had everything to point at Euro to see the prized asset injection into it's portfolio.

To add on to it, Euro had been really lacking in showing it's true value on it's already owned assets and properties spanning a list of Freehold land in some strategic areas of which some had not been revalued since 1997.

Independent advice circular from DWA Advisory Sdn Bhd had also outlined the undervaluation of Euro existing assets and properties in reflection of the take over of RM 0.44 cash offer from the consortium, and had then advice the general public to reject the offer of RM 0.44 that had been made.

According to DWA Advisory Sdn Bhd, the RNAV of Euro is RM 1.03 per share. Source - Bursa Malaysia


To conclude, shareholder should not only reject the offer, however, at the current price which is below RM 0.70, Euro will be good for existing shareholders to increase their holdings, and also to public to lock a position in Euro as Euro will be the next prominent property player in the Penang Island after E&O, with more than RM 10 billion worth of GDV to be launched in the prime area. To put it right, Euro will be a possible replicate of Ecoworld in the coming days. With Euro currently below RM 0.70, it had nothing much to lose based on it's existing business, assets and properties, however, everything to win because of the future exploding potential in the upcoming development.

In short, Euro will be looking to trend higher in the coming day as time is running out. A short term outlook will place Euro trading above RM 0.70, while a longer term outlook will see Euro trading above RM 1.00.

Euro - On a Dragon Roar
Euro - Unleash the Dragon

Bone's short term TP : RM 0.88 (Maintain)

Cheers and have a nice day


Friday, 3 October 2014

Supermax - On Hot Shots

The global equity market had been shedding off trillion in value after seeing a strong note of profit taking and selling down which had took the market into a correction. Many are still puzzle on whether this is a correction on the existing bull run, or the start of the economy slow down effect in the equity market. To put more confusion into the decision making of the investor and trader, ECB had announced it's decision to keep the interest rate at 0.05% and outlined an asset buying program that is to be started this month. While Ukraine and Russia had negotiated a truce, the latest shelling near the Donetsk's Airport had put the truce on the thin line again. And October will be a month where the US bond buying program will see a stop, raising speculation of a earlier than expected interest rate hikes which had sparked a strong buy back on the USD as US Funds are selling their foreign holdings and cling on to the USD.

While all these had been happening, the seemingly yet to be controlled Ebola Virus had reportedly spread it's wing into the US after Texas confirmed on it's first case of Ebola Virus infection on Thomas Eric Duncan. Currently, more than 80 people that had been in contact with the patient is under monitoring from the state. The deadly virus had infected more than 7,200 people in Africa and had then taken more than 3,300 lives.

With all this global event (Stronger USD and Ebola Virus Pandemic) that is happening, Supermax would somehow looking to call the shots as both event had inevitably benefit the glove sector.

Let's have a quick look at Supermax latest price chart.

Supermax had reached quite a bottoming level after sliding down from a peak of RM 3.00. However, Supermax will be looking to challenge higher after consolidating at the range of RM 2.25 for 2 months with double fuel boost from stronger USD and Ebola Virus Pandemic to charge Supermax into higher ground in the coming days.

Supermax - All The Reason For An Uppercut

Supermax had a very funny character with the KLCI - Inverse Relationship. Let's have a quick look on Supermax and the performance of KLCI from December 2013 to the current level.

From the past, Supermax had successfully displayed a relatively strong inverse relation towards the movement of the KLCI. With the current global market development, the KLCI will be looking to inch lower, possibly towards the support range of 1800 in the coming days due to :

1.) Stronger USD against the MYR.
2.) Ongoing Ebola Virus infection with no proven and guaranteed vaccination at the moment.

The USD will be looking to get stronger in the coming days due to the anticipation of a earlier than estimated interest rate revision from the Feds after the last tranche of bond buying program ends in October this month. The steep and strong pick up of the USD against the MYR will be looking to hit MYR 3.40 against USD 1 in the coming days.

Supermax which trades gloves in USD will see a boost on top of another boost after expecting a rising demand in gloves from the US and European Country amidst the Ebola Virus infection while riding on a stronger USD with will translate to a greater gain in forex.

Supermax will be even more interesting after being looked as the only laggard in the gloves industry that had saw it's competitor charging up.

1. Hartalega Holdings Berhad - 5168

2. Kossan Rubber Industries Berhad - 7153

3. Top Glove Corporation Berhad

4. Careplus Group Berhad

In a conclusion, Supermax is just another big bomb that will explode upwards in the market of red sea. Supermax will be a good counter to be traded / invested based on :
- Stronger USD outlook against the MYR, with a projection of reaching RM 3.40 for USD 1.
- BNM had just recently announced the unchanged OPR at 3.25%, pegging the nation interest rate for at least another quarter to half year period, hence putting away speculation of a sudden increase in OPR to counter the currency outflow.
- Rising global concern on Ebola Virus infection, with 1st US patient confirmed in Texas.
- Supermax being a laggard compared to all it's peers which had responded towards both the events
- Supermax to see factory expansion producing more output in FYE 2014.

A quick outlook will see Supermax challenging RM 2.50 based on approximately 10% capital appreciation from the current level of RM 2.24. Supermax will definitely be the next big thing in KLSE with all the factors lining up for a great run upwards.

Punching in? You decide.
Bone's short term TP: RM 2.50

Cheers and have a nice day


Thursday, 2 October 2014

October Highlight - Bornoil - Gold Blast

Borneo Oil Berhad (Bornoil - 7036) was used to be known as Sugar Bun Corporation Berhad back then before 2007. However, due to the company new direction in it's involvement in the downstream oil and gas, renewable energy and mining, Sugar Bun Corporation Berhad had since then changed to Borneo Oil Berhad to reflect the diversified business in the group. Currently under Bornoil's active business portfolio includes
- Gold Mining Division
- Fast Food Franchise Division (Sugar Bun)
- Oil and Gas Division
- Property & Management Division

Let's have a quick look at the latest price chart of BornOil.

BornOil had been consolidating at the range of RM 0.65 for a period of 9 months. The consolidation had saw a series of saturation and will be looking to see a new burst of volume visiting Bornoil after a corporate exercise which had saw a PAR value reduction of RM 0.90 from RM 1.00 which is effective on 25th September 2014. Bornoil will be looking to trend higher in the coming days ahead, and will be on a positive mark in breaking RM 0.70 convincingly.

While the mother share had been looking promising, BornOil-WB will be an even attractive target after being traded with a 6.8% discount from the mother share, as exercise price is being revised to RM 0.10, putting BornOil-WB into a huge discount. At the current closing price of BornOil at RM 0.66 as of 1st October 2014, BornOil-WB should be trading at RM 0.56 after exercise price had been revised to RM 0.10. To put it more interesting, the expiry of the warrant is slated at 28th February 2018, putting it more attractive to be trading at a premium instead of a discount.

BornOil - Gold Rush

BornOil had finally found it's way to a golden land after securing a gold mining contract from Champmark Sdn Bhd for gold prospecting and mining on a 400 acre area for 5 years and renewable option of another 5 years in Merapoh, Mukim Batu Yon in Lipis, Pahang. To recap back, MMC Corp Berhad had leased the mining land from Perbadanan Kemajuan Negeri Pahang which in turn contracted it to Champmark Sdn Bhd for mineral prospecting and mining.

In June 2014, BornOil had successfully recovered 43.5 kg of gold (current market worth RM 5.655 million) after processing 187,255 tons of alluvial which contain gold dust and fragments. Back then at 2012, Minarco Mine Consult had a site study and estimated around 4.02 tons of gold in the alluvial. However, a further study conducted by Professor Li Sezhuan of Champmark Sdn Bhd had indicated that the site might contain an estimated 30 tons of both indicated and inferred gold reserve (Worth RM 3.9 billion at RM 130,000 per kg) - Source (The Star - BornOil look for Gold in Pahang)

Currently, BornOil is operating in area 4-1, whilst another 6 more gold mining sites will be operation in the coming days once the green light is given by the authorities.

Whilst the Gold Rush had been the most interesting and exciting development in BornOil, it's longest operation asset - Sugar Bun, will be looking for a greater expansion in the Johor, Sabah and Indonesia. BornOil appointed franchisor SB Franchise Management Sdn Bhd had awarded an exclusivity to Indonesian firm PT Mitra Adidaya Perkasa to operate Sugar Bun restaurant in Jakarta, Medan and West Kalimantan which will see 20 new outlets to be set up by 2018. The first outlet will be phased in Ayani Megamall, the biggest shopping mall in Pontianak, West Kalimantan.

To further spice up the whole prospect in BornOil, the involvement in downstream Oil and Gas which focuses in bio diesel storage tank facilities had also kick out with a contract secured from Shell Timur Sdn Bhd for the engineering, procurement, construction and commissioning of 2 palm oil methyl ethylene bio diesel storage tank facilities in Kuala Baram, Miri and Labuan. With the government initiative to support a bio diesel roll out plan in the whole Malaysia in 2015, BornOil will be seeing more contracts in this division in the coming days ahead.

Current Catalyst

To fully kick start all the planning and to put them into work, BornOil estimated a need to raise a total of RM 35.5 million through a 20% private placement earlier in July 2014. The RM 35.5 million raised will see an allocation of RM 10million for new mining plant and equipment, RM 5million for gold exploration activities, RM 5million for new fast food central processing plant, RM 4.63million being PAR value of RM 0.10 for 46,248,000 new shares from private placement, while the rest will be used for repayment of hire purchase and expenses related to corporate exercise.

To raise RM 35.5 million from a 20% private placement, or 46,248,000 shares, the price for the private placement must be above RM 0.7675 in order to reflect the proceed.

RM 35,500,000 / 46,248,920 shares = RM 0.7675 / share

However, while the private placement had been fixed at RM 0.56 per share in 25th September 2014, raising approximately RM  26 million, BornOil current ongoing gold recovery in Merapoh will had saw a further convincing result that will be looking to spiral the company further.

BornOil will be looking to recover at least 250 kg of gold in the end of 2014 in the current operation. which will be worth RM 32.5 million.

I believe BornOil will be an interesting counter to be looked upon in the coming days. With the huge potential into tapping a huge reserve of gold amounting to 30 tons which is worth RM 3.9 billion, a skeptical 50% slash cut will still put the figure at RM 1.95 billion worth of gold to be recovered. Currently trading at a 30% discount from it's NTA at RM 0.95, BornOil will be a shining leopard in the coming days.

In summary, Bornoil will be good for a long term outlook based on
- Potential tapping into 30 ton of gold reserve worth RM 3.9 billion
- Fast food arm - Sugar Bun, expansion into higher populated area such as Indonesia
- Involved in the downstream sector of the Oil and Gas, focusing in Bio Diesel tank storage which will see great prospect in 2015 once government open up whole Malaysia for Bio Diesel program
- Already secured several contracts from Shell for the engineering, procurement, operation and commissioning of the Bio Diesel storage tank in Kuala Baram, Miri and Labuan.
- Trading at 30% discount from NTA of RM 0.95

Place in your cards? You decide.
Bone's short term TP : RM 0.75

- The Star
- The Borneo Post
- The Edge Malaysia

Cheers and have a nice day