Monday, 5 December 2016

Not a PPAP, but PA in Gunung

Today I am going to share to you on how to apply "Personality Analysis" in the upcoming mind blowing stock for 2017.

Of course, there are a lot of well known investor in the world. High profile names in the equity market like Warren Buffet, Jesse Livermoore do not need much introduction. On the local Malaysian scene, there too are a few mention like Koon Yew Yin, Fong Si Ling nicknamed Coldeye and Dr Neoh Soon Keat.

So if today I am going to write about all this well known people, I will be wasting your time reading all these information because all their tactics and investing fundamental are already well known to the majority public. In fact, most of their investment method are well easily available in book stores and even online. For me to write and publish them here will be altogether redundant, and I would dare to take it up as you will agree to what I am saying, right?

Liken to my stock pick, I would always like to pick on something that is not heated up so much in the market.

So let me show you some proof of my picks based on the recent heatedly discussed counter

1. Gadang
This is a much over heated discussed and debated counter in 2016. Due to the fact that Koon Yew Yin had publicly promoted this company on it's future prospect. So what about me?

On the 5th of July 2013, I had written on Gadang - Ripe for Ride. That time, Gadang is just RM 0.80. You would be saying, I could be just lucky to be able to poke my nose here. But I am here to tell you that all these are no luck, because I am well involved in some sale and marketing of Gadang project. I am involved in the sale of the maiden project of Gadang - The Vyne at Sungai Besi. Block A was fully sold internally by staff and their relatives, and Block B is fully sold in just 2 weeks to the public. Back then, prices are selling at 500 psf, but the frantic buyers are rushing just to buy with eyes close. Due to the fact that a few of my friends are in construction line, they informed me that at RM 500psf, the real construction cost is just 50%. And that is the time I took Gadang seriously, and gave him a good ride with long term TP RM 1.50 to RM 1.80.

However, due to the fact that Gadang plan for bonus issue, the counter got over hype and shot through RM 3.00 in 2016.

Of course at the high price of RM 2.00 and RM 3.00, I will not ask people to invest in Gadang already. Albeit the heated discussion and promotion, that is just not me doing a promotion at such a high price.


2. Ulicorp
Another worthy mention of my selection in Ulicorp on 12th February 2014, Ulicorp - Towards An Ultimate Front. That time, it was just swinging at the range of RM 1.05.

Yet another coincident? That's rightfully wrong to say that. This is no coincident because at that point of time, I can see that the local construction scene is taking up a boom due to massive new development taking up, buyer rushing in frantically and pushing up demand. So as a sensitive investor that can smell Gadang, Ulicorp is nothing to be missed due to the fact that this company work hand in hand with most of the developer in providing cabling services that is totally essential for any new development.

The rest is history, Ulicorp took away until a peak of RM 6.50. Despite a recent huge drop to RM 3.50, that is still 350% in record for 2.5 years holding.

3. KESM
So let's put aside construction, I too look into electronics like semiconductor. So I recommended KESM at the range of RM 5.30 before a equity shake up (KESM - Burning Higher) and reinfornce a buy call to add RM 4.30 (KESM - The Rose Among Thorn) as well. Despite some asking member to cut their KESM during highly pressured moments, this counter is now in great blossom, trading at the range of RM 10.00.

Well I have a lot more, and that will take you up more than 3 week to finish it.


So back to my main point, I know many are preaching FA (Fundamental Analysis), TA (Technical Analysis), but I would like to share to you my approach on Personality Analysis in Gunung now.

So who is worth a good mention in Gunung now?

For this, I will not talk about Gunung first, but guide you into Appasia, one of the latest hot mention in KLSE. So how hot it is?
Not very hot, just from 10 cents to 35 cents 4 months. Good enough? Can it get hotter?


Wow, look at this. We had got Nazifuddin on board this boat. You know what magic can Nazifuddin (son of prime minister) do in the market, right? Then Ooi Hock Lai as the 4th largest shareholder? Wow, who is this Ooi Hock Lai?


According to Annual Report, as of 10 Feb 2014, there are no mention of Ooi Hock Lai as one of the large substantial shareholder.

So in 2016, Ooi Hock Lai shareholding is standing side by side with Nazifuddin in Appasia. If it takes a lot of your study to invest RM 100k into a counter, then for Ooi Hock Lai to invest approx 2 to 3 million should not be a blind bet after all, right? So to put it forward, I would have high credible assumption that Ooi Hock Lai is well connected and also well knowing on the underlying development of a company once he is invested into it.

So where are the other traces of Ooi Hock Lai ?



24.26 millions of share in Gunung, and that is like 10.27% stake!


So now that you had seen how Appasia throttling 350% in just a short time frame, I don't know what magic can do to Gunung in 2017.

By now, you can see I am on a very hard sell mode on Gunung. But is alright, I am hard selling it when it is still low, and there are still margin for appreciation. After all, what is share market? This is a market where you share, share out your thoughts, share out your points. But of course, the most important is to share something beneficial at the right time.

Have a nice week ahead.



Since 2016 is Ekovest, then 2017 will be Gunung

With the current fire starting to grow stronger in Gunung, I would like to tell you why this is the best time for you to hunt into Gunung before it is too late for you again.

To recap 2016, one of the hottest super star in the KLSE could not be completed without the presence of Ekovest Berhad (Ekovest 8877) as one of the top 3 star, if not, Ekovest could potentially be the no.1 top star in 2016. Albeit taking a slow start in the 1st quarter of 2016, Ekovest started it's throttle in 2nd quarter of 2016, and the momentum continue towards November 2016, which saw the share price picking up from a lowly RM 1.00 to peak of RM 2.60 in just 8 months, chalking up 260% in capital appreciation.

Now what had Ekovest got to do with me? To recall the event, I had been been putting Ekovest as a prime target since August 2015. Yes, I am telling you that it is August 2015. And that is the period of time where Ekovest do not have any good earning, no trading volume. And to make it brutal, technically nobody is giving me a "hoot" on what I am talking about on Ekovest during that period of time, because it is apparently a dead stock without player, without volume, without excitement and a dull flat laying counter.

At this instant, you could be wondering, where the heck did Mr.Bone talk about Ekovest ? It is not even being featured inside his personal blogging journal. Little do I need to inform you that I actually do have a small group chat that talk about stocks. And apparently, I had been "promoting" on Ekovest during that period (All the way back starting from August 2015). Of course, some of them are smart enough to take my word seriously and caught a good journey later on. However, I would lament that they deserve it and should be rewarded with this good profit for their patient on holding into this stock for almost 1 year.

Now that Ekovest had become a full blown flower, it could technically take some time for adjustment and consolidation after a series of projects and asset sale that help boost up the share price of Ekovest. While this is a good event after all, I do feel a little bit incomplete due to the fact of me missing a small writing on Ekovest in my blogging journal, probably I had gone lazy and have it auto running. As for Gunung, now I will not want to waste this journey again.

So by now, you would be wondering what does Ekovest had to do with Gunung ?

What if I am going to tell you that Gunung could be the "Ekovest" of 2017 - 2018 ?





VS



With this, I am going to use a comparison on commonalities of both company.

Firstly, both of them have corporate exercise to enlarge outstanding share. For the case of Ekovest, it is a share split for 1 to 2, putting it's par value to RM 0.50. As for Gunung with RM 0.40 in par value, it is a bonus issue of 2 to 3.

Secondly, both of them have right issue with free warrants. Right issue to raise fund for new undertaking and compensate with warrants to avoid instant dilution. So that is why you see Ekovest having Ekovest-WB, and for Gunung is Gunung-WB.

Third commonality is both are well connected politically with the ruling government. Like it or not, I definitely have to tell you that politics play a large influence in company performance. And having your foot with the ruling government definitely put you in the upper hand. For Ekovest, Datuk Haris Onn Hussein, which is the brother of Datuk Seri Hishammudin (Defense Minister), having 20% stake in Ekovest. As for the case of Gunung, Dato Syed Abu Hussin (UMNO Division Chief of Bukit Gantang) also have more than 20% of stake in Gunung.

Fourthly, both company have asset generating recurring revenue. I would highlight this being a very important point, as this is one of the major fundamental backing the business, attracting institutional fund and investor to invest in the company. And EPF had announced recently that they are looking for more recurring income base investment. For the case of Ekovest, they have DUKE Highway, which is suitable for the investment portfolio of EPF. The purchase of DUKE highway from Ekovest is also one of the major factor on why Ekovest saw it's share price spiraling upwards without brakes. What about Gunung? With approximately 140MW of renewable energy through mini hydro electric from streams of river in Perak, a 21 years REPPA  (Renewable Energy Power Purchase Agreement) concession is definitely an infrastructure that will generate solid recurring income.

So since both of them have so much identical trend, I would like to put this in a similar time frame comparison, what is going to happen to Gunung in 2017 would be looking to take your breath away!


Boombastic Projection!!! If this is all accurate, this is the start of the fire cracking point.

Now that Prime Minister had asked all UMNO members to prepare for GE14, this is the one last piece for the puzzle that we need to see for Gunung to be completed in 2017!


Now, what are you waiting for? I am definitely excited for Gunung coming 2017. For first instance, 60 cents perhaps? Don't hesitate anymore, if not you could become another batch of sour grapes.

See you in 2017 with a top booming up Gunung!!



Tuesday, 29 November 2016

Just 3 Simple Reasons For You to "Hoot" Gunung

Gunung Capital Berhad (Gunung - 7676) should be a no stranger since my previous introduction in my blog entitled Gunung - Hydro Pumped. But of course, if you still do not know what is the business of Gunung, and future prospect of this company, here is a brief summary for your easy reference.

Basically, Gunung is engaged in land logistic chartering business, which provides buses to national services and several local universities. However, the future long term business will be the largest mini hydro renewable energy player in Peninsula Malaysia, with all the sites in Perak. Gunung will also be the master developer of all mini hydro renewable energy site in Perak through it's 51% effective stake in PHREC (Perak Hydro Renewable Energy Corporation).

Now, I would want to list down to you why you should get your position in Gunung before this counter explode above RM 0.50. Gunung had closed at RM 0.475 on 28th November 2016.

Here is a simple 3 reason for you to hoot Gunung into your portfolio.

Reason 1 - Selling Renewable Energy is liken to IPP
The first reason is there are still many retailer in the public that do not know Gunung had a change of business direction. Even if they know, they could had forgotten about this because this news is much highlighted then during 2013, 2014. Back then, the hype of the news is not backed with earning from the division. However, right now at the end of 2016 and going into 2017, Gunung already invested into the infrastructure, and these mini hydro are going to turn the inertia of the flowing waters that flows from the river stream in Perak into electricity, and then sells it back to TNB through a REPPA (Renewable Energy Power Purchase Agreement), which is then the revenue for Gunung.

While renewable energy do not come in a large scale like coal fire power plant which can generate capacity up to 900MW, Gunung is considered not bad after all, with installed capacity of up to 140 MW (according to Annual Report 2015). For 140MW, we are talking about RM 150 million in annual recurring revenue from PPA, now this is something commendable.

So, if TNB, YTLPower and Malakoff is so sought after by institution because of their defensive nature of revenue through generation of electricity, now Gunung is a company with multiple PPA with 21 years feed in tariff signed, right in front of you. What are you waiting for?


Reason 2 - Dato Syed Abu Hussin Took Position at RM 0.52
The second reason is based on major shareholder and executive chairman, Dato Syed Abu Hussin purchase price of RM 0.12 in Gunung warrant (Gunung-WB), I am definitely looking at him putting in RM 0.40 exercise price per share in the coming future to reap dividend benefits. That would priced his purchase of the mother share at RM 0.52.

With the price now being at RM 0.475, it would definitely be a good buy for a long haul.


Reason 3 - Gunung Break Out from Long Term Downtrend
The third reason is that Gunung had broken away from it's long term downtrend line after 2 years. This is something not to be overlooked as the break out is backed with the commencement of the mini hydro renewable energy.

While the break out can be accommodated by buying from institution, emerging market funds, syndicate or high profile investor, however, you must know that who is behind the break out is not a very important question.

The most important question is, are you inside Gunung during the breakout and uptrend?



While I had laid my 3 simple reason for you to see the future prospect of Gunung, the rest is up to you to decide.

Bone's short term TP: RM 0.60 (Upgrade)

Long term : Hold 10+ years

Thursday, 17 November 2016

OKA is shaken down for a good buy up

OKA Corporation Berhad (OKA - 7140) had been one of the better performing company dealing in precast concrete products in the KLSE despite the global challenges in volatile currency and low crude oil prices.

I had first covered on OKA back on 9th May 2016 (OKA - Topping The Packs). OKA was trading at the range of RM 1.05 then, with a forecast of the company to deliver FYE 2016 with an EPS of 13 cents.

As a result, OKA indeed delivered FYE 2016 with 13.07 cents despite the lower revenue compared to FYE 2015. The share price of OKA peaked out at the range of RM 1.35 for 3 months, with the highest transacted at RM 1.38.

However, the current sell down in equity market could had opened up a new buying opportunity into this stock, especially for investor who had missed the previous run.
Based on the latest known Q1 FYE 2017, OKA continue to deliver it result with a growth in revenue with improvement in the EPS.

Whilst 2017 will be a difficult year, I continue to believe that OKA will be able to withstand such headwinds, underpinned by strong local demand from local infrastructure projects from MRTs to Highways. The latest inclusion of ECRL into the budget continue to underpin demand in precast concrete.

To put a quick recap, OKA is unique from other precast concrete player due to some of it's specialty products that are proven and acceptable in the market. One of it is the "Porous Concrete Pipe" that is vital for the development of highway and railroads.

Beside that, new development of township that is sprouting in Malaysia will also put in demand for such pipes in use. This pipe is essential for land drainage because of it's ability to rapidly remove water by letting the water sipping through it's porous surface.


OKA continue to deliver increasing profit after tax for 5 consecutive years. One of the reason is due to the improving profit margin from due to savings in operation and inventory management.

Technical Outlook


Although OKA might had look bearish after breaking down from it's uptrend support line, the fall is attributable from an ex-date of dividend which at the same time saw major market sell down from the US presidential election.

Can OKA return to it's position at the range of RM 1.30 soon? Should the coming financial quarterly be satisfying and being able to deliver above EPS of 3 cents, OKA will definitely have a strong chance to rebound back to it's glorious form. Of course, based on it's past record, it is safe to assume that OKA can deliver for Q2 FYE 2017.

Given it's total dividend of 5 cents in 2016 and a solid performance, it is quite a good bargain to begin with at the current price range for OKA before it got swoop up by others.

Bone's TP : RM 1.30

Wednesday, 16 November 2016

AYS can be your November's Bargain

AYS Ventures Berhad (AYS - 5021) came from humble beginning, founded by Mr Oh Chiew Ho in 1982 which started as a trader, stockist and distributor of various steel and construction material before expanding into manufacturing of it's own wire products. To date, AYS has evolved into one of the major steel trader and stockist in Malaysia, specializing in structural steel products.


With the recent equity shake up in the global market due to the US presidential election that shocked the world with a Donald Trump victory, some good bargain had emerged in the equity market. For this instance, I would believe that AYS would be one of the qualified counter which is suitable to see good bargain at the current depressed level.

As a matter of fact, AYS had not been an interesting counter for the past 3 years. This can be reflected by it's business operation which is highlighted in the latest annual report, where the company is just able to trend at the range of 2 to 3 cents EPS per annum.


However, the recent price spike in base metal commodity could see AYS turning in the fortune. With just into Q1 of FYE 2017, the company had took in an EPS of 2.82 cents. Albeit the lower revenue compared to the previous correspondence quarter, the group had seen better profit margin albeit lower sales prices in their products. The earning of Q1 2017 is more than what AYS had managed for the whole financial year for FYE 2015 and FYE 2016.


While the market had mixed feeling and reaction towards the steel industry due to glut and slowing down consumption, it is cushion by safe guard tariff that is imposed by the MITI recently. Now, local steel player had protection in cold rolled coil and long HRC steel products.

As a matter of fact, the recent financial quarterly that is reported by Ssteel, generating 4.6 cents in earning from a loss of 12.38 cents on the previous correspondent quarter give comfort on the general steel market performance for their coming result announcement.

Taking into a conservative projection, we can estimate AYS to perform generally stronger for FYE 2017, estimation on a FYE 2017 total EPS of 6 cents, which can bring to valuation of RM 0.60 for AYS at PER x 10.


On a technical basis, it can be seen that the share had been hit down by volatility in equity market. However, at the current price, it is quite an interesting level to take position for the next coming quarterly result that AYS is going to release soon in November.

Should the result be satisfying, AYS can look towards trading above the resistant of RM 0.36.

Bone's Mid Term TP : RM 0.40

Friday, 11 November 2016

Gunung - Hydro Pumped

Gunung Capital Berhad (Gunung - 7676) caught spot light in late 2013 when the company had announces on it's future plan on bringing in renewable energy through hydro electric into it's business portfolio. The company which saw turnaround when Dato Syed Abu Hussin came in with government contracts on land based logistic chartering services that provide services to the National Services.

Gunung had taken a bad shot in 2015 when the government decided to defer it's National Services due to adjustment to the government budget which is widely affected by the slump on global crude oil prices. However, the group had weather out the bad news in a quite diligent manner, managed to scratch through the financial year in a subdue manner.

However, now will be the time to see the harvest in the investment on the renewable energy sector, which is going to generate recurring income from the renewable energy generated from mini hydro electric plant.

Investment into Conso Hydro RE Sdn Bhd

In the 1st Quarter for 2016, Gunung, through it's 90% owned subsidiary, Gunung Hydropower Sdn Bhd, had purchased 50% stake into Conso Light Sdn Bhd for RM 2.5 million cash. Conso Light Sdn Bhd is the holding company with 95% stake in Conso Hydro RE Sdn Bhd, which is involved in developing, maintaining and operating of a 2MW hydro plant at Sungai Geruntum, Kampar, Perak.

Prior to the acquisition, Gunung had an indirect interest of 2.55% in Conso Hydro RE via it's 85% owned Pusaka Hijau Sdn Bhd, which own 60% of Perak Hydro. The investment will see Gunung having an effective stake of 45.3%

The company had secured a FIT (Feed-in-Tariff) approval from the Sustainable Energy Development Authority for it's Sungai Gerundum site with an annual availability of 10,000 MWh.

With the new rate of 26 cents per kWh, this will translate to RM 2.6 million of recurring income from the hydro plant once operation commence in the end of this year.

While the deal look like just another normal paper deal, investor that are familiar with in the renewable energy industry will know that the capital layout for 1MW of renewable energy through solar plant or hydro electric will require a capital layout of RM 10 million. As for Conso Hydro RE Sdn Bhd which carries 2MW mini hydro electric plant, that will require a capital investment of RM 20 million. Hence, a 50% stake will actually relate to a sum equivalent to RM 10 million.

For Gunung Hydro to acquire 50% in Conso Light which is worth RM 10 million in asset (based on Sungai Geruntum mini hydro site) for only RM 2.5 million, that will immediately revert to unrecognized profit of RM 7.5 million.

Aside from the Sungai Geruntum site that is almost ready for commission, Conso Hydro RE Sdn Bhd still have another 2 sites from Sungai Geroh with 1.1MW and Sungai Kundor with 0.5 MW. Both site carry an asset value of around RM 16 million, which had yet to be accounted for as well.
With the completion of all 3 sites, the 50% stake will be carrying hydro plant asset worth RM 18 million.

Do u want to invest in a company that had the way to pay RM 2.5 million cash to acquire asset worth RM 18 million ? You do the decision.

Continuous Share Accumulation from Major Shareholder and Director

Gunung had saw huge accumulation from Gunung major shareholder and director.
The notable individual is Dato Syed Abu Hussin, an executive chairman in the company and a division leader in UMNO, with the latest stint being a off period purchase of 3.3 million of mother share units at RM 0.42, and 2.6 million units of warrant at RM 0.12, which carries an exercise price of RM 0.40 (Translating to a total cost of RM 0.52 to convert into mother share). Currently, Dato Syed Abu Hussin have a total of 22.48% interest in Gunung Capital.


Others individual are Ooi Hock Lai, which gradual purchase for the past 2 years saw his stake increased to 10.27%, executive director Encik Beroz Nikmal with 3.55% and Encik Iskandar Ibrahim through his Aasia-East Capital Sdn Bhd investment vehicle, holding 4.79%.


With all this attractive information available, Gunung is still trading at a lowly 38-40 cents range, in which one of the reason is due to the liquidity and the volume of the company share. However, this will be the most appropriate time for any opportunist investor to lock in their position in Gunung as this stock will be poised to be a star shaker stock in 2017.

Keep watch for the next episode on what is actually brewing inside Gunung that you should not miss as an investor. More to come, don't miss it !

Bone's short term TP : RM 0.50


Monday, 7 November 2016

Insas - Head In for a Northern Ride

Insas Berhad (Insas - 3379) is a diversified group with businesses in technology, property investment holdings, finance, corporate advisory, stock brokering, car rental and logistic. 2 of it's subsidiary which are also public listed are Hohup Construction Berhad (Property and Construction) and Inari Amerton Berhad (Technology).

With the existing state of economy uncertainty, it is vital for investor to seek out for strong fundamental company if they want to stay invested in the market. Beside searching for a company that had resilient business, strong cash backing, one of the most important investing factor that will influence the appreciation of share price the most will be the the company earnings, and the earning per share.

As for Insas, what can we foresee of for it's performance in 2017 ?


Looking at the technical outlook of Insas, it is noticeable that Insas had broken away from a long term down trend line that had been plaguing the counter for more than 1 year. Currently, the share price had saw a solid footing with support at RM 0.70. The counter is seen consolidating at the price range of RM 0.70 to RM 0.75, and will be looking to break above RM 0.75 should a stronger financial quarter prevails. Technically looking, Insas had a tendency of turning uptrend with bullish bias.

Financial Outlook


Despite the challenges poised for FYE 2016, the group had steered through the harsh waves to finish the financial year in a positive note, albeit with a lower revenue and a slightly lower earning per share at 11.64 cents. However, it is good to note that the NTA of the company increased slightly to RM 2.04 per share. To highlight it further, the company cash and cash equivalent as well as financial asset at fair value make up of more than 50% of the company NTA.



While most of the segment had performed well, the biggest drag for the group is from the investment holding and trading segment. This is due to recognition of losses from fair value changes of financial asset. We believe that the financial asset held by the group such as quoted shares in the market had reached a fairly bottom price, hence the losses shall not be look to see a possible repeat for the time being.

One of the notable improvement is the operation profit from the financial services and credit leasing segment, putting up a drastic improvement of more than 100% for the segment alone from a profit of RM 9.6 million to 23 million. The biggest contributor is from Insas Credit & Leasing division.

To support this, RCE Capital Berhad (Rcecap - 9296) which also involves in money lending business had saw booming revenue for the past 2 quarters, which is the back bone reason of the explicit surging of the share price as of lately. Despite the tough market, Rcecap had proven itself with share price appreciated to almost 100% within a 3 months period.



More consolidation in the Semiconductor related technology sector

With the growing reliance of human activities in technology, the semiconductor and related sector will be going to see further consolidation. The advancement in hand held devices and automotive industry continue to see more and more usage of advance chip set in the devices. With self driven car being the hottest development in the technology market now, it had spur big merger and acquisition in the sector. The latest being Qualcomm putting up USD 38.5 billion to acquire NXP semiconductor in order to put up a stronger synergy together.

This will be indeed a good news for Inari Amerton Berhad, which is also in the related field of play. Currently, Inari is having a market capitalization of RM 3.17 billion. Insas 21% stake in Inari will probably valued at RM 650 million.

That will be a jackpot deal for Insas's shareholder if Inari is up for a deal.


On a quick summary, Insas is a rather interesting counter to be monitor at the current level. At the range of RM 0.70, with a strong fundamental background and supported earning, there are strong potential on the counter heading uptrend, supported with a good 1Q FYE 2017 result in the coming days.

Bone's TP : RM 0.90

Thursday, 20 October 2016

Denko - Towards Explosive Growth

Denko Industrial Corporation Berhad (Denko - 8176) had made headline in 2015 when the group had decided to acquire PT Winsheng Plastic and Tooling Industry in Indonesia to expand it's manufacturing capacity in plastic mould injection. Prior to the acquiring of PT Winsheng Plastic and Tooling, the group had yet to record strong stream of revenue from the wholly owned subsidiary. However, related sources are looking forward to see Denko starting to recognize revenue from it's Indonesian arm in the 2H of 2016.


Supplier for Dyson's product

Aside from providing plastic injection mould services for electronic and electrical brand such as JVC Kenwood, Pioneer, Fujitsu, Olympus, Schneider Electric, one of it's core customer is Dyson. Dyson is well known for it's wind based solution electrical product from blade-less fan, air blade technology hand dryer, and with the latest being Dyson handy hair dryer.

The hair dryer that had a similar resemblance of the blade-less fan is the latest product from Dyson, where it is small, light but yet powerful if compared to it's own range of competitor.

Familiar sources are looking to see Denko seeing contribution of revenue from this product from Dyson, not withstanding future Dyson product in the pipeline which is currently under development.

Aside from Dyson, Denko also strives to benefit from other plastic mould injection products.

Technical


Based on the price chart of Denko, the share could had saturated after a 9 months consolidation. As the share had detected some fresh buying movement prior to the nearing of the next quarter release of financial result, Denko is looking in favor in trading towards 40 cents region in the coming days.

With the weaker ringgit for here to stay, Malaysia will become an ideal location for contract based manufacturing and plastic fabrication. In fact, competitor like EG had spent RM 30 million for a new plant in Sungai Petani to cater for more demand. As for Denko, the weaker ringgit is a bonus for as there was large increase in demand for Malaysian manufactured products. Through Denko principal operating subsidiary Winsheng Plastic and Tooling industry, it is an indirect exporter by supplying plastic parts to it's multinational customers who are the exporters.

Aside from making investment into complex machinery, the group also invested into human resources to provide a one stop solution for clients, from CAD designing until assembly.


At the current market capitalization of RM 38.6 million with 104.468 million shares, it is expected that once it's Indonesia unit start to achieve operation of scale, it will greatly contribute to the EPS of the group. At the current share base, it will be easy for Denko to achieve a stronger EPS for FYE 2017 when operating in full capacity, which can potentially see an EPS of 5 to 6 cents per annum.


Bone's TP : RM 0.45

Monday, 17 October 2016

Suria - Budget 2017 Fireworks

Suria Capital Holdings Berhad (Suria - 6521) is a Sabah based company that had multiple business from port operation, logistic and bunkering service, civil infrastructure contract and engineering service, ferry terminal operation, property development and investment. However, Suria core business will be port operation, as Suria is in charge of 8 ports in Sabah, namely, Sapangar Bay Container Port, Sapangar Bay Oil Terminal, Kota Kinabalu Port, Kudat Port, Sandakan Port, Tawau Port, Lahad Datu Port and Kunak Port.

With the challenging business environment in the global front, volatile currency, business had been hard for logistic company such as South Korean Hanjin Shipping that had succumbed to the ill market. As for the case of Suria, in order to remain it's competitiveness in the port operation in the region, the choice will be in the upgrading of infrastructure and facilities in the region.


A prime beneficiaries for coming Budget 2017

On of the most appealing factor to take note on Suria is due to the coming Budget 2017 announcement which will indefinitely benefit the group in an overall manner. For the past couple of budget, it is noted that there isn't much major infrastructure announcement in Sabah, unlike the infrastructure development in Peninsula Malaysia such as the KVMRT, LRT, numerous highway, as well as the Pan Borneo Highway for the Sarawak section.

For the coming Budget 2017, Sabah is finally looking to see major infrastructure upgrade that will connect all port in Sabah through railway line. Sabah Ports Sdn Bhd that operates 8 ports in Sabah is the wholly owned subsidiary for Suria. It is a plan for Suria to turn ports into a one-stop for BIMP-EAGA region. (Brunei, Indonesia, Malaysia, Philippines, East Asean Growth Area). According to familiar sources related in the development of this area, it is been informed that the planning is already at it's very advance stage now, and it's only waiting for the Federal Government to include this mega infrastructure project into the upcoming Budget 2017. The whole development could be looking to see no less than RM 5 billion in an overall manner. However, the project will be looking to be separated into a few packages.


Suria a potential Project Delivery Partner

Beside then port operation, Suria have a division for engineering and construction. While this division had not generate much revenue as of lately, we see that Suria will be one of the Project Delivery Partner in this railway construction that will connect all 8 ports together.

Back then in Year 2008, Suria has won a RM 8.5 million job from KTM to build additional signalized railway crossing on the rehabilitation of the Sabah Railway project from Tanjung Aru to Tenom.

Another potential candidate that will probably be teaming up in Suria will most probably be Gabungan AQRS Berhad (Gbgaqrs - 5226) based on the their track record in KVMRT 1. To recap, GbgAqrs alongside with SBCCorp had entered into a joint venture agreement with Suria to development a total of 23.25 acres in One Jesselton Waterfront project, in which the project had recently obtain the sub division of the master land title. GgbAqrs is joint venture portion is 7 acre, which carries a total GDV of RM 1.8 billion. It is also worth to take note that the major shareholder of GbgAqrs, which is Ganjaran Gembira Sdn Bhd had been actively mopping up share in the open market for the past 5 months.

Fundamental Outlook


The lower revenue on this quarter when compared to the previous year corresponding quarter is due to a 1 off recognition of revenue from property development. The 2nd quarter revenue is reflecting revenue mostly from port operation. However, with the breaking ground of development and construction on One Jesselton Project, the whole project is expected to contributed to Suria earning for the next coming 8 years.

Aside from this, the railway construction will also contribute to Suria earning significantly should Suria emerge as one of the Project Delivery Partner.

With a healthy cash position, Suria current market price of RM 2.10 is only reflecting 61% of it's total NTA of RM 3.43 per share, making Suria an interesting look out given it's coming prospect and growth in revenue in the coming quarters.

Technical Outlook


On a long term outlook, Suria is likely to be seen as trading in a gradual long term downtrend. However, Suria is looking to put a good challenge upwards given the coming positive outlook on the company. With the supported development, it is very likely that Suria can make it's way up to the upper band of the trend.


However, on the near term outlook, it is noted that Suria had consolidated well at the price range of RM 2.00 before the stock started to move recently. The move which would coincide with the coming Budget 2017 announcement, putting Suria as one of the potential beneficiaries.


Given that Sabah had not received any huge budget for infrastructure project for the past few budget announcement, this would probably be the last budget that is to be announced by the BN lead government before Malaysia enter into general election next year. Suria is foreseeable to see strong growth for the next couple of years from property development and construction in One Jesselton Project as well as the potential candidate as PDP for the railway construction to link all 8 ports in Sabah under the Sabah Port Authority. With the better facilities and infrastructure at place, it will also reinvent the image of Sabah port in the regional area, boosting volume.

Still guessing on who will benefit on Budget 2017 ? Look no further than Suria, choice will be at your hand now.

Bone's TP : RM 2.50



Wednesday, 12 October 2016

Hexza - Stronger Footing

Hexza Corporation Berhad (Hexza - 3298) is a low profile company that deals in the manufacturing of chemical products. Sitting in a handy amount of cash pile, the group had been actively in search on investment with recurring income. The latest investment is a buy and lease back of a 8MW fuel oil generation system in Myammar that will provide the group with a 10 years of recurring income that can reap a handsome USD 9.6 million over the tenure.

The global business environment had been very challenging, with fluctuating demand and volatile raw material cost. That being said, the investment environment had become even harder with investor looking for safe haven financial instrument, or asset that can provide a steady recurring income through dividend. With the central banker from economy powerhouse such as ECB and Japan playing with negative interest rate, this had send investor scrambling for asset that can provide foreseeable recurring yield, such as the REIT market.





REIT are quite resilient in nature in a volatile market because of their asset class that generate recurring income through dividend for investor. However, REIT are generally heavily financed with bank borrowings, hence will be very sensitive with the interest rate.

However, to opt towards another vehicle that pay dividend and having a healthy cash position could be none other than Hexza.

The dividend payment for the past 3 years are
2013 - 5 cents
2014 - 4 cents
2015 - 4.5 cents
2016 - 4.5 cents (to be approved in coming AGM)


Current cash level at RM 51.42 million. With another RM 12.34 million of asset that is held for sale, that will beef up cash level back to RM 63.76 million, resemble RM 0.318 of cash per share. Currently, Hexza do not have any liability or debts with financial institution.

Hexza is disposing non performing asset that are incurring losses, and streamline operation and lower down the cost of production. With the latest restructuring and asset disposal, the manufacturing arm is turning in with approximately 10% in gross profit.

In addition, the financial leaseback agreement will also continue to contribute recurring income of RM 4 million for 10 years.

With the healthy cash level and profitable operation in Hexza, it is foreseeable that Hexza will be able to continue it's dividend payment policy for the next 3 to 4 years to come at the range of 4 to 5 cents.

With the cash pile, it is inevitable that Hexza will continue to look for good investment. However, the group will also be looking into restarting it's property development back in Ipoh should opportunity arises.

Other than that, the group will continue to streamline it's chemical manufacturing operation.

Technical Outlook
On the technical outlook, Hexza is looking on challenging a horizontal resistant line at RM 0.95. Supported with a good up trend that is back with fundamental such as healthy cash level, profitable business and dividend policy, the company is looking good to break above RM 0.95 in the coming days.


To summarize, Hexza will be a considered as a good equity that had the characteristic of weathering volatile economy sentiment. With a foreseeable dividend of at least 4.5 cents for the next 3 years, at the price of RM 1.00, this company will still be able to provide a yield of 4.5% to it's shareholder. At RM 1.10, the company is still yielding slightly above 4%.

Bone's TP : RM 1.10

Friday, 30 September 2016

Bright - Brighter Go

Bright Packaging Industry Berhad (Bright - 9938) had once shot into the lime light at the hostile change of ownership which saw the emergence of Dato Ricky Wong through Wong SK Holdings Sdn Bhd as a substantial shareholder for Bright with 22.7% stake on October 2013. After the ruckus in Bright, Wong SK Holdings Sdn Bhd again offer to take over TechFast in 2014 at 26 cents.

Subsequently, Wong SK Holdings Sdn Bhd continue to increase stake in Bright, which is now at the critical border of MGO, which is 33%.

According to the latest filling on the shareholding of Wong SK Holdings Sdn Bhd, it is at the borderline level of 32.936%. Which means, Wong SK Holdings Sdn Bhd just need to purchase from the open market a mere 105,128 units of share in order to trigger the MGO.


What is actually so interesting in Bright that makes Dato Ricky Wong edging nearer and nearer towards a MGO of this listed vehicle?

While an easy answer will be "Value", but what kind of values are the retailer seeing, and what kind of hidden values that the retailer could had missed ?

For most of the mass retailer in the market, the fastest way is to access is cash level, and determine the net cash position. For this case, Bright is holding on a RM 35.616 million of net cash. For a share base of 164.264 million, that is equivalent to 21.68 cents per share.


But for an experienced investor, there are more to that on just the net cash value. These value are easily missed out by retailers that are not familiar with corporate finance, hence hidden value.

Firstly, the company have a share premium of RM 15.584 million. While this amount cannot be access directly by means of dividend, but it can give Bright a potential "bonus issue" of 1 bonus share to 6 existing mother share, enlarging the share base by 27,377,333 share based on par value of RM 0.50, which can utilize RM 13.688 million. (Bonus of  1 to 6 is based on Par value of RM 0.50)

Secondly, the share is carrying a par value of RM 0.50 per share. It is possible for the company to do a par value reduction and capital repayment back to shareholder if agreed by majority of the shareholder. Take an example for a reduction towards par value of RM 0.10, that will unlock 40 cents of shareholder equity that can be repay back to the shareholder.

To take all this into account, if Bright is to do a capital reduction and repayment of 40 cents, and uses RM 30 million to pay special dividend, that would worth a total cash of RM 0.58 per share (RM 0.40 from capital repayment and RM 0.18 from dividend).

Subsequently with the lower par value of RM 0.10, then the company can undertake a bonus issue of 2 bonus share for 3 ordinary share (instead of 1 to 6 with RM 0.50 par value) which will make it more enticing for further speculation and boost liquidity of the share.

At the current price of RM 0.36, that really looks like a crazy offer, where you are paying RM 0.36 with potential of getting RM 0.58 in capital repayment and dividend, and also a chance for a bonus issue exercise. The NTA of Bright is RM 0.73 per share.


To put this into technical mean, Bright had broken 2 resistant line, one which is horizontal resistant of RM 0.34, and a long term down trend resistant line as well. It is a good indicator to see that the counter is gaining positive uptrend momentum, for this case, we will see the potential corporate exercise of MGO is the best fuel to boost the stock price higher.


To take this further, the pioneer vehicle of Dato Ricky Wong, which is Asia Media (Amedia), had went through some corporate exercise and is banging it's way upwards in the market again, sending a signal to the market that Dato Ricky Wong is "in the office and at work now".

While Bright had contracted with Zao Philip Morris Izhora from Russia for a USD 15 million aluminium foil supply, the business had saw challenging environment such as fluctuation of currency and commodity prices. With the potential cash pile in Bright and a ambitious Dato Ricky Wong, who knows if Bright will be a vehicle for some new business venture for him again after Amedia?

For this reason, the chances are bright for Wong SK Holdings Sdn Bhd to head for a MGO in the coming days. In fact, familiar sources are looking to see the MGO putting a potential price range of RM 0.50 to RM 0.60. If the offer is RM 0.60, why not ?

Bone's TP : RM 0.60

Thursday, 22 September 2016

KSSC - Of Steel and Water

K. Seng Seng Corporation Berhad (KSSC - 5192) a Selangor based steel manufacturer, focuses in stainless steel water pipes, steel sheets and other polishing consumables. The company supplies to various industry, such as marine industry, oil and gas, construction as well as automotive industry. Given the latest stint in the steel industry that had saw various steel manufacturer pushing up in a bullish manner, KSSC could be possibly be one of the last remainder in the bullish steel run.

While some are thinking when will this bullish steel sentiment is going to end, some analyst could predict that it will not end so soon, reason given is due to the impact from the implementation of anti dumping tax on CRC steel to protect the local steel industry from foreign player, the current cessation of HRC production from Megasteel and robust infrastructure demand and construction boom in the local arena. The sentiment could be lasting until at least the the 2nd half of 2017, where most company will start to report on the financial year end.





Based on the price chart of the above 4 steel manufacturer, it is notable that the steel sentiment continue to run strong, given the strong interest in those company. While most of the company had accelerated much in their capital appreciation, this could provide a great stage for KSSC which had just started it's journey.


Given the chart out look, KSSC had just broken up on primary resistant line of RM 0.45.  This could be a convincing start for the company that had been lacking of share movement activity for almost 1 year.

With the booming steel sentiment not looking to back down anytime soon, there shouldn't be much of a problem for KSSC to trade at the range of RM 0.60.

KSSC to expand in house

It had been noted that KSSC had been holding back on reinvestment due to the uncertainty of the steel industry in the past few years. Albeit the tough environment, the company had been operating in a profit and pays an annual dividend without fail for the past 4 years.

Now, with the government implementing anti dumping tax to protect the local steel manufacturer, KSSC will expand it's operation with their existing land in Seri Kembangan, which is good for operation integration and synergy.

With demand chalking in from the vacuum left by China's import and cheaper HRC material import, the steel industry in Malaysia now can enjoy a better margin.

Fundamental Outlook


The Q2 FYE 2016 financial had saw an earning of 1.15 cents per share. However, the management is positive on seeing better revenue from demand in automotive and construction sector as well as water steel pipe replacement work in Selangor to address the issue of non revenue water.

The group also expect a better contribution from it's engineering work segment. While there are no profit forecast from the management, familiar sources that link with KSSC are estimating a better Q3 and Q4, which could chalk up a a total revenue of more than RM 70 million for the 2 remaining quarters, of which huge revenue are from the water pipe replacement exercise from Selangor.

Conclusion
KSSC is a potential rising star, given it's exposure to the water pipe replacement exercise in Selangor. With the current better steel margin, this will be a double joy for KSSC. Trading at 60% of the NTA value RM 0.77, and with a good record of dividend paying for the past few years, KSSC could be a good bet as the last rising steel player.

Bone's TP : RM 0.60