Monday, 29 February 2016

Ewein - Transforming Penang

Ewein Berhad (Ewein - 7249) is known for it's metal sheet fabrication, designing and fabrication of precision moulds, tools and dies, as well as plastic injection business. However, the group had started to embark into property development and construction since Year 2011 in order to enhance the revenue and profitability of the group.

As a start, Ewein had bought over Menara IJM Land in Penang, receiving rental income from the fully tenanted building. Under their property portfolio is also Fort Cornwallis which is generating revenue from the rental, car park, and ticketing income.


However, bigger plans are ahead of Ewein under the helm of Dato Ewe Swee Kheng. The City Of Dreams - A brand new image for Penang, is a multi billion ringgit development that is going to attract multiple investor in the global arena into Penang's booming potential.



Transforming Dream to Reality

The first maiden project that Ewein undertook involving 572 units of luxury service apartments at the prime land of Bandar Tanjong Pinang, carrying a GDV of RM 800 million. At an average price of RM 1172 psf, the project had saw more than 1200 applicants that had put forward interest in owning a piece of the project that offer a direct sea view.

With the project almost sold out, and construction for this project had commenced and will be contributing towards the bottom line of Ewein for the next 3 years.

Penang is slated for bigger transformation process with the entrance of Consortium Zenith BUCG (CZBUCG) in developing and constructing the RM 6.3 billion undersea tunnel that connects Butterworth to Gurney Drive. In return, Penang government will pay CZBUCG with 110 acres of prime seafront land at Bandar Tanjung Pinang, of which 50 acres of land will be sale of Ewein Zenith (60% owned by Ewein Berhad, 40% owned by Consortium Zenith) in order to develop a one stop wellness destination from a synergy of health, healing, recuperation and entertainment area.

This mega development that Ewein Zenith is developing will carry a massive GDV of RM 13.9 billion, which includes wellness apartments, retirement and healthcare wellness residential suits, serviced apartments with wellness facilities, resort suites and ambulatory services. This massive development is the top champion in the Malaysia EPP 10 for Wellness Resort.


Providing a great sea view with great connectivity in an integrated wellness resort and tourism hub in Penang which is free from natural disaster such as earthquake and typhoons, that is what most baby boomers are looking forward for their retirement.


While the massive construction and development held by Consortium Zenith BUCG had not saw any listed entity involved, Ewein will be the closest link towards any spill over project that will be awarded in the future.


Conclusion

Ewein is an interesting counter to be look upon for a long period, considering the growth potential of the company in the property and construction arena in Penang.

Technically, Ewein had saw consolidation at the region of RM 1.10. Ewein is looking to see a revenue of more than RM 100m for FYE 2015, boosted from construction billing and stronger orders from it's metal fabrication and plastic injection business.

A stronger quarter will definitely set Ewein northward bound again, with a target of RM 1.50.

Friday, 26 February 2016

Salcon - Watering Flakes of Gold

Salcon Berhad (Salcon - 8567) is well known as a water and wastewater infrastructure contractor and specialist. However, the latest changes in the boardroom which saw the emergence of Dato Eddy Leong had saw Salcon putting a focus into property development and construction. The group is also involved in telecommunication infrastructure through the it's 50% + 1 share stake in Volksbahn Technologies Sdn Bhd that hold the exclusive rights to lay fibre optic cables on Prasarana Malaysia Berhad rail network and premises for up to 15 years.

Growing up from a small company that provide water treatment for palm oil mills, Salcon had evolved into a water and wastewater specialist that had to date completed more than 900 water and wastewater project in Malaysia, Thailand, Sri Lanka, Vietnam and China.


While the Year 2016 is a rocky year for most investment as volatility increase in the global market, it is crucial for asset and fund manager to seek to value protection as well as good bargain during any panic sell down. Given that, Salcon could be one of the good candidate for this cause.


Salcon long term chart had suggested that the region of RM 0.57 had been one of the strongest support line for the past 2 years. It had from 2 occasions rebounded strongly after a series of panic selling, chalking up more than 10% gain.

The support line is further supported by massive open market share buy back from the company. In fact, Salcon had been actively buying back share from the open market at the price range of RM 0.56 to RM 0.60 during this period of time. However, it is notable that Salcon had bought from open market at the price range of RM 0.70 before the market turn volatile.

Technically looking, Salcon is seen at an oversold position, and is resting at the strong long term support line that is backed by company share buy back. The current price range at RM 0.60 could be a good entry position for investor to take exposure into the growth of Salcon.


Salcon - Water of Life 

Salcon is current still having an existing book order balance of RM 700m from the book of RM 1.1 billion that it had secured. A huge chunk of the book order is contributed by the Langat 2 Water Treatment plant, whereby Salcon work is estimated at RM 358 million from the total of RM 1 billion. The Langat 2 Water Treatment plant is a joint venture between MMC, AZRB and Salcon.

As the Langat 2 Water Treatment plant is slated for completion in 2017 in order to cater for the growing demand, the delay and fiasco that is caused by the water asset restructuring exercise had put Langat 2 Water Treatment plant completion back by 2 years, which is 2019.

The delay had caused critical supply issue that had to be addressed immediately, prompting Selangor government to dish out 2 water treatment plant in 2016 in order to ensure continuous water supply between 2017 to 2019. Semenyih 2 and Labohan Dagang, Kuala Langat carries a total value of RM 800m will see work order to start as soon as 2nd quarter 2016.

According to close sources that are familiar with this matter, it is imminent to see Salcon involvement in construction project as Puncak Niaga had exited the water business in Selangor. Familiar sources are looking for Salcon to bag in approximately RM 400m to RM 500m from the total project value of RM 800m from the 2 alternative water treatment plant. Sources had indicated that subsequent announcement and update should come in by March 2016.

Incidentally, Salcon had also saw massive mop up of shares in the open market in the middle of November 2015 with more than 28 million shares transacted in the open market in a single day, putting up a solid bullish closing on the 12th November 2015. The huge open market accumulation could had further strengthened the basis of Salcon involvement in the alternative water treatment plant.

Due to the urgency of the project, Salcon involvement in both the alternative water treatment plant (Semenyih 2 - 100mld and Labohan Dagang, Kuala Langat - 400mld) will contribute to strong earning for FYE 2016 and FYE 2017.


Others
Salcon had signed two 10 year contracts with U-mobile and Celcom for mobile site rental for shared infrastructure through their subsidiary, Volksbahn Technologies Sdn Bhd which will see recurring income kicks in as soon as 2017.

Salcon also had replenished book order by RM 5.4 million for the rehabilitation, operation and maintenance management of a distribution system in Bukit Kecil, Terengganu.

Salcon had up to date tendered RM 2billion of works, and expect a success rate of 20% to 30% which will replenish their work order.

Salcon will be looking to materialize a one off RM 50 million gain from the last remaining water concession in China that is in the process of disposal.

Salcon current in net cash position of approx RM 0.24 per share


Conclusion
Based on the above events and opportunity, Salcon is a great look at the current price level to be invested in. A short term outlook could see Salcon challenging back to RM 0.65.

Tuesday, 23 February 2016

Seacera - Proligen Synergy

Seacera Group Berhad (Seacera - 7073) is known for it's diversify business portfolio from tiles manufacturing, construction, property development as well as the latest being in the healthcare industry by purchasing 51% shares in Proligen Sdn Bhd, focusing on the niche product in renal treatment.

With the acquisition of 51% stake in Proligen, what kind of opportunity is pave ahead for Seacera ?


To recap, Proligen Sdn Bhd is EPP 14 status company in Malaysia that is designed to produce disposable dialyser filter in Malaysia. (Proligen - Disposable Dialyser Manufacturing Plant EPP 14).

This is an effort in addressing the rising End Stage Renal Disease (ESRD) which is an escalating pandemic for most of the country in the world which Malaysia is not excluded. According to latest official records, Malaysia are treating more than 35,000 of patients with ESRD as the number of patient had been peaking at a growth rate of 15% annually.

The increase of aging population, as well as the changing lifestyle of human being had contributed largely in the increase of ESRD amongst Malaysian. ESRD requires critical health maintenance which had remained as a costly endeavor to the patients.

Proligen will set to be the first Polysulfone dialysis filter manufacturer in Jasin, Melaka. It will also be the first plant to produce high grade blood filtration filters that will cater to Malaysia and have exclusive distribution rights in ASEAN for it's pattern product and technology from SuisseMed Technologies SA.

While a dialysis patient will require to undergo dialysis every 2 to 3 days, that will sum up to a patient needing approximately 150 filter for a 1 year dialysis.

Based on the current 35,000 patients needing renal treatment, that will easily sum up to a demand of 5 million of filters in Malaysia alone, with a growth of CAGR 15% annually.

While the production will project a local consumption of 20% and the rest being exported out in the neighboring country, Proligen had put up a profit guarantee of RM 75 million for the next 3 year.


Technically, Seacera had saw good consolidation below the region of RM 1.00. A successful break up above RM 1.00 will see Seacera trading at a healthy range of RM 1.00 to RM 1.20.

Seacera will resemble a good buy at the range of RM 1.00 with much corporate exercise such as private placement and ESOS with a minimum subscription price of RM 1.00. The recent share buy back from Encik Zulkarnin bin Ariffin as well as an a massive conversion of Seacera-WB by Datuk Mansor bin Masikon at the price of RM 1.00 had definitely put more comfort at the current price range.

A long term outlook will definitely see Seacera growing above RM 1.50 when the production line kick in in 2017.