Wednesday, 20 July 2016

Hohup - Value Bargain

Ho Hup Construction Company (Hohup - 5169) could be able to see value emerging at the current state of price. Hohup had went through a strings of corporate exercise that had saw the group coming out from it's PN17 status. Currently, the group is actively involved in construction project in Johor, Sabah and it's maiden property development and construction project in Bukit Jalil.

What could be so interesting in Hohup at the current juncture ?

Looking at the technical chart of Hohup, the current price at the range of RM 0.80 could be a very good bargaining value buy for investor.

The last incident on Hohup dropping to RM 0.80 is associated with the spillover effect from market shake up from China and the US market. However, stock rebounded swiftly with renew buying from major shareholder Datuk Thong Kok Khee as well as employee exercising ESOS.

The current technical reading could signal Hohup being well supported at RM 0.80. Interestingly, Hohup downtrend line had saw good intersection with the support line, suggesting a potential technical rebound on the current level. Primary resistant level will be set at RM 0.90, and breaking above RM 0.90 will suggest RM 1.00 as the stronger resistant level.

Hohup, a bargaining value buy

Valuation of a company is very subjective. Adding up to the current market sentiment, investor are becoming stricter in defining a true value buy in a company. What would be the case for Hohup ?

Based on the performance for the past 3 quarters, the total EPS for Hohup is actually 16.14 cents. The earning are derived from progress billing from ongoing construction in Aurora Place in Bukit Jalil City, Polytechnic Kuala Terengganu and RAPID in Johor.

For the coming 2nd quarter result that will be released in August, Hohup will be seeing stronger revenue and earning per share from
- Progressive billing on Aurora Place, Bukit Jalil City which is at approx 50% completion
- Polytechnic Kuala Terengganu
- Rapid Pengerang
- JDA with Pioneer Haven Sdn Bhd for foundation work
- West Coast Expressway sub-contract work from Teluk Intan to Kampung Lekir, Perak
- 2 new construction project in Johor and Perak worth RM 384 million

Despite the current market condition, Hohup earning had been resilient. Season analyst would see this as "value lock out". Hohup is possibly not under analyst coverage due and also due to sector wide downgrade in the properties industry.

With more new project secured, Hohup will also be doing a second corporate exercise in order to raise minimum RM 111 million from rights issue with free warrants.

Others

The current market capitalization on Hohup only RM 280 million based on 350 million shares issue. While investor might be aware of the maturity of preference shares (Hohup-PA and Hohup-PB) in the end of December 2016, the additional conversion of 24.95 million shares is not a huge dilution to the earnings of the company, considering ongoing projects and upcoming projects in the pipeline.

For the FYE 2016, Hohup will be able to deliver decent earning, with decent estimation of 20 cents. Trading at PER x 7, Hohup should be trading at RM 1.40.

Short term target : RM 1.00


Tuesday, 19 July 2016

Astino - Blue Ocean Steel Player

Astino Berhad (Astino - 7162) could be known as just another steel player that had major presence in the northern region of the Peninsula Malaysia. Unlike other steel maker that focused on various steel bars, rods and pipes, Astino offer a  a wider range of steel products such as netting system, scaffolding, sunroof, spandec, bendec and ceiling panel.

While steel business in the northern region of the Peninsula continue to be competitive due to lack of demand in the public infrastructure development as well as competitive imports, it is imperative for steel player to evolve into a different steel industry player by offering niche market solutions through creating new building material as well as providing EPC solution as well.  This is what Astino had been doing, which is the core reason why Astino stand out among other steel player in the region. For Astino, being the EPC (Engineering, Procurement and Construction) player in the Agro House is the way going forward to see the company striving through different stages of market.


Defining Agro House with Astino

What is show special in this Agro House ? Let's have a short clip to have a better understanding on Agro House solution from Astino.



Here is a quick summary on Astino Agro House

Astino will continue to penetrate into new market in South East Asia. Growing market such as Vietnam, Indonesia and Cambodia are rising market with full of potential. The Agro House command a good profit margin for Astino. Further streamlining of process could potentially see gross margin at 20%.

Fundamental

Astino fundamental is improving as of lately, with 1 bonus issue in the late 2014 as well as consistent dividend payment for the past 2 years is one of the best proof to be seen by investor. Despite the challenging environment that is faced by various steel player, Astino continue to grow with product and service differentiation.

Despite a reduction in revenue, profit margin increased, and Astino 3 rolling quarter EPS is standing at 8 cents, back with a NTA of RM 1.08. Factoring future growth, dividend and the potential in Agro House, it is deemed fair to annualized Astino FYE 2016 EPS at 11 cents trading at a PER x 12, which could bring up a valuation of RM 1.32


With Astino just started to break away from a down trending range, Astino is showing the start of a technical uptrend.

At the current price of RM 0.71, Astino still have a appreciation space of 90% assuming fully valued at RM 1.32 based on PER x 12 on EPS 11 cents for FYE 2016.

Outlook

Despite the current lack of huge infrastructure development in the northern region of Peninsula Malaysia, on going private development in Penang, undersea tunnel, as well as more highway construction will continue provide better prospect towards the steel industry in a whole in 2017 and 2018.

At the current price of RM 0.71, Astino is still very attractive.

Bone's Short term TP : RM 1.00

Friday, 15 July 2016

Bina Puri - Worthy of a Revisit

Bina Puri Holdings Berhad (Bpuri - 5932) current pricing could had fallen way beyond it's fundamental and it's future prospectus, not to mention several corporate exercise such as listing of it's Indonesia power generation unit.

Reeling away from KLIA2 issue, the share price had taken a hit from volatile equity market and foreign selling pressure. The local construction market is still healthy with ample of private and public infrastructure projects despite the current economy headwinds.

For Bina Puri, the following 3 events could deemed the share price attractive and worthy of a  revisit.

One of the attractive event to note is the private placement that is priced at RM 0.50 which had successfully placed out in full in 4 tranche.

 A total of 21,684,800 shares had been placed out.

Secondly, the exercising of 300,000 units of ESOS by Dr Tan Cheng Kiat at the price of RM 0.54 recently would certainly raise some eye brown.


According to a seasoned analyst, a director action in exercising ESOS at such a high premium price from market could be ringing a note on possible corporate exercise would relates to
- Confidence in the company future
- Potential corporate exercise that could relate to share split or bonus issue


The current market price of Bina Puri resembled more than 20% discount from private placement of RM 0.50 and ESOS placement of RM 0.54.

The last would be the listing of their Indonesia Power Generation unit in the IDX. Bina Puri is expecting to raise RM 18 million from the MegaPower IPO. As of end of May 2016, the Indonesia Stock Exchange (IDX) had principally agreed to the proposed listing of PT Megapower Makmur. The listing exercise will definitely garner some market interest towards Bina Puri as it is currently a 80% owned subsidiary.

Conclusion
The current market price is worth a revisit in Bina Puri. Medium term target would see Bina Puri looking at RM 0.50.

Tuesday, 12 July 2016

Sycal - Point of Perak

Sycal Ventures Berhad (Sycal - 9717) might had caught the attention of some investor after seeing the emergence of new substantial shareholder through investment vehicle WestHill Capital Sdn Bhd as of lately. To recap, Sycal primarily involves in construction activities, and is a major construction proxy towards the upcoming development in Perak.

Perak - An Upcoming State

Perak is full of potential, considering with over 5 million acre of land and 10 administrative district covering various industry and communities. Under PKNP, future development in the state will focus in creating integrated township and develop plan with the ultimate goal of raising overall socio-economic and intrinsic values in the area.

Riding on the development in Perak, Sycal will continue to benefit from planned development in Greentown Ipoh, Klebang Ipoh, Taiping, Sitiawan, Segari and Sri Iskandar Perak, which can see a potential GDV of more than RM 1.2 billion.

Business with Accor Group

Sycal had significant business ties with the Accor Group that manages world wide hotel chain under the brand name like Pullman, Novotel and Ibis Hotel. To put this in simple terms, Sycal is the closest proxy towards the expansion of Pullman Hotel in Malaysia.

Currently, Sycal is constructing the ICC (Ipoh Convention Center) which feature a 21 storey Pullman Hotel and 23 storey Pullman Residences in Ipoh.

The current progress is at level 15.

According to Gerrard Guillouet which is the senior vice president for Accor Malaysia, Malaysia is one of the top tourism destination in Southeast Asia, hence there are still potential and plenty of room for the group to expand.

Accor Malaysia will continue to expand into region like Malacca, Penang, Johor and Sabah. The Accor Group run a travel booking site that promote their own brands of hotel and food under the site name AccorPlus.


Technical Outlook

On a medium term outlook, Sycal could had broken away from the down trend chart with a flow of strong volume recently.


The strong rebound on the floor price at the range of RM 0.31 could be marking a new trend in the making. Sycal next resistant should sit at RM 0.40.

The current price could mark similar entry price for substantial shareholder Westhill Capital Sdn Bhd during 2 November 2015. Westhill Capital should had purchased the block of shares at the price of RM 0.40, which is 40% discount on the NTA of RM 0.75

The latest open market buy in had saw Westhill Capital taking in more than 3 million shares from the open market, pushing their direct stake to 9.3%.


We continue to believe in the more robust infrastructural development in the state of Perak. Political influences will play a key role in development of Perak as deputy prime minister Dato Sri Hamid pushing Perak to more key development.

Baring unforeseen circumstances, Sycal will be able to perform well in 2016 with the progress billing on existing construction book order of RM 500 million, as well as potential RM 1.2 billion GDV in future township development in Perak.

TP : RM 0.45