Wednesday, 19 July 2017

This Pekan Company can really fry up when time's come

"Market theme" is a proven key factor that will influence the share market. When "market theme" start to play in, companies that falls within that theme will see heavy trading interest, or in direct - speculation. Usually, this kind of market theme movement will disregard the underlying company fundamental and past financial records.

For example, if FCPO contract suddenly shot up to more than RM 3000, the next thing you will see is that plantation company will be speculated upwards. Or when the media hype up the news of USD getting stronger against the local MYR, then you will see certain sector like the furniture and gloves sector being speculated upwards.

There is no right or wrong is such speculation. However, one of the main concern is - whether you are in it before the market theme kicks in, or you are only starting to go into it when the market theme already kicked in. Of course, both will yield very different sets of result, and the early birds, for this case, always get the best money.

Earlier this year, there are lots of market theme. Starting from Lim Kang Hoo theme (IWCITY and Ekovest), Jack Ma theme, packaging and logistic theme, then e-commerce, then banking and so on. All these are good if you can forecast it coming, and the main thing moving forward is to forecast which theme is coming next.

As for this, allow me to tell you that our nation will be having the next big event - 14th General Election. Since we did not really experience the election frenzy yet, I think it will be a good to look out for potential targets now.

This time around, I will like to point at some hot election seats. Since we are saying hot hot seats, then Pekan seat should be hot enough, right ? So what is happening over at Pekan ?



Lately, there was a company by the name of Merge Energy Berhad (Merge) which was awarded a RM 158 million construction project in Pekan in March.


Subsequently, Merge went on rampaging upwards as per shown in the chart.

Now, I think this company which is also involved in intensive project in Pekan should not be missed, especially when it is still at it's low level now. Of course, this company is BHS Industries Berhad (BHS - 7241)


As you can see, the technical chart highlights that BHS is currently resting at it's long term support line, which is at the range of RM 0.40. Moreover, it had also started to broke away from it's mid-term down trend line, highlighted in red color. Technically speaking, BHS can be viewed as bullish biased, with good upward potential as volume kicks in.

So what does BHS got to do with election ?

Firstly, BHS is planning a mega township in Pekan, dubbed as GTP (Green Technology Park), whereby energy supplied is created from renewable energy, which used biomass energy from waste products of palm oil plantation, such as empty fruit bunches. Secondly, this GTP will also be housing several factory such as paper mill, corrugated box manufacturing as well as tissue paper and box. The total GDV will be more approx RM 2 billion.

While the above plans are parts of the diversification plan, the original business of BHS is actually printing and publishing. Now with the new printing factory ready, BHS is expecting to kick in more revenue.
Excerpt taken from the 3rd quarter financial result of BHS also highlight that the group will be expect to deliver higher sales in the 4th quarter.

As for me, I caught interest in the line highlighted in green where it says - "the government print order which were absent in previous 2 years have now been revived and tenders were called."

I will interpret it as because the general election is drawing very near, hence the demand of print media will rise. Aside from the electronic media, the need of printing such as political magazine, leaflet, and other print media is still an important source for spread of information. For this, I can be expecting millions being poured into it, which will be very beneficial for BHS.

Now BHS can be still considered as a sleeping giant, consolidating at the range of RM 0.40. Will it get awaken by a in the later stage by some election theme speculation ? I don't know, but if it does, make sure you are in it before the big run.

Thursday, 6 July 2017

Gdex is a successful story, but missing this company will be your successful sorry!

In life, when you want to be respected, it is not given just like this, you have to earn it. However, it is the process of earning it - many quit halfway, and thus, did not get the respect from others.

For the same comparison and applying this to the share market, I have to tell you that everyone that started to venture into the share market do not become an instant market genius in a short period of time, and the same had to be applied to me as well.

Many see me as a big master sifu in the Malaysian share market, but is that really who I am ?

There are 3 kind of sifu. The first kind is very simple, and can be defined as - When you are right, you are sifu, when you are wrong, then you will instantly become another piece of seafood. The fine line of become sifu and seafood, is just a thread away.

The second kind of sifu is made after having track record of a long term consistent result. This is more of a real sifu, which can juggle with facts, and very patiently prey on the target. This kind of sifu usually eyes upon fundamental stock only, hence cutting off the large excitement of sitting the roller coaster of the market, and the feeling of switching stock in a frequent manner.

The third kind of sifu is a more complex kind of sifu. Beside having the traits of the second kind of sifu, he will also dabble in non fundamental stock and turnaround stock, and can uncover real gems from dirt. The important element to be this kind of sifu is by having a strong sense of prediction of the particular company, both in corporate action, and also share price movement.

As for me - I am Bonescythe, and I will let you choose which kind of sifu I am. I am totally alright to be called seafood, at least I know very well that if I am a seafood, I will by far taste better than many other seafood that is in the cooking pot. Hahaha



But if I am your highly respect sifu, today, I have to tell you that I am going to put my respectable name in the ring once again, and make a gamble on my name in this one corporate event that is happening in KLSE.

As you know, one of the latest most happening event in the Malaysian market have to be in the logistic/warehousing arena. In fact, the battle had just began to tense up lately as heavyweight player continue to get arm up in order to secure and increase their market share.

For this reason, CJ Korea had came all the way from Korea, and hitch on Century Logistic Holdings Berhad by purchasing 31.44% of controlling stake in Century at a price tag of RM 175 million for it's expansion in the South East Asia region. RM 175 million might sound big to you, but that could just be a pie for CJ Korea.

One of the attractive reason is that Century are having the strategic infrastructure to sync on with CJ Korea objectives. That is the strategic multi storey warehouse from Century, and the intention of CJ Korea to expand into parcel delivery in Malaysia.

So, the latest new is that Century is planning to acquire a mid size logistic firm with parcel delivery with presence in major town. Wow, this is a big big news, and missing it could be very expensive.

To put it in a more objective manner, there will be 2 main question here. The first question is which is the most potential target ? And secondly, how much will CJ Korea / Century be willing to splash in for that.

For that, I am willing to put my name to bet on this - Century will be heading for Nationwide Express Holdings Berhad (Natwide - 9806). For instant, Gdex will be out of the list, because Gdex is being cornered by bunch of Alibaba related investor, and the valuation is too high now, which is probably trading at PER x 150, x10 the NTA value. There will be no other better candidate other than Natwide. Natwide also met most of the important requirement by Century, which is having presence in most of the major town.

Now, how much is Century willing to fork out for Nationwide ?

According to the latest event in the logistic arena, Tasco Berhad had bought Gold Cold Transport Sdn Bhd for RM 186 million. Now that is quite a huge sum I can tell you. And for this, I can surely tell you that the money that Century is going to fork out will be definitely in the hundreds of million.


Now, here comes my prediction.

In my opinion, I think Century will not be privatizing Natwide, however, the deal will be good enough to see a mandatory take over offer being offered to all the minority shareholder. This is because the best possible stake sell out will be BHR Enterprise Sdn Bhd, with 54.78% stake in Natwide. The is very similar to what CJ Korea did when they came into Century, which is to take a controlling stake in the company without needing to privatize it. Therefore, there is a very high chance that this technique will be repeated in Natwide.

Now the tricky part is to know how much Century offer to BHR Enterprise Sdn Bhd until it is so sweet not to reject the deal. Honestly, I had no idea, but I can come out with the best possible scenario for comparison based on revenue and market capitalization with Gdex.

As you can see, Gdex is currently having a quarterly revenue of approximate RM 60 million, while Natwide is running at RM 20 million, which is one third of the revenue size. If we use this simple comparison, Natwide should command a market capitalization of RM 1 billion, right? As you can see, Gdex earning is so tiny, hence trading at a PER x 150 is almost as good as nothing. If Century director is able to overhaul Natwide's  whole operation, and putting it back into the black, Natwide is just as good as a Gdex in making, just smaller by two third in Gdex revenue scale.

After seeing the potential, so I will put it simple. Let's say Century will be throwing RM 100 million for 54.78% stake, ok ? Too high ? Ok, we discount 30% from RM 100 million, we talk about RM 70 million for 54.78% stake (65,863,090 shares), this will work out at around RM 1.06 per share, so let's discount another 6%, and make it a RM 1.00 offer. Now fair and good? Discount and discount many times already.

Since the purchase involve more than 33%, then it will be mandatory to offer a take over exercise to all at the same price, RM 1.00. But, if Gdex can be hype up until PER x 150, why would Century want to privatize Natwide ? Might as well let it float like a Cadillac and put up a good fight with Gdex.

If that comes true, RM 1.00 take over offer will see the share price becoming RM 2.00 based on my theory.

Wow, amazing amazing amazing. I must be dreaming in deep blue sea.

I remember the time when I recommended Rex at RM 1.83, some naysayer come cursing me and as me to go fxxx myself when the share when to RM 2.00 and fell down. Today Rex is standing at RM 2.30, with an occasion hitting RM 2.38 ! Now, I am taking this opportunity to send back those word you gave me.. Go xxxx youself. And for those who ask me to xxxx myself at Natwide when I first mentioned at 30th June in a forum, you gotta watch and see who will have the last laugh!!!

Friday, 30 June 2017

This company will be doing big things in China

The Malaysian market continue to remain strong amidst the continuous prepping of the market due to domestic influence such as incoming general election that is expected to happen in the next 7 months. Such an event continue see foreign funds coming into the local market in anticipation that the local government will be dishing out more infrastructure projects to GLC linked conglomerate.

Analyst are looking at month of Nov-Dec if the election is going to happen this year. This is partially due to ann important event happening in October 2017, where China's President Xi JinPing will visit Malaysia to witness the official opening of Xiamen University's Malaysian campus in Bandar Sunsuria, Sepang. For this reason, it is quite reasonable for you to believe that the local market will continue to be supported until then.


While Malaysia continue to see big investment from China in some core infrastructural area, it is also important to note that some Malaysian counterparts too have big influential development in China. If you still do not know what are the big developments in China that is owned by Malaysian businessman, then you should open up your eyes once again to know this company potential involvement in China and it's big development in the tourism sector.

So this company, is none other than the sensational hit of 2017 - Dataprep.

By now, I will not go about what is Dataprep doing, what will Dataprep will doing and where will it be doing. I think I had gave out more than enough data concerning Dataprep, and the rest is up to you to do your own reading and research.

All I can tell you that at the crucial point where I had identify and share with you about Dataprep, it is lingering at a lowly 12 cents. Yes!!! It is just a freaking 12 cents!!! And I continue to inform interested investor to take position at anything below 30 cents back then.

Lo and behold, I don't know what happened to Dataprep until it hit a high of 70 cents, and I have to tell you that I had nothing to do with that - seriously. But one of the thing I did is, I did not ask anyone to run towards Dataprep and grab it when it is flying too overly high at that point of time. I only recall me telling you about the potential and goodness of Dataprep when it is 12 cents, 20 cents, and the last being 30 cents.

Now, as the price of Dataprep consolidate, I am here again to share with you that this might be a good price to take position in Dataprep.


Today, I will talk more about technical charting of Dataprep. Here, I will look into 4 important points, - a long term support line
- a mid/short term support line
- a resistant line
- consolidation in terms of price and volume.

The red color line is a long term support line. I had drawn it from the start, touching the base of the whole up trending chart. Today is the defining moment, where the long term support line had finally touch another upper base of the price chart. If the uptrend continue to be intact, then Dataprep will be continue to trend upwards, and not violating the long term support line.

Now, I will support my chart with another mid/short term support line, which is highlighted in blue. As you can see, the blue line is formed at the higher region, after the major spike. This mid term support is important to show that the entity holding substantial stake is still in the game, and not selling out.

Then, as I already form a good judgment on the support base of Dataprep, looking for a good entry into Dataprep will have to see the intersection of a resistant line and a support line, which I had highlighted in Green Color. The intersection point resemble the best potential point of entry into Dataprep as there will be heavy interest in technical traders looking for big rebounds when there is a strong breakout.

Finally, in order to confirm your decision, it is important to know if the consolidation is ripe or not. A good consolidation will see a price holding at a certain price level without much volume being transacted. For this case, Dataprep at the price range of RM 0.40 is proven to be well consolidated technically.


Putting all of this fantastic 4 factor together, I could be able to sum up that Dataprep might be in a good position for you to invest, trade, or increase your stake. As you see, I am not someone that will ask people to buy when stock are flying up, but I will ask you to take note when the stock is sleeping, consolidated with low volume but still with greater potential. For this case of Dataprep, I will let you decide on your course again.

As you can see, despite the flat financial performance by Dataprep in the latest quarterly result, the company share price had been holding good. If by any chances Xi Jinping will touch on Genting Secret Garden during his visit in October 2017 at the official opening of Xiamen University, then you will know what is going to happen.


For this case, like what Bono sings - With or Without You.

Friday, 16 June 2017

Special Cash Dividend Never Fail

For some, investing is an art; for some, investing is a game of luck; for some, investing is just a gamble. As for me, investing is about hard work - putting away leisure time, screening charts manually, reading through all the newspaper from local, global, social, sports to business news.

Of course, there are many more component to form a decision to invest, and emotion is one of them. Human are very vulnerable to emotional swings, and that is why stock prices have to swing up and down, so that human emotions will follow along the swinging of going up and down as well. It is very easy to say to buy at low, and sell at high. But at practical, it is not as easy as you think.

Today I am not going to talk on the effects of emotion towards a decision on share trading. But I would like to show you how a normal individual can trade the stock market without having any super natural intelligence, or being a super investor, or super logical thinking.

If you are hardworking enough to look for company that is going to pay special dividend (usually after some asset sale, or after capital reduction, or some special one off big dividend), you will notice that upon the approval of such dividend, the company share price will definitely go up.

Take for example, last year Sapura Resources had disposed off it's entire 49% stake of APIIT education group. The deal was announced in March 2016, and the dividend is approved in September 2016. Prior to the announcement of the dividend, the share gap up accordingly to reflect the cash payment back to the share holder.

So in this case, you can see that buying in at a period of time where the dividend is going to approve might be advantage for you because you the price had probably found it's balance, hence lesser fluctuation.

The second case I am going to present to you is the case of MAA. If you are aware, MAA had sold it's takaful arm to Zurich Insurance in 30 November 2015. Approximate 6 months later, MAA announce a 35 cents special dividend to be paid back to shareholder prior to the sale. As you can see from the chart, from the sale to the approval of dividend, the share price had been trending up strongly.

The third case is about Alcom. This stock had been suffering for the past 2 - 3 years, but the company had gone back into the black as aluminium demand shifted upwards. Despite that, the company restructure capital and pay back shareholder a hefty 20.5 cents. Upon this announcement, the share price continue to rocket upwards.

As you can see, if you are hardworking and looking at chart manually, you will know what is happening and most importantly why it is happening this way. You will not get this if you are too reliant on robotic screener.

Of the 3 example, 2 of them are related to asset disposal, while 1 is capital restructure and pay back to shareholder. All of them carry the same trait - a big fat dividend in the kind of special dividend, and subsequently, the share price gap up upon the confirmation of the special dividend payment.

So, as historical result prove this concept to be right working, it is back to an individual hard work in order to get the company which such event happening, and most importantly, is to board in before the confirmation of such special dividend being declared official.

Now, your problem is, you are too tied up, no time to scan manually, not to say search up and down the internet for such news. If I will to give you this news, of course, you have to decide on your own again.

So this company is nothing than a bleeding company, but had concluded the sale of it's infrastructure arm, netting in RM 380 million cash. This company is - Silk Holdings Berhad.

As you can see, the onus here is that the company will be using RM 70 million from the sale proceed to declare a 10 cents dividend for each shareholder. For a share trading at the range of 50 cents, that will means a 20% return. Or to put it in other words, this special dividend is akin to the company giving you 5% return a year for 4 year in a very instant manner. Sekali gus kaw tim 20% for you.


According to the technical chart, Silk had also broken away from the short term down trend line after consolidating at the range of RM 0.48. This is amidst the coming EGM that will be happening on 21st June which will determining the  approval of the special dividend amounting to 10 cents per share. Should the EGM approved the special dividend of 10 cents per share, where will Silk be at that time? 55 cents ? 60 cents ? I don't know, but all I know is that if you buy in before any solid announcement of the dividend, you will stand a better chance among all the others who bought it after the announcement.

In conclusion, I am educating you on how to look at opportunity in the share market using some solid examples and case studies. In the future, if such case arouse again, be very sure that you are the first one to notify it and get your position ready.

Cheers.

Wednesday, 7 June 2017

If you suck in stock investing, read this to understand why

Today, I am going to share with you another one of my secret on how I do my market analysis. As you would know, the market had 2 general analysis - Fundamental Analysis and Technical Analysis. But as for me, I always go beyond Fundamental and Technical Analysis, because I believe that in order to out perform the market, there are much more stuff required to learn. To me, one of the most important factor is the study of Psychological effect towards human being in reacting to news and it's underlying intention.

As you would see, if you are able to crack this great code, you will definitely be at the upper hand because you are able to analyze a market event different from the others, which is the herd.

One of my biggest reveal in the market is being the "Secret behind the Take Over Offers". You could had read a lot of investment journal, investment and trading courses, Warren Buffet books, Peter Jack or Jill trading strategy and etc... But I have to tell you that you will be in no where at any corner of the world that gave you a free education on cracking the secret behind take over offers.

If you had been reading my article and journal word by word, you will notice that I had teach you how a Take Over Offer without intention of delisting the company will result in the company share price doubling up from the take over price. Not even any prominent investor, trader, guru in the world would had taught you this, but only me, and giving you for free.

Plenty of example of take over offer, and share price doubling up. For instant, Euro, Denko, Halex, Gwplast, Iwcity, Alcom. You can check them out on your own as your own research. Of course, when REX (take over RM 1.65) goes to RM 3.30 in the coming future, then my basket will add in another proof of event.

Today, I am going to release another secret weapon of my analysis to you - FOR FREE AGAIN!!! But if you think I am putting up another BS talk, and thinking that Free stuff is never good stuff, then for goodness sake, you can close the browser and don't let me poison your mind. I have to tell you my poison is highly toxic, and will poison your investment mind forever. Haha..

Now, I am going to teach you, how to see beyond a bad news, which is actually a good news. As usual, I will give you a good example of this case for your understanding.

I am going to study the case of Masteel with you.


As you can see, during the year 2015, Masteel had a shocking event that put great fear on investor. That event is a delay in submission of financial report, which had resulted in the counter being suspended for 3 months. As a company running more than 10 years, suddenly slapped with trading suspension because of delay in submission of financial report ??? Weird, funny?  I don't know.

Honestly, there hasn't been much change in the fundamental of the company, but the effect of the counter being suspended for 3 mths trading due to delay in submission of financial report is loud enough a story to shake up the weak investor. Adding salt into wound, the period of 2015 to 2016 is the year where Malaysian equity market are suffering, especially from weakening exchange rate and exit of foreign funds. The share price drop 60%, from 90 cents to trade at 35 cents.

But now, 2 years after this event, Masteel is enjoying windfall from selling steel bar when MITI implemented some trade protection on certain steel products which had greatly benefited them.

Now, let's put it this way to think. If there is no such suspension, I would reckon that Masteel will definitely not be trading at 35 cents region. At most, it would be lingering at the range of 80 cents. As you can see, comparing the percentage of rise from 80 cents to the current RM 1.20, and 35 cents to the current RM 1.20,  you know how to do the math.

Alright, but I am not painting a picture that the management deliberately make this happen by intention. Honestly, I do not know, and also don't want to know. But as far as I know, they delay, they got suspended, they pay the fine or penalty and do the require submission, and things are done. All I can say is, they are playing within the rules of the playground. Not white nor black, it is grey.

As of now, you might be able to put up an argument - what are some other underlying factor that I can back up on seeing Masteel being able to perform better in the future ? Of course, I had to tell you that this one really do not come easy. If you had been following the steel sector closely, you would know that the local steel industry player had been actively seeking for protection from imports since 2014. If this is a standalone news, there might not be any click. But if you would put this news together with the temporary suspension order, now there might be a click.

So now, did you get it ?


If you don't get it, then go to sleep now, wake up later and read again, repeat until you understand.

With the above case as reference, now I am going to show you one potential case.

This is the case of Eden Inc Berhad (Eden - 7471)

I know you might not even know such company even exist. So, I will give you a brief background of what Eden is doing. Basically, this company is the holding company for Garden of Eden, where you can find a tree that grows apple. As this mysterious apple is so tempting, entry ticket to the garden of Eden is selling at unknown prices - And I will cut the crap now. Haha...

Now jokes aside. Eden is a company that had been bleeding cash for many years. Despite that, the bleeding got worst when their power plant unit got flooded during a wet season in 2014. Not only incurring lost of revenue, it comes with additional cost for repair and maintenance as well. You might be asking, so how bad is it ?

In short, it is so bad that the external auditor from Ernst & Young had issued a qualified opinion that the company had material uncertainty related to going concern.

Ah ? What material uncertainty ? What going concern ? Alright, unless you have accounting background, you will not understand what is going concern. As for me with "rojak" background, I am going to explain to you in a very simple manner.

Going concern means - Can the company continue to operate properly for a period of time, say the next 6 mths or 12 mths. If a company keep losing money, it will reach to a stage where there is no more money in the bank, and no cash flow, and everything stuck and boom and bankrupt.

So, on 31st May 2017, Eden is slapped with going concern issue! Waah..... If it get worst, default in banks payment, then it can potentially slip into Pn17, and that is a big big warning.


So, should a share price drop when there are potential of slipping into Pn17 ? Obviously, a human with rational mind will think that manner. But according to the chart, Eden had broke away from a long term down trend, and the down trend resistant line had become a temporary support line for Eden now. Now, this is very interesting.

For a company rich in asset, if got cash flow issue, the first thing to do is to dispose off the asset and convert into liquid cash. You do not need a PhD to teach you this step.

So what kind of asset that Eden really have ?


Of course, if you browse through the list, the highest possibly is definitely the investment land at Gebeng, Pahang. First the land is vacant, secondly, it is for investment purpose. Since it is for investment purpose, then I don't assume that they want to develop the land, and will be looking to sell it off when the time comes. Make sense to you ? Well I don't know, but it makes sense to me at least, haha.

But I had to tell you that this is not enough. If you are doing your analysis research, you should not stop here. You should dig further to know where is this piece of land actually.

For this case, I will dig for you.


Since it is 450 acres, it is very big. I had no idea how big is 450 acres in this map, but I had plot out 2 potential location which is near to Sungai Karang, Gebeng.

By looking at it, this is just a piece of land, situated at Pahang, near the sea, and nothing much. But I have to tell you that if you are thinking so, you are wrong. First, you must notice that this land is very near to Kuantan Port. And do you know how valuable is the land near Kuantan Port. Go and study the case of Tenaga Nasional Berhad taking Integrax private.

Not only that, now we already know about the development of ECRL (East Cost Railway Line), with major eastern hub at Kuantan Port. And to have big development, we talk about big big piece of land. And 450 acres of Industrial land is actually very big.

Since this land is so good, let's talk about RM 12 psf for the land, reasonable or not? Reasonable la, because KL land all talking 500 to 800 per square foot, some talk 2000 per square foot. So Pahang talk RM 12 per square foot, very reasonable, maybe undervalue.... Haha

Based on 450 acre (x 43560) = 19,602,000 square foot, then x RM 12 psf to get the potential selling price.

Wow, a freaking RM 235 million !!!
To support my assumption, I will do research to see what are the asking land price. So iProperty got a
land is selling at RM 526 million for 928 acre, which work out to RM 13 psf.

So I assume RM 12, and reality check is RM 13psf. Reasonable assumption ?

Just the land alone, it is worth 75 cents for a share in Eden. So by selling the land at RM 235 million, I don't know if you want to smile or laugh, because I scared this company later will limit up.

As a conclusion, you know why you are still reading this blog ? Because, you will never find another site, or another guru, or another prominent investor teaching you such thing step by step for FREE. Everything is here for you to study as a reference.

Eden now slapped with going concern issue, but your decision to take the rocket or not, is your own choice.

Limit up to Moon? Mars? Saturn? or Pluto ? It is your choice also.


Tuesday, 6 June 2017

This Company can Load Up your Duit Raya Packet now!

In the stock market, we must admit that irrational things will happen. As a normal human being, we are always taught to be rational in everything we do. Rational in our thinking, rational in our action and there goes the list. However in stock market, many a times, we start to have self doubt when we are accessing stock rationally, yet the stock acted otherwise.

The irrationality of the market that frustrate most of the investor is when bad stock are in good times, and good stock are in bad times. This happened so often that investor are conquer by frustration, which lead to emotional judgment, and hence a potentially wrong decision. And often due to this, we will be shy to recognize and confront the wrong move made, hence, we will always repeat the same old movement again and again.

Many a time in investment, we have to really cling to our own precious study, and endure the market irrationality towards the pricing of the stock. Of course, here I am pointing out on stocks that are fundamentally good, yet traded at a misunderstood pricing.

Before I would hand to you this stock that had been misunderstood by the market, and trading at a irrational low price, I had to tell you a real scenario where I had encountered the same situation in 2016.

Back then in the spring of 2016, the Malaysian equity market is severely punished, with problem such as low crude oil price, volatile and weak exchange rate and a series of scams as well. Banks are doing huge restructuring and taking in big impairment that had drag down the financial reports. During those tough moment, it is where undervalue share with great fundamental become gems. So it is this one stock named KESM that I had noticed then which is very undervalued despite it's solid earning and cash position in the company.
As you can see, during bad times like 2016, a good stock can be misunderstood, and being priced at a valuation of PER x 5, despite the fact that the company had been growing in revenue, sector is beefing up for a much greater expansion, and the company had been sitting in huge cash position.

However, when the market turn on to a bullish note, albeit the company did improve it's bottom line EPS by 33%, the valuation shot up from trading at PER x 5 to PER x 15. And I had to tell you that this big leap in valuation brought KESM into almost four fold in price appreciation, from RM 4 all the way to RM 15.

So, did you get your lesson now ?


As the Hari Raya is coming, I would like to try to point to you this 1 valuable share that could increase your Duit Raya. This share I believe is bearing the same traits of being misunderstood for it's fundamental, and to see it trading at irrational prices, you either take action, or see people take action.

So this share is called KSL Holdings Berhad (KSL - 5038).

You might think that what is so special in this property developer now that can give you a fatter and juicier Duit Raya to spend.


For this, I have to show you few things that is happening in this company that is comparable to KESM.

Firstly, we must talk about earning. Base on FYE 2016, KSL had a final EPS of 31 cents. If we talk about valuation of PER x 5, that is also RM 1.50 already, right? Now let's forget about 2016, we will talk about 2017.

Based on Q1 FYE 2017, the earning is 5.25 cents. Most of the contribution are from property development in Johor and Klang. Others contributing segment is property management and car park.
Since KSL have a good track record and as property billing are progressive in nature, let's take annualized the earning and take 80% of it, that will come out to a projection of 16.8 cents for FYE 2017. I had to tell you this calculation is very "kiamsap" to the max, because as you can see property sentiment had started to pick up, I am taking a very bad case scenario by further discounting 20%. What if KSL 2nd Quarter is better, 3rd Quarter is even better, and 4th Quarter also around the same? Alright, we will stop building big mansion in the sky first.

Let's talk about putting a PER x 10 valuation on projected earning of 16.8 cents. That alone will see KSL worth RM 1.68 per share. I have to tell you that KSL is now trading at RM 1.25 and you have to be fast, because these 2 parties are not going to wait for you at all.

 

As you can see, the first party is Lembaga Tabung Haji. As a matter of fact, they had been mopping up KSL share since earlier this year, and it had gone even intense lately, with the latest being 870,900 units mopped up on 1st June 2017.


The second person mopping up is none other than director himself. As you can see, for the past 3 days, he had been committed in mopping 100,000 units from the open market.

Both their action signal 1 thing in accord - The share of KSL is very undervalued, misunderstood, and trading at irrationally cheap price !

I do not need to convince you further, but you have to look at the cash position as of lately.

As you can see, one of the major reason on the massive drop in share price is due to no dividend payment in 2016. With this RM 230 million cash pile in the bank, KSL will probably restart their dividend again in 2017.


To make sure the cash are not loaded out from extra loan incurred, this financial statement is a strong proof, showing great decrease in liabilities and bank borrowings as well.

In a nut shell, with RM 230 million in cash and only RM 80 million in bank borrowing, this is a net cash property developer company.

So, I had presented to you a company
1. Trading at low single digit PE
2. Trading 50% from NTA
3. Net cash company
4. Consistent development plan in Johor and Klang
5. Share mopped up in open market by director and institution fund


Now the ball is yours. Take the shot wisely. Good luck!

Thursday, 25 May 2017

Talk about business combo, probably you need to look at this company

Despite the 4 to 5 months long bull run in the KLSE, if you would agree with me, 1 of the segment which is still lacking is the plantation industry.

There had been a lot of headwinds in this particular industry. Firstly, the industry is hit by a higher minimum wages for it's worker. Subsequently, the usage of palm oil in edible consumer good is being boycotted by some Europe country in order to promote the usage of soy beans. Then, we have a cyclical weather of El Nino that will hamper the production of the fruits and the OER (Oil Extraction Rate) of the fruits.

While all this uncontrollable factors are inevitable, it will then boils down to the plantation company's prudent management as well as new strategy in order to keep it's competitiveness in the industry. Those company that had taken initiative to evolve for the better will continue to survive and keeping on the top of the packs.

But, if I would to ask you - How many plantation companies that you know, had taken such measure to make a bold step and evolve for the better ? For some bigger plantation company, probably that would be having a palm oil mill for oil extraction. But for most, they just want to plant palm oil, and sell palm oil.

Of course for now, I am going to share with you this 1 company that had taken a bold step in evolving it's business and adding value to it's existing plantation operation. As you know that global warming had push further on the usage of green energy, and what this company does in investing for a Biomass and Biogas renewable energy plant is just perfect to the notch.

Need not much of introduction, this company Sabah based plantation company is called - CepatWawasan Group Berhad (Cepat - 8982).


It was in 2014 that Cepat had invested in a 12MW Biomass Renewable Energy Plant and a a 3MW Biogas Renewable Energy Plant. However, the Biogas Renewable Energy Plant is currently upgraded into 3.8 MW, hence putting a combined output of 15.8 MW.

Now it is the time where Cepat will be able to reap the profits from the investment from the operation of the renewable energy plant. For the 1st Quarter of 2017, the renewable energy segment had contributed to 6.35 million in revenue. The figure will be expected to be raise with an additional 0.8 MW added into the Biogas plant, as well as more production of fresh fruit bunches this year.


The latest quarter had saw Cepat revenue increase significantly. For the past 4 rolling quarters, it had achieved a total EPS of 9 cents.

For a consistent growing company that pay dividend with diversified income from renewable energy, it will be fair to value Cepat based on PER x 12, which bring to a valuation of RM 1.08.


As you can see, the price of palm oil had been looking at a long term bullish with higher volatility in price swing. I will not give you a 5000 words research to tell you why palm oil is going up, but summarize in 3 of my own point
- Population is going up, and demand for food is going up.
- The higher usage of palm oil blend in bio diesel.
- The global weather is getting hotter and hotter, and a tough crop like palm oil tree can withstand harsh weather, making it a reliable investment.

By looking at the CPO price chart, we can possible see CPO being traded at the range of 3000 for the next 3 months due to a hotter weather generated from El-Nino. And a hotter weather with lesser rain will encourage more harvest at the plantation site, hence boosting the input to the renewable energy plant.


Now as you look at the price chart of Cepat, honestly I do not think Cepat will fall back below the support at 80 cents. This is due to additional revenue stream from the renewable energy division that can cushion the price fluctuation in the CPO. However, the share price could possible poise for an up leg, which can potentially looking to hit RM 1.05.

Last but no least, there had been a strong correlation movement between MHC and Cepat. It is understandable that MHC is also the biggest single shareholder in Cepat. With corporate exercise spanning across the equity market, it will not be impossible for Datuk Mah King Seng to do a reorganization with M&A activities to streamline the group operation and unlock the value in Cepat.


So, if you are a investor that like recurring income, I believe a plantation and renewable energy combo can be considered as one of the good combo that you can get in the market. Of course, through the journey, I believe the dividend from the business operation will subsequently increase.

In the end, you have to be "Cepat", because if you are "Lambat", then you will get nothing.

Monday, 22 May 2017

Will John Cena buy this stock ?

The latest announcement from Bank Negara Malaysia on the economic performance of Malaysia in 1st Quarter of 2017 had definitely took many with shock as GDP is recorded at 5.6%, which is way above the expectation of many, including analyst. The growth is very attributable with manufacturing and exports of E&E related goods.

There is no doubt that a lot of Malaysian company that are focused in export market are seeing turnaround in their company, while many of them are reaping huge profits during this period of time as well.

Since the export market is so good, then we will definitely need to look at the segment which are inter related with the export market, and preferably the supply chain of the export market.

When we talk about export, we will talk about logistic, and it will then go down to packaging and warehousing. For logistic, I believe this theme had been looked into for the past 2 months, as we had see how share price of Gdex, Century and Complet had risen.

As for me, I think there would still be hidden gems laying around in the packaging industry.

In fact, the packaging industry had been hotly targeted for the past 1 year. We had seen the take over and privatization of Century Bond, the take over offer of Denko (food packaging). This is just to name a few, and there are a few more out there which I will let you to do your own homework in researching those out.

But for now, I would find delight in this particular company that is involved in plastic packaging of consumer products, industrial goods finishes as well as export market.  According to market research Report Buyer, the plastic packaging industry is growing at a pace of  CAGR 4.12% and expected to hit USD 1.145 trillion in 2022. One of the rising growth will be attributed to the Asia Pacific region, where emerging country are coming up and rising population are pushing the demand.

As for investing into equities, choosing the right industry is important, but what is more important will always boil down to choosing on the right company as well. And for now, I am going to unveil to you yet again a company that is in the right industry, right management, solid fundamental, good track record of dividend payment of at least 40% of net profit, sitting in a net cash position and is looking good for a corporate exercise on Bonus Issue.

Now, I will let John Cena to show you this company. If you don't like it, then go and find John Cena, he will make it right for you. Hahaha...


I know you could be asking - is there still such good stock lying around in the KLSE ? Honestly, I can't tell you it is a Yes or No, but I will show you my finding, and you will be your own judge thereafeter.

So this stock, straight forward now - Is BP Plastics Holdings Berhad (Bpplas -5100).

Bp plastic products

I will not talk so much on it's fundamental, but summarized to you that this company is now Net Cash Position and paying 8 cents dividend for the past 2 years.

In fact, I will like to tell you the 3 reasons why this company will be likely to go for a Bonus Issue.

The first reason is to use up the share premium account.

As you know, the latest amendment in the Company Acts had abolished Par value and Share Premium, but company are given 48 months to settle out the Share Premium account. The current law will only see Bonus Issue given out through Retained Earnings. The money in the Share Premium account can be used for Bonus Issue and Related Fees and Charges from Corporate Exercise.

As highlighted in the statement that Bpplas is having almost RM 5million in Share Premium account, they can use the account to pay off the for at least 2 corporate exercise. Since there are retained earning of RM 67 million, who knows if Bpplas is going for a 2 bonus share for every 3 shares held ?


The second reason is the enhance market liquidity.

As you can see here, the latest release of Annual Report 2016 had indicated that the top 5 shareholder in Bpplas is holding  approximately close to 70% of the total shares in the company. That will see probably less than 30% being floating in the market. And since this is a good company, shareholder will be even more reluctant to see their share, since the dividend is still consider very good at the current level.

For this, a bonus issue will enhance the public trading liquidity, and will also attract more fund into investing into the company.

The third reason is to cater for future growth and expansion.

Bpplas had saw the demand of the market, and had proactively invest RM 13.5 million to acquire a new 3m cast stretch film machine in 2015. The new machine will be looking to put in double digit sales growth, which is expected to see contribution in 2017.

Since the machinery will be capital intensive, and for Bpplas to keep it's dividend policy of at least 40% of net profit for distribution, it will be good for Bpplas to do a Bonus Issue now, and subsequently do another right issue with free warrant for future expansion.


Technically looking, Bpplas had broken away from a long term downtrend line. It will be looking set to challenge the horizontal resistant line in the coming days. With a good anticipation on the coming quarterly report as well as high chances of having Bonus Issue, I believe that Bpplas can rise up till it's past glorious form of at least RM 1.80 in the near future.


As for you, either you are tagging in with John Cena, or, you can tell John Cena to give you a FU finishing. Opps, now it is called "Altitude Adjustment". Haha...

Monday, 15 May 2017

This Austin might leave you Stone Cold

In the equity market, there are many kind of analysis styles. Different analysis will give different stock picking criteria.

As for me, one of my important stock picking criteria is that the stock must still be within an acceptable level from it's lower price level of consolidation stage. Secondly, the stock must also have a good future outlook, be it from corporate exercise, new business venture or having better financial performance in the coming days. If you adhere to this simple rule, I believe that you stock selection will probably see some improvement.

So, you would be asking that what if you did not come across any stock with such criteria?

The answer is simple - Then don't do anything. Fair and simple answer, right? Of course if you choose to chase other stock, that is altogether a different kind of risk, and you will definitely expose to greater risk. There is not right or wrong in your decision in stock market - but only consequences.

The market had been quite bullish for the past 4 months, and it is utmost important that you will need to make higher standard in your stock selection criteria. Since the month of May is talking about Financial reporting month, then maybe it is time that we look at some company with acceptable level of financial performance, yet is still consider undervalued at it's current price.

I will be going to straight forward today, and introduce you this small niche property developer company called - Gromutual Berhad (Gmutual - 9962)

Gmutual is a Johor based property developer that derived revenue from 3 segment - Property development, property management and plantation. The property development segment is the main contributor of revenue.

What I like about Gmutual is that this property developer company does not rush itself into a lot of development at one time, but rather make proper launches that ensure it is able to sell.


Based on the most recent FYE 2016 result for Gmutual, the company did achieve commendable result with 6.18 in EPS, and distributed a total of 2 cents in dividend during 2016.

I am in the opinion that Gmutual will continue to see better EPS for the next few quarters due to it's project heading for completion. The Austin 18 commercial project in Iskandar, Johor is heading for completion in 2017.

As you can see, the billing of property development always come in stages. And the huge chunk of revenue that can see the most profit will always be at the ending stage where the draw down do not involved huge structural building cost.

For example, on VP, the developer will claim 12.5% from the total price, which can be translate in profits, as all of the building structural and construction expenses had been draw down earlier. Attached below is a residential progressive billing for your reference.


Since Austin 18 is heading for completion stage this year, I am expecting Gmutual to deliver a stronger EPS for the coming quarters.

Although I might not be expecting major corporate event from Gmutual, but this company is still considerable attractive due to it's current pricing.

The recent chart does support a potential uptrend from Gmutual, and at the price of RM 0.47, there are still space for capital appreciation if you are looking to value Gmutual based on FYE 2016 EPS 6.18, PER x 10 = RM 0.62. The NTA of the company is RM 0.89. To add on some bonus, Gmutual had been paying dividend for the past 4 years, which is a commendable track record for a smallish property developer.

Moving forward, the company will be eyeing more towards affordable housing in Johor and Malacca.

So, again, please do you due diligence before investing. If you are thinking that the completion of Austin 18 in Iskandar will be an earning catalyst for Gmutual in FYE 2017, then you should do what you need to do.

Thursday, 4 May 2017

名将之战



战场,

一山还有一山高 ,

普将胜负运气告 ;

兵法策略数多招 ,

传奇名将
一招 。



Tuesday, 25 April 2017

Eating Chocolate is easy, but understanding the making of a Chocolate is an Art

According to my previous article in GCB, I believe now you will be anticipating eagerly to know my thoughts and perspective into Guan Chong Berhad (GCB - 5102).

Here, I will share with you 2 of my views into GCB from different angles.

On the first angle, I will definitely need to highlight the massive 40% drop of cocoa prices in the international market, and it's subsequent effect for the next 2 to 3 years.


Let's go to some basic of economics - The Law of Supply and Demand.

If you do not really know what is supply and demand, I will try to explain to you in the simplest manner I can using my own layman words. Basically, consumer creates demand, and manufacturer creates supply.

For a consumer point of view, when a subject item is cheaper, it will create more demand. For example, a chocolate bar selling at RM 25 might probably get 100 buyers, but if the same chocolate bar is now selling at RM 10, then there will be 700 buyers willing to buy it. So, when an item get more expensive, the demand become lesser ; vice versa, an item get cheaper, more demand. So, I assume you already understand the terminology of "demand" now.

Now, we will look into the "supply" of the chocolate, since we are talking about chocolate now. For a chocolate manufacturer point of view, if the chocolate is going to be sold at RM 25, then they will be willing to manufacture 900 pieces, but if the chocolate is to be sold at RM 10 (baseline price), then the manufacturer will be willing to manufacture 100 pieces only.


Let's say at the baseline price of RM 10, the cost is RM 9 and the profit is RM 1. Now since the raw material price - Cocoa, had dropped to almost 50%, the input production cost become lower now.

Let's assume the cost is RM 4, and the manufacturer continue to take RM 1 profit, so the new baseline price is RM 5 now.

As you can see in the chart, there will be a new Supply Curve S2 formed due to the lower production cost. And without sacrificing the manufacturer own profit (Maintain at RM 1), now the manufacturer is able to sell at a cheaper price (due to cheaper raw material cost), hence pulling more demand from consumer as the price of chocolate bars drop. This will see a new equilibrium at point E2, where buyer increase from 400 to 500.

Based on this simple analysis, I can tell you that Chocolate demand will pick up again, and it will definitely going to last for more than 1 year if there is no supply disruption. When that happen, GCB will be having a busier year grinding more cocoa which will translate to more revenue, and more profits.


Now, after looking at the macro economic scale, I will bring you to see the immediate relationship between the prices of cocoa and the share price movement of GCB.


As you can see from above, I had done a same period comparison from year 2011 to the current 2017. The price movement of the cocoa and share price movement of GCB definitely have an inverse relationship, whereby when cocoa price increase, GCB share price will drop, and when cocoa price decreases, GCB share price will increase.

This inverse relationship is of course by no means of luck. If you would understand the law of demand and supply, you would understand that when chocolate bars are cheap, then there will be more consumer demands. When raw material become cheaper, chocolate bar manufacturer will increase their production and sell cheaper chocolate bars. The increase in production from the chocolate manufacturer will then increase the buying of cocoa powder, which means, GCB will need to buy more raw cocoa and grind them into cocoa powder, and sell them to the chocolate manufacturer.

That is a simple 2 different angle of view I had presented to you on my analysis towards GCB.

If that is enough, then go and do your own due diligence and study.


Still have doubts? Alright

Now, I will give you one more information before you decide to invest into GCB.

I know that you might be wondering why the 4th Quarter FYE 2016 result is so poor. As you can see from the statement obtain from Bursa filling, the 4th Quarter took in a lot of impairment from forex and commodity futures contracts. These 2 item alone had taken RM 50 million off from the profits, which can contribute to 10 cents of EPS (Share outstanding only 480 million)

Since the MYR had already rock bottom, and could be poising for recovery due to foreign fund flowing back into emerging market, this is a good time again for GCB, ready to ride high on 2017 with a clean sheet after full impairment done.

So, I had gave you a 3 point shot. But, the ball will be on your hand, to take the shot, or to call it off. But again, make your own study until you are convince, don't rush into it.