Tuesday, 21 March 2017

Alibaba will give this company a big splash of profit

Alright, I can sense that some of you guys might be anxiously waiting for my next exciting stock pick. So, in order to satisfy the hunger of yours, I had poured in additional efforts, sacrificing my rest time during my weekend, in order to share with you my up coming insights on potential developments that are taking place in Malaysia which will benefit this company.

Although the market continue it's bullishness even grow stronger than ever, it remained important in selecting the right stock to invest, with a potentially great future growth in it's prospect. As of now, the latest news that are taking the market by storm will be the news involving Jack Ma's Alibaba to make Malaysia as the regional distribution hub.

As for me, when this kind of news arises, it is most important to be very market sensitive towards the beneficiaries of this kind of big capital investment that will boom up the supply chain of the whole industry. Of course, when you are fast, you take position on a cheaper price, when you are late, you will have to pay high premiums.

If you don't believe me, then I will have to refer back to the case of Dataprep in order to wake you up to the brutal reality. As you can see, I had started to mentioned on Dataprep starting in the earlier January 2017, that was 15 cents then. Subsequently, Dataprep had traded towarads 20 cents, and 25 cents. In my latest highlight on Dataprep and it's potential corporate action, that was just 30 cents, but I had warned that anyone who is slow will be left out, or risk paying a high premium towards the growth of the company. To date, Dataprep is now trading above 50 cents, and I will rest my case here.

As gracious as I am, now I am willing to point out to you yet another company that have great future prospect, and this time, it will be closely related to the investment that Alibaba will be making to make Malaysia as the regional distribution hub.

So for those that had missed out on Dataprep, I hope this will give you another chance again, but provided that you are quick enough to make the decision. And as for those that continue in disbelief on my sharing, please do not waste you precious time here, because I am going to write a very long article, and you will feel terribly stupid if you read it, and do not belief it, because I do not want to waste your precious time.

So, that's a deal, alright?


Now, if you would remember, I had took mentioned that the Malaysian packaging industry are being the most active industry that are prone to take over / privatization exercises. In fact, the recent few years had saw company such as Maypak, Century Bond being privatized. Denko was offer take over while maintaining listing status. Then we have owners of Century Logistic selling controlling stake to CJ Express Korea, the largest logistic player in S.Korea. To summarize, all this corporate exercise involved huge money, and it doesn't come by mere luck.

Of all the company, I am most interested in the privatization of Century Bond, which I believe will be the key of a series of chain events that I forecast to see. And for this, since Century Bond had been privatized by Kumpulan Perangsang Selangor Berhad (KPS - 5843), then I believe that greater things are going to happen to KPS in the coming future.

I know, now you would be wondering how will KPS be linked to Alibaba and the rest.

Let me bring you back to some history on the privatization of Century Bond by KPS. It was in August 2016 that KPS had proposed to acquire the remaining 71.44% equity interest in Cenbond for RM 150 million, which work out to about RM 1.75 per share.

And to be honest, albeit KPS paying a premium of about 20%, this is a way straight forward to the point, fast cut deal, and Cenbond was delisted in January 2017. Of course, looking on surface, this is a very good deal for Cenbond shareholder as KPS is willing to pay a good premium, putting a valuation of PER x 14.21, which is slightly above the industry average. But what is boiling behind the quick privatization could opened your eyes bigger than ever.

Now, I will link you up on the relationship of KPS and Alibaba, so listen up.

As you would know, Alibaba is e-commerce B2B, B2C. And after a transaction is seal, the purchaser pays, and the supplier deliver the goods. If you had experience of ordering goods from TaoBao, you would notice that your parcel will be wrapped up with plastic stretch film or adhesive tape to protect your goods from water and act as a cushion towards the ruthless handling from the workers. Internally, they will also put in EVA foams to act as a cushion of protection from external pressure.



All these protection are very crucial for the parcel to be delivered and arrived to the customer in a good piece. Aside from these, the demand for corrugated products will also increase, such as corrugated boards and corrugated cartons.

So what have all this to do with KPS ?

Since KPS had acquired Cenbond, then I will have to tell you that it will have to do with Cenbond, and such, will benefit KPS since they took it private. The strong reason is due to Cenbond actually had a factory situated at Nilai, which is very near to KLIA, and the upcoming KLIA Aeropolis which will also see Alibaba regional distribution hub, is also very near to Nilai.

Being a regional distribution hub, we are talking about handling very huge volumes since Alibaba business is so terribly huge and still expanding.

In fact, according to close sources, KPS could have a close hand involved in the distribution hub, leveraging on Cenbond current packaging services, proximity to the KLIA Aeropolis and experience in warehousing solutions, which is the ultimate reason on KPS choosing to privatize Cenbond in a quick manner.

With the long awaited take over of Splash by the Selangor government, KPS which holds 30% will also stand to benefit from equity payment. While the exact amount is yet to be identified, a RM 1.5 billion payment of equity will land KPS will RM 450 million in cash.

I am predicting that the "Splash saga" will resolve by 1H 2017, and subsequently, the money received by KPS will see a special dividend to shareholder, and the remaining cash load will be reinvested to the new business - which could potentially involving warehouse and packaging solution to cater for Alibaba expansion in Malaysia.

Technical chart wise, KPS had indeed broken on some long term resistant line, supported with substantial volume. I believe this event is a significant pointer in seeing the KPS benefiting from Century Bond future prospect, and also concluding the Splash take over issue by Selangor government.

As usual, chances are sometimes once in a life time. However, I do not want to label KPS being in the same ranking of opportunity as of Dataprep. But, it's prospect is just too big to be ignored, especially when we are talking about Alibaba making Malaysia the regional distribution hub. If you are sensitive enough, you would have know by now that Alibaba had sent Gdex shares flying, Appasia shares flying and Century Logistic shares flying.

Since no one talks about packaging solution, so I am going to point out KPS to you now. And for this, I am looking to see Alibaba sending KPS shares bursting into sky. After all, KPS is sitting on NTA of RM 2.60. If it is heading towards RM 2.00 without you, again I have to tell you this, you have nothing but your own to be blamed.

Champagne or Water, you have to decide.

7 comments:

  1. Thanks for promoting kps, i hold a lot on it, and waiting 2.00

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  2. very good information, but i am too late.......

    anyway Thank You for good info

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  3. Remarkable input....maybe might impact alot on packaging n delivery line too..thks

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  4. Well said n excellent analysis :)

    ReplyDelete