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!!!

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