Monday, 31 July 2017

Good opportunity is nothing without action. This opportunity can make you a hero if you believe in it

Talk about DRB-Hicom selling off 49.9% stake to Geely of China, I would assume that this event might still appear fresh in our mind, and also resemble one of the hot market topic in the street. Back then, if you are still in the market, you would know that Proton Holdings Berhad is still listed in the KLSE 5 to 6 years ago. That was not until DRB privatized Proton at a price of RM 5.50 a share, which cost them a huge RM 1.29 billion bomb.

Today, I would like to teach you how to look at the event of the privatization of Proton by DRB back then from November 2011 onward.

Pointing on the privatization of Proton by DRB, I would say that many of us see this as just another corporate exercise of merger and acquisition between companies in order to create synergy, but fail to interpret the happening of the event in order to turn them into trading / investing advantages. Of course, everyone is not born smart into this world and knowing everything. The universe just doesn't work this way. As for the capital market, I have to tell you that the ability to predict and interpret based on given facts from media along with market participation plays an important role in good decision making to make money out of the market.

One of the main point that you need to know is that major corporate exercise that involves core asset disposal doesn't happen frequently in a company. Such an event, you can either do it out right and complete it 1 time, or play around the news for a few times before concluding the sales. Both are pointing towards 1 same objective - disposal of the asset, but different method yield a different manner. One good example will be Gpacket. If you are very found of Gpacket, you would know that Gpacket had been in the news for at least 3 years before the real deal is concluded at TM. That is at least is share price had been speculated for at least a few rounds, which is good if you know how to play the game.

For the case of Proton, the same will apply. But since this is an almost 6 years ago event, let me bring you back to see what happened. I will teach you how to look at event such as this.

As you can see, the media first toyed on the news that Proton is heading for a management buy out by firms such as Naza, Sime or Drb in the market at November 2011. Proton had surged from a lowly price range of RM 2.60 to a high of RM 3.50 before denial of such news came to subdue the price surge.

However, the news subsequently become more solid as time is running out and Khazanah looks set to divest all of the 42.7% stake. Market returned in speculating the front runner, and Proton share price continue surging to almost RM 5.00 in December 2011.

To cut the story short, DRB is the concluded winner at RM 5.50 a share for a General Offer for all Proton minorities shareholder after buying all of Khazanah stake.

As you can see, one of the major characteristic is that Proton share price did not falter much despite the news of denial. Subsequently, the news continue to brew with more interest and it's share price went higher.

So, if we implement the historical lesson of Proton into Nationwide, you might be interested to see that Nationwide may bear the same traits with Proton. 

According to the movement of share price, Nationwide consolidated at a higher price range, and volume consolidated, forming a mirroring triangle. This is despite the news that Century and Nationwide issue a denial.

What do I see here ?

From my perspective, Nationwide could be at it's stage 1, just like how Proton begins. What we know is that Century will be having their multi-storey warehouse ready by 1H of 2018. However, plans are intact for Century to start parcel delivery as soon as 4Q 2017. If you tell me how to get this fleet as fast as possible, the most possible answer will only lies at Nationwide.

At the current scenario, Century is lacking of a fleet of transport to penetrate into the parcel delivery industry. On the other hand, Nationwide is lacking of a strategic partnership that can provide them with consistent supply of delivery order and better management process in order to fine tune the operation.

The logistic sector had been firming up with M&A, and the possibilities of Century teaming up with Nationwide is just as good as synergy formula of 2+2 = 5.

End note, I had shown you how Proton had moved up with it's M&A with DRB in 2011. Now, it is your choice to either be part of the show, or just to see the show. This could be your last chance before Nationwide will shoot up higher as news firm up later. As mentioned previous, I had bet my name and reputation into Nationwide to have a M&A exercise very soon. Now, time will only tell how it will goes.

No comments:

Post a Comment