Sunday, November 1, 2015

Malaysia Marine & Heavy Engineering Berhad (MMHE - MHB 5186)

Company background 

Malaysia Marine and Heavy Engineering Holdings Berhad (MHB), formerly MSE Holdings Berhad, is a Malaysia-based company. The Company is engaged in the provision of heavy engineering and marine services, which focuses on the oil and gas sector. The Company operates in two segments: engineering and construction, and marine conversion and marine repair. Its engineering and construction business offers a range of oil and gas construction and engineering services, from detailed engineering design and procurement to construction, installation, hook-up and commissioning. Its marine conversion business includes converting vessels, such as very large crude carriers (VLCCs), Aframax tanker and offshore oil rigs into floating structures for the offshore and gas industry. Its comprehensive marine conversion services range from engineering design to fabrication, installation and commissioning of these structures. In October 2011, it dissolved its wholly owned subsidiary MSE Corporation Sdn Bhd.


Current price (1/11/2015) : RM 1.10
Target price by year end 2016 : RM 2.50 (given crude oil hovers at $USD 60 per barrel).


MMHE is an indirect associate of Petronas via its 62.6% stake in MISC Bhd, which in turn owns 66.5% of MMHE. (Even if O&G are doing not too good, MHB's parent (MISC) can utilize the yard to service and repair their LNG Tankers, please remember, MISC is among the THIRD LARGEST SHIPPING COMPANY IN THE WORLD!).

As we can see, the company is being controlled by the TOP 30 Largest Shareholders who owns the total of 92.62%. The remaining portion left is only 7.38%.

The interesting fact is that, most of them did pay RM 3.80 per share which they had obtained from its initial public offering (IPO) back then.

Due to the fact that the price of crude oil has been heading downhill for the past 2 years, the share price has dropped drastically and I think it has reached its bottom at 90 cent few months back.

Their 3 main core businesses are as follow :

1) EPCIC construction services for the offshore <--- Greatly impacted by falling crude oil price.
and onshore oil and gas industry.
EPCIC services include: 
• Deepwater facilities
• Integrated platforms
• Wellhead platforms
• Compression, dehydration and water injection modules
• Topsides and hulls
• Jackets
• Living quarters
• Turrets and mooring buoys
• Enhanced Oil Recovery facilities

2) OFFSHORE CONVERSION <--- Impacted by falling crude oil price.
One-stop centre for converting vessels such as VLCCs,
Aframax tankers, offshore oil rigs and LNG carriers into
floating structures such as:
• FSOs
• FSUs

3) MARINE REPAIR <--- Interesting part is here.
Comprehensive marine services include repair,
refurbishment and upgrading of a wide variety of vessels,
including energy-related vessels such as:
• Crude oil tankers
• LNG Carriers
• LPG Tankers
• Offshore Support Vessels
• Offshore Rigs
Ability to undertake complex and higher value projects
such as repair and life extension of LNG carriers and
offshore rigs. Other key services include ‘jumboisation’

and newbuilding of vessels such as tender barges.

Based on their 2014 annual report. Their secured orders are as follow :

 RM 1.6 Billion which includes FPSO Cendor conversion for MISC Berhad, KBB Topside for KPOC, Tapis-R topside for EMEPMI, SK316 for PCSB and Malikai TLP deepwater for Sabah Shell Petroleum Company (SSPC).

MHB was also awarded the PCC Besar A topside and jacket project in September 2014 by Petronas.

MHB received a Subcontract Agreement from Hyundai Heavy Industries (HHI) on 2 October 2014 for the fabrication of well head platform, jackets and the connecting bridge for the Bergading Complex, located offshore Peninsular Malaysia, within Block PM302 immediately south of the Malaysia-Thailand Joint Development Areas (MTJDA), approximately 150 kilometres North East off Kota Bharu in 55 to 60 m water depth. Total estimated weight of all structures when completed is approximately 14,800 MT and is scheduled for sailaway and delivery to the project’s ultimate client, Hess E&P Malaysia BV by April 2016.

MHB has over four decades of experience. They have served more than 3,700 vessels and rigs for both local and international clients.
The yards are in full occupancy of 15 vessels and rigs for repair and refurbishment works at the same time.

Throughout 2014, some of their notable projects include LNG vessel repairs for LNG Hyundai Utopia, LNG Puteri Firus and LNG Seri Anggun.


Technip MHB Hull Engineering Sdn Bhd (TMH) -Malikai TLP project.

MHB-SHI LNG Sdn Bhd (MSLNG) - Cargo Tanks for two LNG vessels (Puteri Nilam and Puteri Delima of MISC Berhad)
Delivery of one LNG Carrier “Shen Hai” for an intermediate dry-docking repair (Singapore).

MMHE-ATB Sdn Bhd -  In the last quarter of the year, the company has been awarded major pressure vessels and tanks orders from SAIPEM France for the Kaombo Project in Angola and from South Korea’s HHI.

Possibly the biggest beneficiary of RAPID. 
Source : The Star

With the recent announcement of Budget 2016, Investment of RM18 billion estimated in 2016 for the Refinery and Petrochemical Integrated Development Project (RAPID) Complex in Pengerang, Johor.

I like the properties and land that they own, with a combined area of 25.545 million square feet which in turn is equivalent to 573 acre in both Plentong and Pasir Gudang. Which means they have the real capability of competing with other big players.

If the price of crude oil could reach $USD 60 per barrel in 2016, we could see the share price of MHB rising to RM 2.00 at least. 
MHB has RM 714.555 million of cash in hand, their total number of shares issued is 1.76 billion which in turn gives us RM 0.405 of cash value from the current share price of RM 1.10. So you are only paying RM 0.70 for MHB's share and I have mentioned earlier there are only 7.38% of shares not held by the TOP 30 big boys. 

This might be one of the play of ValueCap fund. 

We want this kind of company because they hardly have any debt/borrowings. 

Wednesday, December 24, 2014

London Biscuits Berhad (7126) 2015 Stock Pick

Fair value : RM 0.83
Current Price (24/12/2014) : RM 0.60 
Potential Upside on Fair Value : 38.33%
Earning Per Share : RM 0.1246

Refer below :

Company Overview :

London Biscuits Berhad is a Malaysia-based company engaged in manufacturing and trading of confectionery and other related foodstuffs. The Company offers packed and ready to eat products, which can be categorize into corn based snacks and cake products, such as Swiss rolls, pie cakes and layer cakes. In addition, it also manufactures range assorted chocolate confectionery, including chocolate-coated peanuts and biscuits, pancake cookies, jelly and puddings, wafer sticks, cup sticks and snack noodles. The Company’s products are marketed under the brand names of Lonbisco, London, Kinos, Gega, Caca, Mizu and Hiro. Its direct subsidiaries are Khee San Berhad, which is engaged in investment holding, and Kinos Food Industries (M) Sdn Bhd, which is engaged in investment holding, manufacturing and trading of confectioneries and snack food. In addition, its indirect subsidiaries are Khee San Marketing Sdn Bhd; Khee San Food Industries Sdn Bhd, Kim Choaw Sdn Bhd and Kinos Food Trading Sdn Bhd.

52 weeks High RM 0.93 
52 weeks Low RM 0.565

Balance Sheet :

Fair value : RM 0.83
Current Price (24/12/2014) : RM 0.60 
Potential Upside on Fair Value : 38.33%
Earning Per Share : RM 0.1246

Refer below :


EGM to be hosted on 31st December 2014 to authorize the proposed bonus issue of ONE warrant for every FIVE existing shares.

Wednesday, November 5, 2014

Revised Target Price For Mitrajaya : November 2014.


In March 2014, I have written an entry for Mitrajaya Berhad (9571).
Kindly refer to this post here.

Current price @ 5th November 2014 - RM 1.01
Target price by March 2015 - RM 1.54

I gave out the first buy call when it was priced at RM 0.49 per share for a projection target price of RM 0.90 per share due to the fact that it's FY 2013 earnings was 7.43 cent per share.

However circumstances have changed over the course of this few months, Mitrajaya remain as the best small cap construction stock to be chosen due to the following reasons :

i) Significant increase on its current order book tenders which stood at roughly RM 1.4 billion ringgit. Yes it is quite big for a small company with about RM 200 million share capital. Recent contracts awarded are as shown below :

With the current order book, Mitrajaya Bhd should be in a safe region for the upcoming 2 to 3 years. Best part is that I have not included it's property segment business yet!

ii) Interesting growth shown in the year 2014 :

Comparison of earnings in the past years are shown below.

iii) It's property division project which is 280 Park Homes in Puchong is approaching it's completion. Major structural works are almost finished and the expected completion will be around October 2015. Gross Development Value : RM 330 million.
Attached below is some of it's current progress that I have obtained from their official website :

iv) Their next property project is Wangsa 9 High Rise Condominium which will be launched next year with a total gross development value of RM 650 million comprises of 565 units Condominiums in 3 blocks. It will be the tallest condominium in Wangsa Maju and it is strategically located besides LRT Sri Rampai.

v) Undervalued land banks which has not been revalued since it's listing (90's) which in book only shows about RM 160 million whereas the market value would be about RM 624 million by now, primarily consists of the following :

Happy investing ;)

Saturday, November 1, 2014

October 2014 Summary

In the last 4 weeks, there have been few significant events that we should pay close attention to :

1) IMF cuts the global economic growth forecast.

2) Saudi Arabia are willing to sell crude oil at a lower price and boost its production, it's official spoke person even said that they won't mind if the price reaches 70-72$ per barrel. As of Friday 31/10/14 , WTI and Brent are trading at $80.54 and $85.86 respectively.

3) After the 2008 sub-prime crisis that hits The United States, The Federal Reserve have been providing a lot of economic stimulus such as Quantitative Easing, which the Fed supports the stocks market by encouraging banks to make more loans and hence the idea works by bank to take the new money and buy assets to replace those they have sold to the central bank. In just mere 4 years, the Fed has spent about 3.7 trillion dollar on it's quantitative easing program. And it has officially ended QE on Thursday 30/10/14.

4) However, as the Fed stops QE, Bank Of Japan made a huge surprise, Japan's Prime Minister, Shinzo Abe announced that they will be expanding their QE program at even faster pace of about $712 billion a year! Their goal is to reduce deflation and at the same time put an end to it.

5) Gold and silver price tumbled to a 4 years low thanks to Bank Of Japan's decision, which means there will be a huge rally on share markets that are about to take place.

Saturday, March 1, 2014

Stock Pick March 2014 : Mitrajaya Holdings Berhad

Mitrajaya Holdings Berhad 4Q 2013 financial report :

Current price (28/2/2014) - RM 0.49
Target price - RM 0.90
4Q 2013 EPS - 7.43 cent
NTA - RM 0.88

The earning per share for the financial year ending 31 Dec 2013 is at 7.43 cent per share. Increased by 63% as compared to the financial year ending 31 Dec 2012 which was at 4.54 cent per share.

The board of directors is recommending a 2 cent single tier final dividend for the financial year ending 31 Dec 2013. This is to be finalized during the AGM.

I have compiled the list of Mitrajaya current order book along with the values, start date, and expectation of completion.

For the fourth quarter ended 31 December 2013, the Group's revenue increased significantly by RM34.79 million (39.1%) to RM123.88 million from RM89.09 million as reported in the preceding year's corresponding quarter. Correspondingly, the Group's profit before tax in the quarter under review rose by RM5.64 million (40.9%) to RM19.42 million from RM13.78 million in the preceding year's  corresponding quarter.

 The increase in the Group's revenue and profit before tax were mainly derived from construction, property development and healthcare divisions.

For the 12 months ended 31 December 2013, the Group's revenue of  RM338.44 million was higher by RM87.90 million (35.1%) from RM250.54 million in the 12 months of 2012,leading to a growth in the Group's profit before tax by RM12.46 million (44.8%) from RM27.84 million to RM40.30 million. All divisions has improved in their financial performance in 2013 as compared to 2012.

The Construction division's revenue increased by RM55.76 million (34.9%) from RM160.00 million to RM215.76 million for the 12 months ended 31 December 2013. And, its profit before tax improved by RM1.42 million (12.0%) from RM11.79 million to RM13.21 million for the 12 months ended 31 December 2013. The increased in both project's construction cost and finance cost has reduced the overall profit margin of this division.

The Property development division has also contributed higher external revenue of RM95.88 million for the 12 months ended 31 December 2013, RM27.88 million (41.0%) as compared to a revenue of RM68.00 million in the preceding year's corresponding period. It was mainly derived from the increased in revenue contribution from South Africa property and sales of completed units in Kiara 9.

However, with additional finance cost incurred during this period which saw it rise by RM1.32 million, its profit before tax increased by RM1.84 million (17.0%) at a lower margin from RM10.81 million to RM12.65 million. The additional finance cost was incurred to finance the on-going property projects and completed properties held for sale. 

On the back of higher revenue for the 12 months ended 31 December 2013, the Manufacturing division recorded a profit before tax of RM0.72 million as compared to a loss of RM0.48 million in the preceding year corresponding period.

The Healthcare division managed to turn around and reported a profit before tax of RM0.59 million as compared to a loss of RM2.13 million in the preceding year corresponding period. The significant improvement in financial performance was mainly due to the increased in revenue and reduction in operating expenses. The profit was mainly derived from the disposal gain of a premix plant.

 In additions, this division has written off huge amount of capital expenditure in 2012 after closure of some non-performing centers. The profit before tax from others division has increased significantly by RM3.77 million to RM3.88 million from RM0.11 million in the preceding year corresponding period. This profits was mainly derived from the disposal gain on investment in an associate company (Rawang Specialist Hospital Sdn Bhd) for RM4.22 million.

The Property division should be able to maintain its contribution for 2014 given the encouraging take-up rates for its completed properties in Kiara 9 and an on-going project in Puchong '280 Park Homes'.

Besides, the Group is actively working on the following 2 property projects with combined gross development value in excess of RM1.6 billion:

a)  Proposed development of 3 blocks of condominiums (565 units) in Wangsa Maju, Kuala Lumpur - target launching by end of 2014
b)  Proposed mixed development comprising 3 blocks of serviced apartment, 1 budget hotel and shopping mall in Taman Puchong Prima - target launching in 2015

As for our property project in South Africa, the 3 new townships launched in 2013 and early this year has recorded a good take up rate. As such, the Group is confident that this division will continue to increase its contribution  to the Group in 2014.

The Healthcare division has shown a significant improvement on its financial performance for financial year ended 31 December 2013. With its aggressive marketing strategies to boost sales, the Board is positive that this division will continue to contribute positively to the Group for the year of 2014.

Sunday, November 10, 2013

Titijaya IPO - RM 1.50 issue price

Initial Public Offering (IPO) of :

Offer price : RM 1.50 per share
PE : 7.5 times ( 8.33 if used diluted EPS - RM 0.18 )
EPS : RM 0.20 (20 CENT) - Proforma
NA per share : RM 0.78

Date of public application : 11/11/2013 until 5 p.m. 18/11/2013

81,705,000 new ordinary shares of RM 0.50 each at RM 1.50 issue/offer price per share.

i) 17,000,000 new shares available to PUBLIC
ii) 6,000,000 new shares available for application to the directors, employeees.
iii) 34,000,000 new shares available for application by MITI
iv) 24,705,000 new shares available for cornerstone investors.

Group structure 

Utilisation of proceeds from the public issue of Titijaya shares :

1) Working capital - RM 49,458,000 - 40.35%
2) Repayment of bank borrowings - RM 15,000,000 - 12.24%
3) Repayment of advances from the previous shareholders of Epoch Property - RM 24,300,000 - 19.83%
4) Purchase of land bank - RM 30,000,000 - 24.48%
5) Estimated listing expenses - RM 3,800,000 - 3.10%

Market capitalisation upon listing : RM 510,000,000

Dividend policy : payout ratio of up to 30% of our future net profits to our shareholders in each financial year.

Are we in the bull market?

How to Identify the Beginning of a Bull Market

As we can see that our composite index (Kuala Lumpur Composite Index - KLCI) is around it's all time high range, which is above 1800 for almost a week plus now. Along with Dow Jones Industrial Average staying at it's peak value of 15,761 and are still able to maintain above 15,500. With this up-trend continuous, we will be in total bullish market.

With a lot of stocks that gone through price appreciation in the past few months, we can observe that most stocks are at their premium's price which little stocks that remain undervalued.

Most penny stocks have increased significantly making their current price to performance ratio totally ridiculous. 

A bull market is represented by a rising price trend, and a bear market is indicated by a falling price trend. Given this simple definition, you might think it would be easy to determine what type of market we're in at any point in time. However, it's not as easy as it sounds because it all depends on what time frame you choose when determining where one kind of market ends and another begins. 

    • Interest rates are low.
    • Industrial production statistics are inching higher.
      • Technology and cyclical stocks are starting to rise.
        • Bullish percent index indicator shows bull alert or bull confirmation pattern.
          • Composite Index are it's peak recorded value and remain constant for awhile.