Monday, March 20, 2017

Equities are rallying, but why?

Over the past 2 months, we have seen KUALA LUMPUR COMPOSITE INDEX surpassing its long term resistance of 1730.

Most financial medias are linking this stocks rally with the General Election hence explaining the hot money from both local institution and also foreign source pouring in.

However, I do not think we should get our mind focused solely on that assumption only.


As we could observe, over the past 1 year, our Ringgit has depreciated severely against the greenback (US Dollar) by close to 30-50%.


When a currency of a nation falls, it reduces our purchasing power, say items that are imported outside Malaysia would suddenly costs more due to the difference of the currency translation.




As the modern economics has it, a currency is a subset of an asset classes. There is a definite equilibrium between all these.



With a weaker ringgit, it is simply more attractive and lower risk for investors to jump onto Real Estate, Equities, Commodities, and also Fixed Income. However, the reflection is usually not an instant process, there is usually a few months lag for it to readjust to a valuation investors deem as fair.






Take Petronas for example, in their fourth quarter earnings, their earnings were beyond great simply because Brent Crude Oil were hovering around 50-55$ per barrel. As for shale producers in the USA, they do not get the benefit from strengthening of the dollar, meanwhile Petronas are actually making money due to currency translation difference and is finally consolidated in Ringgit.


Take for example, when Ringgit was at RM 3.10 vs USD in 2012-2013. Crude oil was around 80-100$ per barrel.

Hence Petronas were earning

$90 x RM 3.1 = RM 279 per barrel.


And as for now,

$55 x 4.45 = RM 244 per barrel.

Note the difference werent that bad as we were lead to believe?


As for now, I foresee our ringgit recovering to RM 3.9-4.00 vs USD and KLCI will eventually break 1800 thanks to the currently improving sentiment.


Meanwhile, enjoy the free ride x)


Wednesday, February 1, 2017

NAIM Holdings. The Hidden Gem of Sarawak : General Election Theme Play.




Naim Holdings;
Current Price RM 1.57 ( 2nd February 2017)
Target Price: RM 5.21 + (15% x RM 5.21 x 6 years ) = RM 5.21 + RM 4.68 = RM 9.89
Holding period recommendation = 3 Years

Expected Return P.A. : (RM 9.89 - RM 1.57 x 100%) / 3 years = 176%  

** Disclaimer : This article is for educational purposes only and should not be considered as a replacement to reading the financial report and annual report on your own. I shall not be held liable for any loss you incur.**


With Dayang shares being priced on the open market with a range of RM 1.00 - RM 1.10 over the past January 2017, the cost of ownership for Naim (RM 1.60) are reflecting a significant discount to enter Naim Holdings Berhad at approximately RM 0.50 only.


Introduction :

Commenced their first operations in 1995 with its landmark development in Tudan, Miri (now known as Bandar Baru Permyjaya).
Ventured into construction with current order book of approximately RM 2.00 Billion
Oil & Gas exposure from its assosciate Dayang Enterprise Holdings Berhad (DEHB)


Naim Holdings Berhad has accepted the award of Pan Borneo Highway Project which is the package work for Pantu Junction to Batang Skrang in Sarawak. The contract is estimated to worth at least RM 1.1 Billion for Naim Holdings Berhad.


  • Naim owns approximately 29.1% of Dayang which in turn translate to about 255,236,081 shares of Dayang.
  • Naim currently has about 250,000,000 number of shares issued to date, which actually gives you the entitlement of owning 1 shares of Dayang with 1 shares of 
  • Dayang currently has about RM 3.5 Billion order book held in hand with majority of it being awarded by Petronas.
  • With Dayang shares being priced on the open market with a range of RM 1.00 - RM 1.10 over the past January 2017, the cost of ownership for Naim (RM 1.60) are reflecting a significant discount to enter Naim Holdings Berhad at approximately RM 0.50 only.
  • With over 2,500 acres of land bank located at Sarawak's key growth areas namely Bintulu, Miri and Kuching. With that as a benchmark, we can say that if we bought 100,000 shares at RM 1.60 (RM 160,000) we are entitled to be owner of 1 acre of land!


Current property development that are on going :

1) Bintulu Paragon - Street Mall, 6-Storey SOVO, The Peak (Tallest Condo in Sarawak), Bintulu Festival Park.


a) Sarawak Corridor Of Renewable Energy (SCORE) - major initiative to develop the Central Region and transform Sarawak into a fully developed State by the year 2020.

b) Around RM 500.00 Billion has already been committed since the launch of SCORE in February 2008. Sarawak State Government has indicated it will invest RM 334.00 Billion to fully develop the regional economic corridor by 2030.

c) As the epicentre of SCORE, Bintulu is strategically positioned to benefit from it. Already the town is seeing an influx of workers and a steady increase in property prices. Bintulu Paragon, as the biggest integrated development in Bintulu poised to be one of the best investments you could make.



2) SouthLake Permyjaya - Spanning over 450 acres, Southlake is a chic enclave based on appreciation for the environment, security and healthy community living. 



  • In line with the planned operation of KPJ Miri Specialist Hospital, strategic location - 20 minutes from Miri Airport, Curtin University at Senadin, next level of avant-garde living style in Sarawak, 30 acres of lake for rejuvenation.


  • Components - River Dale, River Villas, Willow Moss Precint, River View Precint, Garden Villas (South Lake).


3) Kuching Paragon - approximately 33 acres which nestled amongst mature residential and commercial and industrial enclaves at Kuching South, the development site is easily accessible via major thoroughfares, Jalan Batu Lintang, and Jalan Rock. 10 minutes from the heart of Kuching City and 15 minutes from Kuching International Airport. Kuching Paragon will provide close to 1 million sq ft of retail space, condominium tower and office towers, hotel and serviced apartment. Marriot Hotel has signed MoU with Naim Holdings Berhad.



Currently projects available for sale :
1) EduVista Apartments - Desa Ilmu, Kota Samarahan, Sarawak.
2) Garden Villas - River View Precint, SouthLake Permyjaya, Miri, Sarawak.
3) Pusat Bandar Shophouses - Bandar Baru Permyjaya, Miri, Sarawak.
4) River Dale - River Dale Precint, SouthLake Permyjaya, Miri, Sarawak.
5) River Villas - River Dale Precint, SouthLake Permyjaya, Miri, Sarawak.
6) Riveria Square - Riveria, Kota Samarahan, Sarawak.
7) Sapphire On The Park - Kuching Paragon, Batu Lintang, Kuching, Sarawak.
8) SOVO - Bintulu Paragon, Sarawak.
9) Street Mall - Bintulu Paragon, Sarawak.
10) Terraces - Willow Moss Precint, SouthLake Permyjaya, Miri, Sarawak.
11) The Peak - Bintulu Paragon, Sarawak.
12) Twin Villas - Rivew View Precint, Southlake Permyjaya, Miri, Sarawak.


 



  • Fairfield By Marriot Bintulu Paragon will feature a total of 238 tastefully designed accommodation rooms, complemented by a host of facilities for its guests. Not only it will be the first international hotel in Sarawak but also the first hotel under the  Fairfield by Marriot brand in Malaysia.


  • Fairfield by Marriot is a global leader in the mid-tier hotel segment, and is Marriot International's second-largest distributed brand with more than 750 hotels worldwide. It is expected to open its doors to all by Mid 2017.







The new KPJ Miri Specialist Hospital would be a 300-bed facility, and feature latest medical technologies in areas such as orthopedics, traumatology, cardiology, and heart surgery, as well as chemotherapy and radiation oncology for both local and international patients which is in line for the next booming sector - Medical Tourism.

The total cost of the hospital is over RM 130 million with the location on Permyjaya New Township on a 4-acre site and it is also aimed to capture on the growing populations of Miri, Brunei, and Kalimantan.

It is expected to be ready by 2018.





Year Number of Units Sold
2012 783
2013 692
2014 433
2015 268
2016 N/A yet


Balance sheet shows that it is fully leveraged to take advantage when properties division starts to kick in like good old days.



  • Interests in Associates - Dayang Enterprise Holdings Berhad alone worth RM 395,897,000! More than Naim's own share capital of RM 250,000,000.

  • Current Reserves indicate it should be RM 4.00 as its minimum share price because of RM 1,000,000,000 divided by its capital of RM 250,000,000 is 4 and multiply that by its PAR Value of RM 1.00 makes it RM 4.00.

  • Net Assets Per Share is RM 5.21 as indicated on its Q3 2016 Financial Report.
Majority Shareholders :


Total 30 majority shareholders control a total of 69.41% of the shares issued. Only 30% of shares are left floating.




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 :




CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED BONUS ISSUE OF UP TO
37,281,357 FREE WARRANTS (“BONUS WARRANTS”) ON THE BASIS OF ONE (1) BONUS WARRANT
FOR EVERY FIVE (5) EXISTING ORDINARY SHARES OF RM1.00 EACH HELD IN LONDON BISCUITS
BERHAD (“LBB”) ON AN ENTITLEMENT DATE TO BE DETERMINED LATER


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.

Greetings,


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.