Value Investing In KLSE

Berjaya TOTO is Attractive Now!

2011-04-10T08:55:00.000-07:00

Some reasons:

Producing around RM 400 mil free cash flow (FCF) consistenly but its market cap is at RM 5.8 bil, indicating BJTOTO is selling at 14 times FCF only.

Attactive dividend policy which gives around 6% yield at current price of RM 4.28

Defensive business in inflationary environment.Sales tends to pick up during economic slowdown

Potential privatisation target at RM 4.90 per share (Very very likely) :)

Malaysia Smelting Corp (MSC) to list in Singapore Stock Exchange

2010-12-29T00:54:00.000-08:00

The news is out this afternoon that MSC is going to list in Singapore stock exchange after shareholders' approval.The stock flew to RM 4.50.But this post is not about MSC.It's about a company which also owns MSC,ICAPITAL.BIZ

ICAP is non speculative,does not pay dividend and it has very small daily volume for traders.Hence,it stayed undervalued since 2008 crisis because uncle and aunty weren't interested.Why ICAPITAL is attractive?

a) ICAP is one of the THIRTY (30) LARGEST SHAREHOLDERS in MSC now. ICAP bought MSC in April 2010 at around RM 3 per share.It owned about 1.9 mil shares and at current price of RM4.50,it's sitting on an unrealised gain of RM 2.8 mil today.Since ICAP will continue to hold MSC even after it lists in Singapore,the future potential gain is tremendous.

b) ICAP is still holding RM 100 mil in its vault and judging from its impressive record to double the NAV less than 5 years, ICAP's NAV can easily breach RM 3.00

c) Tan Teng Boo is "cooking something delicious behind the kitchen" to serve to ICAP's shareholders in order to justify the under priced share

d) Current share price offers almost 20% discount to its NAV.

ICAP is ripe for picking now

Buy Some Stocks Before Christmas Holiday!

2010-12-18T05:50:00.000-08:00

Bursa Malaysia is undergoing some healthy correction during year end holidays due to fund managers going for vacation,school holidays for children so no time for stocks or whatever reasons.

It's during this period when value investors should hunt around looking for undervalued companies.They should allocate some cash to pick up some good stocks with good fundamental to ride the bull in Jan 2011.

Are you ready for bull run in January 2011?

You still have around 10 working days to pick up great companies at attractive price.Focus on companies with good cashflow,healthy debt ratio,cash rich companies,mid to low market cap.Some of the companies you should be looking at are mentioned in my previous posts.

2011 is a great year for Malaysia due to snap election, ETP, foreign fund inflow and various government initiatives to boost the Malaysian Economics.In short term,these news will lift the market confidence.In long term,we shall see....well,in long term,the success of all government initiatives will depend on the man in the mirror.You are the main determinant whether Malaysia will be able to leap from middle income trap to High Income Country.If you want to make Malaysia a better place,start looking at the man in the mirror.Let's work hard,work smart,save and invest now!

Are You Ready For Super Bull?

2010-11-16T05:10:00.000-08:00

4Q2010 to 1Q2011 will be SUPERBULL for KLSE. Foreign investors will pump in huge amount of liquidity into stock market. Cheap money will always go to highest yielding asset. Comparing all the countries in Asia, Malaysia is on the radar now.Malaysia has a lot of undervalued good paying dividend companies with low PE.

Big cap companies have ran up a lot recently so the focus will shift to second liners.Make sure you pick/hold your portfolio to ride on the bull.Don't sell too soon..not until the stock is fully valued.There will be more corporate activities coming up in these few months.Take note of companies selling below their net current asset.They are ripe for pickings.

Take note of my previous recommendation because these companies have something brewing in them.If you could just put some $$$ in them,you'll be laughing all the way to the bank next year.

Why bother investing in Malaysian REITs?

2010-10-21T09:25:00.000-07:00

Today, i read an article on The Star by Mr. Ooi Kok Hwa regarding REITs. Take a lot at the article here.

What makes me furious is that Mr. Ooi who is an investment adviser and managing partner of MRR Consulting,has misled the public by not discussing the real issues in Malaysian REITs(MREIT).I guess a consultant is still a CONsultant.

MREIT is full of crap properties.If you look at their portfolio,most of these properties are actually dumped by developers/owners since they cannot sell their buildings in the market to professional institutional investors.For example,SUNWAY REIT (which i wrote earlier) is one of them.Creating a REIT is the best way for developers/owners to either 'sell their building at higher valuation' or 'unload their poor quality properties to the market'.

Most of analysts would reasoned that the owners of the buildings which are pumped into REIT want to raise fund to capitalize other opportunities.But these crooks can actually refinance these buildings.So,why go through the hardship to create a MREIT?Because the bankers refuse to refinance these properties at crazy valuation.

So,these crooks will repackage their buildings by bringing in tenants through creative leasing contract to boost the rental income.Property manager will help to make up their properties so that the net operating income is marketable.There are a lot of ways to tweak the buildings to improve the performance for a few years.

Some developers actually treat their own REIT as a dumping site.If they want to sell their buildings at higher valuation,they can pass it to their own REIT.Who cares if the total office space in KL has reached its oversupply condition.Just build them and sell to their own REIT!It's a fool proof business model for developers.

MREIT is very far away to be compared to the actual REITs in US,UK and Australia.In these countries,REITs can directly involve in property development and become a developer.They can leverage up to boost great return for their investors.

Which type of REIT is better for investment?

1) A REIT which buys land,construct the building at cost,sell some % and keep some for recurring income and manage & control the building management.OR

2) Just like MREIT,which have to buy properties at market value from some crooks and manage it for recurring income?

Generally,REIT is very liquid but that only applies to overseas REITs.Whoever said MREIT is liquid must be copying his work from some foreign article without using his brain.A quick check with the MREIT's daily volume will show you the reality.MREIT is so illiquid and you may have to sell at loss, below their NAV to get back your $$$.Compare to MREIT,you may find more liquidity investing in an actual condominium next door nowadays.

My 2 cents-->If I want recurring dividend,i would rather buy BJTOTO.Low cost and simple business model which will still makes $$$ when you let an idiot run the company.

Undervalued Advance Information Marketing (AIM)

2010-09-15T08:02:00.000-07:00

I posted about AIM before.Those who bought it after reading my blog and sold it would have been making super profit.Check out my previous post and see the share price for yourself!!!

Recently,AIM announced bonus issue of 1 share for every 3 shares. After the announcement,there have been a lot of activities in the company.

The company has been actively buying back its shares using its strong balance sheet.

Latest balance sheet revealed that AIM is very healthy financially,little liabilities and has about RM 23 mil on its account.AIM has also sold one of its factory to raise about RM 6.6 mil this week.This will increase its cash built up to RM 30 mil.But AIM 's market cap is about RM 35 mil (at RM 0.185 per share currently)

So besides the bonus issue,what is brewing in AIM?

One possibility:AIM is venturing into some special projects which will boost up its revenue in the future.AIM may give good dividend to its shareholders after the bonus issue too.AIM may be transferred to Main Board in the future.

Investing in AIM has more rewards than risk. Buy AIM now @ 0.185.

Willowglen MSC is extremely undervalued

2010-09-12T04:03:00.000-07:00

Willowglen is in the process to join the big boys in the Main Board.This will attract more investors and hence more liquidity or volume can be expected for this stock.

What really attracts me is Willowglen 's balance sheet is very strong. Check out my previous blog on this company too.

If you check on its balance sheet,Willowglen has about RM 50 mil but the company market cap is around RM 90 mil (at current share price 0.37).That means the business is only selling for about RM 40 mil.But past records revealed that the business is producing about RM 10 mil p.a in net profit.

Assuming a P/E of 7x for Willowglen (post transfer to Main Board), it should be selling at RM 120 mil (market cap). This means the price can shoot up to RM 0.48 post transfer to Main Board.

Investors can expect 30% upside, bonus issue, share buy backs and special dividend from Willowglen within this financial end.

SUNWAY REIT IPO:THE BIGGEST RIPPED OFF IN BURSA MALAYSIA

2010-07-03T08:37:00.000-07:00

Why you should sell Sunway REIT when it starts to rally on July 8 (listing day)?

Jeffrey Cheah is selling his stake in Sunway REIT to "shift his focus" away from Malaysia, which FDI is dwindling at worrying rate. He knows that the Malaysian economy is going down the drain sooner or later.If it's so good,why sell it to the public?More shopping centres will flood the market in the next 2 years but the prospectus never mentioned it.

Dividend rate is so low at 6.7% compared to other Malaysian REITs.Average dividend by other REITs is at 8.5%. Hence,the share price will normalise (drop) to follow the other Malaysian REITs. Remember to sell it on July 8.

Sunway REIT have very large space in Sunway/USJ. Where is Sunway located? It is a suburban satelite city far away from KL city centre. So,yield at 6.7% is not justified at all.Give me a yield of 10% and I may consider it.

What is the future expansion plan of Sunway REIT?What Sunway REIT is gonna buy to increase its NAV ? If the NAV is appreciating at inflation rate while the buildings are depreciating at even faster rate,the dividend yield may be affected due to high repair and maintainence cost.

Why bother to buy Sunway REIT?I rather buy KLCC Property Holdings which is more secured and expanding.

SUNWAY Real Estate Investment Trust is the biggest ripped off IPO in Southeast Asia this year.

WHY MAMEE DOUBLE DECKER IS STILL UNDERVALUED?

2010-05-22T00:28:00.000-07:00

I've recommended Mamee on 25 July 2009 and those who bought it would have laughing all the way to the bank.Today, I'm recommending you guys to relook Mamee due to its attractive valuation.

There are several reasons for its further upside:

At RM 3.00 per share,Mamee is selling at RM 454 mil. It's earning about RM 44 mil net. Current P/E is around 10.3x...In the Edge Weekly on 3 May 2010, the Board of Directors of Mamee-Double Decker (M) Berhad said that Management has set a vision for the Group to achieve RM1 billion revenue in five years' time. This target would be achievable through the implementation of various growth strategies which was with full support of the Group's staffs, including enhancing our distribution channel locally and overseas, developing and launching new products, as well as undertaking marketing efforts to build our brands. Mamee also aimed to outperform in 2010. If this is true, the 1Q2010 financial result will be very excellent! Assuming the RM 1bil revenue is achieved after 5 years, the net profit is about RM 110 mil (assume 11% industry net profit margin). Applying conservative P/E of 10x, the company would worth about RM 1,100 mil in the next five years, indicating a conservative compounded rate of return of 15% pa. Put it at simple term, if you buy MAMEE at RM 3.00 today, it will worth about RM 7.20 per share in the next 5 years.
The Board of Directors announced that a dividend policy of distributing a minimum of 50% of group net profits to shareholders. Mamee has became a dividend stock which is still growing organically. Dividend yield is about 5% at current price. Mamee has about 56 cents net cash as at 31 Dec 2009.Net operating cash flow ranging from RM20 to RM30m per year.So, no issue to expand the operation or pays dividend
Pang family owns abut 63% of the company. They eat their own cooking.
To hedge the group’s vegetable oil needs for food production, Mamee’s has entered into 60:40 JV to develop 10,000ha (Phase I: 2k ha; Phase II: 3k ha; and Phase III: 5k ha) of oil palm plantation development in Central Kalimantan, Indonesia in June 2008. This is also another source of recurring income for Mamee after 5 years.
Mamee generated about 30% of its sales from the export markets which cover more than 80 countries across all continents. Australia, being the largest and fastest growing export market, contributed 18% of the total export sales in FY09, followed by Singapore 9%, Russia 7%, Hong Kong 7% and Netherland 6%. The management is targeting to boost its exports contribution to 40% and 50% in 3 and 5 years’ respectively. Appointment of new or additional distributors and more marketing support from Mamee are among the plans to expand its export presence.

To sum it up, you're buying Mamee for long term low risk investment which promised 5% growing dividend yield and 15% compounded return on share price

Will M3nergy CEO Datuk Shahrazi able to convince Datuk Yaakob to sell his shares?

2010-05-18T20:39:00.000-07:00

I'm sure Datuk Shahrazi spoke to the major shareholder (could be Datuk Yaakob) before he launched the take over offer.Datuk Yaakob is the major shareholder of Melewar which owns M3nergy.There could be some arrangement between them,just like what we saw in Astro privatisation.

The CEO's willingness to buy up the company @ RM 1.85 per share signifies that M3nergy is deeply undervalued.The CEO knows something great is brewing in M3nergy.

Please continue to accumulate M3nergy for long term.

ARBITRAGE IN M3NERGY

2010-05-17T18:10:00.000-07:00

M3NERGY BHD managing director and chief executive officer Datuk Shahrazi Sha’ari is making a conditional takeover of the company at RM1.85 a share through his privately-owned company Adamus Avenue Sdn Bhd.

I bought a lot of M3nergy shares today!!!

UNDERVALUATION OF A VALUABLE FUND: ICAPITAL.BIZ

2010-04-27T20:41:00.000-07:00

ICAP is selling @ RM 1.75 per share,valuing the company at about RM 245.0 mil on 28 April 2010

Let's look at ICAP's latest balance sheet as at 28 Feb 2010.

Investment cost is about RM 165.3 mil.
Current asset is at RM 38.5 mil.
Addback the dividend from 28 Feb 2010 up to today,28 April 2010, is about RM 1.5 mil
Total Investment Cost plus Liquid Asset = RM 205.3 mil (RM 1.47 per share)

If you buy @ RM 245 mil , you're paying about RM 40 mil premium for the business.Note that RM 205.3 mil is the total investment cost for its portfolio (AT COST) and liquid cash. The 205.3 mil is quite safe because it's liquid and can be recovered easily if anything happens.

What will you get by paying RM 39.7 mil for the business?

Potential unrealized gain of RM 56.0 mil (Based on NAV of RM 2.16 per share). The unrealized gain of RM 56.0 mil may go up or down but it has safety margin (unrealized profit) of 16.3 mil (about RM 0.116 per share).
You are making about 41% instant return on the premium paid (RM 56 mil minus RM 39.7 mil divide by RM 39.7 mil )
You're getting the business for free plus 41% return
Margin of safety since the portfolio is selected using value investing principle
Good management with solid track record (20% compounded return)
Good sleep at night with no worries

Another information which is noteable in the 3Q is ICAP sold all TM, bought Suria and invested in "XYZ" company. XYZ company will be revealed in the 4Q when ICAP complete its acquisition. Subsequent to 28 Feb 2010, ICAP sold all KLK,LION,POHKONG,SWEEJOO and ASTRO to raise cash. I estimated the proceeds from the sale of these 5 counters is about RM 70 mil.The best thing is, the sale is not recorded in the balance sheet because it clearly stated under the note that "Subsequent to 28 Feb 2010,.."

The investment cost for these 5 counters is about RM 46 mil. The picture shows the 3Q balance sheet.

So, if you were to estimate the balance sheet as at 28 April 2010, certain assumptions have to be made. Assume the investment cost in XYZ and Suria is about RM 20 mil.
Hence, the investment cost = RM 165m - RM 46m (sold 5 counters) + RM 20m (XYZ and Suria)
Total investment cost = RM 139 mil
The current asset(CA) in 3Q is RM 38.5 mil. Assume further dividend of RM 1.5 mil. And proceeds from 5 counters sale is RM 70 mil.
Hence the CA= RM 38.5m - RM 20m (XYZ and Suria) + RM 1.5m (dividend) + RM 70 mil = RM 90 mil

So, Total Asset = RM 139 mil + RM 90 mil = RM 229 mil

Assuming no other investment been made by ICAP, that will raise it Total Asset to about RM 1.63 per share with huge unrealized gain in 4Q

Today price is RM1.75 per share only. What are you waiting for?

ICAP's Portfolio (estimated from 3Q quarterly announcement)

Boustead Holdings Berhad
Fraser and Neave Holdings
Hai-O Enterprise Berhad
Integrax Berhad
Mieco Chipboard Berhad
Padini Holdings Berhad
Parkson Holdings Berhad
Petronas Dagangan Berhad
P.I.E. Industrial Berhad
Suria Capital Holdings Berhad
Tong Herr Resources Berhad
XYZ COMPANY (WHICH WILL BE REVEALED NEXT QUARTER)

Attached is the four years balance sheet of ICAP. Because its total liabilities is pretty negligible, just look at the trend of Total Asset since its inception until now. In 4Q, the Total Asset will increase significantly!!!

Something Brewing In Advance Information Marketing Berhad?

2010-04-13T02:22:00.000-07:00

Advance Information Marketing Berhad, together with its subsidiaries, provides customer loyalty management solutions and business process outsourcing services in Malaysia, Singapore, and Indonesia. It develops and provides loyalty and database management software applications and information technology infrastructure. The company offers Advance Information Marketing System, an enterprise marketing management solution that comprises managed loyalty application to manage various aspects of loyalty program, including members’ information, merchant activities, inventory updates, and redemption process; enterprise application for campaign management, e-auction engine, SKU tracking system, payment gateway, electronic data interchange, B2B integration with Web services, grid computing, and mobile and wireless computing; and business intelligence application that enables users to analyze their customers’ profile, and purchasing behavior and pattern. It also offers various solutions, such as business intelligence services; outsourced integrated marketing services; inbound and outbound contact management solutions, including customer service, telesales, relationship, and contest management; outsourced procurement and fulfillment services; and technology infrastructure solutions.

AIM is listed in ACE market of Bursa Malaysia just in case you can't find it. It has market capitalisation of RM 49 mil,Current asset of RM 40 mil compared to total liabilities of RM 16 mil. So,AIM has about RM 24 mil liquid assets.That means out of RM 49 mil, about 49% is cash or equivalent.Investors are paying half for its business plus the remaining fixed assets of RM 9 mil.Let's exclude the fixed asset of RM 9 mil for simplicity.

The question now is what is so attractive about AIM that I have to pay about RM 25 mil for its business component?

1) Actually there is nothing attractive in the "Income Statement" of AIM. In 2009, its revenue is about RM 46 mil (very stagnant for 4 years) but COGS has been increasing from RM 24 mil in 2007 to RM 41 mil in 2009. Profit margin has been shrinking which signifies intense competition in that industry.It may also means "hanky panky" stuffs have been happening for the past 4 years. My point here is,why spent so much when the revenue is stagnant?

2) Something is happening to the shareholder.

On 8 April 2010,DATO' SHAMSUDDIN BIN HAYRONI has sold all his shares in AIM @ RM 0.23. Before this, he and his wife owned about 19.1% of AIM. Their 19.1% was sold for around RM 8.23 mil.His wife Datin Rahmah Binti Kassim has resigned as the Alternate Director.This is quite a good news because Dato Shamsuddin and Datin Rahmah had sold their 127 m2 condominium in Villa Flora TTDI to AIM for RM 430,000. They bought it for RM 375,000 in 2003.Why the board of directors approve it if it's not in favour of AIM?

3)Who is DATO' SHAMSUDDIN ?

Shamsuddin Bin Hayroni serves as Executive Chairman of Majulia Group of Companies. Dato Bin Hayroni has been Non-Executive Chairman of Advance Information Marketing Bhd. since February 21, 2005. A civil engineer by training and profession, Dato Bin Hayroni started his illustrious career in Jabatan Kerja Raya, Selangor at Public Works Department, Selangor from 1978 to 1988 and Project Lebuhraya Utara Selatan (PLUS) Bhd from 1989 to 1995. He then ventured into the construction and property development industry in 1995. Subsequently, in 1999, he ventured into the CRM business and serves as Director of Electronic Commerce Technology Sdn Bhd (ECT). Dato Bin Hayroni graduated from University Technology Malaysia with a Diploma in Civil Engineering in 1978 and a Bachelor Degree in Civil Engineering from the University of New Hampshire, USA in 1983.

His company Majulia Group of Companies, has obtained many projects from JKR. I don't know whether it was a fair tender but don't play play with this guy because he and his wife are 'orang kuat'. No wonder AIM bought their condominium.

3) Appointment of Tan Chin Yen as Executive Director. She is quite experience in the current industry.

From qualitative point of view,it's a good news that Dato Sham is leaving. And i'm sure that his shareholdings of RM 8.23 mil has been bought by 'someone' else but it was not reported.Tay Woon Teck and Nyang Koon Seng (CEO & Executive Director) jointly owned 43.5% of AIM.

So,nothing to worry because i personally think AIM is planning to offer something "nice" for its shareholders.

Possibilities are

1) Bonus issue

2) Special Dividend

3) Acquisition of another complimentary business

4) Successfully obtained big contract from government

5) Joint venture with another companies

Good news are brewing, Are you buying?

Why EPF want to acquire MRCB?

2010-03-09T07:14:00.000-08:00

These are possible reasons:

(a) It is a way for the connected shareholders to cash out so they can use the proceeds to invest in foreign markets which give higher return compared to MRCB. No one will buy up MRCB except for EPF who is remotely controlled by someone.

(b) It is a way for the government to share the country growth with EPF contributors “you and I”. MRCB has high chance to secure government lands in KL. It also means higher dividend yield in the future since EPF is investing more of its fund in equity now rather than bond.

(c) If EPF has successfully acquired MRCB, MRCB can raise funds from EPF, to fund the land price and development of government lands in KL for 10 years. Construction contracts will then be given to connected parties. Government can also use the proceeds from the sale of government lands to pay its debt. And there are various loop holes in construction and development to suck the cash out

(d) Malaysia is running on deficit already and it would be too obvious and unpopular to announce huge development to be funded by government. Hence, using EPF to fund development is the best “not so obvious” way. Whether EPF will benefit from it will remain unknown. But what is certain is that “reaping the money today is less risky than trying to get back the money 5 years later”. Shareholders of MRCB and connected parties understand this principle very clearly.

I don’t know the actual answer but looking at the direction which EPF is heading, I better take out my EPF as soon as possible now.

WILLOWGLEN MSC BHD

2010-02-01T06:30:00.000-08:00

I wrote about this company a few months ago and swore that if you didn't make money buying Willowglen,i rather shut down this blog.

I believed you have made good $ out of it. But this company has more to offer.

Willowglen has a market cap of 85.5 million at current price RM 0.345 per share.

It made about 8 mil for the past 3 years and its net profit is set to increase to RM 10-12 mil with the new contract lately. This will set its forward P/E at 8x

Wong Ah Chiew has been buying in and increased his stake in Willow to 51.97%

1) Willow has very healthy balance sheet. In 3Q2009,its current asset amounts to 56.7 mil against total liabilities of 9.1 mil with no long term debt. In this net cash position, Willow can easily expand its business through acquisition or new market venture.From what I see,it's very likely to distribute its cash back to investors by bonus issues / special dividend.

2) Willow is a closely held company. Its shareholders have strong experience in this industry and that bodes well for Willow to get new contract through networking.Willow is set to get new business as the economy recovers

3) Besides acquisition and special dividend, Willow has announced its plan to list itself in Main Board. This is absolutely great news for investors.It's expected that Willow share price may hit RM 0.50 per share.

I don't know what to say anymore if you don't buy this stock.

VALUE BUY ICAPITAL.BIZ (ICAP)

2009-10-10T00:27:00.000-07:00

Did you make great profit from my previous tips? Please check out my previous recommendation to see them for yourself.Track record doesn't lie.

ICAP is another stock for you to make superior profit. What is ICAP doing actually?

iCapital.biz Bhd is a closed-ended equity mutual fund launched and managed by Capital Dynamics Asset Management Sdn Bhd. It invests in the public equity markets of Malaysia. The fund invests in stocks of companies operating across financial sectors. It invests in value stocks of companies. The fund benchmarks the performance of its portfolio against the KLSE Composite index.

The attraction in ICAP lies in its portfolio,which consists of the following companies:

Integrax
Parkson Holdings
Astro
Padini Holdings
PIE
Boustead
Poh Kong Holdings
Suria Capital
Tong Herr Resources
Petronas Dagangan
F&N Holdings
Telekom
Kuala Lumpur Kepong
Swee Joo
Mieco Chipboard
Lion Diversified
Hai-O Enterprise

There are three potential upsides for ICAP:

a) Most of these companies have shot up in the recent recovery in the stock market. Most importantly, these companies are cash rich with little debt. These companies will definitely have plenty of room to grow by capitalising on distressed assets and ride on the economic recovery. ICAP is a great proxy to these companies

b) Current ICAP's NAV is RM 1.91 while its stock price is trading at a discount. It closed at RM1.79 on Friday. While buying ICAP at discount will provide some safety cushion, investors should also focus on its potential appreciation. ICAP still have about RM 30 mil cash on hand (based on its latest quarterly result) which placed it at a great position to buy on the dip.

c) ICAP is only allowed to invest in KLSE currently. If it is allowed to invest overseas,it will boost ICAP's potential and more investors will be more attracted to it since it provide a cheap proxy to value companies all around the world.

This is the right time to capitalise on ICAP

Value Buy ALUMINIUM Company of Malaysia Bhd (ALCOM)

2009-09-20T02:09:00.001-07:00

Aluminium Company of Malaysia Berhad, engages in the manufacture and trade of aluminum sheet and foil products in Malaysia, other Asian countries, and internationally. It offers pre-coated finstocks for use in air-conditioners. Aluminium Company of Malaysia Berhad is a subsidiary of Novelis Inc.

A few keys point of ALCOM:

1) Alcom does not produce aluminium but uses it as a raw material for its products. Due to the rise in the commodities prices and depressed demand last year, Alcom suffers a small net loss in its previous financial years. That has been causing the lag in its share price recently.

But many didn't know,when the commodities prices were stable from 2007 to 2008, Alcom were able to consistently produced about RM 14 mil p.a. Alcom has established customers in India, Hong Kong, the Philippines and Thailand.Recently,the company was looking at new markets in India and Middle East.

Alcom has a market cap of RM 142 mil and consistently reward its investors with 10% dividend. Its currrent asset is RM 133 mil against total liabilities of RM 40 mil. Hence, by paying RM 142 mil for the business,investors are getting RM 90 mil net-net current asset plus non-current asset of RM 93 mil. In short, investors are paying RM 50 mil for ALCOM's business which produces RM 14 mil p.a (or P/E = 3.5 x) and gets non-current asset of RM 93 mil for FREE.

2) ALCOM is controlled by Novelis Inc. Novelis Inc. is the global leader in aluminum rolled products and aluminum can recycling. The company operates in 11 countries, has approximately 12,500 employees and reported revenue of $11.2 billion in fiscal year 2008. Novelis supplies premium aluminum sheet and foil products to automotive, transportation, packaging, construction, industrial and printing markets throughout North America, South America, Europe and Asia. Novelis is a subsidiary of Hindalco Industries Limited, one of Asia's largest integrated producers of aluminum and a leading copper producer. Hindalco is the flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai, India.

3) ALCOM has RM 62 mil cash with no debt. Alcom can easily raise another 100 mil from debt market (assuming debt/equity = 0.50). In total, Alcom has access to RM 160 mil to acquire other companies with the assistance from Novelis. Or Alcom can distribute its cash to shareholders through bonus issues / special dividend.

To sum it up, Alcom gives you:

a) Stable 10% dividend due to stable business and balance sheet. Potential special dividend

b) Future appreciation due to business link with Novelis which opens up vast acquisition opportunities

c) Great margin of safety at current entry price. The share price has been almost stagnant for the past 1 month. It didn't follow the recovering market sentiment.

d) Good business at cheap valuation. Investors are paying RM 50 mil for ALCOM's business which produces RM 14 mil p.a (or P/E = 3.5 x) and gets non-current asset of RM 93 mil for FREE.

Value Buy Pan Malaysia Corporation

2009-09-03T18:22:00.000-07:00

Pan Malaysia Corporation Berhad, an investment holding company, engages in manufacturing, marketing and distributing confectionery, and cocoa-based and other food products primarily in Malaysia, Australia, Singapore, and Hong Kong. It also involves in operating departmental and specialty stores, and property investment activities. The company is based in Kuala Lumpur, Malaysia.

PMCORP is in the process of restructuring.Recently,it posted a positive net income compared to losses in the last few year.the attraction of PMCORP comes from its assets. Its book value is at around RM 0.45/share.This gives a safety margin of over 50% at current price of RM 0.135.

PMCORP has come a long way to 'cut some of its rottenning poisoned limbs'. It has let go subsidiaries which are loss making and focus on its profit making businesses such as retail and manufacturing. So,PMCORP does not need to consolidate any losses and will be able to report good profit.

A few good points on PMCORP:

a) The cash level is at RM 127 mil while total liabilities is at RM 54 mil.This means by paying off its liabilities,investors will own some of the assets (properties,businesses,subsiadiaries and fixed assets) at half the value plus a clean balance sheet.

b) Expected to post cumulative earning per share of RM 0.013. At current price of RM 0.135, its forward P/E is 10x

c) It's a closely held company

Since it is in black now,PMCORP should be trading at around its Net Asset per share. PMCORP is a classic story of a frog turning into a prince.

Value Buy Willowglen MSC

2009-08-30T04:06:00.000-07:00

Willowglen MSC Berhad, through its subsidiaries, engages in the research, design, development, engineering, supply, sales, implementation, and maintenance of computer-based control systems. The company offers hardware products, including RTUs and communication controllers. Its software products include SysLink VIDEO-SCADA software for telemetry, video surveillance, control, and monitoring functions; system simulator that allows a user to test RTU programs without a physical RTU; and Web accessibility via InterLink. The company’s products also comprise digital video recorders (DVR) and PC-based DVR’s. It operates in Malaysia, Singapore, and Europe. Willowglen MSC Berhad is a subsidiary of New Advent Sdn. Bhd.

Willowglen has a market cap of 59.5 million at current price RM 0.24 per share. It made about 8 mil for the past 3 years, which gives it a P/E of 7.4x. What makes Willow attractive?

1) Willow has very healthy balance sheet. In 1Q2009,its current asset amounts to 54.7 mil against total liabilities of 6.9 mil. In this net cash position, Willow can easily expand its business through acquisition or new market venture.

2) Great dividend at 2 cents per share per year. That gives a dividend yield of 8.3%. Due to rising revenue and profitability (refer to 1Q2009 result),Willow can easily distribute more than 2 cents dividend in the coming years.At current price,its dividend yield can easily rise to 10% next year

3) Willow is a closely held company. Its shareholders have strong experience in this industry and that bodes well for Willow to get new contract through networking.

4) Besides acquisition and special dividend, Willow is ripe for bonus issue while listing itself in Main Board. Comparing Willow with other MESDAQ companies,Willow is more than prepared to join the big boys in Main Board. If this happens,Willow 's share price can easily jump 50% .

Willowglen is a darling stock for those who likes MESDAQ companies. If you can't make money through Willowglen,i will rather shut down this blog.

Value Buy Cocoaland Holdings

2009-08-23T06:48:00.000-07:00

Cocoaland Holdings Berhad, an investment holding company, engages in manufacturing and trading processed and preserved foods, fruits, and other related food stuffs primarily in Malaysia. The company also engages in the wholesale and retail of processed and preserved foods; and the manufacture of fruit juices. Its products include chocolates, cookies and wafer, nuts, candies and gummies, snacks, and soft drinks and jellies. The company is based in Kuala Lumpur, Malaysia. Cocoaland Holdings Berhad is a subsidiary of Leverage Success Sdn Bhd.
Prospects
Cocoaland Holdings Bhd has set-up a plant in Fujian province in China under a 50:50 joint venture (JV) to produce its popular Lot 100 fruit gummy products. Cocoaland is one of the few gummy manufacturers in Asia. In the JV, Cocoaland Industry Sdn Bhd, signed an agreement with China’s La Bi Xiao Xin International Co Ltd.
The JV company, Coco (Fujian) Food Industrial Co Ltd, would involve US$5 million (RM17 million) in investment and start production in August 2007. Cocoaland will be responsible for manufacturing and its partner will look into distribution and marketing. The investment is fully funded via cash. It is expected that the earnings from the China operations coming through for the 2008 financial year and subsequently, the full impact can only be felt in year 2009.
La Bi Xiao Xin is a unit of Singapore-listed China Lifestyle Food & Beverages Group Ltd. It has more than 17,000 retail outlets under the La Bi Xiao Xin brand and annual revenue of over 500 million renminbi (RM221 million). The distribution network is large and perhaps in the future,

Cocoaland may own 1% of China’s Market through the JV.

Cocoaland is at RM 1.03,has P/E of around 10 compare to the industry standard, Dividend Yield 5%. Cocoaland is expected to declare bonus issues / special dividend for its investors.

Value Buy Suiwah Corporation

2009-08-16T07:10:00.000-07:00

Suiwah Corporation Bhd., through its subsidiaries, operates supermarkets, departmental stores, and hypermarkets primarily in Malaysia. It operates four retail outlets, including Sunshine Square, Sunshine Farlim Hypermarket, Sunshine Jelutong, and Suiwah Air Itam. The company also engages in the research, design, development, manufacture, and prototyping of flexible printed circuits boards; property investment and development; money lending; electrical goods retailing; and trade of garment, construction materials, and general merchandise. The company was founded in 1961 and is based in Penang, Malaysia. Suiwah Corp. Bhd will open its latest lifestyle concept store cum supermarket at the Penang Times Square in October. The store, called Sunshine City, is the latest addition to the Suiwah Corporation chain of retail stores and will also be the anchor tenant of Penang Times Square phase one.

Why Suiwah is attractive?

a) Damn cheap valuation,partly due to its weaknesses to deploy capital. Market cap is around RM76mil but the company is in net cash position of RM39mil. Separating the business with the cash will price the business at RM 37 mil (P/E around 3.7 based on 10 mil net profit)

b)Expansion through concept store in Penang to tackle middle high income group.Penang people knows Sunshine very well and income from middle low remain stable.

c) Implementing share-buy back to return 'some lose change' to shareholders (to calm shareholders due to stupid mistake of JV)

d)Going to declare first and final dividend of 8 cents/share in Nov 09 (not generous at all)

e)Majority shares are owned by friends and family (more than 50%).

f) Just opened PT. Sunshine Amanjaya in Indonesia to engage in the business as a main distributor, importer and exporter (this may provide business synergy)

g) Net Asset per share is RM 2.76 (at current price,investors are paying 45 cents for a ringgit)

The risk in Suiwah:

a) Lack of direction: Its executive directors are very old (56 and 60 years old).Due to their unexciting life,they want to try something different to spice up their life using shareholders' money.Instead of specialising in retailing business,Suiwah jumped into OIL & GAS in May 2008. It entered into an agreement with parties from India that include Valdel Investments Pvt Ltd and Valdel Oil and Gas Pvt Ltd (VOG). Suiwah took up a 15% stake in VOG, which is involved in the exploration and production of oil and natural gas in India. Luckily,this J.V has failed to win any bid for exploration project and hence,the J.V has been called off in Jan 2009.

The failure in this JV is good for investors because every tom,dick and your dogs know if the J.V successfully win an exploration project,Suiwah will still lose big time because it only owns 15% equity with no control over the cash outflow.In addition,it's risky to deal with Indian partners/businessmen.Even,Ananda Krishnan who is borned in Sri Lanka having hard time to understand them.

The sad thing here is no valid reason given by Suiwah for this JV but your dogs smell that this maybe a hanky-panky deal which does not benefit Suiwah shareholders at all.Shareholders feel happier if the Suiwah returns the cash back to shareholders. The unwillingness to explain to shareholders shows bad corporate governance (aka treating shareholders like idiots) and Suiwah has high possibility of repeating unrelated diversification again.

b) Declining revenue: This may be due to intense competition. It also shows management weaknesses to handle market dynamics.

c) It is a waiting game: Investors must wait for the 'old' management (currently,in retirement mood) to execute an aggresive startegy in related fields

Weighing the risk & rewards in Suiwah,current price will
provide investors a huge margin of safety,6% dividend and potential
growth story.

Value Buy Mamee-Double Decker

2009-07-25T00:20:00.000-07:00

Mamee-Double Decker (M) Berhad, an investment holding company, engages in the manufacture and marketing of food and dairy products, and soft drinks primarily in Malaysia, the People's Republic of China, Myanmar, and other Asian countries. The company offers various products, including instant noodles, snacks, dairy products, chilled products, beverages, and confectionery. It also exports a range of products, including yogurt, cultured milk, fruit juice, instant noodles, snacks, and beverages to countries in Asia, the Middle East, Africa, the Americas, Europe, and Oceania. In addition, the company engages in the development of commercial buildings; and provides advertising contractor and agent services, as well as information systems management and motor vehicle rental services.

Mamee is currently selling at 2.46 per share at P/E 6.6. In 1Q2009,it made 10mil which is almost 2.5 times compare to 1Q2008. By analysing historical earnings,Mamee is expected to make 30 mil this year (compare to 20 mil for previous years)

Its balance sheet is very strong.It holds about RM51 mil in cash with no long term debt.Its current ratio is 2.88 and quick ratio is 2.26.Historically,it gave about 6% dividend yield.There are a few possibilities on how MAMEE will utilize its cash

1) Make acquisition to enhance cashflow. Recently it acquires Charmille Pte Ltd (Charmille) which is a company that has involved in the precision engineering industry in the Asia Pacific for more than 25 years. This type of business has some synergy element in manufacturing and trading business.

2) Buy back shares if the share price is undervalue.Mamee-Double Decker has been buying back its shares since a few months ago.Hence,it's downside is pretty small.

3) Take over target.Mamee is a good take over target by Pang's Family or other companies.But Pang's family,which own around 70% collectively of MAMEE may not takeover MAMEE since these owners are in their 50s already.Thus,MAMEE may be taken over by other companies.

MAMEE has net asset per share of 2.46 and based on current share price,it is selling at RM 210 million for the whole business. Stripping the cash of RM 51mil away,the whole business is selling at RM 160 mil.By estimating a net profit of RM 30 mil this year,the actual P/E is 5.3

At share price of RM 2.46,investors are getting a good bargain for defensive company with further growth prospect such as MAMEE.

Felda, (maybe in hot soup), to seek listing soon

2009-06-30T03:55:00.000-07:00

This is just another way to pass the funds from the public,EPF,Khazanah,PNB and other national coffers into some connected napoleans.I am waiting for its prospectus.

But,why list FELDA now?

What about PN17 Malaysia Airlines? It's very funny how a national airline can be so badly managed until it goes into PN17 status.Let's compare with Singapore Airlines.

A quick analysis : It's the people that makes the difference !

Just FIRE the whole MAS's top management and replace it with top notch from all around Malaysia regardless of skin colour.

You will see a very BIG improvement ! That's the TRUTH that no one can deny.

Value Buy Mah Sing Group

2009-06-26T07:38:00.000-07:00

This is another stock which I've recommended but it didn't go up much.Those who bought it at RM 1.60 in April 09 is making some quick 20% return @ current price of RM 1.76 plus RM 160 dividend.

Mah Sing Group involves in construction, management, and development of residential, commercial, and industrial properties in Malaysia. The company also involves in the manufacture, assembly, and sale of a range of plastic molded products in Malaysia and Indonesia.

Around 80% of its revenue originates from property development and another 20% from its plastic division.Currently,Mah Sing is in net cash position.In times of turbulence,”Cash is King”.
By comparison to other property developers,its landbank is small.Moreover,it does not have revenue from property investment unlike Sunway and IGB.It does not have a REIT as well.

With current financial strength,Mah Sing is well positioned to:

1) Buy cheap lands in M’sia and other countries. Take note that Mah Sing has not venture overseas unlike SPSETIA,GAMUDA and GUOCOLAND

2) Eat up competitors to enhance landbank because good lands are limited

3)Increase J.V projects and benefit from current low construction cost

4)Capital repayment and buy back shares if Mah Sing does not have any future plan which I doubt

If you check its shareholders, Tan Sri Leong owns around 40%,Capital Group 9.7% and Amanah Saham Bumiputra owns 14%.

What intrigue me was Amanah Saham Bumiputera has been accumulating Mah Sing ’s shares in an aggresive mode.Could there be insider news?

Currently,Mah Sing declared 16sen dividend for the year.This stock has little probability to fall to RM 1.25 level again due to high percentage of institutional owners which are actively investing in this company

Risk of investing in Mah Sing:
1) Weakening property industry outlook
2) Bad capital deployment strategy

Weighing its risk and reward,Mah Sing is a good buy at around RM 1.76

The similar article can be read from:
http://boyboycute.wordpress.com/2009/03/28/mah-sing-is-a-good-buy/

Value Buy Astro All Asia Networks

2009-06-19T23:11:00.000-07:00

Astro All Asia Networks plc is a Malaysia-based investment holding company engaged in the provision of management services. The Company’s business segments comprise: Malaysian multi channel television, which is engaged in the provision of multi channel direct-to-home subscription television and related interactive television services in Malaysia; Radio, which provides radio broadcasting services; Library licensing and distribution, which is engaged in the ownership of a library of Chinese filmed entertainment and the aggregation and distribution of the library and related content, and Others, which includes a magazine publishing business, interactive content business for the mobile telephony platform, Malaysian film production business, talent management; creation of animation content, television content aggregation and distribution, ownership of buildings, its regional investments in media businesses and investment holding companies

Astro is the sole provider of satellite DTH TV service in Malaysia with exclusive DTH rights until 2017. It's the biggest pay-TV operator in Southeast Asia with 2.56M residential subscribers. Its total penetration of Malaysia TV households is 44% todate. This is a highly cash-generative business which generates around RM 0.13 of cash flow per share - per year on average.

Astro is spreading its wings to India,Indonesia(but failed) and Middle East. Due to its sheer size of population,you'll go crazy to estimate its potential future cashflow derived from these countries.What you can estimate is the value of business in Malaysia. Its Malaysian DTH monopoly business is valued at RM 3.50 to RM 4.00 per share. But current share price is @ around RM 2.80 per share.At current price,it's selling at a discount because stability of Malaysian business and future potential is not included.

Major shareholders are Tan Sri Ananda Krishnan (42.4%), Khazanah Nasional Bhd (21.4%) and
Employees Provident Fund (7.3%).Recently,we heard rumuors that Astro,Measat and Maxis will be 'lumped' together for creating more value through cost savings and synergy.In fact,this rumuor is not new and has been circulating in the industry even before you guys know it through local newspaper.

This event is very likely to take place some time in the future if the share prices of Measat and Astro is staying too long at low valuation.If you have made money in my previous recommendations (Mah Sing,SP Setia,HIRO,BJLAND and others),Astro is the next place to diversify your investment to capitalise on its future potential.

Please read my previous posts on Astro (http://boyboycute.wordpress.com) to gain more knowledge on it.