KLSE Winner

Top 10 1Q2019 Mistakes I've Made from KLSE Investment

2019-03-30T22:24:00.003+08:00

My apology as I have been stop blogging for more than 8 months. It's not because I'm busy, just that I'm doing badly last year and I'm trying my best to improve my skill before I can post again.

Thanks to my poor trading skill, I made a net loss of 102k last year, the worst ever. It evaporates my last few years profit in just within a year. Congratulations to me.

Fortunately, thank God that stock market made a come back starting Christmas and it's on rally.

Last month, I have been making back around 40k but it's been dropped to 30k up to yesterday. Congratulations those who not only made back those they lose last year, but with a lot of gains as well. I can only say that I have a lot more to learn.

With the past trading records, I've concluded top 10 stock investment mistakes I've committed over the 1st quarter in 2019. With these mistakes published and shared, I hope we all can learned from mistakes and we can do a lot better in 2nd quarter.

1. I did not dispose the losing & stuck stock at the right time when market rebounded 1-2 months ago, which give me the golden opportunity to change to better potential horses. I did dispose 2 or 3 stocks, but I should disposed all the lousy stocks instead.

2. I've wrong mindset (too positive thinking) that my losing & stuck stocks (lousy fundamental companies) will go back to the original state like other strong horses (DAYANG).

3. I've wrong mindset on over optimistic that the stock price will shoot up after bought during bullish days, and over pessimistic that wanted to dispose the losing stock during correction.

4. I've bought & hold too many stocks which unable to manage & monitor properly. And yet most of them are not making money or not under main recovery themes, i.e. O&G / Construction. And now, I have 13 stocks in hand, which is too much considering my fund is relatively moderate.

5. I did not invest based on main / recovery themes, i.e. O&G, Construction, just because I'm lack of good feel, confident, common sense, experience.

6. I followed some buy calls from sifu (paid subscription) selectively, where some of the picks have bad QR and didn't manage to decide & sell on time (the next day after QR). On the other hands, some of the buy calls I didn't follow, they went up at least 20-40%.

7. I do not have a proper cut loss strategy, i.e. must cut loss when the stock drops below 5-10%, or need to do dollar cost averaging (DCA) on retracement (buy on weakness) on very potential stock? I still cut loss and do DCA very much based on my feeling (emotion).

8. I do not have a proper strategy to invest (buy/sell criteria, take profit, cut loss, buy on retracement, capital mgmt, market observation, etc). Since this is the case, I also always changed horses from 1 to another and cause losing more money & confident. At the same time, I do not really know which is strategy is best suit to me, i.e. FA? TA? FA + TA? Follow subscription?

9. I omitted stock investment risks, including losing money, upcoming quarterly result, global market and capital management risks. I simply dumb the hard earned money into the stocks and just think they will make money for me, but without thinking about these risks properly.

10. I obtained the wrong advice from wrong persons (sorry to say we only can know after it's wrong), even though they are sifu level. It's not their fault, as they are not gods, but we have to do our own due diligence & homework as well. From this, I understand the winning strategy in stock market is not 100% correct every time, but it's about optimizing the best probability to win.

That's about the top 10 mistakes I've made this quarter. Hope I can workout a proper strategy and improve my probability in the coming quarter!

All the best, folks!

New Kangtao KEYASIC?

2018-07-15T17:20:00.002+08:00

When I first saw this company name KEY ASIC BHD in the local finance newspaper this morning, it seems so strange to me. It is listed in Bursa since Dec 2011, about 7 years ago. The news boosted about it’s bright future with unique product under Internet of Thing (IOT) industry. That further boosted m curiosity. What does this company does actually? IOT is a very big market from now till the future.

After did some researches, I found out indeed this is a technology company that developing it’s own IOT related products while doing ODM for it’s customers. It specializes design and manufacturing of IOT chips and system, connecting any electronics and non-electronic items to the Internet. Kcard, Kdrive, Mcard and Mdrive are the IOT products currently shipping in the market. It also offers turnkey ASIC design service and SoC design and manufacturing.

If you familiar with Bursa’s technology or semi-conductor listed companies, most of them are OEM and ODM. Those who do OBM are only a few, don’t talk about developing own products. Why is that? For those who doing OEM and ODM, they just need to follow the vendors requirement will do. Hence, the output will be guaranteed purchased by the vendors. The R&D expenses are also comparatively lower comparing to OBM and vendor. A good example will be INARI, GTRONICS, SKPRES, VS, etc. So why OBM or develop own products then?

Let’s look at Apple, Dyson, Nike and Samsung, are they making a lot more money than the OEM/ODM who assist them to make the products? Anyway, there’s no the point today we want to talk about. China ex-president used to say, whoever can catch the mice is a good cat.

If you are in the business, developing own product indeed the ultimate way to go. Let’s look at IQGROUP and SALUTE for example, they rather sacrifice their margin and share price but to focus on developing their own products. For KEYASIC, it is mainly focus on developing it’s products since listed and that is why, it is making losses over the past 7 years since listed. It’s bottom line only started to turn black over the last 3 quarters.

Basically I would say KEYASIC product is unique. Their trump card is it has built-in WIFI in the flash card and USB drive, allow the data flow freely from and to the memory. In fact, it’s just launch it’s enhanced product – block chain device named RYC in China last 2 weeks ago, which allow patients to store their own health data under the USB drive and able to retrieve by doctors whichever hospital they go easily. You can read the release from this URL: https://www.facebook.com/notes/key-asic-malaysia/keyasic-launched-ryc-ai-medicine-in-a-block-chain-drive/1876928789033786/

The near future prospect for KEYASIC is definitely bright, if the MOH of China decided to acquire these USB drives from KEYASIC for contract basis. The margin is also superb where the previous 2 quarters have about 54-57% gross margin, since it is own developed products.

From the management prospect, it stated:

The Company has recorded two consecutive quarters of profits largely attributed by design fee (NRE), IP licensing and chips sales. The revenue associated with Internet of Things (IOT) has increased and it is expected to continue to do so in the coming quarters. There are a number of new engagement of designs with large companies from US and Japan using Mcard for Internet of Things (IOT) solutions. The Company has also invested additional business development resource in China market in the past few months and there are several new projects currently under development.

About the management trustworthy, I’m not sure at all. They are half Taiwanese and Malaysian board members. No doubt that the Taiwanese is strong in hardware technology development, where American is too strong in software development. But one thing for sure, the management seems not that keen on doing investor relations because I noticed some typo mistakes and errors in the quarterly and annual reports.

The management owns about 36.6% shares, where Khazanah National owns about 22.1%. Both of them took up in total of 59%. This makes me reminds of BIOHLDG where they have about the same arrangement. I guess Khazanah is betting about the better prospect of the company and hence bang on it for huge potential return once the business model is succeeded.

One thing for sure is KEYASIC is running out of money, where their cash balance is left with RM580k while operations and R&D still needs to be ongoing. Hence, they have proposed private placement to raise about RM45m for working capital, which will be 25% diluted upon exercise.

KEYASIC share price stood at 18.5 cents as of 13 July 2018, valued at RM180m. If you take the latest quarter EPS as full year forecast, it’s PER around 4. The PER is considering very low since it’s a technology company, provided the company managed to sell it’s products and sustain from there.

Anyhow, they have made loss over the last 8 years and make a lot investors shy away from investing this company. The recent few quarters black turning also does not spur much interest from the investors. It can be due to the current poor market sentiment.

Whether this company can be invested, the key is lies on your insight whether you can trust the management and the so called IOT products can sell? How easily it can be replicated since it’s just a USB drive with WIFI?

Let’s see.

Note: This post is not recommendation of buy or sell of a company shares, but only personal opinion.

What is Potential for CEPAT?

2018-01-13T10:59:00.002+08:00

I believe some readers did read Sin Chew newspaper investment article about CEPAT which it is undervalue due to the diversifying into power plant business back in early March 2017. At that time, CEPAT share price was 82 cents.

Once the news was released, CEPAT share price was shot up to 98.5 cents in the end of Aug 17 and then retreating all the way back to 80.5 cents (post-dividend is 82 cents), exactly the same share price as the day before the investment article released.

CEPAT share price was started to retreat way before its 3Q17 QR releases, may be due to insider news or trade. And hence once the poor 3Q17 released, the share price did not goes down further. The poor 3Q17 result is thanks to the 2 months scheduled maintenance, and I believe the subsequent quarter profit will be back on track.

If you don’t know yet, CEPAT is a small cap company operating palm oil business with only 8,450 hectares land bank, 1 palm oil mill with 90 mt/hr capacity. CEPAT has recently ventured into power plant, including 12MW biomass power plant and 3.8MW biogas power plant, which both have 16 years of contracts selling renewable electricity to Sabah Electricity Sdn Bhd (SESB) at 34.86 cents/kWh and 41.69 cents/kWh respectively.

Below are CEPAT’s oil plant age profile statistics.

From the statistics, we can notice that it has 42% prime, which expect the FFB yield to be stable, and coming up with 6% young mature estate. Unfortunately, it also has past prime high rate of 36%, which requiring heavy investment on replanting and offsetting the prime FFB yield. I have not seen CEPAT expanding its planation land bank over the past 7-8 years. That’s why I’m not surprising its share price has been running flat over the past 7 years.

So what prospect does this company has for investor?

From the look at the plantation and milling business, CEPAT has nothing to offer on the table compare to other plantation companies, as it has no land bank expansion and acquisition plan over the past 8 years. The maximum it can goes up is just like KMLOONG, with PER 12-13.

If we look into CEPAT past 3-4 QRs in details, the power plants income are started to kick in. Up to 9 months, power plant business has contributed PBT of $6m, about 18% of the total PBT. The amount is derived from biomass plant of 42,528mWh and biogas plant of 10,646mWh respectively. We expect the contribution will be gradually increasing due to better efficiency and higher exporting of electricity. Eventually it will takes up at least 30-40% of total CEPAT PBT within 2-3 years’ time.

As CEPAT is using oil palm EFB as primary fuel for its biomass power plant, and capturing methane gas from palm oil mill effluent (POME) to generate electricity, that is why it called renewable electricity and able to sell such a reasonable price to SESB. With the cost of both power plants are almost fixed, we can expect the margin for this business is better than oil palm. Hence, we can understand why the management tries to focus on power plant rather than expanding its current palm oil business.

I suspect that the management obtained the Feed-In Tariff (FiT) approval from SEDA using its political power, where SESB is currently suffering huge loss but yet still need to buy these renewable electricity from similar contracts at this premium price. But of course, the loss seems to be bear by the Government as TENAGA is not going to do losing business. Anyway, that’s one of the points, which means others may not easily get into similar FiT with SEDA within the state itself. Hence, CEPAT possibly can expand similar power plant business within the state if it continues to do well.

With current share price of 80.5 cents dated 29 Dec 2017, CEPAT is capitalized at $256m with PER of 7.x. If we calculate the valuation of CEPAT land bank, it is priced at about $16K, which is still slightly below market price but it is not as cheap other plantation companies like JTIASA and RSAWIT. As per management commented in 3Q17 QR, they also expect the earning performance will be better in the coming quarter due to normalize power plants income.

If we buffer in FY18 power plant income with stabilized palm oil price and currency exchange, CEPAT PER can possibly drop to 6.x. Let’s say the full valuation for CEPAT is PER 11-12, its upcoming share price should worth around $1.32 and $1.44, about 64% upside to go.

The upside may not seems as attractive as other small cap, but at least its business is more stable and predictable. I always need to remind about Warren Buffet's 2 golden rules.

Note: This post is not recommendation of buy or sell of a company shares, but only personal opinion.

Can JTIASA Makes It Back?

2018-01-06T16:52:00.001+08:00

JTIASA announced an improved latest Q1FY18 quarterly result end of last month, at $255.7m revenue and $42.3m PBT which has improvement of 4% revenue and 44% PBT over the same quarter last year.

The slight increasing in revenue due higher CPO and PK sales volume of 26% and 31% respectively. Profit margin has significantly increased due to better OER, CPO selling price and mills capacity utilization rate, as well as lower OPEX.

Nonetheless, with the improvement of Q1FY18, the share price is gradually diving few cents for the past 1 month. Why is that?

Well, that’s the question. We only can explain that more sellers than the buyers, and that’s why share price is diving. But we only can confirm that the management and major shareholders are not selling any at this moment. It doesn’t matter for now, our discussion point today is to review if JTIASA share price can return to where it falls about 1 year ago, RM1.60-1.70.

With the market capitalization of $1b, what can JTIASA offers?

The most attractive part will be one helps us making recurring income - plantation land bank, which is about 69,649 hectare (ha). We’ll also get 4 units of CPO mills with capacity of 60 / 90/ 120 MT per hour. We will also own the largest timber concession area and quota in the country, with total of 662,563 hectares and annum quota of 630,000 m3. On top of that, we will also own the wood downstream processing of plywood and veneer business with factories. We will put aside reforestation business for now, as it is not making any money but more to CSR.

We will need about $11.5k to purchase 1 acre of JTIASA’s planted land bank upon some basic calculation. The market price is around $30k to $40k per acre depends on location and landscape. Hence, JTIASA share price is consider way underprice if we calculate based on per acre price.

The business offers and land bank price sounds attractive, but why JTIASA’s share price has plummeted over the past 1 year especially during this bull year?

If we are to look at JTIASA’s past 5 years performance, it has stopped growing since FY15, it’s up and down from FY15-FY17, with FY17 is the worst ever PBT among the recent 5 years, due to the goodwill impairment of $62.3m in wood manufacturing segment as well as reduction in log and plywood volume. Else, FY17 PBT supposes be the best among the 5 years. Well, it is really out of expectation and let a lot of its investors dropped their jaws once the Q4FY17 QR released.

Now, that’s the catch. I noticed below are some potential signs about JTIASA right now:

1. JTIASA has more than 75% age profile of mature area in FY18 to be cropped, which can contribute significant to the group for the next few years. There’s also 19% are young mature. Hence, we are expecting good potential with the increase in CPO and PK volumes.

2. With the increasing of mature area and FFB production, OER expected to be increased from 16% to 18% in FY18, which significantly improve the gross profit margin.

3. CPO price has been stabled over the past 1 year and now stood at $2,400-2,600 which can bring stable profits to the group. The further hike of CPO price will be additional bonus for JTIASA.

4. With the completion of Harimaya CPO mill few months ago, there will be further CAPEX savings on transportation and distribution costs.

5. Since the impairment of goodwill is one time deduction, we assumed and hope that it won’t come back again in FY18.

6. The significant duty hike and limited supply for logs will be continuing impacting the timber profits. But JTIASA has officially transferred the listing to plantation last month. Hence, the core income should be from plantation and whatever generates from timber and reforestation are bonus. We expect the timber price remains competitive due to limited supply as well as economy is improving in the timber imported countries such as India. Hence, there should be profits for JTIASA under timber export division.

On the other hand, we noticed there’s some negative signs from JTIASA as well, as below:

1. The appreciation of MYR against USD will impact the profit margin from the export currency gain for both palm oil and timber.

2. Minimum wages imposed by Govt and serious shortage of labors continue to be the main issues and margin killer for palm oil industry.

3. The management has invested almost $71m to help their ‘related’ company – RSAWIT early this year, to exchange about 10% of RSAWIT share at 50 cents each. Yes, by calculating the per acre price, RSAWIT share is super value. But it is in huge debts position with very limited cash in bank. A bulk of its profit will be just used to pay debts for now and yet only 60% of the land bank is being planted. Can it sustains when CPO price drops? Hence, we are not sure when it can comes back. With RSAWIT share price has fall to 38 cents recently, JTIASA is making about 30% paper loss in this investment. I would personally think it is a bad investment at this moment, unless RSAWIT has the ability to turnaround by getting more fund injection to plant more trees, cut down unnecessary CAPEX, and cash out the loss making businesses.

In summary, for sure, the potentials are definitely overriding the drawbacks, especially with the current share price.

Let’s obtain a closer peer with similar age profile of mature area to compare in terms of valuation, KMLOONG. Its share price has been performed over the past 2 years, from $2 to $4.50. It has only less than 15,000 hectares plantation land bank but with 76% age profile of mature area, about the same as JTIASA for FY18. That’s why the one can see KMLOONG is just sitting there to reap the profit over the past 2 years with increasing FFB and income. If we look at KMLOONG current valuation, its share price standing at PER 12.x.

For JTIASA, its land bank is about 4.7 times larger than KMLOONG. Hence, it deserves a higher valuation should the plantation business is back on track. Let’s assume that JTIASA conservative estimated net profit for FY18 is around $120m, the PER would be at 8.5. If the target PER is 14-15, then the share price should be $$1.75 - $1.88.

I would think JTIASA might be able to come back at this price within 1-2 years’ time depend on the FFB growth, provided no impairment and other surprise again. Yes, its share price won’t shoot up like semi-conductor companies or act like a roller coaster, but at least its business and income are more predictable and stable.

Note: This post is not recommendation of buy or sell of a company shares, but only personal opinion.

My 2017 KLSE Investment Review

2017-12-30T17:55:00.003+08:00

2017 ending very soon and we are welcoming 2018 soon. How’s your investment result for 2017?

To me, local property investment is no longer a good choice at this moment. However, local stock market seems like a better choice for me this year. I don’t know much about Bitcoin or crypto currency, so I have not invested in it at all. So let’s talk about my local stock market investment 2017 outcome and review.

The 1^st half of 2017 seems like a bull market where I noticed most of the daring investors are making good money. Of course, December is also a good month to get some extra income for New Year.

Overall, I’m doing fine for 2017 where I have invested about 11 companies. 7 companies making profits and 4 companies making losses.

Below are the summary of my 2017 portfolio:

Gain Portfolio

No.	Company	Gain	Status
1	PENTA	333%	Hold
2	MLGLOBAL	56%	Hold
3	HUAAN	53%	Hold
4	COMFORT	30%	Sold
5	ECOFIRST	9%	Sold
6	IQGROUP	3%	Sold
7	CANONE	2%	Sold

Loss Portfolio

No.	Company	Loss	Status
1	NOTION	45%	Sold
2	SYSTECH	10%	Hold
3	EG	7%	Sold
4	SALCON	3%	Hold

The best company I invested this year is PENTA, which has shot up more than 330%, the best return I ever had so far. The previous case was only about 200%+ from AMEDIA few years ago. In fact, I would say its purely lucky for me to bet on PENTA, as I only know its future is brighter early this year. But I really did not know it will shot up over 300%, else I will just all in this company and have fun every day afterwards.

For NOTION, I would said its luck factor as the share price slumped due to huge fire incident. Anyway, no point to argue about it, as it has rebounded. I’ve no choice but to clear it due to the need of funds to inject into other more potential counters.

MLGLOBAL and HUUAN returns are not bad in overall, which gives me more than 50% return within 6 and 2 months respectively. The rests is history, as I’ve sold them. But if I still keep COMFORT, the return should be at least double. L

I’m still holding SYSTECH and SALCON even though they are in losing position after invested for almost 2 months, as I think they should be able to come back once they have improvement in the upcoming QRs.

In overall, my total 2017 annual return is around 29%, which is much better than last year return of 16%. In fact, you can see I’ve made 45% loss in NOTION alone. That’s a pain one, but it gave me a very good lesson.

The Stock Pick Year 2017 Final Result has been released from i3investor. There is total of 21 contestants have more than 40% return in overall! There’s a fantastic stock picks from these brilliant people. It also proven 2017 is exactly a BULL MARKET.

Below are my lessons learned for 2017:

1. Even if you do your homework and invest properly, you still have a chance to make loss. So invest all eggs into 1 basket also has its kind of risk, i.e. NOTION in my case.

2. Don't try to act smart to sell the golden goose. As long as the fundamental has yet to change and it's not expensive, do not sell too early. i.e. COMFORT in my case.

3. Focus on industry outlook rather than purely individual company prospect. i.e. Semi-Conductor, Steel. i.e. any Semi-conductor company

4. Don't only listen to others and analysts. You have to listen to your own, do your own homework because making profit or loss is all yours, not them.

5. Look into the importance of porfolio fund management. If one of the companies invested proportion is over the other companies, if anything happen to that company it will cause imbalance of profit & loss. i.e. NOTION in my case.

6. Try to reduce the frequency of BUY and SELL. But invest for mid to long term.

7. Try not to look at the share price more than 1 time a day. It can leads you to emotion, regardless of making paper profit or loss.

I hope my lessons sharing will help you in your investment too.

Looking forward 2018, I hope it is a good year ahead for stock market as we foresee BN will be continued to lead the country to obtain 6.x% GDP growth, MYR strengthening against USD, and the increment of all kind of taxes. :)

Happy new year 2018 and all the best to you, folks!

Can HUAAN Ride on Steel Uptrend Wave?

2017-12-03T15:19:00.005+08:00

Sino Hua-An International Bhd (HUAAN) was the superstar for over since late Aug 2017 until early Nov 2017, where the share price has shoot up almost 9 times from 4 cents to 35 cents, upon the released of 2 consecutive stunning quarterly reports.

However, the share price has fallen from the top to 23 cents as of 10^th Dec 17, dipped about 34%. What is going on for HUAAN?

By right, it’s share price should be on uptrend or at least maintaining, instead of dipped all the way down to 23 cents. The management and major shareholders seem like did not take any action, to buy or sell any shares officially. Since it has no institutional investor under top 30 shareholders, it doesn’t seems like they are selling it as well. Is HUAAN purely involving speculation play?

There’s a few reasons the investors are guessing in the market, which might be the reasons it’s share price cannot grow.

1. It’s a China based company listed in Malaysia. Hence, it might be another similar scam like other red chips under KLSE.

2. It’s a company which is affected listed issuer pursuant to Paragraph 8.03A of MMLR of Bursa.

3. It’s profits most probably cannot sustain in upcoming quarters, due to something is wrong.

4. It’s just a speculation counter.

5. Bear market is threatening the share price.

6. Others.

From what I thought, it presents a golden opportunity for retail investors to invest amidst the retreating share price of 20+ cents. Yes, it has shot up almost 6 times from the beginning, it sounds scaring. However, the one who calculate the FY2017 EPS will be getting around 7 cents, which is only about PER 3.x! Come on, got such a fat chicken running on the street for a normal person like us to slaughter? We should think that definitely something goes wrong!

I would like to share what I understand about HUAAN and its near-term prospects.

Firstly, the largest shareholder is not any Chinese, but a local royal member - Y.A.M. Tunku Naquiyuddin Ibni Tuanku Ja’afar, the executive chairman of HUAAN holding about 29.39% for many years. He is the original largest shareholder from Antah Holding Bhd during 2006 before the Chinese took over. The other major shareholders are Liu Guo Dong from China, the China boss holding 15.86% and Zhu Qing Hua from China, 9.09%. Total 3 of them holding 54.34%. Hence, it’s not totally Chinese from mainland controlled company, but the Malaysian boss. If you refer to the 6 times board meetings under FY16, most of them attended the meeting except Liu has missed one. The remunerations they are getting also very reasonable, and the share quantity remains the same since 2007 without the sign of abusing.

Secondly, HUAAN has consecutively makes profits over the past 2 QRs, which is qualify to uplift from Paragraph 8.03. That is why you can see HUAAN tries to release the QR as early as possible (current QR released by 30-Oct-17) as they want to resolve this issue. And finally, they have submitted an application for the upliftment from being classified as listed issuer pursuant to Paragraph 8.03A on 8-Nov-2017. The outcome should be able to announce within this month.

Thirdly, let’s get to know it’s business and how it makes money.

The operations business is 100% operating in China, where the group is producing and sales of metallurgical coke under 100% owned subsidiary – Linyi Yehua Coking Co Ltd located in Shen Quan Zhuang Industrial Park, Luo Zhuang district, Linyi City, Shandong Province with a build-up area of 319,014 sqm. They also have a coal storage area located nearby with 85,454 sqm. Both lands’ tenure remain 29 and 50 years respectively. They have about 1,500 employees at peak time, but I’m not sure how many left for now. For the products, metallurgical coke contributes 80% and the rests are from its by-products namely coal gas, tar, ammonia sulfate, crude benzene, coal slime and middling.

For how the metallurgical coke being produced, you may refer to the product flowchart below.

Metallurgical coke production flowchart

Unfortunately, HUAAN is not exporting any of its products overseas but purely sell it under its own city. HUAAN is also buying the raw material, low sulphur bituminious coal from local market as well. Hence, in order to examine HUAAN prospects for the higher coke price, the one has to examine the coke and coal market price under Shandong Province. Unfortunately, one has to know that steel and coke industry is a cyclical sector. HUAAN share price has been depressed badly for many years due to the steel cyclical downturn and price war. I can see the price is started to pick up from those product market web sites recently. The closing Linyi's coke price on 1-Dec-17 was RMB3,220.

The local management also took the effort to understand the progress of the plant at China, where they have paid a visit to the site on mid of Nov 17 to make sure the plant is operating as usual.

Mgmt's visits to Linyi Yehua Plant

So what’s the near future prospects for HUAAN?

For now, HUAAN has resume the operation of 3 coke ovens with total production capacity of 900,000 tones since 9 months ago. If the demand is growing, they can further boost up the productions with the 2 vacant coke ovens which assumed to have additional 600,000 tones.

The one can see HUAAN is expanding its inventory to almost double from previous to current QR. Hence, the debtors also shooting up tremendously since it’s resumption of production. If you see the latest QR, there’s a drawdown of RM25m short term bank loan. Although the QR did not explain where the money spent for, but from the cash flow statement you can noticed it went for inventory and new plant/equipment. I foresee the loan and inventory will be continued to increase in the next QR, if the demand is increasing.

2 things for sure and as mentioned in the latest quarterly report as well, Chinese Government has instituted stricter environmental regulation to deal with pollution concerns in the country by shutting down many illegal factories that failed to comply with the environment protection policies. On top of that, China’s Central Bank governor forecasts that the economy could grow at a rate of 7% for the second half of the year. Hence, it continues to create local demand over supply gradually on steel and coke.

What about currency exchange? For this case, we will have to look at RMB to MYR. Up to today, MYR has appreciated over RMB for 3%, not as worse as USD. So I assumed it does not have much impact as RMB will be growing strong with 7% GDP under FY17.

Another factor which will help HUAAN to widen its margin, which are the local coke and coal market prices that bound by the demand and supply. With the coke price gradual recovery over the past 1 week and also the high potential of uplifting from Paragraph 8.03A, I’m confident that HUAAN may able to stabilize its share price upon the release of upcoming QR. Assuming the share price can stands firm conservatively at PER 5 upon upcoming QR, then the share price will be 35 cents.

Everything looks fine, except the share price fluctuation. Dropping 1 cent of its share price is equivalent to losing about 4-5% of your investment. High risk high return or high risk run away? It's bull or bear market now?

Note: This post is not recommendation of buy or sell of a company shares, but only personal opinion.

Can SYSTECH Leads the Way?

2017-11-25T16:43:00.003+08:00

If one looks at Systech revnue and profit over the 5 years, nothing fantastic. Refer to Systech's last 6 years revenue in the table below, it it has growed almost 3 times from $6m to $15m. But PBT is not in tandem, where it stucks at $3m which is abotu the same as 2013 and 2015.

So what's so interesting about Systech and also it's future?

If track from the QRs, no doubt the e-business solution is the most making money division under Systech. However, the management admitted that the growth for it's e-business solution is limited, about 10-20% growth max. The new acquired divisions, e-Logistics can contributes about $0.5m profit per year and software applications are still in losing stage. We hope these 2 new divisions able to push up the profit to higher stage upon adjustment to the group.

I reckoned that the one which has the huge potential growth is cybersecurity solution division.With the booming of cyberattacks recently, there's attention paying to this company where one of it's business arms, SysArmy is purely specializing on cybersecurity solutions and services. The attacks have forced most of the companies especially FSI and telco to fork out budget to enhance their ICT security and do prevention. Not only that, SysArmy is not only targeting in Malaysia but also Indonesia market as well.

SysTech past 6 years revenue & PBT

As per Systech's director mentioned to media in Oct 2016, SysArmy revenue's will be contributing 50% of SysTech's total revenue from 19%. But he did not mention WHEN and also what's the bottom line growth. SysArmy revenue has grew up to $3.6m in FY17, about 24% of total Systech's revenue, where FY16 is about 17%.

Unfortunately, SysArmy has been not making much profit even though the revenue is growing in a fantastic mode. We can noticed that the loss is reducing and the latest 6 months outcome is having $8k loss. Up to 1H18, the revenue seems not growing as rocket comparing the previous FY. If the upcoming revenue for Q3 & Q4 is also about $1m each at my conservative estimation (remember the management target of 50%), then it makes up about total $4m and estimated GP of $100-150K based on current QR profit margin.

SysArmy's FY revenue & GP

So how can SysTech and SysArmy brings benefits to investors? What are the prospects that SysArmy has for now?

Personally, I'm working under an IT company which is focusing on ICT networking and security. I've about 16 years of experience in IT industry. So I'm quite well-verse on how SysArmy business works. We are also dealing with SysArmy on certain opportunities since this year, which we and our customers have no complaint so far. Perhaps my background and understanding on the business able to make me contribute my view about SysArmy and the business slightly better.

Business Model

SysArmy is specializing only in cybersecurity solution and services, including 1 Next Gen Security Operation Center (NGSOC) and also recently a newly setup training center. They mostly only do services, and if it's turnkey then they will have to bundle products and solutions. Hence, the margin is way better than the typical IT distributor like ECS. Although they are similar like system integrator like MSNIAGA and HTPADU, but they are only specializing in cybersecurity solution and services. Hence, it is a niche market where many system integrator and distributors are started to work on this field and build resources.

Nonetheless, ICT security experts and resources are generally scarce in Malaysia and ASEAN at this moment. It is scarce because it is very difficult to obtain the professional certification, such as CISA, CISM and CISSP. Hence, it's not anyone can be a ICT security consultant. Because of the scarcity, the wages for CISSP is extremely good in the region. Hence, it is quite costly to maintain certain CISSP headcounts unless you have certain projects in hand.

SysArmy services offering

Advantages

This is why I do not surprise to see SysArmy facing losses all this while as they have a full certified team including CISSP and CISA personnel. This is good as it provides a slightly higher barrier of entry. From what I noticed, most of the ICT security projects requiring certifications as requisition. With the scarcity of resources and the specific tender requirement, SysArmy has a better advantage to win more projects with slightly better margin due to less competition comparing to normal ICT projects.

From what I found out, Security Commission (SC) has enforced new guideline in 1st Nov 2016 where entities are required to implement adequate physical and systems security arrangements. Bank Negara has also addressed the safeguard for FSI in Aug 2017 as well. Hence, the involving companies will have to allocate budget to follow the guideline and assessment and able to bring business to SysArmy if they have the connections and win the projects.

On top of that, SysArmy also working closely with Cybersecurity Malaysia Association to improve the ICT security protection within SME in Malaysia. They just worked together to launch the SME package mid of this month.

Other advantages SysArmy has including it has granted MSC status last year which provides 10 years of tax exemption in Oct 2016. It also achieves Certification to ISO/IEC 27001:2013 in Dec 2015.

As of cost control, I would say they are prudent in spending after dealing with them a couple of times. In a way I think they are also control by SysTech. They have about 65 staffs for now and I can see they have hired a lot of Bumiputra staffs as ground staffs. It should have some added advantage in bidding & implementing projects from my perspective.

Disadvantages

The first disadvantage comes to my mind is definitely competition. I did mention the barrier of entry is slightly higher due to lack of certified resources. However, resources can be trained and they will grow if the market is growing. Since this niche market profit margin is higher than normal ICT solutions, definitely more and more companies will jump in and grab the cakes. Just look at property sector then you will know. When competition is getting stiffer and the vendors offering is about the same, then it downs to price war. SysArmy will have to continue it's innovation and connections in order to take the lead and grab more key customers.

The second con will be the resources. As the resources are scarce, the key persons might be targeted and offered by other companies to do the same thing. Once the key persons are going, the customers might be gone as well. That's the fact for this industry. A good example is SysArmy CEO has quit SysArmy few months ago and open up his own firm. That means the prospect is really good but unfortunately it falls under resource's threat.

The last disadvantage will be the diluted shares & low ownership. Up to now the shares have been diluted around 38% compared to last year due to the shares allocated for acquisition of Postlink and Rofarez owners. Hopefully these 2 companies can generate sufficient profits to cover up the diluted shares within 1-2 years. One have to remember Systech only owns 50% of all these 3 companies, SysArmy, Postlink and Rofarez. So all profits will have to divided by half before give it to shareholders.

Latest QR Comment

The latest QR is disappointed for sure, due to the high selling expenses (almost doubled), cost of acquisition & losses brought by Rofarez. However, without all these costs, it should be making slightly lower profit as previous quarter as partly can be offset by Postlink $126K GP. From what I observed, the main gap is the 35-50% profit reduction from e-Business solution.

Nonetheless, with the stronger coming up from Cybersecurity division and hopefully e-Business solution's profit can come back by next quarter, it might be a beautiful 3Q18 for SysTech.

Conclusion

This company definitely has a good near future prospect from the business point of view. It just happened that the share price has retreated 33% from the peak, perhaps due to KLCI retracement and poor latest QR. There's no way to evaluate Systech with the PER but only prospect. With the combination of business model and advantages I summarized in addition to the retreated price of only 30.5 cents + possible beautiful upcoming QR, I think it is a good buy for it's prospect for now.

Note: This post is not recommendation of buy or sell of a company shares, but only personal opinion.

What's My View on NOTION Fire Incident?

2017-10-21T21:33:00.001+08:00

Sadly to share that my return stumbled badly yesterday afternoon after one of my heavyweight invested listed companies got serious fire incident at the main factory. This is the first time in my life suffering so much loss from share investment.

As per quick phone interview with the company director published by the media, he expressed that there’s about 500 control machines were affected, estimated $150 million losses and roughly needs 9 months to recover! And their existing inventory can only last for 2 months.

Once this news spreads out yesterday noon, the counter share slumped 30% just within an hour and it’s been suspended due to hit the down limit. And it also hits the highest volume among the entire stocks, about 36.7 million shares transacted within an hour! Not only that, it also created the highest volume record since listed from 2005! Why majority of the shareholders has just a big reaction while fire incident is not something new for manufacturer?

Unfortunately, this is not the first time for this company to hit fire incident. The previous incident was occurred in Jan 2014, merely less than 4 years! And this time, the estimated losses and recovery time are at least 3 times worse than the previous fire incident!

To me, it’s not a big deal about the fire incident and one-time loss, as most probably they can be recovered 80 to 90% via insurance compensation. What matters me is the company reputation and customers’ order! With the production is affected for 9 months or more, how can they deliver the goods to customers as their inventory only can last for 2 months?

I’m not sure the current factory capacity % and number of control machines at Plant 2, 3 & 4, but the affected factory is the core production site which consists of 1,500 control machines and about 1/3 of the machines are affected by fire. As per director's feedback, they have about 200 control machines can be utilized to fulfill the capacity, but what about the remaining 60% capacity?

Put aside the trust and the upcoming 9 months affected income, if they are not able to deliver the goods to customer but the customers are growing, what will happen next? The customers will definitely approach other manufacturers for the orders, may be for short term. But if other manufacturers are aggressive enough, providing perhaps a better quality and price than this problematic company, what will happen next? That’s what I worry about.

The revenue can sure come back upon the rebuild of the machines and production. But trust and orders cannot once customers ran away. Unless the management is able to demonstrate the outstanding leadership and effective way to solve this production issue, else I think that’s it.

Another plus point is the company can leverage this opportunity to buy new control machine equipped with latest technology with less labor intensive, better quality and higher quantity! With bulk purchase of 500 control machines, the money compensate by insurance company may able to cover the new machine while greatly improve efficiency in the near future.

The company market capitalization is about $312m before slump, and now at $230m upon slumped. Can you see that? The fire incident has caused $150m loss but the capital is only $230m. It looks very attractive provided the management takes a prudent steps to pinpoint this issue by next week.

Well, crisis always comes with opportunity. I think most probably I’ll give it a small shot on next Monday to average down my buying price, regardless the share price slumps further, retains or bounces back. I think this company is still having a bright future, but perhaps I have to hold longer than I expected now.

Booming of Furnitures Theme

2014-05-27T13:28:00.001+08:00

Have you invested any Furniture business related counters recently?

If yes, congratulations to you not only because you have earned some handsome profits but I foresee there will be more to come. Let me explain why later.

For newbie, you may wonder what are the furniture counters we are looking at. They are not a lot and complicated if compare to Plantation, Construction, Property and Technology sector.

Those I'm aware consist of LATITUD, POHUAT, LIIHEN, EUROSP, HOMERIZ, SHH. These counters share price have went up at least from 10 to 70% since January this year. The highest so far is SHH, which has just shoot up more than 80% over the past few days before it rebounded. This is scaring but let's put this counter aside first. Of course, there are 2 counters are yet to fly high but merely 10% so far. This is more or less related to the volatility of it's shares which the transaction volumes are very pity at this stage.

There the related counters on supplying plywood materials are HEVEA and FLBHD. These counters are definitely benefits a lot if the furniture counters making more money.

Basically the furniture business is booming since second half last year due to the demand and economy are recovering from the low peak especially the developed countries like US, Japan and Europe. Developing countries demand also rising due to brighter economy such as China, India and Indonesia. Since it is just turning from the low peak for less than a year, there will be more rally to go.

On top of that, USD appreciation against MYD also boost up the earning indirectly. In addition, most of these companies are running very low PE ratio. Thus, they are really inexpensive and low risk to invest at this stage although some of them have went up a lot. Furthermore, news started to flow out that some companies / leaders have started to expand their capacity in order to boost up the existing revenue.

I'm very confidence that these companies will be continuing to rack in more profit at least in the coming 2 to 3 quarters. Perhaps these counters near future prospects are even better than the property counters, as you can see property sector index has went up a lot.

Of course, there are some risks to consider as below:
1. Weakening demand from Japan, Europe and US.
2. Strengthening of MYD currency against USD and local factory currency i.e. DONG / BATH.
3. Significant rising of plywood cost as furniture main materials.
3. Re-occurring of Vietnam riots that affecting those have factories / operations in Vietnam.
4. Instability of Thailand politics that may affecting those have factories / operations in Thailand.
5. KLSE facing downtrend or correction.

Well, if want to list down all the risks, they are too much to go. But let's look at property sector, after some many negative news, those undervalue counters still went up steadily.

Well, It's a challenge now to make money from KLSE at this high index period even though you still see a lot people are making a lot of money. All we need to do is to play safe and invest every penny carefully. Therefore, I've swapped part of my plantation shares to invest in 1 of the counters above today. Not a lot but just trying to make some coffee money. :)

All the best!

Is Property Theme Still Going On?

2014-05-11T23:41:00.000+08:00

There are quite a number of property counters have shot up a lot for the past few weeks if not months.

The counters fall under my monitoring list including BREM, DAIMAN, EUPE, GOB, MATRIX, MALTON, MKLAND, KSL, PLENITU, PJDEV, UOADEV, TROP, TAMBUN, SBCCORP, L&G and so on.

Why these counters?

It's very simple. Basically the lands these companies holding are worth more than their share prices. Once there is an article and report released by analyst or author on newspaper to uncover these gems which is heavily undervalue, the investors came to realize and invest on them.

In fact, these counters' prices have been on uptrend since the past few years. The early birds have been making a lot of money for the past few years from just holding these counters. Of course, some of them outperforming like MATRIX and TAMBUN, and some of them just came up recently i.e. BREM and TROP.

Well, I think generally the investors have come to know about these counters thus we are not going to talk about individual counter. We are more concern about whether the theme or uptrend will be ongoing. As long as the uptrend is still ongoing, any counter we invest will be still stand a chance to shine if they are continuing to outperform.

In my opinion, the recent price drop will be just temporary and I'm sure it's just a minor correction as the overall uptrend is still intact. Fundamental wise, the transactions are started to reduce and new condo projects started to have the sign of oversupply in the major cities.

However, for the counters having massive lands in Penang and Selangor, they may have a better chance to shine ahead of the rests. I'm not looking good at Iskandar for the time being, due to possible of oversupply and land title. issues

AIRASIA BERHAD

2014-05-04T19:32:00.005+08:00

AirAsia Bhd has fallen to the support price of RM2.20 for the 3rd time on Friday. Is it a good time to collect?

By looking at the technical analysis, it looks like a good time to buy by touching the strong support price level.

On the other hand by looking at the fundamental point of view, I'm fully supporting Air Asia even it's recent numbers are dropping significantly. But people still travel, and the number of people will also increasing as AirAsia makes the travel so affordable just like taking a cab or train right now.

Furthermore, it has mature business within the South East Asia including Malaysia, Thailand, Indonesia and Philippine. The short fall of Thailand is just temporary. Once the politics are stable, the revenue will be back afterwards. Not only that, it will operate the business in India soon, which is the second largest population in the world!

Look at the con end, the pressure from the local Government, airport operator and local competitors are really annoying, which is really an disadvantage to AirAsia. AirAsia is making a lot of money and contributing tax to the Government. Just because of they have a similar business and managing very poorly, while the airport operator is not doing a good job and try to protect them, the relationship turns sour. If this continues, it will hurts AirAsia badly.

Overall, I still like AirAsia for it's
1) Aggressive management way of doing business
2) Stick to it's vision - low price leader, and definitely indirectly created a barrier moat for others to compete
3) Business expansion to India
4) Worst situation has over and anticipating a brighter outlook in the future

Is Bear Coming to Take Place (Part II) ?

2014-04-20T22:42:00.002+08:00

Have you started to hear the grandmas and amateurs out there started to make money from stock market recently?

Since end of last year, I have consistently hearing people make a lot of money from stock market, newbies enter into stock market, even those don't know any but just want to get a piece of it. The market rally is strong and unstoppable since early September last year. A lot of mid and small caps price have grown many times.

Now, based on these information given, can we tell is it the time to cash out our money from stock market?

Well, the information above are definitely not sufficient to confirm the Bear is coming. There are 3 basic major indicators to look at to see whether the market is overbought.

The first indicator is the Price Per Earning Ratio (PER). Althought KLCI index is currently at the history high, is is priced at 17.1x as of closing last week, which is slightly above the median of 15x or 16.6x based on past 10 years history PER. And if you see the past history of 10 years, the bears normally took over when the index PER is priced after 19-20x and above. So it is telling us that KLCI index is now running slightly more expensive than fair value. But I reckoned that it is quite reasonable after factored in the population growth, inflation and improved quality of the 30 top cap companies.

The second indicator will be the total KLCI trading value (total volume x transacted price). If it is at the maximum point, the trading value normally is at the peak as well. However as of last week statistics, it is still trading at a normal value for the past 6 to 8 months.

The final indicator will be the GDP and inflation growth. The GDP has just started to recover in year 2010 and it is contracting of 0.9% from 2012 to 2013. The forecast GDP by analysts for 2014 is 5%, which will slightly 0.3% improve. With this kind of minimal GDP growth and high inflation era, I don't see any possible sign that the bubble will burst any time soon.

In conclusion, I don't foresee there is any bear coming soon, even grandma and amateurs are started to enter stock market to get a piece of profit. It's just started anyway and perhaps it is at the second stage of peak bull run. There should be another stage to go.

Despite we can still comfortably put our money in stock market for investment, we foresee the low and middle class people will be suffering the most, as most of their active income will be stuck at paying house and car loan or rental, as well as coping with high cost living and necessity, i.e. electricity, petrol, foods, toll, etc. I'm pity on the low and middle class old parents too, where the children are not afford to take care of themselves not even mention taking care of their parents in terms of finance!

But one thing I would like to remind everyone of us. Just be remember, no one will pity us or can help us, but ourselves. We have to fight our own way out!

All the best, Malaysians!

Is Bear Coming to Take Place?

2014-04-12T17:11:00.004+08:00

KLCI is now going back to near new high of 1852, compare to the peak of 1873 end of last year. Since the election last year, a lot of people make money from the stock market, easily 5 to 10 folds.

Just look at DSONIC, INARI, HLCAP, HAPSENG, etc, how much they have grow over the past 1 year. Easy money for those dare to buy even growing higher, isn't it!

For those who earned a lot from the stock market over the past 5 to 6 year, are you earning enough?

Well, I can tell you there is never enough. So everyone is making money from the stock market, who is making loss? Actually no majority is making loss yet, as the investors are now buying high over one another. Today you buy high, tomorrow there will be someone buying higher from you. And thus, you make easy money. But it there really such a good thing happens every day, month and year? Most of us have almost forgotten how the market crash in year 1998, 2001 and 2008.

As you can see, overall the index is still climbing. Once the stock analyst published any so called 'undervalued stock counter' which falls under small / mid cap, everyone is targeting on it and you can see the sudden surge of price and volume. That's very normal as everyone knows. But what I want to bring up is that, is the current index able to sustain or exceeding it's first 1,900?

Just to apply my common sense here. Index is mainly push by surrounded economy and investors' emotion. By looking at the surrounding economy, it doesn't seems continue growing but growing slowly. You can testify this by going out to the commercial areas, banks and retail and see whether the business is better than a couple of years ago. So the index is sustaining mainly based on investors' emotion, especially small cap counters. Investors will not think it is expensive in a very optimistic environment. Same as 1998 / 2008, where the market is at the bottom, most of us think the market is still dipping.

I'm not concluding the market will drop or the bear has come from now on. But regardless you have make money or not, just be extra careful. There is a point where the stock analysts recommending defensive stocks at this point. Those are your hard earn money, isn't it!

Anyway, I will continue to put my 20-30% portfolio in stock market on defensive and undervalue stocks and let it grow. If the market crashes, I have no choice but to either do dollar cost averaging or cut lose and wait for the possible right entry point again.

All the best, folks!

Malaysia Airline System Berhad

2014-03-16T20:07:00.004+08:00

Malaysia Airline System Berhad (MAS), this company name has spread across almost the entire world over the past 9 days and managed to become the most well-known airline in the world.

However, it gets famous not because it has an outstanding service or stellar result, it's just because of MH370 mysteries that make the crowd following the news, as well as condemning the incapabilities of the relevant party in Malaysia. Well, I won't elaborate more the full story here as everyone has knew about it. I want to focus on share market here.

At first suffering from huge loss in the latest quarterly result, follow by MH370 incident. The day after MH370 incident happened, MAS share price dropped 20% and then revert back to only 4% loss. It immediate created an opportunity for speculators to earn easy money.

A friend of mine which is good in short trading and daring. He quickly locked in 2,500 lots at 21 cents, and then he released all of them the next 2 days at 24.5 cents. This incident has let him made gross $8,750 windfall. According to his experience, he said the GLC IA i.e. EPF always like to dump money to save GLC listed companies. He has successfully made similar easy money on GLC counters over the past 6 years. The best margin he had made is on PROTON, which is 5 years ago and about $20,000 in just short period.

For me, I believe what he did is right, the IA sure will salvage the GLCs based on the history. But I did not invest any, due to I'm not a speculator and I'm not fully confident to do so. I also never buy Warranty before. But what I want to share is that and from the look at it, MAS seems like having a very strong support at 24 cents even with such a bad news. 1 unit of Boeing 777 easily costs $173 millions, even 70-80% of it can be recovered by insurance coverage, MAS still needs to face the 20-30% loss and fork out a lot money to purchase a new plane. Definitely the share price is worse than 24 cents if confirmed the plane is crashed or went missing for a couple of months.

Thus, like what everyone suggested, it's better to sell MAS to whoever capable to run the business. Or like what Japan Airline did, hired a reputable and superb CEO to run this business. Otherwise, why wasting the tax payers money to invest in this non-profitable business?

4th Quarter 2013 Results Review

2014-03-02T20:57:00.001+08:00

An extremely busy week for my work and compliment with the release of 4th quarter results, I was almost exhausted. Fortunately, I'm still able to blog about it. :)

Since there are so many companies involved, I will just highlight a couple of counters that I'm invested in and posted here earlier.

1) KSL Holdings Bhd
A very surprised negative result and the price has immediately shrunk almost 12% the next day. I think 12% is reasonable because other counters are doing really well. The market is expecting KSL to perform at least on par with the previous quarter result. But unfortunately, it makes a big loss quarter! I thought it's one of the biggest losers after MAS. Nonetheless, it's landbanks in hand definitely worth more than double of RM2.13. So it's still consider undervalued. :)

2) Eversendai Bhd
A couple of months ago, SENDAI's boss asked the investors to buy it's shares because he thinks it is undervalue and there are more projects are coming in, etc. Furthermore, he said SENDAI has already appointed security to do share buy back. Good one, I don't see any transaction yet after the first one. Well, not surprising it is a negative earning this quarter, as the previous quarter offered us a clue already. I'm not sure whether there will be further surprise in the near term. :)

3) Jaya Tiasa Holding Bhd
A disappointed result for JTIASA, due to the reduction of FFB outputs. I thought it will be a lot better as other plantation counters are getting a good results, why not JTIASA? I suspecting the reduction of FFB yield is due to the heavy rain and flooding in late Nov and entire Dec 2013. Perhaps 1Q14 will be better as the rain is only took place in Jan 14 before CNY. Let's see. :)

4) Asia Media Group Bhd
One of my favourite counters last year. It has make another worse result this quarter. Well, I have no idea what is the management and sales team are doing as sales are dropping significantly after collected so much money from the investors. However, the good thing is it's OPEX should not be high as CAPEX is the key thing in this business. Well, the management team really should do something for now to regain investors' confidence. :(

5) M-REITs
A couple of M-REITs are dropping more than 10% recently. Apart from QE news, nothing much that I'm aware of. Perhaps it's a sell down from the foreign investors to cash out. Well, M-REITs have been bullish for a couple of years. Perhaps they are undergoing a retreat, but I'm sure they will come back by giving the more attractive yields. :)

Jobstreet Corporation Berhad

2014-02-23T22:34:00.002+08:00

What a sad news! I just found out that Seek has bought over the core business of Jobstreet with RM1.73B. Even though JOBST is trading at high PER of 20+, it is indeed a very good company that keep growing and expanding around Asia.

The management has decided to reward the shareholders with all the net income for the selling of core business, which translated to RM2.40 per share. Interestingly, there is also an interim dividend of 1.75 cents to be distributed early next month.

After the news announcement, JOBST share price has went up and then plunged to RM2.52 as of closing. So my question is, is it worth to go in JOBST at RM2.52 or lower?

If we look at what is left in JOBST, it's 32 cents of Net Tangible Assets with few companies. By just looking at this, there is a discount of around 9% from the current share price, because:

Dividend = RM0.0175

Special Dividend = RM2.40

NTA after all dividends = 0.32

Total = RM2.40 + RM0.0175 + RM0.32 = RM2.74

By minus the current share price, RM2.74 - RM2.52 = RM0.22, or equivalent to 8.7%.

Thus, by just looking at NTA after dividend distribution, buying at RM2.52 is actually getting a 8.7% discount from the NTA.

Now let's look at what is left under the NTA. The companies that are making money are 104 Corporation Taiwan which owning 23.54% and Innity Berhad, owning 21.13%. The total annual net profit under 2012 is around RM5.1M. Where Jobstreet Thailand is currently still making loss of RM1.xM for JOBST, which owning 49.1%. The rests are unknown because they are subsidiary of Jobstreet and there are no information found about them.

The total worth for NTA is RM226.6M, which the bulk of it is from the associates. By looking at the net profit these associates are generating, the ROA is only less than 3%.

In summary, even though there is 9% discount, there are uncertainties of these associates and there is no plan from the management yet. If you said you are buying JOBST tomorrow because you have faith in Chang and you believe these associates will grow and fly, you should invest! Somehow the total risk is only RM0.1025 per share and it's very minimal.

I have very much faith in Chang, and I believe the management is planning for something for JOBST and shareholders! If the share price drops further and there is no negative news, you should further invest!

JAYA TIASA HOLDINGS BERHAD

2014-02-16T18:37:00.002+08:00

Many people are paying attention to JTIASA recently, thanks to a person.

A successful stock market investor and businessman, Mr. Koon Yew Yin has publicly promoted JTIASA in his blog for this counter's potential of making a lot of money from it's palm oil and timber businesses in the coming 10 years.

Mr. Koon and his family have already bought in more than 40 million JTIASA's shares up to now, approximately 4.2% of the total shares. The market predicts his entry price is between RM1.80 to RM2.30. Thus, he has invested more than RM82M in total.

According to him, JTIASA is worth to invest due to:

70% of JT plantation are form by young trees, ranging 5 to 8 year old. Thus, the profit from palm oil business will be increasing and recurring for the coming 10 to 12 years.
Reviving CPO price from the bottom and the earning will definitely improve in tandem with the increasing yield.
Largest forest for timber business in South East Asia and having concession with Sarawak Government for 20 years, which can supply for the another 5 to 10 years.
Share price depressed for a long period and has not reviving, due to the company spending a lot of money for growing palm oil business, i.e. plant trees and soying, etc. Mr. Koon is not worry about the high debts from JTIASA, as it will gradually reducing due to the trees planting activity is around the corner and the cost of nurturing the plants are decreasing.
Majority of the shares owned by Tiong family, around 24% in total. Thus, the family will still take care of the business like their own business.
Based on his success experience on investing palm oil companies, i.e. KULIM, TWSPLNT and RSAWIT.

I did a thorough research at JTIASA last few weeks ago. In fact, what Mr. Koon shared may be right. However, the high PER and debt are scaring and concerned by most of the investors. Furthermore, most of the analysts think that JTIASA current share price has fully valued and they are recommending other plantation counters as they are having a cheaper valuation than JTIASA. On the other hand, timber price is already at it's peak but the earning is not improving much.

In my opinion, I'm not really sure how far JTIASA can goes once it's trees are mature and yield at it's peak. But definitely it's not within these 2 years, as it's now only 5 to 8 year old. At this stage, the nurturing cost will be starting to reduce and soon after 1 or 2 years and it's 80,000HA has almost finished planted. You will see much profit made by JTIASA because of significant cost reduction and the recent improving of CPO price.

Compare to TAANN, the most valuable thing I see in JTIASA is it's aggressiveness of planting the palm oil trees at it's landbank over the years even though it is raising it's debt to do so. In fact, it is the best time to plant or replant the trees as the CPO price is at it's bottom over the past 2 years.

As a result, JTIASA faith is now looking at the CPO price. If it continues to go up for the coming 1 to 2 years, JTIASA will be the star again. If the price is remains or shrinking, then it would be better to look for other industry for better return.

Based on my findings and Mr. Koon recommendation, so far I have invested 9,500 units on JTIASA at average price of RM2.31 earlier. With the inflation going up like nobody business, I believe CPO price will climb further!

What do you think?

Eversendai Corporation Berhad

2014-01-31T00:37:00.003+08:00

My apology that I made a mistake by posting a non-relevant article just now. Anyway, I did a thorough study on SENDAI last week and would like to share with you all.

If you are paying attention on this SENDAI lately, it is falling from high point of RM1.70 in mid July till the lowest point of RM0.995 as of today, more than 40% price slides. Do you think it is undervalue or oversold now?

From the look at this counter, it LOOKS LIKE undervalue, even the owner himself told us so and perhaps you can make some free lunches by investing into SENDAI

However, I decided not to invest any of my hard earn money into SENDAI last minute. This is because I'm quite sceptical about what the owner of SENDAI told the investors over the past few months.

Reason 1:
The owner told us that SENDAI's share is undervalue when it's about RM1.x at 1 to 2 months ago, and he told the reporters that he have already appointed 1 or 2 investment banks to do share buy-back. It has done once only, and that's it. Until today, there is no further share buy-back from SENDAI even the share price has dropped further to RM0.995.

Reason 2:
In early April 2013, he claimed that the company earning is so strong but the share price is undervalue. He also plans to double the revenue (RM2 billions) within 5 years. That's a very strong confidence given to shareholders. However, the share price immediately plunged to historical low of RM1.04 after that.

And in mid June 2013, he claimed that the 2013 earning will be robust. However, after the released of the poorer result in end Aug 2013, he re-claimed that the certain art of the projects are complicated and thus customers requested for variation orders. The missing profit can only be brought in by 2H14. Hence, he claimed that 2014 result will be definitely the best ever. Please bear in mind the quarterly report is for 2nd quarter, from April to June 2013. What did he tell again in mid June 2013?

Reason 3:
SENDAI is doing steel structure on building, where not every building require it. So it can experience hard time if there is less steel structure building to be built. As usual, all the projects have to go through formal tender process. So the risk to win project with less margin also have to factor in as well. Furthermore, it is quite heavily rely on middle east market.

Reason 4:
The margin is depressed according to the recent quarters' result. I don't understand much about the competition. However, the owner claimed that the clients normally look for them automatically. This should be able to dominate the market with reasonable margin. But it seems like their market is only covering Middle East so far.

Reason 5:
The owner told the reporters there are few giant projects coming in 4Q13, but we have yet to see any. Now he told that they have been deferred to 1Q or 2Q14. We will have to wait further.

Reason 6:
I don't feel good guts about the management team. From the way the owner talks in the annual reports and in front of reporters, it made me recalled another Indian ex-owner from Masterskill Education Group Bhd. You will understand what am I trying to tell if you read up both annual reports and look at where is MEGB today.

Reason 7:
Low dividend yield compared to other more attractive company, like MUDAJYA.

On the other hand, I hope I'm wrong because the owner owns more than 70% share price and he did not dispose any of them up to today. Furthermore, the entry into oil and gas steel structural business perhaps is a positive move for the company for business expansion. Just that they acquire Technics at very expensive price due to the need for JV to bid for a tender.

If what the owner told is true and everything is smooth, 2H14 will be the time for SENDAI to shine. If this is the case, I'm sure SENDAI is heavily undervalue and it's worth to invest now. But I prefer to invest my money for other counter for now, due to my reasons given above. In the end of the day, I'm too concern about the management's integrity.

SENDAI is currently trading at:
Price - RM0.995 / PER 6.1 / D/Y 2% / Net Cash
The reasonable price will be RM1.65 based on PER 10.0.

Ops, it's 12.50am now. Happy Chinese New Year, folks!

Interview with CEO of AirAsia

2014-01-19T16:23:00.000+08:00

There was an interview from CNBC with Tony Fernandes on past Friday regarding the current issues and the future of AirAsia and AirAsia X. It supposed to involve QPR but somehow He did not mention anything about it.

The interview is very short, just a few minutes interview. He talks quite fast and I don't really get all his conversation, but luckily there is a written conversation underneath the video. This is what I love about CNBC, it's web site is very professional.

As you know, AirAsia together with it's X share price has dropped more than 20% since the listing of AAX and poor result of AirAsia quarterly financial report, due to the significant drop of profit and the uncertain of future prospects foresees from the investors.

In summary, Tony is still very confident about AirAsia near term future prospects and the current issues are just temporary as the company is still doing what they are suppose to do, LOW PRICE. Low price will always win, according to him. What do you think?

For those who are interested, you can watch the interview conversation video here, http://www.cnbc.com/id/101344515.

OCK Group Berhad

2014-01-05T22:34:00.003+08:00

I have met one of the directors from OCK Group Berhad for a business discussion recently.

Since this is a golden chance to understand about OCK and he is a nice person, we have discussed about the current situation and future prospects of OCK.

Basically OCK is doing well and they estimating to bag in RM200M revenue in 2014. Profit margin is yet to known as it depends on the project management and material cost as RM is weakening. But definitely the prospect will be better than last year.

Below are the prospects outside Malaysia:

Myanmar - It won't bring any profit to group as the Telco license is yet to award to the one of the two bidders due to some political issues.
Indonesia - it starts to do well and bring profits to the Group in Q4 last year. It didn't mention in the report but will definitely add it to the report this year.
They started to have businesses in Brunei, Philippine & Vietnam as well, but not significant yet.
The group is aggressively sourcing around the potential companies for acquisition within the South East Asia, in order to bring consistent profit to the group.
The group is aggressively looking for business that can consistently bringing profit to the group, as project income is not consistent and margin is low as well.

We talked about INSTACOM as well. He mentioned that one of the directors may not be sincere as it keeps selling its shares and it looks like political linked.

In summary, I think OCK is genuinely doing business and it's aggressive in it's business expansion. I like the aggressive CEO like Mr. Wong as well. This counter is definitely worth to take a look. But it looks like the current price is a little bit too high for me compare to it's current earning.

Undervalue Property Counters

2014-01-04T21:18:00.002+08:00

No doubt, BREM is the star of the week.

BREM is seriously undervalued due to the lands it accumulated since many years back. BREM finally fly to the sky few days ago after Nanyang newspaper writer revealed it's actual value on the paper.

Without the writer paragraph, I believe BREM will still need some times to go up to RM2.00. However, before that, it has managed to shoot up from RM1.20 to RM1.50, and now at RM2.00 level.

Congratulations to those who buy in since RM1.20, it is such high return within a short period. Not only that, it also brought up other undervalue property counters price, such as CVIEW, SHL and KSL. CVIEW just shoot up 13% yesterday!

In my opinion, BREM is seriously undervalued in terms of lands holding, but not the income that it can brings to investors. In view of the index is already very high, people will just fry whatever it makes sense or doesn't make sense. And that's why suddenly high NTA property counters become the target. It's worth to pay attention to those who have not shoot up a lot.

2013 Investment Portfolio Review

2014-01-01T23:13:00.003+08:00

My investment result is stumbled in year 2013.

KLSE went up 10.5% for the entire year 2013, and a lot of the counters have grew a lot more than that. However, I only managed to get 3% net return of my total stock investment in overall, including dividends.

From the look at it, fixed deposit and mutual fund return is a lot better than my investment portfolio for 2013. What a shame!

I did a review this morning and I concluded that not because I did not pay sufficient attention to the market, it's because I did not do sufficient homework.

Just to review and share what I did for 2013, as below:

Hold too many lots of REITs and they have corrected at least 10% - 30% and I did not release them but even increase the lots this year.
Heavily invested into BJTOTO and JTIASA since November and these 2 counters are drop at least 10% - 15% over the past 1-3 months. I did some dollar cost averaging but my buying price is still high compare to the current price. Thus, I make some paper loss from my buying price.
Invested the correct counters, i.e. PLENITU, INARI, PCHEM, but I released too early.

They look okay actually. Just that I feel that I did not do sufficient homework. Otherwise, I'm confident that I can exceed the last year net return of 33.5%.

Anyway, no point to regret or complain for now. Let's move forward and look into 2014 how can I get a better return. The index is at history high of 1,867, so we really have to be extra careful for making further decision and building portfolio. I would insist to focus on undervalue and great potential counters only, with more homeworks to do.

Happy New year!

Reason Behind Neglecting Blog Update...

2012-08-20T22:27:00.002+08:00

Selamat Hari Raya to all Muslim friends!

My sincere apology for not updating my blog. Not I'm lazy to do it, just that I've been too busy with my current job all over the year.

To be honest, my job is overloaded due to my inefficiency, inexperience and lack of helpers. Anyway, it has offloaded a little bit since May as 1 staff has been recruited to help out. I hope it can be easing sooner as another staff will be coming in next month, and perhaps the 4th person will be coming in by October. You won't believe the level of busyness and I only can conclude that my boss, sales team and company are moving very aggressively.

Busy at work not only affected my personal lifestyle, neglecting my blogs update, but also neglecting of my stock portfolio and investment plan. I really don't have time to read annual reports and do research nowadays, including Saturday and Sunday. I feel like I'm gradually away from stock market. Anyway, I still force myself to pay attention to the quarterly report that falls under my stock portfolio, which is a few days later it has been released.

This has been prolonged for about 1/2 year for now. I know this is not a long term solution, as job is only part of the life. I do enjoy a little bit about my job, but it's not about all. I still have other things to learn an grow, including stock investment.

Over the past 1 year, I have been thinking hard of what am I really interested in and have passion with. Needless to say, do company research is one of my interests, but I don't think I want to make it full time as it is too dry. Haha. Secondly, I don't really find myself possessing any other strength apart from the current job as well as get a good return in stock investment.

So definitely I'll continue to stay with my current job. Of course, change is required as I would like to have my personal time after office hour too. Who know, after October i will revive my personal time to do company research and update my blog again. But I'm glad to borrow Raya free time to update my blog.

Regarding my portfolio, since I have been very busy, I don't really have many trades this year, the five (5) transactions only so far. Anyway, the portfolio return is also the best ever compared to the past 3 years. If more efforts put in and swap the non-productive counters at the right time earlier, it should be a lot better.

I have took profit for my shares on MUDAJYA and TOMYPAK end of last week, as I'm looking good on 2 counters and I need some cash to invest. But I would like to see some more dips to lower my risk. I also tried to release my shares on AMEDIA but I missed the boat. Well, index has been shot to new high but it doesn't mean it reaches the limit. This is stock market and no one can predict what's next.

Have fun in stock investment.

My Comment: FELDA Global Ventures Holdings Bhd IPO

2012-06-01T21:41:00.002+08:00

FELDA Global Ventures Holdings Bhd Initial Public Offering prospectus has issued yesterday. Since it is the 2nd largest IPO after Facebook, many investors are paying attention on it.

For those who subscribed Gas Malaysia Bhd, it is a very disappointed one. This is because it does not need our money for future expansion and it only do it for the sake of listing. As a result, Gas Malaysia Bhd only offers 30.5 millions shares to the public. I would say the chance for retail investor to hit is extremely low, even compared to ARMADA, PCHEM and MMHE.

As a Malaysian retail investors, we are also given a chance this time to subscribe a total of 73 million shares at RM4.55 per unit. To be honest, 73 million is very insufficient for the public and the chance to hit is also extremely low, but definitely better than GAS and MSM.

Most of the retail investors are skeptical about this FGV listing plan, is this a right time and right price to subscribe and invest in this company? General election coming, BN weakening, settlers and KPF issues, global economy crisis, CPO pricing retreating, oil palm tree age issue, PER of 16, etc. After all, investing a share is just like doing a business. It has risk involved. If every GLC company goes listed and confirmed it is making money for retail investor, then this is not a stock market. But so far this bull year is doing good for all GLCs, I believe it is the same as FGV amid all the problems came up, especially it is supported by 10 cornerstone investors.

From business point of view, I think RM4.55 is definitely a fair deal. This business should worth RM5.05 per unit.

I'm currently accumulating most of my bullets and once it is done, I'm going to subscribe by next week. I mean I'm going to sleep into it. It's one of the rare opportunity after MMHE and PCHEM last year.

Good luck, guys. (Yes, this is really required a lot of lucks if your bullet is not strong enough!)

Market Continues to Goes Up?

2012-02-12T21:27:00.000+08:00

Market continues to go up after Chinese New Year. I believe most of us are making handsome profit this year. All 'experts' started to talk about how much they make yesterday or last week.

There are many news going on to heat up certain counters price, including Puncak and NICORP. NICORP is the craziest one just like HARVEST did.

It's 1,562 on 10th Feb, it's only 30+ points from the peak of 1,595. I believe it's only time matter to break 1,600 now before the national election. So let's continue to make some money before knowing our country's fate.

Anyway, I've just bought 10 lots of TOMYPAK last week at RM1.01, as I see it is an undervalued gem and it has a lot of potential to go this year. Perhaps I will explain in detail why I like and bought it in my next post, if I have the time.