Wednesday, August 27, 2014

3 Results That You Should Not Miss

During the short lunch break, 3 of KLCI member companies have released their quarterly earnings. Details as follow:

i) RHB 2Q14 EPS increased 33% to 21.90 sen. 1H14 cumulative EPS was up 28% to 39.50 sen. Its latest book value is RM6.97.

ii) AXIATA 2Q14 EPS fell 32% to 5.20 sen. 1H14 cumulative EPS was down 11% to 13.10 sen. Its latest book value is RM2.27. Dividend declared was 8.0 sen.

iii) TM 2Q14 EPS is flat at 5.97 sen. 1H14 cumulative EPS was down 1% to 11.86 sen. Its latest book value is RM2.03. Dividend declared was 9.5 sen.

Wednesday, April 30, 2014

The POSITIVES despite FIBON 9M14 EPS decline of 27% YoY

1. 9M14 EPS declined 27% YoY to 2.90 sen.
According to its announcement to Bursa, the decline was due to lower operating margin and higher admin expenses incurred. Zooming in, the sales to Indonesia has declined to RM0.5m from RM2.0m previously possibly due to slower growth experienced in Indonesia economy.

2. But there are three positives despite the earnings decline:
a. Super strong net cash of RM20.8m or 21.2 sen per share. This is an increase of 4% from RM20.0m as of end FY13.
b. Business Cash Flow generation remained healthy. Operating Cash Flow is RM2.3m, Capex RM0.4m, Financing Cash Flow RM1.2m. Meaning this Company business is still generating positive cash flow to shareholder.
c. Outlook for FY15 (Year End May) should be better. Although FY14 earnings likely to be lower, FY15 prospect is better. Remember FIBON secured the factoring business in Aug 2013 and is now in the gestation period to get the business running efficiently. After one year, the Company should perform better in FY15 as its factoring business improve.

3. VALUE OF FIBON is RM0.61. BUYING OPPORTUNITY if share price stay below RM0.50.
a. Assuming 8x PE to FY15 EPS of 5.0 sen, the Company business is valued at 40 sen. Add the net cash of 21.2 sen, the Company is worth 61 sen per share.
b. The 8.0x PE is conservative as it is significantly lower than Small Cap PE of 11x currently.
c. The 5.0 sen EPS is assuming Fibon can grow its business back to FY13 level of 5.0 sen EPS based on growth seen in its factoring business.
d. Overall, potential return is 24% but one must take a longer term view (6 to 12 months holding power) to wait for the potential of FIBON factoring business to grow.

Tuesday, February 18, 2014

Take profit on YOCB. Switch to TSH.

1. YOCB Spot On! On 18-July-2013, I highlighted that YOCB is worth RM1.00 and investors should watch out on this stock. At that time, YOCB share price was only 69.5 sen. Check my previous post here

2. 44% gain in 7 months. After 7 months (today 18-Feb-2014), the share price has indeed hit RM1.00. As a result, my paper portfolio of 14,000 shares of YOCB has grown 44% to RM14000 (begin = 14000 * 0.695 = RM9730).

3. Time to take profit on YOCB. YOCB valuation is no longer attractive at RM1.00 as:
i) It is now trading at fair 7.9x PE. While this is slightly lower than consumer stock PE of 10x, its market cap is smaller.
ii) Dividend yield is now compressed to 3.5%. This is assuming the Company pay same net dividend of 3.5 sen like last year. Seriously, with the outlook of higher interest rate in the 2H14, you might as well put your money into Fixed Deposit.
iii) It is now 10% higher than its book value of RM0.90. So my previous argument of buying because it is below book value no longer hold.

4. Switching to TSH (can touch RM4.00 by end-2014). I am buying this stock before CPO prices break RM2700 per tonne. This stock need no introduction. It is in palm oil plantation business and has young trees and high volume growth in FFB. Again, I am looking for 30% gain in 1 year and I believe this stock can hit RM4.00 by end-2014.

5. 30% gain = 20% growth from FFB volume growth, 10% from CPO price. CPO prices last year is very low at about RM2400 per tonne. Just assume 10% growth in price will give around RM2640 and this is still below yesterday CPO price of RM2680.

6. My paper portfolio made 43% so far due to gain in YOCB, hope TSH can grow another 30% in 2014!

     SharesTotal PortfolioReturn
18/7/2013 10000
18/7/2013Buy YOCB 10k shares0.695140009730270973010000
18/2/2014Sell YOCB 10k shares1.001400014000270140001427043%
18/2/2014Buy TSH3.004500135007701350014270

Tuesday, December 24, 2013

Take Profit On HARNLEN

1. Share price increased 45% since I highlight this stock. On 1-Oct-2013 when I wrote about HARN LEN, the share price at that was only RM1.00. At that time, the news is that Harn Len Corporation (HARNLEN) sold its 2410 ha of land in Sabah for RM184.6m cash to Boustead. Recall at that time I mention that "If you look at the share base of 185.5m, the cash of RM184.6m translated into about RM1.00 per share. Since this Company still owns 12,200 ha of plantation land in other states, its share price is unjustifiably trade near RM1.00."

2. Announced special dividend of 20 sen yesterday. This confirms The Star news previously on 3-Oct-2013 that the potential amount of special dividend works out to near 21 sen. You can read more here

3. Lack of short term excitement after the special dividend announced. I still believe HARNLEN is worth RM1.80 in the long run but you must know that this is the minimum value of all of its estate. This value will only be realized in the long run. Ex the dividend of 20 sen, my new Target Price will be RM1.60.

4. Time to lock in profit after good 45% gain. At this juncture, I think the 45% gain should be good enough for me and hence I close position on this stock. I will switch this money to TSH, a promising counter, will write about it next time.

Wednesday, November 27, 2013

BIMB result not bad, but share price upside only 7%

BIMB released its 9 months earnings this afternoon. Here's some of the highlights:

1. 9M13 earnings grow 19% YoY to RM219m. If we look at 3Q13 alone, the earnings growth is 25% YoY to RM75m. In its announcement to Bursa, BIMB mentioned that "The higher profitability was mainly achieved on the back of higher operating results of RM32.5m, and RM49.6m improvement in allowances for impairment on financing and advances, investment and other assets, as well as the non-recurrence of provision for contingent liability.
2. Considered not bad as it makes up 70% of consensus. Consensus looking at RM313m FY13E Full Year Earnings on average.
3. Only another 7% upside to go based on Consensus Target Price of RM4.82. Conclusion is good result, but if buy now should have limited upside. But not for sell also because it is still delivering satisfactory earnings growth.

Friday, October 25, 2013


1. Update. Both DRB-Hicom and Konsortium Logistik are suspended this morning for whole day on Friday 25-Oct-2013. Note that DRB-Hicom last price is RM2.46 and Konsortium is RM1.51.
2. Takeover soon? Looking at the coincidence that the two are suspended on the same day, it is possible that DRB-Hicom could be taking over Konsortium Logistik.
3. Related to Budget 2014? Surprisingly, today is also the budget day. Given that DRB-Hicom is somehow Government linked, we may see this deal is somehow related to Budget 2014. I could not find the reasons at this juncture, but it could be another petrol price increase.... But to sooth things out, bus ticket prices to be reduced? Anyway, this is still too preliminary, wait for the Budget to see what happen.

Tuesday, October 1, 2013

HARN LEN worth RM1.80?

1.    The price that it sold its land is already RM1.00 per share. On 27-Sep-2013, Harn Len Corporation (HARNLEN) sold its 2410 ha of land in Sabah for RM184.6m cash to Boustead. If you look at the share base of 185.5m, the cash of RM184.6m translated into about RM1.00 per share. Since this Company still owns 12,200 ha of plantation land in other states, its share price is unjustifiably trade near RM1.00.
2.     Will HARNLEN sell its other plantation estates? HARNLEN has suffered consecutive 3 quarter of net losses due to low CPO prices, so it may make economic sense that the owner may want to sell its estates to another Company to realize its investment.
3.       HARNLEN is worth RM1.80 if the estates were to be sold. Assuming a very low land valuation of RM25,000 per ha for the remaining 12,200 ha of its land, this share is easily worth RM1.80. The 12,200 ha of land is already at deep discount of 65% to the Sabah estate price (due to the low FFB yield) in this calculation. This means its 12,200 ha land worth RM305m or RM1.60 per share. But of course we need to take care of its net debt of RM148m or RM0.80 per share.
4.    Conclusion: Land sold at cash (RM1.00) + Remaining estates (RM1.60) – Net Debt (RM0.80) = RM1.80 per share.
5.     Short term will be volatile, but the value should emerge soon. Investors sentiment may be clouded by US Government Shutdown Concern, but value investors know the trick to buy when the market is in fear. Grab this opportunity before too late.