Tuesday, June 28, 2011

What if I miss out MSM? Then look at BERNAS

MSM gained RM1.15 (about 33%) to RM4.65 as of 3pm. Is there any upside? I think not that much. But what if I have miss out on MSM?

Look at BERNAS instead. Kenanga wrote about BERNAS yesterday. Here's the first paragraph:

Padiberas Nasional Berhad (BERNAS) is primarily involved in procurement, importing, buying, processing and selling of rice, rice by-products and paddy.

Recently, BERNAS has received the renewed mandate from Malaysian Government to manage Malaysia’s rice supplies for the next 10 years.

Net profit improved in both FY10 (+5% YoY) and 1Q11 (+36% YoY) as average cost of rice declined.

Net dividend totaled 19.0 sen in FY10 (yield 5.6%).

We view BERNAS as a cheap proxy to consumer staples sector in Malaysia as it trades at 7.8x PER of FY10 (25% below MSM IPO’s PER of 10.2x).

We recommend a fair value of RM3.85 (based on 10.2x historical PER to FY10), implying potential upside of 33%.

Short comment:

Hmm... RM3.85, still plenty of upside. May consider this if you have missed out MSM

Wednesday, June 22, 2011

MUHIBBAH director sell shares at RM1.82

Director sells shares

MUHIBBAH Engineering (M) Bhd executive director Lee Poh Kwee disposed of some half a million shares in the company for RM1.82 on June 16.


Short Comment:

I guess the indication is quite straight forward, even director is selling...

Thursday, June 16, 2011

Kenanga downgrade Muhibah to HOLD

News reported that CIMB Bank is pulling out the financing for APH. This could lead the potential write off for Muhibbah amount due from APH amounted up to RM370m as per audited account 2010. Based on the report, to date APH has drawn down up to RM840m loan from the RM1.4b bridging loan facility by CIMB, which secured in 2006. At present, APH’s main shareholders are KIC Sdn Bhd (40%), PTP Sdn Bhd (35%) and Trek Perintis Sdn Bhd (15%). We view this news as negative to Muhibbah in the short-term. As such, we downgrade our call from BUY to HOLD (due to the uncertainties) but maintain our Target Price of RM2.24, as we keep our forecast unchanged at this juncture, pending for further clarification on the issue.

Thursday, June 2, 2011

MSM IPO Priced at RM3.38 or 10.2x PE

So we know it now the IPO price is RM3.38 or 97% of the "Institutional Price".

MSM is the leading sugar producer in Malaysia. Its products range from white refined sugar and soft brown sugar. The Company owns brands such as "Gula Prai" and "Gula Perlis".

My view:
1. Lack of growth story as Malaysia market is generally matured. Sugar intake will be correlated to population growth. I think 5% to 8% revenue growth is the range where the top line will grow.
2. Cost of production will swing according to global sugar price. But current downtrend in sugar price will benefit MSM. Net profit margin = 10.6% in 2008, 14.4% in 2009, 10.7% in 2010. Something like 11% net profit margin should be the case in 2011.
3. Dividend policy of at least 50% of net profit. This will translate to about 17 sen dividend or 5.0% dividend yield.
4. Conclusion: more to dividend play than growth story. Characteristic wise, it will be something like MAXIS (share price stable but give consistent dividend).