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.

Tuesday, September 10, 2013

The return of foreign investor to Malaysia?

1. Yesterday, foreign buying turned net buyers with RM159m after about 2 weeks of consecutive net seller.
2. This could be caused by positive economy data from China which shows that exports rose more than consensus estimate.
3. Conclusion: It's time to buy again... Stocks that I am looking at include PPB Group, Zhulian and Fibon.

Tuesday, August 27, 2013

The Store 9M13 EPS increased 29% YoY

1. Background. The Store Corporation Berhad (Code: TSTORE or 5711) is a leading operator of supermarkets, departmental stores and hypermarkets in the country. The Group has been listed on Bursa Malaysia since 1994. Overall, the Company focus on retail operations with presence throughout every state in Malaysia.
2. 9M13 EPS increased 29% YoY to 23.30 sen. According to its announcement to Bursa, the increase was mainly due to the improvement in revenue, saving in operating cost which derived from the consolidation of certain underperforming outlet with the outlet in the vicinity as well as increase in the other income.
3. 4Q13 should be weak. Last year in 4Q12 TSTORE registered 2.7 sen EPS. Conservatively can assume it manage to get the same 2.7 sen EPS in 4Q13 will make up FY13 forecast EPS of 26.0 sen.
4. Target Price of RM2.47. Assuming 9.5x PE on its FY13 EPS of 26.0 sen. From its current market price of RM2.20, upside is about 12%.

Thursday, August 15, 2013

Time to take profit on MAS

1. Entry at about 30.5 sen. I recommended MAS as stocks to watch on 19-Jun-2013. The post is with the title "3 STOCKS to BUY NOW... Foreign investors turned into net buyers". At that time MAS was trading at about 30.5 sen.

Original link: http://wallstreetklci.blogspot.com/2013/06/3-stocks-to-buy-now-foreign-investors.html

2. MAS share price up recently after Government says looking to sell MAS shares but depend on the price. 

3. 10% gain within 2 months from 19-Jun to 15-August today. For this kind of high risk stocks with little fundamental, I think 10% return is good and it's time to take the chips off the table.

4. Recap of what I wrote last time about MAS as per below...

MAS (Target RM0.34-RM0.35) WARNING: Only for daredevil
>> Nothing much to talk about on this Company fundamental.
>> But due to its strong backing from government, I think this stock unlikely to fall below RM0.30.
>> Technical RSI is only 33 now (very close to oversold level of 30).
>> Expect small rebound to RM0.34-RM0.35 in the next 1 month. Once hit, take profit fast.


Friday, August 2, 2013

FBMKLCI +5 points but net foreign selling RM262m?

1. Lose support in last 5 minutes yesterday. Those who track FBMKLCI closely yesterday would have noticed that at 445pm, FBMKLCI is still +10 points before suddenly erased 5 points of its gain at 450pm. At 450pm, all share price will be "locked" and all trades must be transacted at the same price transacted at that time until 5pm.
2. In the end, FBMKLCI ended only +5 points. And guess what? Net Foreign Selling is RM262m.
3. Net foreign selling RM810m in the last 3 days.
Tuesday:   Net Selling RM122m
Wednesday: Net Selling RM437m
Thursday: Net Selling RM262m
4. What does this mean? It's quite clear net foreign selling has returned and it may stay for about 1 week. Depending on foreign investor confidence in Malaysia, it may end earlier or later.
5. So KLCI may gain today but maybe only 5 points. This is caused by strong liquidity in local market. But KLCI can't appreciate significantly because it will attract major sell from foreign investors again.

Thursday, August 1, 2013

Besides Malaysia, who else downgraded by Fitch?

1. It's Petronas, Maybank and TM. All outlook has been now downgraded to "Negative" from "Stable".
2. In the short term, Maybank and TM will need to pay higher interest cost in the next round they go to the market to raise bond. This should impact their earnings if the bond yield rise significantly.
3. In the long run, this is a wake up sign that Malaysia better get its debt situation under control. Otherwise, the real downgrade on the "A-" situation for Malaysia is just a matter of time.
4. What to do?
>> If you do not believe much will done to ratify the issue raised by Fitch, then go open account which allow deposit in foreign denominated $. This will at least protect against Ringgit depreciation.
>> Diversify stock investment away from pure Malaysia stocks. I am looking at WILMAR (SGD 3.15) because this stock has been bashed down severely from SGD5.50 in the last 1 year. Their earnings will be released next week, hope it will be good then this stock can move.
>> Buy into stocks that fundamentally can benefit from weak MYR such as plantation companies, rubber glove makers and technology stocks.

Tuesday, July 30, 2013

FIBON FY13 earnings grow 9% to RM4.9m

1. FY13 EPS up 9% to 5.00 sen. FIBON reported FY13 EPS of 5.00 sen (+9% YoY against 4.59 sen last year). However, its 4Q13 EPS declined 7% YoY to 1.04 sen due to higher admin expenses.
2. Background. FIBON is a technology Company. It is engaged in the formulation, manufacturing and sales of polymer matrix fiber composite materials and products for the Electrical, Electronic, Petrochemical and Automotive industries.
3. Dividend of 1.25 sen was announced. This will still need approval in the next AGM but usually it will go through. At current share price of 33 sen, this translates into dividend yield of 3.8%.
4.Low volume, boring stock. Today volume is still small (~65k) although the earnings and dividend was announced yesterday. Hence, this is a boring stock in which share price does not move much.
5. Strong balance sheet. This Company has no borrowing at all. And its net cash is RM20.0m or 20.0 sen per share. Basically, this means about 65% of its share price is backed by cash. From corporate finance angle, FIBON does not use its cash into good use hence its depressed share price so far.
6. Theoritical value of RM0.32 per share. Simply by using its latest book value of RM0.32 per share.


2Profit/(loss) before tax
3Profit/(loss) for the period
4Profit/(loss) attributable to ordinary equity holders of the parent
5Basic earnings/(loss) per share (Subunit)
6Proposed/Declared dividend per share (Subunit)

7Net assets per share attributable to ordinary equity holders of the parent ($$)

Thursday, July 25, 2013

Tower REIT post flattish 2Q13 earnings

1. Flattish earnings. TOWER REIT ("TWRREIT") reported 2Q13 EPS of 2.51 sen (+2% YoY against 2.47 sen last year). The slight increase of 2% in EPS is in line with 2% increase in revenue to RM13.2m.
2. Income distribution of 5.09 sen was announced. Ex date will be on 7-Aug-2013. Payment date is 27-Aug-2013. However, this is 8% lower compare to last year distribution of 5.48 sen.
3. Some background: The three assets of the company are Menara HLA, HP Towers and Menara ING.
4. Just a dividend play. Despite flattish earnings, dividend remain attractive with net yield of more than 6.5%.

Thursday, July 18, 2013

Watch YOCB (Worth RM1.00)

Main business in home linen, homeware, and bedding accessories. Yoong Onn Corporation Berhad (YOCB) engages in the design, manufacture, distribution, retail, and trading of home linen, homeware, and bedding accessories in Malaysia. Some of the Company's key products brand are Diana, Novelle and Jean Perry. To market its product, YOCB has 17 fully-owned retail outlets under the Home’s Harmony brand name.

3Q13 grow 32% YoY to RM5.62m. 3Q13 EPS was 3.51 sen  (vs. 3Q12 level of 2.67 sen). Good earnings growth was due to higher sales through higher consignment and boutique sale. Collectively, 9M13 earnings increase 15% YoY to RM16.34, again due to same reason (better sales).

Good dividend yield of 4.9%. The Group paid 3.5 sen net dividend last year and this year. Based on latest share price of 71 sen, this translates into good dividend yield of 4.9%.

Net cash of RM13.7m. This strong balance sheet should allow the Group to expand its business easily without affecting its ability to pay dividend.

Trading below book value of 86.5 sen. It is surprising to see such a good Company is trading below its Book Value of 86.5 sen. This could be due to not many investors know this stock.

YOCB theoritically worth RM1.00. By applying very low 7x PE to 14.3 sen EPS estimate in FY14, this stock is easily worth RM1.00. For FY13, its 9 month result already achieve 10.21 sen. Make simple assumption 4Q13 can achieve 3.0 sen... FY13 forecast EPS should reach 13.21 sen. I think demand for the Company's product (home linen, homeware, and bedding accessories) is rising as many young couple move into new house and need to buy these stuffs. Hence, FY14E EPS just assume another 8% earnings growth to achieve 14.3 sen. The 7x PE is for small cap stocks which is already 30% discount to current Small Cap Index PE of 10x.

Buy 14,000 YOCB into my paper portfolio. Based on all reasons stated above, I add this stock into my paper portfolio yesterday at 69.5sen (14,000 shares). Hopefully this stock can help this paper portfolio to achieve 30% growth next year.

Wednesday, July 17, 2013

Target 30% return every year for the next 3 years

1. Market return @ 10%. Generally, stock market return is 10% every year (based on FBMKLCI total return in the past 5 years).
2. But I target 30%. However, I believe that through good stock picking, it is possible to achieve 30% annual return in the stock market.
3. Start with RM10,000. Since I am not rich, let's build a small portfolio and test whether my strategy works.
4. 1st trade: BUY 14,000 YOCB @ RM0.695. By doing this simulation trading, now my portfolio is RM9730 in YOCB shares, RM270 cash. Reasons why I find this stock attractive will be covered in another post.
5. Grow to RM13,000 by 30-Jun-2014. Since now is 17-July-2013, let's make it simple for next year target at 30-Jun-2014.
6. Final target RM21970 by 30-Jun-2016. The 30% is compounded over 3 years, so the final target is RM21970.
7. Assumptions: 
i) Brokerage commission is excluded as this is only paper portfolio.
ii) Dividend will be included in this portfolio.

Tuesday, July 16, 2013

SUNWAY and SUNWAY-OR arbitrage opportunity

SUNWAY mother price: RM3.30
SUNWAY-OR (rights to buy SUNWAY) price: RM1.47

Conversion price to the mother share: RM1.70

Theoritically, there's an opportunity here... Here's how it work...

BUY 1000 shares of SUNWAY-OR at RM1.47:                        RM1470
CONVERT SUNWAY-OR into mother by paying RM1.70:      RM1700
Total Cost:                                                                                   RM3170

Total Money Received:                                                                RM3300

Net Arbitrage Gain:  RM3300 - RM3170 = RM130

But remember this is only theoretical as these need to be fulfilled:
1. SUNWAY mother share (after conversion) will still trade at current level.
2. This calculation exclude broker commission.
3. This calculation ignore time cost to fill in the conversion form and submit it.

Friday, June 28, 2013

The Magic Number for Dow Jones, Hang Seng and Nikkei

Here's the 3 number that you should not forget:

1. Dow Jones: 15,000 points
2. Hang Seng: 20,000 points
3. Nikkei:        15,000 points

Last week, global equity market sentiment turned negative when Dow Jones got bashed down below 15,000 and Hang Seng got sold down below 20,000. Reason is QE may end soon, hence SELL.

And then US released its 1Q2013 GDP growth of 1.8% (which is below market expectation). GUESS WHAT? Market think that QE will continue because of this and equity market rebound.


Follow the market, now it's time to BUY... 3 stocks to look at are:

1. YEE LEE (Good earnings in 1Q13 growing > 100%, maybe the last consumer stocks with PE at only 7x)
2. IJM PLANTATION (FFB growth > 40% in April and May, meaning results can still grow YoY despite low CPO prices)
3. MAS (only for daredevil, don't expect the stock to come down below 30 sen due to strong GLC support. Trade and sell at 34 sen).


>> When KLCI touch 1785. Now KLCI about 1760, so about 25 more points to play.
>> When Nikkei touch 14,500. Now Nikkei is about 13,600. So about 900 more points to go.

Tuesday, June 25, 2013

CIMB upgrade Jaya Tiasa Target Price to RM2.36

CIMB Research: Jaya Tiasa’s timber earnings to surge

KUALA LUMPUR: CIMB Equities Research expects Jaya Tiasa's timber earnings to surge in the coming quarters, due to the recent sharp rise in log prices.
It said on Tuesday another factor is the stronger housing starts in Japan, which are likely to support plywood prices in 2H13.
“We upgrade our call from underperform to Trading Buy given the likelihood of a near-term re-rating, driven mainly by stronger timber earnings.
“We raise our FY13-15 EPS by 29-60% to account for the more bullish outlook for timber prices. Our SOP-based target price goes up to RM2.36 as we apply a higher valuation to the group's timber business,” it said. 

Source: http://biz.thestar.com.my/news/story.asp?file=/2013/6/25/business/20130625085751&sec=business

My take:

>> RSI is only 40 something at current price of RM2.01 so the downside should be limited.
>> Share price should be supported at RM2.00 which is a strong psychological support.
>> Longer term outlook will really depend on timber prices which is volatile and unpredictable.
>> Assume KLCI does not fall some more below 1725, Jaya Tiasa should be able to appreciate to RM2.25 - RM2.30 level.

Friday, June 21, 2013

What to do now when Dow Jones fall 350 points?

What happened?

>> Dow Jones Index crack below 15,000 level convincingly.

>> Foreign investor took the signal of QE coming to an end as an excuse to exit emerging market, including Malaysia.

>> Net foreign selling in local index RM283m yesterday, likely to continue today.

What to do?

>> SELL. You may hate me when I say this, sell everything except dividend yield stocks which has return of > 5%.

>> All the indicators are bearish. USD strengthen against Ringgit, commodity price tumble, Malaysia bond yield got sold significantly and pushing its yield up.

>> Index may fall below 1750 today, support at 1700 next week.
Roughly I expect KLCI to end at 1740-1750 today, meaning down about 10 points to 20 points.

>> Collect Maxis at RM6.50. If the fall is so great that Maxis pushed to RM6.50, can collect a bit. Annual dividend 40 sen, so getting 6.2% dividend yield from KLCI stocks should be OK.

Thursday, June 20, 2013

SBCCORP: Target Price RM2.35 according to Kenanga

Kenanga wrote about SBCCORP today and assign Target Price of RM2.35, implying 38% share price upside.

·          Low land cost. Most of SBC’s landbanks were acquired between the period of 2000-2004, hence relatively low in land cost. Out of its c.134ac landbank, the bulk (59%) are located in Ulu Selangor, 23% are located in KL (mostly in the Mukim Batu area), 10% are in Kota Kinabalu (“KK”) and the remaining in Kuantan. Their Mukim Batu land is near the Taman Wahyu area while they also have niche landbank along Jln Ipoh. Landbanks in KK are in Signal Hill and Tj Lipat, which is a prime area and MAHSING has projects there that have fared well in terms of take-up rates and pricings. Their net gearing is comfortably at 0.2x which provides ample room for landbanking.
·          SBC has been making in-roads into Kota Kinabalu, Sabah (KK), which is another booming market. The big boys are already there; MAHSING has recently acquired land there, while SPSETIA has kicked-off its Aeropod@Tanjong Aru project while IJMLAND has niche landbanks in the area. In May-13, they entered into a JVA with Suria Capital Holdings Bhd to undertake a mixed development project on 16.25ac land along the Jesselton Waterfront, KK. JVA is likely concluded in Dec, so we believe significant earnings contributions will only be felt from FY15 onwards.  The project will have GDV of RM1.8b, in which Suria is entitled to 18% of the GDV as part of land payment; positively, the land obligations are stretched over 8 tranches over a 7 year development period.
·          Risks. We note that revenue has been on a declining trend since 1Q13. However, it 4Q13, revenue did improve by 177% QoQ although it was still 8% YoY lower. We are unclear of their new launches beyond Dex Suites @ Kiara East.
·          Big RNAV upsides and compelling valuations. We project FY14E net profit of RM29.3m (+10% YoY).  The stock is trading at 4.8x FY14E PER and 0.4x FY14E PBV which is far below its peer (developers of RM100-500m market cap) average of 10.8x Fwd PER and 1.0x Fwd PBV. By revaluing their landbanks, particularly the KL and KK landbanks, we derive an RNAV of RM5.86. Even after applying our maximum RNAV discount of 60% on their RNAV (due to small market capitalization of RM145m), we derive a TP of RM2.35, which provides a 38% share price upside to the last price of RM1.70.

Wednesday, June 19, 2013

3 STOCKS to BUY NOW... Foreign investors turned into net buyers

On Tuesday, foreign investors turned into net buyer of RM133m and KLCI stay strong above 1770 points. It is the local institutional (net sell RM62m) and local retail (net sell RM71m).

Usually, foreign investor are regarded as "smart money". Hence, this may be the time to BUY again.

These are 3 stocks I am looking at:

1. HAIO (Target RM2.85-RM2.90)
>>Should announce full year result soon before end-of June. With 9M13 net profit already growing 51% YoY to RM37.3m, the full year FY13 net income should be growing very good.
>> What to do? I think this stock can increase up to RM2.85 - RM2.90 level.
>> For reference purpose, Affin is valuing HAIO at RM2.98 while Kenanga is valuing it at RM2.90.

2. YEELEE (Target RM1.50)
>> I have written about this Company's 1Q13 result previously which grow more than 100% YoY.
>> Despite the good result, the share price has not move much. Meanwhile, Spritzer has increased a lot (>15%) within the same period.
>> Valuation is attractive as this Company is one of the few consumer stocks with PE below 10.
>> What to do? I think this stock can increase closer to RM1.50.

3. MAS (Target RM0.34-RM0.35) WARNING: Only for daredevil
>> Nothing much to talk about on this Company fundamental.
>> But due to its strong backing from government, I think this stock unlikely to fall below RM0.30.
>> Technical RSI is only 33 now (very close to oversold level of 30).
>> Expect small rebound to RM0.34-RM0.35 in the next 1 month. Once hit, take profit fast.

Tuesday, June 18, 2013

Smart money coming back to KLCI?

1. Foreign investor selling cooled off yesterday with only RM30m net selling, this is significantly lower than more than RM200m last Friday.
2. KLCI break above 1770 points yesterday while mid cap stocks are generally flattish.
3. BUY SLOWLY. Time to accumulate slowly on stocks and prepare for the next surge.
4. Concern on Fed Reserve reversing QE have been priced in into the market.
5. My view is that Ben Bernanke will "manage" his words carefully and it won't sound outright QE exit. Which means market should react positively to it after its announcement on Thursday.