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.

SUMMARY OF KEY FINANCIAL INFORMATION
31/05/2013

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31/05/2013	31/05/2012	31/05/2013	31/05/2012
		$$'000	$$'000	$$'000	$$'000
1	Revenue	3,352	3,598	16,674	16,901
2	Profit/(loss) before tax	1,228	1,550	6,566	6,226
3	Profit/(loss) for the period	1,019	1,102	4,901	4,499
4	Profit/(loss) attributable to ordinary equity holders of the parent	1,019	1,102	4,901	4,499
5	Basic earnings/(loss) per share (Subunit)	1.04	1.12	5.00	4.59
6	Proposed/Declared dividend per share (Subunit)	1.25	0.00	1.25	0.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	0.3200		0.2900

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%.

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.

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.

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

SELL SUNWAY at RM3.30
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.