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Sunday, August 30, 2009

Value Buy Willowglen MSC

Willowglen MSC Berhad, through its subsidiaries, engages in the research, design, development, engineering, supply, sales, implementation, and maintenance of computer-based control systems. The company offers hardware products, including RTUs and communication controllers. Its software products include SysLink VIDEO-SCADA software for telemetry, video surveillance, control, and monitoring functions; system simulator that allows a user to test RTU programs without a physical RTU; and Web accessibility via InterLink. The company’s products also comprise digital video recorders (DVR) and PC-based DVR’s. It operates in Malaysia, Singapore, and Europe. Willowglen MSC Berhad is a subsidiary of New Advent Sdn. Bhd.

Willowglen has a market cap of 59.5 million at current price RM 0.24 per share. It made about 8 mil for the past 3 years, which gives it a P/E of 7.4x. What makes Willow attractive?

1) Willow has very healthy balance sheet. In 1Q2009,its current asset amounts to 54.7 mil against total liabilities of 6.9 mil. In this net cash position, Willow can easily expand its business through acquisition or new market venture.

2) Great dividend at 2 cents per share per year. That gives a dividend yield of 8.3%. Due to rising revenue and profitability (refer to 1Q2009 result),Willow can easily distribute more than 2 cents dividend in the coming years.At current price,its dividend yield can easily rise to 10% next year

3) Willow is a closely held company. Its shareholders have strong experience in this industry and that bodes well for Willow to get new contract through networking.

4) Besides acquisition and special dividend, Willow is ripe for bonus issue while listing itself in Main Board. Comparing Willow with other MESDAQ companies,Willow is more than prepared to join the big boys in Main Board. If this happens,Willow 's share price can easily jump 50% .

Willowglen is a darling stock for those who likes MESDAQ companies. If you can't make money through Willowglen,i will rather shut down this blog.

Sunday, August 23, 2009

Value Buy Cocoaland Holdings

Cocoaland Holdings Berhad, an investment holding company, engages in manufacturing and trading processed and preserved foods, fruits, and other related food stuffs primarily in Malaysia. The company also engages in the wholesale and retail of processed and preserved foods; and the manufacture of fruit juices. Its products include chocolates, cookies and wafer, nuts, candies and gummies, snacks, and soft drinks and jellies. The company is based in Kuala Lumpur, Malaysia. Cocoaland Holdings Berhad is a subsidiary of Leverage Success Sdn Bhd.
Cocoaland Holdings Bhd has set-up a plant in Fujian province in China under a 50:50 joint venture (JV) to produce its popular Lot 100 fruit gummy products. Cocoaland is one of the few gummy manufacturers in Asia. In the JV, Cocoaland Industry Sdn Bhd, signed an agreement with China’s La Bi Xiao Xin International Co Ltd.
The JV company, Coco (Fujian) Food Industrial Co Ltd, would involve US$5 million (RM17 million) in investment and start production in August 2007. Cocoaland will be responsible for manufacturing and its partner will look into distribution and marketing. The investment is fully funded via cash. It is expected that the earnings from the China operations coming through for the 2008 financial year and subsequently, the full impact can only be felt in year 2009.
La Bi Xiao Xin is a unit of Singapore-listed China Lifestyle Food & Beverages Group Ltd. It has more than 17,000 retail outlets under the La Bi Xiao Xin brand and annual revenue of over 500 million renminbi (RM221 million). The distribution network is large and perhaps in the future,

Cocoaland may own 1% of China’s Market through the JV.

Cocoaland is at RM 1.03,has P/E of around 10 compare to the industry standard, Dividend Yield 5%. Cocoaland is expected to declare bonus issues / special dividend for its investors.

Sunday, August 16, 2009

Value Buy Suiwah Corporation

Suiwah Corporation Bhd., through its subsidiaries, operates supermarkets, departmental stores, and hypermarkets primarily in Malaysia. It operates four retail outlets, including Sunshine Square, Sunshine Farlim Hypermarket, Sunshine Jelutong, and Suiwah Air Itam. The company also engages in the research, design, development, manufacture, and prototyping of flexible printed circuits boards; property investment and development; money lending; electrical goods retailing; and trade of garment, construction materials, and general merchandise. The company was founded in 1961 and is based in Penang, Malaysia. Suiwah Corp. Bhd will open its latest lifestyle concept store cum supermarket at the Penang Times Square in October. The store, called Sunshine City, is the latest addition to the Suiwah Corporation chain of retail stores and will also be the anchor tenant of Penang Times Square phase one.
Why Suiwah is attractive?
a) Damn cheap valuation,partly due to its weaknesses to deploy capital. Market cap is around RM76mil but the company is in net cash position of RM39mil. Separating the business with the cash will price the business at RM 37 mil (P/E around 3.7 based on 10 mil net profit)
b)Expansion through concept store in Penang to tackle middle high income group.Penang people knows Sunshine very well and income from middle low remain stable.
c) Implementing share-buy back to return 'some lose change' to shareholders (to calm shareholders due to stupid mistake of JV)
d)Going to declare first and final dividend of 8 cents/share in Nov 09 (not generous at all)
e)Majority shares are owned by friends and family (more than 50%).
f) Just opened PT. Sunshine Amanjaya in Indonesia to engage in the business as a main distributor, importer and exporter (this may provide business synergy)
g) Net Asset per share is RM 2.76 (at current price,investors are paying 45 cents for a ringgit)
The risk in Suiwah:
a) Lack of direction: Its executive directors are very old (56 and 60 years old).Due to their unexciting life,they want to try something different to spice up their life using shareholders' money.Instead of specialising in retailing business,Suiwah jumped into OIL & GAS in May 2008. It entered into an agreement with parties from India that include Valdel Investments Pvt Ltd and Valdel Oil and Gas Pvt Ltd (VOG). Suiwah took up a 15% stake in VOG, which is involved in the exploration and production of oil and natural gas in India. Luckily,this J.V has failed to win any bid for exploration project and hence,the J.V has been called off in Jan 2009.
The failure in this JV is good for investors because every tom,dick and your dogs know if the J.V successfully win an exploration project,Suiwah will still lose big time because it only owns 15% equity with no control over the cash outflow.In addition,it's risky to deal with Indian partners/businessmen.Even,Ananda Krishnan who is borned in Sri Lanka having hard time to understand them.
The sad thing here is no valid reason given by Suiwah for this JV but your dogs smell that this maybe a hanky-panky deal which does not benefit Suiwah shareholders at all.Shareholders feel happier if the Suiwah returns the cash back to shareholders. The unwillingness to explain to shareholders shows bad corporate governance (aka treating shareholders like idiots) and Suiwah has high possibility of repeating unrelated diversification again.
b) Declining revenue: This may be due to intense competition. It also shows management weaknesses to handle market dynamics.
c) It is a waiting game: Investors must wait for the 'old' management (currently,in retirement mood) to execute an aggresive startegy in related fields
Weighing the risk & rewards in Suiwah,current price will
provide investors a huge margin of safety,6% dividend and potential
growth story.