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Wednesday, December 29, 2010

Malaysia Smelting Corp (MSC) to list in Singapore Stock Exchange

The news is out this afternoon that MSC is going to list in Singapore stock exchange after shareholders' approval.The stock flew to RM 4.50.But this post is not about MSC.It's about a company which also owns MSC,ICAPITAL.BIZ

ICAP is non speculative,does not pay dividend and it has very small daily volume for traders.Hence,it stayed undervalued since 2008 crisis because uncle and aunty weren't interested.Why ICAPITAL is attractive?

a) ICAP is one of the THIRTY (30) LARGEST SHAREHOLDERS in MSC now. ICAP bought MSC in April 2010 at around RM 3 per share.It owned about 1.9 mil shares and at current price of RM4.50,it's sitting on an unrealised gain of RM 2.8 mil today.Since ICAP will continue to hold MSC even after it lists in Singapore,the future potential gain is tremendous.

b) ICAP is still holding RM 100 mil in its vault and judging from its impressive record to double the NAV less than 5 years, ICAP's NAV can easily breach RM 3.00

c) Tan Teng Boo is "cooking something delicious behind the kitchen" to serve to ICAP's shareholders in order to justify the under priced share

d) Current share price offers almost 20% discount to its NAV.

ICAP is ripe for picking now

Saturday, December 18, 2010

Buy Some Stocks Before Christmas Holiday!

Bursa Malaysia is undergoing some healthy correction during year end holidays due to fund managers going for vacation,school holidays for children so no time for stocks or whatever reasons.

It's during this period when value investors should hunt around looking for undervalued companies.They should allocate some cash to pick up some good stocks with good fundamental to ride the bull in Jan 2011.

Are you ready for bull run in January 2011?
You still have around 10 working days to pick up great companies at attractive price.Focus on companies with good cashflow,healthy debt ratio,cash rich companies,mid to low market cap.Some of the companies you should be looking at are mentioned in my previous posts.

2011 is a great year for Malaysia due to snap election, ETP, foreign fund inflow and various government initiatives to boost the Malaysian Economics.In short term,these news will lift the market confidence.In long term,we shall see....well,in long term,the success of all government initiatives will depend on the man in the mirror.You are the main determinant whether Malaysia will be able to leap from middle income trap to High Income Country.If you want to make Malaysia a better place,start looking at the man in the mirror.Let's work hard,work smart,save and invest now!
   

Tuesday, November 16, 2010

Are You Ready For Super Bull?

4Q2010 to 1Q2011 will be SUPERBULL for KLSE. Foreign investors will pump in huge amount of liquidity into stock market. Cheap money will always go to highest yielding asset. Comparing all the countries in Asia, Malaysia is on the radar now.Malaysia has a lot of undervalued good paying dividend companies with low PE.

Big cap companies have ran up a lot recently so the focus will shift to second liners.Make sure you pick/hold your portfolio to ride on the bull.Don't sell too soon..not until the stock is fully valued.There will be more corporate activities coming up in these few months.Take note of companies selling below their net current asset.They are ripe for pickings.

Take note of my previous recommendation because these companies have something brewing in them.If you could just put some $$$ in them,you'll be laughing all the way to the bank next year.

Thursday, October 21, 2010

Why bother investing in Malaysian REITs?

Today, i read an article on The Star by Mr. Ooi Kok Hwa regarding REITs. Take a lot at the article here.

What makes me furious is that Mr. Ooi who is an investment adviser and managing partner of MRR Consulting,has misled the public by not discussing the real issues in Malaysian REITs(MREIT).I guess a consultant is still a CONsultant.

MREIT is full of crap properties.If you look at their portfolio,most of these properties are actually dumped by developers/owners since they cannot sell their buildings in the market to professional institutional investors.For example,SUNWAY REIT (which i wrote earlier) is one of them.Creating a REIT is the best way for developers/owners to either 'sell their building at higher valuation' or 'unload their poor quality properties to the market'.

Most of analysts would reasoned that the owners of the buildings which are pumped into REIT want to raise fund to capitalize other opportunities.But these crooks can actually refinance these buildings.So,why go through the hardship to create a MREIT?Because the bankers refuse to refinance these properties at crazy valuation.

So,these crooks will repackage their buildings by bringing in tenants through creative leasing contract to boost the rental income.Property manager will help to make up their properties so that the net operating income is marketable.There are a lot of ways to tweak the buildings to improve the performance for a few years. 

Some developers actually treat their own REIT as a dumping site.If they want to sell their buildings at higher valuation,they can pass it to their own REIT.Who cares if the total office space in KL has reached its oversupply condition.Just build them and sell to their own REIT!It's a fool proof business model for developers.

MREIT is very far away to be compared to the actual REITs in US,UK and Australia.In these countries,REITs can directly involve in property development and become a developer.They can leverage up to boost great return for their investors.

Which type of REIT is better for investment?
1) A REIT which buys land,construct the building at cost,sell some % and keep some for recurring income and manage & control the building management.OR
2) Just like MREIT,which have to buy properties at market value from some crooks and manage it for recurring income?

Generally,REIT is very liquid but that only applies to overseas REITs.Whoever said MREIT is liquid must be copying his work from some foreign article without using his brain.A quick check with the MREIT's daily volume will show you the reality.MREIT is so illiquid and you may have to sell at loss, below their NAV to get back your $$$.Compare to MREIT,you may find more liquidity investing in an actual condominium next door nowadays. 

My 2 cents-->If I want recurring dividend,i would rather buy BJTOTO.Low cost and simple business model which will still makes $$$ when you let an idiot run the company.

Wednesday, September 15, 2010

Undervalued Advance Information Marketing (AIM)

I posted about AIM before.Those who bought it after reading my blog and sold it would have been making super profit.Check out my previous post and see the share price for yourself!!!

Recently,AIM announced bonus issue of 1 share for every 3 shares. After the announcement,there have been a lot of activities in the company.

The company has been actively buying back its shares using its strong balance sheet.

Latest balance sheet revealed that AIM is very healthy financially,little liabilities and has about RM 23 mil on its account.AIM has also sold one of its factory to raise about RM 6.6 mil this week.This will increase its cash built up to RM 30 mil.But AIM 's market cap is about RM 35 mil (at RM 0.185 per share currently)

So besides the bonus issue,what is brewing in AIM?

One possibility:AIM is venturing into some special projects which will boost up its revenue in the future.AIM may give good dividend to its shareholders after the bonus issue too.AIM may be transferred to Main Board in the future.

Investing in AIM has more rewards than risk. Buy AIM now @ 0.185.

Sunday, September 12, 2010

Willowglen MSC is extremely undervalued

Willowglen is in the process to join the big boys in the Main Board.This will attract more investors and hence more liquidity or volume can be expected for this stock.

What really attracts me is Willowglen 's balance sheet is very strong. Check out my previous blog on this company too.

If you check on its balance sheet,Willowglen has about RM 50 mil but the company market cap is around RM 90 mil (at current share price 0.37).That means the business is only selling for about RM 40 mil.But past records revealed that the business is producing about RM 10 mil p.a in net profit.

Assuming a P/E of 7x for Willowglen (post transfer to Main Board), it should be selling at RM 120 mil (market cap). This means the price can shoot up to RM 0.48 post transfer to Main Board.

Investors can expect 30% upside, bonus issue, share buy backs and special dividend from Willowglen within this financial end.

Saturday, July 3, 2010

SUNWAY REIT IPO:THE BIGGEST RIPPED OFF IN BURSA MALAYSIA

Why you should sell Sunway REIT when it starts to rally on July 8 (listing day)?


  • Jeffrey Cheah is selling his stake in Sunway REIT to "shift his focus" away from Malaysia, which FDI is dwindling at worrying rate. He knows that the Malaysian economy is going down the drain sooner or later.If it's so good,why sell it to the public?More shopping centres will flood the market in the next 2 years but the prospectus never mentioned it.

  • Dividend rate is so low at 6.7% compared to other Malaysian REITs.Average dividend by other REITs is at 8.5%. Hence,the share price will normalise (drop) to follow the other Malaysian REITs. Remember to sell it on July 8.

  • Sunway REIT have very large space in Sunway/USJ. Where is Sunway located? It is a suburban satelite city far away from KL city centre. So,yield at 6.7% is not justified at all.Give me a yield of 10% and I may consider it.

  • What is the future expansion plan of Sunway REIT?What Sunway REIT is gonna buy to increase its NAV ? If the NAV is appreciating at inflation rate while the buildings are depreciating at even faster rate,the dividend yield may be affected due to high repair and maintainence cost.


Why bother to buy Sunway REIT?I rather buy KLCC Property Holdings which is more secured and expanding.

SUNWAY Real Estate Investment Trust is the biggest ripped off IPO in Southeast Asia this year.


 

 

 



 

 

 
 









 

  

 

 


 

Saturday, May 22, 2010

WHY MAMEE DOUBLE DECKER IS STILL UNDERVALUED?

I've recommended Mamee on 25 July 2009 and those who bought it would have laughing all the way to the bank.Today, I'm recommending you guys to relook Mamee due to its attractive valuation.

There are several reasons for its further upside:
  1. At RM 3.00 per share,Mamee is selling at RM 454 mil. It's earning about RM  44 mil net. Current P/E is around 10.3x...In the Edge Weekly on 3 May 2010, the Board of Directors of Mamee-Double Decker (M) Berhad said that Management has set a vision for the Group to achieve RM1 billion revenue in five years' time. This target would be achievable through the implementation of various growth strategies which was with full support of the Group's staffs, including enhancing our distribution channel locally and overseas, developing and launching new products, as well as undertaking marketing efforts to build our brands. Mamee also aimed to outperform in 2010. If this is true, the 1Q2010 financial result will be very excellent! Assuming the RM 1bil revenue is achieved after 5 years, the net profit is about RM 110 mil (assume 11% industry net profit margin). Applying conservative P/E of 10x, the company would worth about RM 1,100 mil in the next five years, indicating a conservative compounded rate of return of 15% pa. Put it at simple term, if you buy MAMEE at RM 3.00 today, it will worth about RM 7.20 per share in the next 5 years.  
  2. The Board of Directors announced that a dividend policy of distributing a minimum of 50% of group net profits to shareholders. Mamee has became a dividend stock which is still growing organically. Dividend yield is about 5% at current price. Mamee has about 56 cents net cash as at 31 Dec 2009.Net operating cash flow ranging from RM20 to RM30m per year.So, no issue to expand the operation or pays dividend
  3. Pang family owns abut 63% of the company. They eat their own cooking.
  4. To hedge the group’s vegetable oil needs for food production, Mamee’s has entered into 60:40 JV to develop 10,000ha (Phase I: 2k ha; Phase II: 3k ha; and Phase III: 5k ha) of oil palm plantation development in Central Kalimantan, Indonesia in June 2008. This is also another source of recurring income for Mamee after 5 years.
  5. Mamee generated about 30% of its sales from the export markets which cover more than 80 countries across all continents. Australia, being the largest and fastest growing export market, contributed 18% of the total export sales in FY09, followed by Singapore 9%, Russia 7%, Hong Kong 7% and Netherland 6%. The management is targeting to boost its exports contribution to 40% and 50% in 3 and 5 years’ respectively. Appointment of new or additional distributors and more marketing support from Mamee are among the plans to expand its export presence.
To sum it up, you're buying Mamee for long term low risk investment which promised 5% growing dividend yield and 15% compounded return on share price

Tuesday, May 18, 2010

Will M3nergy CEO Datuk Shahrazi able to convince Datuk Yaakob to sell his shares?

I'm sure Datuk Shahrazi spoke to the major shareholder (could be Datuk Yaakob) before he launched the take over offer.Datuk Yaakob is the major shareholder of Melewar which owns M3nergy.There could be some arrangement between them,just like what we saw in Astro privatisation.

The CEO's willingness to buy up the company @ RM 1.85 per share signifies that M3nergy is deeply undervalued.The CEO knows something great is brewing in M3nergy.

Please continue to accumulate M3nergy for long term.


Monday, May 17, 2010

ARBITRAGE IN M3NERGY

M3NERGY BHD managing director and chief executive officer Datuk Shahrazi Sha’ari is making a conditional takeover of the company at RM1.85 a share through his privately-owned company Adamus Avenue Sdn Bhd.




I bought a lot of M3nergy shares today!!!

Tuesday, April 27, 2010

UNDERVALUATION OF A VALUABLE FUND: ICAPITAL.BIZ

ICAP is selling @ RM 1.75 per share,valuing the company at about RM 245.0 mil on 28 April 2010

 Let's look at ICAP's latest balance sheet as at 28 Feb 2010.

Investment cost is about RM 165.3 mil.
Current asset is at RM 38.5 mil.
Addback the dividend from 28 Feb 2010 up to today,28 April 2010, is about RM 1.5 mil
Total Investment Cost plus Liquid Asset = RM 205.3 mil (RM 1.47 per share)

If you buy @ RM 245 mil , you're paying about RM 40 mil premium for the business.Note that RM 205.3 mil is the total investment cost for its portfolio (AT COST) and liquid cash. The 205.3 mil is quite safe because it's liquid and can be recovered easily if anything happens.

What will you get by paying RM 39.7 mil for the business?

  • Potential unrealized gain of RM 56.0 mil (Based on NAV of RM 2.16 per share). The unrealized gain of RM 56.0 mil may go up or down but it has safety margin (unrealized profit) of 16.3 mil (about RM 0.116 per share).
  • You are making about 41% instant return on the premium paid (RM 56 mil minus RM 39.7 mil divide by RM 39.7 mil )
  • You're getting the business for free plus 41% return
  • Margin of safety since the portfolio is selected using value investing principle
  • Good management with solid track record (20% compounded return)
  • Good sleep at night with no worries
Another information which is noteable in the 3Q is ICAP sold all TM, bought Suria and invested in "XYZ" company. XYZ company will be revealed in the 4Q when ICAP complete its acquisition. Subsequent to 28 Feb 2010, ICAP sold all KLK,LION,POHKONG,SWEEJOO and ASTRO to raise cash. I estimated the proceeds from the sale of these 5 counters is about RM 70 mil.The best thing is, the sale is not recorded in the balance sheet because it clearly stated under the note that "Subsequent to 28 Feb 2010,.."

The investment cost for these 5 counters is about RM 46 mil. The picture shows the 3Q balance sheet.



So, if you were to estimate the balance sheet as at 28 April 2010, certain assumptions have to be made. Assume the investment cost in XYZ and Suria is about RM 20 mil.
Hence, the investment cost = RM 165m - RM 46m (sold 5 counters) + RM 20m (XYZ and Suria)
Total investment cost = RM 139 mil
The current asset(CA) in 3Q is RM 38.5 mil. Assume further dividend of RM 1.5 mil. And proceeds from 5 counters sale is RM 70 mil.
Hence the CA= RM 38.5m - RM 20m (XYZ and Suria) + RM 1.5m (dividend) + RM 70 mil = RM 90 mil

So, Total Asset = RM 139 mil + RM 90 mil = RM 229 mil

Assuming no other investment been made by ICAP, that will raise it Total Asset to about RM 1.63 per share with huge unrealized gain in 4Q

Today price is RM1.75 per share only. What are you waiting for?

Tuesday, April 13, 2010

Something Brewing In Advance Information Marketing Berhad?

Advance Information Marketing Berhad, together with its subsidiaries, provides customer loyalty management solutions and business process outsourcing services in Malaysia, Singapore, and Indonesia. It develops and provides loyalty and database management software applications and information technology infrastructure. The company offers Advance Information Marketing System, an enterprise marketing management solution that comprises managed loyalty application to manage various aspects of loyalty program, including members’ information, merchant activities, inventory updates, and redemption process; enterprise application for campaign management, e-auction engine, SKU tracking system, payment gateway, electronic data interchange, B2B integration with Web services, grid computing, and mobile and wireless computing; and business intelligence application that enables users to analyze their customers’ profile, and purchasing behavior and pattern. It also offers various solutions, such as business intelligence services; outsourced integrated marketing services; inbound and outbound contact management solutions, including customer service, telesales, relationship, and contest management; outsourced procurement and fulfillment services; and technology infrastructure solutions.

AIM is listed in ACE market of Bursa Malaysia just in case you can't find it. It has market capitalisation of RM 49 mil,Current asset of RM 40 mil compared to total liabilities of RM 16 mil. So,AIM has about RM 24 mil liquid assets.That means out of RM 49 mil, about 49% is cash or equivalent.Investors are paying half for its business plus the remaining fixed assets of RM 9 mil.Let's exclude the fixed asset of RM 9 mil for simplicity.

The question now is what is so attractive about AIM that I have to pay about RM 25 mil for its business component?

1) Actually there is nothing attractive in the "Income Statement" of AIM. In 2009, its revenue is about RM 46 mil (very stagnant for 4 years) but COGS has been increasing from RM 24 mil in 2007 to RM 41 mil in 2009. Profit margin has been shrinking which signifies intense competition in that industry.It may also means "hanky panky" stuffs have been happening for the past 4 years. My point here is,why spent so much when the revenue is stagnant?

2) Something is happening to the shareholder.
On 8 April 2010,DATO' SHAMSUDDIN BIN HAYRONI has sold all his shares in AIM @ RM 0.23. Before this, he and his wife owned about 19.1% of AIM. Their 19.1% was sold for around RM 8.23 mil.His wife Datin Rahmah Binti Kassim has resigned as the Alternate Director.This is quite a good news because Dato Shamsuddin and Datin Rahmah had sold their 127 m2 condominium in Villa Flora TTDI to AIM for RM 430,000. They bought it for RM 375,000 in 2003.Why the board of directors approve it if it's not in favour of AIM?

3)Who is DATO' SHAMSUDDIN ?

Shamsuddin Bin Hayroni serves as Executive Chairman of Majulia Group of Companies. Dato Bin Hayroni has been Non-Executive Chairman of Advance Information Marketing Bhd. since February 21, 2005. A civil engineer by training and profession, Dato Bin Hayroni started his illustrious career in Jabatan Kerja Raya, Selangor at Public Works Department, Selangor from 1978 to 1988 and Project Lebuhraya Utara Selatan (PLUS) Bhd from 1989 to 1995. He then ventured into the construction and property development industry in 1995. Subsequently, in 1999, he ventured into the CRM business and serves as Director of Electronic Commerce Technology Sdn Bhd (ECT). Dato Bin Hayroni graduated from University Technology Malaysia with a Diploma in Civil Engineering in 1978 and a Bachelor Degree in Civil Engineering from the University of New Hampshire, USA in 1983.

His company Majulia Group of Companies, has obtained many projects from JKR. I don't know whether it was a fair tender but don't play play with this guy because he and his wife are 'orang kuat'. No wonder AIM bought their condominium.

3) Appointment of Tan Chin Yen as Executive Director. She is quite experience in the current industry.
From qualitative point of view,it's a good news that Dato Sham is leaving. And i'm sure that his shareholdings of RM 8.23 mil has been bought by 'someone' else but it was not reported.Tay Woon Teck and Nyang Koon Seng (CEO & Executive Director) jointly owned 43.5% of AIM.

So,nothing to worry because i personally think AIM is planning to offer something "nice" for its shareholders.
Possibilities are
1) Bonus issue
2) Special Dividend
3) Acquisition of another complimentary business
4) Successfully obtained big contract from government
5) Joint venture with another companies

Good news are brewing, Are you buying?


Tuesday, March 9, 2010

Why EPF want to acquire MRCB?

These are possible reasons:



(a) It is a way for the connected shareholders to cash out so they can use the proceeds to invest in foreign markets which give higher return compared to MRCB. No one will buy up MRCB except for EPF who is remotely controlled by someone.



(b) It is a way for the government to share the country growth with EPF contributors “you and I”. MRCB has high chance to secure government lands in KL. It also means higher dividend yield in the future since EPF is investing more of its fund in equity now rather than bond.



(c) If EPF has successfully acquired MRCB, MRCB can raise funds from EPF, to fund the land price and development of government lands in KL for 10 years. Construction contracts will then be given to connected parties. Government can also use the proceeds from the sale of government lands to pay its debt. And there are various loop holes in construction and development to suck the cash out



(d) Malaysia is running on deficit already and it would be too obvious and unpopular to announce huge development to be funded by government. Hence, using EPF to fund development is the best “not so obvious” way. Whether EPF will benefit from it will remain unknown. But what is certain is that “reaping the money today is less risky than trying to get back the money 5 years later”. Shareholders of MRCB and connected parties understand this principle very clearly.



I don’t know the actual answer but looking at the direction which EPF is heading, I better take out my EPF as soon as possible now.

Monday, February 1, 2010

WILLOWGLEN MSC BHD

I wrote about this company a few months ago and swore that if you didn't make money buying Willowglen,i rather shut down this blog.



I believed you have made good $ out of it. But this company has more to offer.



Willowglen has a market cap of 85.5 million at current price RM 0.345 per share.

It made about 8 mil for the past 3 years and its net profit is set to increase to RM 10-12 mil with the new contract lately. This will set its forward P/E at 8x


Wong Ah Chiew has been buying in and increased his stake in Willow to 51.97%

1) Willow has very healthy balance sheet. In 3Q2009,its current asset amounts to 56.7 mil against total liabilities of 9.1 mil with no long term debt. In this net cash position, Willow can easily expand its business through acquisition or new market venture.From what I see,it's very likely to distribute its cash back to investors by bonus issues / special dividend.


2) 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.Willow is set to get new business as the economy recovers

3) Besides acquisition and special dividend, Willow has announced its plan to list itself in Main Board. This is absolutely great news for investors.It's expected that Willow share price may hit RM 0.50 per share.


I don't know what to say anymore if you don't buy this stock.