Wednesday, November 5, 2014

Revised Target Price For Mitrajaya : November 2014.


In March 2014, I have written an entry for Mitrajaya Berhad (9571).
Kindly refer to this post here.

Current price @ 5th November 2014 - RM 1.01
Target price by March 2015 - RM 1.54

I gave out the first buy call when it was priced at RM 0.49 per share for a projection target price of RM 0.90 per share due to the fact that it's FY 2013 earnings was 7.43 cent per share.

However circumstances have changed over the course of this few months, Mitrajaya remain as the best small cap construction stock to be chosen due to the following reasons :

i) Significant increase on its current order book tenders which stood at roughly RM 1.4 billion ringgit. Yes it is quite big for a small company with about RM 200 million share capital. Recent contracts awarded are as shown below :

With the current order book, Mitrajaya Bhd should be in a safe region for the upcoming 2 to 3 years. Best part is that I have not included it's property segment business yet!

ii) Interesting growth shown in the year 2014 :

Comparison of earnings in the past years are shown below.

iii) It's property division project which is 280 Park Homes in Puchong is approaching it's completion. Major structural works are almost finished and the expected completion will be around October 2015. Gross Development Value : RM 330 million.
Attached below is some of it's current progress that I have obtained from their official website :

iv) Their next property project is Wangsa 9 High Rise Condominium which will be launched next year with a total gross development value of RM 650 million comprises of 565 units Condominiums in 3 blocks. It will be the tallest condominium in Wangsa Maju and it is strategically located besides LRT Sri Rampai.

v) Undervalued land banks which has not been revalued since it's listing (90's) which in book only shows about RM 160 million whereas the market value would be about RM 624 million by now, primarily consists of the following :

Happy investing ;)

Saturday, November 1, 2014

October 2014 Summary

In the last 4 weeks, there have been few significant events that we should pay close attention to :

1) IMF cuts the global economic growth forecast.

2) Saudi Arabia are willing to sell crude oil at a lower price and boost its production, it's official spoke person even said that they won't mind if the price reaches 70-72$ per barrel. As of Friday 31/10/14 , WTI and Brent are trading at $80.54 and $85.86 respectively.

3) After the 2008 sub-prime crisis that hits The United States, The Federal Reserve have been providing a lot of economic stimulus such as Quantitative Easing, which the Fed supports the stocks market by encouraging banks to make more loans and hence the idea works by bank to take the new money and buy assets to replace those they have sold to the central bank. In just mere 4 years, the Fed has spent about 3.7 trillion dollar on it's quantitative easing program. And it has officially ended QE on Thursday 30/10/14.

4) However, as the Fed stops QE, Bank Of Japan made a huge surprise, Japan's Prime Minister, Shinzo Abe announced that they will be expanding their QE program at even faster pace of about $712 billion a year! Their goal is to reduce deflation and at the same time put an end to it.

5) Gold and silver price tumbled to a 4 years low thanks to Bank Of Japan's decision, which means there will be a huge rally on share markets that are about to take place.

Saturday, August 9, 2014

Bina Darulaman Berhad (BDB) a hidden gem of Kedah

2 years range price chart.

BDB core business includes :

1) Construction
2) Property
3) Investment holding
4) Oil palm plantation

List of landed properties owned by BDB :

Most of the land held have not be revalued.

Majority shareholders of the company :

3) RESON SDN BHD : 3.54%

Financial aspects :

b) Share capital  : RM 72 million
c) Earning per share for 2013 : 29.03 cent
d) Earning per share for 2012 : 29.78 cent
e) Earning per share for Q1 2014 : 7.11 cent
f) Net assets per share : RM 3.71 (keep in mind that this is without all of BDB's land being revalued - if they were to be re-assessed, it's NTA could reach RM 5 (based on self valuation by multiplying it's current land and properties with a 1.5 factor)

Current P/E ratio (2013) is only 8 !

My personal consideration for a company that is directly linked to a State Government, 15 would be a fair P/E for it.

Target price by end of 2014 : RM 4.35

News :

a) The company has made a press release about their goal of expanding outside of Kedah.
c) Darulaman Realty Sdn Bhd (subsidiary of BDB) had entered into S&P with TulangisMaju Sdn Bhd for disposal of a piece of leasehold land for RM 3.8 million. (To receive the payment within 3 months from agreement date).
f) Might be the beneficiary for proposed development of Kulim airports ( costs expectation : RM 1.6 billion)

Wednesday, May 28, 2014

Boustead Plantation IPO - Indicative Price RM 1.60 - Target price RM 1.97

The official prospectus can be found here.

Malaysian palm oil producer Boustead Plantations Bhd (IPO-BOPL.KL) priced its IPO at an indicative price range of 1.50 ringgit to 1.60 ringgit per share as it seeks to raise up to 1.05 billion ringgit ($327.05 million) in an initial public offering, its chairman said on Tuesday.

The company is the plantation arm of financial-to-defence conglomerate Boustead Holdings Bhd. It is offering 163.57 million shares to institutional investors and about 64 million to the Malaysian public.

Those shares are in addition to 428.43 million shares being offered to unit holders of Al-Hadharah Boustead Reit, Boustead Holdings and eligible directors and employees.

"I must say the demand for our stock has been quite encouraging," said Boustead Plantations's chairman, Lodin Wok Kamaruddin.

Lodin told reporters after the launch of the company's IPO prospectus that "if we are able to price it at 1.50-1.60 ringgit, we feel that certainly would be a good price for investors to take up the shares in the market," he added.

Boustead Plantations plans to use the proceeds to expand its total planted area to 100,000 hectares from the current 71,000 hectares by 2017 via acquisitions of existing plantations estates and reserve land mainly in Malaysia, Lodin said.

Pricing is slated for June 11 and its market debut set for June 26, according to the prospectus.

Affin Investment Bank, Credit Suisse and Maybank Investment Bank are the global co-ordinators, the prospectus showed.

Monday, March 31, 2014

This Grandfather Left One Final Letter, You Gotta Read...

On Sept. 3, 2012, James K. Flanagan of West Long Branch, N.J., died unexpectedly of a heart attack.
He wrote this letter to his five grandchildren just months earlier and it is reprinted here with the permission of his daughter Rachel Creighton.

Dear Ryan, Conor, Brendan, Charlie, and Mary Catherine,

My wise and thoughtful daughter Rachel urged me to write down some advice for you, the important things that I have learned about life.
I am beginning this on 8 April 2012, the eve of my 72nd birthday.

1. Each one of you is a wonderful gift of God both to your family and to all the world. Remember it always, especially when the cold winds of doubt and discouragement fall upon your life.

2. Be not afraid . . . of anyone or of anything when it comes to living your life most fully. Pursue your hopes and your dreams no matter how difficult or "different" they may seem to others.
Far too many people don't do what they want or should do because of what they imagine others may think or say. Remember, if they don't bring you chicken soup when you're sick or stand by you when you're in trouble, they don't matter.
Avoid those sour-souled pessimists who listen to your dreams then say, "Yeah, but what if . . ." The heck with "what if. . ." Do it! The worst thing in life is to look back
and say: "I would have; I could have; I should have." Take risks, make mistakes.

3. Everyone in the world is just an ordinary person. Some people may wear fancy hats or have big titles or (temporarily) have power and want you to think they are above the rest.
Don't believe them. They have the same doubts, fears, and hopes; they eat, drink, sleep, and fart like everyone else.
Question authority always but be wise and careful about the way you do it.

4. Make a Life List of all those things you want to do: travel to places; learn a skill; master a language; meet someone special. Make it long and do some things from it every year.
Don't say "I'll do it tomorrow" (or next month or next year). That is the surest way to fail to do something. There is no tomorrow, and there is no "right" time to begin something except now.

5. Practice the Irish proverb: Moi an olge agus tiocfaidh sí "Praise the child and she will flourish."

6. Be kind and go out of your way to help people -- especially the weak, the fearful, and children. Everyone is carrying a special sorrow, and they need our compassion.

7. Don't join the military or any organization that trains you to kill. War is evil. All wars are started by old men who force or fool young men to hate and to kill each other.
The old men survive, and, just as they started the war with pen and paper, they end it the same way. So many good and innocent people die. If wars are so good and noble, why aren't those leaders who start wars right up there fighting?

8. Read books, as many as you can. They are a wonderful source of delight, wisdom, and inspiration. They need no batteries or connections, and they can go anywhere.

9. Be truthful.

10. Travel: always but especially when you are young. Don't wait until you have "enough" money or until everything is "just right." That never happens. Get your passport today.

11. Pick your job or profession because you love to do it. Sure, there will be some things hard about it, but a job must be a joy. Beware of taking a job for money alone -- it will cripple your soul.

12. Don't yell. It never works, and it hurts both yourself and others. Every time I have yelled, I have failed.

13. Always keep promises to children. Don't say "we'll see" when you mean "no." Children expect the truth; give it to them with love and kindness.

14. Never tell anyone you love them when you don't.

15. Live in harmony with Nature: go into the outdoors, woods, mountains, sea, desert. It's important for your soul.

16. Visit Ireland. It's where the soul of our family was born -- especially the West: Roscommon, Clare, and Kerry.

17. Hug people you love. Tell them how much they mean to you now; don't wait until it's too late.

18. Be grateful. There is an Irish saying: "This is a day in our lives, and it will not come again." Live every day with this in mind.

Tuesday, March 25, 2014

Ranhill to enter Bursa listing via Reverse Take Over (RTO)

After aborting its controversial initial public offering (IPO), Ranhill Energy and Resources Bhd is heading to a listing on Bursa Malaysia via a reverse takeover (RTO) of Symphony House Bhd.
The proposed takeover of the business process outsourcing (BPO) company will first see current controlling shareholder Tan Sri Azman Yahya buying over the businesses of Symphony,
leaving a listed shell for Ranhill to buy over, sources said. "It will provide Ranhill a shortcut to the equity market. It's also a cheaper option compared with an IPO and less time consuming.
 Sources said Azman would remain a shareholder of Symphony after the reverse takeover by Ranhill, which has businesses in energy and utilities.

Ranhill's IPO plans were put on hold last year after it emerged there had been a disclosure breach related to the suspension of the licences of its affiliate company,
Perunding Ranhill Worley Sdn Bhd, by Petroliam Nasional Bhd for an indefinite period.

Currently Symphony House ; suspended with last traded price of RM 0.135

Source : StarBiz

P/S New Barakah in the making?

Tuesday, March 11, 2014

Malaysia Airlines (MAS) stocks review by Dr. Nazri Khan

Quoted from Dr Nazri Khan's facebook.

I say it again. Malaysia Airlines (BURSA : 3786) is a super excellent buy for long term investors. A perfect buy for three year holding period.

My personal view, regardless of all MH370 Grand Theory (mostly illogical) being bandied around from (1) poor weather (2) pilot error (3) engine failure (4) Xinjiang Separatist aka Chinese 9/11 (5) pilot commit suicide (6) Asian Bermuda Triangle (7) Airasia Ops Telanjang Attacks (8) Anwar Ibrahim Court Diversion, MAS will definitely suffer loss of confidence in the short term which open up a huge buying opportunities for long term investors.

As we know MAS is facing its most severe turbulences that threatens its very survival. Hence, I personally speculate two things may happen to MAS now. Privatisation or Bankruptcy Protection.

While I believe the latter is extremely & highly unlikely (given MAS strong intangible asset), both scenario may reinvent stronger MAS over three years time frame. If there is any case, Japanese Airlines is a good example which rose miraculously from 5 Japanese cents (a day before delisted from Tokyo Stock Exchange in January 2010) to as high as Japanese Yen 3,790 immediately on relisting day in September 2012 (an absolute gain of 75,800% after three years of painful restructuring ie. cutting a third of its workforce, cancelling unprofitable routes and replacing older planes).

Three major reasons why I believe MAS is a fail-proof-long-term-investment (1) Government will not let MAS go under due to its massive strategic role to Malaysian economy (2) MAS has lasting intangible asset namely Best Airline Brand, Best Cabin Crew & Safest Airline Track Record (3) MAS has numerous business sharks ready to pounce on cheap privatisation.

The Most Likely Scenario : Privatisation, White Knight & New Leadership :

With MAS price now standing at dirt cheap of RM0.23, privatisation attempt may be highly viable as the total acquisition cost is a cheap RM4bil (MAS Total Market Cap as at Monday 10th March is RM4.1bil, the lowest in its 50 years business history). Judging from the highest volume transaction spotted yesterday, I expect more bidding sharks to quietly accumulate for control after the last Airasia-led privatisation attempt was aborted in May 2012. Exactly what we see yesterday, MAS fell the most since June 2013 (11% plunge) but made a strong turnaround to 24 sen with volume at 39.96 million shares, the highest single day transaction ever in one year. If this scenario materializes, expect MAS share price to range bound (say RM0.15 to RM0.30) with mysteriously active trade sparked by insider accumulation.

The Unlikely Worst Case Scenario : Bankruptcy Protection

Should operation continue to bleed, MAS may have no choice but to trigger a drastic bankruptcy protocols to break out from the financial doldrums and close it under creditor protection. This is highly unlikely but is still MAS last option to deal with its legacy hurdles namely the demanding union politics, overstaffing and lopsided procurement contracts (from engineering, maintenance to catering). Filing for bankruptcy under Section 176 of the Malaysian Companies Act will give MAS a fresh start and emergency room to resuscitate its operation and do what is necessary to face the cut throat competition (which include selling business units and shed staff as Japanese Airlines did). This scenario however is remote in probabilities given that MAS has strong intangible assets and MAS shareholder, national asset manager Khazanah Nasional has consistently ruled out winding down the airline. If this scenario materialize, expect a Flash Crash on MAS share price with RM0.10 as the most likely downside target for aggressive buy.

As for strategy, expect the following stocks to be the biggest losers from MH370 disaster :

(1) Airport Operator : Malaysia Airports (Bursa : 5014) : SELL

If security concerns are to be blamed, we should expect Malaysia Airports to impose more measures at higher cost. Don’t forget the repercussion may also create flight delay & cancellation, adding to the bottom line of Malaysia Airports.

(2) Tourism Player : Genting Malaysia & Shangrila (Bursa : 4715 & 5517) : SELL

Tourism may plummet in the short term, causing marginal loss with Genting as the most vulnerable targets. Following this, we should expect hotel occupancy to fall as well due to psychological distress and shorter tourist tenure immediately after the event.

(3) MAS Partner : China Southern Airlines (HKEX : 1055) : SELL

MAS operational code-share partner will get the immediate negative impacts from the repercussion as reflected by China Southern Airlines which fell 3.85% on the Hong Kong stock exchange.

(4) Insurance : Willis Group Holding (NYSE : WSH) : SELL

Willis was the broker for Malaysia Airlines liability insurance cover. The size of the potential claims for workers/clients compensation following the disappearance of a Malaysia Airlines jetliner can be in the tens to hundreds of millions depending on the results of the investigation.

The following companies may set to be the biggest winners :

(1) MAS Competitor : Airasia (Bursa : 5099) : STRONG BUY

The missing of MH370 will trigger short term loss of confidence for MAS and results in last minute cancellation of booking with competitors such as Airasia and Malindo to stand the most from the disaster. This is especially true given AirAsia recent foray into the medium-range (five and eight hours flight) to further steal booking of Malaysia Airlines specifically with flights to Japan and Australia.

(2) MAS Supplier : Brahim (Bursa : 9474) : STRONG BUY

Regardless of MAS direction, Brahim stand to win as the contract has been fixed and MAS must pay RM250 mil a year until contract ends in year 2028.

(3) Technology Communication Software & Security Hardware : Willow, Vitrox, iTronic and KESM (Bursa : 0008, 0097, 9393 & 9334) : BUY

The incident may force substantial resources to be put towards improving security, in the areas of communication technology be it hardware or software.

In conclusion, Buy MAS for three year time frame. Buy Airasia & Buy Brahim for one year time frame. Sell MAS for one month time frame

Good luck and all hearts to the victims of MH370.

You can keep in touch with Dr. Nazri Khan via his facebook fanpage from the link below.