Sunday, November 1, 2015

Malaysia Marine & Heavy Engineering Berhad (MMHE - MHB 5186)

Company background 

Malaysia Marine and Heavy Engineering Holdings Berhad (MHB), formerly MSE Holdings Berhad, is a Malaysia-based company. The Company is engaged in the provision of heavy engineering and marine services, which focuses on the oil and gas sector. The Company operates in two segments: engineering and construction, and marine conversion and marine repair. Its engineering and construction business offers a range of oil and gas construction and engineering services, from detailed engineering design and procurement to construction, installation, hook-up and commissioning. Its marine conversion business includes converting vessels, such as very large crude carriers (VLCCs), Aframax tanker and offshore oil rigs into floating structures for the offshore and gas industry. Its comprehensive marine conversion services range from engineering design to fabrication, installation and commissioning of these structures. In October 2011, it dissolved its wholly owned subsidiary MSE Corporation Sdn Bhd.


Current price (1/11/2015) : RM 1.10
Target price by year end 2016 : RM 2.50 (given crude oil hovers at $USD 60 per barrel).


MMHE is an indirect associate of Petronas via its 62.6% stake in MISC Bhd, which in turn owns 66.5% of MMHE. (Even if O&G are doing not too good, MHB's parent (MISC) can utilize the yard to service and repair their LNG Tankers, please remember, MISC is among the THIRD LARGEST SHIPPING COMPANY IN THE WORLD!).

As we can see, the company is being controlled by the TOP 30 Largest Shareholders who owns the total of 92.62%. The remaining portion left is only 7.38%.

The interesting fact is that, most of them did pay RM 3.80 per share which they had obtained from its initial public offering (IPO) back then.

Due to the fact that the price of crude oil has been heading downhill for the past 2 years, the share price has dropped drastically and I think it has reached its bottom at 90 cent few months back.

Their 3 main core businesses are as follow :

1) EPCIC construction services for the offshore <--- Greatly impacted by falling crude oil price.
and onshore oil and gas industry.
EPCIC services include: 
• Deepwater facilities
• Integrated platforms
• Wellhead platforms
• Compression, dehydration and water injection modules
• Topsides and hulls
• Jackets
• Living quarters
• Turrets and mooring buoys
• Enhanced Oil Recovery facilities

2) OFFSHORE CONVERSION <--- Impacted by falling crude oil price.
One-stop centre for converting vessels such as VLCCs,
Aframax tankers, offshore oil rigs and LNG carriers into
floating structures such as:
• FSOs
• FSUs

3) MARINE REPAIR <--- Interesting part is here.
Comprehensive marine services include repair,
refurbishment and upgrading of a wide variety of vessels,
including energy-related vessels such as:
• Crude oil tankers
• LNG Carriers
• LPG Tankers
• Offshore Support Vessels
• Offshore Rigs
Ability to undertake complex and higher value projects
such as repair and life extension of LNG carriers and
offshore rigs. Other key services include ‘jumboisation’

and newbuilding of vessels such as tender barges.

Based on their 2014 annual report. Their secured orders are as follow :

 RM 1.6 Billion which includes FPSO Cendor conversion for MISC Berhad, KBB Topside for KPOC, Tapis-R topside for EMEPMI, SK316 for PCSB and Malikai TLP deepwater for Sabah Shell Petroleum Company (SSPC).

MHB was also awarded the PCC Besar A topside and jacket project in September 2014 by Petronas.

MHB received a Subcontract Agreement from Hyundai Heavy Industries (HHI) on 2 October 2014 for the fabrication of well head platform, jackets and the connecting bridge for the Bergading Complex, located offshore Peninsular Malaysia, within Block PM302 immediately south of the Malaysia-Thailand Joint Development Areas (MTJDA), approximately 150 kilometres North East off Kota Bharu in 55 to 60 m water depth. Total estimated weight of all structures when completed is approximately 14,800 MT and is scheduled for sailaway and delivery to the project’s ultimate client, Hess E&P Malaysia BV by April 2016.

MHB has over four decades of experience. They have served more than 3,700 vessels and rigs for both local and international clients.
The yards are in full occupancy of 15 vessels and rigs for repair and refurbishment works at the same time.

Throughout 2014, some of their notable projects include LNG vessel repairs for LNG Hyundai Utopia, LNG Puteri Firus and LNG Seri Anggun.


Technip MHB Hull Engineering Sdn Bhd (TMH) -Malikai TLP project.

MHB-SHI LNG Sdn Bhd (MSLNG) - Cargo Tanks for two LNG vessels (Puteri Nilam and Puteri Delima of MISC Berhad)
Delivery of one LNG Carrier “Shen Hai” for an intermediate dry-docking repair (Singapore).

MMHE-ATB Sdn Bhd -  In the last quarter of the year, the company has been awarded major pressure vessels and tanks orders from SAIPEM France for the Kaombo Project in Angola and from South Korea’s HHI.

Possibly the biggest beneficiary of RAPID. 
Source : The Star

With the recent announcement of Budget 2016, Investment of RM18 billion estimated in 2016 for the Refinery and Petrochemical Integrated Development Project (RAPID) Complex in Pengerang, Johor.

I like the properties and land that they own, with a combined area of 25.545 million square feet which in turn is equivalent to 573 acre in both Plentong and Pasir Gudang. Which means they have the real capability of competing with other big players.

If the price of crude oil could reach $USD 60 per barrel in 2016, we could see the share price of MHB rising to RM 2.00 at least. 
MHB has RM 714.555 million of cash in hand, their total number of shares issued is 1.76 billion which in turn gives us RM 0.405 of cash value from the current share price of RM 1.10. So you are only paying RM 0.70 for MHB's share and I have mentioned earlier there are only 7.38% of shares not held by the TOP 30 big boys. 

This might be one of the play of ValueCap fund. 

We want this kind of company because they hardly have any debt/borrowings. 

Wednesday, December 24, 2014

London Biscuits Berhad (7126) 2015 Stock Pick

Fair value : RM 0.83
Current Price (24/12/2014) : RM 0.60 
Potential Upside on Fair Value : 38.33%
Earning Per Share : RM 0.1246

Refer below :

Company Overview :

London Biscuits Berhad is a Malaysia-based company engaged in manufacturing and trading of confectionery and other related foodstuffs. The Company offers packed and ready to eat products, which can be categorize into corn based snacks and cake products, such as Swiss rolls, pie cakes and layer cakes. In addition, it also manufactures range assorted chocolate confectionery, including chocolate-coated peanuts and biscuits, pancake cookies, jelly and puddings, wafer sticks, cup sticks and snack noodles. The Company’s products are marketed under the brand names of Lonbisco, London, Kinos, Gega, Caca, Mizu and Hiro. Its direct subsidiaries are Khee San Berhad, which is engaged in investment holding, and Kinos Food Industries (M) Sdn Bhd, which is engaged in investment holding, manufacturing and trading of confectioneries and snack food. In addition, its indirect subsidiaries are Khee San Marketing Sdn Bhd; Khee San Food Industries Sdn Bhd, Kim Choaw Sdn Bhd and Kinos Food Trading Sdn Bhd.

52 weeks High RM 0.93 
52 weeks Low RM 0.565

Balance Sheet :

Fair value : RM 0.83
Current Price (24/12/2014) : RM 0.60 
Potential Upside on Fair Value : 38.33%
Earning Per Share : RM 0.1246

Refer below :


EGM to be hosted on 31st December 2014 to authorize the proposed bonus issue of ONE warrant for every FIVE existing shares.

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.

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.