FCPO UP!! LUMBER PRICE UP!! WHAT TO INVEST? INVEST JTIASA OK OR NOT?

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Today market happening - aside from Coronavirus or Covid19, vaccine for covid 19 or booming gloves industry, something to take note on the raising commodity prices of Palm Oil and the Timber / Lumber should be taken into every investor alert list

FCPO had been raising with continuous purchase from Middle east, India, China and European countries. The trend is looking for FCPO to trade nearer to 3000 for a longer period of time, which will be beneficial for palm oil producer with the price staying at the higher range for a longer period. The subsequent effect of this will see palm oil industry player reporting better earning and profits, hence higher share price.

Another thing to take look is the madness surge up of the Lumber Futures in the global market.

The steep surge in LUMBER FUTURES is from a set of event that contribute to this.

1. LACK OF SUPPLY FROM CANADA PINE FOREST DUE TO BEETLE INFESTATION ON PINE TREE.

2. SAWMILL OFFLINE DUE TO ASSUMPTION THAT PLYWOOD DEMAND WILL DROP DUE TO COVID19 LOCKDOWN

3. LOCKDOWN ACTIVITIES IN US HOUSEHOLD ENCOURAGES DIY PROJECT, CONSUMES MORE PLYWOOD (TIMBER)

4. LATEST EFFECT FROM HURRICANE LAURA PUT IN BIG DEMAND FOR REBUILDING

5. JAPAN REBUILDING FROM TYPHOON HAGIBIS 2019 

Sources

beetle infestation - https://www.bloomberg.com/news/features/2020-08-17/mountain-pine-beetle-infestations-are-killing-forests-could-worsen-emissions

hurricane laura - https://edition.cnn.com/2020/08/28/us/satellite-images-hurricane-laura-before-after-trnd/index.html

Japan Hagibis rebuilding - https://www.mida.gov.my/home/9788/news/plywood-makers-may-see-rebound-in-exports-to-japan/

The LUMBER FUTURES will not be looking to come down fast due to government all over the world will be pushing more infrastructure development to boost up economy and GDP. TIMBER CONSUMPTION WILL CONTINUE TO MAINTAIN HIGH.

IF YOU INVEST IN COMPANIES DEALING WITH EITHER 1 OF THIS INDUSTRY, OR FOR BETTER, BOTH ALSO INVOLVED, YOU ARE MOST PROBABLY IN GOOD HANDS.

ONE COMPANY THAT I THINK WILL BENEFIT GREATLY FROM THESE 2 (HIGHER FCPO PRICE and HIGHER TIMBER PLYWOOD PRICE) WILL BE - JAYA TIASA (JTIASA 4383)

JTIASA have palm oil plantation, and also wood based product and harvesting.

Their output for AUGUST 2020 is not bad.

According to the chart analysis, JTIASA is on an uptrend, with a good entry point.

JTIASA is a good company to get some exposure for the trend. The company have good liquidity and will be an attractive target for investor and trader in the coming days.

Mid Term TP : RM 1.00

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EKSONS INVENTORY VALUE WRITE DOWN OF RM 11.7MILLION IS A BLESSING IN DISGUISE NOW

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Lumber price continue to sky rocket without stopping. These event will be turning into a golden opportunity to a lot of timber/lumber company that had been sleeping for so many years. The current spot rate had gone as high as USD 857 per 1000 bd ft. This is the highest in history on lumber prices had gone up.

A lot of timber company are worth looking at with the surging price of lumber not looking to back off until at least reaching USD 1000

My attention is towards a undervalued company - Eksons Corporation Bhd 9016, a plywood mill at Sabah which export to international market, especially Japan, Europe and US.

This company recently reported a huge losses on FYE 2020 for March 2020. One of the biggest reason is the inventory valuation at the current market price during March 2020, which is at the worst of pricing. The inventory write down RM 11.7 million due to spot price plunged below USD 300 per 1000 bd ft. This resulted in company announcing a loss of 25.6 cent per share despite higher sales revenue from timber division.

The explanation note stated on 2.5 million from property impairment and RM 11.7 million from inventory value write down. 

Here is the ending spot rate for March 2020 of lumber futures. According to the delivery spot rate for LUMBER FUTURE AT MARCH 2020 is USD 276 only!!!! That is the reason for RM 11.7 million write down on inventory value.

However, the current spot price for the LUMBER FUTURE is USD 857. That is an increase of USD 581, or increase of 310% from the MARCH 2020 low point

Based on the current impairment done on EKSONS inventory, now all the TIMBER INVENTORY at EKSONS will be carrying value at 276, but current spot price of more than 800 will be giving EKSONS a very good profitable margin in the coming QR for November.

EKSONS NTA is RM 2.40, current share price RM 0.645.

NET CASH position RM 175.963 million

NET CASH PER SHARE = RM 1.07 net cash per share

How much can EKSONS share price move in the coming future?

Short term looking at RM 0.80

Mid/Long term looking RM 1.20

Above information are just for your reading resource and not a guideline to buy sell or trade.

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Pharma already price in for current quarter result and prepared for future earning

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As I had been invested in Pharmaniaga, the result that is release on Wednesday evening could had gotten some mixed feeling over revenue and profits.

While there are some investor which are expecting a very good revenue and profit, however, it turn out that the profit is still going good, but not explosively tremendous until it will see the stock limit up. According to analyst, the result is within expectation.

Pharma revenue did improve by 44 million, and earning increase. There is some slight drag down on Indonesia operation due to payment from Indonesia government could be slightly hard during this trying time. Other than that, it is good.

https://www.thestar.com.my/business/business-news/2020/08/19/pharmaniaga-2q-net-profit-higher-at-nearly-10mil

The result could be factored into the price from a peak of RM 5

As you can see, the current price of RM 4.40 is more than 10% adjusted from the peak of RM 5.00, which is reflective of the current quarter result, but anticipating on the future revenue from the vaccine bottling and distribution effect.

If we are to compare on the virus outbreak and movement of share price, the Coronavirus got detect in the middle of December 2019 in WUHAN, CHINA. It got into momentum earlier this year, and global lock down on March 2020. However, most of the gloves share price are still not moving drastically upwards. It took almost 4 months for gloves company to consolidate, and journey to >1000% capital appreciation.

Hence, this will be the same for Pharma. The revenue and profit is there, but there will be waiting, but any good news on Vaccine development will spike the interest of investor in Pharma.

Currently, there are 2 vaccines under approved for limited use. One is from RUSSIA, and another from CHINA by Cansino Biologics. 

https://www.thestar.com.my/aseanplus/aseanplus-news/2020/08/18/china-grants-country039s-first-covid-19-vaccine-patent-to-cansino

It is prime time now for Malaysian counterparts to get ready for Vaccine sourcing in order not to get stuck in the bottleneck of orders.

Further news from Minister of Science Technology and Innovation, Khairy Jamaluddin is recommending that the vaccine to be provided free to ALL MALAYSIAN. If this will come through, Pharma / Dpharma could be almost certain in getting a confirmed sales of approx 80 million doses (if 2 doses required per person)

https://www.channelnewsasia.com/news/asia/covid-19-coronavirus-malaysia-vaccine-free-for-all-13034404

Any drop in Pharma share price will be a good opportunity to scoop in due to the confirmed revenue and sales from the government.

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TSH BENEFIT FROM HIGH FPCO AND TIMBER PRICE, BACK WITH EPF PURCHASE FOR A GOOD UPWARD SWING

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Today glove industry stage a nice rebound, with multiple limit up coming back to the market. Market sentiment will continue to be strong with ample of volume.

I do not need to introduce gloves industry counter anymore, because it is known to everyone. Today want to highlight a potential company - TSH RESOURCES BHD (9059)

This company main business is palm oil plantation, including milling and refinery services. Other business is cocoa, biomass energy and timber (wood) business.

Primary revenue contribution is from operation of Palm Oil Plantation, and then follow with Timber sector (wood).

3 MAIN POINT THAT PUT TSH AS AN ATTRACTIVE COMPANY

1.) FCPO PRICES HAD BEEN CONSOLIDATING AT 2800 FOR MORE THAN 1 MONTH. LOOKING TO PUSH ABOVE 3000 WITH MORE BUYING FROM INDIA, EUROPE AND CHINA TO RESTOCK

FCPO projection can go above 3000 with supported buying from INDIA, EUROPE and CHINA as government restock on this commodity

https://www.reuters.com/article/malaysia-palmoil/update-1-industry-body-expects-q3-rise-in-malaysian-palm-oil-exports-to-biggest-buyers-idUSL4N2DO1YR

2.) LUMBER FUTURE ALL TIME HIGH, BENEFIT TSH TIMBER CONCESSION

TSH got 100 years concession for sustainable timber plantation. A few years ago, TSH privatized Ekowood, a company that manufacture timber flooring products. The product are supply to local and international market.

High timber price will give TSH a better margin.

https://www.ekowood.com/en/inspirations/malaysia-projects/

3.) EPF AGGRESSIVE BUYING OF TSH FROM OPEN MARKET

The past 30 days, EPF had accumulated approximately 2% of TSH shares. This I believe is due to the positive outlook from higher palm oil and better margin from timber division.

TSH technical chart is giving good entry point. Current trend look set to see TSH is heading for uptrend, with positive news from industry. The current price is at technical low side, and can point towards potential upward swing.

Can target for a mid term RM 1.20

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WTK RIDING HIGH WITH THE ALL TIME HIGH LUMBER PRICE, BACK WITH UPRISING FCPO PRICE

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Today want to introduce a stock which is overlooked, due to the market attention that is all focus on gloves, vaccine, gold primarily. Malaysia is a diverse market, not only good in gloves, vaccines and gold. There are other important commodities that Malaysia export to such as Palm Oil, Timber/Lumber.

The retail perception of these timber / lumber commodity is that during the MCO lockdown, demand of such goods will fall. Surprisingly, the demand for LUMBER had sky rocketed into all time high (highest in the history) as the lock down force US/EUROPE citizen at home, they are looking into renovating their own house, and doing up repairs that are needed.

This had put up a surprising demand from the lumber operator, where most lumber operator thought demand will not be good, hence reducing output.

The situation now is high demand and low supply, pushing LUMBER FUTURES to all time high in history

So, what can this mean for lumberjack operator in Malaysia?

In Malaysia, those involved prominent ones that are involved in lumber chopping are FLBHD, WTK, SUBUR, JTIASA. 

WHY I CHOOSE WTK ?

Of all, the company with most liquidity is WTK - 4243. That is the reason WTK will perform better than the rest due to availability of liquidity for investor.

At the current market, investor/trader/IB will prefer to trade on company with liquidity. Although FLBHD is going to benefit, but the liquidity of shares will shy away big investor.

WHY WTK CAN BENEFIT IN A DOUBLE KILL MANNER?

There are a few operation under WTK, namely LUMBER, PALM OIL, MANUFACTURING OF TAPES.

Of all, revenue is 70% from LUMBER, 15 to 20% from PALM OIL, and the rest at manufacturing.

The drastic increase in LUMBER LOG price will give WTK a JACKPOT WINDFALL towards it's existing stock pile inventory.

Another benefit that WTK is getting is improving FCPO prices. FCPO predict to hit above RM 3000

As you can see, during crisis time, different country will want to stock up their important supplies. India is going to continue purchasing palm oil, europe as well and China. All these will be pushing CPO towards 3000 and beyond.

WTK CHART STRONG BREAKOUT WITH POSITIVE VOLUME

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WTK recommended at 11th AUGUST 2020 at baseline price.

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PHARMA technical chart consolidation points towards imminent break out at RM 5

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As you know, I am staunch supporter of Pharmaniaga (PHARMA - 7081). As vaccine is a sure thing to happen, Pharma is a sure thing to profit from this vaccine bottling and distribution. It is only a matter of time.

We witness how powerful glove company can rally. I believe Pharma also can be this powerful when the vaccine solution arrived.

Today closing RM 4.75 give PHARMA a total market cap of RM 1.24 billion, which I still consider it very cheap.

Even DPHARMA got a higher market cap compared to Pharma although Pharma earning is better. DPHARMA market cap is RM 2.16 billion.

So if PHARMA need to go to RM 2 billion market cap, the share price need to be RM 7.66 to reflect this

I believe PHARMA will continue to see strong uptrend this month especially when QR is coming out.

Based on the latest chart that Pharma is going on, it is matter of time RM 5 will be break out. Consolidation is pointing on breakout happening this couple of days. RM 5 already been test 3 times, I believe 4th time will see a strong break out and many retailer will start chasing it.

Since Pharma is destined for vaccine bottling and distribution to government hospital in Malaysia, and probably Indonesia, it will be good to invest into Pharma to capture the growth. Anything below RM 5 will be a good entry point as break out above RM 5 is very soon technically.

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GLOVE MAKER RAMPAGE EXPANSION WILL BOOST KSSC SHARE PRICE HIGHER

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Glove maker all over the world are having a big problem now, which is to deliver all the pending order as soon as possible. However, due to demand exceeding supply, the ordering waiting list can be as long as 18 months. This can continue to put pressure on pricing escalation, but it will also be a sweet tooth for glove player to expand in a more generous manner.

According to the news featuring the TOP 4 glove companies in the world, all of them had wasted no time to purchase land and start the expansion plan.

SUPERMAX - Buy Klang land to expand production

https://www.theedgemarkets.com/article/supermax-buying-klang-land-expand-production-capacity

KOSSAN - Buy factory from CBIP for RM 40 million

https://www.theedgemarkets.com/article/kossan-buys-property-cbip-rm40m-facilitate-production-expansion

And KOSSAN also sell land at Kuala Langat for RM 153 million to fund glove expansion at Bidor, Perak

https://www.theedgemarkets.com/article/kossan-unit-sells-land-rm153m

Hartalega - Buy 95.1 acre land at Kuala Langat for RM 263.1 million

https://www.theedgemarkets.com/article/hartalegas-growth-plan-seen-kuala-langat-land-buy

TopGlove - 21% growth and expansion plan

https://www.cleanroomtechnology.com/news/article_page/Top_Glove_reports_21_sales_growth_and_expansion_plans/153389

TopGlove allocate RM 600million for expansion plan in 2020

https://www.theedgemarkets.com/article/top-glove-allocates-rm600m-capex-fy20

All glove company are in crazy expansion mode now, they are buying land at high speed, and factory need to be set up within 1 year. All this point to very positive growth to GLOVE SUPPLIER.

HLT had took the prime bite on the growth, it is time for KSSC (via KSG ENGINEERING SDN BHD) to catch up on all the missing bites)

Now at 79 cents, KSSC is just a meager RM 75 million market cap.

If KSSC can go

RM 1 - KSSC is worth RM 96 million

RM 2 - KSSC is worth RM 192 million

RM 3 - KSSC is worth RM 288 million

RM 4 - KSSC is worth RM 384 million

Based on a simple voting result, 35% are optimistic on KSSC heading towards RM 2.65

However, do not that this polling result is not and should not be treated as a reference or guide to buy or sell.

All this are purely for your informational purposes that are happening on the glove industry.

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KSSC is the hidden gem in Malaysia glove dipping line provider, will be shooting to sky for next few days!!

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Today got very very good and interesting company that will maybe see limit up a few round due to many investor overlook on this company potential despite being directly related to GLOVE INDUSTRY, and support big company like TOPGLOVE and KOSSAN..

This unknown company is hidden as a steel pipe manufacturer, but actually got a 100% owned company doing set up for glove dipping line.

Remember to allocate some bullet for KSSC - 5192, because this stock is super undervalue.

There is one subsidiary under KSSC (100% wholly owned) named KSG ENGINEERING SDN BHD

KSG ENGINEERING WEBSITE

https://www.ksgengineering.com/

There are end to end consultant and fabricator and contractor to build glove dipping line for large company such as TopGlove.

They also provide spare parts

KSG ENGINEERING MAIN CUSTOMER

As you can see, KSG ENGINEERING is supporting TOPGLOVE, KOSSAN (2 of the TOP4 glove manufacturer in the world)

The closest competitor with listed glove dipping line provider is HLT, which have market cap 1.66 billion.

If based on current valuation, KSSC should be worth RM 20 already. But since this is a little bit over the board, what about RM 4? Just grow 10 times the market cap?

So have to get ready KSSC to be limit up a few round in a row!!! We know that a lot of gloves company are buying lands and setting up new factory in a big big aggressive manner to cater for the demand. KSSC will aggressively benefit from this.

Short term TP RM 1.50

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PHARMA Q2 RESULT PREDICTION WILL BE VERY GOOD AND POSITIVE EVEN WITHOUT VACCINE

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Pharma will be reporting coming 2nd Quarter QR and insider projection is expecting it to burst into some very good figure. Expected date for PHARMA Q2 result is 18/19 AUGUST 2020.

Since Pharma contract to supply to Malaysian government is extended to the end of December 2021, we expect that the COVID-19 preparation and the medical supplies stock up as well as enhance usage of gloves, face shield, face mask and hand sanitizer will increase drastically.

Don't forget PHARMA also have INDONESIA operation, so the effect will be much more stronger!!! MORE SALES, MORE REVENUE, MORE PROFIT!!

So in short, without the VACCINE coming in, PHARMA will still be reporting very excellent result for Q2 and that is for sure..

There are still a lot of other product, needles and syringes, medical machines and stuffs.

Even though PHARMA today had went up 12%, actually it is still very cheap.

At RM 4.78, PHARMA market cap only RM 1.25billion. Reason is because only 261m shares, so the chances to go up in a parabolic manner is very high..

Look at the awesome chart, at the current environment and feel, easily Pharma will be heading 3 to 4 days to big green candle, parabolic upwards, break above RM 5.00, challenging RM 6

Then when vaccine news come stronger, another leg up..

So better prepare your heart to invest PHARMA and hold until RM 10, then aim for RM 15 to RM 20 for BONUS ISSUE...

Gonna be a long investment journey with PHARMA.

I AM INVESTING PHARMA UNTIL RM 10 ALSO NOT GOING TO SELL... TIME WILL TELL.

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Coronavirus (covid-19) created a vaccine business worth USD936 billion yearly!!! What you need to do to capitalize on this?

The COVID-19 has indeed created a lot of fear, cracked up a lot of economy, creating hyper inflation from government stimulus, but it also add into a potential business worth USD 936 billion annually!!!

Yes, you read it right, it will not be a one off event, but rather a annually / seasonal vaccine that will require human to spike up immunity defense against the virus.

According to BioNTech, PFIZER, SHANGHAI FOSUN partnership, this coronavirus vaccine shot will be needed seasonally. The virus is expected to be here to stay, hence annual vaccination is required to spike up human immunization against the virus.

Based on the global population of 7.8 billion people, each dose costing USD 60, and with 2 dose vaccination, this is equivalent to USD 936 billion annually!!!!

Pharmaceutical companies are going to make the heist, and that is for sure! 

What can you do as a Malaysian investor in order to capitalize on this opportunity?

Luckily for our minister, the Malaysian counterpart had put in intention that the vaccine will not be imported as a fully finished product, but to be import as a partly finished, with the end bottling process to be finished in Malaysia pharmaceutical companies which are capable of handling it.

If you do not understand, this is like buying a CKD version of BMW or MERCEDES instead of buying a CBU version. This will create job opportunity for Malaysian, which is beneficial for the nation.

Currently, 2 most suitable pharmaceutical for this bottling process is Dpharma and Pharma.

While both are good, I will prefer Pharma due to

1. Government supply contract to government hospital

2. Established supply chain, logistic and network

3. Lower share outstanding compared to Dpharma, hence capital gain are higher due to less dilution of profit

Global pharmaceutical company are going fast and rushing into the vaccine.

Time line expected to see it at Q4, October 2020..

Just like Glove.. Since the detection of coronavirus, Glove are muted for 4 months from December until April... After that, all hell break lose..

Pharma will be the same.. Now it is muted at this level around RM 4.00..

But when the vaccine comes, it will not be RM 4.00, and you will have to risk chasing higher and higher and roller coaster...

Invest now or chase later? That is your decision to make.