Investing in Jaycorp

Dear avid fundamental investor

This couple of days could be your last few chance to bag into Jaycorp prior before the announcement of the coming Quarter Report.

This stock is definitely not for speculation, and only suitable for those looking to hold for a good period of time, say 6 months to 1 year or more.

Jaycorp is more towards consistent dividend income with a steady growth of capital appreciation.

To recap, Jaycorp main business is furniture manufacturing and export. Jaycorp also owned their own rubberwood supply at Indonesia, and also venturing into property development at Sabah through a 60% owned joint venture company.

The past 3 quarter had been putting in amazing result, however the share price did not rise much probably due to the liquidity and also market sentiment which is still volatile with US China trade war.

But look at it, Jaycorp past 3 quarter performance

3.4 cents + 4.69 cents + 3.67 cents already made up 11.67 cents.

This quarter if can perform to 4.5 cents, that would be putting 4 rolling quarter earning at 16 cents.

Valuation for such good fundamental and dividend paying company can go PER x10 = RM 1.60

So Jaycorp still have a 60% room for capital appreciation at the current price which is below RM 1.00

WHY COMING QUARTERLY RESULT SHOULD BE GOOD

Since Jaycorp quarter result is 1 month later from the other, we can estimate how the furniture export sector is doing by looking at their financial result. If most are doing great, then that would be safe to assume that the industry sector is coming back, and most should be doing better.

As you can see, Liihen result also got stronger with higher revenue and even higher EPS.

Therefore, you can assume if there is no major shocker, Jaycorp result should be around the range of 4+ cents earning in the coming quarter report release.

Since the price had not go up much, buying now before the news come out, then you will have advantage of not needing to chase the share price when the news is out.

US CHINA Trade War - Look not on casualties, but the beneficiaries.

Hi all reader and investor again.

This month of May is a real challenge for those who are trading for a living. The volatility is max with trade war brewing at a full scale with US imposing tariffs on China and China countered with their tariffs as well.

Market is bad, companies stocks are shaken. But I believe that every big shaking is also a big opportunity here. While trade war hurts the global economy somehow, but I think some of the Malaysian industry will stand to benefit from such event.

I believe the trade war will benefit Malaysian export market, especially the furniture market.

The key reason are
1. Malaysian furniture exporter benefit from a stronger USD
2. Demand shifting to Malaysia due to no tariff
3. US economy is still strong

While there are many key companies involved in the furniture market, namely Liihen, Latitude, Pohuat, and Jaycorp to name a few, today I will focus on the Jaycorp due to it's good prospect looking forward.

Investing in Jaycorp Berhad

1. Why is Jaycorp interesting? 

One of the most important factor in investing will be the fundamental of the company. The company must be having good earning, and pay dividend.

This is the past 3 quarterly result of Jaycorp.

Sep 2018

December 2018

March 2019

So for the past 3 quarter of Jaycorp, the company already made
3.4 cent + 4.69 cent + 3.67 cent = 11.76 cent

Dividend paid in the 9 month time frame = 8 cents ( 5 + 3)


So you can see this is a company that is doing well, have decent earning and is paying dividend to it's shareholder.


2. Jaycorp is heading for a new uptrend

The share already fallen from a height of RM 1.60 and consolidating at 90 cent range. Now it is the time for the company to make a new come back after breaking away from long term downtrend resistant line that is back with good result for 3 consecutive financial reports. (9 months)


3. Jaycorp to benefit from a weaker MYR

The latest measure of BNM to cut 0.25% in OPR will also see MYR floating lower against USD.
Source: https://www.thestar.com.my/business/business-news/2019/05/07/bank-negara-lowers-opr-by-25bps-to-3pct/

According to technical chart, the USD/MYR already broke resistant and looking to trend higher, potentially visiting the range of 4.2x to 4.3x

Conclusion

Since there are a lot of indicator pointing towards the positive outlook for furniture industry, Jaycorp will be very interesting for the next coming few months.

Assuming the coming quarter report to produce 4 cents in earning, that will bring a total 4 consecutive quarter earning to 15.76 cents

Simple valuation of PE X10, Jaycorp can see valuation at RM 1.50 to RM1.60

At the current price of RM 0.95, this will be more than 50% capital appreciation for the investor now. Now is the best time to invest when Jaycorp is low while the potential is high.