Can Mclean future growth come from JCY's customer supply chain rationalisation ?

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Hello all... The latest happening in the global equity market - GAMESTOP (NYSE: GME). Sky rocket share prices that are not according to the fundamental of the company, but more towards a retail revenge towards hedge fund shorter that over-short GAMESTOP with more than 100% are putting hedge fund to brink of bankruptcy.

Welcome to the new era of trading. With so much money flushed into the capital market, gone are the days where hedge fund and IBs used to be controlling the market like how they used.

However, let's get back to business here, delivering my opinion and analysis towards this stock - MCLEAN 0167.

I have to tell you that I had this stock with me, I did mentioned about this stock for the past 2 months if you are following in my Telegram as well. But I am looking for the next 2 to 3 years with slew of interesting development that can happen to Mclean.

As I had mentioned in my previous posting, Mclean will be looking to see better revenue and profit starting 2021 due to new and increased orders from Thailand factory.

As you can see, the company involved in HDD works in Malaysia is just handful of company.

1. DUFU

2. JCY

3. Notion

4. Mclean

Let's dig deeper into all of them.

1. DUFU - Market leader, market cap RM 2 billion. Last 4 quarter cumulative revenue RM 291 million, trading at PE x40. Main focus all on HDD servives.

2. JCY - market cap RM 933 million. Last 4 quarter cumulative revenue RM  1.07 billion. trading at PE x 36. Will be diversifying into Automotive sector. HDD will reduce with 1 major customer heading for a stop on 2021 due to realignment of supply chain.

3. Notion - market cap 435 million. Last 4 quarter cumulative revenue RM 242 million. Trading PE x 70. Notion already been diversifying out from HDD business, and going more into Automotive. Currently Notion is also into gloves business.

4. Mclean - market cap 78 million. Last 4 quarter cumulative revenue RM 56 million. Smallest amongst all 4, and have the smallest share outstanding in current position, 197 millions share only.

Today, I am going to discuss about - JCY order reduction which eventually will span out to a total stop from 1 major customer. This below is the official announcement from JCY.

If you know well, JCY customer in HDD segment includes Western Digital as well as Seagate. Both are major customer. Since Seagate had redirect most sources into Thailand to make it the main production hub, there is a high level of assumption that the major customer mentioned could be Seagate? This is my assumption, alright?

Since it is a major customer, we could be possibly looking at it contributing at least 25% to 35% to JCY total revenue. Let's take an assumption of 30%, that could be looking into RM 300 million.

As you can see, at the other hand, Mclean is expecting more job at Thailand factory this year.

So I will run some numbers based on current situation assumption. Do not treat all the numbers as facts, as I do not have any real figures.

Assumption scenario

Mclean to see extra revenue of RM 200 million per annum. Benchmark on current DUFU operating net profit margin, it is 17%. I am not going to take 17%, but using 12% as net profit margin.

RM 200 million x 12% = RM 24 million.

RM 24 million / 197 million shares = 12 cents EPS

Based on PE x 40

Share price valuation will be  12 cents x 40 = RM 4.8

At RM 4.8 share price, market capitalization for Mclean will be RM 945 million.

Here is Mclean chart

This is Dufu chart (adjusted to bonus issue)

So if Mclean is really heading towards RM 4, I would say it will not be an immediate event. It will possibly takes 2 to 3 years or even 4 years to materialize. Can you hold on to your investment that long? That is a question you need to ask yourself.

IMPORTANT NOTICE

Please be informed, above are rough calculation of a normal person outlook. I am not a professional or certified analyst. Not a licensed consultant, just a normal retail investor. Please do not use my figures or data as a real referencing material. I am just sharing my thoughts of calculation, all truly based on assumption. This is not a buy sell trade reference material, please trade at your own risk or consult your own certified financial personnel.

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INVEST DOMINAN NOW, FUTURE CAN GENERATE 10% ROI FROM DIVIDEND. CASH COW GOOD BUSINESS SOLID DIVIDEND PAYMENT RECORD. NO TIME TO MISS

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With MALAYSIA OPR rate shrinking down, FIXED DEPOSIT RATE had been dropping and interest income are affected greatly. 2 years back, the FD PROMOTION RATE can be as high as 4.5% PER ANNUM. At the current market scenario in 2020, the FD PROMOTION RATE can only go as high as 2% PER ANNUM, and the OPR RATE will be expected to stay low for sometime until economy recover and pick up again.

How long the market will takes to recover? How long will it pick up again? Will it stay low for a few years? 2 years? 3 years? 5 years?

If that is your concern, maybe is time to take some time and look for some dividend income that had better yield, steady and also had good management.

The one company I am looking into is DOMINAN 7169 (DOMINANT ENTERPRISE BERHAD).

This company main business is to supply raw material to furniture company for their manufacturing. Furniture plywood and skirtings. Dominan also supplies so construction material as their expansion business.

Dominant will also be looking to create a stream of steady rental income this year after their warehouse factory is ready and already have ready tenant to rent their commercial property.

Most importantly, investor have to know that this company is not a goreng goreng stock, the company owner always prioritize shareholder value, and dividend payment every quarterly.

DOMINAN had been paying dividend without fail since 2005.

Why the current price is very attractive for you to invest into DOMINAN.

1. The company had good and strong record of paying dividend. Here are the past 4 years total dividend that the company had paid out to shareholder.

YEAR 2017 - TOTAL DIVIDEND PAID IS 5 CENTS

YEAR 2018 TOTAL DIVIDEND IS 7 CENTS

YEAR 2019 TOTAL DIVIDEND IS 7 CENTS

YEAR 2020 TOTAL DIVIDEND IS 4 CENTS 

WHY FYE 2020 TOTAL DIVIDEND PAID IS LESSER ?

REASON IS SIMPLE, NOW THE WHOLE WORLD GOT COVID-19 SITUATION, AND DOMINAN SUFFER FROM A 3 MONTH LOCKDOWN ON OPERATION. THE IMPACTED THE REVENUE, HENCE THE LOWER DIVIDEND PAY OUT

HOWEVER, THE CURRENT FURNITURE LANDSCAPE AT MUAR, JOHOR IS OPERATING AT MAX CAPACITY. ORDER ARE PILLING UP AND FURNITURE MAKER ARE ALL BUSY FULFILLING ORDERS.

COMPANY LIKE POHUAT WHICH HAVE OPERATION IN MUAR AND VIETNAM ARE BOOMING WITH ORDERS.

DOMINAN ALSO HAVE OPERATION AT MUAR JOHOR AND VIETNAM.

BOTH ARE FURNITURE HUB IN SOUTHEAST ASIA!!!

SO WILL DOMINAN BUSINESS CONTINUE TO BE LOW ? OR THE BUSINESS WILL REBOUND?

IF BUSINESS REBOUND, WILL THE DIVIDEND GO BACK UP?

LETS SAY U ARE INVESTING AT 70 CENTS NOW, GIVE ANOTHER 1 YEAR, DOMINAN BUSINESS REGAIN TRACK AND CONTINUE PAY BACK 7 CENTS DIVIDEND A YEAR, MEANS YOU ARE GETTING 10% ROI ON DOMINAN DIVIDEND

RULES OF 72, BASED ON 10% ROI OF DIVIDEND, YOU WILL RECOUP ALL YOUR INVESTMENT FROM DOMINAN IN 7 YEARS!!!!

NOW THIS IS UR CHOICE TO SEE IF DOMINAN AT THE CURRENT PRICE WORTH FOR YOU TO TAKE THE RISK

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SCABLE FULL OF UPSIDE POTENTIAL NOW !!! CAN BE RUNNING AHEAD BEFORE SARAWAK ELECTION

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The Sabah state election already passed, votes casted, and new state government formed. Now the heat will be looking at the incoming Sarawak state election.

According to the constitution, the Sarawak state election must be held before the 7th September 2021, which means both parties got lesser than 12 months to prepare for it.

The Sarawak Election will be very crucial. The Sarawak state government had been pushing out a lot of infrastructure upgrade in order to improve the welfare of the people. One of the most significant is the construction of PAN BORNEO HIGHWAY.

According to TheEdge, the current completion of the Sarawak section stands at 52%, and Sabah is 32% as of August 2020.

There is still balance of 20 packages for the highway.

Excerpt taken from The Edge.

Sarawak push for infrastructure upgrade will benefit a lot of local Sarawakian company. Sarawak based company such as CMSB, SCABLE, KKB, HSL, ZECON

For now, my focus light will be SCABLE 5170. SARAWAK CABLE BERHAD

SCABLE price at the current level is very attractive. The company share price currently is resting at technical support line. While the company is making some losses, the political linkage with the Sarawak state government and established ties is very valuable for the company future potential growth.

We see the technical accumulation on 25th June 2020 as a very positive signal for the stock to move forward.

SCABLE substantial shareholder include Dato Sri Mahmud Abu Bekir Taib holding a total of 26%, which is the son of the Sarawak Governor - Tun Taib Mahmud

SARAWAK ENERGY BERHAD (SEB) also held substantial stake of 16%

WHY SCABLE WILL BE ATTRACTIVE 

1. MORE PROJECT TO BE AWARDED IN SARAWAK TO UPGRADE INFRASTRUCTURE AND RURAL AREA. EXAMPLES ARE ELECTRICITY CONNECTIVITY, INTERNET CONNECTIVITY AND ROAD.

2. SCABLE BOOK ORDER CURRENTLY MORE THAN RM 500 MILLION

3. ABLE TO PARTICIPATE MORE OF PAN BORNEO AND OTHER SARAWAK PROJECT IN COMING FUTURE

4. CURRENT SHARE PRICE IS LOW AND ATTRACTIVE WITH MINIMAL DOWNSIDE BUT GOOD UPSIDE POTENTIAL

WE HAD WITNESS SCIB UPSIDE POTENTIAL. FROM RM 1.00 UNTIL RM 4.00

NOW SCABLE CURRENT SHARE PRICE IS RM 0.20, WHERE WILL BE THE UPSIDE POTENTIAL ? RM 1.00 ?

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KMLOONG IS THE GOLDEN DRAGON RISING UP IN 2H 2020 WITH STRONG FCPO PRICES

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Prices of Crude Palm Oil continue to rise with strength. The FCPO had broken above 3000 mark for OCTOBER delivery. This is a very good price for plantation company because they will be having good profit margin from the high price that they are selling at open market.

Previously I had introduced a few plantation company, all of them had risen up.

You can check THPLANT, recommend at 38 cents, currently trading at 46 cents

Jaya Tiasa (Jtiasa), recommended at 65 cents, currently trading above 70 cents.

Today want to recommend a good company that is doing good at palm oil plantation previously, and also give dividend yearly. 

This company is KMLOONG (KIM LOONG RESOURCES BHD - 5027)

IN CHINESE, THIS COMPANY IS A GOLDEN DRAGON

THIS YEAR IS BEST YEAR FOR PLANTATION COMPANY TO SEE SHARE PRICE RISING UP STEADILY, JUST LIKE A GOLDEN DRAGON AWAKEN UP TO FLY

WHAT ARE THE REASON FOR PALM OIL PLANTATION TO CONTINUE SEEING A BULLISH PRICE THROUGHOUT END OF 2020 UNTIL START OF 1H OF 2021.

1. CHANGES OF WEATHER AFFECT SOY BEAN HARVEST

THE GLOBAL WARMING EFFECT HAD BROUGHT HEAVIER RAINFALL DURING MONSOON SEASON. THE WETTER THAN USUAL RAIN AND STRONGER THAN USUAL WINDS WILL DESTROY CROPS, HENCE DECREASING THE HARVEST OF GOODS.

2. LOCUST SWARMS ATTACK ON INDIA DEVASTATED AGRICULTURE PRODUCTS, INCLUDING SOYBEAN PLANTATION.

3. GROWING DEMAND FROM ORGANIC BROILERS (CHICKEN FARM) PUSH UP NON-GMO SOYBEAN CONSUMPTION

4. INDIA REPORTED A 30% DROP ON GMO SOYBEAN HARVEST

5. CULTURAL FESTIVAL WHICH ARE LINED UP (CHINESE - MOONCAKE FESTIVAL, INDIA - DEEPAVALI, DECEMBER CHRISTMAS) WILL PUSH UP EDIBLE OIL CONSUMPTION FOR 2H 2020.

US SOYBEAN OIL FUTURE

US SOYBEAN FUTURES

WHY KIMLOONG ?

THIS COMPANY DURING LOWER PALM OIL PRICES STILL CAN BE PROFITABLE, AND ALSO PAY DIVIDEND.

THE COMING QUARTERLY RESULT WILL NOT BE TOO BAD, BUT CAN EXPECT DIVIDEND TO BE DECLARED, PROBABLY AROUND 3 CENTS. DURING GOOD TIMES, KMLOONG PAY 6 CENTS DIVIDEND.

THE DIRECTOR ALSO FEEL GOOD ON THE COMPANY OUTLOOK AND CONTINUE BUYING SHARES FOR COMING RESULT AND DIVIDEND.

KMLOONG PROSPECT AND OUTLOOK POSITIVE, AND WILL BE A VERY STRONG DRAGON AT 2H 2020.

ONCE BREAKOUT FROM RESISTANT LINE RM 1.45, KMLOONG CAN GO FURTHER RM 1.60.

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BTM RESOURCES BHD CONFIRMED UPTREND.. SHAREHOLDER ALSO INDICATE CONFIRMED UPTREND

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BTM RESOURCES BERHAD, A NORTHERN REGION TIMBER PLAYER DIVERSIFYING INTO RENEWABLE ENERGY COULD BE ATTRACTIVE TARGET FOR INVESTOR EYEING TO INVEST INTO THE CONCESSION AT THE CURRENT PRICE.

BTM RESOURCES BACKGROUND

BTM Resources Berhad ("BTM") was incorporated in Malaysia on 10th June 1994 as a public limited company under the Companies Act, 1965. BTM is listed on 27th March 1996 on the Main Market of the Bursa Malaysia.

The principal activity of BTM is that of investment holding and provision of management services while its subsidiary companies are involved in logging, sawmilling, trading of sawn timber, logs and plywood, kiln-drying operations, timber moulding, manufacturing of finger jointed timber and lamination boards, and letting of plant and machineries.

RECENT DEVELOPMENT

BTM TO SELL ENERGY TO TNB FOR 21 YEARS, COMMENCING NO LATER THAN JANUARY 2023. THE CAPACITY IS 10MW, WITH A FIXED RATE OF 34.86 cent PER kWH FOR 21 YEARS.

https://www.nst.com.my/business/2020/07/605491/btm-sell-power-tnb-21-years

While things are still fresh, there are a lot of background work which is already going on.

Firstly is private placement of 10% which is approved.

Secondly, there is a new entry of shareholder which is very bullish on BTM to be CONFIRMED UPTREND

DATUK WOO THIN CHOY 4.45% acquisition via CONFIRMED UPTREND SDN BHD. This company name already giving hint :D

Now that the KLSE MOST PROLIFIC COMPANY, TOPGLOVE, already announce outstanding QR, i believe the shift of trend will be coming towards PLANTATION AND TIMBER INDUSTRY next week

The chart is showing good consolidation effort around 20 cents. Trend like is looking good with uptrend effort able to see BTM trading 25 cents for next spike.

Market talks are looking at BTM probably eyeing for fresh concession from TERENGGANU STATE GOVERNMENT for fresh timber concession. If BTM is able to secure more land for INDUSTRIAL TIMBER PLANTATION, then BTM will be very attractive moving forward.

The INDUSTRIAL TIMBER PLANTATION CONCESSION will be used to feed in fuel for the 10MW BIOMASS ENERGY PLANT.

MARKET OBSERVER ARE POSITIVE BTM WILL BE ABLE TO GET 3000 TO 6000 ACRE OF LAND FOR INDUSTRIAL TIMBER PLANTATION, FROM A MIXED OF PRIVATE JOINT VENTURE AND STATE GOVERNMENT LEASE LAND.

With just a market capitalization of RM 27 million, there are much space for BTM to explore upwards

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FGV IS ALL YOU NEED FOR GORENG GORENG PLANTATION - FIGHT ALL WAY OUT

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TODAY, A VERY VERY IMPORTANT EVENT HAPPENED IN THE MALAYSIA DERIVATIVES MARKET. THE FCPO (CRUDE PALM OIL FUTURES) HAD OPENED WITH A BULLISH START, AND END WITH A BULLISH NOTE THAT HAD DEFEATED THE RESISTANT LINE OF 2900 WITH GOOD STRENGTH AND VOLUME

THE PALM OIL FUTURES ALSO TESTED ABOVE 12 YEAR LONG RESISTANT LINE, WITH GOOD STRENGTH TO PUSH TOWARDS 3000

SINCE ALL LOW AND MID LINER PALM OIL COUNTER HAD MOVED, ONLY 1 FAVORITE BIG GORENG GORENG LEFT.

THE COUNTER IS NONE OTHER THAN  FGV - 5222

FGV HOLDINGS BERHAD

FGV PRODUCTION OUTPUT FOR CRUDE PALM OIL IS EVEN LARGER THAN IOICORP BY 4 TIMES!!!!

TECHNICAL CHART SHOW FGV IS IMPENDING TO EXPLODE ALL WAY OUT !!!!

1. BASED ON 6 MONTH TREND LINE, FGV IS ON UP TREND, AND WILL BREAK ABOVE DOWN THE DOWN TREND LINE AND TRADE HIGHER

2. FGV GOT CUP AND HANDLE FORMATION, AND BACKED WITH HIGHER FCPO PRICE WHICH REAFFIRM BREAK OUT

3. FGV BREAK OUT FROM TRIANGLE SHAPE WILL BE A UPWARDS BREAK UP INSTEAD OF DOWNWARDS BECAUSE FCPO PRICES ARE ALL TIME HIGH IN 2020

WHERE WILL FCPO BE HEADING TOWARDS IN 2020?

IN 2008, IT WAS ABOVE 4000!!

LET ME BRING YOU SOME PROJECTION FOR 2020

FOLLOWING THE UPTRENDING PROJECTION OF THE FCPO, THE FCPO HITTING 3100 / 3200 RANGE IS POSSIBLE.

FGV IS THE LAST BIG POWERFUL WOLF IN PLANTATION INDUSTRY GOING TO MOVE !!!

FGV LETS GO - RM 1.50 

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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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