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.

Can Pharma be worth RM 20 next year?

We had seen with our eyes how a pandemic create chances that are unthinkable in normal circumstances. The primary beneficiaries for this is gloves industry and their related companies.

By now, a lot of gloves companies already saw share price appreciated much, some with still room to go, some maybe priced in. But we do not know what will continue on, however, the near term can be seen as this pandemic will continue to be here for a little more while as the world enter into the 2nd wave.

Gloves companies such as Topglove, Supermax, Hartalega, Kossan, Careplus, Comfort, Rubberex, HLT had saw share price went up by many fold.

Other related industry are Hexza, Luxchem, Samchem, LKL, Ocncash also saw share price booming up.

Pharmaceutical company are catching up. Among them are PHARMA, DPHARMA, KOTRA, YSPSAH, AHEALTH.

Today focus is - PHARMA GETTING TO RM 20, PRACTICAL? REASONABLE ? DOABLE ?

We calculate here 1 by 1

Total share is 261.7 million, if RM 20 per share, means total market capitalization is just RM 5.23 billion. Only 5.23 Billion.

So can the coming future of Pharma earning able to justify PHARMA worth RM 5.23 billion, or RM 20 per share ?

1st, the usual normal operation is profit making, around 9 cents per quarter.

Hence, the valuation for this company at PE x 15 = RM 5.40

Secondly, Pharma is a good candidate for bottling of covid-19 vaccine with facilities ready.

Malaysia put it as 40 million people (citizen + foreigner combine)

Vaccine if selling RM 150 per dose and each person needing 2 dose.

40 million x RM 150 x 2 = RM 12 billion business opportunity annually

But Pharma got some established Indonesia operation, and can get exposure to more than 300 million people.

Got coverage in all the main indonesia island

And MPI is listing and 75% owned by PHARMA, hence can capture the large growth rate

Indonesia listed Millennium PI also can see share price increasing

So if PHARMA also can capture 15% of the 300 million people from INDONESIA market

45million people x RM 150 x 2 = RM 13.5 billion market business opportunity

So if PHARMA potential future business opportunity increased by 25.5 billion annually, profit margin 10%, and lets say only take 40% from the pie

So potential earning is RM 1 billion a year !!!!!!!

EPS will become RM 3.90 a year potentially !!! 

If value PE x 20 will become RM 78 !!!!!

RM 78 hard to believe right? So we take 30% from it, reasonable ? That is RM 23.40

So future can PHARMA share price go to RM 20 ? Now RM 4 better act fast

Why you should buy Pharma now

With the covid-19 pandemic spreading all over the world, glove industry had been making a big windfall from maxed out orders and higher average selling price due to orders from all over the world.

As the whole world is 7 to 8 months into the virus, the chase for vaccine development had been speeding up globally. R&D had been pouring out in US, Europe and China in search for the suitable vaccine candidate for this coronavirus.

How should this relate to Pharmaniaga (Pharma - 7081)

As you may see, our Malaysian minister had shortlisted 2 candidate to be the vaccine bottling process - Dpharma and Pharma. Subsequent on this new, the share price of this 2 companies had rocketed much, but is this fully valued?

Pharma still have a lot of potential to rise based on the company prospect and shareholding.

Pharma only have 261.7 million shares outstanding, at the current price range of RM 4, the market capitalization of Pharma is only RM 1.04 billion.

As you can see, BOUSTEAD already hold 56%.

LTAT holding 11.5%

Hence, majority of the shares (70% of the shares) are already being held by strategic investor that are not going to sell out, leaving the market with just 30% of the shares.

This means, just 78 million of shares are left floating in the market for the public. 

This is not discounting investment fund, unit trust fund investing into it and holding for longer term tenure, hence probably the market is only left with 30 million share for the retailer only.

A lot of you might be concerned on Pharma FYE 2019 loss of 57 cents per share. This is due to impairment of a system development, which is not going to be recurring, but a ONE OFF EVENT impairment.

Subsequent proof of result is PHARMA delivering 8.57 cent in earning per share with a 6 cent dividend.

Hence, based on this average result, ANNUAL EPS PROJETION is 36 cents

At PE x 15, PHARMA should be valued RM 5.40 based on existing performance.

So PHARMA is still a good buy, because it had not yet factor in VACCINE reselling and also potential in INDONESIA operation for vaccine reseller.

Keep you updated in next post.

WZSATU worth to invest while waiting for Bauxite Mining SOP to be ready end of this year to restart mining

Alert to all investor, because I want to inform you that good things are turning up for WZSATU again after a long 3 year wait.

Now it is the time to make WZSATU great again in 2019.

If you are wondering, how can WZSATU be great again this year....

So these are some of the keys point that can make WZSATU great again in the radar of investor/trader/punter.

1. Bauxite Mining ban already uplifted, and pending official SOP to have a go ahead green light, then the bauxite mining industry can be restarted.

https://www.thestar.com.my/news/nation/2019/03/31/sop-on-bauxite-mining-unveiled-stop-work-order-still-in-force/

Earlier this year on March, the minister unveiled the SOP for the industry in order to regulate the mining activities.

One of the rules is

"Under these strict regulations, the minimum conditions for mining lease or proprietary mining lease application must be at least 20ha, whether it be an individual lot or a combination of neighbouring lots."

Now those small ah kao ahmad mutu kind of mining cannot go on already, hence it will be good for a regulated player like WZSATU.

The draft SOP is 174 pages long, and it encompasses the procedures in the five major networks in bauxite handling activities. They are application planning for mining rights, site management of bauxite mining and involves stockpile and port storage management.

Apart from that, it also involves transportation, enforcement and export procedures and all improvements made with various ministries, departments, and agencies.

News link on Draft SOP is here

Given the demand of bauxite from China to manufacture aluminium is so great, this will be a good news for WZSATU when the mining activities can start back 4Q of this year 2019. However, under the regulation, there will be a monthly total output of 600,000 tonnes of bauxite that can be exported.

The bauxite mining is one of the reason WZSATU share price went soaring high during 2015/2016 period towards a peak of RM 1.5 region. And the ban that lasted for 3 years sent WZSATU share price towards the lowly 24 cents region as of now.

When the mining activities resume, WZSATU will draw a good revenue from this operation, and the share price will definitely head up again.


2. ECRL work to restart on 25th July 2019. Local contractor participation up from 30% to 40%.

Beside the bauxite mining going to restart end of this year, the ECRL is also going to restart coming 25th July 2019. Source news ECRL to be relaunched 25 July 2019.

According to analyst, the ECRL work will benefit local player such as GBGAQRS, IJM, WCT, WZSATU, ECONPILE, ADVCON and SUNCON.
Source from The Star https://www.thestar.com.my/business/business-news/2019/04/15/ecrl-revival-bodes-well-for-local-construction-sector/

WZSATU have some experience in building rail project, hence got upper hand in getting ECRL related contract work.

3. Share price already bottom up, and showing sign of coming up back again

The share price dropped a lot from no income from mining activities and other cost overrun due to Variation Order from work in Pengerang and other contract work from IJM WEST COST EXPRESSWAY.

But the Variation Order will be billed back.

Now share price is almost at the bottom stage, and is looking for a come back.


Conclusion
Hence, you can study and look at WZSATU prospectus. Weight your option on short term lookout and long term look out. When Bauxite mining restart in 4Q 2019 this year, WZSATU will definitely be in the investor radar again. If invest now, then invest near base price. When good thing come in line, then price will be higher as usual.