Monday, December 12, 2022

PESONA METRO BHD TAKEOVER OFFER TO PAVE THE COMING BACK OF PUTRAJAYA PERDANA BHD?

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With the global equity market recovering from covid, we are hit yet by another inflation storm fuel by rising interest rate from the US. Tension from Russia Ukraine war had contributed to volatile commodity and energy prices.

For Malaysia, most of the company share price had hit the rock bottom level. However, for some companies, the rock bottom price level is seen as an opportunity for major shareholder to do a takeover offer exercise due to the company underlying valuation or the future prospect of the company.

In 2022, there are numerous takeover offer exercise in the market. Let us look through a few example.


1. HEXTECH (Formerly known as COMPLETE LOGISTIC SERVICES BHD)
Takeover offer RM 2.50 (Dec 2021)
Current price - RM 13.00

up 500%




2. COMCORP 
Takeover offer RM 0.15
Current price - RM 0.90

up 600%




3. CITAGLOBAL
Takeover offer - RM 0.19
Current price - RM 0.26

up 40%




4. MBRIGHT
Takeover offer - RM 0.07
Current price - RM 0.15

up 100%





As we can see, most of the companies that got takeover will see share price heading upwards in the later time frame as the takeover offer goes unconditional.



As of 7 December 2022, PESONA takeover offer from WIE HOCK KIONG become unconditional.


For a recap, PESONA METRO is a construction company. The major shareholder WIE HOCK KIONG is a former CEO of PUTRAJAYA PERDANA BHD which is in charge of more than RM 10 billion of development in Putrajaya.




As the covid pandemic rollback a lot of construction progress, it is a prime time to see Malaysia giving a much needed boost in the construction and infra structure development.

PESONA 
Takeover offer - RM 0.19
Current price - RM 0.235

Based on the example of takeover, the price can be up 40% to 600%.

If PESONA can go up 50% from offer price, share price can go RM 0.30
if 100%, then can go RM 0.40

How far can PESONA share price goes with this takeover offer? Only time will tell.
However, if PESONA can be a vehicle for the coming back of PUTRAJAYA PERDANA BHD into the market, that will be a good potential for it to go 500% up until RM 1.00




IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.




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Sunday, November 13, 2022

MUHIBAH LOOK SET TO SEE A BETTER YEAR AHEAD WITH ROBUST SPENDING IN OIL AND GAS INDUSTRY

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With GE 15 in just few days away, we pray that Malaysia will be in good hand of politician that are voted into power. I believe that foreign fund and investor will start to flock back into Malaysia when a new government is formed. Currently, sector that are attractive in Malaysia will be the oil and gas industry and the related supply chain.

As the world is pivoting away from dirty energy sources and heading into renewable and clean energy, Malaysia is sitting on the sweet spot to export excess clean energy production to energy hungry country like Japan, South Korea and China.

Today will be just touching on Project Safina and its potential effect to MUHIBAH (5703) MUHIBBAH ENGINEERING (M) BHD

As you can see from below, MUHIBAH provide vast range of business services support the oil and gas industry and other construction and energy industry as well.

The Project Safina is an initiative by Petronas to build 100 OSV in 4 years, replacing the current aging servicing ship. This project which is launched in 2019 got delay due to Covid19.

However, things are restarting back as global economy had pick up again with supportive crude oil prices to support the oil and gas industry.

Petronas invites bids for building of 16 OSVs | The Edge Markets


This round, all the ship will be built by local shipyard which are registered with AMIM (Association of Marine Industry of Malaysia)

Here are the member list of AMIM

MUHIBAH shipyard is one of the members.


There are many other shipyards that are registered with AMIM, amongst them is SYSCORP. The recent run up of SYSCORP share price could be very well reflecting the positive momentum from the busy ship building activities for the coming few years.




Building 1 ship alone will take 18 months to 24 months to complete. 

With a balance of 84 OSV yet to be tendered out, we can foresee shipyard will be busy for the next 5 years.


MUHIBAH is very attractive currently, looking at its prospect and the current price at RM 0.415
With the share price trading at the lowest level in history, the current price might see a sweet investment point as the oil and gas industry in Malaysia pick up next year.




IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.





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Friday, August 12, 2022

THE LAST RIDING BET ON HENGYUAN REFINERY

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Global energy prices are very volatile with Ukraine Russia war. The under investment on the oil and gas industry had also saw production not able to catch up with the demand as global economy reopen post pandemic.

The tension of the war had sparked strong rallies on the oil prices as well as oil refinery crack margin. Both saw strong rallies in prices back in the 1st and 2nd quarter of 2022.

However, as of the last quarter earning report in May, Hengyuan apparently appear not to be able to capture the windfall in crack margin prices.


With almost RM 5 billion in revenue, Hengyuan only manage to get a profit of 47 million, turning into 15.82 in EPS. 
As many investor are expecting a big improvement in the result, the result being not up to the expectation lead to a major sell down of the stock from RM 7 to RM 4.
A big chunk of gross profit being RM 508 million are knock down with big operation losses of RM 338.5 million.
Many predicted that the losses could be due to bad hedging, selling contract that are too low while crack prices go way above. While this argument can be a valid point, it can also be a important turning point moving forward.



Assuming that HENGYUAN spread out their monthly hedging by selling contract are a certain price range, for example is USD 20.

If the price continue to go up until USD 30, every contract stand to lose out USD 10. (That is losing money)

If the price go down to USD 10, every contract stand to profit USD 10 as they sold at USD 20.


MY ANALYSIS (All numbers are my own assumption for easy understanding)
One of the reason for the major operational losses or hedging losses could be due to HENGYUAN do a forward hedge of 1, 2, 3, 4, 5, 6 month probably around the price of USD 25, 22, 20, 18, 15, 12 respectively (price are example)


When the crack margin prices continue to go up, all the hedging done in the forward month will be in a losing position. However, as long as HENGYUAN DO NOT CLOSE THE CONTRACT POSITION until the contract end settlement, then there is still chance for it to make a profit.

I will give you an example.

During the month of MAY 2022, lets say HENGYUAN sell 100 contract at USD 20 for the month of AUGUST. The crack margin continue to go up until USD 35. On paper, that is a paper lose of USD 15 for every 1 contract, and accounting practice will need to recognize the "paper losses" into operation losses as the contract will result in such losses at that material time.

However, if HENGYUAN held on the contract and coming to AUGUST 2022, the crack margin now is USD 10. If HENGYUAN DID NOT close all the sell contract in the month of AUGUST, then HENGYUAN will be looking for a paper profit of USD 10 per contract now.



CONCLUSION
So, do you think HENGYUAN still have the last ride on this oil refinery saga? Do they have the golden hand where contract sold at high are still holding on to their hands until delivery?

I am not related and do not have any insider information in HENGYUAN operation. I am only a investor in HENGYUAN and still holding in HENGYUAN share as waiting for them to unveil the secret.



If you think HENGYUAN hedge master is very good and still hold a golden hand, the coming quarter report will be very powerful as it will reverse all the operation losses and turn into profit. But if the hedge master is so bad and got played up side down by the global oil syndicate, that is too bad for HENGYUAN.



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Friday, May 27, 2022

US REFINERIES BRACE FOR HURRICANE SEASON STARTING JUNE 2022. OIL CRACK MARGIN CONTINUE TO STAY ELEVATED AT THE TOP SIDE WHICH WILL BENEFIT HENGYUAN

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As you know that I had been investing in Hengyuan Refinery for quite some time. I will continue to stay invested in Hengyuan as a hedge towards commodity inflationary prices, especially in the oil and gas industry.

Prior to the current development that is happening in the global stage, here are the reason for me to stay invested in Hengyuan

1. The 2 years of Covid19 had resulted in oil refinery closure. a total of 5 oil refineries in the US shut down permanently during 2021.

2. Reopening of global economy and air travel boost demand for refined oil products such as jet fuel.

3. Russia Ukraine on going war had resulted in Russian oil products getting sanctioned by the West, hence elevated the oil price further.

4. Moving into 2H 2022, there are more violent weather changes in the gulf of US, where weather reports are looking between 6 to 10 hurricanes which will start from in June, peaking in September and ending on November 2022.




As such event are lining up which will continue to push the oil refineries crack margin higher, or maintaining in a high range, oil refinery operator over the world that are not affected by oil sanctions or turbulent weather will be looking into mega earning season.

Hengyuan refinery will definitely fit into the context.




The price of Hengyuan had dropped from a peak of RM 7.70 to the current price of RM 6.30 is probably due to expiry of call warrants HENGYUAN C22

The exercise price of HENGYUAN C22 is RM 4.75.
As the price of HENGYUAN is above RM 4.75 now, the call warrant holder will be entitled for cash settlement after the maturity date of 30th May 2022.

Hengyuan is expected to post it's largest ever revenue and net profit for the 1st time, which will be 31st May 2022. With the crack margin sustaining at the higher range, HENGYUAN will be the darling stock of 2022.


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Monday, February 28, 2022

IS HENGYUAN WORTH THE WAIT FOR A BIGGER AND BETTER RESULT IN THE NEXT 3 MONTHS?

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Today HENGYUAN had released its quarterly result for the financial performance period of OCT - DEC 2021.

During that period, the crack spread of MOGAS 92 BRENT is averaging at USD 9 to USD 10.



The profit estimation back then from my calculation is around RM 175 million.

As per the official result, the profit is almost RM 180 million.

So moving forward, it is important to know whether HENGYUAN is worth for the next wait on the bigger pie of profit or you are just going to sell it off.

My previous estimation is based on crack spread average of USD 9.

According to the moving price chart, I can foresee that Q1 2022 average crack spread can be lingering around USD 12 to USD 13. Let's take USD 12.50 as a point of calculation.



Crack spread rate of USD 12.5 is approximately an appreciation of 39% from previous average of USD 9.

So most probably next coming quarter can expect earning per share around 80 cents to 85 cents.

I believe next quarter can be seeing HENGYUAN start to give huge dividend to the shareholder again.


HENGYUAN will most likely challenge RM 5 in the immediate term as the resistant line. If the prospect of oil refinery crack spread continue to remain elevated, then the chances of HENGYUAN running above RM 10 will not be a dream too big.

So it will be the investor decision whether it is worth the wait for them to see the bigger piece of prize.


IMPORTANT NOTICE

Projection is based on estimation, and I am not responsible for the accuracy of the data provided. Please be informed, I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

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HENGYUAN IS ON TECHNICAL RETRACEMENT OF AN UPTREND CHART

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With the Russia and Ukraine war going on, energy prices especially in the oil and gas sector continue to stay elevated. Supply chain in the oil and gas sector continue to see higher margin with the higher energy commodities prices.

I would suppose that this will be the same for oil refinery company.

PETRONM had report the quarterly report with positive EPS that had shown the recovery of the oil refinery sector.


As you can see, PETRONM result is very good with EPS 22.4 and even giving out 20 cents dividend for the share holder.


HENGYUAN is going to report the quarterly report later today on 28 FEB 2022 after market hour.

Currently, the share price is on the uptrend, but sitting towards the support line of the uptrend.



I do not hold any insider information about the upcoming result of HENGYUAN.

However, with the positive oil price environment, and also a big margin in crack spread in oil refinery, it should be giving a good profit.

At the current price below RM 4.30 on technical retracement, do you think it is a good point to average down? enter into new position? add your investmet position?


IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.


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Wednesday, February 23, 2022

IT IS THE TIME FOR HENGYUAN TO DRIVE A NOTCH HIGHER WITH RISING CRACK SPREAD

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HENGYUAN REFINING COMPANY BERHAD (HENGYUAN - 4324) will be reporting it's quarterly report in a few days time.

With the rising crack spread margin in the overall industry, it will be safe to say that oil refinery company should be making a profit from their services as the margin enable them for a profit.


Above is the Singapore MOGAS 92 UNLEADED BRENT CRACK SPREAD FUTURES.

The crack spread trading almost to an all time high. The margin is sufficient enough for the company to report very high profit.

As you can see from past historical record, the current price can be considered at the high zone which can delivery promising profit to refinery company.




While every refinery company have their own fixed cost and overhead, HENGYUAN did delivery some stunning record profit back then which had sent the share price over to more than RM 20 per share.



As HENGYUAN price chart movement had finally broken away from the long term downtrend, the current uptrend in 2022 had just started, backed with high crack spread margin for the share to appreciate more when the company delivery the profit.

I do not possess any insider information on HENGYUAN coming quarter report. I got no idea if HENGYUAN can be reporting a big profit, or a big loss again. Technically speaking, it should be able to give a report back to the black. As a normal retail investor, I am still holding this share as prospect of the refinery margin improves.

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

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Monday, February 21, 2022

PUNCAK to be lifted with speculation on MRT3 and high palm oil prices

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One of the coming excitement for the construction player in 2022 will be tender of MRT 3 related projects. With estimation as high as RM 40 billion for the whole project, investor can expect a mixture of old players in the previous MRT 1 and 2 with a slew of potential new players into the segment.

Here, I will highlight the potential new player that could come into the tender of MRT 3 - Puncak Niaga Holdings Berhad (Puncak - 6807)

With the disposal of water asset to Air Selangor for RM 1.5 billion in 2016, the company had hunt for new asset with the cash load.

The 2 significant new portfolio added into Puncak is as below

1. Purchase of TRIPLC construction firm for RM 210 million in 2016 to boost the firm construction capabilities.


2. Purchase of Shin Yang's oil palm unit in Sarawak for RM 446 million.


Now looking back at the move to purchase these asset back then, it had proven to be a good and strategic move from PUNCAK to acquire such in order to penetrate into new market.


With expectation that MRT 3 tender for civil works to be out at Q2 2022, could we be seeing PUNCAK as one of the new player in the basket as they leverage their construction prowess through the acquisition of TRIPLC back in 2016.

Beside that, it should be noticeable that PUNCAK 90% owned plantation unit is also able to enjoy a higher return from ALL TIME HIGH FCPO prices.



With so much positive news for PUNCAK in 2022, it would give a positive momentum for the company share to move upwards. 

As the company share price had hit the long term resistant, can PUNCAK successfully break above the resistant line and give an upward rally?


The next few days will determine for PUNCAK chart trending. With hopeful news on MRT 3 and all time high palm oil prices, this will bring towards an upwards rally for PUNCAK, which is trading way below is NTA of RM 2.92


IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

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Wednesday, February 16, 2022

Will OPCOM see a take over offer from DATO ONG CHOO MENG ?

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One of the active businessman and investor during the volatile market in 2021 / 2022 period had to be Dato Ong Choo Meng. 

Dato Ong Choo Meng business vehicle Ruberex had a great wind fall profit during the Covid19 pandemic, while Hextar is doing well in the chemical segment.

The recent movement included take over of SCH Bhd, renamed into Hextar Industries Bhd. Subsequently, he also bought into other listed entity - Opcom 0035 and Complete Logistic Services Bhd (COMPLET - 5136). He had also ventured into property and commercial retail segment with the 20% stake purchase at the EMPIRE CITY SHOPPING MALL RM 180 million through RUBEREX.

With the current spree that Dato Ong is going on, it seems that there will be more to be expected from his investment he had made.

The current notable movement is at Complete Logistic where Dato Ong offer a take over at RM 2.50.

To have a clearer look at how things unfold in Complete Logistic
5 march 2021 - Acquire 29% around price RM 1.70 to RM 1.80
November 2021 - Offer take over at RM 2.50, which is 40% above the block acquisition price
Feb 2022 - Complet price headed higher to RM 4.00




Will this event happen at Opcom ?

First acquisition of 15% around RM 0.80
Subsequent stake increase to 19% with additional stake acquire around RM 1.10

If the Dato Ong is going to offer a take over at 40% premium from it's previous purchase, that will priced around RM 1.50




Currently, Opcom is trading at RM 1.05, which is quite an attractive pricing to speculate on big corporate movement from it's shareholder.

Given the prospect of 5G where fiber optic are needed to enhance the speed of data delivery, OPCOM definitely had an edge over the future prospect.

If Dato Ong Choo Meng had great plans for OPCOM, there will be a high chance where OPCOM will see a take over offer in the coming future. Reader should be advise that the ABOVE CONTENT ARE BASED ON SPECULATION OF MARKET MOVEMENT BASED ON A PREVIOUS SET OF EVENT.

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.



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Monday, February 7, 2022

Mclean heading for a better start in 2022 with new HDD customer order and oil and gas industry rebound

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It had been a rough ride for Mclean investor for year 2021. Share price of Mclean had saw a good 300% upswing before settling down around the range of 30 cents.

However, what is still keeping Mclean attractive in 2022 ?


1. HDD segment continue to see better demand in enterprise cloud storage solution.

Seagate, one of Mclean key customer had ramp up production for it's 20TB HDD production to meet mass data growth demand. This will directly improve key performance for Mclean



2. Mclean secured new customer with new orders for 2022

In a report sighted, Mclean had indicate on new customer secured for it's services in Thailand for precision cleaning and surface treatment. While it had not indicated which customer, the established HDD player in Thailand will be Seagate and Western Digital.



3. Revival in Oil and Gas industry

Oil and Gas industry had call for more capital investment and ramp up activity in order to meet the demand post covid-19, where economy had start to normalize. The activity in cryptocurrency is also pushing more usage in energy.

Mclean through it's subsidiary DWZ Industries Sdn Bhd is involve in precision cleaning and surface treatment for oil and gas customer. The higher activity ratio in the oil and gas industry will see more demand will contribute to DWZ Industries Sdn Bhd performance.


4. Mclean on a potential breakout with better fundamental outlook

Can Mclean make a cut above the resistant line in 2022 with better outlook from the HDD as well as O&G industry?



At the current price of RM 0.30, Mclean will definitely be a good watch out stock for year 2022.

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.


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