Wednesday, April 5, 2023

Malton might see a special dividend prior to disposal of Pavilion Bukit Jalil for RM 2.2 billion

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One of the largest real estate transactions for the year 2023 will be the disposal of Pavilion Bukit Jalil for RM 2.2 billion to Pavreit. The transaction will finally see Malton Bhd cashing in the gain from the 51% joint venture of Regal Path Sdn Bhd, a subsidiary which holds the 50 acres prized shopping mall.


While the disposal of the shopping mall at book value RM 2.2 billion will result in the company losing money due to the cost of disposal and other related cost, it must noted that the price tag of RM 2.2 billion actually carries a profit of RM 200 million recognized earlier due to revaluation of the property.

In simple terms, Malton 51% ownership will see approximately RM 100 million of profit from the disposal process coming back to the company in the form of cash.

The payment term will be set out in the following manner





The full cash scenario will see RM 2.2 billion paid by cash, while the minimum cash scenario will be RM 1.6 billion in cash and RM 600 million worth in issuance of shares.


Pavilion Bukit Jalil started work in 2015. Loyal shareholder had held out from 8 years to see the fruit of the labour.




With the current share price lingering around RM 0.42 against the NTA of RM 1.87, there is certainly a big gap in the market price with the underlying value of the company. As the disposal of Pavilion Bukit Jalil is certainly to beef up the company cash level, there will be a very high chance to reward loyal shareholder with a special dividend as the last dividend Malton paid out is 2019.


Another catalyst for Malton will be the opening of Pavilion Damansara Height in May 2023.


I am obliged to inform you that I had invested in Malton due to 
1. Current share price is at steep discount to NTA, and cheaper than the price 10 years ago
2. Potential special dividend to reward shareholder from Pavilion Bukit Jalil 



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Sunday, February 5, 2023

CUSCAPI TO BENEFIT ON GST IMPLEMENTATION - GST CAN BE DELAYED, BUT CANNOT BE DENIED

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With Malaysia growing debt in the short term, it is crucial for the current government to address the government debt issues in order to keep the country's debt in control. While Malaysia still has a few options in order to increase government tax collection, and one of the more effective and efficient tax collection method could be the GST.

Citing on World Bank's lead economist comment on Malaysia option to increase government revenue, the GST is one of the best options for the country. A lot of developed country had adopted GST as it is a proven method to collect tax in a more effective manner.

GST is able to tax the untaxed category that is making a living and staying in Malaysia. That will include foreign workers which is more than 2 million of peoples.


If we put in a GST rate of 4%
2 million foreign workers with each spending RM 1,500 a month on GST items.

2,000,000 x RM 1,500 x 4% = RM 120,000,000 per month GST collection

1 year
RM 120 million x 12 = RM 1.44 billion

The above is just an example on how GST can help government to get more revenue.

Malaysia had learned a lot from the 1st implementation of GST. One of the major challenges is the GST filling and GST refund.

In order to streamline this process and minimized human error, and reduce the time needed for GST refund, it is suggested that the GST eco system should be connected directly to the Kastam server for live data feed in.

1. This will eradicate malpractice of business owner doing business with 2 set of revenue (a real revenue and a edited revenue for submission)
2. It will also cut off the process of using human to key in GST data into government server every quarterly, which is waste of time and prone to error.
3. It will also enhance GST refund process to the vendors and suppliers.


CUSCAPI - A PIONEER AND PROMINENT PLAYER IN THE F&B INDUSTRY POS SYSTEM

CUSCAPI is an established player in the F&B industry POS system.




With client spanning across South East Asia, the company is set to see more client in the future with the implementation of GST.



At the current price of CUSCAPI, can the share price rose again towards it's recent peak at RM 0.45?


Next on will share with you on my views on CUSCAPI AND GST - WHAT IS THE POTENTIAL BUSINESS MODEL.


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, January 15, 2023

MCLEAN EYING TO MAKE IT BIG ON NICHE BIOTECHNOLOGY SECTOR WITH 40% CAGR


Every crisis is an opportunity. As most of Malaysian equity were settled down at the lower price range, does not this turn into an opportunity for a good bargain?

Revisit back to Mclean (0167), this company is involved in the E&E industry, specifically on surface treatment and cleaning, with major customer in the HDD industry. While the development of better HDD technology continued to keep HDD relevant in enterprise data storage, Mclean took a big step in diversifying in healthcare through asset injection from the current major shareholder - Yeo Hock Huat.

The latest proposal involving asset injection - Biocair, a Singapore based home grown brand that manufacture and sell bio-active disinfectant.



The acquisition will be funded through
- private placement
- rights issue and free warrant upon subscription
Upon completion, Mclean will own 60% of JCS Biotech Pte Ltd, which is the holding company for the disinfectant brand, Biocair.

The acquisition will come with a profit guarantee of SGD 5.5 million.

The fund raising and acquisition will also provide a bridge for 

Biocair to penetrate into Europe (UK) market for the start.

The market prospect for disinfectant is growing very strong, with CAGR of 41% in the global export market. The covid-19 pandemic had help raise awareness on usage of air purification in the general market.

Market observers are of the view that medical sanitization which include air purification are here to stay. This once a niche segment will be a big growing market especially in the developed country.

The BAIT AND HOOK BUSINESS MODEL

One of the strong and successful business model is bait and hook model. There are a lot of successful example in the consumer product segment which uses this business model such as water filter system and coffee maker (machine and pellets)

This business model operate on selling a one time cost hardware at a low cost, and capture a repetitive revenue from product consumption.

For Biocair, it will be selling air purifying machine for 1 time, and it will lock the customer into purchasing refillable disinfectant liquid for a period of time until the customer changes their brand preferances.

Mclean diversification into this industry will present the listed company with a better growth prospect, which will be good for investor in the long term.


After all, at a price below 20 cents, it represents an attractive prospect for investor on the future growth of Mclean.


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, January 6, 2023

WILL NOTION VTEC REPEAT THE FEAT OF 2017 WARRANT NOTION-WB EXPIRY FROM RM 0.40 TO RM 1.40


Equity market continue to be volatile with the mixed view on the economic outlook. Some say economy is hampered by inflation, hence the need to increase interest rate to cool down the inflation. Food cost continue to rise, and energy prices are elevated due to war and also economy going back to pre-covid level. 6 to 7 years of under investment in the oil and gas sector resulted in oil production unable to cope with the demand. On the bright side, oil and gas industry are flourishing with fat pay checks and bonuses. Every crisis come with opportunities, it is a matter on whether you choose to look at the crisis and run away or find the opportunity and take action.

Notion VTEC Bhd (NOTION 0083), primarily involve in HDD business and automotive brake part fabrication. However, through years of improvisation, the group is now an EMS supplier for top MNC. They are also involved in face mask supplies.

Season and experienced investor will know that Notion is an exciting counter to trade at when the time is right.
Going down memory lane, one of Notion strong rally came during the near maturity date for Notion-WB in 2017.


Notion WB exercise price RM 1.00

As we can see the mother share had rallied strongly at the start of the year from RM 0.40 until RM 1.40 for the warrant to be worth converting into mother share.


Coming into 2023, now we have Notion-WC in the coming of maturity stage in the month of MARCH 2023.

At the revised exercised price of RM 0.56, can Notion mother share rally to RM 1.00 region again?

It will be very much interesting to see how Notion will trade in the next few weeks

Technical outlook will be seeing a good uptrend outlook for Notion entering the new year of 2023.



NEXT ON NOTION  ---> Potential new EMS contract from existing customer in 2023?



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, January 4, 2023

WASEONG TO BENEFIT FROM MORE OIL AND GAS PIPELINES JOB IN 2023


Happy new year 2023 to all my readers. May you continue to be blessed with good health and good wisdom for your investment journey.
2022 was a rough year for most of the investor as the market is very volatile with wars, geo-political tension, election, rising interest rate, covid lock down. However, one thing that is certain for 2023 is a very positive outlook from Petronas on the local and international oil and gas prospect. 
As we entered into a series of energy transition - towards cleaner energy, the current set up and infrastructure will slowly transit in stages with hydrogen as a core clean energy, and as an energy storage medium.
To achieve a cleaner energy production, an important aspect in the production of sour gas oil field (oil field with high CO2) will require carbon dioxide to be stored into depleted oil well instead of being released into the atmosphere. Another aspect of it will see the storing of CO2 into depleted oil well from the process of refining LNG into hydrogen.
All the method will require the installation of oil and gas pipe from production site into depleted storage well, which can run into more than 100 kilometers.
According to the Petronas 2023 to 2025 outlook activities, the required pipeline will run up to 11,000 kilometers.

Wah Seong Corporation Bhd (Waseong 5142) expertise in the oil and gas pipeline coating is the leading company in this niche industry. It has got a range of track record in the international presence, including the 1200 km long NORD STREAM 2.
In Feb 2022, Waseong announced RM 1 billion contract from EAST AFRICAN CRUDE OIL PIPELINE.
In Dec 2022, Waseong surprised the market with a topside module contract for YINSON FPSO worth USD 127 million.

However, there are still many other prospects for future project to be won by Waseong from the carbon capture and storage infrastructure.
1. Sarawak KASAWARI - site to storage approx 110km
2. Terengganu - blue hydrogen (CCS)

Waseong to see strong reversal on project impairment?
Waseong had in FYE 2021 impaired all the project that is being delayed due to oil price slump and covid19. However, all those projects in the middle east had since restarting slowly in stages.
The revival of project will be going to see massive reversal from the project impairment that runs up to more than RM 200 million.
On the technical outlook, Waseong does trade in technical points by looking at parallel lines created by 1 and 3, and project the parallel line to upwards spot 2 to predict the 4th spot.

The current upwards trend might signal a reversal on spot 3 (in green) heading towards spot 4 region.

After all, Waseong is fully impaired in its book, and do not have anything much to lose, but have everything to gain with a bright prospect in the oil and gas industry.
I am obliged to inform my readers that I owned Waseong shares. Currently at the price of RM 0.64, will it be a good entry point?

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, 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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