MINHO TO SEE BIG UPSWING WITH HIGHER GLOBAL TIMBER PRICES

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This covid-19 pandemic had unleashed a massive amount of money into the global financial system, resulting in creeping up inflation. We can see that stock market are heading higher with higher PE ratio, crypto currency are gaining track in the market as the digital gold, and commodities are going higher as well.

The latest QE is the known USD1.9 trillion which President Biden had signed into effect. How is the market going to reflect on this money?

Today I am going to talk about Commodities.

CPO chart are showing massive uptrend on the palm oil. The trend is not stopping and will be looking to hit RM 5000 in the next 3 months to come. Some analyst are projecting RM 6000 to RM 7000.

Here are some metal prices. 

ALUMINIUM GLOBAL PRICES

COPPER GLOBAL PRICES

PLATINUM GLOBAL PRICES

Now, I want to talk about TIMBER prices

TIMBER GLOBAL PRICES

Global timber price will look set to trade around USD 1000 per bdsf. This could be a new norm going forward due to the excessive money printing exercise.

As you can see, when commodities prices go up, a lot of raw material prices will go up, and in the end it will end up in inflation because good and product will go up eventually.

In Malaysia, the steel sector already go up. Leading steel maker - Annjoo, despite report a operating losses, share price went up more than 300%

WHAT IS THE NEXT COMMODITY SECTOR TO SEE UPLEG ?

I believe the next one will be TIMBER SECTOR. Timber companies involved in upstream logging and downstream manufacturing will see massive upleg.

One of the laggard is Minho (M) Bhd - MINHO 5576

The company is involved in timber upstream logging, and downstream manufacturing from plywood to sawn timber. Export market 80% and local usage 20%.

Current share price NTA RM 1.10 per share. MINHO chart shown a breakout from short term down trend. With more than 6 months in consolidation and global timber prices breaking upwards, MINHO is just another company waiting to see a big upwards swing in it's share price.

IMPORTANT NOTICE

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 on my ideas and  opinion of the market outlook. Above materials are taken from original source as a referencing material. This is not a buy/sell/trade call. Please do your own research and buy at your own risk.

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PCCS NEW BUSINESS VENTURE INTO HEALTHCARE TECHNOLOGY TO SEE GREATER UPSIDE

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We are entering the 3rd month of year 2021. 1 year through the Covid-19, the equity market is still nowhere to be seen dropping below 1000 as the naysayers goes saying. In fact, US equity are going strong and breaking into new heights with trillions of stimulus injected into the global economy. The only way for you to stay in the inflation is to stay invested - in the right stock with growth prospect.

Healthcare stock are good in the long run. Company that diversify into healthcare industry (except glove) should be given attention as the medical needs will continue to rise with aging population.

The stock that came to my attention is PCCS GROUP BHD (PCCS - 6068). It is regarding their planned diversification to the medical industry with a strategic partnership with Shanghai Shenqi Medical, a medical technology company focusing in R&D of new medical instrument for treatment.

Source

https://www.theedgemarkets.com/content/advertise/pccs-group-berhad-pccs

This venture is not a rogue decision as PCCS had already set up a company that will be dealing in sales, rental and repair of medical equipment in Singapore through the name - La Prima Medicare Pte Ltd in 2020.

What is so good about Shanghai Shenqi Medical Co.

Shenqi Medical is establised 6 years ago. Shenqi Medical has completed the R&D of a number of interventional products, including the detachable coil embolization system with fibrous hair, peripheral microcatheters, distal access (DA) guiding catheter, drug-coated balloon catheter used in coronary, left atrial appendage (LAA), etc. In addition, Shenqi Medical has about 10 products under development.

Two core products of Shenqi Medical have achieved good results. The independently developed drug-coated balloon catheter was approved by NMPA in December 2019, and another product, LAA, is in the clinical stage and is expected to be launched by the end of 2021.

Shenqi Medical just recently completed a USD 14million Series C funding for the marketing for their products.

Personally, I am very positive that the MOU between PCCS and SHENQI MEDICAL CO. will materialize and see a signing before the 30 June 2021 deadline. One of the reason is because of the company owner and the management team that is real businessman that will walk the talk. PCCS is owned by the Chan's family in Johor. From a track record of growing PCCS from just a garment manufacturing company into labelling, packaging and hot print with branded names under their belt is a proof of record.

Technical Outlook

The current price chart for PCCS is looking to see a breakout from consolidation point. The share is under good accumulation and will be looking on a positive upside with new diversification on healthcare industry.

IMPORTANT NOTICE

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 on my ideas and  opinion of the market outlook. Above materials are taken from original source as a referencing material. This is not a buy/sell/trade call. Please do your own research and buy at your own risk.

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WILLOW TO RIDE ON DEMAND FOR (AI) ARTIFICIAL INTELLIGENCE DECISION MAKING FOR LARGE BASE DATA AND (IOT) INTERNET OF THINGS

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Entering 2021 and beyond, companies that are dealing with IOT (Internet of Things), AI, large data analysis, and cybersecurity will be the company of the future. Company that are involved in these industry can command high PE valuation.

Today, I want to introduce a company - WILLOWGLEN MSC BERHAD ( WILLOW - 0008) which is involved in A.I Decision making, cyber security, large base data analysis, and digital monitoring services.

The company has extensive knowledge in providing services to core infrastructure system in different country.

Here are the major services in a short summary

Electric and Power

Oil and Gas

Water and Waste water

Transportation

Willow promote the use of SCADA (Supervisory control and data acquisition) system to get latest data on the whole system being evaluated. Data collected then can be interpreted through A.I system for better decision making.

Willow price chart is interesting with share price consolidation from top and bottom coming to a tight point. The share price is on a positive node to see potential upwards break out from consolidation

With the company involved in services of the future, Willow is a good investable candidate.

IMPORTANT NOTICE

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 on my ideas and  opinion of the market outlook. Above materials are taken from original source (Willow company website) as a referencing material. This is not a buy/sell/trade call. Please do your own research and buy at your own risk.

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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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Mclean growth path is great with Thailand expansion

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If you are in my Telegram group, you would had noticed that I had been talking about Mclean Technologies Bhd for quite sometime. If you want to join the Telegram for FREE, yes, FREE, you can do so at https://t.me/targetinvest88

In fact, I had been talking on Mclean since the days it is trading below 20 cents. As I find this company very interesting on it's own way, the potential growth of this company opened up my eyes and mind as I compared to the peers of the industry, hence I would like to inform that I had vested interest in Mclean Technologies Bhd (MCLEAN - 0167).

Investing are tough nowadays, hence it is imperative to look for good companies to invest in growth that can burst up in a quick manner. 

While Mclean is a small company that most do not know yet, it is dealing with services such as cleanroom packaging and surface treatment such as precision washing for a few sector, namely oil and gas, HDD and other electronic goods.

One of the most exciting move that Mclean had taken 5 years ago is to venture to Thailand to be nearer to it's major customer Seagate.

Source

https://www.theedgemarkets.com/article/mclean-expects-earnings-recovery

Seagate expansion in Thailand from 2015 to 2020 valued at USD 470m CAPEX.

Source

https://www.reuters.com/article/us-thailand-seagate-technolo-idUSKBN0LE15720150210

Currently, Seagate owned global HDD market share 40%

What we are seeing here is could be another future technology gem riding along with global MNC growth.

According to the latest quarter report from MCLEAN, the company is expecting a improved revenue starting 2H 2021 with contribution from Thailand factory due to increase demand and orders.

Let's look at the matured player in the HDD industry scene

1. DUFU - market cap almost RM 2 billion

MCLEAN TECHNOLOGIES BHD

RM 68 million market cap

I believe that MCLEAN is on a good growth position by leveraging on the growth of Seagate, and also the proximity of MCLEAN with Seagate largest producing hub in South East Asia will definitely give MCLEAN a lot of better chances in the coming future.

At the current market capitalization of RM 68 million, there is just a huge growth in terms of market cap for Mclean, given competitor are sitting at RM 2 billion market cap (DUFU).

JCY RM 950 million

Notion RM 440 million

(Do note that JCY will be exiting HDD business and focus on Automotive, and Notion is also reducing on HDD business and focus on other)

So do you think Mclean will stay at market cap RM 68 million forever? With JCY and Notion exiting and reducing HDD orders, player in this industry will streamline to 2 player - Dufu and Mclean

How much is the potential for Mclean, let's talk about a 3 years time frame?  RM 500 million market cap? That will be above RM 2.

Stay tune for more news on Mclean with Target Invest.

-- I have to informed that I have vested interest in Mclean, and I am not a certified financial or stock analyst. Above view is just my expression for your reference study and this is not a buy sell trade call for Mclean. Kindly do your own due diligence and consult your own resources --

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Global lumber prices soaring to benefit Minho in export

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What is the possible next trend for the global market? 2020 had saw glove theme, vaccine theme, plantation theme, logistic theme and the end year steel theme play. Coming into 2021, we should be looking no further at timber theme play, at least in the 1Q 2021.

Global plywood prices had been staying up, putting up pressure for prices to increase in construction as plywood are one of the main component in construction.

Prices for 1000 bdsf of plywood are now trading above usd 600, and in my opinion, prices will continue to remain inflated above usd 500 due to several factor as highlighted below :-

1. Coronavirus pandemic had affected the supply of log wood due to the lockdown. The timber processing supply chain from upstream logging work until downstream processing are affected by worker supply issue.

2. Developed country practicing work from home are encouraging more home renovation work to be done, and also more new home sales, hence pushing up demand for plywood in construction.

3. The forest supply for raw timber log at British Columbia are affected by infestation of mountain pine beetles. Warmer weather continue to encourage their growth and infestation.

4. Forest fire burned down 15 billion board feet of timber. 

Source - After the fires, timber industry faces ‘generational’ losses and longer-term supply questions of supply (msn.com)

With all the issue that are happening, supply chain are getting damaged while demand keep pushing up higher. This will only result in higher selling prices for timber goods.

WHY MINHO IS A POTENTIAL COMPANY TO GAIN FROM THIS ?

MINHO is in the business of timber for more than 40 years. Throughout the years, the business had expanded into several categories which include

-Kiln drying and chemical preservative treatment
-Manufacturing, exporting and dealing in moulded timber and related products.
-Export of processed timber products
-Trading in logs supply and timber related products
-Exploitation of timber concessions
-Operation of a fully integrated timber complex
-Manufacturing and distribution of industrial paper bags
-Property development
-Plantation

Minho export the sawn timber goods to Germany.

Currently, Minho charting is attractive as consolidation of the chart looks good at 35 cents

The price movement suggest a maturity point where a potential break out point will trigger the share price to move with a positive upward bias based on the global event happening in the timber trading.

For Mid/long term investor, current price around RM 0.35 +/- could be a good entry as price consolidated nicely around this range.

Above information is for reading and references on the write own personal opinion on the global timber trade and how it will affect company (Minho) that is dealing with timber trading. It does not represent a buy sell or trade to your investment decision.

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