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.

Investing in Jaycorp

Dear avid fundamental investor

This couple of days could be your last few chance to bag into Jaycorp prior before the announcement of the coming Quarter Report.

This stock is definitely not for speculation, and only suitable for those looking to hold for a good period of time, say 6 months to 1 year or more.

Jaycorp is more towards consistent dividend income with a steady growth of capital appreciation.

To recap, Jaycorp main business is furniture manufacturing and export. Jaycorp also owned their own rubberwood supply at Indonesia, and also venturing into property development at Sabah through a 60% owned joint venture company.

The past 3 quarter had been putting in amazing result, however the share price did not rise much probably due to the liquidity and also market sentiment which is still volatile with US China trade war.

But look at it, Jaycorp past 3 quarter performance

3.4 cents + 4.69 cents + 3.67 cents already made up 11.67 cents.

This quarter if can perform to 4.5 cents, that would be putting 4 rolling quarter earning at 16 cents.

Valuation for such good fundamental and dividend paying company can go PER x10 = RM 1.60

So Jaycorp still have a 60% room for capital appreciation at the current price which is below RM 1.00

WHY COMING QUARTERLY RESULT SHOULD BE GOOD

Since Jaycorp quarter result is 1 month later from the other, we can estimate how the furniture export sector is doing by looking at their financial result. If most are doing great, then that would be safe to assume that the industry sector is coming back, and most should be doing better.

As you can see, Liihen result also got stronger with higher revenue and even higher EPS.

Therefore, you can assume if there is no major shocker, Jaycorp result should be around the range of 4+ cents earning in the coming quarter report release.

Since the price had not go up much, buying now before the news come out, then you will have advantage of not needing to chase the share price when the news is out.

US CHINA Trade War - Look not on casualties, but the beneficiaries.

Hi all reader and investor again.

This month of May is a real challenge for those who are trading for a living. The volatility is max with trade war brewing at a full scale with US imposing tariffs on China and China countered with their tariffs as well.

Market is bad, companies stocks are shaken. But I believe that every big shaking is also a big opportunity here. While trade war hurts the global economy somehow, but I think some of the Malaysian industry will stand to benefit from such event.

I believe the trade war will benefit Malaysian export market, especially the furniture market.

The key reason are
1. Malaysian furniture exporter benefit from a stronger USD
2. Demand shifting to Malaysia due to no tariff
3. US economy is still strong

While there are many key companies involved in the furniture market, namely Liihen, Latitude, Pohuat, and Jaycorp to name a few, today I will focus on the Jaycorp due to it's good prospect looking forward.

Investing in Jaycorp Berhad

1. Why is Jaycorp interesting? 

One of the most important factor in investing will be the fundamental of the company. The company must be having good earning, and pay dividend.

This is the past 3 quarterly result of Jaycorp.

Sep 2018

December 2018

March 2019

So for the past 3 quarter of Jaycorp, the company already made
3.4 cent + 4.69 cent + 3.67 cent = 11.76 cent

Dividend paid in the 9 month time frame = 8 cents ( 5 + 3)


So you can see this is a company that is doing well, have decent earning and is paying dividend to it's shareholder.


2. Jaycorp is heading for a new uptrend

The share already fallen from a height of RM 1.60 and consolidating at 90 cent range. Now it is the time for the company to make a new come back after breaking away from long term downtrend resistant line that is back with good result for 3 consecutive financial reports. (9 months)


3. Jaycorp to benefit from a weaker MYR

The latest measure of BNM to cut 0.25% in OPR will also see MYR floating lower against USD.
Source: https://www.thestar.com.my/business/business-news/2019/05/07/bank-negara-lowers-opr-by-25bps-to-3pct/

According to technical chart, the USD/MYR already broke resistant and looking to trend higher, potentially visiting the range of 4.2x to 4.3x

Conclusion

Since there are a lot of indicator pointing towards the positive outlook for furniture industry, Jaycorp will be very interesting for the next coming few months.

Assuming the coming quarter report to produce 4 cents in earning, that will bring a total 4 consecutive quarter earning to 15.76 cents

Simple valuation of PE X10, Jaycorp can see valuation at RM 1.50 to RM1.60

At the current price of RM 0.95, this will be more than 50% capital appreciation for the investor now. Now is the best time to invest when Jaycorp is low while the potential is high.

Invest in the potential FANG of KLSE !!!

To all legendary investor and trader of KLSE

This message is crafted to you in order to let you know what are the instrument that billionaire and multi millionaire used to bring in huge wealth in a decade.

In the past, massive wealth is created through brick and mortar business. For example, real estate is one of the instrument that a lot of people used during those days to attain massive wealth. Yes, I do not disagree with this, but it takes quite some time. Other businesses such as oil and gas, manufacturing business are also good as well, but to date, the largest corporation in terms of market capitalization are mostly made out from IT / Technology company.

The latest line up are Facebook, Amazon, Apple, Netflix, Google.

It used to be a fight between Warren Buffet and Bill Gates in the top 2 position, but to date, this had changed. Now it is Mark Zuckerberg of Facebook, and Jeff Bezos of Amazon (before divorce settlement) that rise up so quickly to dethrone the legendary.

Technology is the key forward, and this is just a start, especially for Malaysia. There are a lot of things that can be improved with application of technology, or being replaced by them as well. The application is technically have a wide scope.

Now Cuscapi is one of the potential target that legendary investor should take note. This company is not just another Tom Dick and Harry, but it is backed with track record management that brought up MyEG from a mere RM 200 million company to a RM 5.5 billion company to date.

The Cuscapi that we know is of the yesteryear story. Please delete away your mindset that Cuscapi is the company producing those Rev Tablet for food ordering system.

Now Cuscapi is moving way faster than you think.

Cuscapi is still involved in Food & Beverage POS system, and additionally, they are developing a system for automotive segment.

If you see, Cuscapi got this EDMS system that links some of the process that is previously done manually into a systematic manner that will ease the process and also reduce fraud.


Bonus info

Previously, I got mentioned about Cuscapi being linked with Grabfood expansion. While some see a potential on it, some also doubted it.

If you looked carefully, 1 of the executive director of Cuscapi is Mr Toe Teow Teck. He is a Singaporean and formerly worked in a private equity NTU Venture in Singapore and also an angel investor himself. To link this up, Grab is actually a Malaysian startup that went to Singapore to get funded and become to the Grab that we are seeing to day.

Since the private equity / incubator / startup funding is a niche market, there is high chance that Mr Toe also have network that is related to the funding of Grab at the initial stage.

The latest move on Cuscapi acquiring a Singapore based food ordering POS system (Amplify Me Pte Ltd) continue to underline the prospect of Cuscapi having more corporate exercise related to Singapore based company.


Let you put this to thought

1. Grab is dealing with Car / Transport + Food, while Cuscapi is dealing with Food Ordering System and Automotive related registration with government.
2. Executive director is Singaporean, and involved in startup funding, angel investor, private equity funding
3. Both Grab and Cuscapi having the same geographical growth - South East Asia market

So now, do you see a definite link between the 2 company ?

What should you do to a share that is potentially RM 1.00 but now below 20 cents?

Dear Investor and Trader alike,

Sometimes, when things appear to be too good to be true, most of the people will tend to take a conservative approach, but there are still people that are willing to take the front risk and plunge their money and invest into it.

There are no right and wrong in such situation, because investment comes along with risk. But a lot of time, the too good to be true investment done with the right study and right research will bear good return when things start to get inline and things develop accordingly.

Let's say, now I am telling you EDEN is too good to be true, will you want to believe?

A share trading below RM 0.20 now, but with NTA at RM 0.77, but in fact the land asset can be holding up to more than RM 1.00 per share at the current market price.

So actually, what is there to consider more?

I had been talking and promoting on EDEN since it is 14 cents.

Now it is 17 cents, which I think there is still plenty of room since we are talking about RM 1.00 here backed with land asset that is of strategic location, near to Kuantan Port, and also upcoming ECRL.

This is a no play play issue because Land is a commodity, and it is strategic because the location is there, and this cannot be moved as you like because other infrastructure already in place, and that is the reason making the specific land to be strategic.

Look again, 450 acre of land at Gebeng Industrial area, which is near to Kuantan Port.

The recent transaction involving a 1.7 acre land is sold at RM 22 per square feet.

If put into EDEN land, at RM 22 per square feet is equal to RM 432 million
(calculation is 450.74 acre x 43560 x RM 22 psf)


This Kuantan Port will not be an ordinary port, because this port will be a very important port that will replace a lot of shipping activities that will be going pass Singapore. Technically, this area will be very sought after by international player, eyeing to have a piece of profit in this area.

Many ship will stop at Kuantan Port, unload the container, and load into ECRL cargo train, go to Port Klang, and continue their journey. This will save cost, save time and also make Malaysia have more revenue.

Now Alliance Steel already invested in Gebeng area. The MCKIP already attracted multi billion investment. All these investment will require huge factory to be set up, and that will involved purchasing of land and such.

Since EDEN have 450 acre of land, some land will be acquire by ECRL, some land will be sold to 3rd parties foreign investor, or local business that are going to set up factory near to Kuantan Port.

EDEN now is RM 0.17
Potential is RM 1.00

If you give 50% discount on RM 1.00, there is still RM 0.50. But the NTA is RM 0.77, so that is no kidding issue also.

Eden land absurdly undervalued at RM 165million

Today need to continue to talk deeper about Eden Inc Berhad.

Since we know that Eden only biggest trophy is about the strategic big piece of land near Kuantan Port, which is very crucial and good for port storage usage, and also very critical for ECRL, that is the main point about it all.

Today, I will only talk about the land, the 450 acre of land at Gebeng Industrial Land that Eden is holding on.

As you can see, according to the annual report, the land is 450.74 acre in size, and carrying a book value of RM 165 million (RM 164.9 million if you want to be exact)


Yes, this is a big plot of land acquire some time ago, and the main question here is - Is the land value at RM 165 million reflecting the market value as of today condition ? Taking into consideration the place will get better with port development (Kuantan Port to be more busy + ECRL development), making the place more in demand in the future.


So, let us do some research on the public.

So, Malaysia 1st popular real estate website - iProperty.com.my reveal that there is only 1 piece of land for sale at Gebeng
RM 18 million for 10 acre, but this is just the asking price. Of course, owner have the right to ask any price they want.

Is based on RM 18 million for 10 acre, then Eden 450 acre will be worth

RM 18 million x 45 = RM 810 million

Wow!!! Very huge amount there compared to the annual report of RM 165 million. Big difference of RM 654 million. But again, RM 18 million is the asking price.

Now, we need to go to some transacted price to determine the clearer price that is in demand.

So, we will go to brickz.my to see the transacted price that is recorded in the land office.

According to Brickz.my , the price of the land is around RM 22 per square feet. This is much reasonable price and also transacted price that reflect the demand can reach RM 22 per square feet.

So now we put into calculation at RM 22 psf, what is the 450.74 acre worth.

450.74 acre x 43560 = 19,634,234 sf

19,634,234 sf x RM 22 = RM 432 million (431,953,156.8)

So, it is RM 432 million, which is a very handsome price tag. Approximately 50% down from the asking price in iProperty.com.my

Now, looking back at annual report, the land is RM 165 million, which based on market value is RM 432 million. This is a difference of RM 267 million.

If RM 432 million / 392 million share
Eden share price will be worth RM 1.10 if all land sold

Now Eden share price only RM 0.17

So if you are looking at the prize land which can bring Eden to RM 1.10, and current price RM 0.17, this is a very valuable investment considering the land is
1. Near Kuantan Port
2. Near ECRL
3. ECRL will be buying some land from Eden

Steel On Fire - What do you think?

Steel on fire. Good or bad - It depends on how you are looking on it. Every coin got 2 side of face.

But 1 rocking truth that led my attention to iron/steel company is due to a major global event that is sparking steel prices upwards. The untoward disaster at Minas Gerais at 25th January 2019, send iron ore future leaping 20% upwards due to cut of supply in iron ore. The company involved in the disaster, Vale, which accounted for the largest iron ore output in the world had to shut down a further 10 iron mine that will estimate to pull out 40 million tonnes of iron ore supply in the market.

Analyst are continue to be bullish on iron ore, and is certain that iron ore will be hitting 3 figure next week when Chinese restart iron ore purchasing after Chinese New Year celebration.

Currently, Iron Ore Futures are at 3 years high.

So is this actually good or bad for iron/steel manufacturer in Malaysia?

Technically, when the price of iron ore is higher, it is not good for manufacturer as raw material prices will be higher, that will erode margin. But if demand continue to outstrip supply, then iron/steel product will eventually have a better margin.

China play an important role as it is the biggest consumer for steel, and any increase of steel demand will pull a great demand in influencing global steel prices.

The latest expert view is China's steel sector to remain resilient in 2019, boosted by infrastructure investment. This can translate that China will most probably be able to absorb most of the steel products manufactured for their own consumption.

http://www.chinadaily.com.cn/a/201901/15/WS5c3d4301a3106c65c34e4839.html

Analyst believe that steel rebar price had hit bottom up. And demand will be picking up soon. However, this disaster in Brazil could be pushing purchaser to buy more with anticipation that steel price will be going higher.

The disaster at Brazil is not going to resolve so soon, and global supply of iron ore will continue to see a vacuum which could potentially take up 6 months to 1 year.

This will in turn push purchaser to purchase more in order to lock in cheaper prices before prices become higher in the next coming few months.

The push effect will then create better margin for steel manufacturer.

As such, local steel manufacturer should be able to see a better margin in the coming days.

So for local pick, I will choose Masteel.

Masteel had fallen from a high of RM 1.80 before bonus issue.

Now at RM 0.51, Masteel is trading at huge discount to NTA of RM 1.60, and 3 cumulative quarter earning of 7.44 cents. Coming quarter if can hit 3 cents will make 10 cents, which means Masteel is trading at PER x 5 only.

Now with better margin coming, and customer likely to buy in more to lock in prices, that will give Masteel a good boost in profit for next 6 to 9 months.

Other steel counter include Lionind and Annjoo.

So I am not asking you to buy or sell. Just writing this to inform you that steel industry is taking a better turn. If you don't like Masteel, you can look for Lionind, Annjoo, Lsteel, CSCSteel, SSteel. Any investment decision, please do your own due diligence and study.

Eden can be riding high with ECRL back on track

Dear investor trader and reader,

Now the ECRL theme is very strong because Tun Mahathir is going to visit China this month April. One of the thing is to discuss about ECRL which many would say will continue at a correct price tag after negotiation. For me, I think the negotiation already done, and Tun Mahathir could be going there to do signing of papers only.

That is one reason why ECRL contractor like GBGAQRS share's keep going up.

Now many don't know about a hidden beneficiaries for the ECRL development. This beneficiaries is actually EDEN.

Many thing EDEN is actually food operator in Langkawi, and also owned some diesel energy generator at Kelantan, but actually the main prize asset of EDEN is a big plot of land as big as Bandar Malaysia size near Kuantan Port.

As you can see, 450 acres, worth RM 165 million in value of land at Gebeng, Sungai Karang.

So i do a google map checking where is Sungai Karang area. The red color line highlighted by Google Map is Mukim Sungai Karang

So where is Gebeng ?

So these area the area label as Gebeng. And according to the land plot of industrial land, I think the industrial land is along the coast line.


As you know, ECRL is divided into 2 phase

• Phase 1: Kota Bharu – Kuala Terengganu – Kuantan – Bentong – ITT Gombak

• Phase 2: Gombak North – Serendah – Port Klang and Kota Bharu – Pengkalan Kubor

Although Eden now is losing money, but the NTA is RM 0.77.

If the land is sold, acquire for rail construction or international party buy for development of Port for storage, that will be a good windfall for Eden.

How good is the windfall

RM 165 million / 393 million shares = RM 0.42 per share in land sell gain

So now Eden is only 14.5 cents.

Very good chance to buy and accumulate for low, since Eden is also government friendly, so good chance to see this company having a revival.