MillionaireHub17/2/2015 Tuesday Company had just made an announcement this evening regarding the utilization of right issues money. Basically the director Datuk Chai (DCWC) and his company OceanMiles (registered in January 2015) will be subscribing the rights (total of extra 99million rights) if shareholders did not want to exercise the rights.
In the disclosure, the company also mentioning about the future projects which the company may bags (high probability), all are Projek Perumahan Raykat (or better known as Pr1ma). In other words, they are government-linked projects, which worth up to about RM323 million (from construction), to be completed in 36 months (3 years). On the other hand, another development project (JV with another company) which is mentioned inside the PDF worth around GDV RM83 million, of which Astral will be benefiting the 63% of total profit of around RM40 million)
From the announcement, we can have a visual on the improvement of the company's fundamental. This can be backed up by the financial results of the past 3 quarters, in which the revenues of the company has been improving from a few hundred thousand in the previous quarters to 16m / 27m / 24m respectively. Also, we're happy to see that the earning per share has made a leap bound from nega into positive.
Let's assume that under ideal condition, whereby all the contracts are bagged and run smoothly, the estimated profit would be :
1) From construction RM 323 million x 3% (profit margin based on average profit of latest 3 quarters actually is only about 2.x% ) = roughly RM10 million
RM10m divided by 3 years (project to be completed in 36 months) = RM 3.3 million per annum ( RM800k per quarter) which translates into EPS of 0.3 per quarter
2) From Nilai development 63% from RM40m (around RM24 million ) if spread over 3 years means RM 8 million per year. ( RM 2 million per quarter or EPS 0.75 per quarter)
Now lets sum up the EPS for 1 year, which is 0.3 * 4 + 0.75 * 4 = 4.2 cent per year
PE ratio = 17 / 4.2 = 4 times If PE is 10, should worth at RM 0.4 ( haven't factor in the diluted shares after right issues)
This assumption is based on current knowledge I know
If anyone has any opinion ,kindly please correct me
**this is not a buy/sell call , merely for study purpose **