Q3 July 2022 Report - Prospects

The Group’s Manufacturing segment continue to deliver positive results stemming from persistent orders and healthy demands for metal fabricated components. Looking ahead, the outlook for this segment is expected to remain upbeat as the Group works on upgrade and expansion of its plant and machineries to fulfil the existing surge in orders besides capturing new markets and industries to diversify and increase our customer base. The strengthening of US Dollar exchange rates has also benefitted the Group’s business and is expected to sustain over the near term. Nevertheless, we anticipate headwinds to our operation and business to linger driven by fluctuation in input cost and overhead, manpower constraints and challenges in the global supply chain affecting availability and lead times.

As for Construction & PD segment, the Group will cautiously seek out new projects and opportunities for expansion. Our associate company, Broadway Lifestyle Sdn Bhd (BLSB) is in the midst of planning for the proposed development in Sepang, Selangor on a parcel of land it acquired back in 2020. Premised on the above and barring further unforeseen circumstances, we remain cautiously optimistic of the Group’s financial performance and prospect for the coming quarters.

Federal International Holdings upbeat in securing more RE projects. FIHB has a 4.9 per cent direct stake in Sunview.
https://www.nst.com.my/business/2022/10/837072/federal-international-holdings-upbeat-securing-more-re-projects

Federal International to benefit from Starbucks’ aggressive India expansion
https://www.theedgemarkets.com/article/federal-international-benefit-starbucks-aggressive-india-expansion

Federal International partners China’s major power generator in RE venture
https://focusmalaysia.my/federal-int-partners-chinas-major-power-generator-in-re-venture/

Mercury sets 60 sen TP for ACE-bound Sunview on strong growth prospects
https://www.theedgemarkets.com/article/mercury-sets-60-sen-tp-acebound-sunview-strong-growth-prospects

SNS Network sees positive outlook on demand for ICT products
https://www.thestar.com.my/business/business-news/2022/09/27/sns-network-sees-positive-outlook-on-demand-for-ict-products

PT Resources debuts with brisk volume; posts higher profit in 1QFY23
https://www.theedgemarkets.com/article/pt-resources-debuts-brisk-volume-posts-higher-profit-1qfy23

PT RESOURCES HOLDINGS BERHAD (IPO Note)
Recommendation : Subscribe
IPO Price : MYR 0.36
Fair Value : MYR 0.54
Key Points:
• PT Resources revenue CAGR was at 44.2% annually, mainly attributable to its processing and trading of frozen seafood products to overseas markets that saw sizeable increase in export sales to Saudi Arabia and China.
• The IPO proceeds of MYR48.6 million will mainly be utilised for its working capital (55.9%), capex for new cold storage warehouses (36.3%), and the remaining for the listing expenses. This will increase the facility capacity to 4,000 tonnes from 700 tonnes.
• Moving forward, the Group expects to grow export sales at a faster pace as compared to local sales and continue to generate more than 50% of revenue from the processing and trading of frozen seafood segments. The purchases of raw materials would also remain the main component of the total cost.
• We believe demand for seafood would remain resilient, as part of essential products and supported by growing consumption in its overseas markets. We have a SUBSCRIBE recommendation on PT Resources with a target price of MYR0.54 and a target multiple of 10.8x (based on the enlarged issued share capital of 535,020,000), which represents a 12-month potential return of 50%. The indicative IPO price of MYR0.36 is based on PE Multiple of 6.8 and existing issued share capital of 400,020,000 shares).

Phillip Research Sdn Bhd

Ramssol secures new revenue stream via deal with GT-Max Motors
https://www.thesundaily.my/home/ramssol-secures-new-revenue-stream-via-deal-with-gt-max-motors-LC9859379

PCCS set to trend north, says RHB Retail Research
https://www.theedgemarkets.com/article/pccs-set-trend-north-says-rhb-retail-research

PCCS adopts 30% dividend payout policy
https://www.thestar.com.my/business/business-news/2022/08/29/pccs-adopts-30-dividend-payout-policy

Focusing on developing high-tech sports wear ( Kindly refer to BursaKakis Telegram for full article }
https://www.thestar.com.my/business/business-news/2022/09/17/focusing-on-developing-high-tech-sports-wear

Very good article on PCCS in The Star Biz on Sat 17092022

Mr Koon, how about Ruberex ? Ruberex purchased Reszon for RM180m or PE multiple of approximately 3.6 times. RM54m will be paid by cash & RM126m paid by issuing Ruberex shares @ 0.7091 per share. After this deal, Ruberex still has cash resources of about 126m. Reszon is providing a profit guarantee of RM50m for each year of financial years 2022 & 2023. Based on enlarged capital of 1,038,367,281 shares & 50m profit guarantee, eps is about 4.8 cts and forward PE 10 will be 48 cts. This is excluding their gloves business. Both Scomnet & UMC are trading above pe of 35 times. Ruberex will be changing it's name to Hextar Healthcare Berhad.

Rubberex gets shareholders nod for RM180mil acquisition
https://www.nst.com.my/business/2022/09/831306/rubberex-gets-shareholders-nod-rm180mil-acquisition

Rubberex acquires Reszon Diagnostics for RM180mil
https://www.nst.com.my/business/2022/05/801178/rubberex-acquires-reszon-diagnostics-rm180mil

Purchased Reszon for RM180m or PE multiple of approximately 3.6 times. RM54m paid by cash & RM126m paid by Ruberex shares @ 0.7091 per share. Annual profit guarantee by Reszon of RM50m for each year of financial years 2022 & 2023. Ruberex changing name to Hextar Healthcare Berhad.

Budget 2023 to focus on automation, digital technology - MOF
https://www.theedgemarkets.com/article/budget-2023-focus-automation-digital-technology-%E2%80%94-mof

Budget 2023 to focus on automation, digital technology - MOF
https://www.theedgemarkets.com/article/budget-2023-focus-automation-digital-technology-%E2%80%94-mof

Eps way ahead of D&O but share price much much lower.

Four Quarters of steady performances. At 0.145 cts now, PE is 4.9

Outlook
Genm Outlook :

GenM has finally returned to black mainly driven by capacity ramp up and increase in footfall from subsided Omicron wave and foreign visitors from border reopening. Looking ahead, the recovery trajectory should continue for RWG from (i) hotel capacity ramp up (room available as at July was 7.6k vs. 6k in June); (ii) theme park capacity ramp up (3 more rides by 4Q22); and (iii) increase in foreign visitations as more countries relax their border restrictions. The current weak local currency should bode well for foreign visitations. Furthermore, the opening of SkyWorlds theme park also allows RWG to attract a large and previously untapped Muslim market which represents c.63% of Malaysia population. GenM will be able to harness the full potential of SkyWorlds in 2H22 as capacity ramps up. The increased footfall to the theme park should have a positive spillover effect to the other venues in RWG

HLIB 26 Aug 2022

OWG: The worst is likely over

A victim of Covid-19. Listed in the Main market since 2014, OWG Berhad (OWG) is an investment holding company that manages and operates F&B and leisure-related brands found in popular resorts and shopping malls. The group's F&B outlets, water amusement parks, and family attractions are strategically located in tourist attractions, such as Genting Highlands, Komtar Tower at Penang and Klang Valley.

As the group business is primarily involved in the tourism industry, the onset of Covid-19 has heavily affected the group's operation. The decline of business volume from its Food service operation as well as the Amusement and recreation operation has whipped 79% of its FY19 revenue of RM123m to RM25m in FY21. In turn, the group chalked into red in FY20 (the first loss-making FY since it was listed), and the loss expanded further to RM42m in FY22. Nonetheless, we see the return of tourism following Malaysia's transition toward endemicity as a turning point for OWG as it will drive more footfall to its F&B outlet and family attractions.

A comeback. As of 21 June, Malaysia has already surpassed its full-year target of 2m incoming tourist arrivals. Genting Highlands, where most of its outlets are located and made up 40% of OWG's bottom line back in 2019, has seen its footfall gaining traction supported by (i) pent-up demand for travel, (ii) the depreciation of ringgit, and (iii) the launches of GentingSkyworld theme park. We flag that the group turnaround 3QFY22 (report until 31 March) had yet to reflect the strong return of foreign tourists as Malaysia only reopened its international border on 1 April 2022. In view of solid recovery momentum (2H seasonally stronger earnings), we expect greater business volume in its F&B outlet and family attractions and thus better earnings going forward.

HLIB 26 July 2022

4Q22 results ahead of expectation

Maintain BUY and MYR1.90 TP
FY22 core net profit of MYR335m was 10% above our estimate, fuelled
mainly by the strength of the oil price realized (+34% QoQ) at its North
Sabah ops in 4Q22. Our estimates are unchanged, on stronger operating/
financial outlook in FY23, benefiting from the full-year impact of its
Repsol ops. Our TP is unchanged, pegged to a USD11/boe of EV/2P
reserves valuation; undemanding relative to peers’ USD18/boe.

4Q22: A spectacular performance
Core net profit of MYR210m (+497% QoQ; 6-fold increase) in 4Q22 took
FY22 core earnings to MYR335m (+223% YoY), 110% of our FY estimate.
The better-than-expected QoQ performance was driven by relatively
higher: (i) oil, condensate & gas sold at the group level (2.2x to 2.2m
boe) and ASP of crude oil realized, especially at its North Sabah ops:
+34% to USD120/bbl, followed by Anasuria ops (+5% to USD128/bbl). For
FY22, it sold a higher 4.6m boe of oil equivalent (+22% YoY), comprising
3.5m bbls of oil and 1.1m boe of gas.

Expect a stronger FY23
We look forward to a stronger FY23 (+78% YoY core net profit). The YoY
strength will largely be underpinned mainly by the full-year impact of its
Repsol ops (vs. 6M in FY22). Operationally, it targets to sell 7.2m-7.5m
boe of oil, condensate and gas in FY23 (+57%-63% YoY) in FY23. Based on
its 1HFY23 planned off-take schedule, it aims to sell up to 1.6m/ 2.6m
boe of oil, condensate & gas in 1QFY23/ 2QFY23, which would account
for 22%/ 36% of its FY23’s sales. We see upside to our earnings estimates,
should it accelerate its development plans. Gearing up to fast-track
growth is a possibility.

More positives in the pipeline
Hibiscus remains the best play for a cyclical, strong energy price market.
It is fundamentally sound, financially resilient and offers compelling
growth with undemanding valuations. Securing Field Development
Planning (FDP) approval on Marigold would: (i) turn its 43.6m bbls of 2C
resources to 2P reserves, (ii) lift its Group’s 2P reserves by 60% to
115.9m bbls and (iii) make it a more attractive M&A proposition. An
extension on Repsol’s PSC (beyond 2032) would also be positive in
improving Repsol’s NPV and potentially adding a further 30m bbls of 2P
reserves to Hibiscus.

Source : MIB 25/8/2022

U.S. says about 20 models will get EV credits through end of 2022
https://www.theedgemarkets.com/article/us-says-about-20-models-will-get-ev-credits-through-end-2022

Seven Malaysian companies make it to Forbes Asia's Best Under A Billion 2022 list
https://www.theedgemarkets.com/article/seven-malaysian-companies-make-it-forbes-asias-best-under-billion-2022-list

Volcano bought 11 laser cutting machine in year 2021. New Thailand factory will be twice the size of the present factory.
Source : Bursa Announcement.

Front-end semiconductor, upstream energy spaces bodes well for DNeX, says HLIB Research
https://www.nst.com.my/business/2022/08/818888/front-end-semiconductor-upstream-energy-spaces-bodes-well-dnex-says-hlib

Global investment in RE hit US$226 billion in 1H2022, says BNEF
https://www.theedgemarkets.com/article/global-investment-re-hit-us226-billion-1h2022-says-bnef

KYM looking to electric vehicles, renewable energy to power business transformation - The Edge Weekly dd 25/7/2022

Tesla profit tops target; Musk sees no demand problem
https://www.reuters.com/business/autos-transportation/tesla-misses-quarterly-revenue-estimates-production-challenges-2022-07-20/

Technology stocks: Poised for a rebound?
https://www.thestar.com.my/business/business-news/2022/07/16/technology-stocks-poised-for-a-rebound

TSMC's 2Q profit up 76%, beats market estimates
https://www.theedgemarkets.com/article/tsmcs-2q-profit-76-beats-market-estimates

Taiwan economy minister: Order books for chip firms still very full
https://www.thestar.com.my/tech/tech-news/2022/07/06/taiwan-economy-minister-order-books-for-chip-firms-still-very-full

Global semicon sales up 18.0% y-o-y in May to US$51.8 billion, says SIA
https://www.theedgemarkets.com/article/global-semicon-sales-180-yoy-may-us518-billion-says-sia

Global semicon sales up 18.0% y-o-y in May to US$51.8 billion, says SIA
https://www.theedgemarkets.com/article/global-semicon-sales-180-yoy-may-us518-billion-says-sia

Tech-sector-tops-net-cash-companies
https://www.theedgemarkets.com/article/tech-sector-tops-net-cash-compa...

Taiwan's Foxconn raises full-year outlook on strong tech demand
https://www.theedgemarkets.com/article/taiwans-foxconn-raises-fullyear...

Tech-sector-tops-net-cash-companies
https://www.theedgemarkets.com/article/tech-sector-tops-net-cash-compa...

Taiwan's Foxconn raises full-year outlook on strong tech demand
https://www.theedgemarkets.com/article/taiwans-foxconn-raises-fullyear...

tech-sector-tops-net-cash-companies
https://www.theedgemarkets.com/article/tech-sector-tops-net-cash-companies

Taiwan's Foxconn raises full-year outlook on strong tech demand
https://www.theedgemarkets.com/article/taiwans-foxconn-raises-fullyear-outlook-strong-tech-demand

Top 5 customers are listed in NYSE, NASDEQ, Stock Exchange of Thailand, Taiwan Stock Exchange & SIX Swiss Exchange. Bulk of IPO funds RM37.8m or 65 % are for the expansion of facilities ( 5x from 22,800 sq ft to 130,000 sq ft) with strong growth potential ahead.

Poh Huat 1Q net profit soars 59.43% on better profit margins

https://www.theedgemarkets.com/article/poh-huat-1q-net-profit-soars-5943-better-profit-margins

DNeX hits all-time high of RM1.27, takes top spot among most actively traded stocks
https://www.theedgemarkets.com/article/dnex-hits-alltime-high-rm123-top-active-stock

Initiate coverage with TP 1.60 by CIMB

Dnex set to break historical high of 1.05 & move into uncharted territory

https://www.theedgemarkets.com/article/rhone-ma-proposes-private-placement-fund-milk-processing-plant-project

Dnex in June 2021 increased Ping stake from 30% to 90 % and Ping in Sept 2021 increased stake in Avalon from 50% to 100%. Ping having 50% interest in Anasuria Cluster with a production of 7900 bopd ( Ping 50% = 3,950 bopd ).

"Anasuria assets are valuable cash cows. With low operating expense per barrel (opex/bbl) of less than USD20, we estimate the unit’s cash-breakeven crude oil price to be at about USD25 per barrel – based on our calculations. In the event of an oil price crash, we are comforted by the fact that these low cash opex levels to provide shelter from going into deep operating loss. With that, we deem the Anasuria assets to be a valuable cash cow. Meanwhile, we estimate the unit’s breakeven price to be at about USD45 per barrel on the net level" - HLInvest 19/1/2022

http://www.pingpetroleum.com/assets_anasuria.php

Tech stocks pare gains, are they attractive now?
https://www.theedgemarkets.com/article/tech-stocks-pare-gains-are-they-attractive-now

SilTerra offers new manufacturing tech with Finnish firm's help
https://www.nst.com.my/business/2022/01/764623/silterra-offers-new-manufacturing-tech-finnish-firms-help

https://www.theedgemarkets.com/article/konsortium-transnational-secures-rm2645m-building-contract-perak

Q3 Sep 2021 eps up QoQ 62 % & YoY 72% to 1.57 cts.

Aemulus order book seen as healthy. TP 1.50 by CIMB.
https://www.klsescreener.com/v2/news/view/906965

EV cars set to smash records with seven million cars in 2021
https://www.theedgemarkets.com/article/ev-sales-set-smash-records-seven-million-cars-2021-says-rystad

https://www.theedgemarkets.com/article/budget-2022-tune-protect-lauds-move-increase-perlindungan-tenang-voucher-rm75

https://www.thesundaily.my/home/budget-2022-gov-t-to-continue-digital-connectivity-efforts-through-jendela-initiative-MK8509871