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Bursa Master

Author: BURSAMASTER   |   Latest post: Tue, 14 Jul 2020, 5:59 PM

 

THIS STOCK SHOULD BE RECATEGORIZED INTO CONSTRUCTION !!! EARNINGS QUADRUPLED IN LATEST QR !!!

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THIS STOCK SHOULD BE RECATEGORIZED INTO CONSTRUCTION !!! EARNINGS QUADRUPLED IN LATEST QR !!!

Hello to all readers out there. The CONSTRUCTION sector had been robust and resilient as among the earliest sector allowed to operate by the government under the MCO.

Having said the above, the stock which I'd like to talk about today which I feel was overlooked by the masses is ECOBUILT HOLDINGS BERHAD (ECOHLDS - Stock Code 0059, Main Market, Telco & Media)

BASIC INFORMATION ABOUT ECOHLDS

ECOHLDS core business:

i) Civil Engineering, Building Contracting and Construction

ii) Property Development

iii) Digital Content

Market Capitalization : RM 48.6 million

Shares Float : 313.56 million

1. ECOHLDS SHOULD BE RECATEGORIZED INTO CONSTRUCTION AS IT CONTRIBUTED 93.4% TO TOTAL REVENUE

Refer below latest QR on the segmental information.

As we can see, Construction sector recorded revenue of RM 36.67 mil (93.4%) as compared to Digital sector with revenue RM 2.59 mil. 

As such, I believe ECOHLDS should be looked at mainly as a CONSTRUCTION company, instead of a telco/media company.

I am amazed that no MEDIA outlet has picked up on this matter and covered in the news. I believe investors out there deserve to know more about this company hence why I am taking the effort to do this write up and share my findings.

 


2. ACQUISITION OF REXALLENT CONSTRUCTION SDN BHD (RCSB) VIA ISSUANCE OF SHARES AT 24.5 CENTS IN SEPTEMBER 2019

Refer below news article by The Edge in April 2019. The acquisition of construction arm was completed via cash & issuance of new shares of 102 million units priced at 24.5c per share to Kilau Makmur Sdn Bhd (refer image below), which was completed in September 2019. 

Since then, due to the US-China trade war, our local political uncertainties, oil price crash and COVID19 pandemic, the price of ECOHLDS has dropped to a very attractive price.

Even at the latest closing price of 15.5c, this is still 9c discount (36.7% discount) to the price of the new major shareholders which took up shares at 24.5c a piece.

 

https://www.theedgemarkets.com/article/new-shareholders-emerge-ecobuilt-after-takeover-construction-firm

3. CONSTRUCTION ARM STARTING TO BEAR FRUITS - EARNINGS QUADRUPLED IN LATEST QR

Refer below QR summary for ECOHLDS. As we can see, in the latest QR, improvement as below:

i) Revenue Up to RM 39.26 mil from RM 23.87 mil (jump of RM 15.39 mil or 64.5% increase)

ii) Net Profit Up to RM 1.81 mil from RM 442k (jump of RM 1.368 mil or 309% increase)

This shows how the acquistion of the CONSTRUCTION arm is starting to bear fruits for ECOHLDS. I checked the latest news in 2020 and it seems that no media outlet had written about this company's earnings improvement and outlook.

I urge my friends in The Edge, The Star, Focus Malaysia and other financial news outlets, to sincerely take a look into this company and provide some fair coverage for all the existing shareholders and also to outside potential investors.

Also, if we look at the ASSETS VS LIABILITY summary below, we can see below notable points:

i) Total cash holdings at RM 21.4 mil, which is about 44% of the latest market cap

ii) Total Assets stood at RM 181.97 mil or 35.37c per share

iii) Total Liabilities stood at RM 69.47 mil

iv) Total Assets RM 181.97 mil versus Total Liabilities RM 69.47 mil (which means assets surplus of RM 112.5 mil)


4. TECHNICAL ANALYSIS - HIGH UPSIDE BASED ON MONTHLY CHART, BREAKOUT OF KEY EMAS ON DAILY CHART

Refer below the basic price and volume chart with key EMAs for ECOHLDS monthly chart :

A few observations on the monthly chart:

i. Refer Circlr 1, ECOHLDS hit a peak of 82c in 2014, before price trended downwards

ii. Refer Circle 2, price hit a low of 7.5c in March 2020, during COVID19 pandemic peak flash crash

iii. Refer Circle 2 & 3, since hitting the low, price and volume started to significantly improve with better trading interest seen in ECOHLDS

iv. Key EMA14 at 18c and EMA43 at 25c

v. Low downside is seen, and very high potential upside towards its historical high

Refer below the basic price and volume chart with key EMAs for ECOHLDS daily chart :

 

A few observations on the daily chart:

i. When the price hit low of 7.5c in March 2020, the selling volume was also very low (Refer Circle 1 & 2). This indicates no major shareholders were exiting the company during this flash crash

ii. After hitting the low, significant improvent was seen in the trading volume, indicating buyers are rejecting low prices and keen to buy upwards

iii. The Price had broken key EMAs of EMA14 and EMA43 at 14c, and to test the next EMA200 at 16.5c and EMA365 at 20c in the short to medium term

CONCLUSION

Considering all the above, I opine that current price for ECOHLDS is attractive due to below:

i) Miscategorization of this stock in TELCO/MEDIA whereas it should be seen as CONSTRUCTION as it contributed 93.4% of total revenue in latest QR

ii) Acquisition of CONSTRUCTION ARM was done via issuance of cash & 104 million new shares to Kilau Makmur at price of 24.5c. Latest closing price of 15.5c is still 9c discount to the issuance price

iii) In latest QR, earnings had quadrupled due to constribution from Construction arm

iv) Assets RM 181.97 mil versus Liabilities RM 69.47 mil (asset surplus of RM 112.5 mil)

v) Low downside and high upside potential on monthly chart, breakout of key EMAs on daily chart

LET’S SEE HOW THE SHARE PRICE MOVEMENT IN THE NEAR FUTURE FORBEARING ANY GOOD CORPORATE NEWS.

Disclaimer : The above opinion is never intended to be a BUY CALL whatsoever. I am sharing my observations ONLY based on fundamental; past history; current trading pattern; charts etc. Please make your own informed decision before buying this share or whatever share for that matter.

BURSAMASTER

 

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Labels: ECOHLDS

Related Stocks

Chart Stock Name Last Change Volume 
ECOHLDS 0.16 -0.01 (5.88%) 953,700 

  Sabarudin Abu Bakar likes this.
 
Sabarudin Abu Bakar wow....good to enter
07/06/2020 12:55 PM
Lukesharewalker Invested in quoted investments and with fund managers. Almost 80% of the cash. Would be hit by impairment coincide with market downturn
07/06/2020 6:03 PM
nickthebest Trade receivables also high. Recoverable or not?
07/06/2020 6:06 PM
nickthebest Based on current condition, I believe need to have impairment. No impairment also need to assess for ECL.
07/06/2020 6:07 PM
apolloang the theme now is close all entertainment and gambling centres why u all wanna buy gaming stocks? hahaha
07/06/2020 8:28 PM
Lukesharewalker Suspected the 45 million reverse takeover is to bail out rexallent assets. They might leave Ecobuilt with the debt of rexallent after expire of the projects
07/06/2020 9:32 PM
Lukesharewalker Ecobuilt and Rexallent are involved in the same project hence a double counting element which surprisingly SC approved. Which technically means rexallent is the sub contractor of ecobuilt.
07/06/2020 9:41 PM
Lukesharewalker Q3 might be a loss while Q4 is definitely a loss, how much do you think profits for 2020 is?
07/06/2020 9:45 PM
Lukesharewalker Nta over inflated as goodwill comprises of a 30 to 50% of the net tangible assets
07/06/2020 10:19 PM
Andrew Wong increase trade payables and other payable
09/06/2020 9:50 PM


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