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1,011 comment(s). Last comment by Mike Chong at May 26, 2019 6:18 PM
 leno likes this.
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47 posts

Posted by EPF_sell > May 25, 2019 4:37 PM | Report Abuse

>RM 2.5 EPF sell. <RM 2 EPF sailang.

466 posts

Posted by commonsense > May 25, 2019 5:06 PM | Report Abuse

Hi Mike,

I would focus more on how a company would perform and its valuation in my analysis when trying to come up with a decision on an investment rather than putting too much time in understanding why a certain shareholder is buying or selling its shares. That being said, if the person that is selling or buying is a prominent investors, then maybe i would try to find out what he or her thesis on the investment might be.

In the case of EPF, to understand why they are selling MBMR might be a bit hard to do. They are just too many reasons or possibilities. My guess is that they are currently just trying to lock in some profit in shares (not just MBMR. They are also selling Takaful, Bimb, Sunreit, Bauto etc) that is currently performing well in 2019 in order to be able to deliver on the dividend payout to be made to their members later.

If you think that EPF is selling because they have a negative outlook on the Auto industry for example, then you might need to take note that they are also currently buying UMW which as i mentioned before is just an expensive version of MBMR (UMW is trading at 19x PE while MBMR is currently below 6x). Even though UMW has other businesses like the equipment (Toyota forklifts and Komatsu heavy machinery), aerospace (rolls royce fan casing contract which is still in the red), M&E ( lubricants and other auto parts like Kayaba shock absorber) the main profit contributor to UMW is still their automotive division under Perodua and Toyota (which since 2019 has a production agreement with Perodua to produce the Rush in totality and supply engines for Vios, Yaris and Avanza).

Clearly EPF still believes in the Auto industry (they are also buying Sime Darby which has a PE of 18x) which is why i think their selling of MBMR is just to lock in some profit. I don't think they want to sell their stake to zero.

Making your investment decisions on what EPF buys or sell might not be the best strategy. If you were to sell a company just because EPF is selling then you need to ask yourself are you also willing to buy the companies that EPF is buying? (UMW, Sime, Velesto, Harta, up until april Pos Malaysia etc).

What about other institutional investors like PNB, Tabung Haji, LTAT, etc? Are you going to follow their transactions as well for your investment decision? What happen when PNB buys a company and EPF sells the same company at the same time (Velesto for example. EPF is buying while PNB is selling). Who will you follow then?

This is why for an investors, you would be better off studying the underlying asset itself which is the company when making an investment decision. At the very least, you understand why you are buying or selling the company.

Have a nice weekend. And good luck on you investments.



2373 posts

Posted by nckcm > May 25, 2019 6:09 PM | Report Abuse

Keep selling for raya duit...

Mike Chong
123 posts

Posted by Mike Chong > May 25, 2019 6:55 PM | Report Abuse

Zhulian will be better choice : 0% gearing ratio , continual profit for 5 years , higher dividend due to dividend policy of 60% from net profit, Share price range higher with stable bottom price....

Mike Chong
123 posts

Posted by Mike Chong > May 26, 2019 9:04 AM | Report Abuse

Anothe one is Inari which EPF is buying . These 2 companies can invest with lower amount and generate same profit or even higher comparing the pricing .....

17113 posts

Posted by Icon8888 > May 26, 2019 9:19 AM | Report Abuse

You are such a savvy investor

Mike Chong
123 posts

Posted by Mike Chong > May 26, 2019 12:09 PM | Report Abuse

Thanks for highlight Velesto , this is a high risk high gain counter , with the new chairman and increasing demand , is a potential one but need to monitor after 3rd quarter report. Like Zelan those bought at low price oredi gain double , with the result of arbitration by this month .... less risk after this month.Mbmr will have internal risk as major share holder want to sell even at rm2.56. As Perisai example , suddenly a huge profit after sold assets, then borrow the cash to major share holder company . If UMW suceeded , MBMR will be delisted as said.

466 posts

Posted by commonsense > May 26, 2019 2:43 PM | Report Abuse

Hi Mike,

I think you had misunderstood my earlier message. I wasn't actually proposing Velesto as a potential investment ( i actually don't think they can make any significant profit anytime soon given the very low charter rate).

The point that i would like to make was that by following EPF transactions blindly without having done the research on the companies might proof to be a very bad investment strategy. It would be better for investors to do the research of the company first before making decision on whether to invest or not in a company.

On Zelan, i think its a pure speculative stock. Based on the public info, it does not seem to have any corporate exercise planned. Appeal of this stock would most probably be purely based on technical.

The company posted a net loss of RM23.6mil in FY18 (refer to 2018 annual report). It would have been worst if not for the reversal of write off of receivables (RM13mil) and sudden high profit from its associate companies (profit jumped from a loss of RM1.1mil in FY17 to RM14.5mil in FY18. Not sure why though).
Excluding all of the one off items (i did not exclude the associate result), Zelan core net loss in FY18 actually reaches RM30mil.

However, the biggest issue with the company is its very weak balance sheet. As of Dec 18, the company has a total current liabilities amounting to RM416mil (of which RM 184mil is debt) and only RM101mil in current asset (of which only RM4 mil cash).

This was also highlighted by their auditor, PwC, in the 2018 annual report when it issue a statement of material uncertainty related to the going concern of the group (page 53 of the annual report).

I would advice you to maybe not put all your investment in this one company alone as the risk is actually quite high. In the case that the outcome of the arbitrage award by the Abu Dhabi Court is not to Zelan's advantage, the company will most probably need to impair a big chunk of the RM184mil receivables in its balance sheet. Basically any arbitrage award that is less than the RM184mil would result in an impairment to the receivables.

Given that the shareholder equity of Zelan was RM44.3mil as of Dec 18 or 52.45% of the paid up capital (of RM 84.5mil), any arbitrage award that result in the company having to impair amount that is higher than RM20mil would potentially result in Zelan shareholder equity to fall below 25% of the paid up capital. This is one of the events that could put Zelan under the PN17 list.

Good luck. Hope the arbitration ends well for Zelan.


109 posts

Posted by k55s > May 26, 2019 3:21 PM | Report Abuse

Icon8888, comoonsense is conman.

Mike Chong
123 posts

Posted by Mike Chong > May 26, 2019 3:28 PM | Report Abuse

Commonsense, as said Zhulian and Inari is better choice than mbmr. Zelan is high risk high gain counter, if you have done the research , the borrowing is 540 mil. IIUM will provide recurring income effective this year until concession period . Drawbridge just completed and test run on 2/6 to 17/6 . Suke shall complete on 25/9/19 . This year will be a good year for Zelan. The last hurdle is on arbitration which result deadline by May’19. Looking at the events happening and re recruit of the Head of Legal and become COO whom just confirmed , and AGM is set on 11/6/19, some positive hint.
26/05/2019 3:25 PM

Mike Chong
123 posts

Posted by Mike Chong > May 26, 2019 6:18 PM | Report Abuse


And Velesto bag rm 433 mil contract from Petronas carigali for 4 jack up drilling rigs operations starting April to June/July , that’s why I wrote shall monitor after 3rd quarterly report .

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