Stock Analysis - BabyAce

COMCORP (7195) Big Turnaround for Massive Gains! TP: RM0.30 - by Top 1 Analyst in i3investor BabyAce (28/7/2020)

Publish date: Tue, 28 Jul 2020, 11:06 AM
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This is the blog for No 1 Analyst in i3investor BabyAce
BabyAce is
- No 1 Fundamental Analyst in Malaysia by analyzing the business of a Company and combined with years of experience in auditing in one of the Big 4 accounting firm making it possible by combining both knowledge.
- ACCA, C.A. (M)
- Time frame length of holding superb fundamental stocks ranged from 1 year to 2 years.
- Advocate of Buy Low Sell High.
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Stock to review: Comcorp (7195) Current share price as at 28/7/2020: RM0.17

Principal activities: Comintel Corp Bhd is a Malaysia-based investment holding company. The business activity of the group is functioned through System integration and maintenance services and manufacturing segments. The System integration segment is engaged in the provision of turnkey engineering design and integration, program management, installation, commissioning and the provision of electronic systems testing and repair; and Manufacturing segment is involved in the provision of manufacturing and assembling of electronic components. The group's operations are substantially operated in Malaysia.

Current Position of the Group (Based on latest Quarter Report 30 April 2020)

Statement of Financial Position (SOFP)

a) Cash and bank balances of RM1.2mil and other investments (unit trust) of RM9mil. Total cash is RM10.2mil. Here I assume unit trust is cash convertible.

b) Borrowings RM6.4mil. 

So if you net off the cash and the borrowings its arount net cash of RM4mil approximately.

c) Property plant and equipment classified as current of RM3.1mil. Normally PPE we classified as non current but in this case I assume they wanted to sell off the PPE that is non related to their business.

Balance sheet quite okay. No complains for a PN17 company like this. Overall quite clean.

Earnings and Future Prospects

Please read the following blog of the person I think he wrote most of the thing, I will only add in addition to his points. So basically raiway job going to be injected in, with regularisation plan to be approved by Bursa. The White Knight is linked to LTAT and UMNO, so in the event any of raiway or related project gets rewarded he will have his own portion.

Regularisation Plan (Refer Below)

(i) Does not matter disposal of loss making subsidiaries stake - Nothing to comment

(ii) The capital reduction effect please refer below, a lot of people love to assume things, based on past PN17 companies action. Please note that there are different ways to restructure a company not just share consolidation and bla bla bla..look into the facts. It won't hurt you to read 51 pages of regularisation plan, people are just damn lazy. Here I summarise for you the effect below, no need read so much. 

(iii) and (iv) Private placement to the White Knight - If you see the private placement is RM0.075 sen but now the share price is higher. So you ask then this Knight will profit from this. Then I will ask you, he inject the contracts to this company no need take account to that also? He is linked to a lot of Railway projects and if some of you notice currently, those LRT and MRT project seems to have speed up and caused lots of traffic jam. More to come. Below I just take one part for you to see only, on the prospect in this sector. If you're hardworking please read page 13 till page 20 of the regularisation plan which is in PDF in Bursa Announcement.

This plan which is to be submitted to Bursa for approval is done by Puclic Investment Bank, so usually Investment Bank deals that do this usually will succeed based on past trend so I don't see an issue. If you want buy a turnaround Company I would say this is better compare to Air Asia.

This is a goreng stock so please be careful. However the gains would be massive if this plan is to be approved by Bursa. Easily could RM0.30 if this goes through. Also the share base is small so quite easy to "goreng" up. Trade at your own risk.


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