MTRONIC - WHITE KNIGHT TAKING OVER THE CASTLE ??!!

(PERSONAL TP 0.15 Short Term, 0.20 Mid to Long Term)

Recently I had spotted this small cap company; which I believe has an interesting story ahead  -METRONIC GLOBAL BERHAD or MTRONIC (Stock Code 0043, listed on MAIN BOARD, INDUSTRIAL PRODUCTS/SERVICES, market cap RM 84.89M as at writing)

In summary, MTRONIC is a company whose core business is in intelligent building management systems (IBMS) and integrated security management systems (ISMS), e-Project Management (e-PM) and provision of online administration service for healthcare sector.

I noticed considerable interest starts to build in on 7/6/2019 where the volume registered a sizeable increase to 100.3 million units.

With this positive momentum & enthusiasm ahead, I believe, should carry forward next week. I foresee it trending to the next resistance of 0.10 before heading to my personal TP of  0.15 (short term) to 0.20 on the intermediate to long term.

WHY I THINK THIS STOCK COULD HAVE GREAT POTENTIAL TO RISE FURTHER? 

1. Entry of White Knight - Tan Sri Lee Kim Yew (COUNTRY HEIGHTS CHAIRMAN & MAJOR SHAREHOLDER)

Refer below image of the recent change in major shareholdings. As we can see Tan Sri Lee Kim Yew, had bought in a total of 204 million shares of MTRONIC up to 30th May 2019. But the announcement was made on 7th June 2019 which explains the spike on volume on that particular day. So who is Tan Sri Lee Kim Yew?

Tan Sri Lee Kim Yew (TS LKY) is Chairman and largest shareholder of COUNTRY HEIGHTS HOLDINGS BHD (5738, MAIN BOARD, PROPERTY). As at 2018 CHHB annual report, he holds 68.8% of the company. So why is a property magnate interested in MTRONIC ? Does he has some plan in mind for MTRONIC???  !!!!!

Recently, we see that TS LKY is becoming more interested in blockchain. Recently, they held a vote at CHHB EGM and shareholders voted in favour of an Initial Coin Offering (ICO). Refer article below. My guess is that he might want to make MTRONIC his listed vehicle to further pursue his passion in tech, Internet of Things (IoT), smart buildings & blockchain.

https://www.edgeprop.my/content/1442684/tycoon-lee-kim-yew-gets-country-heights-shareholders-nod-ico-issue

2. EGM Called on 1 July 2019 to Remove Existing Directors

https://www.theedgemarkets.com/article/metronic-global-shareholders-seek-egm-kick-out-directors

Above news article is referred. Major shareholders had called an EGM on 1st July 2019 to remove existing directors and replace with new ones.

From the above move, I see that the new major shareholder, would like to protect his interests by appointing his people to the board, to ensure all the policies and missions align with his interests; visions & missions. 

Further announcements will be made in due time by MTRONIC on this matter. 

Looking at this matter further, I had studied the existing shareholdings of all directors. Refer below image taken from latest annual report. It seems that all directors do not have any shares in the company, except for Dato Kua Khai Shyuan who holds 1 million shares. 

Since the amount of shareholding of current directors are very small and insignificant, it would be very likely that they will be voted out and replaced with new board members who have more interest in the company.

3. 71.09 million warrants exercised at 8 cents (RM 56.87 million capital going into the company)

Refer below image on the 13th June 2019 announcement of listing of new shares. There had been a conversion of 71.09 million warrants at strike price of 8 cents (implying cash amount of RM 56.87 million capital going into MTRONIC). 

There was no mention of who had converted these warrants into shares. However, from this action we can see that someone is willing to convert their warrants at 8 cents a piece instead of buying them in open market, which shows the support they are putting in strengthening the company's capital strength, at the same time increasing their shareholdings in the company. 

It is worth to monitor, in due time, who was the person who made this conversion.

4. Technical Analysis - Accumulation in Progress Towards Breakout of Downtrend

Refer below weekly chart of MTRONIC.

If we look at its history, MTRONIC has been on a downtrend since 2012 (7 years downtrend). Looking closer, we see that huge volumes have been appearing at the lower range pf prices between 0.05 - 0.07. I see this as a positive accumulation at bottom price, which when completed, would allow MTRONIC to jump up strongly to higher prices.

I see 0.10 as an important resistance to be broken in near term, so that the price may trend towards 0.15. Longer term resistance is seen at 0.20.

CONCLUSION

Considering all the above, my personal TP for MTRONIC is set at RM 0.15 (Immediate & Short Term ), and RM 0.20 (Mid to Long Term).

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

Disclaimer : The above opinion is not a BUY CALL but only sharing my observations.

BURSAMASTER