MEGASUN (7146) -Potential takeover target , very little debts !

ACE Market

Syariah Status: Yes

Closing Price: 0.115

Expected TP: 0.15/0.18/0.20

Business Background

MEGASUN, through its subsidiaries IPCSB and IPBPOSB, offers value-added project management services from design evaluation to the completion of the construction phase.

Their broad range of value-added project management services can be grouped into three (3) major service categories as follows:

• Project Design Evaluation;
• Project Value Engineering; and,
• Project Construction Management.

MEGASUN's clientele include property developers, property/land owners and construction companies related to property development.

MEGASUN's clients will have access to Project Design Evaluation services which is provided by their panel of experienced professionals namely architects, civil and structural engineers, mechanical and electrical engineers and quantity surveyors. Due to the Project Evaluation Design teams' exposures to various types of development projects, clients are often assured of an increase in their net saleable area of their project which translates into higher GDV for their project.

After the completion of the Project Evaluation Design, MEGASUN will add further value to its clients by providing Project Value Engineering services before proceeding with Project Construction Management services. By engaging MEGASUN's Project Value Engineering services, client able to further reduce the project's overall construction costs and implementation time. Once the Project Value Engineering proposal is accepted by the client, MEGASUN's Project Construction Management services will ensure that the project's objectives and implementation will be smooth and timely. Their senior management has an average of 17 years' experience and have been exposed to many projects and as such, place them in a position to offer and share their invaluable advice and experience.

Why MEGASUN?

1. Government allowed resumption of construction and development projects, which will cause demand in MEGASUN project management services

2. Trading below its NTA of 30c

3.  Small float shares of 250.49 million, and top 30 shareholders are holding 71.7% shares which leaves balance float in market about 28.3%
 

4. Healthy Asset versus Super LOW Liability

Refer below latest asset & liability sheet as of February 2020 QR. A few points to note:

i. Total NTA stood at RM 0.30. Current trading price of 11.5c is a BIG DISCOUNT of about 18.5c (60% discount).

ii. Total assets stood at RM 69 million versus liabilities of RM 2.4 million. As the liability of the company is very low, it makes it an attractive target for companies looking for backdoor listing into BSKL, as the company which will take over MEGASUN will inherit very small debt and large asset base.

5. Some current projects under MEGASUN porftolio are Arena Residence, Goldern Triangle, Mansion One and One Imperial, PENANG.

Technical View

Volume just started to kick in on 19/5/2020 which indicates that they are strong buyer coming inside MEGASUN.

The price managed to break EMA200 at 10.8c today, and next EMA365 at 12.8c to turn into long term uptrend.

AEM major resistance at 0.13 once broken we can probably see MEGASUN to move towards 0.15 first before going to 0.18 and higher.

Support seen at 0.08 and 0.06

MACD and RSI indicating bullish movement.
 

Conclusion

We strongly believe that MEGASUN is one of the unknown GEM in the Project Management Business, as the Construction & Property Sector is allowed to reopen.

MEGASUN is definitely worth a look especially as it is trading 60% discount from it’s NTA and it has very low liabilities compared to its asset which makes it a high potential takeover target.

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.