The Truth About Kanger International Berhad (0170) - MUST READ

Arguable, KANGER is one of the most discussed counters on every single forum. There are investors who loved the company, and as always, there might be haters. But for normal investors, layman like you and me, what is truly outstanding about KANGER?

On the first glance, the company might had suffered losses in the previous quarters due to COVID-19, and some investors are really sensitive on the high numbers of shares. So today, we will be focusing on the discussion on these 2 topics.

1. Business Prospects

As you may have already known, the lockdown in China and Malaysia had impacted their bamboo business. However, the management is quite smart for investing into 126 serviced apartments in Antara @ Genting Highlands for a total value of RM142.9 million. We know that the prospects of the overall property segment had been impacted by the COVID-19 as well as the travel restriction, so I couldn’t think of any better time to invest in Genting’s properties.

Moreover, the bulk purchase of the company for 126 units had also secured them a certain discount on the acquisition. They had previously disclosed the discount sum in the circular, and to those who are interested, you may refer to the circular for more information.

With our country’s vaccination rate hitting the 40% mark, the in-bound travel prospects are prone to recover, and Genting might see better footfall in Q4 this year. Although Antara @ Genting Highlands will be completed by 2024, the company will be able to resell the properties in 2022, 2023 at a good profit whenever the market recovers.

KANGER had also acquired 51% stakes in the building material supplier – Sung Master Holdings Sdn Bhd to tap on the recent surging prices of building materials. For your reference, Sung Master is mainly involved in the sales and trading of timber flooring, tiles, bulk cement, concrete, locksets, and sanitary ware. Once again, with the reopening of economic activities, KANGER will benefit from it.

On a side note, KANGER is also working on construction projects with order book of close to RM1.0 billion. The company is also applying for a G7 contractor license from CIDB, in which we might be hearing some good news from them really soon.

With the business’s prospects aligned, we can see that from supplies of construction material to construction, and up to the property end, KANGER had plans ready and this would bode well for the company’s profitability as well as cash flow. But one problem remains.

2. High Outstanding Number of Shares

Some investors are really concerned about the number of shares. But I would like to emphasis that it is the ultimate numbers that reflected on per share basis that is important, not the hard figure of revenue and profit, or number of shares that is important.

What I meant with that is ultimately, we are shareholders of a company. When a company improve, under normal circumstances our return as shareholder will return in the form of higher EPS or if they are paying dividend, then higher DPS.

With KANGER turning around, more than likely we will bid farewell to the negative EPS in the near future and EPS will be improved. So, this would increase the confidence of investors on KANGER and thus increasing the share price, of course.

For strong believers, KANGER is already at the lowest price you can imagine. If they want, they can always consolidate the shares and make it look nice, but they did not choose to do so simply because they don’t need to.

As an investor of the company, I would like to once again urge you guys to stay with KANGER and hold tight, just wait for the day we see 20, 30 cents of KANGER in the near future.

Peace.