Icon8888 Gossips About Stocks
(Icon) Puncak Niaga - RM2.67 Net Cash Per Share Provides Huge Margin of Safety For RM1.08 Share Price
1. Huge Cash Pile Post Assets Disposal
Since I started blogging in 2014, I believe this will be the first time I make a Buy call based on Balance Sheets.
Puncak was previously the water concessionaire for the State of Selangor. It sold its water assets to the government in 2015 and received RM1.56 billion cash.
During the same year, it undertook a distribution of RM1.00 cash per share back to shareholders. Upon completion of the corporate exercise, it was left with cash of RM1.26 billion (comprises RM335 mil cash and RM927 mil short term investment).
Puncak has borrowings of RM57 mil. As such, net cash is about RM1.2 billion.
Based on 450 mil shares, that is equivalent to RM2.67 cash per share.
2. Historical Share Price
Since the completion of distribution of RM1.00 cash per share by end 2015, the stock has been trading at around RM1.00.
3. Proposed Acquisition of TRIplc
On 18 April 2016, Puncak announced that it has entered into Heads of Agreement to explore the possibility of acquiring the assets of TRIplc. This is a related party transaction as Tan Sri Rozali is the major shareholder of both Puncak and TRIplc.
Based on 66 mil shares and latest price of RM2.25, TRIplc's market cap is approximately RM150 mil.
TRIplc is the owner of government concession to provide facilities and infrastructure management for UiTM campuses. The concessions will last for more than 20 years. In the latest financial year, TRIplc reported net profit of RM7 mil.
4. Concluding Remarks
In my opinion, Puncak is undervalued at current price. The major risk investing in this stock is possible injection of assets by major shareholder at inflated value. However, at 60% discount to cash per share of RM2.67 and 70% discount to net asset per share of RM3.67, I believe the margin of safety is big enough to warrant a BUY.
Have a nice day.
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Discussions
2 people like this. Showing 50 of 83 comments
Global economic uncertainty, low inflation, and unusually easy monetary policy have caused about $13 trillion worth of bonds to have negative yields, according to Bank of America Merrill Lynch
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what is the difference between negative yielding bonds and shares trading at 70% discounts to cash?
one word only.....trust.
2016-07-19 17:02
.
What have you seen.. in the financial statements of listed companies. .... ex auditor stockmanmy.. to become so figures wary??
Share a bit.. come on stockmanmy
.
2016-07-19 17:08
.
Yes... after paying the 80 sen special cash divvy.. the price will be at least sen 80..
.
2016-07-19 17:25
Ya... Quick quick buy...
stockmanmy
1611 posts
Posted by stockmanmy > Jul 19, 2016 05:28 PM | Report Abuse
there is another 80 sen special dividend?
2016-07-19 17:33
from the latest accounts.
No dividend has been proposed or declared for the current financial year-to-date.
(2015 : A Special Dividend of RM1.00 per ordinary share amounting to RM447,171,674 in of RM1.00 each in respect of the financial
year ended 31 December 2015 had been paid by the Company to the entitled shareholders of the Company on 23 December 2015 post
completion of the disposals of PNSB Water Sdn B
2016-07-19 17:36
.
Without some incentive.. like an 80 sen special cash divvy... how is Rozali... going to get the minorities... to approve his TRIplc RPT??
It has got to be.. win win win
.
2016-07-19 17:39
.
It is nothing new... special cash divvy tied to a RPT... it has been done previously.. successfully
.
2016-07-19 17:43
icon
if a figure in the balance sheet is margin of safety, there are plenty of red chips you can buy in the klse.......hahahaha
2016-07-20 00:15
Don't be so sure of your self. You were wrong for being positive about Chin Well and Kein Hing. You were wrong for being negative on Air Asia and JHM.
Even though you also have got many things right, your success rate is not 100%. Keep mind open, Puncak is no red chip.
stockmanmy icon
if a figure in the balance sheet is margin of safety, there are plenty of red chips you can buy in the klse.......hahahaha
20/07/2016 00:15
2016-07-20 01:28
Those cash will later become assets (don't forget the leverage by loans and payables), and those assets will generate earnings
Of course the risk is that the assets will be injected inflated
Stockmarket requires us to take a bet. I am making a bet that after those value extraction, there will still be sufficient left to justify buying at current price. Hence the saying that there is huge margin of safety
Nothing is 100% sure in life. But as rmoi said, if u want no risk, play FD
2016-07-20 01:39
As somebody who invested in Puncak since its IPO in the 90s, I have a different view of Rozali than u
He is no crook , no fool
He is super well connected and got plenty of brains
Puncak was in the mess because of political wrangling with Pakatan. Puncak had not been mismanaged
2016-07-20 01:48
Of course he will take care of himself first when he injects assets
I have factored this risk in
Don't want risk ? Play FD
2016-07-20 01:50
Agree. Beside having huge cash pile they also have profitable business unlike Puncak which is loss making eg Xinghe, CSL, etc.
Posted by stockmanmy > Jul 20, 2016 12:15 AM | Report Abuse
icon
if a figure in the balance sheet is margin of safety, there are plenty of red chips you can buy in the klse.......hahahaha
2016-07-20 03:46
Now that Mr K has stopped talking shares... totally lost direction this stockmanmy.... just talk many
2016-07-20 07:56
not to worry.
given enough time Rozali will find a way to squander away all the money. There is trust there.
2016-07-20 08:43
This Stockman loves to criticize without giving relevant substance to support his claims....so easy. Get back to do your homework first la...We don't mind too if you want to be a clown here.
2016-07-20 09:22
Hahaha
You can turn the gun around and ask....what has that Rosli done except piratise our water with help from that dentist.
2016-07-20 09:28
his water really sucks ha ha. I switch on the tap with the new filter, within one MINUTE the filter turns brown
2016-07-20 09:31
Talking c ock again. No ending if we want to discuss this...Better look for more input for improving rather than loitering here.
2016-07-20 09:33
Extracted:
別對自己太好 因為你 3年後的成就，其實並不難想像！
看一個人的現在，就可以知道他的過去。
看一個人的未來，只需要看看他的現在。
2016-07-20 09:50
ever wondered why people buy $ 13 trillion of negative yielding bonds instead of equities? Up? down?
2016-07-20 10:12
with Rosli, we got water rationing.
now, without Rosli, even with El Nino no water rationing.
2016-07-20 10:14
water in selangor was not properly managed by Puncak in the past.. and that is why selangor government had no choice but to interfere and take over...
2016-07-20 10:51
Stockmany only offer criticism many times. You preach your style of investments, apply it and share a stock using your style of investment. Let results of that stock speak volume. At least icon shares his thought on the stock he analyse, his analysis is logical n show results to readers. That why readership increase. You can too, otherwise with you, fd is the only solution reader can have. Maybe you work for PIDM syndicate?
2016-07-20 12:14
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Will tell your wife... you are posting crap like this
stockmanmy the dentist spend his whole professional life drilling holes.
20/07/2016 10:16
2016-07-20 12:28
r°Moi Travoltakeong
If you insist and have the flexibility..... do us a favour here..... come up with the 30 ratios 20 formulas.... incorporating the following...
- TRIplc as a 70% subsidiary
- 3 b worth of clean and treated water projects under the Rural Water Supply Programme under the MP 11
.
20/07/2016 12:25
r°Moi .
And.... add on the 80 sen special cash divvy
.
20/07/2016 12:26
2016-07-20 12:30
cheok
there are at least 500 companies listed you can say honestly.....your values align properly with the values of the company.
no trust + no control = no margin of safety.
2016-07-20 12:48
good people good business good numbers
one out of three is not margin of safety.
it is a sand castle.
2016-07-20 14:44
You sounds like Aunty at the wet market keep mumbling this no good....that is bad....what's really not good.....you don't even know....Lol
2016-07-20 14:59
calm down up_down, stockmanmy has his rights to voice up his views... in fact, same goes to sostupid... if you really analyze their statements, i think they are fair enough... we have to be neutral, see things in both sides...
2016-07-20 16:11
iloveshare. Dont take my words seriously. i am just a farmer from kampung. I saw many catepilars were eating my vege. It is a bit hot to work under the sun to get rid of them.
2016-07-20 17:01
This stock has zero margin of safety! Why? Purely the owner is an arse hole! Mark my word! Nothing but arsehole! Know nothing abt water quality, spend whole life making millions of people suffer. I am glad Selangor now under pakatan. Else I need migrate singapore
2016-08-27 01:19
This Rosalie will spend whole life, his whole family will get bad karma cycle many life to do co e!
2016-08-27 01:22
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
r°Moi
.
What have you seen.. in the financial statements of listed companies. .... ex auditor stockmanmy.. to become so figures wary??
Share a bit.. come on stockmanmy
.
2016-07-19 17:01