Koon Yew Yin's Blog
Why should AYS Venture buy back its own shares? Koon Yew Yin
Koon Yew Yin
Publish date: Mon, 08 Nov 2021, 12:48 PM
Koon Yew Yin
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An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
Share Placement:
On 2nd November AYS placed out 38 million shares at 76 sen to big investors who are familiar with the company operation and its profit growth potential. No investor would buy 38 million AYS shares unless he knows the company’s business and its profit growth prospect. AYS Venture received Rm 28.9 million cash.
On the first day of the Budget 2022 announcement Rm 33 billion was wiped from the market capitalisation. Almost all the listed shares plunged. AYS plunged to 68 sen per share. As a result, there are many forced selling to meet margin calls.
AYS is a steel trader:
Steel price does not affect AYS because AYS is a steel trader. It will only buy steel from the cheapest steel manufacturer to sell the get better profit.
AYS latest quarter EPS 8.5 sen and its previous quarter EPS was 4.45 sen, an increase of about 100%. Even during the Covid 19 MCO lockdown, AYS could make so much of profit. Currently there is no more MCO lockdown, AYS should be able to make more profit in the next quarter ending Sept. which should be announced before the end of this month.
Assuming its profit remains unchanged, its annual profit should be 4 X 8.5 sen = 34 sen. Currently it is selling at 72 sen. The PE is 72 sen divided by 34 sen = 2. Ridiculously cheap.
How is the share placement price fixed? According to Security Commission rule, the placement price should not be less than the average price in the last 5 trading days with a maximum discount of not more than 10%.
AYS Venture should buy back its own shares.
Since the company has Rm 28.9 million cash from the share placement, it should buy back its own shares at cheaper prices to make more profit. These bought back shares can be sold at higher prices when there is no more forced selling to make additional profit or kept for distribution as dividend to shareholders.
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Discussions
Be the first to like this. Showing 12 of 12 comments
Ays did share placement so that the company can buy back its share? Will the Bursa allow this or even Bank Negara? Ays needs to apply for financial license as profiting from buy or sell share commercially need licensing ( like a broker )? All the buy back is just so that you can sell out your share? That means Ays will be looking at big lose after all the traders do sell of their holding. Logic or just to save an investor wrong call?
2021-11-08 14:19
i'm sure the investment bankers pocketing the fees for arranging the placement will thank uncle koon for this brilliant suggestion!
2021-11-08 15:17
Same like how a gold trading company makes exceptional profit when gold prices are rising... they buy gold at RM100 in Jan, gold price goes up to RM110 in Feb, and they sell at RM120 in March. ... simple?
2021-11-08 16:38
Ayai you guys don't know KYY meh. The blog is to trick retail investors to buy AYS la. You think he don't know the company will not listen to his crap meh. Same old trick
2021-11-09 08:10
The company need cash for some reason, so they did PP.
Now you ask them to buy back, where to get cash again for the same reason?
To PP again at even cheaper price?
2021-11-09 08:19
Wakaka
Uncle Koon not happy price is downtrend
Buffet is say if good company price drop is ok
Just buy until pokkai
Wakaka
2021-11-10 09:26
Game over for AYS?
The earlier super profit is not sustainable.
Earlier super profit made was due to old inventory/stock bought at much lower price and sold at higher price.
Going forward, the cheap inventory/stock could be depleted by now and need to replace with new inventory/stock at higher price.
The next few quarters result should not be fantastic and expect AYS price to move South or at best flats
This is just my humble opinion
2021-11-10 09:46
Uncle KYY, Can i claim back my loss from AYS from u? If not... U don write any blog now. Wasting ur time to write and our time to read.
2021-11-10 14:53
Proceeds from a private placement cannot be used for share buy back unless you have Bursa approval.
When steel price dropped, AYS may have higher cost stocks which will incur a trading loss. Dont tell me you dont know that KYy ???
2021-11-11 10:27
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How did AYS make exceptional profit if it is not due to the surge in steel price? A steel trading company can sustain close to 20% operating profit?
2021-11-08 13:34