Readers of my blog would probably realise that I have been away from i3 for quite some time, mainly because I was quite fed up with the bickering in the forum where some people are just not interested to put in a logical argument. The same people never contributed anything in the forum yet has the guts to question everyone else’s intentions. For me, I wrote what I wrote because I wanted to share what I know but I don’t owe anyone anything, certainly not those low-lives. So I took my time-off, travelling and enjoy life while seeing my portfolio grew nicely over time.
After taking some time off, today I will be going through the stocks that I have previously blogged about. This is my way of reviewing my past ideas/actions before moving forward and hopefully readers and myself could learn something through this exercise. For those who are not interested, you may move on. Those who continue reading, please be mindful that like all my previous articles, they tend to be lengthy.
1) Sona-WA (sell/avoid)
Price then: 6c
Price now: 0
Back when it was still trading at around 6c, I warned that the QA is most likely going to fail and warrant will be worthless. I was subsequently proven right. Although Reach did manage to squeeze their deal through, looking at how the price and warrant performed, I think SPACs are unlikely to have a future in Bursa in its current form.
Conclusion: SPACs remain only as an attractive arbitrage vehicle for me, it is still a no-no investment by any other measures.
2) Triplc (Buy)
Price then: RM1.50
Price now: RM1.95
This remains the only stock that I have blogged four times. The first article was back in Apr 2016 when the HOA was signed, then a formal agreement was signed in Dec 2016 and finally SC clearance was obtained this month. The whole process has taken longer than I expected and many things have transpired during the period, details I will leave it to interested ones to browse through the previous posts.
Till today, I still think this is a no-brainer stock. It runs an extremely simple yet lucrative campus construction, maintenance and concession business and has undervalued landbank. Many people still don’t understand its business and its financials despite my best efforts in sharing my knowledge. Nonetheless, Puncak is offering around RM3 per share to acquire the biz. As a shareholder, I’m inclined to accept the offer as left on its own, market does not seem to appreciate the true value of the company. For Puncak shareholder, I have even wrote an article to show them how they are at the better end of the deal https://klse.i3investor.com/blogs/purelysharing/112371.jsp
If they still only see the Triplc price and not the value, then there’s really nothing I can do to help them.
Conclusion: At current price level, it is still a steal. If the deal goes through, you get RM3 net cash company (PN16 but your cash is secured). If the deal fails, the business value itself is more than RM3 (although it might need some time to submerge).
3) MBSB (sell/avoid)
Price then: RM0.90
Price now: RM1.30
It was around 90c back then. Now of course it has surged to around RM1.40 level before retracing a bit. I was bearish back then, I am still bearish now. The company has poorer credit control compared to its peers like Aeon Credit or RCE and I still think it should trade at a discount P/B compared to the banks (not a premium) based on its low ROE. The new MFRS9 next year will be a new challenge and I’m interested to see how its profit would be affected.
Conclusion: I still think it is a risky company. But share price has proven me wrong so far, that’s why sometimes positive newsflow (Chua Ma Yu, banking license etc.) does move prices regardless of whether you think it improves the fundamentals. So I may have erred on the cautious side but please invest at your own risk.
4) Vivocom (sell/avoid)
Price then: RM0.18
Price now: RM0.14
I highlighted in the post how the selling points for this company were grossly over-inflated and the analysts promoting the stock was clearly incompetent or corrupt. And so it proves, with the company reporting disappointing results in subsequent quarters and the analyst caught possessing and releasing insider info (unintentionally I assume) on the company.
Conclusion: This is a rare case where an overhyped company was brutally exposed. Previously I only thought that this company was merely overvalued, but recent quarters’ horrible results may suggest that there are more earnings risk than I thought. In any case, this is a dodgy company with poor corporate governance track record, definitely not suitable for long term investing.
5) Prestariang (no rating)
The article was just to discuss on the SKIN contract and its potential impact. I did not really rate the company as based on my calculations, even with the new contract contribution, the stock is still expensive (although maybe not too expensive if compared against tech players). Subsequently, it was reported that Prestariang only owns 70% of the company that gets the contract, so my calculations are definitely off.
Conclusion: Sometimes even after a contract is signed, we still have to be careful and alert (like how Prestariang ends up only with 70% stake). That would change the estimates previously made. And Prestariang case also helped to illustrate the importance of understanding accounting. There was one forumer called PurplePain who understands nothing about the accounting treatment for SKIN (and the financial analysis in the article) yet keep leaving stupid comments. Ultimately, the company and the analysts proved me right by confirming that revenue and earnings will be recognised in the first 3 years of concession. Lesson learned: Only open your mouth when you really know something, if not, stay humble and learn. With ability it’s called confidence, without ability it’s called arrogance.
6) Gunung Capital (sell/avoid)
Price then: RM0.47
Price now: RM0.40
Another goreng/speculative stock. But it caught my attention back then because there was a seemingly solid renewable energy story behind it. But close inspection reveals that the company only owns small stake in most hydro power plants and most are not operational yet.
Conclusion: Similar to Prestariang, effective stake is an important aspect that should not be overlooked. And sometimes behind a seemingly legitimate story, it only take a little more homework done to reveal its true colours. That’s why it is always important to conduct your own independent research before trusting any rumours.
7) Ekovest/ Ekovest-WB (Buy)
Price then: RM0.93/0.53 (adjusted for special dividend and share split)
Price now: RM1.10/0.69
This is a company that has fallen out of favour in recent months. For me, fundamentals have yet to change. Construction orderbook still very healthy, property still ramping up, highway concessions progressing well and on track for listing. What has changed though is property segment has reported losses in the latest quarter and high effective tax rate also dragged down its net profit. But Malaysian property developers still typically enjoy very good margins so I suspect the property losses are likely to be one-off. Overall, PBT is still doing very well and once effective tax rate normalises, net profit will recover. And more importantly, I have always stressed that just using PE method will not fully capture the value of this company.
Conclusion: The company is still solid in my opinion. However, the whole Bandar Malaysia thing has really put a dent on the sentiment. We may argue that Bandar Malaysia really has nothing to do with Ekovest but in Malaysia, we have to be realistic and understand that most government projects are political in nature. Nonetheless, with the share price being beaten down, I think the company is still a good investment opportunity. However, investors need to be aware of the potential risks such as Duke 2A not being awarded or higher property losses etc. before investing in the company. Low risks of these happening doesn’t mean no risk.
8) Bursa Malaysia/Bursa C-11 (Buy)
Price then: RM9.38/0.21 (adjusted for total dividend 52c received)
Price now: RM10.00/0.25
This stock was recommended back then when market was starting to turn bullish and the trading activities are spiking. All my calculations are based on the assumption that the bullish sentiment will continue and investors will continue to invest/trade actively in the market. However, if you monitor the Bursa Malaysia statistics, the trading value stayed high until May (Mar is still the best month) and subsequently the market has cooled down to a level similar to last year (which wasn’t that great anyway).
Conclusion: As the trading value was not sustainable, my previous assumptions were overly bullish. Full-year it might still hit my target thanks to a strong first-half, but 3Q will definitely disappoint and I’m not so optimistic for subsequent quarters. The price traded as high as RM11 but now with the catalyst weakening and special dividend pocketed, I would recommend those who are still holding to sell before it turns bearish again. For C-11, it’s important to not be overly greedy because timing is everything for these short term structured warrants. I already advised to take profit when it was 40c back in end-May. It went up to as high as 43.5c but now is back to 25c, possibly because traders are also aware that coming results won’t be great. With expiry at Nov 30 2017, time is definitely not on your side if you are still holding. Better take profit or cut loss now.
9) Petron (Buy)
Price then: RM8.00
Price now: RM10.30
Those who knew me would have realised that I have been vocal in the forum about Petron’s prospects even when it was at RM5 but I only formally write an article on it when it was trading at around RM8. The assumptions and prospects remain intact till today. But back when the article was published, the price was sliding hard until it hit around RM7 (which is also the lowest point since then). A lot of jokers and sour grapes (who enjoyed nothing from RM5 to RM8, and still don’t enjoy from RM8 to RM10) kept shouting like it’s the end of the world and criticising the company without bothering to do any research or analysis. I do hope that they have learnt their lesson by now.
Conclusion: Sometimes it’s better to block out the noises and focus on what’s important. Petron’s latest result was affected by inventory loss but the refining crack spread has been stronger in Q3 and Q3 will be inventory gain instead of loss. Overall, inventory gains/loss to me is still one-off in nature which does not really add/destroy value (unless commodity prices are expected to go by one direction). I still like the company for its strong retail and marketing biz while refinery biz is in upcycle plus strong cashflow. This is still a good stock to hold even at current price level (readers would notice my target price is way higher than current level).
Many people has also been asking me about Petron’s “twin brother” Hengyuan. Personally, I think Hengyuan’s profit will be better than Petron in the short term (yes, you see it right). Being a pure refiner, Hengyuan is the best stock to capture the current bullish refining environment. But the only point to note is refining is a cyclical biz. Without stable retail marketing biz like Petron, Hengyuan’s profit is bound to be more volatile so investors PE expectations should be lower for Hengyuan compared to Petron. But in summary, with Petron now at RM10 and Hengyuan at RM8, I still think that both will re-rate upwards strongly in the coming months.
It was a lengthy and brutal exercise where I have to face my past assumptions and recommendations. Many people assume that by making mistakes, they will learn from the experience but the truth is, making mistakes and learnings from it are two separate actions. That’s why many people keep repeating the same mistakes.
By reviewing all my previous posts, I hope you have learnt something from them. I was fortunate enough to have made more right calls than wrong ones but I know it myself that these are the product of 10% luck and 90% hardwork. You can be a fundamental investor or technical trader but only through hard work, then you can slowly master your investing or trade.
If you are one of those that are still chasing one rumour to another, following one stock tip to the next and at the end of the day, losing all your hard-earned money, it’s time to stop. Keep making the same mistakes won’t make you wiser. Go back to basics, try to understand a company’s industry, prospects and financial statements. If you don’t understand, then try to learn by reading books, read other people’s sharing, or even attend some seminars or courses. If all these sounds like too much work for you, then maybe investing is not for you. Find a good unit trust company or maybe just put in bank deposits would be better, at least you won’t lose your pants.
People always say that there’s no free lunch in life. But I say, you might be able to find free lunch sometimes in life, just don’t hope to survive relying on it.
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Thanks for your previous triplc length explanation. Since triplc is lucrative concession, the acquire Puncak should also benefited. Puncak share price have been bashed down significantly due to poor construction execution. Puncak acquire triplc is timely to gain triplc expertise in construction buisness to revive Puncak construction later. After acquire triplc concession business, Puncak will return back to have long term concession business, re rating is on card.
Although Puncak recently acquire plantation which still need gestation time before enter into prime mature, increase yield, but at least its solid long term business. In addition, Puncak oil and gas also pending revival in view of strong recovery in oil now. All in, I think Puncak worse time could be over now.
portfolio have both Puncak and triplc ( sold lucrative concession, but potential to declare special dividend )
Wonderful sharing. Full of substance.
Keep it up Jay.
Jay, You know what? I have just visited your blog page & try to follow your latest comments this afternoon. Only found out that you have "0" comment in the past 30 days. :)
Thanks for sharing your thoughts here. Big Like.
I like Jay's write up and contributions, but fail to understand the sensitivity.
Please continue providing those priceless ideas / advise.
Everyone knows Prestariang will be recognising FAKE PROFIT for SKIN during the development stage in the first 2 years. FAKE ACCOUNTING PROFIT.
Should recognise SKIN profit like EcoWorld International
i see it right~
a good read! tks Jay!
Appreciate your sharing, thank you.
thanks jay for the selfless sharing...
good on u jay for the sharing.
looking forward to ur next stock analysis.
thanks for the comments
@hng33 puncak is a riskier choice. if the deal goes though, triplc earnings can sustain them for the next 3 years but I'm not sure how huge their existing operations and new plantation losses will be. young trees literally gives no fruits and revenue in the first few years. if for some reasons the deal doesn't go through, triplc profit will remain strong but puncak will continue to slip into oblivion (which many puncak shareholders don't seem to understand). but I understand your trading rationale, just be aware of the risk
@PurplePain if you think it's fake then again it shows how limited you know, a reading of how IAS11 or IFRIC12 came about last time may broaden your narrow mind. personally not a fan of recognition only at completion, just make it difficult for investors to understand what is going on
Thanks jay, I have took profit on Puncak today at 76sen, have repeated trade many round already for handsome contra gain. Now, portfolio still retain some for continue exposure for upcoming EGM.
Portfolio have more triplc stake now at average cost around RM 1.89, awaiting for approval too in EGM with special dividend and await for next month Q1 result in which expect higher construction profit from new concession as progress advancing.
keep it up Jay, nice sharing from you indeed.
Jay, your comments and sharing the BEST lah!
I always make money following your calls, to mention few like TopGlov Call warrant before etc.
KEEP UP GOOD sharing here bro. We miss your calls a lot.
Thanks Jay. We all know you you are a kind person. Keep it up.
Stock: [PETRONM]: PETRON MSIA REFINING& MKTG BHD
Feb 25, 2018 01:00 PM | Report Abuse
mind to share your view ,
I believe many here are hoping to read your comments and how you look at petronm now.
I also hope to learn more from you.
Good sharing .