Probability

Yup...look for strong USD beneficiary
but without the ICULS!...

2015-09-27 20:25

feiloh

I prefer ST Engineering

2015-09-27 21:25

股海無涯

i think that is not true GE aviation generate 100% profit for 2015, tht list you show from annual report. from my understand, it mean "major customers"(with S), total sum of the customer more 10%. for example, it can be 33% each for 3 customer.

and from the contract rewarded from customer, you can see SAM received supplier award from SNECMA and get contract extension for EXTRA USD 64m on 25 June 2015

2015-09-28 00:41

Wenyee Chuan

I prefer Realise Engineering

2015-09-28 00:43

股海無涯

anyway, very detail analysis, thanks for your sharing

2015-09-28 00:54

RicheHo

thanks for pointing out, I think you are right :)

2015-09-28 08:12

jonbravo

GRAB MORE TODAY

2015-09-28 08:13

Kevin Wong

Lookout for ever uptrending fundamental stocks...might turn out to be long term winners!

2015-09-28 10:26

goreng_goreng

Hi Richeho,

Can you kindly provide your views on Xingquan?
thx

2015-09-28 11:49

winston1

Looks like heading towards 6 ringgit soon

2015-09-28 11:56

pingdan

Want to add something:
1) The borrowing amount is ICULS not bank borrowing
2) The revenue will continue increase in this year due to equipment sector have been recover during the year.
3) In aerospace, not only GE is the only customer, Snecma and Pratt & Whitney also their loyal customer
4) Only for FY2015 alone, the company have signed total contract of USD569mil contract, which is equivalent to RM2.276 (using USD1=RM4). Imagine if every year SAM are able to secure RM2billion, how much is the revenue in the next few years. Currently only at RM500 per year.

Anyway good article. Thank for sharing. Cheers

2015-09-28 12:08

RicheHo

Thanks Pingdan, I never know ICULS is consider as part of borrowing. Thanks for pointing out!

2015-09-28 12:20

ss20_20

SAM - about GE Aviation, Snecma & Pratt and Whitney
http://klse.i3investor.com/blogs/ss2020_SAM/83536.jsp

2015-09-28 13:44

paperplane2

s/o-89mil?
iculs-105mil

if all convert directly dilute a lot!

2015-09-28 16:48

股海無涯

rohan, nice sharing, learn somethings news from u

2015-09-29 02:05

JT Yeo

rohank71, i like to discuss few points you raised, im neutral on SAM

1. Why do you consider illiquid stock as a negatives? Unless you personally wanted to invest a large sum in SAM which will potentially push up the share price. If business performs well, share price shall reflect it in the long run, no matter how illiquid it is.

2. Giving out dividends doesnt mean it is always a positive things. Comes down to how the management allocate their capitals in the most effective ways. If they can reinvest all earnings and earn >20% ROE, that would make the decision to issue dividend looks bad, in contract, if the mgt can't reinvest all earnings due to reasons like business throwing off too much FCF that theyre unable to reinvest 100% and the share price isnt undervalued to warrant buyback, then issue dividend would make sense.

2015-09-29 07:49

pingdan

JT Yeo, why giving out good dividend also not positive thing? SAM is a net cash company. Not like other company, go and borrow money and pay dividend. Then some company got alot of money but dun wan give good dividend. Then what you want?

People pay good dividend also complain. If I am the management I will scold you also.

You attended their AGM? They got say dun wan to invest? You think set up new factory no need time one? Just doing magic? Do you know that their machine need special design? Also, it is not easy to set up a factory.

They need to copy the patent using one machine. Then let the suppliers come and inspect. Then 1st production, their suppliers also need to inspect. Then the employees need to learn how to produce.

Usually at the start of the process, employee need time to learn how to do. So defection or wastage will incurred.

Then need to cut the steel by using one machine. Then need to polish it by using another machine, then need to wait the polish stable.

Then need to inspect every single part of the machine cover to ensure no damages incurred. For checking, they already spend 6 hours to inspect the machine. They using high tech machine like x-ray to check is it any defection incurred in the casing.

Then they also need to colour the engine case, then package the engine case into a box. You think if wan to set up this factory, no need any planning?

The management already said in AGM they will set up a new factory in 2017. Why you said they did not invest?

2015-09-29 15:29

pingdan

Also, you think that it is so easy to produce engine case by just buying new machine? As easy as ABC?

If it is so easy, why the entries barrier is so high for producing engine case?

First thing, do you understand the business? You don't know. Please shut up.

Please dun use any invest term like CFC or anything. You know nothing about producing aeroplane casing business. Even setting up a factory, u know nothing.

You know that General Electric very strict in checking their engine case? Do you know if the engine case incurred accident, the company will need to compensation RM100million USD just for compensate the accident?

So when setting up new factory, do you tink they no need time to set up?

Also, the main cost of producing engine case is the material cost, employee cost but not machine cost. Although the machine is a few million per machine, but the cost of producing one engine case already reach a few hundred thousand.

Also, they need time to train their employees. Their employees is skilled labour.

Not like other company such as furniture company, glove or other manufacturing company, they require alot of skilled labour.It is because if there is any small mistake they made in producing the casing, they need to scrap the whole engine case to ensure the quality.

Hence they need skilled worker with alot of training before they able to increase their production. It is not easy as you think to increase production. It need time and effort from management.

2015-09-29 15:29

repusez

so what's the valuation of SAM based on your deep research and knowledge on the aerospace industry ? is it still a good buy ?

2015-09-29 15:39