NOW SHOWING : THE TRILOGY OF FAST & FURIOUS SHOW - PART 15 -
SUPER BULL STOCKS,
BUY CALL Kelington Group Bhd
from 5 January 2022
SUPER BULLISH STOCKS
Super Positive Momentum Stocks
FOR 5 January 2022 ---
KGB & KGB WB
KGB will on the way to lauch a new high of challenging on the old current high and closed with great conviction above RM1.89 .
Will you be the ones , who enjoy the acceptance of joining the party to celebrate with joy.
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Author: kiasutrader | Latest post: Tue, 4 Jan 2022, 10:16 AM
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Technology - Semiconductor Remains a Growth Sector
Author: kiasutrader | Publish date:
We reiterate our OVERWEIGHT call on the technology sector for 1QCY22 as we continue to observe aggressive expansions among semiconductor players. INARI (OP; TP: RM4.80) recently committed RMB463m (c.RM299m) cash to form a JV with China Fortune-Tech Capital (a VC firm incorporated by SMIC) to set up a plant in China, offering OSAT-related businesses. Meanwhile, Western Digital has set aside RM1b for a new plant in Sarawak while Intel has proposed an RM30b expansion in Penang. There were also a slew of fab expansions in Singapore by GlobalFoundries, Micron and Siltronic as front-end players scrambled to increase capex to solve the chip shortage situation. Out of the five names mentioned above, KGB (OP; TP: RM2.50) has secured orders from four of them, further reinforcing our investment thesis of KGB as a prime proxy for front-end semiconductor expansion which is expected to continue in the near to medium term. We believe the recent decline in Inari’s share price is an overreaction given that Apple’s recent initiative to strengthen its in-house wireless connectivity system is targeted towards 5G modem rather than replacing its existing RF suppliers. On the prosperity tax, we see negligible impact (c.1%-3%) to the stock under our coverage thanks to exemptions like pioneer tax status and reinvestment allowance. We continue to like GHL (OP; TP: RM2.30) as a proxy to the recovery in consumer spending as the economy reopens coupled with higher adoption of e-payment in Asia.
Capacity expansion on the rise. We reiterate our OVERWEIGHT call on the technology sector going into 1QCY22 as we continue to observe aggressive expansions among local and global semiconductor players. INARI (OP; TP: RM4.80) for instance has recently committed 100% equity shares of its wholly-owned subsidiary, Amertron Technology (Kunshan), and RMB463m (c.RM299m) cash to form a JV with China Fortune-Tech Capital (a VC firm incorporated by SMIC) to set up a plant in China, offering OSAT related businesses. Having already established a strong presence among western customers, Inari is looking to expand its reach into the growing Chinese market as China’s semiconductor self-sufficient rate still lags behind its goal despite SMIC announcing three expansions in a row for 2021. Being the second-largest semiconductor consumption market, only 16% of the chips are made locally (vs. the goal of 70%). This means that opportunity for semiconductor growth in China is still bright and Inari’s aggressive move to diversify its revenue stream is timely as demand for the US smartphone brand is facing issues due to chip shortage and to a certain extent rising inflation rate. While sales volume may not hit its initial target, the US smartphone manufacturer indicated that a record holiday season is still on track.
In addition, we saw Western Digital setting aside RM1b for a new plant in Sarawak and recently Intel proposed an RM30b expansion in Penang which is expected to create 4,000 jobs upon completion in 2024. Over in Singapore, there were a slew of fab expansions from GlobalFoundries, Micron and Siltronic as front-end players continued to increase capex in an effort to solve the chip shortage situation. Out of the five names mentioned, KGB (OP; TP: RM2.50) has secured orders from four of them, further reinforcing our investment thesis of KGB as a prime proxy for front-end semiconductor expansion which is expected to continue in the near to medium term. This is evident by Micron allocating US$150b capex over the next decade and Siltronic setting aside EUR2b for the next three years.
Overreaction over Apple’s in-house wireless connectivity efforts. A recent Bloomberg article speculated that Apple’s move to reinforce their in-house wireless chip could eventually replace offerings from Broadcom and Skyworks. We believe this is a misconception because Broadcom’s wireless chips (Bluetooth, WiFi) has been used in many generations of Apple’s product line-ups and will remain as well for future generations (recall that Broadcom and Apple signed a $15b deal in 2020 for future chip supply) of Apple products thanks to its superior performance. On the radio-frequency front end (RFFE) side, Broadcom, Skyworks and Qorvo have always been working closely with Apple and all three players play an important role due to their respective expertise in certain areas of the RFFE system (high band, mid band, low band). Furthermore, with the massive number of patents and intellectual property rights registered over the years by these three players, it does not make sense for Apple to reinvent the wheel. Therefore, we believe what Apple is trying to develop in-house is the 5G modem instead. Recall that they bought Intel’s modem operation for US$1b in 2019 but have yet to launch any product. That said, we deem the recent decline in Inari’s recent share price as an overreaction.
Little impact from one-off prosperity tax. The Malaysian government had in its latest Budget 2022 introduced a one-off (applicable to FY22 only) prosperity tax of 33% on chargeable income above RM100m while chargeable income below RM100m will be taxed at the statutory rate of 24%. Given that most of the technology companies under our coverage enjoy exemptions (e.g. pioneer status, investment tax allowance and reinvestment allowance) which will still be valid even with the prosperity tax implemented, we foresee a negligible impact (c.1%-3%) to our earnings forecasts. Such impact could be easily mitigated with initiatives such as an accelerated capex in FY22 which is what D&O (OP; TP: RM6.60) is planning.
Automotive sales took a breather. Recent automotive statistics have shown slowing sales which at first glance looked like waning demand. Looking deeper, the real reason is due to the on-going chip shortage which hinders production as more car manufactures are looking to integrate more electronics in a vehicle (lane assist, auto braking, proximity sensor etc). Thankfully, automotive demand remains elevated and the pace of decline has also slowed as China reported -11.7%, -16.5% and -5% in car sales growth for Aug-Oct 21 while Europe car sales growth recorded -23.1%, -30.3% and -20.5% for Sep-Nov 21. In our recent engagement with D&O, its management has also indicated strong order momentum going into 2022, coming from exterior LEDs such as rear combination lamps, headlamps, fog lights and daytime running lights.
Proxy to spending recovery. With Malaysia’s vaccination rate achieving c.77% of total population, daily Covid-19 cases have also fallen to a manageable level of c.5k (vs. >20k in 3QCY21). In addition, the government has recently started to administer booster shots on a voluntary basis. This has facilitated the reopening of the economy where local traveling is back and crossing of states allowed. We learnt that GHL has also seen improving transaction volume for both its e-Pay and TPA segment in the recent months. As the festive season draws nearer, we are positive that this trend will likely continue, thanks to year-end sales as well as strong demand for local travel. This will lead to higher offline-based transactions for credit cards which yield a higher merchant discount rate (MDR). Therefore, we recommend positioning into GHL Systems (OP; RM2.30) to ride the return of consumer spending. In addition, the gradual reopening of international travel will be a boon for GHL which has already established a strong presence in the ASEAN region with more than 383k touchpoints.
Maintain OVERWEIGHT stance on the technology sector. Our top picks are:
(i) Kelington Group (OUTPERFORM, TP: RM2.50). Kelington Group ended the year with a bang after securing RM195m (RM85m on 6 Dec and RM110m on 22 Dec) worth of UHP-related jobs in December alone, propelling value of job wins this year to RM1.18b while the current orderbook soared to RM1.23b. The RM85m award was from a customer involved in solid state memory while the RM110m award was from a silicon wafer manufacturer. With the amount of orderbook on hand, we are sanguine for a strong 4QFY21 performance, and followed by a record FY22 as well.
(ii) GHL (OUTPERFORM, TP: RM2.30). GHL has continued to see MoM improvement in its transaction volume and increase in merchant footprint since mid-2021. We believe this trend will likely continue as there is an urgent need for currently cash-based merchants to digitalise their payment acceptance system in order to remain relevant in the current situation where adoption of e-wallet is being accelerated due to the pandemic. With the festive season in the quarter, we are optimistic for QoQ growth in its upcoming 4QFY21 performance, backed by higher consumer spending and interstate travel.
(iii) Inari Amertron (OUTPERFORM, TP: RM4.80). After registering record earnings, Inari’s current RF utilisation remains elevated at 88% for 24 SiP lines which could translate into another solid performance in the upcoming 2QFY22 (FYE June). We continue to like Inari owing to its strong position in the 5G space as well as on-going efforts to broaden its exposure in the data centre market (via optical transceiver) and automotive. With its recent inclusion into the FBMKLCI index as well as the MSCI Global Standard index, Inari will likely garner more interest from foreign institutional funds.
Source: Kenanga Research - 28 Dec 2021
Kelington Group Berhad./ 0151 Date |
Price Target
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Upside/Downside
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Price Call
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Source
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Link
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06/10/2021 | 2.01 | 0.270 (15.52%) | BUY | MalaccaSecurities | |
06/10/2021 | 2.50 | 0.760 (43.68%) | BUY | KENANGA | |
01/10/2021 | 2.50 | 0.760 (43.68%) | BUY | KENANGA | |
30/09/2021 | 2.50 | 0.760 (43.68%) | BUY | KENANGA |
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Technical Tracker- KGB: On a Solid Footing
Author: HLInvest | Publish date:
Ultra-high purity gas provider. Listed since 2009, Kelington Group Berhad (KGB) is mainly engaged in providing Ultra High Purity (UHP) gas to the electronics and semiconductor industry. Over the years, the Group has expanded its exposure to include turnkey engineering services and industrial gasses business. The group derived 71% of its revenue from its UHP divisions in FY20, whilst Process Engineering (12%), General Contracting (11%), and Industries Gasses (6%) accounted for the rest. Overall, Malaysia, China, and Singapore dominated 94% of its topline in FY20.
Riding on the fab expansion plans. With chips shortage showing no signs of abating, we expect more fab expansions in the pipeline and KGB is well-positioned to tap into more UHP jobs, as chip foundry investment sweeping across Asia (source), especially in China and Singapore where majority of KGB’s UHP projects are located in. Interestingly, this started to reflect from its all-time high outstanding order-book amounting to RM979m as at Oct-21 (FY2020: RM490m).
Industry gas division to cater into F&B. To recap, KGB commenced its liquid carbon dioxide (LCO2) plant in Kemaman, Terengganu on the 23 Oct 2019 with a total capacity of 50,000 tonnes of LCO2 pa. Over the years, the plant utilization rate plant had gradually picked up from 20% (FY2019) to 50% (1HFY2021) within 15 months of operations. As the group is in the final stage of securing the H alal Certification from JAKIM to start the qualification process for the F&B industry, this is expected to drive its LCO2 plant utilization rate to greater heights (CO2 is widely used in F&B business i.e. manufacture of carbonated drinks and food freezing etc.).
Pending for a downtrend line breakout. Technically, KGB is pending for a downtrend line breakout. A successful breakout above its downtrend line resistance (RM1.74) will spur the prices to challenge its previous high of RM1.88 (30 Sept) territories. Cut lost at RM1.61.
Source: Hong Leong Investment Bank Research - 24 Nov 2021
Brokers Digest: Local Equities - Food and beverage, Mr DIY Group (M) Bhd,
Kelington Group Bhd,
MI Technovation Bhd
Food and beverage
NEUTRAL
CGS-CIMB RESEARCH (NOV 1): In Budget 2022, the government announced that excise duty on sugary drinks will include pre-mixed preparation beverages (2-in-1 or 3-in-1) effective April 1, 2022. A flat excise duty of 47 sen per 100g will be imposed on pre-mixed products that have sugar content of more than 33.3g per 100g. This includes: i) mixed chocolate or cocoa preparations, ii) mixed malt preparations and iii) pre-mixed coffee and mixed tea preparations. At this juncture, we are unable to ascertain whether the threshold of sugar content is inclusive of natural sugar or solely added sugar.
Companies under our coverage that will be affected are Nestlé (Malaysia) Bhd and Power Root Bhd as they are key players in pre-mixed beverages such as coffee, tea and cocoa. Based on our initial estimates, 50% of Power Root’s domestic sales and 25% to 30% of Nestle’s sales will be affected by this measure.
In our view, pre-mixed producers are likely to take two approaches to this matter: i) raise their selling prices to fully pass on the additional sugar tax, and ii) lower the sugar content in their products to below the threshold for excise duty. Our early channel checks reveal that F&B producers are confident they can reduce the sugar content of certain products with R&D efforts while keeping the flavour of the products. In the event the sugar level cannot be reduced, they will maintain product availability with higher selling prices or launch lower sugar content options.
Based on our back-of-the-envelope calculation, we expect effective selling prices (per 1kg) to increase by RM4.70 (9.3% to 30.5% for products priced from RM7.70 to RM32.90) for every pre-mixed beverage that has sugar levels of more than 33.3g for every 100g of pre-mixed product. In our view, the price increase is steep (assuming the sugar tax is fully passed on), which may lead to lower sales volume due to reduced consumer affordability.
We currently have “hold” calls on Power Root and Nestlé. We also retain our “neutral” call on the F&B sector. Key upside/downside risks include sharp increase/decrease in sales volume.
Mr DIY Group (M) Bhd
Target price: RM4.10 OUTPERFORM
KENANGA RESEARCH (NOV 3): In the nine months ended Sept 30 (9MFY21), Mr DIY’s sustainable Patami of RM297 million accounted for 66%/65% of our/consensus full-year estimates. We consider the results as broadly within our expectations given the Enhanced Movement Control Order in 3QFY21. An interim DPS of 0.7 sen was declared for the quarter, raising cumulative DPS declared to 2.1 sen, (accounting for 88% of our estimate).
The key to Mr DIY’s sustainable profitability is its agility in offering a variety of quality products at affordable prices, coupled with its flexibility in product mix to sustain sales and margins. We expect 4QFY21 results to be stellar, underpinned by the higher percentage of stores in operation and more store openings to achieve the targeted 175 for FY21. Management guided for 180 new stores in FY22.
Post-results, we make no changes to our FY21E/FY22E earnings of RM451 million/RM707 million. We believe the impact from the one-off prosperity tax will be negligible given that Mr DIY has about 14 subsidiaries and most are likely to have a chargeable income of less than RM100 million.
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Kelington Group Bhd
Target price: RM2.06 BUY
RAKUTEN TRADE RESEARCH (NOV 3): We see huge growth potential for KGB’s ultra-high purity (UHP) segment as more fabrications come on stream amid a global chip shortage as capital expenditure is rising rapidly in Asia. With its record high tender book of RM1.1 billion, KGB is focusing on bidding for semiconductor wafer fabrication projects in China and Singapore, which are its largest revenue contributors. As at last month, the group had an outstanding order book of RM979 million, of which 58% comprised data projects in Malaysia.
KGB also manufactures liquid CO and dry ice. It has signed a 15-year supply agreement with Petroliam Nasional Bhd to purchase waste CO to sell to re-fillers and the F&B industry or process it into dry ice. The group is in the final stage of securing the halal certification from Jakim to start the qualification process for the F&B industry. We believe there will be some contribution from this segment soon, backed by pent-up demand post-Movement Control Order.
The company has a healthy balance sheet, with net cash per share of eight sen as at 1HFY21. There is room for further expansion with a low gearing ratio of 0.3 times.
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MI Technovation Bhd
Target price: RM5.04 OUTPERFORM
PUBLICINVEST RESEARCH (NOV 3): The key takeaway from MI Tech’s recent virtual briefing is China’s role as a key growth driver for the group’s equipment and material business units in the next two years. We gather that management plans to offer total solutions to Chinese clients for both semiconductor equipment and material products, which would help improve margins and cross-sell products. Nevertheless, final-quarter numbers for this year will be softer due to the ongoing supply destruction and deferment by customers, owing to revised capacity schedules. We cut our FY21-23 earnings forecasts by 4% to 10%.
Top line for the third quarter ended Sept 30 surged 77% year on year to RM114 million. China, Taiwan and South Korea are the top three markets.
The group also witnessed gradual upward average selling price revision for its Taiwan-based solder balls due to the cost hike in materials. It plans to penetrate the South Korean and Japanese markets and aims to slowly phase out the low-margin solder ball business.
Following the successful maiden sale of a laser-assisted bonding machine to a reputable South Korean phone maker, the group is aiming for a 20% to 25% market share as it has started qualification for another potential client.
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MAIN CHAPTER
1 THE TWIN SAME BUSINESSES
FOR FOOD BASED INDUSTRIES , SAME CONSUMER SECTOR
HWA TAI INDUSTRIES BERHAD / 8474
& OCB /5533
SAME CHARACTERISTICS OF HWA TAI INDUSTRIES BERHAD / 8674
n terms of positive upwards price actions .
( i ) based in Consumer sector
( ii ) in food business
(iii ) small capital base :
(a) Hwa tai / 8478 = 74, 874 lots
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ANALYSIS OF MARKET CAPITALISATION &
MARKET FLOAT IN KLSE
(b) OCB / 5533 = 102,850 lots = 100 %
( c ) TOP 30 SHAREHOLDERS = 82,548 LOTS = 80 %
( d )LONG TERM INVESTORS = 10,302 LOTS = 10 %
( e ) BALANCE FLOAT IN MARKET
LESS THAN 10,000 LOTS = 10 %
MEAN : 1 LOT = 1,000 SHARES
1.2 The KING of THE FOOD business is HWA TAI INDUSTRIES Berhad ,
in term of positive upwards prices ;
and the followers ,
one of them is
OCB /5533
1.3 Some of my KLSE investors who are well known in the corporate community ask 3 direct questions in order
to avoid pump and dump stock.
FOR OCB /5533
Question Number 1 : MAKING MONEY ?
ANWER : YES
QUESTION Number 2 : PAYING DIVIDEND ?
ANSWER : YES
QUESTION Number 3 : when was the last payment of the dividend ?
ANSWER : ex date 16 July 2021 ;
payment date : 30 July 2021 ( RM 15.00 per 1 lot )
A dividend payment is the distribution of a company 's profit to its shareholders.
Dividend is usually paid as a reward to its existing shareholders.
HOT SELLING FOOD BASED PRODUCTS
IBUMIE PRODUCTS ( EASY CONVENIENT PACKS )
https://youtu.be/8fuEWnJTTYg
https://youtu.be/t-DmvngJPmg
https://youtu.be/1Mb0myJXdS4
https://youtu.be/YhjEWrWJr70
(iii) OCB / 5533
SEE_RESEARCH
WAIT for strong rally VERY SOON
First target ------ RM 1.20
.Thanks for reading and see you in the next post.
THE ABOVE IS NOT A BUY OR SELL CALL AND IS ONLY A PERSONAL OPINION, WRITTEN AS ARTICLE FOR SHARING PURPOSES TO KLSE COMMUNITY MEMBERS.
DISCLAIMER: Investment involves risks, including possible loss of investment and other losses.
This article and charts are provided for information only and should not be construed as a solicitation to buy or sell any of the instruments mentioned herein. The author may have positions in some of these instruments. The author shall not be responsible for any losses or profits resulting from investment decisions based on the use of the information contained herein. If investments and other professional advice is required, the services of a licensed professional person should be sought.
(SEE_RESEARCH )
(SENSING EAGLE EYES RESEARCH)
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sensonic
Post removed.Why?
2022-01-05 21:18