BORNOIL
This is the preliminary evaluation of Bornoil, after my first article in June 4, 2016, at 14 sen. Not long after that, the price peaked at 20 sen, then came down to 15 sen and now back to 17 sen.
Market Cap at 17 sen x 3,046 million ordinary shares = RM518m.
BORNOIL'S ENGINES (preliminary evaluation)
1. GOLD - Explore, develop, mine, investment, and trading
2. LIMESTONE + MARBLE - 60 lease, paid RM100m in Jan 2017, in Lahad Datu (resources/reserve of RM1.111 billion - 24 million MT)
3. SUGAR BUN & PEZZO FASTFOOD - Revenue of RM90m - 100m (2014-2015).
4. SUSTAINABLE ENERGY - BIOMASS - Proposed but not invested yet
GOLD INVENTORY
1. Dec 2016 inventory is 48,918 oz x USD1200 x 4.44 = RM261 million
2. March 2016 inventory is 18,863 oz x USD1,280 x 3.90 = RM94 million
3. Total increase is about RM167 million or equivalent to 5 sen per share based on 3 billion ordinary shares.
4. Mining in Merapoh, Pahang (with infra in place) that provide xxxx production monthly
5. Awaiting management to revert on cash cost of production.
LIMESTONE
1. Stated in the Annual Report 2016, about 800 acres of LIMESTONE land with about 24.5 million MT of reserve/resources (refer 26 Jan 2017 announcement).
2. Valuation report indicates that the resources/reserves is worth about RM1.111 billion.
3. Not sure what is the DCF, but the investment cost is RM100 million.
4. It is reasonable to expect a 6-8 years of payback period.
FRANCHISE OF FOOD & BEVERAGE BIZ
1. 2014-15 revenue is about RM94m to RM100m.
2. Long term profits (stabilised), can expect about 10% return. And they are expanding regionally.
RIGHTS ISSUE
1. Amount raised about RM260m.
2. Mainly spend on GOLD division, RM120m.
3. LIMESTONE division, RM18m plus another RM100.5 million in Jan 2017.
4. FRANCHISE - invested RM5 m.
CONCLUSION
1. Basically, this is a mining company, most investment is injected into GOLD and LIMESTONE.
2. Large investory of GOLD - RM261m based on Dec 2016 announcement
3. Profits from limestone is yet to set in.
4. Franchise is doing reasonably.
5. At the moment, it is hard to estimates its forecast earnings, however, on an NTA basis, it is about 19 sen (excluding the additional inventory of gold from Nov to Dec 2016).
6. Main shareholder is Hap Seng.
7. A good hedge for uncertain time. Which is happening more frequent.
POTENTIAL
1. LIMESTONE mining is at its infant stage. Potential earnings contribution will only come in a year or two. (Small investment in Bauxite)
2. GOLD mining is ongoing, while, inventory is high at RM261m, very liquid. Net cash is about RM51m.
3. FRANCHISE is expanding. With revenue about RM100m, lets hope they can grow the top line first, and the earnings will come later. Sugar Bun is in biz >10 years.
4. AT 17 sen, it is traded below is Shareholders' Fund of RM581m, about half are liquid.
5. PART 2 will come with more details.
SHARE BUY-BACK
1. Buy back of about 171m shares about 16sen.
DISCLAIMER
This is not a buy, sell or hold call. Just sharing a potential mining company in the making.
Chart | Stock Name | Last | Change | Volume |
---|
Created by sosfinance | Jul 14, 2018
The company is trading at RM518m. If we cash out the GOLD inventory (261m) plus net cash (51), what you paid for the company is about RM200m, for its GOLD mining, LIMESTONE mining, and FOOD FRANCHISING biz.
The last I recall, they have invested about RM120m in gold exploration, development and working capital and about RM118m in LIMESTONE biz lease, which the return is yet to be realised, and an established FRANCHISE biz with turnover of RM100m. Making an assumption of 7 years pay back period, I believe the LT stabilised earning yield is not too bad.
2017-02-15 11:42
Company sell 41m treasury shares at 17.5 sen, hmmm...... Before selling, treasury shares outstanding is 171.0m. Not sure the intention, could it be lower earnings expected? Then buy back when lower?
2017-03-03 23:16
Bonus issue - positive, Free Bonus Warrants - even more positive (disregard what the theory said).
With high gold inventory and sold about RM29m worth of own shares, major part of the company's net assets is liquid. Like any other business, need time to bear fruits. In the rubber plantation sector, we have to wait for 6-7 years. In palm oil, it takes about 3-4 years. You need to have stamina to hold the shares. Growth will come, but, do you have the stamina of a marathon runner. If you are a sprinter, don't hold this stocks, it will definitely disappoint. Because, the fruit is not ripe yet.
I like companies that resale their own shares with profits instead of cancelling their own shares. In real life, a dollar in hand is better than the improve EPS in the accounts as market environment is tough.
It would be suicide to issue bonus shares when you expect earnings to be flat and going down.
2017-03-26 11:15
Added a bit up to 80,000 units for Bonus and Free Bonus Warrant. With Hap Seng as management, old school businessman, should be good.
I read a story about the owner of the giant ship, which broke down and looking desperately to fix the engine problem. The owner was looking for expert one after another but none of them are able to find the problem after spending a few days on board. Then, they found a very old man, known to the industry, to fix the problem. The old man carrying a big bag of tools with him and went on board to inspect the problem. He went straight into the engine room and inspect the engine carefully from top to bottom. Looking on, the owner is so worry that the old man is unable to handle his new ship (i.e. not familiar with the new engine). The old man pull a small hammer out of his bag and gently tapped the engine. Instantly the engine lurched into life. He carefully put the hammer back into his tool bag. The engine is fixed.
A week later, the bill came to the owner from the old man, and it was for ten thousand dollars. What? Exclaimed the owner. He hardly do anything? So, the owner wrote a note to the old man. "Can you please give us an itemized bill". The old man send the bill and read:
1) Tapping the engine.....................2 dollars
2) Knowing where to tap ........9,998 dollars
Effort is important, knowing where to make an effort makes all the difference.
Have a good day.
2017-03-26 12:37
John Lu
Follow paperplane sifu buy already
2017-02-14 19:39