PEB ANNOUNCES ITS PROPOSED REGULARISATION PLAN

~ portfolio to have 133 MWp of solar assets on completion, with mid-term target capacity of 508 MWp

Kuala Lumpur, 8 June 2022 – Main Market-listed Pimpinan Ehsan Berhad (“PEB” or the “Company”) announced today that it has entered into a second supplemental and restated share sale agreement with B.Grimm Power (Malaysia) Sdn Bhd, reNIKOLA Sdn Bhd, Boumhidi Adel and YAM Tengku Zaiton Ibni Sultan Abu Bakar (collectively the “Vendors”), in relation to the proposed acquisition of reNIKOLA Holdings Sdn Bhd and its subsidiaries (“Supplemental SSA II”).

To recap, PEB is currently classified as a Cash Company under the Main Market Listing Requirements but has charted its future direction to be a pure play renewable energy (“RE”) company. It had on 24 May 2021 announced the proposed acquisition of 100%-stake in reNIKOLA Holdings Sdn. Bhd. (“reNIKOLA Holdings”) for RM373.0 million. reNIKOLA Holdings owns solar power assets in Arau, Perlis; Gebeng, Pahang; Pekan, Pahang; and will develop a large-scale solar plant in Bukit Kayu Hitam, Kedah (pending issuance of license), all totaling 418 MWp on completion.“PEB’s Proposed Regularisation Plan is just the first step. Besides ground- mounted solar plants, we are also actively exploring opportunities for small hydro, biogas as well as other RE initiatives. We see a lot of attractive opportunities and are keen to capitalize on them, especially given our collective expertise, experience and network between PEB, reNIKOLA and B.Grimm,” Jonathan added.

On the corporate front, as part of the Proposed Regularisation Plan, there will also be a proposed share split involving subdivision of 1 PEB share into 2 PEB shares; as well as proposed private placement of up to 140 million shares, representing 16.8% of the enlarged capital of PEB at an issue price to be determined later.

“Upon conclusion, PEB would have a total solar generation capacity of 508 MWp on completion with aggregate asset value of approximately RM835.0 million (excluding the placement proceed). We believe this will put PEB in a prominent position in the RE industry,” Managing Director of reNIKOLA Holdings, Boumhidi Adel said.

Barring any unforeseen circumstances, the Proposed Regularisation Plan is expected to be completed by the end 2022, while the remaining proposals are estimated to be completed by 1st quarter 2023.

The proposals are subject to approvals from the Securities Commission, Bursa Malaysia Securities Berhad, Ministry of International Trade and Industry, Minister of Energy and Natural Resources, Energy Commission and Tenaga Nasional Berhad, where applicable, shareholders of PEB at an extraordinary general meeting to be convened, as well as any other authorities or parties, if required.

The current selldown present investors a good opportunity to collect /accumulate MSC at attractive prices ( PE of 8 ) .The demand dynamics for tin has changes drastically over the years especially in EVs, photovoltaic installations, and electronics applications.

Rising Tide Does Not Lift All Boats in O&G Sector

Refiners are the obvious winners when oil prices are high and demand outstrips supply, but this is not the trend across the board.

Petron M Refining & Marketing Bhd and Petronas Chemicals Group Bhd posted q-o-q and y-o-y growth, but their peers have not, with Hengyuan Refining Co Bhd earnings down q-o-q, while Lotte Chemical Titan Holding Bhd underperformed q-o-q and y-o-y as margins came down.

In 1Q22, Brent crude oil price averaged US$97.90/bbl, up 22.9% from 4Q21 average of US$79.70/bbl and higher by 59.6% from the average of US$61.30/bbl in 1Q21.

Capital expenditure by Petroliam Nasional Bhd (Petronas) stood at RM7.4 billion, up from RM6.7 billion in 1Q21, and domestic capex rose by close to 30%. This is “rather reflective” of 2019 capex levels, said RHB Research in its June 1 note. Petronas spent RM10.1 billion in capex in 4Q21.

Overall, analysts are still overweight on the O&G sector. While earnings have yet to catch up with expectations, oil prices have climbed further, going beyond US$120/bbl at end-May and averaging at US$109/bbl in the April-May period.

Some also cited continued trading opportunities among refiners and exploration and production players despite the share prices having run by 55%-60% so far this year, with oil price forecasts among analysts catching up to the US$100/bbl-range.

“High O&G and product prices are expected to benefit Hibiscus, Dagang NeXchange Bhd, Dialog Group Bhd, PetChem, Heng Yuan and Petron Malaysia,” UOBKayHian Research said in a June 1 note.

https://klse1.i3investor.com/blogs/ceomorningbrief/2022-06-03-story-h1624198433-Rising_Tide_Does_Not_Lift_All_Boats_in_O_amp_G_Sector.jsp

Folks, Uncle KYY in his blog today said -" Investors should be wait patiently for the announcement of the 2nd quarter ending June. I expect Hengyuan to break its old record price of Rm 18.50 established in Jan 2018 " .

Hmmmm lets see...

CNERGENZ BERHAD POSTS RM36.9 MILLION IN REVENUE FOR 1Q FY2022

Strong manufacturing activities support demand for Company’s integrated solutions

PENANG, 27 MAY 2022 – CNERGENZ Berhad (“CNERGENZ” or the “Company”), an established electronics manufacturing solutions provider based in Penang, has announced its financial results for the first quarter ended 31 March 2022 (“1QFY2022”) today. The Company registered revenue of RM36.9 million for the 1QFY2022, primarily contributed from the sales of standalone surface mount technology (“SMT”) machines and equipment constituting 60.9% of its total revenue. In addition, sales generated from the provision of integrated solutions segment contributed 31.2% to the total revenue.

Further, the Company recorded profit before tax (“PBT”) of RM4.87 million and achieved net profit (“PAT”) of RM3.64 million for the period. After excluding one-off expenses relating to the initial public offering amounting to RM0.16 million incurred during the period, the Company’s PBT and PAT stood at RM5.03 million and RM3.80 million, respectively.

Chief Executive Officer of CNERGENZ, Mr. Lye Yhin Choy said, “Manufacturing activities remained robust in 1QFY2022 leading to the continued demand for our integrated solutions in the electronics and semiconductor (“E&S”) industries. We have also seen a rise in demand for smart factory solutions as customers look to automation to solve manpower woes.”

“We will continue with our plans that we have shared in the run-up to our listing, including the expansion of our facility to enable us to scale up our operations, as well as strengthening our R&D activities to develop new and innovative integrated systems and solutions to the market.

To-date, we have secured purchase orders totalling RM82.48 million, which we expect to fulfil by the end of 2022.”

Dnex reported an operating profit of RM109.93 million with an increase of RM33.99 million as compared to the immediate preceding quarter of RM75.94 million. The contribution for the current quarter mainly derived from Energy segment that directly benefits significant rise in crude oil prices. Technology segment remain contribute to the group operating profit in-line with its revenue for the quarter. The IT segments contribute operating profits in line with revenue for the current quarter.

Prospects for 2021/2022

The Group continues to strengthen its position as a global technology player. Financial contribution from the semiconductor wafer foundry, SilTerra Malaysia Sdn Bhd (“SilTerra”) is expected to continually increase due to higher average selling prices (“ASPs”) as the Group expands into new emerging technologies such as microelectromechanical systems (“MEMS”) and Silicon Photonics devices. Furthermore, the planned expansion to increase SilTerra’s annual production capacity by 10% by early 2023 will translate to better economies of scale, with further improvement in manufacturing cost.

As part of the Group’s long-term plans to enhance business sustainability, the Group is exploring new opportunities to expand its semiconductor fabrication capabilities and address the strong global demand for semiconductors. The Group’s memorandum of understanding (“MoU”) with Big Innovation Holdings Limited (“BIH”), a wholly-owned subsidiary of Hon Hai Precision Industry Co Ltd (“Foxconn”) to build and operate a new 12-inch wafer fabrication plant operating to produce 40,000 wafers per month, encompassing the manufacturing of 28-nanomometer and 40-nanometer technologies will also complement the Group’s existing investment in SilTerra, in areas such as best practices and technology excellence.

Meanwhile, Brent crude oil prices trading at the USD100 per barrel price range augurs well for oil and gas (“O&G”) upstream producer Ping Petroleum Limited (“Ping”) which has an average cost of production of below USD30 per barrel. To benefit from the current strong oil prices, capacity enhancement work programmes are underway to unlock remaining economic reserves at Anasuria cluster through improve operation and infill drilling. Production from Ping’s second oilfield asset, Avalon Oil Development, which has total estimated recovery of 23 million barrels of oil is scheduled to begin between mid 2024 and mid 2025.

Very impressive PAT of RM106.4 million for the last QR with EPS of 39.4 sen.

Cnergenz looks attractive but could its IPO be bad timing?

Cnergenz Bhd is likely to attract investors who may have missed out on the listing of electronics manufacturing services (EMS) Aurelius Technologies Bhd (ATech), which saw a commendable debut, rising as much as 34.6% over its IPO price.

Cnergenz is an EMS provider, specialising in surface mount technology manufacturing solutions for the electronics and semiconductor industries.
Compared Cnergenz with peers Greatech Technology Bhd and Genetec Technology Bhd, which saw dizzying heights in their share prices over the past year.

Genetec climbed to a 52-week high of RM3.85 versus a low of 28 sen while Greatech surged to RM7.60 from a low of RM2.81.

With such an amazing run, investors may find it hard to resist putting their funds into Cnergenz hoping it will also enjoy the stellar performance.

Cnergenz has healthy growth prospects and a strong net cash position post listing.

But if you look at its past financial performance, its net profit growth does not look healthy.

Cnergenz managed to grow its net profit to RM30.5 million in FY2019 from RM23.3 million in the previous year.

Asian companies to ramp up petrol exports to US as sky-high prices beckon

JPMorgan Chase & Co forecast this week that American gasoline could surge to as high as $6.20 a gallon by August

Elizabeth Low | Bloomberg
Last Updated at May 19, 2022 10:18 IST


The worsening gasoline crunch looks set to buoy Asian refiners -- particularly those in India -- as sky-high US prices encourage more exports.

US pump prices have now risen above $4 a gallon in all states for the first time ever as the summer driving season approaches. JPMorgan Chase & Co. forecast this week that American gasoline could surge to as high as $6.20 a gallon by August, which would be more than double the price a year ago.


Motor fuel is taking over from diesel as the major focus of fuel supply fears, with the tightening market stretching a global refining system that was hit by closures over the last couple of years due to Covid-19. In Asia, gasoline margins have doubled to more than $33 a barrel since the end of March and have edged above those for diesel, which have eased from a peak in early May.

“The tightness in the Atlantic Basin, especially in the US, should continue to see Asian gasoline barrels pulled West,” said Dylan Sim, an analyst at FGE. “This will mainly come from India, with several major refineries in the country postponing their planned maintenance to August-September.”

Asia’s gasoline deficit will narrow from an estimated 260,000 barrels a day in June to 110,000 barrels a day in the three months through September as plants return from maintenance and the PRefChem facility in Malaysia ramps up, the industry consultant said in a note. That should provide more scope for the region’s processors to increase exports.

The Indian shipments are likely to come from private refiners like Reliance Industries Ltd. and Nayara Energy Ltd., as the state-run processors have an obligation to meet domestic demand. The nation’s gasoline exports jumped to a five-year high of 1.6 million tons in March, the latest available data show, and domestic prices that have remained unchanged since early April are incentivizing refiners to send as much fuel abroad as they can.

Factors that could limit the amount of gasoline Asia can send to the US would be a comeback in Chinese demand, or an acceleration in consumption in the rest of the region. Crude processing in Asia’s largest economy tumbled to the lowest in more than two years last month, but it could recover quickly if China can put the worst of its current wave of virus outbreaks behind it.

While China is yet to rebound from the hit to oil demand due to Covid-19, fuel consumption in South and Southeast Asia is recovering strongly as restrictions ease, said Max van der Velden, an analyst at Wood Mackenzie Ltd.

CPO Price May Have Peaked, Correction Imminent — Public Investment
Author: edgeinvest | Publish date: Fri, 20 May 2022, 4:27 PM

KUALA LUMPUR (May 19): Malaysian crude palm oil (CPO) prices may have peaked as production is seen picking up in Malaysia while demand is expected to be soft in the short term and as Indonesia’s ban on palm oil exports is anticipated to be short-lived, according to Public Investment Bank Bhd on Thursday (May 19).

"A correction for CPO price is imminent. Edible oil prices, which have been soaring since February [2022] due to geopolitical tensions and the recent ban on palm oil exports by Indonesia, could correct by up to 20% if there is no further setback,” Public Investment analyst Chong Hoe Leong wrote in a Thursday note.

Chong thinks the CPO prices have peaked and expects to see correction in the next three to six months.

Petron offers fantastic value compared to its peers.

Posted by sheldon > May 19, 2022 11:00 AM | Report Abuse

At current prices, Petron still appears seriously undervalued in comparison with similar stocks. Why?

PE are as follows : Petron = 8.145; Heng Yuan = 26.9; Pet Dag = 39.437

JP Morgan forecasts “higher for longer” refining margins

May 17, 2022

https://currencytrader.review/jp-morgan-forecasts-higher-for-longer-re...

MSC Corp Bhd reports RM64.34 mil for the1st Quarter ended 31 March 2022

PROSPECTS - Managements's View


Despite changes in world trades, supply and consumption patterns of major commodities due to the war at Ukraine which has pushed commodity prices to record highs, the market is now experiencing some correction as fears of supply disruption allay. Tin price has recently eased but should remain high in the near to medium term due to increased demand for tin usage driven by global growth of EVs, photovoltaic installations, and electronics applications.

The Group will benefit from high tin price despite inflationary pressure, higher logistics, and operating costs in its smelting and tin mining businesses. Nevertheless, the Group remains cautious, and will continue to focus on its operational efficiencies and improve on all areas of operations, technology, manpower and logistics.

The operation in the Pulau Indah (“PI”) plant, using newer and more efficient technology has reached 75% capacity, and is expected to achieve full capacity in 2022. With the PI plant at full commission, the Group expects higher operational efficiency, lower operational and manpower costs, while improving its overall carbon footprint.

For the tin mining segment, apart from improving and increasing daily mining output and overall mining productivity, the Group is also looking at expanding its mining activities via potential joint ventures. In line with its ESG program, the Group plans to upgrade the mini hydro plant which is currently generating 0.75MW to 5.00MW. This will provide zero-carbon energy to the existing mine.

Cenglid to venture into Urology & Cardiology via JV's.
-----------------------------------------------------
1-UNCKL Sdn Bhd (UNCKL) is a 30%-owned subsidiary of Cengild that is formed to offer urology services to Cengild.
Presently, UNCKL is dormant for the execution of its shareholders agreement and things are still pending between KL Urology (UNCKL’s other shareholder who owns its balance 70% shareholdings) and Cengild.

2-Cengild and Dr. Hendrick Chia had formed a joint venture (JV) company namely, Cardiac Care Centre Sdn Bhd (CCC), where Cengild owns 30% shareholdings and Dr. Hendrick holds the other 70% shareholdings of the JV company.
Presently, it provides cardiology assessments to patients at Cengild’s medical centre.

Kedai Pajak Jack is the only licence financial inst specialising in fully secured micro lending with fat margins.

Cengild- Dividend Policy

(Only a handful in ACE that has div policy)

At least 25% of its consolidated net profits in the form of dividends.

Cengild is heavily dependent on its six consultants for sales and thus, it is vital for Cengild to retain them via ESOS.

Cengild has travelled through a remarkable journey since October 2017 and this IPO has provided us with the platform to realize our ambitions and accelerate our expansion plans.

"As the only independent full-fledged medical centre in Malaysia specialising in gastrointestinal and liver diseases, and obesity, our aim is not only to provide the best treatment for our patients, but also to build a reputable centre of excellence in the region," said Cengild Medical executive chairman Datuk Tan Huck Joo in a statement.

Cengild poised for further robust growth post IPO.
-------------------------------------------------
Cengild raised RM72 million from its IPO with 218.8 million new shares.

Of the proceeds, it intends to use RM37.1 million to establish new medical centres, RM17.4 million for working capital, RM13 million for expansion of existing medical centres and the remaining RM4.7 million for listing expenses.

The group plans to expand its existing medical centre at Nexus @ Bangsar South, Kuala Lumpur, by leasing additional space of approximately 12,000 to 15,000 square feet to cater to current and future demand for its medical services, especially endoscopic procedures to strengthen its position in the segment.

It also intends to expand its presence by establishing two new full-fledged medical centres specialising in gastrointestinal and liver diseases, and obesity in other major cities in Malaysia such as Johor Bahru, Penang or Ipoh.

In order to support the expansion of its existing medical centre as well as into other major cities in Malaysia, it also intends to strengthen its medical team by attracting and recruiting consultants specialising in gastroenterology and hepatology.

Growth being Jacked -Up
-----------------------------
Projecting a 3-year earnings CAGR of c.26.6% for Pappajack, mainly driven by the expansion of pawnbroking outlets (+20%) and growing capital (+40%)


With a total capital of >RM150m (including IPO proceeds) available for loan, interest income could potentially reach RM27m, assuming an average interest rate of 18% pa


While we bake in higher operating and staff costs in relation to outlet expansion, operating leverage could cushion net margin once the newer outlets gain traction and mature


At an implied 12x P/E, its 3-year earnings CAGR of 26.6% triumphs the industry average, supported by outlet expansion, growing cash capital, and newly found listing status

FYI Folks.

Issuance by AMMB of MSC Call warrants - to be listed tomorrow.


https://klse1.i3investor.com/servlets/anpth/1679538.jsp

Proceeds from IPO solely to boost expansion & loans growth.

From the RM50.10 million in proceeds raised from the IPO, RM27.08 million will be allocated for the cash capital of Pappajack’s existing 20 pawnbroking outlets while RM19.22 million will be used to fund the expansion of Pappajack’s pawnbroking outlets, and the remaining RM3.80 million to be utilized for listing expenses.

Bursa's first non bank financial institution.

Dagang Nexchange - Indications Leading to An Explosive 3QFY22
Author: HLInvest

|

Publish date: Fri, 25 Mar 2022, 12:25 PM

We came away feeling positive from a private meeting with DNeX during our site visit to Silterra’s wafer foundry earlier this month. We strongly believe DNeX should register uninterrupted back-to-back quarterly earnings growth over the next 6-9 months on the back of: (i) Silterra’s surging product ASPs, (ii) increasing wafer shipments; and (iii) soaring crude oil prices. We highlight that DNeX would be a major direct beneficiary of higher oil prices amidst the Ukriane-Russia conflict via its oil-producing assets in 90%-owned Ping Petroleum. We maintain our highly-convicted BUY recommendation with an unchanged SOP-based TP of RM1.64/share. Currently at only about 15.5x FY23F earnings in its entirety, we believe that DNeX is a compelling case given its strong foothold in both front-end semiconductor and upstream energy.

2Q/1HFY22 results recap. DNeX registered a record high quarterly core PATAMI of RM62.5m in 2QFY22, bringing 1HFY22 core PATAMI to RM92.7m (having adjusted for RM264.5m gain from the acquisition of Silterra, RM11.4m impairment loss on receivables and RM8.4m on forex losses). The group’s strong performance was mainly attributed to Silterra’s strong net ASP per wafer at USD527 in 2QFY22 (+8% QoQ from USD488 in 1QFY22).

Indications leading to an explosive 3QFY22. From our check with management, we gather that wafer ASPs continues to increase. The group has reiterated that net ASP per wafer is still on an uptrend and is expected to peak in 4QFY22 and hover at c.USD600 to USD625 in FY22-23. Meanwhile, soaring crude oil prices throughout 3QFY22 would also directly benefit its 90%-owned Ping Petroleum via its oil producing assets in Anasuria. As at point of writing, Brent Crude Oil price averaged at about USD96/bbl YTD, which is significantly higher than its 2QFY22 realised price of USD71/bbl.

Planning for another USD150-200m capex for Silterra for an extended plant in end-CY2022. We highlight that the group is planning for another expansionary capex of USD150-200m in end-CY2022 to ramp up its production for emerging technology (MEMS, Silicon Photonics) to about 10% of total capacity. This capex will entail a new building, which would be an extension from Silterra’s existing plant in Kulim currently. The group aims for this new plant to be operational in early-2024.

Ping Petroleum’s 100%-owned Avalon Oilfield to produce first oil in July 2024 (FY25). The group is targeting for Ping’s 100%-owned Avalon Oilfield (greenfield) to produce its first oil in July 2024. Based on our findings, we gather that the Avalon Oilfield will potentially more than quadruple (4x) Ping’s output from c.2.3k boepd to c.9.0-10.5k boepd, based on our internal estimates – which would boost Ping’s earnings by 3-4x.

Forecast. Unchanged. We maintain our conservative assumption of: (i) net ASP per wafer to be at USD500 for FY22; USD550 for FY23; and USD578 for FY24. We also maintain our Brent oil price forecast of USD80/bbl for FY22 (FYTD: USD82/bbl). Note that we are conservative on our assumptions for both of the group’s divisions – indicating significant upside risks to our earnings forecasts.

Maintain BUY, TP: RM1.64/share. We maintain our highly-convicted BUY recommendation on DNeX with an unchanged SOP-derived TP of RM1.64/share. We peg Silterra’s multiple to 30x PE to reflect the monumental growth prospects for the semiconductor foundry over the next few quarters. Currently at only about 15.5x FY23F earnings in its entirety, we believe that DNeX is a compelling case given its strong foothold in both the front-end semiconductor and upstream energy spaces.


Source: Hong Leong Investment Bank Research - 25 Mar 2022

Dato’ Dr. Patrick Yong, Group Chief Executive Officer of MSC said, “Although 2021 was a year of continued challenges globally, MSC stayed resilient and delivered a stellar financial performance for the year. The tin supply deficit is forecasted to continue, which will sustain tin prices in the short to medium term. At the same time, tin demand remains robust in line with the global growth of :-
1-Electric vehicles,
2-Photovoltaic installations and
3-Consumer electronics, among others.

This bodes well for the Group.”

“Against this backdrop, we remain steadfast on our efforts to enhance the Group’s operational efficiencies while managing escalating logistics and operating costs.”
“With the lifting of the force majeure, we are accepting tin ores from customers to be smelted. At the moment, we are smelting the backlog of tin ore accumulated from the pandemic. We are delighted to update that the Pulau Indah smelting facility has reached 75% capacity and expect full production in 2022. The full commissioning of the Pulau Indah plant is expected to improve extractive yields, lower manpower costs as well as our carbon footprint.”
”Concurrently, we are also running the Butterworth smelter in parallel. We plan to de-commission this plant in the next 2 to 3 years when we achieve smooth operations at Pulau Indah. We anticipate our financial performance to improve as we phase out production at the Butterworth plant.”
“Meanwhile, our tin mining business has delivered a strong performance in FY21, being a direct beneficiary of high tin prices. Despite the FMCO, we have successfully increased the daily mining output at the Rahman Hydraulic Tin mine in Klian Intan, thanks to our efforts to mechanise operations and introduce new technologies at the mine. We look forward to an even higher mining productivity in 2022, barring any unforeseen circumstances.”

Dato’ Dr. Patrick Yong, Group Chief Executive Officer of MSC said, “Although 2021 was a year of continued challenges globally, MSC stayed resilient and delivered a stellar financial performance for the year. The tin supply deficit is forecasted to continue, which will sustain tin prices in the short to medium term. At the same time, tin demand remains robust in line with the global growth of :-
1-Electric vehicles,
2-Photovoltaic installations and
3-Consumer electronics, among others.

This bodes well for the Group.”
“Against this backdrop, we remain steadfast on our efforts to enhance the Group’s operational efficiencies while managing escalating logistics and operating costs.”
“With the lifting of the force majeure, we are accepting tin ores from customers to be smelted. At the moment, we are smelting the backlog of tin ore accumulated from the pandemic. We are delighted to update that the Pulau Indah smelting facility has reached 75% capacity and expect full production in 2022. The full commissioning of the Pulau Indah plant is expected to improve extractive yields, lower manpower costs as well as our carbon footprint.”
”Concurrently, we are also running the Butterworth smelter in parallel. We plan to de-commission this plant in the next 2 to 3 years when we achieve smooth operations at Pulau Indah. We anticipate our financial performance to improve as we phase out production at the Butterworth plant.”
“Meanwhile, our tin mining business has delivered a strong performance in FY21, being a direct beneficiary of high tin prices. Despite the FMCO, we have successfully increased the daily mining output at the Rahman Hydraulic Tin mine in Klian Intan, thanks to our efforts to mechanise operations and introduce new technologies at the mine. We look forward to an even higher mining productivity in 2022, barring any unforeseen circumstances.”

TRADING SUMMARY
Prices in US$
Data valid for 08 Mar 2022
09 Mar 2022
LME Tin Official Prices
CONTRACT BID OFFER
Cash 50000.00 50050.00
3-month 49400.00 49500.00
15-month 48355.00 48405.00

TIN- Commodity-Latest - 4/3/2022
US$47,313.50/t +1,176.00+2.55%

MSC 's FYE2022 - EPS is estimated to be around 72 sen per share.

A PE of 12 times is around 8.80 per share.

DNEX 2QFY22 ZOOM Briefing key take away

Key takeaway

- Core businesses: DagangNet, SealNet (Cloud based single platform similar to DNT but on the private sector B2B), DNex solutions, GenaXis, DNex Telco (subsea Telco), OGPC (Equipment, serving upstream and downstream) and Ping (E&P), Silterra (completed 60% stake acquisition)
- Enlarged group expected to have combined revenue >RM1b

Silterra

- Operational improvement: 97,146 wafer fab out in 2QFY22 – 2nd highest. 37,461 wafers fab out in Dec21 – highest monthly wafer out. Fab yield performance at 98.95% - highest ever
- Capex investment – approved USD153m (RM640m) which will expand annual capacity to 10m mask layers. More capacity to be allocated for Silicon Photonics, MEMS. Emerging technology per mask layer ASP would be USD80-100 vs current’s at USD20-25.
- Emerging technology BRCM & Gorilla products started risk run, anticipate to complete qualification by 2H22. Core tech improvements on target, highest yield of 99% for C18F process for ChipOne. Increase of BCD shipment from 15% in 1QFY22 to 25% in 2QFy22.
- Secured two LT wafer supply agreements with Chipone USD 400m and Illitek USD173m. Anticipate to complete 2 more in 2HFY22 to fulfil LTA UR to 80%.
- Growth revenue from ChipOne, 1Q 15%, 2Q 22% and Illitek 1Q 7%, 2Q 11%. Average net ASP from 1Q USD20.8 to USD23.6 in 2Q.
- New management – Dr Albert Pang as Officer In Charge.
- In 2021, the market attrition was at 13%, Silterra overall cumulative attrition was at 10.6% - announced multiple benefits improvements to employees.
- Quality: 996 wafers scraped; first time achieved total wafer scrap <1000 wafers per quarter.
- Net wafers USD527 in 2Q, 1Q-488, 4Q-434. Masks layer – 23.6 vs 18 in 4Q
- Current capacity 8.5m mask layers per year, after approved capex of USD68m till Nov21 – 8.8m mast layer and with approved capex of USD85 in Jan22, it will be 10m mask layers – to start production in 2023.
- Benefits enhancement to attract talents.
- 2 more LTA customer is in progress of negotiation.
- Plant expansion and product mix optimisation with completion of LTA.
- Focused expansion on new technologies – SiPh + MEMS
- Gearing of Silterra in 12M21 at 0.3x vs 1.04x in 7M21
- In summary: Excellent operational improvements achieved – higher production, yield and lower cost. Future plant expansion – higher capacity and SiPh and MEMS which command higher ASP. Product mix optimisation, 2 additional LTA to bring UR to 80%. Financial performance to strengthen both BS and IS. Continue to explore and improve benefits to employees to be comparable to market.

Anasuria

- Brent has reached >USD100/bbl – strategy is to accelerate production to take advantage of current high prices. Taken some hedging position.
- Net volume hope to secure Kbopd to about 10k (to be driven by Avalon, to deliver first oil in Jul24), now is at 2k. Partnering with Hibiscus with Anasuria.
- Anasuria: Profit enhancement strategies via increase in production rate/additional reserves, optimise OPEX, better tax management and extend Cessation of production to add reserves. Capacity enhancement work programs – infill drilling and facility debottlenecking
- Avalon – to deliver first oil in Jul24. FDI and FDP approval expected at FY22.
- Others – acquisition of brownfield assets, embarking in developing a Net Zero framework to achieve ESG, low cost operator.

IT
- National single window (deployment of new services NPCO, cross border trade exchange eCert, Air Manifest for aviation, and potentially Air Cargo System). International front: Increasing pipeline – new initiative with PAA and ASEC, ADB World bank and USAID.
- Trade Facilitation – B2B: Optimising overhead and BPO – Seal Net products – Petronas, Dell & Intel.
- System integration & consultancy – securing funnels with a TCV of RM15-20m


2Q results
- Revenue of RM353m all time high, EBITDA RM130m – Tech – stronger performance on higher ASP, wafer shipment.

DNEX 2QFY22 ZOOM Briefing key take away

Key takeaway
- Core businesses: DagangNet, SealNet (Cloud based single platform similar to DNT but on the private sector B2B), DNex solutions, GenaXis, DNex Telco (subsea Telco), OGPC (Equipment, serving upstream and downstream) and Ping (E&P), Silterra (completed 60% stake acquisition)
- Enlarged group expected to have combined revenue >RM1b

Silterra
- Operational improvement: 97,146 wafer fab out in 2QFY22 – 2nd highest. 37,461 wafers fab out in Dec21 – highest monthly wafer out. Fab yield performance at 98.95% - highest ever
- Capex investment – approved USD153m (RM640m) which will expand annual capacity to 10m mask layers. More capacity to be allocated for Silicon Photonics, MEMS. Emerging technology per mask layer ASP would be USD80-100 vs current’s at USD20-25.
- Emerging technology BRCM & Gorilla products started risk run, anticipate to complete qualification by 2H22. Core tech improvements on target, highest yield of 99% for C18F process for ChipOne. Increase of BCD shipment from 15% in 1QFY22 to 25% in 2QFy22.
- Secured two LT wafer supply agreements with Chipone USD 400m and Illitek USD173m. Anticipate to complete 2 more in 2HFY22 to fulfil LTA UR to 80%.
- Growth revenue from ChipOne, 1Q 15%, 2Q 22% and Illitek 1Q 7%, 2Q 11%. Average net ASP from 1Q USD20.8 to USD23.6 in 2Q.
- New management – Dr Albert Pang as Officer In Charge.
- In 2021, the market attrition was at 13%, Silterra overall cumulative attrition was at 10.6% - announced multiple benefits improvements to employees.
- Quality: 996 wafers scraped; first time achieved total wafer scrap <1000 wafers per quarter.
- Net wafers USD527 in 2Q, 1Q-488, 4Q-434. Masks layer – 23.6 vs 18 in 4Q
- Current capacity 8.5m mask layers per year, after approved capex of USD68m till Nov21 – 8.8m mast layer and with approved capex of USD85 in Jan22, it will be 10m mask layers – to start production in 2023.
- Benefits enhancement to attract talents.
- 2 more LTA customer is in progress of negotiation.
- Plant expansion and product mix optimisation with completion of LTA.
- Focused expansion on new technologies – SiPh + MEMS
- Gearing of Silterra in 12M21 at 0.3x vs 1.04x in 7M21
- In summary: Excellent operational improvements achieved – higher production, yield and lower cost. Future plant expansion – higher capacity and SiPh and MEMS which command higher ASP. Product mix optimisation, 2 additional LTA to bring UR to 80%. Financial performance to strengthen both BS and IS. Continue to explore and improve benefits to employees to be comparable to market.

Anasuria
- Brent has reached >USD100/bbl – strategy is to accelerate production to take advantage of current high prices. Taken some hedging position.
- Net volume hope to secure Kbopd to about 10k (to be driven by Avalon, to deliver first oil in Jul24), now is at 2k. Partnering with Hibiscus with Anasuria.
- Anasuria: Profit enhancement strategies via increase in production rate/additional reserves, optimise OPEX, better tax management and extend Cessation of production to add reserves. Capacity enhancement work programs – infill drilling and facility debottlenecking
- Avalon – to deliver first oil in Jul24. FDI and FDP approval expected at FY22.
- Others – acquisition of brownfield assets, embarking in developing a Net Zero framework to achieve ESG, low cost operator.

IT
- National single window (deployment of new services NPCO, cross border trade exchange eCert, Air Manifest for aviation, and potentially Air Cargo System). International front: Increasing pipeline – new initiative with PAA and ASEC, ADB World bank and USAID.
- Trade Facilitation – B2B: Optimising overhead and BPO – Seal Net products – Petronas, Dell & Intel.
- System integration & consultancy – securing funnels with a TCV of RM15-20m


2Q results
- Revenue of RM353m all time high, EBITDA RM130m – Tech – stronger performance on higher ASP, wafer shipment.

That was a healthy pullback yesterday before ascending higher. No shares goes up in a straight line.

Based on forward tin price, MSC is priced/valued at RM6.48 as per Kenanga Research.

Indonesia may stop tin exports in 2024, President Jokowi says
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Indonesia may stop tin exports in 2024 as part of efforts to attract investment into the resource processing industry and improve the country's external balance, President Joko Widodo said.

Efforts to stop exports of raw commodities and attract investment in downstream industries will improve Indonesia's trade and current account balances, he said, using the example of banning nickel ore exports to attract investment in manufacturing of electric vehicle batteries.

"We have started with nickel. Maybe next year, we are calculating, we may stop exports of bauxite. The next year we may be able to stop copper, and the next year tin," Jokowi told the central bank's annual gathering with financial stakeholders.

This may result in an acute shortage of Tin in future and cause the price of tin to be elevated for a long time.

This news appeared in late last year- still relevant though.

Startup Nanode demonstrates - tin foil anodes for EV -lithium-ion batteries
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Jan 26, 2022

Tech startup, Nanode, has developed a low-cost tin foil anode technology for lithium-ion and sodium-ion batteries to increase volumetric energy density up to 50% while saving up to 60% on raw material costs and processing costs.

Once Nanode achieves cycle life targets and potentially gains traction in the EV sector, this could result in a significant new use for tin.

200mm wafer shortages may persist for years. SilTerra is a 200mm semiconductor wafer foundry.
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Dagang NeXchange Bhd's (Dnex) subsidiary SilTerra Malaysia Sdn Bhd is investing RM645 million on an expansion plan that will increase its annual capacity by 20 percent. SilTerra is a 200mm semiconductor wafer foundry.

200mm foundry capacity is fully booked in the first half of 2022, according to Gartner. Beyond that, demand for 200mm foundry capacity will continue to outstrip supply.


The supply-demand situation will return to relative normalcy by mid-2022, except for some automotive chips. By mid-2022, though, many chipmakers should have enough 300mm fab capacity to meet demand. But 200mm is a different story.

Starting in the 2000s, many chipmakers migrated from 200mm to 300mm fabs. During this period, 200mm fabs were still in use. But 200mm was a forgotten market until 2015, when the industry saw a surge in demand for chips based on more mature processes. Suddenly, 200mm fab utilization rates at the foundries were hovering at 100%. Capacity shortages appeared. From 2016 to 2021, 200mm capacity was tight. 200mm foundries have been operating at near 100% capacity.

Building new 200mm fabs is an obvious solution. Today, several companies are building new 200mm fabs. In total, the industry has increased 200mm fab capacity by over 300,000 wafers per month (wpm) in 2021, up 5% over 2020.

However, that’s not nearly enough capacity to meet demand. Why is the capacity increased at such a low pace?

Cost
The cost of a new 200mm fab ranges anywhere from $450 million for a MEMS facility to $1.3 billion for a power semi plant.

Lack of supplier

Even if you build a new 200mm capacity, chipmakers will run into another problem. It’s difficult to find new 200mm equipment in the marketplace as equipment makers had shifted their focus to 300mm fabs.

In short, supply shortage for 200mm wafer will persist and the new supply is not coming in fast enough. This will bring to a huge demand for the current 200mm foundry. Besides providing a higher average selling price for Silterra, increasing its revenue, the increased utilization rate will also generate positive effects on its bottom line.

Electric car batteries will be the key growth driver for tin
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KUALA LUMPUR: Electric car batteries will be the key growth driver for tin commodity in the next few years as it is now being used as the base metal, aside from nickel, to produce faster charging car batteries.

Malaysia Smelting Corporation Bhd (MSC) chief executive officer Datuk Dr Patrick Yong Mian Thong said tin is greatly used in electric car batteries and it will be the growth base metal and the biggest user of tin due to its ability to fast charge and discharge ability.

"Undoubtedly, tin price will see solid uptrend in the next 5 years when the production and demand for batteries goes up, especially from the electric car segment. - he told The New Straits Times in an interview.

Article a bit dated but still relevant.

https://www.nst.com.my/business/2019/09/518184/future-bright-tin

MEDIA RELEASE

MSC wraps up FY2021 with all-time high net profit of RM118.1 million boosted by record high tin prices

New Pulau Indah smelter operating at 75% production capacity • Proposed dividend of 7 sen per share


Kuala Lumpur and Singapore, 18 February 2022 – Tin miner and metal producer, Malaysia Smelting Corporation Berhad (“MSC” or “the Group”) reported a sterling set of financial results for its fourth quarter (“4QFY21”) and full year ended 31 December 2021 (“FY21”).

Commenting on the Group’s performance, Dato’ Dr. Patrick Yong, Group Chief Executive Officer of MSC said, “Although 2021 was a year of continued challenges globally, MSC stayed resilient and delivered a stellar financial performance for the year. The tin supply deficit is forecasted to continue, which will sustain tin prices in the short to medium term. At the same time, tin demand remains robust in line with the global growth of electric vehicles, photovoltaic installations and consumer electronics, among others.

This bodes well for the Group.”

Dnex to ride on Silterra’s turnaround
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CORPORATE NEWS -The Star
Thursday, 17 Feb 2022

According to the CGS-CIMB, Dnex is well positioned to benefit from Silterra’s turnaround, underpinned by the ongoing semi chips shortages and structural shift towards More-than-Moore (MtM) devices.

In the semiconductor space, Dagang Nexchange Bhd (Dnex) is emerging as a STOCK TO WATCH as the company is expected to enjoy earnings growth from its recent corporate exercises.

Recall that last year Dnex acquired a 60% stake in Silterra Malaysia Sdn Bhd and bought an additional 60% of Ping Petroleum Ltd.

This stock has fantastic growth potential coupled with good management and technology- big funds are accumulating slowly. A few funds are also facing the fear of missing out (FOMO)on this great Malaysian stock. Enjoy the ride to 2.50 by end of year- its will be bumpy though.

Looks like shorties-IDSS will be screwed again today- they jolly well deserve it.

The shorties will be royally screwed later on today and drive the price of DNeX to 1.30 as they need to short cover.

Shorties (IDSS) have to cover in excess of 33 million shares latest by end of today's trading session.

They are in for a good roasting.

CGS-CIMB starts coverage on Dagang NeXchange, target price RM1.60
Surin Murugiah
/
theedgemarkets.com

February 16, 2022 08:10 am +08

CGS-CIMB starts coverage on Dagang NeXchange, target price RM1.60
-A+A
KUALA LUMPUR (Feb 16): CGS-CIMB Research has initiated coverage on Dagang NeXchange Bhd (DNeX) at RM1.13 with an “Add” rating and target price of RM1.60.

In a note Wednesday (Feb 16), the research house said DNeX is well positioned to benefit from SilTerra’s turnaround, underpinned by on-going semi chips shortages and structural shift towards More-than-Moore (MtM) devices.

The research house said it is projecting SilTerra to invest over RM900 million capex in FY22-24F.

“The group plans to increase its mask layer (ML) capacity by 20% to 10m ML/annum by CY23F.

“We expect SilTerra to secure two new long term agreements (LTAs) in 1HCY22F that will take up 80% of its capacity,”it said.

CGS-CIMB projects DNeX to post a 3-year core EPS CAGR of 453% (FY21-24F) driven by 1) higher wafers ASP, 2) higher wafers production volume on the back of new capacity expansion, 3) higher average crude oil prices for Ping Petroleum Limited (Ping), and 4) higher production volume at Ping on the back of its new capex programme.

“DNeX also enjoys a lower effective tax rate given that SilTerra has over RM12 billion as of Jul-21 in unrecognised deferred tax assets that could be offset against its future profits.

“Note that we have yet to account for: 1) contributions from emerging technology platforms like silicon photonics that command premium ASP, and 2) commercialisation of Ping’s Avalon oilfield,” it said.

DNeX's unit SilTerra to invest RN645mil on capacity expansion
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NST Mon, Jan 24, 2022 01:56pm

DNeX said the investment, sourced from both capital injections by shareholders and internally generated fund, would increase SilTerra’s annual capacity from 8.3 million mask layers as at end of July 2021 to 10 million mask layers.
KUALA LUMPUR: Dagang NeXchange Bhd's subsidiary SilTerra Malaysia Sdn Bhd is investing RM645 million on an expansion plan that will increase its annual capacity by 20 per cent.

DNeX said the investment, sourced from both capital injections by shareholders and internally generated fund, would increase SilTerra's annual capacity from 8.3 million mask layers as at end of July 2021 to 10 million mask layers.

The additional capacity is expected to be ready for production by early 2023.

DNeX group managing director Tan Sri Syed Zainal Abidin Mohamed Tahir said the investment was the shareholders' on-going commitment to equip SilTerra with best-in-class manufacturing capabilities and expand the production capacity to achieve a better economy of scale, with lower manufacturing cost.

Syed Zainal, who is executive chairman of SilTerra, said the initiatives implemented thus far to transform SilTerra into a profitable and resilient technology company had yielded fruitful results.

"In the past six months, our debottlenecking and process improvements exercise have resulted in improved productivity and efficiency levels.

"As a result, SilTerra is now a profitable entity and is well-poised to grow further in view of the continuous strong demand for semiconductors and prevailing capacity constraints within the industry due to the high demand of electric vehicles, Internet-of-things (IoT), data centres and electronic commerce," he said in a statement today.

Syed Zainal said the demand was particularly relevant especially for the 200 millimetre (mm) specialty foundries where SilTerra is in.

"Hence, it is prudent for us to continue our long-term investment programmes for SilTerra to cater to the rising demand," he added.

SilTerra is a strategic investment of DNeX and Beijing Integrated Circuit Advanced Manufacturing and High-End Equity Investment Fund Centre.

Tin futures were trading at $43,000 a tonne, hitting a new all-time high, amid low inventories and supply disruptions. The inventories in the LME-warehouses were at 2,059 tonnes, recovering from the lowest of 887 hit on November 2021, but still below 2020 average of 5000 tonnes.

https://tradingeconomics.com/commodity/tin tonnes

DNEX Impressive earnings growth potential.
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DNeX’s core PATAMI to grow to RM155.2m, RM197.8m and RM271.5m for FY22-24F respectively, representing a CAGR of 32% .

This will be driven by:
(i) the 60% acquisition of SilTerra which was completed in July 2021;
(ii) ASP hikes by SilTerra;
(iii) increased stake in Ping Petroleum to 90% (from 30% previously) – which will consolidate Ping’s financial performance into the group’s as it is now a subsidiary; and
(iv) increasing oil production from the Ping’s 50%-owned Anasuria.

(Source HLIB)

Dagang Nexchange - The Grandiose and Crucial NeX-factor
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Date: 19/01/2022

Source : HLG

Price Target : 1.35


We initiate coverage on DNeX with a highly convicted BUY recommendation and TP of RM1.35/share based on sum-of-parts (SOP) valuation. We peg its technology segment to a CY23F P/E of 25x, which is at a slight discount to its global peers weighted average forward P/E of 26x. While we understand that SilTerra is a relatively small player in this space and has a relatively promising technology vs. its listed global peers, we believe that valuation is justified as we are expecting SilTerra to grow faster than peers, with a growth of 28% (vs. a weighted average of 23% for its global peers). At about 14x FY23F earnings in its entirety, we believe that DNeX is a compelling case given its strong foothold in both the semiconductor and energy spaces.

A star is born. Following a slew of corporate exercises in 1HCY21 that ushered in a new management team and business direction, DNeX has transformed itself into both a semiconductor front-end player / foundry and an upstream oil and gas producer in the UK North Sea region. We deem the group’s historical financial performance to be a premature representation of its future performance as the group has ushered in a new management team along with the acquisitions of new assets (i.e. 60% of SilTerra on 26 July 2021 and an additional 60% of Ping Petroleum on 30 June 2021) – of which profits would only be reflected in FY22 onwards.

SilTerra turned into the black with strong growth trajectory ahead. Based on our findings, we understand that SilTerra Malaysia registered loss-after-tax (LAT) of -RM20.2m, -RM172.1m and -RM64.6m in FY18-20, respectively. Post-acquisition by DNeX and CGP, we highlight that SilTerra has turned into the black, registering profits of RM21.2m in merely 2 months (Aug-Sept 2021). We are projecting SilTerra’s FY22- 24F net profit to grow further to RM158.6m, RM202.3m and RM223.0m, respectively, representing a FY22-24F CAGR of 19%. Going forward, the group also aims to venture into a vertically enhanced product mix i.e. Silicon Photonics and MEMS, which will improve profit margins by 3x.

Anasuria assets are valuable cash cows. With low operating expense per barrel (opex/bbl) of less than USD20, we estimate the unit’s cash-breakeven crude oil price to be at about USD25 per barrel – based on our calculations. In the event of an oil price crash, we are comforted by the fact that these low cash opex levels to provide shelter from going into deep operating loss. With that, we deem the Anasuria assets to be a valuable cash cow. Meanwhile, we estimate the unit’s breakeven price to be at about USD45 per barrel on the net level.

Impressive earnings growth. We are projecting DNeX’s core PATAMI to grow to RM155.2m, RM197.8m and RM271.5m for FY22-24F respectively, representing a CAGR of 32% (Figure #11-12). This will be driven by: (i) the 60% acquisition of SilTerra which was completed in July 2021; (ii) ASP hikes by SilTerra; (iii) increased stake in Ping Petroleum to 90% (from 30% previously) – which will consolidate Ping’s financial performance into the group’s as it is now a subsidiary; and (iv) increasing oil production from the Ping’s 50%-owned Anasuria.

Initiate with a BUY, TP: RM1.35/share. We initiate coverage on DNeX with a highly convicted BUY recommendation and a SOP-derived TP of RM1.35/share. At about 14x FY23F earnings in its entirety, we believe that DNeX is a compelling case given its strong foothold in both the semiconductor and upstream energy spaces.

Tin price ends at historical high of US$40,400 per tonne
Bernama

January 12, 2022 12:58 pm +08

KUALA LUMPUR (Jan 12): The Kuala Lumpur Tin Market (KLTM) rose by US$900 per tonne to end at a historical high of US$40,400 per tonne on Wednesday (Jan 12) in its first recorded transaction in 2022.

A dealer said the metal was last traded at US$39,500 per tonne on Dec 21, 2021, the first trading session after the market was suspended starting June 9, 2021.

He said the market recorded transactions only on the first day of trading, but remained muted until Tuesday (Jan 11) due to subdued supply.

"Today we saw the first transaction for the metal for the year and demand was very high. At the opening, total bids stood at 482 tonnes, while the offer was only at one tonne.

"As such, the market closed at the highest price ever for the metal, which was also in line with the upward momentum in the London Metal Exchange (LME)," he told Bernama.

The premium between the KLTM and the LME narrowed to US$125 per tonne from US$1,305 per tonne on Dec 21, 2021.

Buying support came from China, Japan, South Korea, Taiwan, Europe, Pakistan and Bangladesh.

At the close, turnover on the KLTM remained at five tonnes, while bids stood at five tonnes and offers at 10 tonnes, said the dealer.

https://www.theedgemarkets.com/article/tin-price-ends-historical-high-us40400-tonne

Estimated profits from Mining activities or tin extraction - MSC
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12 m/tons extracted per day in 2022
Approx 4,200 m/ton per year
Current Price (per LME) - per m/ton - USD 38k x 4.10= RM155,800
Revenue (2022) just based on mining activities= RM654 million.
Cost per m/ton is estimated at USD 20k
Estimated Net profit from Mining activities alone -USD 18k x 4200 x 4.1 = RM310 million.

Approximately RM300 mil for FYE 2022- just from MINING activities EXCLUDING Smelting works.

EPS just based on MINING activities alone is PAT 310/420 m shares = 73.8 sen per share.

A conservative Forward PE of 8 = RM5.90 (excluding Profits from Smelting)

NOTE- Assuming the price of Tin remains elevated in the foreseeable future.

Global demand for Tin will be elevated for a very long time as Indonesia ( world’s 2nd largest producer of tin) may ban exportation of raw tin.

MSC Bhd will be a major beneficiary of this tight supply as MSC produces and also refines tin .

Their new state of the art Smelter in Pulau Indah will double their smelting capacity in a very cost effective manner- this will boost their smelting margins.