Good call. I have a strong suspicion that the Q earnings will be very strong due to high CPO prices, high FFB production and the appreciation of the IDR vs the MYR which they have a 300+mil fixed income investment denominated in IDR
The director has to sell now, because he borrowed money for the rights and now has to sell the mother to pay back for the rights. He isn't paid that much to be able to afford millions for the rights issue
3. Taann's profit was actually quite strong. The only thing was that in the previous year, they recorded such strong profits due to forex gains (net cash with USD) that they could not beat that quarter
In reality, Taann in the corresponding Q last year had a Reversal of impairment loss on property plant and equipment amounting to RM13.5m significant one off gain on top of forex gains.
It's easy to take WTK's result and project it on JTiasa assuming that their timber and log division will drag Jtiasa down.
A few things that could be helpful in making your decision: 1. WTK's palm oil are still young. They are making losses 2. WTK suffered from one off loss from disposal of subsidiary 3. WTK's Timber division continued to be profitable in the latest Q 4. 81% of WTK's revenue comes from Timber and 2.5% from palm oil
So you shouldn't be so quick to superimpose WTK's result on JTiasa.
For JTiasa a few important things 1. Palm oil has been growing significantly while timber slows down due to the stricter chief minister 2. Most palm oil players are chalking record earnings (cepat, Tecguan, Inno). Some players are getting hit such as FGV due to bad investment in Turkey. Just because they had a bad quarter due to bad governance does not mean Palm oil is doing poorly 3. Taann's profit was actually quite strong. The only thing was that in the previous year, they recorded such strong profits due to forex gains (net cash with USD) that they could not beat that quarter
I could be wrong about JTiasa and they could be performing below expectations, but I agree with FSL that this is still an undervalued stock with significant profit growth from maturing plantations moving forward.
Friends, what happened is that last week, one of the deputy minister in the PM dept indicated that the stupid Eagle deal is still under negotiations. That's why it dropped on Tuesday last week.
On Wednesday, the FGV CEO (this guy is legit) made a public statement that the Eagle deal is shit and it isn't going to happen, which is why FGV rebounded on Wednesday.
However, during the weekend, the Edge reported that the gov is setting up a steering committee for FGV which is above the BOD. This is bad because this steering committee can essentially force all decisions on the FGV board and CEO.
This increases the probability of the Eagle deal back on the table, which is why markets are hammering FGV today.
Sorry Shareinvestor88, it's not easy to find information on IQ. They are very under the radar. What I can tell you so far is that it is very interesting that their latest Q their revenue is quite high, which is unusual since Q1 of the year is usually their weakest quarter.
eskaylien sorry for the late reply. The reason why I'm only expecting 40c EPS is because I am assuming a USD/MYR forex of 4.00.
For forex players, there are two forex effects. One is the forex impact on the BS and the other is on the P/L. I've explained it in my Classic Scenic article and you can read it there.
In any case, even though Q1 2016 ending forex was at 3.92, the average forex for the quarter was actually 4.20 which is quite high. I am assuming that for the rest of the year, the USD will hover at around RM4.00.
Thanks Ong, Icon888. Well done on your AAsia pick, Icon. I wish I bothered to study it. I was too biased against airlines to even look at it which was my folly.
aidwiz, the other notable Malaysian competitor is E-Wood Moulding (S/B). According to their website, they are the largest picture frame manufacturer in Malaysia. Unfortunately it isn't listed so it's difficult to compare
Hi Murali, first of all, thank you for your guidance :) Indeed it is true that warrants > RM1 have low premiums. The Black Scholes model does address the implied leverage, however on a peer comparison basis, you are right in pointing out the observation that absolute value warrants (on Bursa at least) command lower premiums. I think that using an arbitrage "if > RM1, low premium" is a little odd, but the market does behave that way.
Shaun, thanks for your very articulated comment. I need to think about it for a little longer as I am under the impression that since the ex of the WR, the market has auto-adjusted the price of the mother. We would calculate the adjusted mother price if we wanted to compute the value of the warrant cum-WR but at ex, I think using the market price of the mother is sufficient. Nevertheless, I will investigate your point. Thank you.
Hey JT, I am very interested in reading superforcasting. Hook a brother up. email@example.com
Soojinhou, you're right. If there's a shift in the industry, we just gotta keep our eyes peeled to ensure that we don't die while it goes down. Johotin is a little different though, they have a lot of teething issues with their new factory, and therefore are registering very weak profits. Finally, you're absolutely right about the risk of Aspire extending again. We should expect an announcement by next week if they're kicking the can down the road again.
Paperplane, I agree with you. The assumptions are always dangerous, and I may be completely off. I basically try with the best reason that I can muster but it may be still completely off. Please change the valuation basis and the math will follow. All the workings are in the article :)
I may be wrong here, but I am writing that new information may provide a catalyst for short term movement. however in the long term, unless there's a shift in the environment or business, the TP should prevail.