If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls...

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).
https://www.thestar.com.my/business/business-news/2020/10/23/mmc-mulls-reviving-rm41bil-ipo-of-port-assets

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.
• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.
• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.
• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.
• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.
• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.
• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:
• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.
• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.
• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.
• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:

• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.

• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.

• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.

• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).

With Biden being the new President of US, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:
• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.
• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.
• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.
• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).

With Biden being the new President of USA, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

If you guys want to find a company that is a recovery play post Covid 19, you should consider looking at MMC. https://klse.i3investor.com/servlets/ptg/2194.jsp

Below are the positive of the company:
• Valuation is cheap. Despite being the largest port operator in Malaysia, its valuation is still only less than half of its next biggest competitor, Westport.
• Dividend yield is high at between 5.4% to 6.6%. Given the low interest rate environment, this would appeal to a lot of dividend seeking investors.
• Cargo handled in 4Q20 is already passed precovid level. It is even higher that the pre trade war level which started in FY18. The largest port in the group is Pelabuhan Tanjong Pelepas where the 2M shipping alliance has decided to make it their Asean HQ Port. 2M consist of the 2 largest shipping companies in the world: Maersk and MSC.
• Bonus event. Potential monetisation of Port business via IPO. The group is looking to raised RM4bil via IPO. Assuming the amount is from the sales of up to 40% interest in the port business, this values the port business at RM10bil which is way above the current market cap of only RM2.5bil. This does not include their 38% holding in Malakoff (valued at RM1.8bil), 31% of Gas Malaysia (valued at RM1bil) and their Engineering business which is currently the main contractor for MRT2 (via JV with Gamuda).

With Biden being the new President of USA, you can expect him to overturn Trump’s America First Policy. This will make it easier for US to trade with other countries including Europe and China which will increase global trade and benefits ports operators like MMC.

Hi ping,

Result is actually quite good. The much delayed TWY Mont Kiara has already stated to pick up back pace which means investors could expect a steady revenue and profit from the project for FY20 and 21. Star residence also is on schedule in its construction (result under JV)

In terms of valuation this company is only trading at a mere 3x PE and PB of only 0.3x. Currently its actually the cheapest company in my portfolio. Hopefully the market will notice its very low value .

Best regards

I think some investors just decided to take some profit off the table now.

Even at the current share price, MBMR is still the cheapest auto company in Bursa. Excluding all the non recurring items, the company should be able to deliver a profit to shareholder of between RM200mil to RM240mil per year which translate to a PE of only 6.5x to 8x PE. This is a lot lower compared to the industry average of around 14x to 15x PE.

Other appeal of the company include:

1) Domestic focus. will not be too affected by the current trade war between US and China.

2) Affordable market segment. Especially in an economic downturn, most people would prefer to move to a more affordable option rather than buying higher price foreign made brands ( this also apply to Proton who gain market share at the expense of Honda).

3) Strong balance sheet and cash flow. The company has been able to reduce its debt from a high of RM550mil in FY12 to now only RM150mil. Every year the company generates RM100-150mil in cash from operations and investments.

4) New dividend policy which would ensure steady dividend payment to shareholders. This is especially appealing for yield investors given the current low yield environment. Expect US Fed to lower its benchmark yield again in September. Other central banks including BNM will likely follow suit.

5) Main beneficiaries of any decrease of OPR by BNM ( actually for all auto industries).

6) No more losses from OMIA translating to a potential bump in profit by RM20mil. Will start to see the affect in 3Q19.

7) Contrary to some comments earlier, MBMR actually benefits from the increasing sales of Proton as the company is currently the main auto manufacturer for Proton. If you look at 2019 sales numbers from MAA, Proton increase in sales actually does not affect Perodua as the company under Geely is actually wanting to focus on mid premium price range. The X70 for example is price between RM100k to RM123k vs Perodua Aruz of only RM73k to RM78k. The one that is affected by Proton emergence is actually the foreign brands in particular Honda. Sales drop this year but i suspect its mainly due to lower sales of their CRV due to market preference for the cheaper x70.

Best Regards. And congrats to those that invested earlier especially those that stayed when it fell to below RM2 back in Nov 18.

Hi Jeffrey,

I believe Proton is currently shifting its focus to the mid to high end market rather than looking to compete with Perodua directly in the affordable segment.

X70 for example starts from RM100k to RM128k while Perodua Aruz is price between RM72k to RM77k. The offering and price range is just too different to say that they are both competing for similar types of customers.

The companies that are actually affected by Proton sales rebound are mostly the foreign brands. Honda who car sales number in 1H19 fell by 14% is pricing its CRV at between RM138k to RM163k. They didn't specify CRV sales numbers for 1H19 but i suspected that the major contraction in sales comes from this segment.

Either way, MBMR being the largest local auto components supplier will still benefit from Proton's future high manufacturing activities (from move to produce CKD version of the X70 and other future models).

Even after the steady increase of MBMR's share price, it is still currently being valued at less than 7x PE making it the cheapest auto company in bursa vs the industry average of 15x PE.

As a comparison, Pecca (manufacturer of car leather seats and is highly dependent on Perodua ) is currently trading at 13.5x PE. UMW who also has a direct exposure to Perodua is currently trading at 17.8x PE.

Regards.

Hi Mike,

If you take out the RM4.2mil reversal of impairment in trade receivables, the core net loss from operations of Zelan for 1Q19 would have been higher at -RM5.7mil (please refer to page 12 of the 1Q19 report under "Review of Performance") . That being said, the company's secretary failed to include the first 5 pages of the quarterly report which consist of the P&L, balance sheet and cash flow statement. Need to see if the cash reserves balance has improve during the quarter.

Regards.

Hi Guys,

Just some updates on the AGM. It was quite fast and very straight forward. Only one shareholder who asked questions ( but really good ones). Here are the summary:

1) alloy wheel business has ceased operation since yesterday. So there should be no more losses from this division starting from at least 3Q19 onwards. Investors can expect to finally see profit coming from the auto component division which was before dragged by the alloy wheels result. Expect an increase of profit by between 10 -15% for 3Q19 from the closure of alloy wheel.

2) With the decreasing of debt and steady generation of cash from operation and investments amounting to Rm150mil per annum (mostly dividend from associates and JV), the company is expected to have a steady build up of cash reserves in the future ( on top of the current cash reserve of around rm200mil). For the mean time, management has indicated that potential dividend for FY19 would most probably be higher than the 12 sen dividend in FY18. Hopefully, given the stronger balance sheet, management can reward shareholders with dividend payment that is higher than the record 18 sens paid before.

3) a shareholder highlighted to management that they should revised the company's investment properties of value form cost basis to the current market value. In the annual report (page 116) the investment properties has a value of RM59mil which is the cost paid by the company. The actual market value of the investment properties (which is actually indicated in the notes on the same page) is RM 137 mil or rm78mil more than in the balance sheet. This would mean the actual NTA for MBMR is not RM4.14 per share (as of mar 19) . The amount should be higher to reflect the true value of the investment properties. Real NTA is RM4.34 per share.

Anyway, seems like 2019 wilk be another good year for MBMR.

Best regards.

Hi mike,

I dont actually see the value in the exercise that u are proposing here. I think people already did a competition on that in i3 ( but most of the invitation are for promenant/ famous forumer). I did not get the invitation.

That being said, if u are looking for potential investment candidates for ur portfolio, i would suggest the following:

1) MBMR for the reasons mentionned earlier in my post. There is an update from this morning agm. Will share it if no one else have done yet later.

2) Lii Hen. Furniture stock that might proof to be a beneficiaries of the US China trade war as US furniture business will look to diversify their supply chain outside of china. As of 2018 China represent 65% (or around usd20 bil of us furniture import. Tariff on china furniture was raised to 25% from 10% earlier this month). 1q19 growth still have yet to show the potential affect of the US diversification. Most of the growth was mainly from usd appreciation. Expecting sales in usd term to start growing in 3q19. For 2q19 profit growth will still come from the strengthening of USD.
Current valuation is still cheap at only 8x pe.

3) Symlife. Property companies where the maiden profit will comes from the star residence project near KLCC. Take up rate is high. As mentioned b4, Pe is only 4.5x. Actually quit straight forward just like any other property stock. As long as the take up rate is high and projects can be deliver on time, company should be able to make money.

4) Muda Holdings. Industrial paper manufacturer. Expected increase of margin due to the fall of waste paper price which is the raw material for industrial paper. Since last year, China has been more strict in approving the type of wastepaper into the country which has resulted in the oversupply of wastpaper from Us and Europe. At the same time china had also imposed a 25% tariff on all wastepaper from US which is why wastepaper price has fallen substantially. The restrictions by China had also resulted in a lot of paper mill in china to stop or cut their production of industrial paper substantially. This increase the industrial paper price in China which resulted in other paper mills in Asia to sell their products in China instead of markets like malaysia. Given the lesser competition from overseas player, Muda will be able to sell more volume at a price that is good for the company. Current valuation is on 7x PE.

Actually mike, what is important besides the choice of the shares is maybe the reasoning. Some people might want to know why exactly you pick the stock. Maybe u can post it on the companies respective forum to share with others. Off course later there will also be some investors that would want to scrutinize on ur thesis. But isn't that whats this forum is for? I doubt u or me can affect too much on the share price of a company. Even if we promote a company like crazy, they will still fall if they fail to deliver on the result. The opposite is also true as well.

Best Regards. Good luck on ur investment.

Hi Mike,

Here is my reply for your second portion of the question. Please don't get me wrong, I am not saying that the businesses that you mentioned in your post are bad investment (except maybe Zelan for the very risky outlook that it's facing at the moment). Just that when compared to other companies (like MBMR for example) the companies that you listed looks a lot more expensive (at least in PE and PB terms).

1) Zelan. As mentioned before, i still believe it to be a very risky investment. If you really are interested then maybe you should wait for the arbitrage decision which should be out by this week anyway. The issue is the equity to shareholders is already at 54% of the paid up capital. Based on the Annual report, any further losses amounting to RM20mil would reduce the equity to lower than the 25% paid up capital which could pose a risk of being a PN17 companies. I believe the 1Q19 result would deliver a loss of between RM5 to RM10 mil still. So if the Abu Dhabi court decide to reward Zelan anything that is lower than the RM184 mil of receivable amount due by Meena recorded in Zelan's book, then they will need to impair the receivables. If its more than RM20mil then there is a risk for Zelan to be listed as a PN17 company. Another way for Zelan to strengthen its balance sheet back is either by making a capital fund raising like Scomi and Perdana or by restructuring the debt (basically converting the debt amount to equity like KFM). That being said it is still bad for the shareholders.

2) Velesto: As mentioned before, i doubt that the company can make any significant profit in the near and mid term at least not until the charter rates improve significantly. Given the company's market cap of RM2.2bil for it to achieve a PE of 10x, it would need to deliver a profit of RM220mil per annum. The last time they managed to achieve profit of that magnitude was in FY14 just before the oil price tumble. The charter rate back then was double what they received at the moment.

3) Zhulian. An MLM company. Actually at the current price, the company is not that expensive. Only 11.4x trailing PE and 0.9x PB. Just that at the moment, i still have a lot of companies to study that is trading at below 8x PE and has potential growth in profit achievable in the next 12 months. Maybe when my list of companies are exhausted, i will take a look at Zhulian as an investment.

4) Inari. Again a good company. Might have some short term headwind at the moment given the increasing escalation of US China trade war. I am not interested mainly due to its valuation of 22x PE ( at the same valuation MBMR would be trading at RM10.52 per share) and 4.2x PB. At this rich valuation, they need to deliver a very strong profit growth to shareholders which might be hard at the moment.

5) AHB. I have to be honest, i never heard of the company before. In their website, they mentioned that they are an interior office designer business. I would assume that you can categorize them as a property industry correlated company. They are not actually a PN17 company. Market cap of RM26mil and profit of RM 1.6mil for the past 12 months bringing its valuation to 16x PE. PB is actually low at only 0.7x (similar to MBMR). That being said if you want exposure to property industry companies, there are a lot of candidates at the moment. My preference is Symphony Life which is currently developping the Star Residence near KLCC. The take up rate is high. Symlife has a valuation of only 4.5x PE and PB of 0.3x.

Best Regards.

Hi Mike,

I still think MBMR at RM2.90 is a buy mainly due to the very undemanding valuation that it carries of around 6.5x 12 months trailing PE (this however still includes losses from the alloy wheel business). As mentioned in my earlier post, MBMR currently is the cheapest auto company in Bursa even though it has a direct exposure to Perodua which is the market leader. In most cases, this would actually command a premium over the industry average.

As a comparison:

1) UMW, which is the other listed company with exposure to Perodua via its 38% interest is currently trading at around 17x PE.
2) Pecca, a manufacturer of car leather seat of which Perodua contribute to the majority of the company's revenue and profit is currently trading at a PE of 12x.
3) The auto industry average in Bursa is currently trading at 15x trailling PE.

When UMW made the offer of RM2.56 to Med Bumikar to acquire their 50.1% interest in MBMR it was based on PE multiple of 10x of Perodua expected profit (UMW projected RM400mil for FY17 as the numbers was yet to finalized when the offer was made back in March 18. Perodua profit for that year was actually RM440mil. And in FY18 it jumped to RM668mil ) and a total value or RM100mil for the remaining business excluding Perodua. This brings the total offer value to around RM1bil or RM2.56 per share.

Now if you were to use this same valuation methodology based on FY18 results, it would mean that the value of MBMR would be at least :

1) MBMR portion in Perodua = PE multiples x Profit of Perodua x MBMR's shares in Perodua = 10 x RM 668mil x 22.6% = RM1.51bil or RM3.86 per share

2) plus the other business = RM100mil or RM0.26 sens

Total min value of MBMR is RM4.12 per share.

The other business outside of Perodua are actually profitable (except for the alloy wheel business which is expected to ceased operation by mid of this year). So valuing the other businesses at only RM100mil for me is really low.

As an example, please take note that MBMR is currently in the process of disposing 22% each of the company's interest in Hino Motors Sales and Hino Motors Manufacturing for a total consideration of RM74.4mil valuing the combined companies at RM74.4mil/ 22% = RM338mil . Upon completion, the company would still have a remaining 20% interest in both companies which means the remaining 20% interest in Hino alone is already valued at RM68mil.

Other business like the Daihatsu, Volvo and VW distributorships, Hirotako Holdings (which manufactures safety auto components) and 51% interest in Autolive Hirotako are all profitables businesses, If you take out the alloy wheel result in FY18, the remaining business excluding Perodua actually delivers a patami to shareholders of around RM35mil. Valuing it at only RM100mil would means that the PE for the other businesses is less than 3x.

So for me the lowest valuation that MBMR should get is 10x PE ( again this is still lower when compared to the industry average). And given that the alloy wheel business is expected to ceased operation in mid of this year, it is fair to put a zero value on the business.

So to answer your question on how much should MBMR should be valued, then my answer would be at least RM RM4.75 per share based on the method i mentioned above.

If for some reason, investors think that the PE should only be 8x, the TP would still be RM3.80. But again, i just don't see the rational for the market to value MBMR at half the industry average given that it actually has a very strong balance sheet and cash flow.

Every year, the NTA of the company is expected to increased by 50 sens per share (before div payment). As of March 19 the NTA is already RM4.14 per share. At the current price the PB is only 0.7x.

Regards.

Hi guys,

The original comments below was from another forum in discussion with Mike. Just sharing for the benefits of others.

Hi Mike,

I think you had misunderstood my earlier message. I wasn't actually proposing Velesto as a potential investment ( i actually don't think they can make any significant profit anytime soon given the very low charter rate).

The point that i would like to make was that by following EPF transactions blindly without having done the research on the companies might proof to be a very bad investment strategy. It would be better for investors to do the research of the company first before making decision on whether to invest or not in a company.

On Zelan, i think its a pure speculative stock. Based on the public info, it does not seem to have any corporate exercise planned. Appeal of this stock would most probably be purely based on technical.

The company posted a net loss of RM23.6mil in FY18 (refer to 2018 annual report). It would have been worst if not for the reversal of write off of receivables (RM13mil) and sudden high profit from its associate companies (profit jumped from a loss of RM1.1mil in FY17 to RM14.5mil in FY18. Not sure why though).
Excluding all of the one off items (i did not exclude the associate result), Zelan core net loss in FY18 actually reaches RM30mil.

However, the biggest issue with the company is its very weak balance sheet. As of Dec 18, the company has a total current liabilities amounting to RM416mil (of which RM 184mil is debt) and only RM101mil in current asset (of which only RM4 mil cash).

This was also highlighted by their auditor, PwC, in the 2018 annual report when it issue a statement of material uncertainty related to the going concern of the group (page 53 of the annual report).

I would advice you to maybe not put all your investment in this one company alone as the risk is actually quite high. In the case that the outcome of the arbitrage award by the Abu Dhabi Court is not to Zelan's advantage, the company will most probably need to impair a big chunk of the RM184mil receivables in its balance sheet. Basically any arbitrage award that is less than the RM184mil would result in an impairment to the receivables.

Given that the shareholder equity of Zelan was RM44.3mil as of Dec 18 or 52.45% of the paid up capital (of RM 84.5mil), any arbitrage award that result in the company having to impair amount that is higher than RM20mil would potentially result in Zelan shareholder equity to fall below 25% of the paid up capital. This is one of the events that could put Zelan under the PN17 list.

Good luck. Hope the arbitration ends well for Zelan.

Regards.

Hi Mike,

I think you had misunderstood my earlier message. I wasn't actually proposing Velesto as a potential investment ( i actually don't think they can make any significant profit anytime soon given the very low charter rate).

The point that i would like to make was that by following EPF transactions blindly without having done the research on the companies might proof to be a very bad investment strategy. It would be better for investors to do the research of the company first before making decision on whether to invest or not in a company.

On Zelan, i think its a pure speculative stock. Based on the public info, it does not seem to have any corporate exercise planned. Appeal of this stock would most probably be purely based on technical.

The company posted a net loss of RM23.6mil in FY18 (refer to 2018 annual report). It would have been worst if not for the reversal of write off of receivables (RM13mil) and sudden high profit from its associate companies (profit jumped from a loss of RM1.1mil in FY17 to RM14.5mil in FY18. Not sure why though).
Excluding all of the one off items (i did not exclude the associate result), Zelan core net loss in FY18 actually reaches RM30mil.

However, the biggest issue with the company is its very weak balance sheet. As of Dec 18, the company has a total current liabilities amounting to RM416mil (of which RM 184mil is debt) and only RM101mil in current asset (of which only RM4 mil cash).

This was also highlighted by their auditor, PwC, in the 2018 annual report when it issue a statement of material uncertainty related to the going concern of the group (page 53 of the annual report).

I would advice you to maybe not put all your investment in this one company alone as the risk is actually quite high. In the case that the outcome of the arbitrage award by the Abu Dhabi Court is not to Zelan's advantage, the company will most probably need to impair a big chunk of the RM184mil receivables in its balance sheet. Basically any arbitrage award that is less than the RM184mil would result in an impairment to the receivables.

Given that the shareholder equity of Zelan was RM44.3mil as of Dec 18 or 52.45% of the paid up capital (of RM 84.5mil), any arbitrage award that result in the company having to impair amount that is higher than RM20mil would potentially result in Zelan shareholder equity to fall below 25% of the paid up capital. This is one of the events that could put Zelan under the PN17 list.

Good luck. Hope the arbitration ends well for Zelan.

Regards.

Hi Mike,

I would focus more on how a company would perform and its valuation in my analysis when trying to come up with a decision on an investment rather than putting too much time in understanding why a certain shareholder is buying or selling its shares. That being said, if the person that is selling or buying is a prominent investors, then maybe i would try to find out what he or her thesis on the investment might be.

In the case of EPF, to understand why they are selling MBMR might be a bit hard to do. They are just too many reasons or possibilities. My guess is that they are currently just trying to lock in some profit in shares (not just MBMR. They are also selling Takaful, Bimb, Sunreit, Bauto etc) that is currently performing well in 2019 in order to be able to deliver on the dividend payout to be made to their members later.

If you think that EPF is selling because they have a negative outlook on the Auto industry for example, then you might need to take note that they are also currently buying UMW which as i mentioned before is just an expensive version of MBMR (UMW is trading at 19x PE while MBMR is currently below 6x). Even though UMW has other businesses like the equipment (Toyota forklifts and Komatsu heavy machinery), aerospace (rolls royce fan casing contract which is still in the red), M&E ( lubricants and other auto parts like Kayaba shock absorber) the main profit contributor to UMW is still their automotive division under Perodua and Toyota (which since 2019 has a production agreement with Perodua to produce the Rush in totality and supply engines for Vios, Yaris and Avanza).

Clearly EPF still believes in the Auto industry (they are also buying Sime Darby which has a PE of 18x) which is why i think their selling of MBMR is just to lock in some profit. I don't think they want to sell their stake to zero.

Making your investment decisions on what EPF buys or sell might not be the best strategy. If you were to sell a company just because EPF is selling then you need to ask yourself are you also willing to buy the companies that EPF is buying? (UMW, Sime, Velesto, Harta, up until april Pos Malaysia etc).

What about other institutional investors like PNB, Tabung Haji, LTAT, etc? Are you going to follow their transactions as well for your investment decision? What happen when PNB buys a company and EPF sells the same company at the same time (Velesto for example. EPF is buying while PNB is selling). Who will you follow then?

This is why for an investors, you would be better off studying the underlying asset itself which is the company when making an investment decision. At the very least, you understand why you are buying or selling the company.

Have a nice weekend. And good luck on you investments.

Regards.

.

Lii Hen 1Q19 revenua and profit growth mainly comes from the strengthening of USD vs RM. The sales growth in USD terms from US was only 3%. This would mean that it has yet to benefit from US furniture companies moves to diversify away from China to mitigate risks relating to the tariff war. Given the recent increase of tariff from 10% to now 25%, i am hoping that Lii Hen could get some of the spill over affects from the diversification strategies by the US companies ( main beneficiaries will still be Vietnam based furniture companies). Any improvement of sales volume from US should be seen in 3Q19.

That being said, with RM continuing to depreciate vs USD, investors should expect Lii Hen to deliver another quarterly earnings growth in 2Q19.

At the current share price the company is currently being valued at only 7.5x PE. Cheap considering this is a company that have been consistently paying high dividend (relative to other furniture business) to its shareholders.

Regard.

Hi richard..

If you just bought the stock yesterday, i am affraid you cant attend the agm next week. You need to own shares of MBMR as of 21st May to be eligible.

Regards

Morning guys,

An info that some investors might miss out from the recent 1Q19 result is the imminent closure of the Group's loss making alloy wheel business schedule sometime in mid of this year.

Why is this important? The alloy business is currently the main drag to the group being able to reach its optimum profit level. In 2018, the business estimated losses was around rm20mil. Which means if investors were to exclude the alloy wheel from MBMR's result, the profit to shareholders would have jumped from RM167mil to RM187mil, an immidiate 12% jump in profit.

Assuming they managed to close the alloy wheel business as per management schedule, investors should be able to see a jump in profit by an estimate rm5mil per quarter by 4Q19 the latest. This is on top of whatever profit growth that will comes from the better performance of the group.

At the current price, MBMR is still the cheapest auto stock in Bursa with trailing 12 months PE of 5.5x. UMW, which is another company with exposure to Perodua is currently trading at a PE of 17.8x. The industry average is currently trading at around 15x PE.

Regards

Panic selling in the market at the moment especially for the small and mid cap. FBM KLCI itself did not drop so much. Apart from the trade war escalation between US and China, the quarterly results posted by some companies were quite disappointing.

That beings said for MBMR, the 1Q19 result would most probably deliver the expected profit growth mainly form the performance of Perodua in 1Q19.

Please refer to UMW 1Q19 result. Profit from associate which was mainly from UMW's 38% in Perodua recorded good growth during the quarter, delivering a profit of RM65.6mil in 1Q19 vs RM56.3mil in 1Q18. This should bode well for MBMR as well since more than 80% of its profit are derive from Perodua (via its 22.6% holding).

Couple with better automotive manufacturing division due to higher production volume in 1Q19, investors should expect MBMR to deliver a profit growth in 1Q19.

Anyway till MBMR result is out, expect volatility to persist.

Best Regard.

Hi Mike Chong,

Actually the deterioration of the profit level since FY13 was mainly link to the under performance of the Group's alloy wheel manufacturing business under OMIA Alloy Sdn Bhd. The losses made from FY13 to FY17 are -RM12.8mil, -RM26.1mil, -RM25.4mil, -RM38.2 mil and -RM91.1mil respectively. However the FY17 losses of RM91mil was mainly due to a large impairment amounting to around RM60mil which means the total operational losses for FY17 was around RM30mil.

In FY18 the operation has improve with losses reducing to around RM20mil. With a big jumped in volume coming from Aruz in 2019, we should expect the losses for OMIA to be lower this year.

That being said, based on the 2018 annual report (refer to page 142), Management has decided to ceased operation of the alloy wheel business during the current FY. This would mean that MBMR profit level would no longer be dragged down by the losses of OMIA. As a reference, MBMR achieved a PATAMI of RM167mil in FY18 of which RM151mil comes from MBMR's 22.6% interest in Perodua . Excluding the losses of OMIA, the profit for the year would have jump to RM187mil. At the current share price this would mean MBMR is currently trading at a mere 6x trailling PE (excluding OMIA) which is less than half of the industry average of 15x PE.

Now for FY19, MBMR would most probably record a better profit level compared to last year mainly due to the performance of Perodua . In 1Q19 alone, Perodua managed to sell a total of 60,670 vehicle compared to 1Q18 sales of only 55,568 units. This includes a sales of 6,600 units of Aruz which is likely to deliver better profit margins compared to the other Perodua Models.

In addition to this, Perodua has also a production arrangement with Toyota to produce the Rush (in totality) and supply engines for the Vios, Yaris and Avanza (you will notice that all these 3 models are actually using engines similar to the new Myvi). This will provide new revenue and profit stream to Perodua which will benefit MBMR as well.

With all these in mind, I am targeting MBMR to deliver a PATAMI of RM200 mil in FY19 (not inclusive of the potential jump in profit once OMIA ceased operation). At the current share price, MBMR is only being valued at a mere 5.6x PE.

As a reference, UMW which is the only other listed company with exposure to Perodua, is currently trading at a PE of almost 19x.

I think it is better for you to study the fundamentals of a company first when making your investment decision rather than following someones else transactions. As an example, EPF bought heavily into Armada back in Nov 18 when its share price was above 40 sens only to sell aggressively the same stock in Dec 18 at a price of below 20 sens. This just show that sometimes even institutional investors make mistakes. Tabung Haji, Kwap, LTAT and even PNB also makes mistakes in their thesis. It would be better for you to do you own research on the merit of an investment (you should also counter check my thesis as well).

Best regards and good luck on your investment.

Morning,

Just some news on Perodua (indirectly MBMR).

https://www.theedgemarkets.com/article/perodua-suppliers-optimistic-perodua-will-achieve-its-sales-target

This bodes well for MBMR given that it is actually one of the main suppliers for Perodua under its subsidiary Hirotako Holdings especially for the wheel assembly, safety equipment (airbags, seat belts, steering wheels etc) and Noise, Vibration and Harness (NVH) products (sheet panels, carpet flooring, insulators etc). We should see better results from the manufacturing division in 2019.

That being said, main profit contributor would still comes from the 22.6% interest in Perodua.

Regards.

You can clearly see that today is mostly a panic selling event. I would understand investors selling companies that might be negatively affected by the trade war like palm plantation business (due to pressure from soya price), but for the furniture industries, they are basically a clear beneficiaries of the trade war between US and China.

For those that are not aware, US has imposed a 10% tariff on all furniture coming from China back in mid 2018. Given that China represent 65% of the total import of furniture into US (amounting to around USD30bil), US importers have since tried to mitigate the risk from tariff by starting to diversify their supply chain to other countries. The biggest beneficiaries is still Vietnam but Malaysian furniture companies with existing US customer based also benefited. Lii Hen which export 85% of its products to the US is actually one of the main beneficiaries. Now since last Friday, this 10% tariff had gone up to 25% which just means that US furniture importers will only try to diverse their supply chain even more.

Another point for Lii Hen (and other furniture companies with exposure to the US market) would be the strengthening of USD vs RM. For Liihen since the sales are recorded in USD and most of the cost items are in RM (factory located in Muar), this would only mean that the profit margins is expected to increase further.

Investors should expect a big jump in profit for the 1Q19 result to be out this month.

Please do your research first before deciding to sell your position as not all companies in Bursa Malaysia will be affected by the tariff war and in some cases like furniture industry, they are actually beneficiaries of this.

Regards.

Second day of panic in the market. MBMR is also affected. However, the fundamental for MBMR still remain intact with 60,670 units of car sold in 1Q19, investors should expect the company to post good result at the end of this month (potentially on 29th May).

Another point for MBMR is that it is not a trade exposed company. ALL of its sales are in the Malaysia market. So even with the tariff imposed by US or China, it would actually have limited affect on its earnings and balance sheet.

Balance sheet is strong with the company being in a net cash position. The remaining debts are mostly trade debt in nature which means that it is backed by the inventories and its receivables. The company has successfully reduce its debt from a high of RM550mil in FY12 to only RM145mil as of Dec 18. Cash reserves is around RM200mil.

At the current price, the company is currently trading at a mere trailing PE of 6.5x and a forward PE of only 5.5x.

UMW which is a similar company with exposure to Perodua, is currently trading at a PE of almost 19x. The industry average of PE is still trading at above 15x.

MBMR is just too cheap at the moment given that it has a direct exposure to Perodua which is the market leader. In most cases, this would actually demand a premium to the average ( as what you see with UMW).

Regards.

This company is actually a beneficiary from the escalation of the trade war between US and China. (Actually most furniture companies are beneficiaries. But in particular those with high US concentration sales like Lii Hen and Latitude)

65% of US import of furniture comes from china (amounting to around USD 30bil ) Since mid of last year most US furniture companies has started to diversify their value chain for furniture outside of China of which Vietnam is the main beneficiaries of this. The difference between Latitude and other Malaysia listed companies is that Latitude main plant is actually located in Vietnam. Since end of last year, the company had received substantial increased of orders from their US customers (US market consist of 95% of the group revenue and profit). This has forced the company to only accept high margins order.

refer to article: https://www.thestar.com.my/business/business-news/2019/04/11/trump-trade-war-turns-vietnamese-furniture-maker-into-a-winner/

Now since the tariff imposed by US to Chinese furnitures increased from 10% to 25%, investors should expect that there will be more orders from the US customers.

Anyway, investors should expect Latitude to deliver a substantial jump in profit for the next 2 quarterly result at least.

Regards.

A lot of people are worried due to the trade war escalation between US and China last week. However, investors need to do some analysis first before making their decision on whether to sell a certain stock or not.

MBMR for example are quite neutral with the issue of the trade war given that most (if not all) of its sales and profit comes from the domestic market. The only exposure that it might have would be the currency fluctuation but given its main profit contributors comes from Perodua (which has a 90% local content) that itself is also limited.

In addition, the 1Q19 result to be out by end of this month would most probably see the company beat last years result quite comfortably given the Perodua sales recorded in 1Q19.

I am targeting MBMR to deliver a profit of around RM200mil in 2019 which means at the current share price the company is only being valued at a PE of 5.7x way below the industry average of 15x.

Best regards.

As predicted by most analysts, BNM had decided to reduce the OPR rate from 3.25% to now 3.0%. This should bode well for the auto industry as it will make buying vehicles a bit cheaper than before. Investors should expect Perodua (indirectly MBMR) to post better sales numbers starting from May onward.

With higher sales, profit also would most probably grow as well. Anyway investors should expect 1Q19 results which should be out by end of this month (probably after the AGM on the 29th) to show growth compared to 1Q18. My target profit for MBMR in FY19 is still at around RM200mil which will be backed by :

1) Robust sales of Perodua. In the 1Q19 alone, Perodua had managed to record a sales of 60,673 vehicles vs 55,568 units a year ago.This is the highest 1Q sales numbers ever recorded by the company. The new SUV Aruz, which should command higher margins compared to other models recorded a sales of 6,600 units during the quarter. 2Q19 should also provide further growth based on Perodua's April sales number of 22,100 vehicles vs Apr 18 sales of only 19,939 units. with the lower interest rates announce yesterday, we should expect the better sales numbers to continue throughout 2019.

2) New revenue streams coming from sales of Toyota. 2019 will provide new revenue streams for Perodua coming from the production agreement between the company and Toyota Malaysia. Perodua is producing the Rush (whole vehicle) and supplying the engines for Vios (Toyota's best selling model), Yaris and Avanza. The more sales toyota made , the more revenue Perodua will received which bodes well for MBMR.

3) Better sales of Proton will also help MBMR's auto components division record higher sales and profit.

4) The imminent closure of the alloy wheel business (refer to page 142 under "subsequent events" of 2018 annual report). Management has indicated that the company will cease operation of the loss making subsidiary during FY19. Closure of the loss making business would immidiately increase profit of MBMR by around RM20mil per year.

With MBMR trading at only 6.8x trailing PE and 5.7x forward PE, it is still the cheapest automotive company in Bursa. Excluding losses from OMIA (since it will cease operation this year), the trailing PE multiple would have only been 6.1x and fwd PE would fall to only 5.2x.

The average PE for the automotive industry is around 15x. As a comparison, UMW (another company with a direct exposure to Perodua) is currently trading at a PE multiple of almost 20x.

Best Regards

Just like a lot of property developer companies, Symphony Life is also currently trading at a very undemanding valuation. Currently the company is trading at a mere PE of around 4x and PB of only 0.3x.

The difference between Symlife with other property developer companies is that their main project, Star Residence (which is the main profit contributor) has a very high take up rate. Star Residence Tower 1 @ 97% take up rate, Tower 2 @ 84% and Retail units @ 89%. Tower 3 will be based on residence and service apartment concept that will be manage by Ascott.

Given the advance stage of the development, investors should see higher profit contribution (under JV result) to grow further in the coming quarters. Refer to this video on the development of Star Residence as of Mar 19. https://www.youtube.com/watch?v=tu1F6aBtCvk . Star Residence project is expected to continue contributing to the group profit until FY21.

After that the company profit should comes from the Lembah Ledang Project covering 19 acres area in Damansara Height located next to Istana Negara. Projected GDV is RM7bil. Symlife portion in the project which is parked under Jakel Land Sdn Bhd is 33%. Other partners are Jakel Group and PNB. The project is expected to be launch in FY21 ( at the tail end of Star Residence project). This will ensure continue profit (assuming a high take up rate) to the group post completion of Star Residence.

Other catalyst would be the progress development of TWY Mont Kiara project which has a take up rate of 98%. The project faced delays from the initial main contractors but Symlife has decided to appoint a new contractor that will help ensure the steady progress of the project.

4Q19 (ending march) will highly likely show an exponential improvement vs 4Q18 result. Hopefully the profit to shareholder will manage to stay above the RM15mil level.

Assuming a target profit of RM60mil in FY20, at the current share price the company is only being valued at a PE of 4.2x and PB of only 0.3x.

Best Regards.

Today we will see whether Bank Negara will decide to reduce the OPR by 25 basis point or not (0.25%). A reduction in interest rates bode well for all automotive companies as it would mean cheaper financing for prospective car buyers.

Regards.

Given that the US is the biggest market for Lii Hen, the recent trade war has actually somewhat help the company gain more customers as a lot of US furniture companies are looking to diversify their supply chain away from China. In 2018, 54% of furniture imports into the US still come from China. This provides ample opportunities for furniture companies like Lii Hen to grow their revenue base going forward.

I am expecting 1Q19 to show improvement in earnings to take into account the higher sales from US, better forex rate and low raw material costs (rubberwood fiberboard especially). Using a target profit of RM65mil in FY19, the company is currently trading at a PE of only 7.3x.

Another company that will also benefit from these would be Latitude Tree. The main difference between the 2 companies is that Lii Hen is mainly based in Muar while Latitud main production is located in Vietnam. However, Lii Hen is a bit better in terms of stability of earnings and cash flow generation hence why probably it is trading at a slight premium to Latitude.

Both companies are expected to post better result in FY19.

Regards.

Investors need to be reminded that not all companies will be highly affected by the tariff war between US and China. Those that will be affected will mainly be in the export market (however some will actually end up better if the trade war persist) since China is our biggest trade partner at the moment. Please do your analysis.

For MBMR which is highly dependent in Perodua performance, it actually has very limited correlation with what is happening between US and China as almost all of its sales are for the domestic market.

As it is at the moment, investors can expect MBMR's 1Q19 results to post continue growth in profit backed by:

1) robust sales of Perodua in the 1Q19 of 60,673 vehicles vs 55,568 units a year ago. In particular Aruz, which should command higher margins compared to other models recorded a sales of 6,600 units during the quarter.

2) New revenue stream coming from sales of Toyota. As mentioned in my earlier post, 2019 will provide new revenue stream for Perodua coming from the production agreement between the company and Toyota Malaysia. Perodua is producing the Rush (whole vehicle) and supplying the engines for Vios (Toyota's best selling model), Yaris and Avanza. The more sales toyota made , the more revenue Perodua will received which bodes well for MBMR.

3) Better sales of Proton will also help MBMR's auto components division record higher sales and profit.

4) The imminent closure of the alloy wheel business (refer to page 142 under "subsequent events" of 2018 annual report). Management has indicated that the company will cease operation of the loss making subsidiary during FY19. This will help increase MBMR future earnings as it will no longer be drag by the high losses of the division. As a reference, even with an increase of production volume of around 30% in FY18, the division still recorded a substantial loss of around RM20mil ( albeit a lot lower than the loss recorded in FY17). If we take out OMIA performance from MBMR's overall result in FY18, the profit to shareholders would have jump to RM187mil instead of the reported RM167mil. In addition, there will be lesser need of working capital for the group which will help increase the free cash flow from operation even further. This could potentially gives management opportunity to pay shareholder with higher dividend in the future. I would expect management to separate OMIA results from MBMR's other operations in the 1Q19 result. Hopefully this will provide better clarity to the investors.

With MBMR trading at only 6.9x trailing PE and 5.8x forward PE, it is still the cheapest automotive company in Bursa. Excluding losses from OMIA (since it will cease operation this year), the trailing PE multiple would have only been 6.2x and fwd PE would fall to only 5.2x.

The average PE for the automotive industry is around 15x. As a comparison, UMW (another company with a direct exposure to Perodua) is currently trading at a PE multiple of almost 20x.

Best Regards.

Muda Holding margins should improve further given the increasing industrial paper price (which is the main revenue component) and the decreasing waste paper price ( which is the main cost component).

The reason for these are mainly due to China's government stringent import criteria of waste paper products imposed since July 2017. The affects of these new policy changes by China governments are:

1) A drop in demand of waste paper especially for wastepaper coming from the US and Europe. This resulted in US and Europe waste paper looking for other markets besides china of which most of the waste paper ends up in the Asian market (Malaysia included). This resulted in a sudden high supply of waste paper in the global market which resulted in the falling price of the raw material.

2) Closure of paper mills in China due to difficulties of getting supply of waste paper into the country. This has resulted in the sudden fall of industrial paper in the China market which indirectly increase the price of industrial paper in China. Other paper mills in Asian that used to serves market like Malaysia decides to go to China instead as it would command better profit margins and higher volume. This reduces supply of industrial paper in other markets including Malaysia which resulted in the increase of price of the product (in tandem with other market price).

Another event that had contributed to the fall in waste paper price is the China government decision to imposed a 25% import tariff on waste paper coming from the US.

In conclusion the change of policy by the chinese government has indirectly improved the business environment of Muda Holdings.

At the current price and assuming a target profit of RM100mil for FY19, the company is currently only trading at a forward PE of 5.5x. PB is currently trading at 0.6x.

Best Regards,

Toyota is expected to launch the new Avanza soon. And just like Vios, Yaris and Rush, the Avanza will also used the same engine as the new Myvi which is produce by Perodua (for Rush, the whole vehicle is actually being produce by Perodua). This provide another revenue and profit stream to Perodua and indirectly to MBMR as well.

refer to https://paultan.org/2019/05/02/2019-toyota-avanza-facelift-launching-in-malaysia-soon/

Regards

At first glance, investor would think that Latitud Tree has a very rich valuation at almost 20x trailing PE. However, if you look closely at their financials, the PE actually went up substantially due the the very weak quarter of 3Q18 and 4Q18 (FY end in June), where the company only managed to record a profit of RM2.4mil and a loss of RM13.4mil respectively.

FY19 seems to be a lot better given that market demand from US for furniture has increase substantially due to the US govt decision to imposed a 10% tariff on all furniture coming from China in the middle of 2018. Management has actually indicated that they were forced to reject some of the orders from their US customers due to the fact that they are already running at almost full capacity. At the moment, they only accept orders that commands higher profit margins which actually bodes really well for investors.

Given that more than 90% of their sales are for the US market, the strengthening of the USD vs RM would only help increase the margins even further.

Investors should expect a sharp rebound of the company's profit in 3Q19 (expected to be out this month) due to higher demands for higher profit margins products and also a more favorable forex exchange rate during the period (average 3Q19 for USD is 4.09 vs 3Q18 of only 3.92).

Total profit should reach at least RM50mil in FY19. At the current share price the company is being valued at only 7.5x PE. PB is also low at only 0.7x.

The company has a very strong balance sheet with a net cash position of RM123mil as of Dec 2018.

Best Regards.

Hi guys,

Some updates from the 2018 annual report. Most of the information found in the report are already known. The 2 new information that i think are relevant for investors are :

1) Management decision to focus on existing assets. Basically, management are indicting that there will be limited capex spending in FY19. This bode well for investors as it gives potential for management to pay higher dividend for the year.

2) The imminent closure of the alloy wheel business (refer to page 142 under "subsequent events"). Management has indicated that the company will cease operation of the loss making subsidiary during FY19. This will help increase MBMR future earnings as it will no longer be drag by the high losses of the division. As a reference, even with an increase of production volume of around 30% in FY18, the division still recorded a substantial loss of around RM20mil ( albeit a lot lower than the loss recorded in FY17). If we take out OMIA performance from MBMR's overall result in FY18, the profit to shareholders would have jump to RM187mil instead of the reported RM167mil. In addition, there will be lesser need of working capital for the group which will help increase the free cash flow from operation even further. This could potentially gives management opportunity to pay shareholder with higher dividend in the future.

With MBMR trading at only 7x trailing PE and 5.9x forward PE, it is still the cheapest automotive company in Bursa. Excluding losses from OMIA (since it will cease operation this year), the trailing PE multiple would have only been 6.3x and fwd PE would fall to only 5.3x.

The average PE for the automotive industry is around 15x. As a comparison, UMW (another company with a direct exposure to Perodua) is currently trading at a PE multiple of almost 20x.

Best Regards.

I think investors need to take note that the 4Q19 profit to shareholders of RM13.8mil will most probably be a one off event. The high profit for the quarter was mainly due to the reversal in marketing and distribution cost relating to the Parq3 project amounting to RM7.6mil. If you were to adjust the marketing cost to around -RM5mil (which is around the average for the past 2 FY), the PAT for the quarter would have been similar to 3Q19 PAT of around RM10mil. Profit to shareholders would have been between RM4 to 5mil bringing the full year profit to around RM20mil vs the reported profit to shareholders of RM30mil.

That being said even at RM20mil PAT the valuation for Eupe is still very cheap at only 4.5x PE.
In terms of PB the company is only trading at around 0.3x. Still a very good buy.

Regards.

Hi goldenhope,

A big portion of the sales actually comes from the export market with US and Canada being the largest market ( 77% of total sales in FY18). Malaysia market only represent 7.2%.

In terms of valuation the company is currently trading at a PE multiple of only 8x.

I think investors should expect higher profit in FY19 vs FY18 given the higher demand from the US market since the start of the trade war between US and China (US had imposed a 10% tariff on furniture coming from China since Sept 2018).

Profit margins for 1Q19 should be better compared to 1Q18 mainly due to the more favorable forex. RM/USD averages at around 4.09 in 1Q19 vs 3.92 in 1Q18.

Regards.

A big portion of the company’s profit is actually distributed to the non-controlling interest of its subsidiaries. Even when the company managed to deliver a PAT of RM 19.4mil in FY18, shareholders of Bina Puri ends up with only a profit of RM500k.

This is due to the fact that most of its profitable ventures (in property development) are in subsidiaries where the company holds less than 60% interest. For the property development projects, most of it is park under Aksi Bina Puri Sdn Bhd a 60% subsidiary of Bina Puri. In addition to that, most of the development projects are based on JV’s. For example, Sumbangan Lagenda and Karak Land are profitable subsidiaries that are involved in property development projects. Both of these subsidiaries are parked under Aksi Bina. However the interest of Aksi bina in these subsidiaries are only 60% and 70% respectively. This brings the total interest of Bina Puri in these 2 subsidiaries to only 36% and 42% respectively. Hence why most of the profit attributed by property developments projects are actually distributed back to the non-controlling interest.

Construction projects which delivered 60% of the group revenue is still loss making mainly due to the high financing cost (PBT of construction division in FY18 was -RM19.2mil). The company has always had an issue with very thin profit margins for their construction projects which why some investors believes that they are actually undercutting competitors when tendering for projects by submitting very low bids. This is a risk to the company if they could not deliver on budget and on time (most of the cases they failed to do so).

Until the company can proof that they can be profitable in their construction projects, investors need to be prepared for similar level of profit to shareholders for FY19.

If you are looking to hedge your portfolio outside of Bina Puri (due to its weak earnings outlook), I would recommend you to look at MBMR. (https://klse.i3investor.com/servlets/stk/pt/5983.jsp)

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 7.0x PE based on FY18 profit of RM166mil. PB is low at only 0.7x BV.

FY19 should deliver another profit growth year to the company driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi and sales of the new SUV Aruz . 1Q19 result is expected to be better than 1Q18 given that Perodua managed to sell 60,670 cars during the period vs 1Q18 sales of only 55,570 units.

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.8x which is a lot lower than the industry average of 15x PE. As an example, UMW (another company with exposure to Perodua) is currently trading at a PE multiple of almost 20x.

Good luck.

Morning guys,

There are some errors on my earlier post for the Aruz sales. Actually the total sales of the SUV in March was almost 3k units (apologise for the mistake). This bring the total deliveries of Aruz in 1Q19 to 6.6k units. Given that the SUV is expected to carry higher profit margins compared to other models, i am expecting MBMR's 1Q19 result to deliver a very good profit to shareholders.

Regards.