3Q and 4Q18 results should beat last year's. The PATAMI should continue at the above RM10mil level till at least the completion of the City of Dream (COD) project phase 1.

Then the company financials would be dependent on the Phase 2. Basically the profit is sustainable as long as the planned 10-15 years project development of the City of Dream continues. This is dependent on the completion of the reclaim Gurney Drive land which itself is dependent on the Penang Transportation Plan (PTP).

So basically if you believes that the PTP will progress then there would be no issue with the sustainability of EWEIN financial after 2024.

For 2020 to 2024 the financials of the company would be driven by COD 2 from the first 5.5 acre Gurney Drive reclaim land to be delivered by Zenith Consortium by end 2019 (which coincide with the completion of COD1).

I am bullish of this company mainly because i believe the PAT is sustainable. Assuming an average PAT of RM40mil per year from 2018, the current market cap of RM172mil is only 4.3x PE. This year alone i think PAT would actually be around the RM50mil range.

4Q18 result (ending september) should be higher than last year mainly driven by the plantation division from higher production and sales of palm oil products.

Hopefully the property development and construction division would also make a rebound from the 3Q18 low backed by the RM999mil unlbilled sales as of Jun 2018.

Major shareholder and the company itself have been aggressively buying the shares from open market starting from the RM1.40 level which show that the current price is considered undervalue by company's insider. This provide a firm support level of share price at RM1.20.

Can anyone provide a target PATAMI for FY 2019? I have target PATAMI of around around RM88mil assuming the plantation production level maintains at the current year average and CPO price average at around RM2000 per tonne. Assuming also a better revenue and profit generation from progressive billings of existing projects. At the current market cap, it would value the company at around 8.3x fwd PE.

Please take note that the average PATAMI for the company in the past 5 years has always been higher than RM100mil. But mostly it is dependent on the property development and construction division.

I think the outcome of the legal issues with Star is expected.

This company provides good prospect from their power plant project in vietnam (as long as they can complete with the construction on time).

The other issues facing by the company is the property development division. Once they managed to disposed off Evolve mall then it would be a potential rerating to the company.

And the other white elephant in the room is Mr Kyy. Like it or not, if he sells price will get depressed. Hopefully with his other investments in his portfolio, he is no longer forced to sell his shares in Jaks anymore (my wishful thinking).

No denying that valuation is cheap at the moment (basing on Public Bank and Affin forecast).

Another good result by the company.

If only it was cheaper and more liquid.

A valuation of 17x PE is a bit high for me but please be aware that this company has very minimal debt. If you were to used EV/EBITDA multiple, i think it can be considered cheap. And for healthcare industry, at the current multiple you can say that it is still consider undervalue.

And the company has managed to provide steady growth for the shareholders.

Bravo to the shareholders.

Whats the game plan here? In term of profit this company currently has none.

I am assuming those that are buying is betting on Iris to get back most of the contracts that they had lost to Datasonic (RM270mil Jabatan Imigresen contract & the RM300 mil Mycard contract for example). But what is the profit target investors are putting here?

The simplest way is to take the 12 months profit of Datasonic and assume that the same profit can be achieved by Iris. This would mean a PAT of RM59mil (but this would also mean that Datasonic PAT will go to zero. Not sure if its logical or not). Assuming this is the case, then the current market cap of RM460 mil would value Iris at around 7.7x fwd PE. This also assumes that all loss making and non core assets will be disposed off as per what management is planning.

Appreciate those that are invested in this company to provide feedback.

Hi kc,

Whats ur profit forecast for FY18 and FY19?

And whats ur target price? Just wondering since the stock is already trading at 14x PE.

Agree with u on the good result of 3Q18.

3q18 should show a high rev and profit mainly because the sales of oil that was supposed to happen in 2q was pushed to 3q. So there were 2 block sales of oil from anasuria field instead of the average once per quarter. In addition u will also have the rev n profit contribution from sabah fields which was not there last year.

In terms of valuation, after taking into accound the dilution from warrants (in the money already), PE wise its a bit high. But it's actually not fair to value this type of companies using PE valuation. U actually need to used DCF and project the cashflow till the end of each fields concession. I'm too lazy to do that but i think management has done it. Investors just need to tweak the assumptions to come up w the value (mainly oil price and discount rate).

Whats your view on 3Q result?

My expectations is that auto will still do well. Not an issue for me.

Heavy equipment should also do well.

Worries would be on the M&E and unlisted O&G divisions. Expect higher losses on the aero segment (based on analyst report, they actually missed their target for this year) and still high losses on the o&g segment.

Since 2q the only development of the unlisted asset announce in the winding up of vina offshore. But i think that one is just a small company. So expect still higher losses from unlisted o&g segment.

Still dissapointed that they failed to get MBMR. They should have just increased the offer at rm3. Even that its still less than 10x PE and less than 0.8x BV. Given the current valuation of 15x expected core PAT and 1.7x BV that UMW is trading at the moment, it is still consider value accreative. In addition, the market has no other choice but to buy UMW shares to have exposure to Perodua.

Anyway if they can disposed of o&g assets and turn around the aero division that would be great news for investors. Hope they can achieve this soon.

Management objectives for this year are to improvement performance of existing businesses (chemical and polymer) and improved the balance sheet of the company via disposal of non core assets. As of 3Q, both of these has actually improved.

I was expecting a higher profit though. Notice that the main reason for the lower profit in 3q was the high tax rate. Rm5mil tax for PBT of rm10mil. Anyone knows why? Another issue is the caustic price which has gone down by a lot.

Still with Rapid next year, outlook remains bright on condition that the caustic price will recover back to usd500/ tonne level.

At a glance, the acquisition of daiboci seems to be expensive given that scientex valuation currently is lower than daiboci (15.5x PE vs 21.2x) .

But having seen the management capabilities of increasing the revenue and profit with this company, you will be expecting they will do the same for daiboci.

Either way, rev and patami of scientex will automatically increased after taking into account daiboci's contribution starting 1Q19. Just that the valuation will be higher than the current PE after taking acct the new shares paid for the acquisition of daiboci.

Hi Pc Tan,

I see what u mean on them taking debt to finance the dividend as the cfo was negative in 3q18.
But is that not just because the revenue from the sales has yet to turn to cash (stilk under receivable) . Because i saw that aeon credit cash flow statement is similar as well. Is there any other company in the industry that differs from these 2?

Hi USApg,

So does this mean rce cap is cheaper? Cause only trading at 6.0x? Or its cheap because of something else?

Why is the stock so cheap? PE wise only 6.0x. PB wise it still below 1.0x BV. Plus the company even pay dividend.

Is it fair to used the banking industry as its comparable?

Was interested in this stock after it posted its second profitable quarter for FY18.

However, after further study, the company actually recorded losses in both the 1Q18 and 2Q18 . The reason for the positive result in these 2 quarters are mainly due to the reversal of provision for liquidated damages.

The original provision was made due to delays in some of their projects in particular the Marina Puteri Harbour development. Marina Puteri Harbour was supposed to be completed in 2015 but the company had only managed to complete it back in 1Q18.

Another issue of concern is the cash reserve. As of 2Q18 the company has a cash and liquid investment reserve of RM167mil. However, the liabilities to be settled in the next 12 months amount to RM430mil. Debt to be paid in the next 12 months amounts to 110mil with a payment of RM72mil of the Sukuk Murabahah to be made by Nov 2018.

Hi hedgefund,

Got the revenue breakdown from the segmental analysis in 2q18 result. No revenue from singapore and malaysia. I assume that revenue from customers in singapore, china and taiwan are placed under singapore.? Is this wrong?

On cogs: so the only component in the cost of sales is hardware cost? What about the consultation or platform maintenance cost? If it is not parked under cogs, does that mean it is parked under "admin and general expenses"?

Thanks

Ucrest is the cheapest tech and healthcare stock in bursa. Both of this industries normally command a valuation of at least double digit PE. At the current price Ucrest is currently trading at avery undemamnding valuation of less than 7x PE. Interested in buying it but have some question on its financials. Appreciate if someone can answer them.

Based on diehard, the cogs is zero because there was no hardware being sold. So the cogs consist of only hardware device cost? The medical consultant cost (i assume the company still needs to pay for the doctors service) and the cost of maintaining the cloud platform is it parked under admin exp?

If so, does this mean that they have stopped acquiring new customers since 1Q19? I would assume any new customer will need to buy their device first, right? Are we to expect a zero cogs in 2Q19 as well?

Also all of the 1Q19 rev comes from russia. Is this normal? For 3 months they did not have any revenue from china (parked under singapore) and malaysia? I assume that they record a revenue everytime a patient uses their service. Or is this wrong? Is it based on subscription?

Hi spy,

If u target RM2 that means u are expecting market cap of RM1.59bil (based on share outstanding of 794mil).

That's 20.8x fwd PE (based on Pat of rm76.2m). It is a bit high for my taste but if u think that the company can grow their earnings fast why not.

There should not be any issues in terms of the profit growth for 3Q and 4Q18. The PATAMI for FY 2018 should not have any issue to end at somewhere around RM60mil.

At the current price, the PE multiple seems to be ridiculously low at around 2x fwd PE.

However, investors need to be reminded that the share outstanding could potentially increase substantially from the current 110.5mil shares to up to up to 794mil (not inclusive of the proposed share split as the exercise is not dilutive to shareholders). Please refer to the announcement : http://www.bursamalaysia.com/market/listed-companies/company-announcements/5941321

Dilution effects from:

1) Conversion of ideal warrants @ RM1/share 55.2mil shares
2) Conversion of RCPS @ RM0.57/share 136.4mil shares
3) Acquisition of Modular, Ideal Homes and Premium Flame @ RM1/share 353.1mil shares
4) 30% private placement @ 10% discount (around RM1) 139mil

Total shares outstanding 794.2mil. Assuming a share price of RM 1.08, the new market cap would be RM858 mil and the fwd PAT of RM60mil would translate to 14.3x fwd PE.

But PAT should also be higher once the completion of the 3 companies. Based on the announcement, the 3 companies recorded a total of RM16.2mil PAT in FY2017. So if you add this, the new PAT should be around RM76.2mil or 11.3x PE.

However, lets also not forget that the NTA of the company would also go up by RM625mil which means total NTA after dilution effect would be around RM750mil as well. in terms of P/B the company would be trading at slightly above the 1x BV level.

This month is supposed to be the deadline for the delivery of the Hospital Pakar Kanak Kanak in Cheras. Can they meet the target? Or is there going to be a risk of cancellation as to what happened with their Petra Jaya hospital contract. The only difference here is that the progress for Cheras is a lot better compared to Petra Jaya. As of July, it was 74% completed.

http://www.ukm.my/hkkpukm/

The recent statement of material uncertainty (current liabilities exceed current asset) is also a big worry. Has it effected the operation of the company in particular the completion of the Cheras hospital.

What happen with the RM155mil deal between Zecon and the Sarawak state? The last announcement was back in March. Is it still on? Just wondering since Sarawak state was also agreeable to cancel the company Petra Jaya contract back in July. Why invest in a contractor that you just rejected?

https://www.thestar.com.my/news/nation/2018/07/06/main-contractor-of-hospital-petra-jaya-in-sarawak-to-be-fired/

Guys, just wanted to know what are the catalysts to invest or stay invested in UMW?

Previously it was supposed to be the MBMR deal but that has since been scraped. Doing the deal would have made the company very appealing since it will be the only proxy to Perodua growth. Now MBMR looks a lot cheaper compared to UMW.

Toyota sales during the tax holiday was excellent but can it maintain the momentum given now that the cars are on average more expensive post SST compared to during GST in particular the higher margin vehicles like Vellfire and Alphard (both are CBU models). Even the newly launch Rush is actually being manufactured by Perodua. The new plant in Bukit Raja is apparently mainly for the sedan models (Vios and Cambry). I initially thought that they would focus more on the SUV or MPV models for the new factory. I think they still need around RM1bil to complete the factory as of 2Q18.

The aerospace division still has yet to breakeven. Need to wait for 3Q18 to see if they have improved but based on the recent analyst reports it seems like they are facing difficulties in the operation and most likely will miss their target for breakeven by end of this year. Hopefully, they can show improvement in 3Q.

The unlisted O&G division posted a loss of RM122mil in 2Q18. Did they managed to sell the remaining businesses? Most analyst has actually taken out this division performance in coming up with their target price. If they failed to disposed off the assets, then the analysts might add back the losses into the target price calculation, wouldn't they?

My final concern is on the cash flow. They still have around RM2bil in reserves (cash and money market securities) but around RM1 bil is for capital committed for the Bukit Raja plant which leaves them with RM1 bil. Is this enough? in 1H18 they cash outflow was -RM360mil. If it was not because of the RM1.1bil sukuk, the cash outflow would have been -RM1.4bil. Are they planning to raise any further capital soon?

2q18 result was positive mainly due to a rm25.4mil fair value gain and and gain on disposal of rm3mil. Excluding these 2 non recurring items, PBT for 2Q18 would have been almost -rm6mil loss.

In addition the company might have forgotten to deduct the fv gain of rm25.4 mil when calculating their net cash from ops in the cash flow statement.

Their main problem would be the cash reserves which now stands at only rm2.15mil. Did management indicated any future cash call?

The profit from 2Q18 result was mainly due to forex gain of RM15mil and the absence of interest cost (the company must have had an arrangement with the creditors i assume). For the same quarter of 2017, the company had an interest cost of RM18.2mil.

Not sure if the profit that they recorded for the quarter is sustainable.

How much cash do Jaks needs for the Vietnam power plant project?

From my understanding total cost of the project is US1.87bil of which US1.4bil financing already secured. This means that Jaks and it's partner, CPECC, will need to come up with the remaining US470mil. Since its a 50:50 JV, Jaks total cash commitment to the project should be US235mil or RM975mil. Not sure what is the current outstanding amount though.

This off course does not include any potential cost overruns/ over budget that might occur. As of Aug, management indicated that the project is still on schedule for commercial in 2020.

As of end June, Jaks cash balance and deposits is around RM190.5mil. However RM129mil is actually pledge deposits inclusive of the RM50mil claimed by The Star. Which means that the company free cash balance is only RM61.5mil.

This means that there is a big cash gap for the company to raised for the vietnam IPP project. From my understanding cash payment by the vietnam govt will only be made when the IPP is running or when it sells the energy to the vietnam govt. Is this right?

Even the cash from the future right issue is not sufficient for this. Which means there will be more capital call on the investors in the future. Unless the company can find a buyer for their Evolve mall which currently is a doubt at the moment.

I understand that in terms of P&L, the company is expected to show good profit from the construction of the IPP but still that profit will only be turned to cash in 2020 the earliest. Right?

TQ uncle lim.

CIMB project FY19 PAT of RM11mil and RM14 mil in FY20.

That would translate to a forward PE of 15.7x in 2019 and 12.4x in 2020. Better in terms of valuation.

Hope they can achieve the PAT target. Good Luck.

Financially this company performs pretty well.

However a valuation of almost 20x PE is a bit rich for a company that is in the bedding products and furniture business.

For those invested in this, how much is the expected PAT for FY2018 and FY2019?

I don't see any analyst covering this company at the moment.

Valuation is really crazy high at 47x PE.

For those that invested in this company, what is your target PAT for FY2019 ?

What is the play for you to invest into this company? Just curious.

For those that invest in this company, what is the target PAT for FY 2019?
Valuation is super high at 100x PE based on 12m PAT of RM23.6mil.
Even if they double their profit (which i doubt), PE would still be 47x.

What is play with this company?

Why is the allowance for impairment still high? I thought that the impairment prog that started in end 2014 were completed in 2017.

And will the other operating expenses expected to be high (RM109mil in 2Q18 vs RM84mil in 2Q17)?

Notice that the asset of the Australia business (under 3D Oil, VIC/L31 and VIC/P57) is high around RM 240mil but no revenue contribution ever (at least not since 2014). Why is that?

Will there be a potential impairment in the future because of this?

Why is the revenue from the Mother and Child center (under healthcare division) only RM34k? I thought they launched it back in January 2018. Management initially targeted for the division to contribute to the group bottom line in 2H18. Looking at the numbers i doubt that's possible.

Will need to wait for 3Q18 results to see if they managed to push up the revenue of this new division.

I thought the company won a lot of contract awards?

Why is the bottom line still negative? Does this means the new contract are actually not profitable?

Cash reserve excluding those that are pledge to the banks is only RM22mil. How long can it last?
Should we expect more capital call exercises? I don't think any bank would want to lend money to this company at the moment.

A company with negative Equity of -RM357mil. Or -RM0.28 per share.

Can they still participate/tender in any Petronas contracts?

Whats the play here? How do investors (especially those that are buying now) expect to make money?

In distress companies normally investors target the debt which in most turnaround cases will be converted to equity. Current equity holders normally will face dilution but if there is a concrete turnaround plan, dilution is still far better that bankruptcy (in Perisai case, equity shareholder will be totally wipe out since NTA is negative).

Please refer to Noble Group turnaround plan.

2Q18 PAT results includes negative goodwill (RM93.8mil) and unrealised forex (RM8.6).

Excluding these 2 items, Hibiscus actually posted a loss of -RM3.7mil.

Should this be a worry?

Can the profit rebound back above RM40 mil in 3Q18?

Demand for steel should taper down due to slower progress of infrastructure project (ECRL cancelled, LRT 3 completion extended to 2024 instead of 2020, Pan Borneo still awaiting review etc).

Safer bet would be to expect the same profit level as 2Q18 result.

Still the best steel company in Malaysia though....Maybe much more suited for the long term investors as Malaysia still need infrastructure investment in the future. Just not sure when the govt will start that back.......

Excluding the gain on disposal amounting to RM3.8mil, PBT for the 2Q18 would have been RM9.3mil vs RM13.31 mil achieved in 2Q17.

Receivables and payable have increase considerably compared to 4Q17. Is that normal?

Cash balance has decrease to RM21mil only vs 1Q18 balance of RM42mil.

Not sure if the company is facing cash flow constraint....

How much will the PAT be after KPS sells Splash?

Using the 2Q18 result, excluding the Splash contribution of RM40.6mil, PBT from other businesses (excluding Splash) is only around RM1mil. If we were to extrapolate this to 4 quarters, that would mean KPS recurring income/ PAT excluding Splash is only RM4mil (this might be an overstatement as i did not conclude any tax).

Current market cap is RM924mil. That translate to a PE of 262x..

Assuming they pay off all their debts using the cash from the sales of Splash (Cash receive RM765mil. Debt outstanding RM636mil ).

This would actually help save borrowing cost by RM9mil per quarter(which is the total finance cost for 2Q18) or RM36mil per year. This would increase the recurring PAT to RM40mil (still i did not include any potential tax).

Now that will help reduce the PE multiple to 23x.

Isn't that still a bit high?

Every 4th quarter got gain from fair value of investment properties. FY 2017 and 2016 also have. Hahahaha. Nice.

If you take that out, the 4th quarter result would have been -RM87.7mil.

The hospital in cheras supposed to be completed in Nov. Can meet the target or not?

The company already pissed off MOH with delay in Petra Jaya Hospital. Federal govt already cancel the contract.

Would they face the same fate for the Cheras hospital.

Lets wait for Nov to see.

Can the company maintain the margin? Revenue increase only a little compared to last year but profit almost double.

Check the details saw that they made RM32.5mil profit from gain from commodity futures and options. Is that sustainable?

First quarter the same gain from commodity futures and option was -RM2.3mil
Second quarter 17 it was gain of RM7mil.
Third quarter 17 it was gain of RM5.4mil.

Hmmmm.......We'll see next quarter.

What KYY did is that legal? Is that not market manipulation? Especially his blog on 4th Aug. Tell people Jaks is cheap. But he was selling on the 3rd (before writing his blog). Then continue selling again on the 6th, 7th, 8th, 9th , 10th, 13th, 17th, 20th, 21st and finally 23rd.

24th he said he stop selling. Just have to wait to see if its true or not.

If share price go down. Will it effect the right issue? Would it still be RM4bil? Would that mean the number of right issue will be higher becoz right issue normally at a discount to share price. If not at discount no one would want to subscribe. Right?

Can someone explain to me. Why sukuk RM1.1bil in equity and not liability? I thought sukuk is like debt.