Excluding the large impairment on goodwill and impairment on receivables, HSSEB 4Q18 profit would have actually recorded a small profit of less than RM1mil translating to a very depressing core profit margins of only 2.1% vs the FY17 average profit margins of 10.3%.

This just shows how depressing is the current operating environment for the construction industry. Most construction companies are now chasing the same projects given that much of the large infrastructure projects that had helped improve the construction industries margins are now being reviewed, scale down, cancelled and delayed by the federal government. The intense competition has forced some companies to undercut others when tendering for projects. In most cases, the proposal made by these companies will barely result in any profit. Most of them are betting on variables orders to help push for profit later at the end of the project/ contract. Basically, they are betting to have a round of negotiation with their clients later hoping for the clients to agree on paying the additional variation orders (this was what happen in the O&G industry in FY15 and FY16).

Investors need to take note that a contract win does not necessarily translate to profit. The worst case is actually more probable with companies that submitted a too low offer having the risk of cost overruns (and in most cases they also face LAD penalties due to delay in delivering projects).
For HSS Engineering, investors need to take note that even if some of the big projects like ECRL are put back to work, it would be at a lower cost which will be at the expense of contractors like HSSEB.

With this in mind (and couple with the challenging construction environment), investors need to be prepared for HSSEB to deliver margins that are similar to 4Q18 of single low digit. Assuming the company managed to deliver a profit of RM10mil in FY19, at the current share price, the company would be valued at a very lofty valuation of 53x PE. Let say profit managed to improved to RM20mil (which is higher than FY17 and FY18 core profit), the company would still be valued at 26.5x PE. Very high given that the average PE for construction now is less than 10x.

If you are looking to hedge your portfolio outside of HSSEB (due to its weak earnings outlook and relatively high valuation), 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 6.6x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.5x 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.

Hi amtek minorities,

It seems u have done ur research on this investment. Hope u are right. Sincerely wishing u the best.

Good luck. Hope everything turns out well.

Hi guys,

Please find a summary of MBMR for the benefit of those that just got to know company as a potential investment. Apologise in advance to some as this might sound a bit of a repetition to my earlier posts.

MBMR is an automotive company that has 2 core business. The first being the manufacturing of auto components (air bags, seat belt, alloy and steel wheels, steering wheels and noise, vibration & harness products). They are currently the largest manufacturer for these products in Malaysia. The second main business is the auto trading business (Perodua, Volvo, Volkswagen, Hino and Daihatsu).

However, the main profit contributors to the group bottom line is actually from Perodua via its 22.6% interest in the company. Out of the RM200mil PBT recorded in FY18, more than 80% actually comes from Perodua. Hence why when analysing this company, one should actually analyse Perodua outlook first.

In FY18 the company managed to deliver a PAT of RM189mil and a profit to shareholder (PATAMI) of RM165.6mil (excluding impairments it would have actually been RM173mil). At the current share price, the company is only being valued at a PE of 6.7x which is way below the industry average of 15x PE. As a reference, UMW (another company with exposure to Perodua via its 38% holdings) is currently trading at a PE multiple of almost 20x.

Catalysts for the company are:

1) Still high demand for the new Myvi

2) Sales of SUV Aruz. As of February, the sales is already at 3,400 units with bookings of more than 14,000 unit. The best part is that 85% of the sales and bookings are for the higher end version which commands better profit margin for Perodua.

3) Future uplift in sales from the newly revamp Alza sometime in 2H19.

4) Sales to UMW Toyota Motor. Please take note that the Toyota Rush is actually being manufacture by Perodua. The engine of the new Vios is also currently being manufacture by Perodua as well.

5) Improvement in sales of automotive component divisions. As mentioned MBMR is the biggest manufacturer of locally assemble automotive component in Malaysia. Given the new SST structure, a lot of brands have decided to start sourcing their automotive parts components locally in order to reduce the cost from higher SST and import duty.

6) The potential disposal of OMI Alloy Sdn Bhd (the alloy wheel business) which will immediately increase the company’s profit, strengthen its balance sheet and free up MBMR’s cash flow. In FY17 OMIA recorded a core net loss of around RM30mil. I would assume the losses in FY18 was still in the RM20mil level. As an example, MBMR core profit to shareholder would have been around RM180mil in FY18 if we were to exclude OMIA result.

I think the company would be able to achieve the RM200mil profit to shareholder target in FY19. Even if profit only reaches RM185 mil in FY19, at the current share price, the company would still be valued at a mere 6x PE, the lowest in the industry even though it has a direct exposure to Perodua. Most of the time, market leaders normally commands a premium vs the industry average. In MBMR case, they are actually trading at a discount of 60% (based on industry average of 15x PE) which is weird.

Regards,

Hi Amtek minorities,

Just want to get some understand on ur investment thesis. Basically it is based on the idea that the company's properties are currently being undervalue. Based on your previous comments u put the true value of amtek at between rm1 to rm2. This is the reason why management and the major shareholder is not doing anythg to help lift the PN17 status of the company. Their objective is for the company to be delisted and to be taken private cheaply. Basically, by doing this, they can take the company private without having to make any offers to the minorities.

My questuon is: as a minority shareholder, how can u profit from this?

Once the company is taken private, u will become a minority shareholder in a private company. As far as i know, the company will no longer be obliged to give u any information (especially financials) and also not obliged to do any annual report besides the financial statement to be submitted to ssm every year. I also don't think they will do an agm after this. And given that their operation will be less scrutinize, how are u so sure that they will not take advantage of minorities ( even now as a public listed they are already doing this dodgy manoeuvre, i expect it to be worst as a private company).

The best scenario is that they will sell/ rent the properties at market value and then pay dividend to all shareholders. But i doubt this will be the case as they actually can do this even now. I am just afraid that they will try to bring out the money for their own personal adv at the expense of minorities such as:

1) Pay higher personal salaries
2) Buy personal assets at inflated price
3) Do right issues hoping minorities would not participate which will dilute the minorities interest, sell the assets then declare dividend.
4) enter into related parties transactions
Etc.

In conclusion, being a minority in a private company is very risky. That is why certain private equity fund would want a minimum interest of 30% to invest in a private company. Reason being any major corporate exercise need to have the approval of at least 75% of shareholders. 30% would help protect minority investors interest.

Regards.

FY 19 profit is expected to be lower than in FY18 mainly due to the slowing demand of Haio products and the implementation of SST which is expected to increase the overall operational cost of Haio mainly due to the company’s decision to absorb most of the SST in order to price their products competitively. Expect profit margins to decrease in the 3Q19 result to be out this month.

Haio traded at a high of RM5.60 per share back in Oct 2017 and maintain above the RM5 level until March 2018. With a trailing 12 months profit of RM73.2mil, the above RM5 per share price translate to a PE of more than 20x. Investors was willing to pay the high price for Haio shares as they believe that the growth rate of more than 50% seen in 1H18 would persist or at worst would be maintain in the double-digit area for a certain amount of period. When this failed to materialised, some investors decided to sell the shares. This shows the risk of investing in high valuation companies. Investors need to make sure that the high valuation should always be compensated by a high growth in profit as well.

Using RM50mil as the profit target for FY19, at the current share price the company is now being valued at a PE of 15.7x. At this level of PE, investors still would demand some profit growth from the company. Any fall in profit would only makes this company seems to be overvalue when compared to others companies.

If you are looking to hedge your portfolio outside of HAIO (due to its earnings growth uncertainties and relatively high valuation), 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 6.3x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.1x 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.

Investing in a REIT is actually not a bad idea. That being said, even Reits has to follow the normal investment valuation process. One should not just look at the dividend yield to make a decision on whether to invest in a certain reit or not. Dividend are still dependent on the earnings of the company. So, in the end you still need to look at the company’s fundamentals.

In the case of CMMT, the 12 months dividend paid is 7.9 sens which at the current price gives a dividend yield of 7.1%. However, investors should take note that the total earnings made by this company in the past 12 months was only RM135.6mil or an EPS of 6.63 sens. This would mean that the company is actually paying a dividend that is more than what it earns in the past 12 months. This is not sustainable as the company would either have to use its existing cash balance or it has to raised debt to pay the higher dividend. This will only reduce the future profit either because it has to pay extra interest payment (due to higher debt amount) or it will miss out on potential earnings from the disposed assets (if the asset was cash then it would miss out on potential interest income). Please take note that the net debt has increased from RN1.15bil in FY17 to RN1.22bil in FY18 ending Dec.

FY18 profit of RM135.6mil represent a fall in profit of around 12.4% vs FY17. In general, given the soft commercial mall segment (due to oversupply of malls) it is expected that future rental in this segment will trend lower. Investors need to be prepared for a potential decrease of dividend payment in the future.

In addition, at the current share price, CMMT is trading at a PE multiple of 16.8x which is high considering that the future profit is expected to record negative (or at best flat) growth.

If you are looking to hedge your portfolio outside of CMMT (due to its negative growth outlook and relatively high valuation), 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 6.3x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.1x 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.

Ikhmas recorded a total core net loss (excluding impairments) of around RM14.2mil in FY18. Investors need to expect potential losses in the next quarter as well based on the 4Q18 result where even the gross profit margin was a negative of -25% vs 4Q17 GP margins of 3.4%. Any improvement to the bottom line can only be achieve if the government decides to increase back the infrastructure spending which might not happen in the near future.

At the current environment, any new contracts won might not necessarily deliver the expected profit. Given the lack of projects at the moment, a lot of contractors are quite desperate in securing any new contract. Most are willing to submit a tender that is low (with potentially small profit only) and hoped for negotiations of variation orders afterwards at the end of the construction with the clients. Until there are more contracts/ projects to be awarded/ tendered, this depressing low profit margin environment is likely to remain. Ikhmas will most probably still post losses if not only small profit in the near quarters to come.

If you are looking to hedge your portfolio outside of Ikhmas (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 6.3x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.1x 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.

2Q19 result of only RM470k in profit shows how the business environment for the semiconductor industries has become more challenging. With global semiconductor sales to see a slowdown in growth in 2019 due to the downturn of demand for memory chip market (this can be confirmed by the decreasing price of SSD), investors need to expect that KESM will deliver similar small quarterly profit in 3Q and 4Q19 as well. Even if the company managed to deliver a profit of RM10mil in FY19 (3Q & 4Q19 average profit need to reach around RM3.5mil per quarter), At the current share price the company would have already been valued at a PE of 36x.

During the share price peak of around RM22 per share or RM950mil market cap and using the highest FY profit reached in FY18 or RM39.4mil, the company was valued at a PE of 24x. This is actually quite high for a company that is actually in the business of testing the semiconductor components (and not actually developing it themselves). That being said, the high PE was mainly attributed to investors believes that the more than 30% average annual growth rate from FY15 profit of only RM17mil to FY18 peak profit of RM39.4mil would continue in the future. When this failed to materialised, some investors decided to sell the shares. This shows the risk of investing in very high valuation companies. Investors need to make sure that the high valuation should always be compensated by a high growth in profit as well.

If you are looking to hedge your portfolio outside of Kesm (due to its weak earnings outlook and relatively high valuation), 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 6.3x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.1x 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.

First of all, the market cap in i3 for this company is wrong. There is an error in the shares outstanding amount. It should have been 245.7mil shares and not 8.47bil. Market cap should have been only RM24.6mil and not RM890mil as what is shown in i3. Please take note.

That being said, this is still a loss-making property developer and hospitality company with total loss of RM8.8mil in FY18. The company is facing some liquidity issues to fund their operations and any new property development. As of Dec 18, the company has a cash reserve of only RM5.8mil but a near term debt obligation of more than RM30mil.

The outlook for their hotel business in Kota Bahru, Kelantan is expected to be challenging in FY19 due to the opening of new competitor’s hotels in the area. New property development will only be made upon the improvement of the property market which might not be immediate. Investors need to be prepared for another loss year in FY19.

If you are looking to hedge your portfolio outside of Eastland Equity (due to its weak earnings outlook and funding issues), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Excluding the RM91mil impairment, FY18 would have deliver a core net loss of RM30 mil to investors. 1Q19 seems to be a bit better with GP margin improving from -1.1% average in FY18 to now 4.4% in 1Q19. However, the profit to shareholders was still only RM700k for the quarter. Even though the Malaysian division has somewhat recovered a bit, the overall group performance is still being dragged by Thailand division which posted a 1Q19 loss of almost RM5mil. That being said, total volume exported was actually lower compared to 1Q18 but result was supported by better forex and higher sales of higher margin products.

Management is somewhat bearish on the company’s near-term outlook due to lower expected demand of hard disk drive (HDD) especially with the downward pricing pressure of SSD which will indirectly makes HDD less appealing. FY19 could potentially deliver a profit to the shareholders but it won’t be big. Most probably less than RM5mil. At the current share price, the company is valued at a high forward PE of 85x.

If you are looking to hedge your portfolio outside of JCY (due to its weak earnings outlook and relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

The company only managed to record a profit of RM320k in the 1H19 which is a 86% fall vs 1H18 profit of RM2.3mil. 12 months trailing profit was only at RM1.6mil which means at the current share price, the company is being valued at a PE of 27.2x. Given the depressing outlook for the construction industry (due cancelation, delay and review of big infrastructure projects), the company FY19 result is expected to be a lot lower than FY18 profit. Until the government decides to increase back the infrastructure spending, expect the profit level to remain depressed for the near future.

If you are looking to hedge your portfolio outside of Prinsiptek (due to its weak earnings outlook and relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Parlo (previously known as Cybertower) exit the GN3 status back in Jan 2018. The regularisation plan for its exit from the GN3 list consist of an RTO of Parlo Tours Sdn Bhd. The share price jumped to a high of 30 sens as investors turned bullish on the outlook of the company.

In the end, the profit that the investors hoped for did not materialised. In FY18 (the first full year since the RTO), Parlo recorded a total core net loss of around RM3mil to its shareholders. Given the still weak business environment of the travel and tour industry, investors should expect FY19 to be another loss year for the company.

If you are looking to hedge your portfolio outside of Parlo (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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

The company actually managed to record a small core net profit of RM2 mil once you exclude all the impairments and compensation expenses (which are non-recurring). The turnaround is mainly due to the better operational performance of the Glove Dipping Line business where core PBT margin has improve from -13.8% in FY17 to 6.6% in FY18. The newly acquired rubber gloves business is still running at a loss in FY18 but management hope to turn this around in FY19.

Even though the turnaround of the core net profit is a positive development, the quantum is still relatively small compared to the company’s current market cap. At the current share price (and using the RM2 mil core profit in FY18), the company is already being valued at a high PE of 36x. Any potential good news would have already been baked into the share price.

If you are looking to hedge your portfolio outside of HLT (due to its relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

The recent 4 quarters growth of profit alone is already an appeal to buy into the stock. With the 12 months trailing profit of around RM16mil, the company is currently only being valued at an undemanding valuation of 6.7x PE. That alone should attract some value investors.

However, the qualified opinion issued by the company’s auditor on London Biscuits 2018 financial statement last month puts in doubt on the sanctity of its numbers. Any profit that is shown since FY18 are now at risk. The 5 issues highlighted by the auditors are:

1) Inventories value as of 30 Sept 18. This can potentially affect the cost of sales recorded by the company. A lower inventory means higher cost of sales which would mean lower profit.

2) Related party transaction with Secret Ingredients Sdn Bhd. I don’t really see this as a big prob.

3) Misstatement of account balance for FY17. Initially I thought it was not that serious as sometimes items are categorised in different categories by different management/ auditors. The net result would actually still be the same. However, what surprise me the most was the “deposit and cash balance” as this is normally quite straight forward. Basically, you just need to check you cash balance in your account bank to come up with the numbers. However, London Biscuit, indicated in their Annual report that there was a downward adjustment to the cash balance from RM67.8mil to RM9.6mil. This is a big red flag. If you can’t even get the cash balance correct, then the other numbers in the balance sheet like receivables, payables etc are also in doubt.

4) Problems in verifying the Trade receivables value. Like I said, if you already have issues with Cash Balance, then you most probably have issues with the other items in the balance sheet as well.

5) Lack of evidence for the acquisition of machineries amounting to RM52.5mil. Should be straight forward. Just show the new machine to the auditors along with the documents backing the purchase.

With all these issues, I think it would be safer for investors to wait for the reaudit report first. But like I said, some of the issues like the “cash and deposit balance” is a real big red flag. Hopefully management will be able to explain this soon.

If you are looking to hedge your portfolio outside of London Biscuit (due to the risks relating to the qualified opinion by the auditor), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

SCH has a very lumpy and volatile quarterly results. Excluding all the non-recurring items, FY18 core net losses was at RM1mil. For 1Q19, the company only managed to record a mere profit of RM50k. Their main business in the quarry industry is not expected to rebound anytime soon given the still depressed outlook of the construction industry. Management is hoping that the 2 new businesses of equipment rental and fertilizers supply would help fill the profit gap left by the quarry business but given that both divisions are still new, investors might need to wait for a while longer before the 2 business can deliver any meaningful profit. In 1Q19 the combined result of the 2 segments was a loss of RM50k.

If you are looking to hedge your portfolio outside of SCH (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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Bursa’s profit in FY18 only grew by a mere 2.7%. In the past 5 years the profit grew by an average of around 5.8% which is not bad. However, the main issue for Bursa’s shares is it relatively high valuation. At the current share price, the company is trading at a PE multiple of almost 25x. At this valuation, investors would expect the company to deliver a constant double-digit profit growth to compensate with the high price of the shares.

The average profit projection for FY19 from 5 different analysts is around RM236mil which gives Bursa a forward valuation of around 24x PE. Which is still high.

If you are looking to hedge your portfolio outside of Bursa (due to its relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

If you take out all the corporate exercises, you will see that this is actually still a loss-making company. The more than RM40mil raised during the right issues will mainly be used for the Phase 1 of the Kuala Krai project in Kelantan. The Kuala Krai project which consist of 42 units of shoplots, 127 units of terrace house, 6 units of semi D house and 4 bungalows. The project has already started since Nov 2015 but faces funding issues. As of 2018 only 16 of the 42 shoplots has started construction (but yet to be completed due to funding issues). So basically, they will use the proceeds from the right issues to complete all the 42 shoplots. The rest of the projects (residential units) will only start construction if there are enough funds later. I have my doubts on this project being profitable given the outlook of the property industry. I would assume the property segment in Kelantan is a lot worst compared to Klang Valley.

If you are looking to hedge your portfolio outside of Metronic (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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

A very disappointing 4Q18 result with core profit to shareholder of only around RM1mil. This is worrying especially when the core PBT margin in 4Q fell to only around 14% vs 4Q17 of more than 20% margin. The 14% margin in 4Q is also a lot lower when compared to the 9m18 average core PBT margin of around 24%. Investors need to wait for the 1Q19 result to see whether the profit margin compression is permanent or just a one-off event.

At the current share price, MMSV is already trading at a PE of more than 20x which is consider high for a company that is not able to provide consistent profit growth to the shareholders.

If you are looking to hedge your portfolio outside of MMSV (due to its potential weak earnings outlook and its relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

This is actually a very good company that has been able to deliver both the revenue and profit growth to its shareholders. Excluding all the non-recurring items, FY18 profit to shareholders would have been around RM17 mil instead of the reported profit of RM13.1 mil. This represent a 5 years average profit growth rate of more than 20% (when compared to FY13 profit of only RM6mil).

That being said, at the current share price, the company is already being valued at a high PE of 39.6x which indicates that any future profit growth would have already been represented by the current share price. Any disappointment in earning growth would potentially have a negative effect on it.

If you are looking to hedge your portfolio outside of N2N (due to its relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

1Q19 losses of RM21mil marks the 8th consecutive losses recorded by Barakah. Some investors might be hoping for the company to start posting positives results given that the company had won some big contracts since mid FY18 (with the MCM contract won back in July 2018). This however, did not materialise which puts in doubts of the company’s ability to execute the contracts won within budget and on time.

Given its not so good track records in previous contracts, investors are hoping that the MCM contract would help the company to deliver profit this time around. Some of the contracts where the company failed to deliver (and record massive losses) are:

1) Pan Malaysia Transport & Installation (T&I) contract
2) Pengerang Pipeline contract
3) Inspection, Repair and Maintenance (IRM) contract

Investors also need to take note that the restraining order imposed by the High Court to PBJV’s (Barakah subsidiary) lenders which prevent them from calling for an event of defaults on any of its debt will expire by mid-April 2019. There is a potential risk that some creditors might want their debt to be paid in full given PBJV’s failure to honour some of the debt covenants (mainly relating to the debt coverage ratio given that the company has been posting losses since FY17).

If you are looking to hedge your portfolio outside of Barakah (due to its weak contract execution track record and potential credit default event), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Investors should get out of this company while they still can. The company will be suspended from trading on 18 March which only gives investors 5 days (up to Friday the 15th) to disposed of their shares. Even though Bursa gives Amtek up to 15 March to appeal, I think the most probable outcome would still be a suspension. I believe an appeal to Bursa would only be considered if the company can only come up with a solid regularisation plan. Those investors that are hoping for this might be having some wishful thinking on their part. It the company failed to come up with any regularisation plan for the past 1 year, I doubt they can do so in less than 5 days.

If you are looking to hedge your portfolio outside of Amtek (due to the risk of suspension and delisting), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Hi Vincent,

When u want to analyse the dividend, u need to analyse the maximum payout a company can make. For a dividend to be recurring, it will need to come from the company's earnings. So in the case of Bauto, the max dividend it can pay from earnings would be 19.08sens (100% dividen payout) while MBMR max dividend the company can pay is 42.35 sens.

But all this will depends on managememt decision and strategy. You seldom will see a company make a 100% dividend payout as normally they would prefer to use the money elsewhere in order to create more value to its shareholder. Some prefer to do a share buybacks (decrease the share base which result in higher eps in future), pay debt (improve balance sheet strenght and reduce future interest payment which result in higher profit), invest in new assets ( which would increase future income) etc. Basically what u do with the money will depend on the management's strategy but in general the max recurring dividend that u can pay will still depend on the company's earnings.

In the case of Bauto the reason to why the dividend payout is high (in FY18 the payout ratio is more than 100%, the company is paying more div that it earns) relates mainly to the management acqusition of their controlling stake in Bauto from Vincent Tan back in 2016. They had to take a loan of around rm406mil to pay to Berjaya Corp for an additional effective interest of around 11.33% in Bauto (this increase management effective interest in Bauto from only 10% to 21.3%.). Basically Bauto management needs to pay back this loan to the bank hence why the very high dividend payment.

MBMR on the other hand prefer to use the cash that it generated to pay off its outstanding debt in order to reduce the interest payment in the future which will increase the future profit further. Debt has fallen from RM375mil in Fy 16 to only RM145mil (however most of the remaining debts are actually trading debt which is backed by the company's inventories and receivables). That being said, investors should expect higher div payment in the future since now the company has more free cash flow it can used to reward investors. The potential disposal of OMIA will increase the free cash flow even further as MBMR will need less working capital to allocate to its business in the future.

Regards

Another pure speculative stock that has gotten some investors facing huge losses. It all started with the announcement dated 8th Feb indicating Datuk Abd Aziz buying a 31.61% interest in Utusan from UMNO at a price of 19 sens (a premium of more than 65% vs the closing price of 11.5 sens on the 8th Feb which was a Friday). The next Monday the share price went up substantially to an intraday high of 31sens with most of the investors assuming that there will be a potential offer made by Datuk Abd Aziz to take Utusan private.

Investors failed to take note of the % acquisition by Datuk Abd Aziz from Umno was below the 33% threshold needed to spark a General Offer by Datuk Abd Aziz. The same can be said with another UMNO link company KUB where Anchorscape bought 32% interest from UMNO at 68 sens (a premium of around 50% from the last traded price prior to the announcement). Like Utusan, KUB new shareholder is also not obliged to make the same offer to the other shareholders.

As of Dec 18, Utusan is still a loss-making company that still falls under the PN17 status. Excluding all the one-off items (such as impairments and cost relating to VSS), the total net loss for FY18 would still be a high of RM35mil. The future of the company remains weak with the now lack of support from UMNO and Federal Government. The most probable outcome in FY19 would be a further loss.

The balance sheet is also weak with NTA of -RM91.1mil or -82sens per share.

If you are looking to hedge your portfolio outside of Utusan (due to its weak earnings outlook and risks relating to its PN17 status), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

1Q19 result is the 4th consecutive losses by SYF Resources dragged mainly by its furniture business (property segment however only makes a small profit of RM260k). This under performance was mainly due to the shortage of foreign labours which had affected the company’s ability to run its furniture production at an optimum rate. Given that foreign labour issue will only get worst in the future (government want to limit the numbers of cheap foreign labour), the furniture business is expected to continue to record losses for the rest of the year so investors need to be prepared for another full year loss for FY19.

If you are looking to hedge your portfolio outside of SYF Resources (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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

This is a company that has been making consistent losses since 2008. In the 9m19 period, the company recorded a total net loss of RM5.8mil to its shareholders. Expect FY19 result to still be negative bringing it to 12 consecutive years of losses. Some investors believe that FY20 will be different but I think they might be putting too much hope on Dataprep’s management. Most likely FY20 will end up as a loss year as well.

If you are looking to hedge your portfolio outside of Dataprep (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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Reach is still a loss-making company with FY18 loss of RM44mil to its shareholder. But the biggest issue with this company is not the P&L but its very weak balance sheet.

If you look at the balance sheet dated 31 Dec 18, you will see that the company has a total current liabilities of RM359mil and only a total current asset of RM81mil. Of the RM359mil current liabilities, RM307mil are amount due to corporate shareholder of a subsidiary (which carries interest hence is actually debt). Please take note that the company has only paid around RM2.6mil of interest payment out of the combined interest cost of RM138mil for FY18 and FY17. I assume it must be part of the amount due to corporate shareholders as the total amount had increase from only RM273mil in on Dec 16 to now RM600mil as of Dec 18. The corporate shareholder is MIE Holdings Corporation, a listed company in HK that is based in China. Personally, I think MIE would push Reach to pay whatever is due to them given that the company itself is also in a distress situation. The share price of MIE has fallen from 52 weeks high of HKD0.50 to now only HKD0.09. (https://www.bloomberg.com/quote/1555:HK)

Another issue for Reach is the minimum contractual commitment that they have to spend for their four fields in Kazakhstan. In 2019, the amount to be spend is around RM135mil which I doubt the company has. If they failed to spend the minimum committed capex, there is a possibility that the Kazakhstan government would take back their production license for the 4 fields. Investors need to take note of this risk.

If you are looking to hedge your portfolio outside of Reach (due to its weak earnings outlook and weak balance sheet), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Hi guys,

An investor made an inaccurate comparaison between Bauto and MBMR. Sharing my views for the benefit of others as well.

Regards

Hi vincent,

It's actually incorrect to say BAuto is cheaper than MBMR. When valuing a company, you need to compare the company's market capitalisation with the earnings that its generating. This can be done using the PE multiple (Share price /Earnings per share).

BAuto share price of RM2.19 is earning a total of 19.08 sens in the past 12 months. This translate to a PE multiple of 11.5x.

MBMR share price of rm2.63 is earning a total of 42.35 sens in the past 12 months. This translate to a PE of only 6.2x. As u can see MBMR is actually "cheaper" than BAuto by almost half.

Another metrics that u can use is the PB (price over Net Tangible Assets). For every Rm2.19 share of BAuto, it is being backed by an NTA of 44 sens. This equals to 4.9x PB.

For every Rm2.63 share of MBMR, it is being backed by an NTA of rm4.04 per share. This translate to a PB of less than 0.7x. Using the PB metrics, u can see that MBMR is still a lot "cheaper" than BAuto.

Regards.
08/03/2019 06:04

Hi vincent,

It's actually incorrect to say BAuto is cheaper than MBMR. When valuing a company, you need to compare the company's market capitalisation with the earnings that its generating. This can be done using the PE multiple (Share price /Earnings per share).

BAuto share price of RM2.19 is earning a total of 19.08 sens in the past 12 months. This translate to a PE multiple of 11.5x.

MBMR share price of rm2.63 is earning a total of 42.35 sens in the past 12 months. This translate to a PE of only 6.2x. As u can see MBMR is actually "cheaper" than BAuto by almost half.

Another metrics that u can use is the PB (price over Net Tangible Assets). For every Rm2.19 share of BAuto, it is being backed by an NTA of 44 sens. This equals to 4.9x PB.

For every Rm2.63 share of MBMR, it is being backed by an NTA of rm4.04 per share. This translate to a PB of less than 0.7x. Using the PB metrics, u can see that MBMR is still a lot "cheaper" than BAuto.

Regards.

This is a pure speculative stock. Based on the public info, it does not seem to have any corporate exercise planned. Appeal of this stock is purely based on technical.

The company posted a net loss of RM10.5mil in FY18. It would have been worst if not for the reversal of write off of receivables (RM26mil) and sudden high profit from associate (RM13mil).
However, the biggest issue with the company is its very weak balance sheet. As of Dec 18, the company has a total of RM410mil current liabilities (of which RM 184mil is debt) and only RM101mil in current asset (of which only RM4 mil cash). This was also highlighted by its auditor, PwC, back in May 2018 when it issue a statement of material uncertainty related to the going concern of the group (https://www.thestar.com.my/business/business-news/2018/05/02/zelan-external-auditors-uncertain-over-its-outlook-after-losses/) . I would assume the same statement will be made later when the FY18 annual report is out in May. Investors need to take note.

If you are looking to hedge your portfolio outside of Zelan (due to its weak earnings outlook and weak balance sheet), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

In FY18 the company recorded a total net loss of RM23.1mil. Balance sheet is considered to be weak with debt of more than RM38mil (of which RM25.7 mil is current debt) and only a cash reserve of RM2.4mil.

The company immediate plan is to try and develop their 620 acre land at Kuala Linggi, Melaka into Malaysian Tourism City (over 3 phases). The first phase consists of a water theme park, a weekend market, an adventure park, eco-tourism park, a hotel, a tourism facilities and vacation bungalows (called The Estate). The 1st phase is expected to start in the 2Q19 with completion by 2022. The company will start off by focusing on the 480 units bungalows and the 300 rooms hotel which have a total value of RM464mil and RM326mil respectively bringing a total combine of RM790mil.

As mentioned earlier, the company currently has limited cash reserve to start the project which is why they had proposed to do 2 equity capital raising which are:

1) Share issuance of 49.26 mil shares. Estimated to raise around RM18mil
2) Private placement of 49.26mil shares. Estimated to raise around RM18mil

With the RM36mil they will put RM30mil for the development cost of the Melaka project. However, the RM30mil will only be sufficient for the early stage of the development. Investors need to be prepared for another round of equity capital raising later which most probably be in the form of Right Issues as it will provide the company with higher potential amount to be raised.

You should only invest in this company if you really believe in the Melaka project as you will potentially need to pump in more money later to help the company raise the fund to complete the project.

If you are looking to hedge your portfolio outside of Meda Inc (due to its weak earnings outlook and potential future capital raising exercises), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

I see a lot of investors turned bullish on Brahims when its chairman said that they are in discussions with potential partners to come up with a plan to bring the company out of the PN17 status.

But I am a bit sceptic of this. If there was already a way to improve the company’s financial status, why does management would want to wait until Brahim falls into the PN17 status? Why not push the turnaround plan before that? One of the potential partners would most probably be SATS Ltd the other 49% owner of Brahim Airline Catering Holdings (BACH). I doubt they would want to put in more money into the company (they initially paid RM110mil for the 49%. They were supposed to pay another RM100mil but only when BACH reach a certain financial milestone which it never did).

Being a PN17 company will put more pressure on the company’s financials as there will be lesser (or potentially zero) banks that will be willing to provide the company with loans especially for its working capital. Investors need to take note that the company has a RM73mil debt to be paid in the next 12 months.

Brahim has a negative equity value of RM5.8mil at the moment. If you exclude the goodwill (51% of it as the other 49% is owned by SATS ltd), the net tangible asset value is a whopping negative RM58mil. Which means even if the company managed to come up with a regularisation plan, I doubt it will be good for the equity holders. Probably Brahim will try to convert the debt and payable into equity which would only mean a massive dilution for the current shareholders.

If you are looking to hedge your portfolio outside of Brahim (due to its weak earnings outlook and risks relating to its PN17 status), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Even though revenue had grown by almost 20% in FY18, profit grew by only 10% due to the squeeze of profit margins relating to the increasing operating cost. The result itself is commendable but the 10% profit growth is a lot lower than the 32% achieve in FY17. FY19 is expected to deliver the same level of growth (if not lower) as the one seen in FY18 mainly due to the increasing operational cost which will pull down the profit margin and also due to the fact there will be lower new stores opening in 2019.

At the current share price, the company has a PE valuation of 35.5x which is really high given the slowing down of Mynews profit growth. Assuming they managed to deliver a profit of RM30 mil (this is above the expected 10% profit growth), the company would still be valued at a lofty valuation of 31.4x PE.

If you are looking to hedge your portfolio outside of Mynews (due to its relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Profit for Scicom has been trending downward since its peaked back in FY17 with total profit to shareholder amounting to RM45.4mil. As of Dec 18, the 12 months trailing profit was only RM23.2mil which is only half of what they managed to achieve in FY17. Given the disappointing 1H19 result, there is a potential that FY19 profit would be lower than that of FY18 with a profit target of around RM20mil to RM25mil (1H19 profit was only RM11.3mil). At the top range of the target and using the current share price, the company would still be value at PE valuation of 17.2x. This is high for a company with negative profit growth.

If you are looking to hedge your portfolio outside of Scicom (due to its weak earnings outlook and relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

This is a pure speculative stock. The company initially receive a takeover offer of 88 sens per share back in Nov 2018. Which is why the share price jumped from less than 30 sens in mid-September to around the 88 sens when the offer announcement was made.

End Dec, Kaf Investment acting as an advisor for the company, had advice shareholders to reject the offer because it deemed it as unfair and unreasonable. The advisor puts Merge value at around RM1.10 per share.

End Feb the share price suddenly jumped to around the advisor valuation of RM1.10. But then jumped again to yesterday peak of RM1.40. Those that bought above the RM1.10 level must believe that a new offer will be made at above Kaf Investment valuation. Hopefully they are right.

If you are looking to hedge your portfolio outside of Merge (due to its speculative nature) 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

This is a company that has been making substantial losses since FY15 (almost RM30mil). In FY18 alone, the total loss to shareholders was around RM8mil. Those investors that think that the company can suddenly turn to profit in FY19 might be having some wishful thinking. According to management the company’s turnaround plan will mainly be driven by the recent launch of its new online to offline to online system (o2o). However, given the company’s track record, investors would be safer to expect another loss year in FY19.

If you are looking to diversify your portfolio outside of Mpay (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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

This company has made 7 full year losses out of the 10 years since FY08. The last time it managed to deliver a profit was back in FY16 and the amount was only RM1.3mil. It then continues to record losses of RM1.1mil and RM2.1mil in FY17 and FY18 respectively.

The company is facing some liquidity issues with short term debt of around RM32.1mil and having only a cash reserve of RM9.2mil which was mainly raised from the disposal of assets in FY18. In January, the company announce a private placement exercise to raise RM3.3mil cash but this is still insufficient given the company high near-term debt obligation. Expect further sales of assets or another round of equity fund raising in FY19. Almost all of the debts are in Thai Baht with average interest rate of 6.5%. This is not a good given the strengthening of the Thai Baht vs Malaysia Ringgit (debt value would increase if the Baht appreciate further).

If you are looking to diversify your portfolio outside of AE Multi Holdings (due to its weak earnings outlook and liquidity issues), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

Even though the company managed to grow its revenue by a small percentage of 1.8% in 2018, profit fell by a whopping 85% to only RM2.9mil vs RM19mil a year ago. Main reasons for the deteriorating margins were due to higher raw material, financing, labour and depreciation costs. Expect the depressing profit margin to continue into FY19.

At the current price, the company is being valued at 34x PE which is high for a company with limited potential growth in the near future.

If you are looking to diversify your portfolio outside of Ulicorp (due to its weak earnings outlook and relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

This is a pure speculative stock given that the company’s 9m19 result is a loss of around RM4.5mil. The recent increase of the stock price can be mainly attributed to the Edge Weekly report which indicated the possibility of Datuk Tee Eng Ho (major shareholder of Kerjaya Prospek) doing an RTO on GSB to create a new property development vehicle for his family (Kerjaya will focus mainly on construction). In the article, The Edge used a price example of 20 sens as reference for the potential RTO. All this speculation comes from the previous MGO offer by Datuk Tee back in May 2018.

However, investors need to take note that the previous MGO offer was only at 13 sens of which Javawana (Datuk Tee investment vehicle) did not increase the offer price when it failed to get the acceptance of the other shareholders mainly due to the sudden increase in the share price to a high of 25.5 sens.

The last transaction made by Javawana was back in 4th Dec 18 when it acquires an additional 10.5mil shares at 15 sens to bring its equity holding in GSB to 40.82% (a 0.1% increase). This was the only transaction made post the failed MGO.

If you are looking to diversify your portfolio outside of GSB (due to its speculative nature), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

FY18 profit of only RM533mil was lower by almost 20% compared to FY17 of RM652mil (the highest profit by the company). FY19 profit should rebound back given the 13% increase in container tariff effective 1st Mar 19 but it will most probably still be lower than FY17 profit. At the current price, the company is being valued at 23.9x PE which is high considering the company’s inability to deliver consistent profit growth to its shareholder. Even at its highest profit level, the company would still be valued at around 19.6x PE.

If you are looking to diversify your portfolio outside of Westport (due to its relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

The company’s profit reached its peak back in FY17 when it managed to deliver a profit of RM43.5mil to its shareholder. In FY18 core net profit fell to only RM15.7mil but has since rebound back. FY19 is expected to deliver a profit of around RM30mil to its shareholders.

That being said, at the current share price, the company is already being valued at a PE of 19x which is high considering the lower profit delivered since FY17. Given the lower profit margin seen in 3Q19, a return to FY17 profit level might not be possible in FY20. If margin compression persists, expect lower profit level in FY20 compared to the expected RM30mil profit in FY19.

If you are looking to diversify your portfolio outside of Power Root (due to its relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.0x 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.

This is a company that has been consistently making losses since FY10. Their resort and wellness business have not been able to get enough customers for them to be operationally viable for almost 10 years. In FY18 the company posted a net loss of RM37.4mil. Any investors that believe 2019 would be any different might be having some wishful thinking on their part. Expect FY19 to continue recording losses as well.

If you are looking to diversify your portfolio outside of F&N (due to its relatively high valuation), 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 6.1x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

Given the very good result in 4Q18, MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at a very low PE of only 5.0x 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.

Hi AFMGT,

I think they are still negotiating with potential investors/ buyers of the asset. Negotiation has actually started since last year. From my understanding they have put an estimate 1 year as a deadline for the disposal. That being said any potential disposal can only be confirm when management decides to put OMIA as "Asset for sale" in their balance sheet. Once that is done they will have 1 year to do so.

Just to inform u that OMIA losses is actually not small. In Fy17 the total core losses (excluding impairment) was at rm30mil. My estimate is that in 2018 the losses was still around rm20mil. However all of this losses is already part of MBMR patami of RM165mil.

So basically, if managememt decides to disposed of OMIA, there will be an immediate jump in profit of between rm10mil to rm20mil.

My projected profit of rm200mil in fy19 does not take into account the disposal of OMIA.

Regards.

F&N will likely face earnings weakness in 3Q19 onwards from the implementation of the sugar tax. Currently 90% of the company’s beverage product in Malaysia are expected to be impacted by the new tax (to be implemented in April 2019). This will result in potentially lesser demand for the company’s products which would affect both its revenue and profit margin (due to higher unit cost) in the future. We will need to wait for the 3Q19 (or even better 4Q19 result) to see the full affect of the sugar tax on the company’s bottom line.

That being said, even if we were to use the 12 months trailing profit, at the current share price the company is already been valued at a high of 32x PE. This is high considering F&N growth rate for the past 7 years was only at an average of 3.4% per annum.

If you are looking to diversify your portfolio outside of F&N (due to its relatively high valuation), 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 6.4x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

Given the very good result in 4Q18, MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at a very low PE of only 5.3x 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.

Those that are buying into this company need to be bit careful. In terms of fundamentals, the company has a really weak profit earnings outlook. Total FY18 profit was less than RM1mil with the latest quarter recording a loss of RM200k. At the current share price, the company is trading at a very high PE of almost 60x.

Investors need to take note, that the recent spike in price that started on the 22nd Feb is not the first time that it happens for this company. Last year the share price went up substantially from 44 sens on 5th Mar 2018 to an intraday high of 74 sens on 7th Mar 18 (it however closed at 59 sens that day). However, the share price traded back into the 40 sens range in less than a month given that there was no actual fundamental change that could back the sudden increase in the share price.

If you are looking to diversify your portfolio outside of KSSC (due to its weak earnings outlook and the speculative nature of its share price), 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 6.4x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

Given the very good result in 4Q18, MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at a very low PE of only 5.3x 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.

Some investors might be thinking that the company’s profit of RM250mil in 1Q19 would mark the start of rebound back from the low profit of RM153 mil recorded back in 4Q18. However, after deducting all the non-recurring items, the core net profit in 1Q19 was only RM175mil (albeit still better than 4Q18).

Let’s say that the price of palm oil recovers and the company future quarter profit for the rest of FY19 average at around RM250mil/ quarter, this would bring the company’s profit to RM925mil for FY19. At the current share price, the company would already be valued at a very lofty valuation of 28.5x PE.

I don't think that the industry will reverse their down cycle trend anytime soon given the general demand of the commodity is expected to go down in the future. China for example, is negotiating with US to take in more agriculture products from US which would potentially include soybean (or soybean oil). In general, Chinese consumption of oil would not actually grow that much. Any increase of soybean oil import from the US would actually means lower import for other types of oil from other countries (in particular palm oil from Indonesia and Malaysia).

Another issue is on the European demand of palm oil which is expected to go down exponentially given the proposed ban of palm oil use in food and transportation industries in the future. They have already agreed to phase out the use of palm oil in transport fuel by 2030. Some countries like France and Norway have already started to move away from palm oil.

With this in mind you need to have a slightly long-term investment horizon when buying into oil plantation companies like KLK as the return to upcycle might not be in the near future.

If you are looking to diversify your portfolio outside of KLK (due to its relatively high valuation), 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 6.4x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

Given the very good result in 4Q18, MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at a very low PE of only 5.3x 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.

The profit of only RM11.1mil in FY18 is a fall of more than 40% from what the company managed to achieve a year ago (FY17 profit was at RM18.7mil). At the current share price, the company is being valued at more than 20x PE which is relatively high given the negative growth of profit.

Future growth of the company will still be driven by its SCADA solution which in the long run should bode well for the company. The company focus in cyber security solution could also be a growth potential for the company. However, investors might need to be a bit more patient for the company to churn out the expected profit growth. I doubt that substantial profit growth can be achieve in 2019.

If you are looking to diversify your portfolio outside of Willowglen (due to its relatively high valuation), 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 6.4x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models which will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

Given the very good result in 4Q18, the company is expected to achieve a profit of RM200mil for the full year of 2019. At the current share price, the company is being valued at a very low PE of only 5.3x 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.

Hi setia2u,

But u need to be careful when trading based on this info. I think u are assuming that there will be a general offer made to other shareholders as well at the same price of 68 sens per share. However, u need to take note that the buyer purposely bought only 32% stake from Anchorscape (UMNO) which i beleive is to prevent any general offer event. Prior to the sales Anchorscape hold 52.2% interest in KUB. If the buyer wanted to take KUB private, it would have already bought the whole of Anchorscape stakes. In the end this company is still expected to make losses on the near term until its plantation business mature. So u need to be prepare for a quarterly loss result for the near term.

If you are looking to diversify your portfolio outside of KUB (due to its weak earning 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 6.4x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

Given the very good result in 4Q18, the company is expected to achieve a profit of RM200mil for the full year of 2019. At the current share price, the company is being valued at a very low PE of only 5.3x 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.

The 4Q18 result just show how difficult the business environment for MSM has become. With the government committed to end any monopolistic business, MSM’s shareholder will need to be ready to see more competition for its sugar products in the near future especially from the import markets. The new sugar tax which starts in April this year will only make it worst for MSM with expected demand from high volume purchasers to see significant decline due to potential lower demand from end consumer. The higher depreciation charge and finance cost from the new plant in Tanjung Langsat will only reduce the bottom line even further as the company will find it difficult to operate the new plant at the optimum production rate.

If you are looking to diversify your portfolio outside of MSM (due to its weak earning 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 6.5x 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. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).

Given the very good result in 4Q18, the company is expected to achieve a profit of RM200mil for the full year of 2019. At the current share price, the company is being valued at a very low PE of only 5.4x 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.

Hi siowyf8888,

I actually do have some companies under my watchlist and of which i am currently monitoring. However, i would like to reserve from making the recommendation until i also have some of my inquiries on the said companies answered. But to give an indication, most of the companies under the watchlist are companies that are mostly under the radar of investors and trades at very undemanding PE and PB multiples.

A company that has already ample coverage would be Ewein which i first take notice back in Nov last year prior to 3Q18 result. They still have yet to announce their 4Q18 result but it should be out today. It's a property company in Penang with direct exposure to the Penang Transformation Plan Project. Their City of Dream projects is a collaboration with Zenith construction company which is the main contractor for the Penang Transportation Plan project. Valuation is cheap at less than 5x PE and 0.8x PB.

However, the only issue that need to be clarified is the company's cash flows. Hopefully the 4Q18 result can shed some light on this. That being said, given the undemanding valuation i had already started to buy into the company when the share price fell to below the 55 sens level. I did made recommendation in it's forum back in Nov but i think i might have jump the gun a bit.

Regards.

Hi OhYes,

Sorry, i don't actually have any blogs. i find it easier to just leaves comments on the i3 forum.

For the TP i am actually hoping for the market to price MBMR closer to its peers of around 12 to 15x PE. That being said a PE valuation of 10x would already be a big improvement for MBMR. At the current share price the company is only being valued at 5.4x fwd PE (base on a target profit of RM200mil for FY19).

This company has been under the radar of most investors for a long time due to the bad performance of its alloy wheel business of which the management had consistently make impairments on every 3Q and 4 Q of each financial years since FY14. However, management had decided to almost fully impaired the business in FY17 which means there will be low impairment for the alloy wheel business going forward. Any decision to disposed of the business (as to what was told by the chairman) would be a big positive catalyst for MBMR (both in terms of profit and also in terms of working capital needs).

The company had also impaired most of the auto component business under Hirotako back in FY17 as well. Which also means less possibilities of further impairment in the future.

Regards.