Hi ChiefTrader,

Both Uzma and Petronas has refuted allegation by Sabah Kini that the company received preferential treatments for their contracts. However, they failed to clarify on the status of the contract “Provision of Hydraulic Work Unit Ghazi 461 for Petronas Carigali”. Sabah Kini claims (with a letter from Uzma to Petronas as proof. Not sure of the authenticity though) that Uzma is facing difficulties with the contract due to the incompatibility of its equipment (of which they had invested around USD8mil) to perform the work specified in the contract. This resulted in delays which give the possibility for Petronas to terminate the contract.

The Ghazi 461 contract was awarded by Petronas on 28th Dec 2017. The contract tenure is until the completion of 3 firm wells (which is now facing delays) with an extension option of a further 2+1+1+1+1 wells (total 6 additional but the company need to complete the first 2 additional wells first before the option of a another well can be given and so forth). The value of the contract is not specified but would most probably constitute a fair chunk of the company’s orderbook of RM1.7bil as of Jan 2019.

In 1Q19, the company only managed to deliver a core net profit of RM500k (excluding the RM6.8mil forex gain) due to an unexpected downtime of its water injection facilities and lower contribution form Uzmapress. Initially, most investors are expecting that the earnings to bounce back for the remaining of the FY19 but given the recent development with the Ghazi 461, earnings might be affected if Petronas decides to terminate the contract. As an example, Uzma might need to impair most of the USD8mil equipment value which was invested specifically for the project.

If you are looking to diversify your portfolio outside of Uzma (due to its earnings and contracts uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

I was surprise to hear that Careplus, a glove manufacturing company could deliver losses to its shareholders when its other peers keep delivering record profit to theirs. After further verification, I notice that a big portion of the profit is given back to the Non-Controlling Shareholders (NCI). The Company has 4 main subsidiaries, Careplus (M) Sdn Bhd, Rubbercare Protection Products Sdn Bhd, Masterclean Technologies Sdn Bhd and Careglove Global Sdn Bhd. All are 100% owned by the company except for Careglove Global which is only 50% owned.

The issue with the company is that the main contributor of profit comes from Careglove with the other 3 fully owned companies delivering a combined loss to the group. For 9m18, total group profit is around RM4.8mil of which Careglove delivered a total profit of RM9mil while the other 3 fully owned companies deliver a total loss of RM4.3mil. This is why the profit to shareholder is only RM260k for the period of between Jan to Sept 2018. Until the company managed to turnaround the 3 subsidiaries, investors would most probably end up with very small profit (or even losses) in the near future (given that half of the profit from Careglove will need to be return back to the NCI).

In term of business outlook, the company is relatively small compared to the other main glove manufacturers. Careplus has only an output of 4bil pieces annually vs Kossan (smallest among the top 4) of around 25bil pieces annually. With the small capacity there is a limit to the type of clients that the company can approach mainly due to its higher per unit cost compared to other bigger players, which limit the company’s ability to compete on pricing.

In terms of financials, investors will most probably end up with very minimal profit from the company due to the loss-making subsidiaries. Any growth in FY19 will be limited given that all the big players are expected to bring in new capacity supply this year (almost 20bil pieces per year of new capacity combined). There will be more intense competition in terms of pricing to attract new customers to fill in their now bigger capacity and in general the one that usually lose out are the smaller players like Careplus.

If you are looking to diversify your portfolio outside of Careplus (due to its earnings uncertainties and bleak growth outlook) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company’s decision to moves into the oil bunkering business in mid of 2016 from the original business of water filter trading (before the company was known as Raya International) has somewhat been successful given the steady profit seen since 1Q17. Full year profit for FY17 was at RM2.5mil. 9m18 profit is already at RM2.3mil and FY18 could potentially deliver a profit of RM3.5mil to its shareholders. Some investors think that the current business alone (without the potential profit from the proposed new acquisition of Banle Energy) could potentially deliver a profit of around RM5mil in FY19.

The issue with Straits is not the business performance but more to its rich valuation. At the current share price and based on the RM5mil potential profit in FY19, the company would already been trading at a high of 24.6x forward PE. Please take note that there is another 180mil warrants that are already in the money at an exercise price of 11.5 sens per share. Assuming a full conversion (of which the share price will fall to around 20 sens due to the dilution from the lower price warrant conversion) the real market cap of the company is actually RM143mil which means that the company is actually trading at a forward PE of 28.6x. This is very high for a company that is only in the bunkering business which has a low barrier to entry. Anyone with big enough vessel can apply for the bunkering license from the port authorities (who prefer multiples suppliers as it will minimise any concentration risk for the bunkering operation).

Based on the balance sheet as of Sept 2018, the company has an NTA (excluding goodwill) of around RM0.14 per share. Which means at the current share price, it is trading at 1.6x PB.

If you are looking to diversify your portfolio outside of Straits Inter Logistics (due to relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company has mostly recorded full year losses for the past 10 years with only FY09 and FY12 being the only profitable years. 9m18 result was a loss of RM5.8mil with full year 2018 loss expected to reach around -RM8mil. To think that the company can suddenly turnaround and post a profit in FY19 might be a bit of a wishful thinking on the part of some investors.

The company’s decision to venture towards the Property industry might be a bit late given the current negative sentiment of the industry. Any profit from the Tourism segment is not enough to cover the company high corporate expenses. It would be better for investors to focus on other companies that are actually profitable as some are currently trading at very low PE multiple vs their industry average.

If you are looking to diversify your portfolio outside of Inch Kenneth Kajang Rubber (due to its earnings uncertainties and weak market outlook) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company’s 1H19 result was really disappointing for the investors with total profit of only RM2.7mil a fall of more than 75% vs 1H18 results even though revenue actually grew by 7%. The fall in profit margins is contributed by higher raw material (resin), labour, financing and depreciation costs (of which the last 2 are related to the new plant in Kulai). 3Q19 is expected to still deliver below par result due to the delay in the migration to the new plant which is only expected to be completed by end Jan (instead of the earlier target of Oct 18).

FY19 would most probably end by the company only reaching a profit of around RM8-10mil. FY20 would see a better result but given the intense competition for some of the company main products (like lunchboxes and cups) couple with the still high operating costs, investors should only expect a full year profit of around RM15mil in FY20. At the current share price, this would mean the company is already carrying a higher than average valuation of 16x PE.

Another potential problem that need to be monitor by investors is the liquidity issue currently faced by the company with current debt obligation of RM51mil and a cash reserve of only RM7.6mil. If management fails to convert the high trade receivables and inventories (RM47mil and RM38mil respectively) to cash fast enough, the company might need to depend on using more debt to refinance existing debt. Given the higher interest rate trend, this would most likely hit on the P&L of the company in the future.

If you are looking to diversify your portfolio outside of SCGM (due to its earnings uncertainties, relatively high valuation and potential liquidity issue) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Hi Abidjan,

I find it difficult to come up with a consistent future projection based on the macro economics. There is too much input to be considered. I prefer to focus on an individual company financial performance.

The reason i like MBMR over IJM Plantation is not because i prefer the auto industry over the plantation industry. It's merely based on valuation. MBMR is currently trading at a PE of 6.9x and will be trading lower at 5.9x based on FY19 results backed by the reasons i mentioned above while IJM Plantation is currently having a negative PE. Even if the company managed to deliver a profit of RM115mil in FY19 which is similar to FY17 (where CPO price average at around RM2700 per tonne), at the current price the company would still be valued at 12.6x PE which is double that of MBMR. And this is only if CPO price were to increase to RM2700 which is a doubt given the negativity of the commodity outlook in the future.

Currently Indonesia and Malaysia are the 2 main producers of palm oil. But other regions have also started to explore the commodity especially regions with vast land supply like Africa and the South American countries (Peru for example has started to approach Indonesia companies for palm oil project. If you go to Lima you will be surprise to see a lot of Indonesians in the capital). Given our country's commitment to limit the expansion of the planting of new palm oil area, we might be faced with competitions from other nations to supply to our current existing clients in the future (India, China, African countries, US etc) which will affect the future business of Malaysian palm oil companies like IJM Plantation.

Regards.

Hi Jowong7,

Yup. Unlike other logistic companies, Tiong Nam prefer to own all the warehouse asset themselves including the land. The idea of carving their warehouse assets and parking it under Reit has been touted for a long time (i think i first heard of it in 2015) but it has never materialised. Given the increase of the global interest rates trend, listing the warehouse REIT now might not get the best valuation that the major shareholder is looking for. I honestly believe that they had missed the boat to list the warehouse Reit. Should have done it in 2016.

Any listing would only be done later given the current market uncertainties.

Regards.

Hi dhiazahra,

Actually Es Ceramics customers are mostly the gloves companies which means their sales are mostly focused on some big clients like Top Gloves, Supermaxx, Kossan and Hartalega. And smaller revenue might come from the smaller gloves manufacturer like Ruberexx.

Even though, the company might be the largest former gloves manufacturer in Malaysia in terms of capacity, they actually do not command a big percentage of the total market share as the industry is really segmented with a lot of other former gloves manufacturers like Ceramtec (German based company which has a subsidiary in Malaysia), Shinko Ceramic, Vaytec etc. The most premium of which the big gloves manufacturers are willing to pay are actually products from Ceramtec due to its perceived higher quality.

This might be the reason to why the company is not able to pass the increase cost of production to its customers hence the lower profit margins since FY18.

Regards.

2Q19 marks another disappointing quarter for Es Ceramics shareholders with profit of only RM46k from a revenue of RM7.4mil. The profit margin squeeze since FY18 was mainly attributed to the increasing cost of LPG and raw materials which are not expected to come down anytime soon. Investors will need to be prepared for the company to continue posting mediocre results for the rest of FY19.

Even if the company managed to somehow deliver a profit of RM2mil in FY19 (average 3Q & 4Q results will need to be around RM750k per quarter), at the current share price, the company would already been valued at a high of 19x PE which is normally given to those companies with at least double digit profit growth.

If you are looking to diversify your portfolio outside of Es Ceramic (due to its earnings uncertainties and relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

2Q19 result marks the 5th consecutive quarterly losses by Hume Industries. And things are not expected to be any better in the near to mid-term given the depressing cement price (of around RM186/tonne) which was affected by the softer demand from the construction and property sectors but also due to the oversupply of cement in the Peninsular market. Most cement companies had decided to expend their capacity earlier to take advantages of the potential high demands from mainly the big government projects (MRT, LRT, ECRL, HSR etc). But all these demands evaporated when the new government had decided to cancel, hold off or scale down most of these projects.

Investors need to be prepared for the company to continue posting losses for the rest of FY19. Any turnaround will depend on the improvement of the cement price which will only happen if the government decides to refocus back on infrastructure spending. This is not expected to be in the near future.

If you are looking to diversify your portfolio outside of Hume Industries (due to perceived future negative earnings in the near to mid-term), I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company has failed to deliver any consistent profit to its shareholders for the past 10 years. The company would likely post a loss of more than RM10mil in FY18 and I doubt they can reverse the losses in FY19 given the current weak property market (which is even worse outside of Klang Valley).

Investors may need to wait for the property market to rebound back for the company to start posting profit but I still doubt it would be substantial enough when compared to the company’s market cap. Even if you take the FY17 profit of RM6.5mi, at the current share price, the company would still be valued at a high valuation of more than 22x PE.

If you are looking to diversify your portfolio outside of Pasdec (due to its earnings uncertainties and relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Since FY16, the company has only managed to deliver very small profit to its shareholder. 9m18 result only manged to record a profit of RM1.8mil. Even if the company manged to deliver a higher than average profit of RM2.5mil for the full FY18, at the current share price, it would have already been value at almost 30x PE. To think it can deliver a higher profit in FY19 might be a bit of a wishful thinking on the part of some investors especially given the depressing property market at the moment.

If you are looking to diversify your portfolio outside of Sycal Ventures (due to its earnings uncertainties and relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

How ever you want to slice the numbers, the conclusion is still the same. Johan Holding is a loss-making company which most probably will still be loss making in FY19. Even after excluding the RM64.3 mil losses in investment securities, the company would still have a big loss of almost RM30mil from its operation from Jan to Sept of 2018.

What is more worrying is the company potential to fall under the PN17 status (once they come out with their audited 2018 account) given that the shareholders fund is already below the 25% limit of the total paid up capital based on the 3Q18 report. Shareholders fund is only at RM93mil vs share capital of RM381mil which means the shareholders fund only represent 24.4% of the paid-up capital. Investors just need to be reminded of the risk in investing in PN17 company by looking at Perisai Petroleum which face delisting in February (trading has already been suspended).

If you are looking to diversify your portfolio outside of Johan Holdings (due to its earnings uncertainties and potential risk of given the PN17 status) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Since FY17, Melati has failed to deliver substantial profit to its shareholder with FY18 profit of only RM2.4mil. Currently based on the 12 months trailing profit, the company is being valued at a high of 24x PE. Even if the company managed to deliver a profit of RM1mil per quarter for the rest of FY19 (which I highly doubt), it will still carry a high valuation of 16x PE if compared to the industry average of below 10x.

If you are looking to diversify your portfolio outside of Melati Ehsan (due to its relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

1H19 profit of RM13.2 mil is an improvement of 19% compared to 1H18 result of only RM11.1mil. The growth in both revenue and bottom line are driven by the company’s expansion of the Strabucks brand (opened 6 new outlets) couple by the lower losses of Kenny Rogers business (the company closed 3 loss making outlets during the period). Future growth will be driven by new Starbucks stores opening.

However, at the current share price, the valuation of Berjaya Food looks pretty expensive. Assuming that the company managed to reach a profit of RM30mil in FY19 (meaning 3Q and 4Q need to achieve an average profit of RM8.5mil which had only been achieve once in 3Q15), at the current share price the company would have already been valued at around 17x forward PE. Some investors might be a bit too bullish on the potential growth rate going forward and will potentially be disappointed if the profit growth slows down in FY20.

If you are looking to diversify your portfolio outside of Berjaya Food (due to its relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The news on MMHE securing a 6 years frame agreement for EPC job from Petronas is actually a very good news. However, it does not mean that MMHE is confirm to get the EPC jobs from Petronas in the future. The company still have to compete with other fabricators like KKB, Muhibah, Sapura Energy etc (who also secured the frame agreement from Petronas) later in another tender between the shortlisted companies for the actual work orders. Given the strength (both in term of technical expertise and balance sheets) of all the participants, you can be sure that the margins for the future tender would most probably will still be thin. Petronas has indicated that they will continue with their cost efficiency drive even if oil price rebound back to above USD70 (now trading below USD60). Any future earnings boost from this agreement is only expected in FY20 (potential peak spending by Petronas) assuming the company managed to secure the work order contracts.

The agreement with Aramco is also similar to Petronas’s where MMHE is shortlisted as one of the potential contractors for the actual work (which still need to be tender later). Other contractors under the umbrella contracts are: McDermott International, Dynamic Industries, Saipem, Larsen & Toubro - Subsea 7 JV, National Petroleum Construction Company (UAE), Sapura Energy, Lamprell – Boksalis – Techinip consortium and China Offshore Oil Engineering.

Investors need to be patient for the company to deliver substantial earning (vis a vis to its market cap) which will only come if MMHE can actually secure substantial orders from these 2 big agreements. Until then they will most probably continue to post losses (or small profit) in the near future.

If you are looking to diversify your portfolio outside of MMHE (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company profit grew at around 8% in FY18 which is a lot lower when compared to the high growth seen in FY17 and FY16 (45% and 48% respectively). This might signal the start of a lower growth rate going forward to more sustainable rate which is still good given that most companies at the moment are finding it hard to deliver growth to their shareholders.

However, at the current market cap of almost RM1.3bil and 12-month trailing profit of RM29mil, the company is already being valued at more than 44x PE. Any future potential growth would have already been price in. Assuming the company managed to deliver a profit of RM40mil in FY19 (meaning the next 3 quarter will need to achieved a profit of RM11mil/ quarter. This level of profit has only been achieved in 4Q18 and 4Q17 only) the company would still carry a high valuation of 32x PE. Some investors might be a bit too bullish on the potential growth rate going forward and will potentially be disappointed if the profit growth slows down even further.

If you are looking to diversify your portfolio outside of TMC Life (due to its relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

1H19 result was really not that great with revenue of only at RM56.5mil and the company recording a loss of RM7.3mil. Given the slowdown of the property market, couple with the company already high completed unit inventories (RM117mil), it is expected that the company might decide to delay some of their new launches that was initially schedule for 2019. Investors need to expect a similar result in 2H19 with the company probably recording a full year loss in FY19. Any rebound in profit will most likely come in FY20 (end march 2020) given the tail end and expected completion of The Wave development by 3Q20.

If you are looking to diversify your portfolio outside of Ivory Properties (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Apart from the news of Tan Sri Vincent Tan being a shareholder of the company (which he has since disposed all shares) back in June 2018, there is actually no real positive catalyst that could potentially improve the company’s financials in the near future.

The company’s decision to venture into the aerospace and clothing retail industries is a bit weird given that its main core business is in O&G engineering. Any profit from these 2 ventures will not be immediate. The clothing retail industry are facing stiff competition coming from the online platforms like Lazada, Zalora, 11th Street etc. Just look Padini, Bonia, Parkson, Asia Brand as examples where profit margins have been deteriorating at a very fast pace. Aerospace is not really an easy business and will take a lot of time before a company can be profitable. Just look at UMW with its Rolls Royce contract. They are still in loss making territory and will only expected to breakeven this year (if they can reach the volume needed. Initial target was actually in 2018). Margins for the business itself is actually not that high and will need very high capex spending.

In term of financials, T7Global only managed to record a profit of RM4.3mil to its shareholder for 9m18. Assuming the company managed to deliver a steady profit of RM2mil per quarter in FY19, this could potentially bring the total annual profit to RM8mil. At the current price, the company would have already been valued at a forward PE of almost 20x which means most of the potential profit growth might have already been price into the share.

If you are looking to diversify your portfolio outside of T7Global (due to its relatively high valuation and doubts on its business strategies) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

I am just not sure of management decision to start venturing into wellness community business (sounds like a resort business) and retirement homes facilities business is the best at the moment given that the new confinement business has yet to deliver any meaningful profit to shareholders. It would be better for them to focus on the confinement business first as it would potentially need a lot of working capital at this early stage.

The confinement centre in TTDI was launched back in January 2018 and looking at the 3 quarter results (4Q18, 1Q & 2Q19), it does not seem that the business is attracting a lot of customers with a combined revenue of only RM 360k and a loss of RM4mil since it 9 months of operation. We will need to see if the business has improved in the 3Q19 period or not.

The retirement home business will need an initial investment of RM1mil for the renovation of 2 bungalow houses (to cater for a capacity of 70 beds). Then the 2 houses will cost the company a total rent of RM22.5k/month or RM270k per year. Other costs include staffs and marketing cost which are not specified by the company. This sounds just like the confinement center business which the company has yet to show proof of profitability.

The Wellness Valley (the resort type business) will need an initial investment of RM21.8mil to acquire a plot of land located 15 minutes from Genting. Proposed development plan is to build:
1 block of 5 storey medical center
2 blocks of 38 storey retirement homes and 5 storey podium
1 block of 45 storey medical tourism hotel
1 block of 39 storey medical tourism service apartment
5 storey retail, 2 storey f&B retail and 2 storey fruit market retail.

The development is to be carried out in a period of 6 years and expected to start this year (2019). Total GDV is RM558.5 mil.

For me this is actually not a healthcare company but more of a property developer. And what is more worrying is that all this actually benefit Dr Lim Yin Chow who holds 28% equity interest in Mexter the most. Not sure if it will be at the expense of minority.

If you are looking to diversify your portfolio outside of Mexter/ LYC (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company’s gold production has started since August 2018. Since then the company has managed to dig up some 95.9kg worth of gold. In 3Q19 the total gold produce from its Tawau mine amounts to 65.8kg or 2,321 ounce. At an average price of USD1,250 per ounce and average forex of USD1 = RM4.17, the company’s gold value mined for the quarter is around RM12.1mil. Assuming they decide to sell all of the gold mined in 3Q, the company’s revenue from mining should be around the RM12.1 mil (please take note that they actually still have 23.7kg of gold from 2Q19 mining which is in inventories. But here we are trying to calculate the recurring revenue that the company can generate. Revenue would actually be lower if the company decides to keep some of the gold produce in 3Q19 as inventories as well which also means lower profit). Minus the direct mining cost of around RM4.4mil, finance cost of RM600k and admin cost of around RM1.2mil (all taken from 2Q19 report), total cost for the mining business per quarter is estimated at RM6.2mil (it should actually be higher given that the operation for 3Q19 is 3 months vs 2Q19 of only 2 months). This would bring a maximum profit from mining amounting to around RM6mil per quarter. Given that the aquaculture business managed only to record a minuscule profit of RM200k in 2Q19, we can assume that the total max profit for Bahvest should be around RM6-7mil/quarter. Annualize this would mean that the company has the potential to deliver a recurring profit of RM28mil per year. At the current share price, the company is already being valued at 19x forward PE which is high given the uncertainties of the gold price.

The increase of gold price from below USD1200 dollar to now USD1300 is mainly due to the tariff war between US and China as most investors rush to buy heaven assets like gold (US imposed a further tariff on USD200bil worth of Chinese products back in mid September 2018). There will be a meeting between US and China schedule on the 30th and 31st of January. Gold price will most probably go down back to below USD1200 if the 2 countries managed to agree on some kind of a deal (even a small one will help). This would affect Bahvest profit outlook in the future.

If you are looking to diversify your portfolio outside of Bahvest Resources (due to its relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

It seems that the current profit level for Karex has come down to only around RM1mil to RM2 mil per quarter from the high of more than RM10 mil/ quarter recorded in FY14 to FY16. The financial result was highly affected by the lower average selling price of its products coupled with the higher cost structures (in particular the higher labour cost). Assuming the company managed to reach a PAT of RM10mil in FY19, at the current share price, the company has a valuation of 42.6x PE. Very high for a company that is facing downward profit pressure.

What is more alarming is the recent news report by UK’s The Telegraph which indicates the very poor working and living conditions of Karex foreign workers. This has put the company under the spotlight with the biggest risk being the loss of contract from some of its big clients. National Health Service (NHS) in UK for example, source a large volume of condoms from Malaysia (which most probably is from Karex). They have since said to be reviewing their decision in light of the report. Superdrug stores, a subsidiary of Watson Group (in Malaysia famous for its pharmacy chain), has already suspended orders from Karex starting in January 2019. Tesco also took the same decision to suspend their orders. Other companies like Reckitt Benckiser (owner of Durex) are still investigating. Please take note, that the companies mentioned in the reports are all UK based. Other companies from other countries might also follow suit and start their own investigation on the accusation of Karex treatment of its workers. Investors might need to wait for the 3Q19 result to see if Karex financials are affected or not by the news reports (I would assume it does, given some clients decision to already suspend their orders).

If you are looking to diversify your portfolio outside of Karex (due to its earnings uncertainties and relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Hi Nedu,

TSH Resources is not the only plantation company that posted disappointing results in the most recent quarters. If you go through other financial reports, most (if not all) plantation companies are affected by the low CPO price in Jul-Sept period.

In terms of valuation, all plantation stocks are currently trading at a high PE multiple (for those that still managed to record profit) just like TSH. This is reflective of the downturn cycle of the plantation industry. Don't think that the industry will reverse their down cycle 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 go up that much so the increase of soybean oil import from US to China would actually be at the expense of other oil commodities 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 TSH as the return to upcycle might not be in the near future.

If you are looking to diversify your portfolio outside of TSH (due to its earnings uncertainties and relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

BLD Plantation is not the only plantation company that posted bad results in the most recent quarters. If you go through other financial reports, most (if not all) plantation companies are affected by the low CPO price in Jul-Sept period.

In terms of valuation, all plantation stocks are currently trading at a high PE multiple (for those that still managed to record profit) or in BLD case, negative PE. This is reflective of the downturn cycle of the plantation industry. Don't think that the industry will reverse their down cycle 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 go up that much so the increase of soybean oil import from US to China would actually be at the expense of other oil commodities 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.

If you are still interested in the plantation industry then you should try to look at other companies first (at least until BLD is really on a stable footing). You will notice that most plantation stocks have fallen but PE valuation is still high. As I mentioned earlier, this is normal given that the industry cycle is currently at the bottom as reflected by the CPO price. It is better for you to do a PE calculation using an average 5 years PAT to take into account the cyclical nature of the industry. With this in mind you need to have a slightly long-term investment horizon when buying into oil plantation companies.

If you are looking to diversify your portfolio outside of BLD (due to its earnings uncertainties and bleak growth outlook) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Harn Len is not the only plantation company that posted bad results in the most recent quarters. If you go through other financial reports, most (if not all) plantation companies are affected by the low CPO price in Jul-Sept period.

In terms of valuation, all plantation stocks are currently trading at a high PE multiple (for those that still managed to record profit) or in Harn Len case, negative PE. This is reflective of the downturn cycle of the plantation industry. Don't think that the industry will reverse their down cycle 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 go up that much so the increase of soybean oil import from US to China would actually be at the expense of other oil commodities 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.

If you are still interested in the plantation industry then you should try to look at other companies first (at least until Harn Len is really on a stable footing). You will notice that most plantation stocks have fallen but PE valuation is still high. As I mentioned earlier, this is normal given that the industry cycle is currently at the bottom as reflected by the CPO price. It is better for you to do a PE calculation using an average 5 years PAT to take into account the cyclical nature of the industry. With this in mind you need to have a slightly long-term investment horizon when buying into oil plantation companies.

If you are looking to diversify your portfolio outside of Harn Len (due to its earnings uncertainties and bleak growth outlook) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good Luck

IJM Plantation is not the only plantation company that posted bad results in the most recent quarters. If you go through other financial reports, most (if not all) plantation companies are affected by the low CPO price in Jul-Sept period.

In terms of valuation, all plantation stocks are currently trading at a high PE multiple (for those that still managed to record profit) or in IJM Plantation case, negative PE. This is reflective of the downturn cycle of the plantation industry. Don't think that the industry will reverse their down cycle 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 go up that much so the increase of soybean oil import from US to China would actually be at the expense of other oil commodities 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.

If you are still interested in the plantation industry then you should try to look at other companies first (at least until IJM Plantation is really on a stable footing). You will notice that most plantation stocks have fallen but PE valuation is still high. As I mentioned earlier, this is normal given that the industry cycle is currently at the bottom as reflected by the CPO price. It is better for you to do a PE calculation using an average 5 years PAT to take into account the cyclical nature of the industry. With this in mind you need to have a slightly long-term investment horizon when buying into oil plantation companies.

If you are looking to diversify your portfolio outside of IJM Plantation (due to its earnings uncertainties and bleak growth outlook) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Kretam Holdings is not the only plantation company that posted bad results in the most recent quarters. If you go through other financial reports, most (if not all) plantation companies are affected by the low CPO price in Jul-Sept period.

In terms of valuation, all plantation stocks are currently trading at a high PE multiple (for those that still managed to record profit) or in Kretam case, negative PE. This is reflective of the downturn cycle of the plantation industry. Don't think that the industry will reverse their down cycle 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 go up that much so the increase of soybean oil import from US to China would actually be at the expense of other oil commodities 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.

If you are still interested in the plantation industry then you should try to look at other companies first (at least until Kretam is really on a stable footing). You will notice that most plantation stocks have fallen but PE valuation is still high. As I mentioned earlier, this is normal given that the industry cycle is currently at the bottom as reflected by the CPO price. It is better for you to do a PE calculation using an average 5 years PAT to take into account the cyclical nature of the industry. With this in mind you need to have a slightly long-term investment horizon when buying into oil plantation companies.

If you are looking to diversify your portfolio outside of Kretam (due to its earnings uncertainties and bleak growth outlook) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

If you go through the quarterly reports you can actually see that the main business of chemical is actually delivering in terms of profits and growth. Even for the most recent 2Q19 result which came out yesterday recorded a combine EBIT of RM23.6mil. But the main issue of this companies is its media and logistics businesses which failed to deliver any consistent profit to the group. Polymer normally delivers but for FY19 fell short due to the weak profit margin caused by the weak rupiah.

But the biggest worry is still the other businesses (IT, Education and electrical) which delivers very volatile results (which is parked under “Investment holdings & others”). The profit/loss ranges from RM1.1mil (in 3Q18. You have to add IT result as well since it was put under the “others” segment since 1Q19) to -RM12.5 mil (in the most recent quarter 2Q19). Based on the management comments it seems that this negative result will continue due to the very bad outlook from the IT division (which started to be loss making since FY15. Before it was still profitable). You can be sure that the 3Q and 4Q results would most probably be lower than last year’s.

If you are looking to diversify your portfolio outside of Ancom (due to its earnings uncertainties ) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company’s financial outlook does not look great at the moment. Profit has substantially gone down after the peak profit reached in FY15 where the company managed to deliver a profit of RM23.1mil. In FY16 profit fell to RM18.4 mil then to only RM9.6mil in FY17. 9m18 profit is only at RM2.3mil with full year profit target at a low of RM5mil only. The under performance in FY18 is attributed to subdued sales (due to lower orders from international clients), increase in operational cost (in particular ink and solvent), higher finance and depreciation cost (which relates to the new equipment recently installed). The reduction of order from clients is a big worry given that the company now has a production capacity of 40,000mt per year vs in FY16 of only 19,000mt. The company would potentially face even lower profit or a loss if it fails to run the production plant at a certain production rate given that the fixed cost now should potentially double vs FY16 (finance, depreciation, overhead, electric costs etc).

At the current share price, the company is valued at a high of 55x PE. At this valuation, all the positive catalysts (or any jump in profit) would have already been priced in.

If you are looking to diversify your portfolio outside of Tomypak (due to its earnings uncertainties and the lofty valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company has been making losses since FY16 and has yet to turnaround even though oil price is now hovering around USD60/barrel. Most analyst initially thought that the turnaround would come in FY18 given the company’s success in bagging the maintenance, construction and modification (MCM) contract back in Nov 17 from Petronas focusing mainly on the Sabah offshore. It was a very negative surprise for the investors when Petra recorded a core net loss of RM55mil for 9m18.

The company has yet to deliver any substantial profit from the MCM contract with vessel utilisation rate at only 35%. Apparently, the contract rate was too low for the company to be able to make any substantial profit from it (Petra might have bid too low in desperation in order for it to win the contract). Expect further losses in FY19 unless the company managed to negotiate back with Petronas to have a better contract rate for the MCM project (which is doubtful).

If you are looking to diversify your portfolio outside of Petra Energy (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The price of gold actually started to went up back in mid-September 2018 when US intensified the trade war with China by imposing an additional tariff to USD200bil worth of Chinese products (US actually had already imposed a tariff on China product back in July 18 but the products amount was smaller at only USD50bil). The tariff had people running to safe haven investments like US treasuries, Japanese Yen and gold. Currently the 2 big economies are planning for a trade negotiation on 30 to 31 Jan 2019. The outcome of these negotiation will determine the appeal of haven assets like gold which would also determine the outlook of jeweler companies like Poh Kong.

This is actually more of a binary trade where Poh Kong will benefit (via the appreciation of gold price) if the negotiation falls through or would have a lower profit outlook if Trump and Xi Jinping managed to come out with a deal later. That being said, I doubt that the gold price would be able to return to the 2011 – 2012 level of almost USD2000/oz. Maximum profit for the company if the negotiation falls through would be around RM25mil (near FY18 level) which values the company at a PE of only 7.8x.

However, if US and China managed to come to an agreement, of which we will see a fall of gold price to around USD1100 to USD1200 level, Poh Kong would most probably be able to deliver a profit of around RM12mil to RM15mil which values the company at around 13x PE. Which is actually not that high. But given the current market environment, investors can actually find companies that are trading below 10x PE and still able to deliver profit growth in FY19.

If you are looking to diversify your portfolio outside of Poh Kong (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Profit to shareholders has continue to fall in FY18 to potentially end at a full year profit of only RM150mil. Profit was affected by the lower contribution of key divisions (port business and construction) as well as the lower performance of key associate company, Malakoff (profit would have been a lot lower if we were to exclude the one-off gains like the RM55mil gain on disposal of Lekir Bulk to TNB). At the current share price this would translate to a valuation of 17.7x PE (again this would be a lot higher if we were to exclude all the one-off gains).

The company’s profit outlook for FY19 would be highly dependent on the port business which itself depends on the outcome of the tariff negotiation between US and China. A failure to reach any meaningful deal would end up with a continuation of trade tariff between the 2 biggest economies which will affect global trade outlook (MMC’s ports included). The Tanjung Bin power plant has consistently faced with unplanned maintenance every year since its first start operation back in early 2016. In FY18, one of its boiler walls had leaked which causes substantial downtime to the plant hence affecting Malakoff financial performance (reparation was only completed at the end of Oct 18). Expect Malakoff low contribution to continue in 4Q18.

If you are looking to diversify your portfolio outside of MMC (due to its earnings uncertainties and the relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Hi icon8888,

Hopefully the company can pay higher dividend in FY19 given the better profit projection for FY19 (driven by the performance of Perodua) and the potential disposal of the alloy wheel business. In previous financial years, cash were needed to invest more on the alloy wheel plant (to improve its efficiency) and also to pay off most of the company's debt. The company is currently at a net cash position after having reduce debt to only RM193mil from RM416mil back in FY14.

The potential disposal of the alloy wheel business will definitely create more free cash (due to lower working capital requirement and lower capex spending) for the company which could be used to reward its shareholders by higher dividend payment.

Regards

This company share price shoot up after the general election because of its major shareholder being Mukhriz Mahathir. Investors are hoping that since he is part of the winning coalition (and Tun M being the new PM) contracts will start flowing back into the company which is a bit of a wishful thinking in my opinion. Even if Mukhriz can get any favourable contracts from the government (or GLC), Opcom would be the last vehicle that he would want to use to get them. All eyes (opposition, public, NGO etc) are already on this company and any contract awards that are not based on open tender will invite criticism as well as potential investigation by the MACC in the future (Tun M is only expected to stay as PM till 2020).

Anyway, in terms of financial performance the company managed to deliver a profit of RM1.9mil to its shareholder in 1H19. However, please take note that a big portion of the profit (RM900k) are actually due to forex gain. Excluding that, the 1H19 profit would have actually been around RM1mil only. Assuming the business pick up in 2H19 and the company managed to deliver a total profit of RM3mil for FY19 (average profit for 3Q and 4Q need to be around RM1mil per quarter), at the current share price, the company is currently valued at around 35x PE. If the company managed to outperform and deliver a profit of RM5mil in FY19 (avg profit of RM2mil for 3Q & 4Q), the company would still be valued at a high of 21.2x PE.

Investors need also to take note that the previous contracts are mostly awarded by Telekom Malaysia which currently is facing some operational difficulties given the government insistent for TM to reduce their price offering to the public but at the same time increase the service quality level. This would only mean lower revenue but higher cost which will affect TM’s bottom line in the future. I doubt that their future contract tenders would provide high profit margins to its contractors (Opcom included).

If you are looking to diversify your portfolio outside of Opcom (due to its earnings uncertainties and the relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Hi scanner,

We will never know as to why people start selling a specific share but for Press Metal it would most probably be because of 2 reasons: the fall of aluminium price and the rich valuation of its shares even after falling almost 30% from its peak a year ago.

Aluminium price has been falling constantly from the peak of USD2500 recorded back in April 2018 to USD1800 the lowest recorded back in early Jan this year (a fall of almost 30%). The price has since rebounded a bit at now USD1880. The fall in price was attributed to the dampening of aluminium demand due to the slowing down of the global automotive industry in particular the China market (which is the biggest consumer of the commodity). Given a higher expected supply of the metal in the near future (coming from China growth in aluminium production) and if demand of the commodity does not rebound, you can only expect the price of aluminium to fall even further (or at best remain at the current level).

This would most probably affect the profit outlook of aluminium smelter companies like Press Metal. However, please take not that Pmetal has one of the more favourable cost structures given the bulk of its energy cost (from Bakun Dam) has been locked in at a very competitive rates over the long term. That being said, Pmetal needs to ensure a minimum amount of production rate of its smelting plants for it to profit from the bulk purchase of the low-cost energy. If production rate runs below a certain economical level, it would result in a very high unit cost for the company (since Pmetal will still need to pay the bulk of the energy whether it use it or not).

In terms of valuation, the company is currently trading at 26.5x PE which is high given the growth earnings uncertainties. Most of the other global aluminium smelters are actually trading at a PE valuation that is actually closer to 10x given the outlook uncertainties. If the aluminium price stays at this level, we should expect that Pmetal to post a lower profit level in FY19 vs FY18.

If you are looking to diversify your portfolio outside of Pmetal (due to its earnings uncertainties and the relatively high valuation) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company profit by around RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

Boustead only managed to post a core loss of almost rm30mil for the 9M18 result mainly due to weaker results from all its core divisions : plantation, heavy industries and properties. Given the still weak market outlook of all these industries, investors need to be prepared for the company to post similar weak results in fy19 as well. Even if things improves this year, and the company managed to record a core profit of rm100mil in FY19, at the current price, the company would already carry a valuation of 31.6x PE which is very high for a company with limited profit growth potentials.

If you are looking to diversify your portfolio outside of Boustead (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company profit by around RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

The low profit level seen in 4Q18 and 1Q19 are expected to continue in the near future due to cheap steel import mainly from China that had flooded the market. With lower demand due to the slowdown of the construction and property industries, all local steel player will need to lower their price of products (at the expense of margins) in order to survive. The only way for this negative trend to turnaround and improve the company’s profit level is if MITI would step in and impose further safeguards measure. Till then, expect Mycron to continuously record lower profit in the near future. Assuming the trend continues, the company is expected to deliver a profit of around RM6mil in FY19. At the current share price, the company is valued at around 15.8x PE which might be a bit high given the doubts in the company’s ability to deliver growth in the future.

If you are looking to diversify your portfolio outside of Mycron (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company profit by around RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

Hi value88,

The high tax rate in the previous quarter was mainly due to taxes imposed on the profitable business (Steel Tubes) which recorded a PBT of around RM10.6mil. The losses from the other businesses could not be used to reduce the PBT of the profitable business hence why the company still need to pay a big tax amount when compared to the accumulative results of all Melewar businesses.

I think the company will continue to make further losses in FY19 given the cheap steel import (especially China CRC) that is currently flooding the market. With lower demand due to the slowdown of the construction and property industry, all local steel player will need to lower their price of product (at the expense of margins) in order to survive. The only way for this negative trend to turnaround and improve the company’s profit level is if MITI would step in and impose further safeguards measure. Till then, expect Melewar to continuously record negative (or low profit) in the near future.

If you are looking to diversify your portfolio outside of Melewar (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

Just be careful when buying into this company. After all the price movement (very volatile), the company is still a loss-making company which had never been able to deliver any meaningful profits to its shareholders in past 10 years. To think that the company can suddenly deliver in FY19 might be a bit of a wishful thinking on the part of some investors.

Balance sheet does not look great with current liabilities now higher than the company current assets which might mean that the company is facing some liquidity issues (cash is only at RM270k).
Currently it seems that the company is facing some board room tussles which will only create more operational problem later given the unclear directions from the top. An EGM is schedule for the immediate change of 3 directors on 13 Feb.

If you are looking to diversify your portfolio outside of Inix (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

Tiong Nam would have actually posted a core loss of around RM1mil in 2Q19 if we were to exclude all the non-core profits amounting to RM3.2mil (gain on disposal, impairment gain, gain from quoted investment and forex). The depressing results just shows how challenging the logistic market has become at the moment. The anticipated ecommerce boom did not translate to higher profit for the company (and also its competitors) even though revenue has seen a big jump in the past 10 years.

The industry will only be more crowded in the future given that some online platform companies had also decided to participate in the logistic industry. Lazada which is backed by Alibaba has its own logistic company under the brand Lazada Express. The company is touted to allocate a capex amounting to RM1bil for the expansion of its logistics arm. Refer to Lazada Malaysia CEO interview with BFM: https://www.bfm.my/bg-christophe-lejeune-lazada-malaysia-lazada-a-years-worth-of-sales-in-one-day.html

Even if the company managed to bounce back and record a core profit of RM15mil in FY19, the company would still be valued at 22x PE which is high given the doubts on its being able to deliver any consistent profit growth in the future (in view of the challenging industry outlook).

If you are looking to diversify your portfolio outside of Tiong Nam Logistics (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

The worrying issue for investors is not on the revenue side. The company has seen increasing revenue even in FY18 with 9m18 revenue grew at 7.4% vs 9m17. Investors are more worried on the reducing profit margin which fell to only 2.3% in 9m18 vs 4.7% in 9m17. The 3Q18 profit was worse at only RM3mil (margin of only 0.8%) vs 3Q17 of RM14mil which was mainly affected by the surge of cheaper import products into the market. It is expected that the trend to continue unless MITI imposed more safeguards measures. Till then investors of the company will need to be prepared for a lower profit results in the coming quarters. If the issue persists and continue till the end of FY19, PAT of the company would only be around RM12-15mil. At the current share price this would translate to a valuation of 26.5x PE.

The company however has a very strong balance sheet with zero debt which means that the company can face any market headwinds better when compared to its other competitors. At the current share price, it is only trading at a low of 0.5x PB.

If you are looking to diversify your portfolio outside of CSC Steel (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

The handover of the Hospital Pakar Kanak Kanak (HPKK) is delayed to July 2019 instead of Nov 2018. I think they will need to pay some LAD (penalty) which should be reflected in the 2Q and 3Q of FY19. That is still ok as long as they still hold the concession. What would be more worrying is if they failed to complete the hospital by the new deadline of which I think the government might be forced to cancel the contract just like what had happen to their Petra Jaya contract which was terminated in July 2018 due to continuous delays.

Given the company's very weak balance sheet (current asset of RM210m vs current liabilities of more than RM800mil), I have my doubts on their ability to complete the HPKK project before the new deadline.

If you are looking to diversify your portfolio outside of Zecon (due to its earnings uncertainties and going concerns issues) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

Those that are invested in this company did so because of the very high cash balance in the company’s books amounting to RM833.6mil (inclusive of short-term investment). They hope that the company will reward investors later by paying higher dividends.

I doubt Tan Sri Rozali will do that. He would most probably try to use the money to buy businesses that could contribute to the company’s profit later in the future. The problem with this strategy is the investment horizon of the company’s acquisitions are a lot longer than what some investors are willing to wait. Take the acquisition of the plantation business from Shin Yang which the company paid around RM250mil back in 2017. Till now the venture has yet to record any profit with losses increasing to RM49mil in 9m18. It would be a while before investors can see any meaningful profit from this venture given that most of the plantation land is still vacant so the company will need to spend capex for the planting of palm trees. Till the trees matured, investors need to expect that the division will continuously record losses in the near future.

Other businesses like the construction and O&G divisions also failed to take off with combined losses of RM13.2mil for the 9m18 period. Given the current market uncertainties, I doubt that these 2 divisions will be able to deliver any meaningful profit in FY19.

The only bright spot is the UiTM concession business with PBT of RM17.4mil for 9m18. Normally the profit should actually go up in the future in tandem of the concession agreement. It seems that the only business where the company can actually perform are concession type businesses. This might be a challenge in the future given the change of the government to Pakatan Harapan. Tan Sri Rozali was previously the UMNO treasurer for Selangor which some people say is why he got the Syabas (Puncak sold it to Selangor state for RM1.4bil) and Puncak Alam UiTM concession in the past.

If you are looking to diversify your portfolio outside of Puncak Niaga (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

Hi megatti,

Kenanga however actually estimates the losses from alloy wheel at rm23 -26 ml per annum. So for them, the earning boost from the disposal will be a lot higher than my own assumptions.

Regards.

Hi Megatti,

If you look at segmental reporting of 3Q18 result you would see that the total PBT of the auto parts manufacturing segment amounted to RM3.3mil. Excluding the result from associates (Hino Motors Manufacturing) and JV (Autolive Hirotako), the remaining auto component business actually recorded a loss of around RM9.1mil. This represent a combined contribution from both Hirotako Holdings and Oriental Metal Industries (of which the alloy wheel business is park under).

From my understanding, Hirotako has always been able to deliver profit to MBMR which means that the minimum losses from OMI should be around RM9.1mil of which mainly comes from the alloy wheel business (Here I am assuming Hirotako contribute a minimum of RM0 to the company’s PBT). Based on this, we can assume that OMI losses to MBMR should be at least around RM10 mil for the full year of FY18.

If management decides to sell the alloy wheel business, investors can expect the profit of MBMR to increase by at least RM10mil once the disposal takes place. Using the target profit of RM145mil in FY18 before disposal, MBMR profit for FY18 could be higher at around RM155mil. If management managed to disposes of the business in FY19, I expect the full year profit for the year to increase from the original projected profit of RM160mil to RM170mil. This would mean at the current price, MBMR is actually only trading a PE valuation of less than 6x vs the industry average of 15x PE.

Regards.

The group was supposed to used around RM50mil of the proceeds from the disposal of BCM Electroninc to Aurelius back in Jan 2018 (total consideration RM123.8mil) for 3 new core businesses: System Integration Maintenance Services (SIM), waste to energy business and green waste management business. However, all of management plans did not run smoothly as expected.

Their SIM business is facing challenges. The company had failed to secure any new contracts in Malaysia and faces delays in receivables collection. The legal tussle with U Televisyen has make it harder for the company to secure contracts (which include renewals). As a short-term solution, Comintel is trying to find opportunities in Indonesia but most probably any opportunities will be small (less than RM10mil) due to issue of obtaining financing in Indonesia. The company will need to use internally generated funds for all Indonesia related projects.

The company is currently facing delays in getting the Kuang plant, their maiden project in the waste to energy space, to start operation. Initially the Kuang IPP was supposed to be ready by January 2018 but the company faces delays in getting approval from Sustainable Energy Development Authority (SEDA). All approval from SEDA has since been given. The company hope for the plant to start generating revenue in FY20. However, there was still no update from management on the status of the plant since Nov 2018 (not sure if the plant has started operation or not).

Given the various challenges facing the company, it has since decided to put on hold any new expansions or projects both in the waste to energy (they initially plan was to start another new IPP in Penang) and green waste management businesses. The RM17mil which was initially budgeted for new ventures in green waste management projects has since been allocated as working capital for the Kuang IPP which needed more capital than initially projected. It is expected that the company will used up more of its cash reserves at least until the Kuang IPP starts operations.

Investors need to be prepared for negative earnings along with depleting cash flow for 4Q19 and 1Q20 financial reports.

If you are looking to diversify your portfolio outside of Comintel (due to its earnings uncertainties) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analyst is around RM3.50.

Good luck.

The company’s financial performance is actually not that bad. They have always been able to deliver a profit of RM60mil to RM80mil to shareholders since FY16. For FY19 (they change the end year from June to Dec), revenue and profit will be backed by the still high RM1.1bil unbilled sales. Management has decided to delay the launch of their much awaited The Place 2 (Cyberjaya) given the challenging property market sentiment. The project has a potential GDV of RM1.08bil and is located next to Cyberjaya City Center.

In terms of valuation the company is currently trading at a PE valuation of 11.7x PE which is not high but given the depressing market sentiment of the property industry, investors can actually find other property companies that currently trades at a lot lower valuation compared to MCT. That being said growth for FY19 would most probably be small or none at all.

If you are looking to diversify your portfolio outside of MCT (due to its weak property market outlook) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

The company recently proposed to acquire a 12-storey office building in Bangsar South for RM48mil which translate to a price of RM850/sq ft. This is actually lower than some of the other newer office building in that area (mostly price at above RM1,000/sq ft). That being said, the reasoning for the acquisition is a bit weak in my opinion (does not create much value for shareholders). These are the reasons listed by the management:

1) Branding
2) To mark Sanichi’s footprint cross Malaysia
3) To establish an international standard sales and admin office in KL (precision mould and property division)
4) Rental income from existing tenants (not sure how much. No details were given)

I think the company should use the money raised from the 2 right issues (in 2016 & more recently in 2018 for combined total proceeds of around RM160mil) more wisely and maybe focus more on the development of their property projects. If they really wanted the prestige of the Bangsar South location, they can actually do this by just renting an office space (especially given the abundance supply at the moment, the rental would actually be a lot cheaper). Just because you move your office at Bangsar does not make your products more appealing to potential customers.

During the 2018 right issue exercise, management did indicate that a big portion of the proceeds (up to RM84mil) was to be used for property development activities but it was more on a basis of Sanichi developing a new property development project (buy land then develop) which normally provide higher profit margins (if the take up rate is high). There was no mentioned of using the right issue to buy an office building. It is still ok if the rental received from the building is high enough to compensate the purchase price of RM48mil. But from the announcement, it seems like the purchase is mainly for Sanichi’s new office used which is not good since it does not add much value to shareholders (spending money you don’t actually have).

After 2 right issues exercises, shareholders would have hope that the money raised would be spent in projects that can actually deliver good returns to them.

Since the right issue in 2016, the company has yet to be able to show any full year profit to its shareholders (Jan to Dec 2017 record a loss of RM18.1mil and 9m18 result is still a loss of RM9.5mil). Thinking that FY19 would be any different might be a bit of a wishful thinking on the part of some investors.

If you are looking to diversify your portfolio outside of Sanichi (due to its earnings uncertainties and business strategies) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. I am projecting a profit to shareholder of RM160 mil for FY19 which at the current price values MBMR at only 6.2x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. Most analysts have a TP of above RM3 for the company with Hong Leong being the lowest at RM3.13 and Maybank the highest at RM4.50.

Good luck.

Guys,

Some updates on MBMR.

It seems that management had decided to sell off the loss-making alloy wheel business instead of trying to turn it around via collaboration with Citic Dicastal which is actually a better decision for MBMR’s shareholders. Reason being:

1) The disposal of the business would improve MBMR’s future profit since it is still currently generating losses to the group in FY18 albeit at a lower level compared to previous years. Even with the collaboration with Citic, management was only expecting for the operation to either breakeven or post small profit.

2) Any sales of the business would most probably result in a gain on disposal for the company given that most of the investment has already been impaired in the company’s balance sheet.

3) The disposal will free up more cash in the future that could potentially be used to reward shareholders by paying higher dividends.

Total Perodua car sales in 4Q18 was at 59,040 units which is a growth of 10.8% vs 4Q17 and 15.5% vs 3Q18. This brings the total Perodua car sales in FY18 to 227,243 units which beats management official target (of 209k cars) by 8.7%. With this result, the company should be able to deliver a core profit to shareholders of around RM145mil to RM150mil for 2018.

As mentioned previously, growth in FY19 would be driven by the still high sales of new Myvi, the 30k units target sales of the new SUV Aruz and the introduction of the newly revamp Alza in 2H19. With these, MBMR is expected to deliver a profit to shareholder of around RM160mil to RM165mil in FY19.

Regards and have a nice long weekend.

Hi Ciaksai,

Please refer to company's announcement in relation to the right issue.

http://www.bursamalaysia.com/market/listed-companies/company-announcements/5988913

Refer to page 9 for the details on the delay of construction to August 2022.

For the increase in project cost to RM6.69bil you need to read the paragraph before the summary table. Below is an extract from page 10:

"In view of the above, the project cost for the WCE Project will now increase further by
approximately RM0.57 billion to RM6.69 billion (from the RM6.12 billion announced in the
RCULS Announcement). Such increase in project cost will have to be funded by the
shareholders of WCESB on a pro-rata basis and hence the Equity Contribution will increase
from RM1.38 billion to RM1.95 billion. Based on the Company’s 80% equity interest in
WCESB, the Company is now required to inject RM1.56 billion in the form of equity,
convertibles and/or subordinated advances into WCESB, in order to fulfil its share of the
Equity Contribution."

Hi RainT,

They still have yet to finalised on the right issue date (other terms will be the same as the link above). They are trying to get approval from Bursa for non residents shareholder to participate in the right issue.

Regards.