The company's 14% dropped in revenue was mainly due to lower contribution from both its main division, the particle board division and the ready to assemble ( RTA) division. Apart from the strengthening of RM vs USD, particle board prices has been decreasing due to the higher supply of the product in the market at the moment. This competition is mainly attributed to production expansion decision made by most particle board companies boom years of 2015-17. However, Hevea is still ok given that production capacity is still running above 90%. So there is demand just at a lower price.

Hevea's RTA is totally a different story. They actually have a lot of demand for the products (especially for export market) but could not cater to the demand due to foreign labour shortage. Currently the production level of the division is only running at around 70%. Which is why they had recorded lower revenue ( apart form the strengthening of RM vs USD).

The profit margin of the company decrease substantially due to :
1) Lower average selling price (due to competition and strengthening of RM)
2) Higher raw material cost (rubber wood)
3) Higher labour cost. Expected to go up even further in tendence with the higher minimum wage. Additional fees that Hevea needs to pay is the foreign labour levy.
4) Higher operating cost due to machines operating at below the optimum level (due to lack of workers).

Until the issues of foreign labour is resolve (being the biggest issue for Hevea at the moment), i foresee that the margins that we saw in the 3 previous quarters are likely to remain.

In terms of valuation, the company is currently trading at a very high PE. Even if the company can achieve a profit of RM15 mil in FY18 (meaning 4Q18 profit need to be around RM5mil or more than 50% higher than 3Q result), at the current share price the company is still trading at an expensive valuation of 25x PE.

Those that are already invested in the company will need to be prepare to face some volatility in the near term. The coming 4Q18 results almost certainly will be lower than last years.Given the lack of profit growth offer by the company, most investors would prefer to diversify their position into other companies.

If you are interested in investing in the company, it would be better to wait for the labour supply issue to be resolve ( i don't think it would be anytime soon). Given the current market condition you can actually find a lot of companies that currently trade at a cheaper valuation but still able to offer growth to its investors in the near and mid term.

One of the company that you can consider to diversify into is MBMR (https://klse.i3investor.com/servlets/stk/pt/5983.jsp).' target='_blank'>https://klse.i3investor.com/servlets/stk/pt/5983.jsp).

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.0x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Heveaboard labour issue can be resolve soon. Once that is done we can expect higher revenue and profit from the company. .

Good luck

I think the main issue of the company is its valuation. 9m18 PATAMI is only RM110mil. Even if they managed to end FY18 result with a profit of RM200mil (4Q profit need to be around RM90mil more than triple that of the most recent quarter), at the current share price the company is still valued at 35x PE. At this valuation, investors would normally asked for higher sustainable profit growth ( and not declining profit as what Sime Property is facing).

The management strategy to hold off or slow down new launches and focusing on clearing existing high inventory level (4,469 unsold units) by lowering the selling price and intensifying the marketing promotion is logical. However i am worried of the side effects of this strategy such as the compression of profit margin. That being said, if the volume is high enough and can spur profit growth, it will still be a positive thing for investors.

The other negative side effect is on the future perception of Sime Darby projects going forward. Imagine you are one of the earliest buyer of its project. You paid RM800k for your unit. After 2 years holding to your property you would have thought that the property price would have increase or at least remain the same. But now suddenly the unsold property next to your unit is currently being sold at RM750k (since Sime Property is giving discounts). You would be quite devastated to learn this. If Sime Property starts giving off discounts to most of its unsold property, in the future, instead of buying or booking units for newly launch property, people would just wait for Sime to start lowering their prices later. This has a longer term effects on the companies appeal to the market in the future. Which in the end will effect the profit margin and growth.

I think if you are interested in investing in the property industry stocks, you can actually find a lot of other companies that currently trades at lower valuation, in most cases below 10x PE and below 1x BV. There are even certain companies that can actually provide profit growth for FY19.

If you are already invested, better diversify your position a bit given that the current high valuation that the company is trading at. If the company fails to record meaningful growth in FY19, most investors would most probably shift some of their portfolios to other companies.

For those looking to divest some of their portfolio outside of the Property industry, I would recommend them to look at MBMR (https://klse.i3investor.com/servlets/stk/pt/5983.jsp).' target='_blank'>https://klse.i3investor.com/servlets/stk/pt/5983.jsp).

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.0x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Sime Property can proof me wrong and deliver the profit growth that the investors are hoping for.

Good luck.

Hi Organic,

I think you need to reassess back your position. When you bought the shares at 34 sens what was the reason? Does your thesis still stands? I think you most probably have bought it before the 2Q18 result was announce.

If you go through the note of 2Q18, the losses for the quarter was mainly due to gross margin compression attributed to soft selling price of the companies product, higher cost of materials and also a pre operating cost of the new line.

I think you should only hold to the stock if you believe that the profit margin can improve back to FY17 level in 3Q18. Because if it doesn't and it still post a loss in 3Q, i think some investors might decide to shift their position to other companies.

I personally think their operational profit margin will still remain compressed (at least for next quarter). In addition, the bottom line will also be effected by the higher depreciation and finance cost (due to the acquisition of Great Platform).

Good luck.

Since the company's listing in 2008, it had only managed to post 3 positive quarterly results with the last being a small profit of RM1.2 mil in 4Q16. After the disposal of their wimax business to TM, the company has decided to focus on developing their digital services in the hope of bringing the company to a more sustainable profitability. The CEO is targeting FY20 for the company to breakeven.

For those that are interested in the company due to the potential turnaround story, it is better to wait and see if the FY20 target is actually achievable. I have my doubts on this given the company tendency in the past to change the target timeline. Most of the time they will just push the breakeven target years even further. If FY19 quarterly results losses are wider than this year, you can be sure that the FY20 target has little probability to succeed.

For those already invested, you need to be prepare to face some volatility given that FY 19 would still be a loss making year for the company. It is wiser for you to diversify some of your portfolio to other profitable companies in order to mitigate the potential short term price volatility. Not sure the RM300mil market cap is sustainable for a company that keeps posting negative results every quarter.

For those looking to diversify their portfolio outside of the telco or tech industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.0x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Green Packet can proof me wrong and deliver the profit that is expected of them in FY2020.

Good luck

Hi ciaksai,

Here is my views on some of your concerns:

1) Tax holiday period has ended. Car sales will go down. Results will start to go down.

Perodua car sales has actually increased in October this year compared to 2017 (19,528 cars vs 16,491 on Oct 17). In 3Q18 MBMR recorded a PATAMI of RM38.1 mil which is the highest quarter since at least FY2015. This was achieved even when Perodua faces with a production disruption of the new myvi in August and September (sales of myvi was low for 3Q18 at only 11,000 vs 1Q & 2Q average of 23,000 units). Production has normalised since early October. 4Q18 is expected to be higher vs 3Q18 due to management commitment to deliver and clear the 22,000 back log of new myvi that was effected by the disruption in Aug and Sept. In addition, given the normalation of production, average Perodua car sales in 4Q is expected to be higher than 3Q (October numbers has proven that). Growth in FY19 will be driven by still high demand of new Myvi and new Perodua SUV.

2) 3rd national car will effect MBMR business outlook.

Given that MBMR is actually one of the biggest auto component manufacturer (if not the biggest), MBMR could actually benefit from the increase of local car production in Malaysia. The company is the market leader in the manufacturing of steel and alloy wheels, auto safety products (seat belts, air bags and steering wheels) and noise, vibration & harness products (insulator, dampening sheets, headliners etc).

However, i have my doubts on the 3rd national car project. I think the only person that really wanted the project is our PM, Tun M. The others are just being accommodative to his request. Their target is to roll out production by 2021. From the conception of a car to production will actually need a lot of capital and time. Tun M is expected to step down and pave way to Dato Seri Anwar in 2020. I just don't see Anwar wanting another Proton in his first tenure as the new PM.

I think it would be wise to wait and see the development of the said project before we include it in any investment analysis. We might be jumping the gun on this.

3) New car is not necessity. Buy second hand or buy motor cycles.

I just think most Malaysian just prefer buying new products rather than used one. Until that mindset changes i would still think that people would prefer new cars vs second hand.

I have seldom heard (actually almost never) of people selling their cars to convert to motorcycles. Most of the time its the other way around.

But i get your argument that given the current economic condition car sales might get effected (in the case of MBMR case, we are worried that Perodua sales will go down since its the main profit contributor to the group). I have actually a thesis of my own on this. I believe in a difficult economic condition, Perodua sales might actually do better vs other brands. The reason is that instead of people ditching their cars for motorcycles (as per what you suggested), people would actually opt to a cheaper brand of a car (as they will still prefer cars as a mode of transportation). So most of them who are trying to cut cost will actually opt to buy Perodua rather than foreign made car for example. During the most recent financial meltdown of 2007 to 2009, sales and profit of Mcdonalds actually went up in the US. The reason is that people decided to stop going to expensive restaurant and opt to eat out at Mcdonald instead because it is way cheaper.

With the new petrol subsidy mechanism to be introduce in 1Q19, Perodua will actually be one of the main beneficiary. Even most of Proton cars are not entitle to the subsidy as most of them has an engine size of 1,600 cc. Subsidies will only be given to certain car models that have engine size smaller than 1,500cc.

4) Unlimited train and bus passes will reduce future car sales.

I have my doubts on this mainly given the network coverage of our transportation system. Unless u are already living at the center of KL where the network and availability of public transport are better, then i think you will still need a car. For Perodua customers in particular, i think most of them actually lives outside of the city center.

Given the government objective to reduce expenses, i dont think our public transportation system will improve anytime soon. You can refer to the government decision to delay or put on hold some of the projects ( LRT3, MRT, HSR etc).

Hope these can allay some of the concerns that you have.

Regards.

Hi Kiasipu,

Rather than focusing on speculative news, better we look at the company's fundamental. Given the current market condition, most of the companies in Bursa had actually posted profit that was below the expectation of investors (and most actually posted losses rather than profit). Based on CIMB study's only 11% of listed company posted above expectation results.

MBMR is one of those companies. Just to recap (apologise for repeating), the company is currently the most under value company in the Auto segment even though it has a direct exposure to the market leader which is Perodua. Exposure is via the 22.6% interest in Perodua.

Based on a target PATAMI of RM145mil for FY18 (9 months Patami is already RM105.5mil), the company is currently only valued at 5.9x PE and a PB of only 0.6x. The industry average (you have to take out MBMR off course) is around 15x PE.

4Q18 will be higher than 3Q18 and 4Q17 result. Just look at the Perodua car sold in October (19,528 cars vs 16,491 on Oct 17). And remember as at end of Sept, there were still more than 22,000 firm orders of new myvi yet to be deliver. Management is actually expediting this in order to clear them before end of 1Q19 (which also mean 1Q19 most probably be higher than 1Q18).

Now if you roll the profit into FY19, which i'm targeting something around RM160mil PATAMI, the valuation would fall further to only 5.3x PE. The growth will mainly comes from still high demand of new myvi, launch of the entry level Perodua SUV in 1Q19 and also the turnaround of the alloy wheel division driven by higher export market (in collaboration with Citic Dicastal, China largest alloy wheel manufacturer).

In terms of balance sheet, the company is currently at a net cash position and free cash flow are only expected to increase further (management has indicated lower capex spending going forward). The debts are mostly for trading purposes which means it is backed by the inventories and receivables.

Hope that would provide you more confidence in the company's fundamental (rather than focusing on speculative news).

Good luck.

I think 7 Eleven will always be able to deliver the profit of RM50mil to RM60mil to its shareholder every year.

Even though share price has fallen to below RM1.30 per share, it is still consider too expensive for me. Even if FY18 profit can reach RM60 mil (4Q18 need to be around RM21.2mil. Highest ever quarter since listing was RM17,9mil in 4Q14), that would mean the company is currently valued at 24.2x PE.

At this valuation i think investors are expecting a continuous profit growth of at least 15% (so after 5 years profit will double and valuation will fall to 12.1x PE). I have my doubts that they can achieve this given the stiff competition in the convenience store space at the moment ( my biggest worry is the growth of Family Mart store numbers which normally locate just near to 7 Eleven stores.). Management growth will mainly be driven by selling more fresh food products and opening new outlets (100 outlets expected in FY19 but will only represent 4.5% outlet growth as there are already 2,259 7 eleven stores at the moment).

For those interested in investing in the company, i would suggest you wait an see if the profit growth can be deliver in FY19.

For those already invested, it would be wise to diversify some of your position in companies that are undervalue but still be able to provide profit growth.

For those looking to diversify their portfolio outside of the retail industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.8x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope 7 Eleven can proof me wrong and deliver the profit growth that is expected of them from their existing shareholders.

Good luck

At first when i look at the company 2Q18 result, i was a bit bullish on the outlook given that the company recorded a growth of PBT from RM1.8mil to now RM4.3mil. In addition the PBT in 2Q18 was derived from a lower revenue from last year. Initially i thought it was because of the change in focus from construction contract in FY17 to property development in FY18 of which the latter normally has higher profit margin.

But upon studying their result in details, the jump of PBT profit was mainly attributed to the gain on disposal of one of its subsidiaries, amounting to RM 2.6mil. Excluding this PBT would have actually been RM1.7mil which is a slight drop vs last year result. in terms of PAT if normal tax rate were used (24%) PAT would have been around RM1.3mil.

In terms of valuation even if the company managed to get a PAT of RM6mil for the full year of FY18 (1H18 PAT is RM2.2mil), the company's valuation is still high at 16.5x PE. However given the list of projects that the company have at the moment you would assume that the company profit will catch up to the valuation later. Some of the list of project that the company said it is pursuing are:

1) Prima housing in Alor Gajah. GDV RM100mil
2) Housing project in Bangi. GDV RM90mil
3) Prima project in Bukit Jalil. GDV RM155mil
4) Perumahan Penjawat Awam 1Malaysia in Putrajaya GDV RM324mil
5) Affordable housing in Pahang contract value RM166mil
6) Mixed development project in JB GDV RM700mil
7) Mixed development project in Kuantan GDV RM330mil
8) Mixed development project in KL GDV RM202 mil
9) Mixed development project in Melaka GDV RM206 mil

However upon going thru their balance sheet in detail, i have doubts of them being able to pursue these project in the near future. Which means profit level might still be at the RM6mil level in FY19.

If you go through their 2Q18 report, you will notice that cash flow from operation is still negative given that most of the sale is still in receivables. Then you would also notice that the debt level has actually more than double compared to 2017 but still at a manageable at RM61mil. Given the cash balance of RM18.9mil you would think it would be sufficient until some of the receivables (RM77mil) can be converted into cash. But if you look at the cash flow statement, u notice that RM16.4mil are actually pledge to the bank which leaves the company only with a free cash balance of RM2.5mil (and even that RM4.8mil are bank overdraft).

Unless the company convert those high receivables to cash, you have to assume that they are likely to face some liquidity issues which might effect the progress of their property projects. Most probably they will need to raised further capital.

If you are interested in the company, better wait for their balance sheet to improve first. If you are interested in the property industry, there are actually a lot of companies that are cheaper and have stronger balance sheet at the moment.

For those looking to diversify their portfolio outside of the property industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.9x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope OCR can proof me wrong and deliver the profit growth that is expected of them from their existing shareholders.

Good luck

Hi organic,

Financially the company did not perform that well in the past 2 quarters. I think some investors was hoping for a boost in the profit level upon completion of the acquisition of Great Platform back in February. Based on the documents provided, Great platform recorded a revenue of RM53.5mil and PAT of RM4.1mil for the period of Aug16 to Apr17 (9 months). This translated to an average rev of RM18mil and PAT of RM1.4mil per quarter. Mieco paid RM58.6mil for the company.

However, the most recent quarter indicates that while the acquisition had help increase the company total revenue by 27%, it failed to increase the profit and worst they actually recorded losses. EBITDA margin fell from a high of 21% last year to only 4% in 3Q18. The acquisition of Great Platform had also increase the depreciation charges (from RM4.4mil to now RM7.3mil) and finance cost (from only RM1mil to RM4.4 mil) substantially. This resulted in the company posting a loss of RM6.8mil vs profit of RM15.6mil.

If you are interested in the company, it would be better for you to wait for the next quarter result to come out. Currently we are still not sure whether the bad performance in 3Q18 is permanent (the low profit margin is here to stay) or if the result is just a one off event.

If you are already invested in the company, you need to be prepare to face some volatility as some investors might be a bit worried of the future financial results. It would be advisable for you to diversify your portfolio first. I think there are still some furniture/ particle board manufacturers that are currently still profitable and trading at a not so high valuation.

If you are looking to divest your portfolio outside of the furniture industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.9x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Mieco will start posting better results in 4Q18. I think some investors got burnt investing in the company when it was trading at above RM1. With better results, hope the company share price can recover back.

Good luck

In terms of financials, the company actually did not do that bad. 9m18 revenue actually saw a 3.4% growth vs 9m17. 9 months PBT and PAT also grew by 3.8% and 4.4% respectively which is a lot better than other big telco companies.

However, the company is currently trading at a very high valuation of 22.9x PE which investors would have normally expect the company to provide them with substantial profit growth to compensate the high price paid.

There are doubts that the company would be able to deliver this for FY19 onward. Some of the headwind faced by the telco industry in general are:

1) High competition between the different operators
2) Malaysia is already a saturated market. On average Malaysian owns more than 1 phone per person.
3) Government pressure for telco companies to reduce their price but at the same time provide better services to the public which would only mean lesser revenue but higher capex and opex cost.

All these will only expect to lower the company's margin even further. Based on the average forecast of 8 analysts, the target PAT for FY19 is RM1.55bil. At the current price, the company is valued at 22.4x PE which is high for a company that will actually provide small profit growth to its investors.

Another pressure to the share price would be the continuous selling by EPF. As of 3rd December, they still have 1.16 bil shares of the company.

Those that are interested in the telco industry are advice to look at other companies that might be able to provide some growth but at a cheaper valuation. Maybe try looking at companies that are not directly involve in the telco industry but is a proxy/ service provider to it. Like cable supplier/ provider or telco tower owners etc. If you are still interested in Digi, maybe just wait till EPF stops selling.

Those that are already invested are advice to diversify their portfolio to companies that would be able to provide some profit growth in the near to mid term (to compensate Digi low profit growth for the same period).

For those looking to diversify their portfolio outside of the Telco industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.9x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Digi can proof me wrong and deliver the growth that are expected of them from their existing shareholders.

Good luck

In terms of financials, the company actually did not do that bad. 9m18 revenue was actually flat vs 9m17 (fell by 2.5%). However the 9 months profit ,PBT and PAT fell by 8% and 7% respectively which signals margins compression which is likely to continue going forward.

Given the high valuation of 20x PE, investors would have expect the company to provide them with some profit growth to compensate the high price paid.

Some of the current headwind faced by the telco industry in general are:

1) High competition between the different operators
2) Malaysia is already a saturated market. On average Malaysian owns more than 1 phone per person.
3) Government pressure for telco companies to reduce their price but at the same time provide better services to the public which would only mean lesser revenue but higher capex and opex cost.

All these will only expect to lower the company's margin even further. Based on the average forecast of 7 analysts, the target PAT for FY19 is RM1.87bil. At the current price, the company is valued at 22.7x PE which is high for a company that will actually provide limited profit growth to its investors (if any).

Another pressure to the share price would be the continuous selling by EPF. As of 3rd December, they still have 898mil shares of the company.

Those that are interested in the telco industry are advice to look at other companies that might be able to provide some growth but at a cheaper valuation. Maybe try looking at companies that are not directly involve in the telco industry but is a proxy/ service provider to it. Like cable supplier/ provider or telco tower owners etc. If you are still interested in Maxis, maybe just wait till EPF stops selling.

Those that are already invested are advice to diversify their portfolio to companies that would be able to provide some profit growth in the near to mid term (to compensate Maxis negative profit growth for the same period).

For those looking to diversify their portfolio outside of the Telco industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.9x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Maxis can proof me wrong and deliver the growth that are expected of them from their existing shareholders.

Good luck

I think the prospect of vietnam power plant alone would have a lot of investors getting interested in the company given the potential financials (profit but more importantly cash flow ) it would bring once completed in 2020 (18 to 24 months to go).

But given the list of potential negative catalysts that the company faces in the short term, most investors (including myself) would prefer to wait and see how it all turns out. Some of the issues face by the companies are:

1) Legal issue with Star of which the outcome would most probably not be in the company's favor.

2) The bad performance of the property division. Management still have difficulties in finding interested parties for their loss making Evolve mall. Potential higher than expected LAD from continuous delays of their Pacific Star project.

3) Potential delays of the Vietnam power plant project. This concern arises mostly due to the negative surprise from 3Q18 result where the progress billings of the project was lower than what was expected. However management did mentioned that the project is still on schedule.

4) High cash flow need to complete the Vietnam Project. The most recent right issues proceeds was mainly for the project.

5) Apparently there were a lot of early investors that uses margin financing when buying the share. The most notable one being KYY (who is no longer a substantial shareholder). Given the downward trend of the share price, some of these investors were force to sell their shares. Investors are still not sure when the selling pressure will stop given the compounded effect every time the shares goes down (someone will be force to sell).

I think it would be better for those interested in the company to wait for at least another 1 or 2 quarter results to see if the progress of Vietnam power plant project is on schedule as per what management is claiming.

Those that are already invested should be ready to face some volatility in the short term.

For those looking to diversify their portfolio outside of the IPP and property industries, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.9x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope that all of the issues mentioned above could be resolve soon. I think investors would start looking back at Jaks once the power plant is completed or once there is more concrete proof (hopefully by next quarter) of the project's progress is on schedule. The current depressing share price really do not reflect the potentials of the project.

Good luck

Given the depressing offshore supply vessel (OSV) industry at the moment, it was not really a surprise to see Alam Maritime recording another quarterly losses for 3Q18. It should be expected that this losing trend to continue at least until FY19. Even though oil price has since recover from its low in 2015, Petronas still has yet to go out in full steam for its upstream capex. Most of the capex for FY 19 would focus more on downstream segment (in particular the Rapid project).

On the bright side, the company's balance sheet is a lot better if you compared to its other competitors. Debt is at RM128mil (RM112 being short term debt) with cash reserves of RM59mil.

Those that are interested to buy into this company, i would advice you to wait till Petronas indicates that they will start spending back capex into the upstream industry. Until then expect continue losses for future quarter results.

For those looking to diversify their portfolio outside of the O&G industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.6x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Petronas will focus back on the upstream industry once Rapid is completed next year. The OSV industry are really in dire need of it.

Good luck

After the a number of contracts won in the first half of this year, most investors would have think that Icon financials would start to turnaround and to post profits. Some of the contract awarded this year were:

1) 3 years (with another 3 years option) contract worth RM169mil to support a group of oil & gas companies in Malaysian waters
2) Provide 2 supply vessels for Exxon worth RM 106mil
3) 3 year contract from Hess to supply 1 utility vessel worth RM23mil

The 3Q18 result was really a negative surprised to the market not just because it failed to record any profit but also the quantum of the loss of more than RM11mil (should have been worst if not for the RM1.7mil forex gain).

What is more worrying is the balance sheet of the company that currently has debts of more than RM 670mil ( of which RM340mil is current debt) and cash reserves of only RM44mil.

If the situation continues, investors need to be prepare for a potential capital raising exercise.

Those that are interested to buy into this company, i would advice you to wait till management has provided a clearer picture on how it will tackle their cash flow needs going forward.

For those looking to diversify their portfolio outside of the O&G industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.6x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Icon management has something more concrete to present to its shareholders on how it will turnaround the company back to a more sustainable financials.

Good luck

Genting Malaysia financial performance for 3Q18 was actually quite good . Core EBITDA and PAT grew by more than 80% (if you exclude the impairment loss of Mashpee Wampanoag Tribe notes amounting to RM1.9bil).

FY19 profit however might be lower due to the strings of bad news that the company faces recently most notably the government decision to increase the gaming tax rate which will effect the profit margin of the hospitality and entertainment division (the biggest contributor to the group profit).

Fox decision not to go through with the 20th Century Fox World also means that the group will need to find other avenues for growth in the near term. Initially, after several delays, it was expected to open its doors to the public in 2019. But given the recent event, i think 2021 should be a more reasonable target. They will need to reinvest and rebrand most of the rides back since they will not get the licence to promote them anymore. Some of the rides in question are : Son of Anarchy, Fox Theatre Experience, Rio Carnival Chaos, Wings Over Rio, Mub & Grub’s Epic Boat Tours, Scrat’s Nutty Adventure and another 13 rides or so.

Analysts are projecting PATAMI for FY19 to be around RM1.3bil. At the current price that translate to a fwd PE of 12.2x which is not expensive.

If you are looking to diversify your portfolio outside of the entertainment and gaming industry, i would recommend you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.


Good luck.

Genting financial performance for 3Q18 was actually not that bad. EBITDA grew by more than 30% (if you exclude the impairment loss of Mashpee Wampanoag Tribe notes amounting to RM1.9bil). Patami growth was lower though at 7% given the higher depreciation and tax.

FY19 profit however might be lower due to the strings of bad news that the company faces recently most notably the government decision to increase the gaming tax rate which will effect the profit margin of the hospitality and entertainment division (the biggest contributor to the group profit).

Fox decision not to go through with the 20th Century Fox world also means that the group will need to find other avenues for growth in the near term. Initially, after several delays, it was expected to open its doors to the public in 2019. But given the recent event, i think 2021 should be a more reasonable target. They will need to reinvest and rebrand most of the rides back since they will not get the licence to promote them anymore. Some of the rides in question are : Son of Anarchy, Fox Theatre Experience, Rio Carnival Chaos, Wings Over Rio, Mub & Grub’s Epic Boat Tours, Scrat’s Nutty Adventure and another 13 rides or so.

Based on the average target of 4 analysts, PATAMI of FY19 should be around RM2.23bil. At the current price that translate to a fwd PE of 11x which is not expensive.

If you are looking to diversify your portfolio outside of the entertainment and gaming industry, i would recommend you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.6x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.


Good luck.

The most recent quarter result was really a negative surprised to most investors. Market was expecting them to start posting positive result given the huge Pan Malaysia maintenance, construction and modification (MCM) contract that they won back in July.

However, to be fair given that the most recent result is for the period of Jul to Sept, investors might have been a bit too bullish to expect them to turnaround too soon. Its fairer for investors to wait for 4Q before giving a too negative outlook on the company.

Some investors are also worried of the companies ability to execute the contract within budget and on time. Given the many occasions of cost overruns and earnings disappointment in its past contracts such as the Pan Malaysia Transport & Installation (T&I), the Pengerang Pipeline contract and the Inspection, Repair and Maintenance (IRM) contract which all had resulted in massive losses to the company. I am worried that they actually won the MCM because they had underbid the other competitors. Meaning this MCM could be a potential time bomb in the future.

For those interested in the potential turnaround story of the company, it is best for you to wait till there is a real concrete result first (no more losses for example) before you start investing in Barakah.

For those looking to diversify their portfolio outside of the O&G industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.6x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Barakah can really turnaround this time with the new Pan Malaysia MCM contract. If it does, i am sure investors will start believing in the company again.

Good luck

Those invested in this company might be putting too much hope on it turning around. Given the new management team at Tabung Haji, i doubt there will be any more support coming from them.

The JV with Destini is also in doubt given that most of Destini's contracts with the government are also being reviewed. Please refer to their most recent quarter report. Revenue drop drastically from above RM100mil to only RM11mil.

Those that are interested should at least wait till you can see a meaningful revenue coming in. For the past 5 quarters revenue was only in the range of RM80k to RM420k.

If you are looking to diversify your portfolio outside of the O&G industry, I would recommend you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.6x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope TH Heavy can proof me wrong and deliver returns to its shareholders. Management need to start delivering on their turnaround plan. There is no more excuse this time around.

Good luck

Hi Flywheel,

Its hard to say exactly who is selling since the only investors outside of insiders that needs to issue an announcement is EPF and PNB (under ASB) given that there are the only ones that has 5% interest or more in the company. So from the announcement we can only see that EPF was selling in 30th Nov (but not a lot at 1.4mil shares).

Given the high trading volume of the past 5 trading days (from 29 Nov to 5th Dec) at an average of 248mil shares per day vs the normal daily average of 10 to 20mil shares prior to 29th Nov, you can only assume those with big holdings were selling.

Who are the potential sellers? You need to refer to the 2017 annual report page 202 "Analysis of Shareholdings". From there you will see that as of 30 mar 2018, there were a total of 13,777 individuals that are investors in Armada (which we categorise as retail investors). The other 4,345 investors are mostly banks/ financial companies and nominees of which most of it are for investment funds (you can just go to page 205 and see that most funds uses nominee accounts). So these 4,345 i would call them institutional investors.

Then you need to look at the analysis by size of shareholding (page 202 as well). From there you can see those with less than 10,000 units or 100 lots ( which i assume mostly are retailers) only holds a total of 51.7 mil shares. But this already represent 11,422 different investors. Which means only around 2,355 retail investors have a holding of more than 10,000 shares.

I don't think it's logical for you to assume retailers are the one that were mostly trading (in terms of volume) from 29th Nov to 5th Dec. The volume is just too big. This type of volume can only be traded by the institutional investors. Whom exactly we can only see after the 2018 report is out ( but still only on the movement of the top 30 investors).

Hope that answer your question.

Regards.

Hi ronaldo,

I think some investors are worried on the outcome of the negotiation with the company's debtors. There are several potential scenarios that investors are expecting:

1) The company succeeded in its negotiation. Debtors are willing to stretch the payment duration of the debt and the amount of the periodical payment to match something that is closer to Perisai cash flow from current projects. Even provide some discount to the debt. This is the best scenario, given that there will be no need to raised any capital. But debtors must be willing to get their money later than expected. I think this might be a bit of a wishful thinking on the part of equity investors. Probability is very low given the company cash flow is negative.

2) The company managed to find some middle ground with debtors. Debtors agree to some haircut but company must adhere to a new strict repayment schedule. In order to comply, company will need to raised capital most probably in the form of right issues. Probability is low in my opinion. For the debtors to agree to this, they will need to believe that Perisai will be able to improve in its operation in the near future which doesn't seems to be the case.

3) The company also managed to find some middle ground with debtors. Debtors agrees with management views that the outlook of the company is brighter in the future. So with time, the company cash flow will improve. However raising capital now to pay the debt (even after restructuring the schedule payment) proves to be difficult . So debtors, would agree to convert a big portion (if not all) of their debt to equity. Now in this scenario, equity holders does not have to come up with any capital but they will need to face potentially very dilutive effect post restructuring as there will be a lot of ordinary shares to be issued to the current debt holder. If you want to understand further you should try to do case studies on the many debt restructuring occurred back in 1998 (in Malaysia) or 2008 (US mostly). The most recent one that you can look at is Noble Group that actually happened early of this year.

https://www.reuters.com/article/us-noble-group-debt/noble-group-wins-lifeline-as-shareholders-back-3-5-billion-debt-restructuring-idUSKCN1LC0ME

Probability is also low as i doubt anyone (investors and debtors included) believe that the company will be able to win any contracts in the near term.

4) The company and its debtors could not find any middle ground on the restructuring of the debt . In order to protect the company from the debtors and potential legal issues, management are forced to file for bankruptcy. This is the worst case for equity holders as they will be the last party to any proceeds of liquidated assets (please take note that most of the time during bankruptcy proceeding, assets are sold at a massive discount to the book value). I think this scenario has the highest probability to happen.

This is why most investors are dumping the stock . For distress assets in general, you actually could make a lot of money by buying the debt (which normally trade at a steep discount before finalisation of the restructuring plan) but it will take some time before you could see any returns. Those that bought Lehnmen Brothers debt in 2008 (at a very steep discount) only see returns this year.

https://www.investmentweek.co.uk/investment-week/news/3031791/debt-investors-set-for-pay-out-on-lehman-brothers-collapse

Buying the equity now is very risky as you have the potential to lose almost all of your money.

For those that are interested in diversifying their portfolio outside of oil and gas companies, i am recommending them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.6x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Perisai will succeed in its negotiation with its debtors. You never know, they might end up with the first case scenario mentioned above.

Good luck

sorry the noble group link above didn't work. here's the link.

https://www.reuters.com/article/us-noble-group-debt/noble-group-wins-lifeline-as-shareholders-back-3-5-billion-debt-restructuring-idUSKCN1LC0ME

Hi RJ87,

I think some investors are worried on the outcome of the negotiation with the company's debtors. There are several potential scenarios that investors are expecting:

1) The company succeeded in its negotiation. Debtors are willing to stretch the payment duration of the debt and the amount of the periodical payment to match something that is closer to Armada cash flow from current projects. Even provide some discount to the debt. This is the best scenario, given that there will be no need to raised any capital. But debtors must be willing to get their money later than expected. (i think this might be a bit of a wishful thinking on the part of equity investors. Probability is low).

2) The company and its debtors could not find any middle ground on the restructuring of the debt . In order to protect the company from the debtors and potential legal issues, management are forced to file for bankruptcy. This is the worst case for equity holders as they will be the last party to any proceeds of liquidated assets (please take note that most of the time during bankruptcy proceeding, assets are sold at a massive discount to the book value). I think this scenario has an even lower probability vs the 1st scenario.

3) The company managed to find some middle ground with debtors. Debtors agree to some haircut but company must adhere to a new strict repayment schedule. In order to comply, company will need to raised capital most probably in the form of right issues. However in order to do this, the major shareholders of the company itself will need to show willingness to subscribe to their portion (at least ) of the capital raising. In this case, all eyes will be on Ananda Krishnan who controls 34.9% of the company. Markets are saying that he actually does not want to pump any more capital into the company (i think he currently has a lot in his plate with the other investment issues as well). If it happens, current shareholder will need to be prepare to put in additional capital later.

4) The company also managed to find some middle ground with debtors. Debtors agrees with management views that the outlook of the company is brighter in the future. So with time, the company cash flow will improve. However raising capital now to pay the debt (even after restructuring the schedule payment) proves to be difficult ( because Ananda is not willing for exemple). So debtors, would agree to convert a big portion (if not all) of their debt to equity. Now in this scenario, equity holders does not have to come up with any capital but they will need to face potentially very dilutive effect post restructuring as there will be a lot of ordinary shares to be issued to the current debt holder. For me this is the highest probability outcome. If you want to understand further you should try to do case studies on the many debt restructuring occurred back in 1998 (in Malaysia) or 2008 (US mostly). The most recent one that you can look at is Noble Group that actually happened early of this year.

https://www.reuters.com/article/us-noble-group-debt/noble-group-wins-l...

This is why most institutional investors are dumping the stock at the moment. For distress assets in general, you actually could make a lot of money by buying the debt (which normally trade at a steep discount before finalisation of the restructuring plan). Buying the equity now is very risky.

For those that are interested in diversifying their portfolio outside of oil and gas companies, i am recommending them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.6x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Bumi Armada will succeed in its negotiation with debtors. You never know, they might end up with the first case scenario mentioned above.

Good luck

The company actually fares a lot better than other oil plantation companies who mostly recorded a negative earnings in the most recent quarter report.

Valuation wise however, this company is still consider to be expensive at 18.6x PE. Given the depressing CPO price, it is expected that the next 2 quarters earning to be lower compared to last year's (the company had posted a profit of RM430mil in 2Q18 and RM250mil in 3Q18). Investors need to be prepare to face volatility in the share price for the next 6 months a least.

FY19 profit is targeted to be at around RM1,025mil based on the average target profit of 6 analysts. This actually value the company higher at 31.3x PE which also means that most analysts are predicting lower profits (just like me) for the remaining of FY19.

I would suggest that those that are already invested in this company to divest some of their portfolio outside of the plantation industry. Given the current market sentiment, there are actually a lot of companies that currently trading a low PE and PB valuation but can still provide profit growth in the near and mid term.

I would recommend you look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Sime Plantation can proof me wrong and deliver the profit growth that the investors are hoping for.

Good luck.

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

In terms of valuation all plantation stocks are currently trading at high PE multiples (for those that still managed to record profit) or in TH 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 global economy is also expected to slow down.

If you are interested in the plantation industry then you should try to look at other companies first (at least until the TH 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.

However, if you are interested in the company due to the fact that the company is currently trading at below its book value. Then it is also advisable for you to look beyond the plantation industries. Given the current market condition, there is actually a lot of companies that is currently trading at a discount to book value (most of the property development companies for example).

I would recommend you look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope earnings of TH Plantation improved in the future.

Good luck.

The industry as a whole has seen margin compression due to lower average selling price of poultry products starting early of this year. However for Lay Hong the result was worst in 2Q19 due to bird flu incident in Sabah. I think they are the only listed poultry companies that was effected by this which makes the recent result looks worst compared to others.

The main culprit for the margin compression (excluding the impairment) lies on the high feed cost which was suprising given that commodity price in particular corn and soy bean have actually when down substantially.

It might take a while before the profit recover back to the level recorded in FY18 (amounting to RM38mil). I think if you are optimist, the earliest would be in FY20.

For those that are invested in the company, given the still high feed cost, you need to expect the company to post a lower profit margin (if not losses) for next quarter result. I still think that the company would be able to perform better in FY20 given the ongoing expansion plan for its broiler, eggs and processed frozen food capacity. So investors need to look beyond FY 19 if you are interested in the company.

For those looking to diversify their portfolio outside of the poultry industry, i would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope earnings of Lay Hong would normalised back to FY18 level soon.

Good luck.

The company actually would have recorded a PBT of RM2.4mil in 3Q18 if we were to exclude the RM9.9mil impairment charges on its contract assets and trade receivables. But it is still far from the RM13.4mil PBT recorded in 3Q17.

I think investors are just worried that the margin compression that we see in 3Q18 is here to stay. The negative outlook of the construction and property industries might make it challenging for the company to asked for higher margins from their clients now that there will be a lot of contractors eyeing for a smaller pie of future projects. Other piling companies like Econpile and Pintaras Jaya also recorded lower profit margins in their recent quarterly result.

For those that are interested in investing in the company it is advisable to wait for next quarter result to see if the profit margin compression seen in 3Q18 is permanent or just a one off event.

Current investors need to have the stomach to face some volatility given that if the margins are to be as what was recorded in 3Q18, profit would most probably be at a very low level in FY19. This will make the valuation of the company seems to be more expensive later.

For those that are looking for companies outside of the construction industry to diversify your portfolio, i would recommend you look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope profit margins will improve in 4Q. Because if it does assuming a PAT of RM2mil per quarter, or RM8mil for full year, Ikhmas is actually only trading at 8.5x PE.

Good luck.

In term of financials the company actually did not do that bad in 3Q18. But i think some investors might have assume that they would have made higher profit than the RM13.9 mil recorded given that there was the tax holiday period.

4Q18 should post both higher revenue and profit vs 3Q but might be difficult to beat last year's result. 4Q17 PBT was the highest profit recorded per quarter since 2015.

The issue with the company lies mainly on its valuation. At the current share price it is already valued at 25.6x PE. Companies at this valuation normally offers investors profit growth of at least 20% (PAT in FY17 was RM100mil). Even if they do managed to record a profit of RM120mil in FY18, that would still translate to a PE of 19.4x. Still high but if the growth of 20% is consistent, by FY21 PAT should be RM200mil which helps bring down the valuation to 12.8x PE.

Given current market condition, there are actually a lot of companies that currently trade at low PE multiple but can still provide profit growth in the short to mid term.

One company that you can consider for your portfolio is MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope earning growth for Aeon will accelerate in a much faster rate in the future in order to commensurate investors for the high valuation at the moment.

Good luck.

Parkson like any other retailers are facing stiff competition not only from other physical store retailers but also online platforms like Lazada, Alibaba, Shoppee to name a few.

The only bright spot of the company in 1Q19 was the Chinese venture which posted an EBIT profit of RM9.7 mil The company other ventures (Malaysia, Vietnam, Myanmar and Indonesia) posted a combine EBIT loss of -RM38.7mil .

I just don't see the company recording a profit in 2Q19 due to the still high losses of south east asia business ventures. Malaysia for example had managed to increase it's sales by 7% due to the tax holiday period but it still makes RM18.4mil losses. Inclusive of the quarterly net finance cost of RM15mil (after deducting interest income), expecting the company to turn profitable next quarter might be a very tall order.

Those that are invested in the company will need to put their hopes on higher profit growth from the China business. But i still think this will need time and a lot more stores opening for China to compensate the losses from other ventures. Actually it would make more sense to investors if management closes all the stores outside China.

If you decide to diversify your position outside of the retail industry due to current challenging environment (Padini and Bonia for example also delivered disappointing results last quarter), I would recommend you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Parkson Holding can proof me wrong and deliver the profit growth that the investors are hoping for. Management need to start to deliver on their turnaround plan.

Good luck.

Lazada Ceo, Christophe Lejeune, was interviewed by BFM yesterday.

He mentioned that Alibaba is committed to invest a further USD2bil into Lazada of which a big portion of the investment will be used to expend the Logistic division.

I am not sure how much Pos Malaysia revenue comes from Lazada (or ecommerce) but if the ecommerce platform themselves are expected to go down into logistic business, 3rd party service providers like Pos Malaysia might be negatively effected (hence why most logistic players have seen negative profit margin growth).

Those that want to invest in this company need to ask themselves where will the growth comes from? The current market landscape is really tough at the moment with other logistic companies such as Lazada eLogistic, Century Logistic, Gdex, Ninja Van, GrabExpress (yes even they are doing this) etc all expending their networks and fleet size. Revenue might increase but i think it will be at the expense of profit. I think companies like Pos Malaysia is more appropriate for long term investors (those with investment horizon longer than 5 years).

I have doubts that the company are able turn a profit in 3Q19 given the high operating expenses from Postal Services and International segment recorded in 2Q19. Apart from that, the company will still be dragged down by its high fixed cost structure, sunset conventional postal services and the stiff competition in their courier division.

Given the current market condition, i think it would be safer for investors to focus on company's that are currently trading at low valuation but still can offer profit growth in the short and mid term.

With this in mind i would recommend those that are looking to diversify their portfolio to consider MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Pos Malaysia can proof me wrong and deliver the profit growth that the investors are hoping for. Management need to start to deliver on their promises.

Good luck.

OWG financial performance for 1Q19 was actually not that bad up to the EBITDA level. EBITDA for the quarter was at RM9.6mil vs RM8.2mil recorded last year.

But then there was a higher depreciation and amortisation charges (RM6.8mil vs RM4.7mil) and also higher finance cost (RM2mil vs RM900k )which bring down the PBT to only RM1mil. Both of the higher depreciation (related to opening of new outlets in Genting) and finance cost are expected to be at this level for 2Q19 as well.

If OWG's revenue does not increase meaningfully then investors are to expect a profit level of 1Q19 going forward.

Initially FY20 growth story was supposed to be driven by the potential opening of the 20th Century Fox World. But given Fox decision to pull out of the collaboration meaning most of the rides if not all will need to be redone (at least changing of the name and the imaging of the rides) given that Genting will no longer have the licence to market the rights as per the original plan. Some of the rides in question are : Son of Anarchy, Fox Theatre Experience, Rio Carnival Chaos, Wings Over Rio, Mub & Grub’s Epic Boat Tours, Scrat’s Nutty Adventure and another 13 rides or so.

Not sure Genting will be even able to open the doors of the park in 2020.

Even if management managed to increase the current operation and record a profit of RM8mil for FY19, at the current share price it would still value the company at a PE of 18.8x PE. With the uncertainties arising from Genting's Fox world, i don't see how the company could provide the high expected growth that investors would demand for paying an expensive price for OWG.

On the other hand, major shareholders seems to be buying into the company. At least you can see that they actually believes that the company is undervalue.

If you are already an investor, then you need to hold this stock a bit longer in order to see meaningful profit growth which should come when the new Genting theme park is open ( at least another 2 years. 2021 hopefully.)

If you are looking to diversify your portfolio into a company that is currently undervalue but will be able to profit profit growth in FY19, i would recommend you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Genting can expedite the opening of their new park in order to provide OWG with the financial growth that it need.

Good luck.

The market was caught by surprised on the news of the MD, Datuk Seri Anuar bin Adam selling a total of 44.5mil shares of the company on the 30th Nov and 3rd Dec. The amount represent a total of 25% of his original holding (178.6mil shares). Upon the disposal he still owns 134mil shares. Still not sure if he is planning to pare down further his holding or not.

I don't think the disposal was done on the open market given that volume for both of the dates were only 1.5mil and 2.2mil respectively. Still not sure to whom he sold his shares to. If it is to the same party, it should be announce soon given that the 44.5mil shares represent 5.7% shares outstanding (falls under substantial shareholder)

Profit recorded in 3Q18 should continue in 4Q18 supported by the continuous progress billing of Mizumi Residences project which was at 23.7% completion. Assuming the company managed to post a PATAMI of RM16mil in FY19, at the current price the company is valued at 11x PE which is not overvalue but still higher compared to other property companies. NTA is at 47sens of which 28 sens is under "Timber concession rights".

Given the most recent major shareholder activities, it is better for those that are interested in the company to wait for some clarity from the company as to why the major shareholder is selling a big portion of his share.

Those that are already invested, would need to prepare for some volatility given the uncertainties of the recent events.

For those that are looking to diversify some of their holding outside of Tadmax (due to the near term uncertainties) I would recommend them to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope that the MD share disposal is actually a decision to bring in new strategic partners.

Good luck.

Lazada Ceo, Christophe Lejeune, was interviewed by BFM today.

He mentioned that Alibaba is committed to invest a further USD2bil into Lazada of which a portion of the investment will be used to expend the Logistic division.

I am not sure how much Gdex revenue comes from Lazada (or ecommerce) but if the ecommerce platform themselves are expected to go down the value chain since they believe that they will have the volume to reduce their unit cost, 3rd party service providers like Gdex might be negatively effected (hence why most logistic players have seen negative profit margin growth).

If profit are not expected to grow substantially, then the current valuation 75x PE is really overvalue for investors.

Those that want to invest in this company need to ask themselves where will the growth comes from? The current market landscape is really tough at the moment with other logistic companies such as Lazada eLogistic, Century Logistic, Pos Malaysia, Ninja Van, GrabExpress (yes even they are doing this) etc all expending their networks and fleet size. Revenue might increase but i think it will be at the expense of profit. I think companies like Gdex is more appropriate for long term investors (those with investment horizon longer than 5 years).

Given the current market condition, i think it would be safer for investors to focus on company's that are currently trading at low valuation but still can offer profit growth in the short and mid term.

With this in mind i would recommend those that are looking to diversify their portfolio to consider MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope Gdex can proof me wrong and deliver profit growth to its investors. Management need to deliver on their promise of high growth for profit as well and not just revenue. It also help if they can improve on their customer relation services.

Good luck.

I think most investors are interested in Yong Tai mainly due to the Encore Melaka venture rather than the group exposure in the property industry. There was a lot of expectation that the company will do well and reap the benefit from the venture as soon as it open its door to the public (which was in 1 July 2018).

However based on 1Q19 result (which covers July to Sept period), demand for Encore Melaka was rather tepid. This worries the investors as they assume this level of demand will probably stay longer and the gestation period before the venture turn profitable might be longer than expected.

I think Yong Tai was a bit unlucky to open the venture in July this year which was after a surprising general election result and after a lot of negative sentiment towards the chinese investment which might have effected the tourist arrival numbers from China (Encore was developped to cater mainly for the Chinese tourist). Chinese arrival for 2H of the year dropped 30-40% compared to 2017. Sales for the first 3 months of the venture was only at an average of 40k ticket per month vs management original target of 83k ticket per month. This resulted in the division recording an EBIT loss of -RM5.8mil for the quarter.

I actually believes that the chinese tourist will be back visiting Malaysia after the tension between our 2 countries cools down but it might not be too soon. With this in mind, those that are interested in investing in this company should most probably wait till we see an improvement of uptake (or financials) of Encore Melaka. Even though the company still has 2 property development (Amber Cove and The Dawn) these projects will only provide revenue to the group till 2021. And even that the EBIT from the 2 projects is only going to be around RM5mil/ quarter. So if there is limited improvement in Encore Melaka, Yong Tai would most probably still be in the red.

Those that are already invested need to be prepare for some volatility in the future as results would most probably still be weak in FY19.

If you are looking to diversify your portfolio into a company that is currently undervalue but will be able to profit profit growth in FY19, i would recommend you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope that Encore Melaka sales will improve and reach the management target soon.

Good luck.

In terms of financial performance ( based on 3Q18), up to gross profit level the company has actually improved. The one that drag down the PBT is the higher admin and other expenses (which has more than doubled compared to 3Q17). However PBT was still positive at RM2.1mil. Then you have the higher than normal tax of RM7.3mil (due to under provision in previous years) which turned the PAT to negative. If the high admin and other expense are just one off, then the company should be able to post a PAT (assuming tax rate also normalised) of RM6-8mil in 4Q18.

But i think the main issue now is the SKIN contract. Market are worried that the company might lose it which if that happens, for sure the company will be in the red. 9m18 EBIT contribution from the contract is RM29.5mil.

Added to the pressure is the potential further force selling from Dr Abu Hassan (he still has 118mil shares).

Those that are invested will need to be very confident on the company's ability to hold on to the Skin contract and to have the heart to face some volatility.

Prestariang is not the only one facing uncertainties from govt contracts (Destini, Dnex, Myeg, Datasonic, MRT and LRT players to name a few). But in the end, the govt has always been able to find a middle ground in its tough stance when renegotiating with businesses.

If you are looking for companies that are not exposed to govt contracts (due to the potential near term volatility), i would recommend MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Hope the Prestariang can retain the SKIN contract. If it does, the current share price actually only values the company at less than 5x PE (average concensus PAT for FY20 was RM55mil based on previous analyst reports before the Skin issue emerge).

Good luck.

For some reason, if you are interested in investing into this company, it is advisable you wait till they complete the Hospital in Cheras. Once that is done there will be less risk facing the company.

Highest risk will always be during construction period for this type of company especially if there are delays (which the company is actually facing for the Cheras hospital. supposed to be completed in Nov). The biggest risk would be the cancellation of the concession contract (this is actually where the big values lies for Zecon hence why Sarawak govt was interested in acquiring Zecon Medicare). They already had their Petra Jaya Hospital contract cancel earlier this year. Not sure if they need to pay LAD...

Anyway if you are looking to diversified a bit of your portfolio outside of the construction industry, i would recommend you to buy MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Good luck.

Hi RainT,

I think you should wait for the 2Q19 result to be out to confirm whether the low revenue in 1Q19 is permanent or just a one off thing.

You are right to point out the festive season as a potential catalyst for the increase sales in 2Q19. But using the same type of argument, 1Q19 was also expected to post higher revenue given the tax holiday period.

What is worrying is that the low revenue might be an indication of higher competition coming from ecommerce platform such as Lazada. The CEO of Lazada just had an interview session at BFM this morning. He had indicated that Alibaba (Lazada parent company) is committed to invest a further USD2bil or (RM8.4bil) in Lazada to spurs the company's growth.

But I still hope Padini financials would rebound back in 2Q19.

Good luck.

Being effected by the slowing down of the property segment, it is expected that the company will post lower revenue level in FY19 vs FY18. In addition to the compression of profit margin, FY19 will bring negative growth earnings to the company (Fy18 Patami was rm6.5mil). The current valuation of 15x PE is expected to go up even further.

Those that are interested in having exposure to the furniture or property industries are adviced to look to other conpanies that are currently trading at lower valuation vs Signature.

However, if you are looking to diversified your portfolio into low valuation but with potential earning growth in FY19, I would recommend you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Good luck.

Hi Supersun,

It should actually be consider bad news as it will reduce CCB profit substantially.

If you look at the 9m18 results of RM19.3mil PAT, RM11.2mil of that profit actually comes from the dividend from Mercedez Benz Malaysia Sdn Bhd (MBM).

If you to take that out, 9m18 result would have only been RM8.1mil. And if you were to exclude the RM12mil compensation from insurance claim in 2Q18 (which is none core earnings), then the core earnings of CCB would have been -RM3.9mil. Please take note that 3Q18 result of RM4.9mil could only be achieve due to the tax holiday period (which is why Revenue was high for the quarter).

In FY19 most analyst actualy expect lower profit margin for CCB due to Mercedes focus to shift to lower margin cars. So CCB would most probably post a negative result next year.

If you are interested in having an exposure to the automotive industry, then i would recommend you to consider MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Good luck.

Investors will be focusing on the AG report that was out yesterday. One of the issues highlighted by the report was on the Vehicle Entry Permit (VEP) system between Johor and Singapore which Dnex currently has exposure to.

https://www.thestar.com.my/news/nation/2018/12/03/ags-report-2017-vep-system-implemented-without-open-tender/

http://www.theedgemarkets.com/article/dagang-nexchange-bags-another-high-margin-job

Investors of Dnex need to be prepare to face some volatility in the near future. The new government is currently reviewing most contracts awarded by the previous administration which has effected some of the listed companies (Destini, Prestariang, Datasonic, Myeg, most MRT and LRT contractors to name a few). But in the end, the govt has always been able to find a middle ground in its tough stance when renegotiating with businesses.

If you are looking for companies that are not exposed to govt contracts (due to the potential near volatility), i would recommend MBMR.

The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Good luck.

In their most recent reports, all 4 analysts (Affin, Aminvest, Kenanga and MIDF) are expecting further losses for FGV in 4Q18. So when the result is out, expect further selling pressure from the market (4Q17 result was RM76mil PAT).

That being said, all 4 research houses also projected that FGV will turn around and record a profit ranging from RM32mil to RM130mil in FY19 (the wide target profit shows the difficulties of forecasting the company's performance even for a 12 months fwd earning).

For those that are interested in the company due to the potential turnaround story, it would be advisable for you to wait and see concrete results coming from the management turnaround plan. Given that 4Q18 is expected to be negative, result of 1Q19 should provide an indication on whether management plans are working or not. So better wait till then.

If you are interested in the plantation industry then you should try to look at other companies first (at least until the FGV is really on a stable footing). You will notice that most plantation stocks have fallen but PE valuation is still high but 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 Avg 5 years PAT to take into account the cyclical nature of the industry.

However, if you are interested in the company due to the fact that the company is currently trading at below its book value. Then it is also advisable for you to look beyond the plantation industries. Given the current market condition, there is actually a lot of companies that is currently trading at a discount to book value (most of the property development companies for example).

I would recommend you look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already at RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17.

Please go through analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Good luck. Hope management turnaround plan would not disappoint the investing public especially since there is a lot of families especially the Felda settlers that are very dependent on this company success (from what i heard most of them took loans to subscribe to FGV IPO).

Hi kakasi123,

Based on your target price of RM6 and PE of 25x, it means that you are actually targeting a full year profit of RM160mil for FY19. This means that for the next 3 quarters, you are expecting that the company post an average of RM47mil PAT per quarter.

Assuming the margins improved to what was achieve in FY18, in order for the company to achieve that type of results it will need to post an average revenue that is above RM450mil per quarter which I am not saying it is impossible, as they had actually achieved it before. But what worries me is that, if during the tax holiday itself (products are cheaper by at least 6%) they can only achieve a sales of RM330mil, what would be the catalyst for the company to reach a sales of RM450mil? I am not sure they can reach this if they only depend on the physical outlet. Maybe they will need to focus on holiday period sales. I have my doubts but i sincerely hope they can achieve this.

On the PE target of 25x, investors will expect a PAT growth that is higher than average to commensurate paying an expensive price for Padini. Even if the price remain constant at RM6 and PAT of the company grow at a rate of 20% per annum. After 4 years at a profit of RM330mil, the company's PE would still be 12x. If you think that's logical for Padini (not impossible as well), then you need to ask yourself where will the profit growth comes from?

Higher profit margin? Not sure as looking at the company's financial it seems that margin is actually going down.

More stores opening? Most padini stores are located in shopping malls. Unless you think the numbers of mall will double in 4 years and padini stores itself will double, depending on aggressive stores opening might not deliver the growth that you expect. Like magus had highlighted, padini stores is already can be found every where.

Which brings us to export or online sales growth. This i think is possible but based on the most recent financials it would not be as soon as we hope.

That's why i think, if you are interested in Padini, it is better for you to wait for the next quarter result to see whether the sales level will increase or stay low as 1Q19.

If you are already invested in the company, i would suggest you diversified a bit of your position as given the depressing market condition at the moment, there are actually a lot of companies that are undervalue but still provide profit growth for FY 2019.

One of the companies in question is MBMR.

The company is a direct proxy to Perodua via its 22.6% interest. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already at RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17.

Please go through analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Good luck. Hope Padini's financial will improve next quarter.

Those that are invested in this company will need to be a bit patient when expecting a higher PAT.

I believe that the jump in the profit level will only come once the multi storey warehouse is completed which is expected sometime in 3Q19. The warehouse will increase the company's courier capacity from the current 10,000 parcels/ day to up to 200,000 parcels/day. Breakeven can be achieve when the company reaches 100,000 parcels/ day. Currently the division is still in the red wit EBIT of -RM4.91mil. Expect higher losses until the completion of the warehouse.

The company has actually been able to grow the other 2 main division (Total Logistic and Procurement Logistic) at a combine rate of 43%. However this comes at an expense of margin (drop from a combine of 7.9% Ebit margin to only 6.1%) due to very high competitive logistic market (did not help that some platform owners like Lazada has started their own logistic services).

With all this in mind investors need to be prepare for a lower PAT in FY19 vs FY18. I am targeting a PAT of RM10mil in FY19 vs RM12mil for FY18. In terms of PE this translate to a Fwd PE of 19.1x.
But do take not, most analyst expect profit to grow in 2021 onwards (assuming completion of warehouse, 100k parcel per day for courier service and not so high margin compression for the total and procurement logistics businesses).

Those that are invested in the company will need to be patient and need to look beyond 2021. Management has track record of delivering revenue growth in the past.

For those that have shorter investment horizon, i would suggest them to find companies that could offer earnings growth in 2019.

With that in mind, i recommend them to look at MBMR. The company is a direct proxy to Perodua via its 22.6% interest. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already at RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17.

Please go through analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.


Good luck.

The company currently has 2 property projects that still can contribute to their earnings. One in London (a 5 storey office building) and 8 units of apartments from the Shamelin Star project in Cheras. No other property project plan yet.

For the O&G division it is mainly driven by the storing and offloading services contract for an the Yetagun offshore gas field in Myanmar. The contract started in Apr 2018 and will end on Apr 2021.

Not sure how to value this company given that the earnings are very volatile. I still think that this year's and FY19 PATAMI would be negative.

Looking at the balance sheet, net tangible asset after deducting rights of use of assets (i assume this to be intangible. not sure what it is actually) and goodwill is only RM0.24 per share. So in terms of PB they are currently trading at almost 8x BV. However, if you consider the "rights of use of assets" as tangible and can be sold to another party at the listing price of those in the balance sheet, then PB would actually be around 1xBV.

Given the uncertainties of the earning and the prescribed value of the "rights to use of assets" i would suggest investors to look for other alternative if you still are interested in property or O&G industries.

If you are just looking for value companies with potential growth in FY 19, then i would suggest you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already at RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17.

Please go through analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Good luck.

Looking at the most recent quarterly result, i doubt the company will be able to achieve the same level of profit recorded in FY 17 (of RM30mil). Even if the company managed to achieve a PAT of RM25 mil in FY18 (meaning RM 9.7mil PAT in 4Q18) in terms of valuation the company will still be trading at 15.6x PE which is high relative to other companies in the construction industry.

What is more worrying is its balance sheet. Currently there is a RM492.6 mil debt in the company books and only RM29.4mil cash. This would mean a net debt level of RM463.2 mil or a net gearing level of 112.5%. Given the negative cash flow from operation, i worry that the company might faced difficulties in servicing their loans if interest rates were to increased which would also mean lower profit margin.

The company future growth seems to evolve around the solar energy industry where it hoped to be the main and preferable contractors to the project owners. Management however did not provide any profit target for this segment.

For those that are invested in the company, what is your target profit for FY2019? And from where would the profit comes from?

If you decides to diversified outside of the construction industry, i would recommend you to look at MBMR.

The company is a direct proxy to Perodua via its 22.6% interest. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already at RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17.

Please go through analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

That being said, hope CHINHIN financials would improve in the coming quarters and help the share price rebound back.

Good luck

Was surprised to see that the company's revenue didn't grow in 1Q19 given the tax holiday period.
Worst was the compression of gross profit margin (from 61.1% in 1Q18 to now 55.4%) which signals the very competitive market of high end products which includes other well known brands. Operational or EBIT margins has dropped by almost 40% from 4.4% in 1Q18 to only 2.8%.

I don't think you can use the 12 months trailing profit to come up with a PE valuation. The best is to wait for another 1 or 2 quarters to see if profit margin level recorded in 1Q19 would improve or not. I personally think that it would actually come down. Don't see how physical retailers like Bonia can compete with online platform like Lazada, 11Street or Shoppee.

The only relevant metrics that we can use now is the book value. Total net tangible asset to shareholder is RM0.43 per share which values the company at only 0.6x BV. But unless the company decided to liquidate or disposes of some of its assets, it might be a while before shareholders can actually "benefit" from the discount in book value.

Currently given the depressing market outlook there are a lot of companies that are currently trading at a discount to its Book Value. One of the company in question is MBMR. The company is a direct proxy to Perodua via its 22.6% interest. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already at RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17.

Please go through analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

That being said, hope Bonia financials would improve in the coming quarters and help the share price rebound back.

Good luck

The company is currently trading at a very high valuation of which those invested would normally expect very high growth. Even if they managed to deliver a PAT of RM30mil for FY19 (meaning from 2nd to 4th quarter PAT would be around RM7.8mil per quarter), at the current price valuation is still 54x fwd PE.

Not sure where the growth will come from. Agree that ecommerce has very high growth potential but there are a lot of logistics companies out there. The most worrying part is the fact that some ecommerce platform (like Lazada which is backed by Alibaba) has started to provide their own logistic services. How can companies like Gdex compete with Lazada Express for example?

Those invested, what are the positive catalysts for this company? Because looking at the financials, it seems that growth in revenue can only be achieved via margin cutting (as competition are intensifying).

I can only find MIDF analyst report and they are only projecting a PAT of RM26mil in FY19 and RM31mil in FY20 which is still lower than the record PAT recorded back in FY17 of RM36.8mil.

Hi RainT,

The other listed piling companies are Ikhmas Jaya Group Berhad and Pintaras Jaya Berhad.
That being said Econpile is the biggest listed piling companies in Bursa both in term of market capitalisation and 12 months trailing revenue. I agree with you that it is one of the preferable piling companies in the construction industry due to its ability to deliver project on time and budget.


With regards to MBMR, it is a direct proxy to Perodua who's strength is in the entry level market. Perodua's vehicle has actually come down by an average of 3% post SST vs during the GST regime.

Perodua's October sales number of 19,528 cars is an improvement of 18% vs 2017 October sales of 16,491. Most analyst are projecting 4Q to be higher compared to the recent 3Q. Growth in FY19 to continue driven by still higher demand of new Myvi and the new Perodua SUV to be launch in 1Q19.

The attractiveness of MBMR lies in its very undemanding valuation of only 5.3x PE vs the industry average of 12- 15x. PB itself is only 0.5x.

Thanks.

3Q18 result was above expectation mainly due to the better performance of the M&E and unlisted O&G segment. I had been too pessimistic on both the divisions and had anticipated a loss of -RM100mil. The actual result (PBT) for the combined division is -RM2.2mil.

Auto and equipment divisions PBT were both in line with my expectation. Auto division managed to bring in RM151mil PBT thanks to better margin (stronger RM vs USD) and higher sales from the tax holiday period. Equipment PBT was at RM43.5 mil driven by higher export sales and higher demand from construction industry as client would most probably want to take advantage of the tax free holiday.

Toyota sales in Oct dropped to 4,757 cars vs 6,201 recorded in Oct 17 (-23% decrease).
Perodua sales in Oct increased to 19,528 cars vs 16,491 recorded in Oct 17 (18% increase).
If the trends continues, i would assume the PBT for the division could still be around RM150mil for 4Q18.

Equipment should still be able to record a PBT of around RM40mil.

Assuming a breakeven level for the combine M&E and unlisted O&G segment.

Total core PBT for 4Q should be around RM200mil. However please take note that the RM1.1bil sukuk has an interest rate of 6.35% per annum paid semi annually. This would mean on top of the finance cost that you see from 1Q to 3Q18 you need to assume an additional finance cost of around RM70mil per year. Given the issuance date was on 20th Apr 2018, UMW is expected to pay its first interest payment in Oct amounting to RM35m. So core PBT in 4Q18 should be around RM170mil

Valuation wise, I am targeting the company to be able to get RM550mil PATAMI for FY 2019. At the current price this would translate to a valuation of 10.7x Fwd PE which is not that expensive.

For gearing calculation I have adjusted the sukuk of RM1.1 bil to be placed in non current liabilities instead of equity. This would bring the debt level of the company as of Sept 2018 to RM4.2bil and reduce the total equity to RM4.5bil. Adjusted gearing is 93.9% however net gearing (company has RM2.7bil in cash reserves and liquid investment) is only 33%.

I believe you should only invest in the company if you truly believe in Toyota abilities to maintain or gain more market shares and also if you believe in the Rolls Royce project. Currently the rolls royce project is still loss making due to lower than expected production level. But based on management indication, at full capacity the venture could provide good returns to UMW (however, they did not specify the profit target)

For Toyota, i am not certain that the new Bukit Raja plant would be a positive catalyst to the company as the plant is only expected to produce Camry and Vios models instead of the MPV (Vellfire and Alphard) or SUV (Rush currently being manufactured by Perodua). Just because the capacity increase does not mean demand will increase as well.

For those interested in having exposure to Perodua, MBMR would offer a better alternative. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already at RM106mil). PB is low at only 0.5xBV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17.

Please go through analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions.

Good luck.

Hi spininglotus,

Not sure how the 300 lots calculation is wrong. I actually used 300 lots because it can be easily divided by 3 (for the explanation of right issue of new shares) and by 5 (for explanation to the right issue of the iRCPS). Then i just multiply with the current share price. Can you explain which part is wrong? I might miss out something.

The 30 sens and 41 sens i actually got from the Sapura announcement dated 6th Nov. Did they change the pricing of the new shares and iRCPS?

Here is the link: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5966681

In general, i just wanted to highlight that investors will need to prepare additional money when investing in this company. But you are right to point out that you need to do your fundamental analysis to know whether it is a good investment or not.

thanks

Just want to highlight that if you want to invest in the stock due to potential upturn of the o&g industry, u first need to understand how much money you actually need to put in.

In order not to be diluted later post right issue you have to assume a higher investment capital when buying this stock.

Assuming you are buying 300 lots of share @ current price of RM0.355. Total cost would be RM10,650.

For the first right issue of new ordinary shares attached with warrants. For every 3 shares held you will be entitled to subscribe to 5 new shares at RM0.30 per share.

So here (if you bought 300 lots) u need to prepare to buy another 500 lots at RM0.30. Basically u need to fork up another RM15,000 on top of your initial investment. But you will get 500 lots additional share and 50 lots of warrants as well later.

Upon listing of the new shares (assuming share price remain constant at RM0.355 the previous day) all new shares will carry a new price of RM0.32. In terms of investment cost it is actually almost the same. 800 lots x RM0.32 = RM25,600 which is slightly lower than your total investment cost before right issue (due to rounding of price post listing of new share. Theoretically it should have been RM0.3206 per share).

If for some reason you did not subscribe. You will still be effected by the dilution of the share price. So your original 300 lot will now also be trading at RM0.32. So by not subscribing you will lose RM0.035 per share or RM1,050. Your investment now has fallen to RM9,600.

Then there is the second right issue of iRCPS. For every 5 shares (before right issue) you are entitled to subscribe to 2 iRCPS at a price of RM0.41 per unit.

Based on your original investment of 300 lots, you need to subscribe to the 120 lots of iRCPS . This would mean an additional investment of RM4,920. However, please take note that the price of the iRCPS is actually higher compared to the current share price. It would actually be better for you not to subscribe.

In summary at the current price of RM0.355, for you not to be diluted later you need to prepare to fork up additional money to subscribe to the right issue of the new shares.


If for some reason also the share price prior to ex date is higher than RM0.41, then you are advice to subscribe to the iRCPS as well as the right issue for the new shares.

If at ex date the share price is lower than RM0.41, you are advice to just subscribe to the right issue of the new shares but not the right issue of the iRCPS.

If for some reason the share prior to ex date is lower than RM0.30, then you should not subscribe to both the right issue of new shares and the iRCPS.

Can someone please verify this? I actually did this for a friend who was interested in buying Sapura Energy last week. So had highlighted to him that he might need to fork up more capital later.

Thanks. Good luck.