KPOWER - renewable energy play

- RM5bil market value in 5 years
- order book of 1.2bil with target of another 2bil next year
- 9M2020 net profit 5.48mil on revenue 56.5mil. net profit margin 9.7%
- Gross margin EPCC contracts 15-18%
- Net cash 11.8mik

SCIB - Sarawak construction thematic play

- order book 1.0bil target to reach >1.5bil by year end
- anticipating strong 2H2020 earnings recognition
- leveraging on Dato Karim's established experiences and connections from Serba stronghold markets especially Middle East
- potential order wins include Qatar World Cup 2020, Indonesia - relocation of capital from Jakarta to East Kalimantan, Sarawak 2021 election - state budget allocations

Kenanga just issued a report on SCIB. TP 3.90

https://cdn1.i3investor.com/my/files/dfgs88n/2020/07/20/1514355946-1209014206.pdf

From RHB report:

Top Pick: KPOWER. We initiated coverage on this counter, with a BUY and TP of MYR3.46 pegged to 14x FY21F P/E. Being a sector pick, the company is the process of transforming into an energy & utilities services player with the emergence of new shareholders – Dato’ Dr Ir Ts Mohd Abdul Karim Abdullah (founder of Serba Dinamik) and Mustakim Mat Nun – and management team since Jun 2019. We are upbeat on this stock, as it offers an exponential earnings CAGR of 149%, a potential doubling of its orderbook by end-FY21, superior ROEs, and an undemanding valuation of 9.7x. The recently-proposed 35% placement will provide funds to execute jobs in hand, while strengthening the company’s balance sheet. KPOWER is expected to remain in a net cash position in FY21-22, assuming only MYR11-36m of debt/credit line drawdowns.

If it drops back below 2, i will buy back again

From Malacca Securities:

LHI – Chicken prices on the way up after reopening of business

Leong Hup’s was affected on the back of closure of business overall and declining demand throughout MCO/ CMCO period. However, we noticed chicken prices are back on the rising trend following the reopening of business. Hence, we should anticipate mild recovery towards their earnings moving forward.

Compared to its peers, SAM is a deep laggard

Please look at its valuation vis-a-vis earnings prospect and not its share prices

RHB too has revised their DCF-derived TP higher to RM1.18.

The thesis is simple...poultry prices.

Prices has seen sharp rebounds from the bottom reached in April. This is a function of normalising demand outstripping short industry supply. The demand or consumption recovered from May onwards, as both countries eased their respective lockdown initiatives. However, industry supply was unable to adjust accordingly, with smaller farmers struggling with finances and facing labour constraints.

In Malaysia, the reduced supply may persist and can be structural, as the COVID-19 crisis could erode or undermine small farmers’ financial strength. Hence, they will face an uphill challenge to upgrade their farm facilities to a closed house format, in order to comply with the conditions set out by Department of Veterinary Services (DVS) for a renewal of license. Besides, we understand that the lack of a succession plan may also phase out some of the smaller farms.

Barring the resurgence in COVID-19 cases, we believe the elevated poultry prices could sustain, given the supply-demand dynamics as discussed above. This will benefit enterprise farmers, with a larger business scale, such as LHI.

1% and 3% growth rate seems like terminal growth, you are that pessimistic regarding Liihen's prospect?

your PV of FCF, did you take into account its excess cash balances?

buy laggards have proven right

i have sold my positions

remember the no.1 rule, don't lose money, unrealised gains can be evaporated in an instant

trade carefully



Fabien "The Efficient Capital Allocater" Irregardless, i view Kossan as a laggard play.

In terms of forward valuation, it is the cheapest now. 1 year forward projected earnings growth is quite similar to Supermax based on consensus view, but earnings multiple is half of Supermax though i do note that Supermax is anticipated to record higher growth in the second year. So in terms of 2 year forward, Supermax is on par with Kossan. But the disparity can be seen in terms of P/BV, Kossan is much cheaper vis-a-vis ROE in comparison to Supermax.

If the consensus is right, i believe Kossan has more upside potential at current valuation.
13/07/2020 8:07 PM

When i bought it at 1.50, it was no a brainer as it was trading below its net cash of 1.77

and then i top it up at 1.80 as it was still very cheap, way below its NCA of 2.18

even at current price, it is at 0.4x of book value

as the earnings have been volatile and highly uncertain, my investment thesis was largely based on balance sheet

moving forward, my valuation of LCTITAN would be dictated by earnings

if earnings improved then re-rating of earnings valuation may be warranted.

next logical step is to monitor the quarterly earnings closely




Posted by JollyAndy > Jul 13, 2020 4:37 PM | Report Abuse

Mr Fab : the target is 2.83 like in the KAF report
Buy.

Irregardless, i view Kossan as a laggard play.

In terms of forward valuation, it is the cheapest now. 1 year forward projected earnings growth is quite similar to Supermax based on consensus view, but earnings multiple is half of Supermax though i do note that Supermax is anticipated to record higher growth in the second year. So in terms of 2 year forward, Supermax is on par with Kossan. But the disparity can be seen in terms of P/BV, Kossan is much cheaper vis-a-vis ROE in comparison to Supermax.

If the consensus is right, i believe Kossan has more upside potential at current valuation.

https://cdn1.i3investor.com/my/files/dfgs88n/2020/07/13/1514330958-138...

Following the spark US/China/Huawei tech war, many have rushed to develop their semiconductor capabilities, especially in leading edge (≤7nm) frontend fabrication (foundry) to be self-sufficient on the back of national strategic and security interests

Expect robust capex in near to mid-term on frontend subsector benefiting companies like Frontken, UWC & SAM.

Global peers valuation at forward PE of 35 times.

SAM Engineering

A hidden gem? Under-researched SAM Engineering and Equipment (not rated) has morphed into a sizable semiconductor contract manufacturer after successful diversification strategy from aerospace market. Its equipment business has outgrown aerospace in FY20 with revenue and PBT accounted for 52% and 63% of overall.

Supported by strong parents (SAM Group and Accuron Technologies), SAM has exposure in semiconductor frontend and storage devices with reputable customers (Agilent, Teradyne, KLA Tencor, Bosch, P&G and etc) in telecommunication, medical and automotive sectors. Conservatively, assuming that any slack from aerospace will be compensated by equipment’s strength and yield a flattish bottom line for FY21 (RM80m), SAM is currently trading at undemanding 13.6x PE. However, we do note the concerns of liquidity and severe-than-expected slump in aerospace segment which should be mitigated by its initiatives to divert capacity to equipment business.

https://cdn1.i3investor.com/my/files/dfgs88n/2020/07/13/1514330958-138...

Following the spark US/China/Huawei tech war, many have rushed to develop their semiconductor capabilities, especially in leading edge (≤7nm) frontend fabrication (foundry) to be self-sufficient on the back of national strategic and security interests

Expect robust capex in near to mid-term on frontend subsector benefiting companies like Frontken, UWC & SAM.

Global peers valuation at forward PE of 35 times.

SAM Engineering

A hidden gem? Under-researched SAM Engineering and Equipment (not rated) has morphed into a sizable semiconductor contract manufacturer after successful diversification strategy from aerospace market. Its equipment business has outgrown aerospace in FY20 with revenue and PBT accounted for 52% and 63% of overall.

Supported by strong parents (SAM Group and Accuron Technologies), SAM has exposure in semiconductor frontend and storage devices with reputable customers (Agilent, Teradyne, KLA Tencor, Bosch, P&G and etc) in telecommunication, medical and automotive sectors. Conservatively, assuming that any slack from aerospace will be compensated by equipment’s strength and yield a flattish bottom line for FY21 (RM80m), SAM is currently trading at undemanding 13.6x PE. However, we do note the concerns of liquidity and severe-than-expected slump in aerospace segment which should be mitigated by its initiatives to divert capacity to equipment business.

First target hit


Stock: [LCTITAN]: LOTTE CHEMICAL TITAN HOLDINGS BHD

Jul 2, 2020 7:55 PM | Report Abuse

net cash (after adjusted for dividend 159mil) is 4,033mil

price at 1.81, market cap = 4,177mil

you are paying 303mil for its entire business

net current asset is 4,495mil = 2.18 per share

even at 1.85, your return on NCA = 17.8%

first target NCA = 2.18

https://cdn1.i3investor.com/my/files/dfgs88n/2020/07/13/1514330958-1381086382.pdf

Following the spark US/China/Huawei tech war, many have rushed to develop their semiconductor capabilities, especially in leading edge (≤7nm) frontend fabrication (foundry) to be self-sufficient on the back of national strategic and security interests

Expect robust capex in near to mid-term on frontend subsector benefiting companies like Frontken, UWC & SAM.

Global peers valuation at forward PE of 35 times.

SAM Engineering

A hidden gem? Under-researched SAM Engineering and Equipment (not rated) has morphed into a sizable semiconductor contract manufacturer after successful diversification strategy from aerospace market. Its equipment business has outgrown aerospace in FY20 with revenue and PBT accounted for 52% and 63% of overall.

Supported by strong parents (SAM Group and Accuron Technologies), SAM has exposure in semiconductor frontend and storage devices with reputable customers (Agilent, Teradyne, KLA Tencor, Bosch, P&G and etc) in telecommunication, medical and automotive sectors. Conservatively, assuming that any slack from aerospace will be compensated by equipment’s strength and yield a flattish bottom line for FY21 (RM80m), SAM is currently trading at undemanding 13.6x PE. However, we do note the concerns of liquidity and severe-than-expected slump in aerospace segment which should be mitigated by its initiatives to divert capacity to equipment business.

Rightly so, strong balance sheet with net cash >80% of market cap, do you think the company deserved to be valued at less than 0.5x of book value?

https://www.theedgemarkets.com/article/indiachina-dispute-presents-opportunity-malaysia-boost-exports

The heightened border dispute between India and China presents an opportunity for Malaysia to boost exports to India as the South Asian country plans to impose strict rules and tariffs on Chinese goods, said MIDF Research.

This is on top of the global disruption of raw material supplies from China as a result of the COVID-19 pandemic, prompting key importing countries including India to consider import substitution or diversification.

The firm said there were no specific products emphasised in India’s tariff plan but they could generally include chemicals, steel, electronics, heavy machinery, furniture, paper, industrial machinery, rubber articles, glass, metal articles, pharma, fertiliser and plastic toys.

The fact that certain stocks have declined by more than 30% to 60% does make a compelling case for bargain hunting. As Bill Ackman pointed out, the simplistic approach of assigning a P/E multiple to analyst estimates of next year's earnings is not valid for the current environment as the next 12 months of earnings are not representative of the true long-term earning power of most companies. In fact, very likely, the current crisis will disrupt the cash flows for the next 12-24 months. Having said that, generally, the disruption anticipates to destroy perhaps 5 - 10% of the value of the business.

For the case of Muhibbah, i see downside risk is rather limited, of course no one knows how market perception will change in the future. But at current valuation, i'm looking at least 20% upside potential.

semicon upswing. look at the Chinese market, the chip makers were being valued at over 100times of earnings

look at domestic market, Dufu, UWC, Greatec..all being valued at 50 times multiples.

i will leave it to the wisdom of the market in deciding the correct multiple for SAM

MFCB remains one of my best investments ever. My entry price was at RM1.90. Buy and hold works wonderfully if you have selected the right stock.

net cash (after adjusted for dividend 159mil) is 4,033mil

price at 1.81, market cap = 4,177mil

you are paying 303mil for its entire business

net current asset is 4,495mil = 2.18 per share

even at 1.85, your return on NCA = 17.8%

first target NCA = 2.18

perhaps the share price hangover was due to public invest coverage

price up after good riddance of that analyst

sometimes if you don't possess of that vision. to be able to see further ahead of what's blocking in front of you, too fixated on current terms. that's what happened to that poor analyst. too myopic, narrow focused. unable to see the big picture

poor guy, Tan Siang Hing, doubt he will ever thrive in investing

under rated prop stock. trading not even half of its NTA 2.60

i decided to take positions, partly due to the dividends and its cheap valuation

as a value investor, i just can't resist a bargain purchase

my target price remains at rm5 at least based on projected earnings (assuming no change to its PE multiplier which is considered rather low at 8x v. its peers)

we should be looking at PE of 12x. a re-rating is not unreasonable given its double digit (increasing) ROE

TGUAN remains at explosive growth phase, albeit minor blip in its pace this year. having said that, the co has steadily increased its dividend payout in line with increasing earnings

Looking back at my previous comments.

Value investing has its days too...all you need is a little patience...


Stock: [POHUAT]: POH HUAT RESOURCES HOLDINGS BHD

May 8, 2020 7:52 PM | Report Abuse

yes, pohuat valuation is at extreme low. at current price, it implies that the company is facing severe impairment to its earnings power

even pre-covid, its market valuation multiple has been very low compared to its peers. and this company has been doing ROE of 15% in the last few years

sometimes, you just need to look hard and think whether the market has been unduly irrational in pricing some companies

well, value is in the eyes of the beholder

to me, it's value play, pure and simple


Stock: [POHUAT]: POH HUAT RESOURCES HOLDINGS BHD

May 18, 2020 5:05 PM | Report Abuse

when the retailers are busy chasing the hot themes...irregardless of fundamentals

while we value investors, quietly accumulating bargain stocks

life has been good...


Stock: [POHUAT]: POH HUAT RESOURCES HOLDINGS BHD

May 27, 2020 8:09 PM | Report Abuse

sure, it's boring here. no excitement at all....quiet enough for the CEO to accumulate shares

17.5billion order book which already above management target of 15bil this year

YTD order book replenishment of 9.7bil

earnings on track at least 10% CAGR

will it end above 1.60 or below, it doesn't matter in the short term. i'm very confident the share price trajectory over the long term is only one way that is UP

rotational play to furniture counters?

both Liihen and Pohuat up

rotational play to furniture counters?

both Liihen and Pohuat up

bought some at 0.91

4.5sen dividend to be locked in soon

Japan’s largest airline to be asked to resume flights to Cambodia

https://klse.i3investor.com/blogs/kianweiaritcles/2020-06-29-story-h1509651071-Japan_s_largest_airline_to_be_asked_to_resume_flights_to_Cambodia.jsp

When you think you are a better investor than Warren Buffett, Howard Marks, Stanley Drunkenmiller, Mohamed El-Erian, to name a few.

at least RM10

Very obvious SAM is deeply undervalued vis-a-vis its peers.

Valuation is unjustified given its track record. A simple back of the envelope calculation shows it deserves a blended PE of 25x at least.

commendable performance

the management has proven again and again

this gem is worth a keep

Latest NTA 9.10

Pre-covid from beginning of the year, P/BV is at least 0.6x (=RM5.46)

end 2019 P/BV was 0.7x (=RM6.37)

over the last 5 years, the max P/BV was 2.05x in January 2019

median was 0.9x

3iii

don't get me wrong, i am not prohibited by high PE from investing in any wonderful companies

what i'm trying to say is given the exceptional profit growth in the next 1-2 years, with mean reversion in mind, don't you think the forward PE as implied by current price is sustainable vis a vis its historical PE valuation.

i paid PE 38x to own Disney shares as i believe the future runway is still very long, i'm not too sure about TopGlove

it implies forward PE of 30x.

such valuation sustainable?

Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > Jun 16, 2020 3:30 PM | Report Abuse

Topglove


At RM 15.56 per share, its market cap is RM 41.7 billion.

I project Topgloves' total earnings for this and next 3 quarters to be RM 1.4 billion.

SAM

Growth stock albeit temporary headwinds, valuation are undemanding

HLIND

Strong FCF generation

Cash cow

LCTitan net current asset per share is 2.18

benjamin graham would have been an eager buyer, even more so when it drop below its net cash per share

have a look at the annual report. there is no mention on the competition risks from new airport. it remains as business as usual as far as communication from the management

hope it breaks first target 4.50

once the economy is fully opened up, gaming would rebound the fastest. you can't bet against human nature, ingrained over hundred of years of evolution, when gambling became an obsession since the ancient kingdom

CIMB Target Price - RM5.06

The resilient demand for PVC food wraps should assist Thong Guan to stay on a growth
path. With the ringgit and oil prices expected to remain depressed, we upgrade Thong
Guan to Add. Our higher TP of RM5.06 is still based on 13x FY21F P/E, our target
multiple for the packaging sector, based on its 10-year historical valuation. Upside risks
for the stock include further declines in ringgit and raw material prices. Downside risks
are a rebound in oil prices and the US dollar enervating.

sure, it's boring here. no excitement at all....quiet enough for the CEO to accumulate shares

Kenanga has revised its target price to RM4

https://klse.i3investor.com/blogs/kenangaresearch/2020-05-22-story-h1507779076-Thong_Guan_Industries_Bhd_Situational_Black_Horse.jsp

First quarter seems promising.


Posted by Fabien "The Efficient Capital Allocater" > Nov 20, 2019 3:12 PM | Report Abuse X

Next year EPS should normalise, back to growth trajectory.

erm, can write off quarter 2