SKB Shutters Corporation Berhad (Ticker: 7115)

*Investment Highlights*

1.The key beneficiary of IFS requirement implementation in Malaysia

2.Recovering from Covid-19 woes

3.Targeting more significant market share through product innovation and capacity expansion

*Company Background*

SKB has more than 65 years of operational experience in the manufacturing business. It specialises in manufacturing roller shutters, steel door and storage, and handling systems, with 2 principal subsidiaries, SKB Shutters Manufacturing Sdn Bhd and SKB Storage Industries Sdn Bhd.

Its production facilities are 50,000 square meters of modern steel structural at Kota Damansara, Selangor. SKB’s products are offered in Malaysia and exported overseas as tested and proven to conform to the highest worldwide fire testing standards - testified by the Warrington Fire Research in the UK and accepted and certified SIRIM and Jabatan Bomba Malaysia locally.

*Investment Merits*

1.SKB IFS is the *1st IFS in the region* that has achieved 240 minutes of fire resistance and 240 minutes of insulation. The self-developed and manufactured IFS is currently a patented product in the area with a good margin. With the *enforcement of the adoption of IFS for all commercial and industrial buildings in Malaysia*, the Company is expected to be *benefited from the growing demand for IFS*.

2.Currently, IFS contributes approximately 5% to the SKB group’s revenue. The Company expects the contribution from the IFS segment to *grow 3 times* to 12%-15% of the group’s revenue within the next 5 years given more ASEAN countries are adopting the insulated compartment requirements.

3.The Company *returned to profitability in FYE 2021* with a net profit of RM5.02mil compared to a net loss of RM962k despite the cost-driven challenges from the post-Covid-19 pandemic. This was mainly attributable to its improved gross profit and efforts in its cost management. In addition, the relaxation of Covid-19 restrictions and uplift of MCO have resulted in significant recovery in the industrial construction sector and picking up of sales orders, which is expected to enhance the profitability of the Company further.

The Company’s on hand orders in 2022 comprise a sizable portion of foreign-invested industrial projects, mainly in medical device and components, hi-tech electrical and computer components. In addition, the Company is expected to &ride on the growing trend of industrial and warehousing projects&, especially in the northern and central regions.

4.The Company is working on the R&D for several products, including floodgates. In addition, the Company has increased its production capacity by automating the production process and is currently running at approximately 75% to 80% utilization rate. The Company *aims to increase its production capacity by 70% within the next 5 years* to cater to the expected long-term growth in the demand of its existing products and new products (which is expected to yield a higher profit margin).

*Our View*

We gathered that SKB is tightly held by its major shareholders (Top 30 shareholders control more than 92% of the Company); with the free warrant is coming on board soon, this will bode well to the share price.

Since the Company is planning to increase its production capacity by 70% within the next 5 years, we believe it will need to start its CAPEX in the near term. We think the share price will need to continue its uptrend to ensure a successful funding exercise (from warrant conversion). We opine SKB’s fair value should be at RM1.00 (forecast FY22 NP of RM7.5mil and PE of 17x)

*Technical Analysis*
On 25th Jan, the share price found its support at RM0.48. We think that it is a strong and valid support level as the share price witnessed a deep pull back from the peak. We expect a V-shaped recovery for the stock. Supported by the upcoming issuance of free warrants and the company's increased production, the share price has a higher chance to break a new high.

R1: 0.745 (+52%)
R2: 0.865 (+30%)
S1: 0.480 (-15%)

Our View
Subscribe to the Rights Issue to Ride on the Potential Share Price Appreciation
Based on what we gathered from our sources, we are convinced that YB will have a series of major announcements (refer to our write up above) to promote the share price.
We suggest investors to buy the LR on the market to have a better exposure to ride on the potential share price appreciation.
By investing into the LR is equivalent to the investment into Warrants, LR will be able to provide a leverage effect to investment return. Based on our calculation below, the total cost to invest in YB-LR will be RM0.05. The leverage effect against the investment into the mother share is huge!

(1) YB-LR price = RM0.01
(2) Nominal value of LA = RM0.04
(1) + (2) Total purchase price = RM0.05
YB share price = RM0.465
LA Conversion price RM0.48

Assuming YB share appreciate to RM0.61

Scenario A
Investment Return by investing in YB Share
RM0.61 / RM 0.465 Investment return = 31%

Scenario B
Investment Return by investing in YB-LR
YB share price appreciation = RM0.61- RM0.465 = RM0.145
RM0.145 / RM 0.05 = 200%!! (The power of leveraging)
YB-LA will provide the greatest share price gain! Conversion to Mother Share is unnecessary at this point in time.

We think YB ventures could potentially be one of the key RE players in East Malaysia. Based on what we gathered, YB is close to finalising a RE deal in East Malaysia, and investors should expect some great announcements to be made in the near future. Its tile manufacturing business will provide base earnings for the Group to fuel the Group’s expansion in the IT and RE business. Earnings growth from the IT segment will likely be the short-term catalyst for the share price, while diversification into the RE segment will ensure the Group has another earnings boost in the mid-term.


Technical
Based on technical we think that YB worth for a trade as we believe the management will support the share price to ensure the successful of the corporate exercise, technically the share should trade at above RM0.55.

R1, R2, R3
0.53, 0.58, 0.63

S1, S2
0.42, 0.40

Why RE in East Malaysia?
The growth potential of LSS projects in Sabah and Sarawak are huge, especially in the state of Sabah. Malaysia has targeted to increase installed capacity of 1,200 MW of LSS farms whereby 200MW in Sabah and another 1,000 MW is in Peninsular Malaysia. Studies have also shown that the average electricity production for a proposed 5MW power plant is projected to be 8,377MWh annually, available for export in Sabah.
Aside from that, the application of Solar photovoltaic for the grid-connected system over a 21-year project lifetime is also feasible financially. As for Sarawak, the state-owned energy provider, Sarawak Energy, is taking the lead in pushing the adoption of RE in the country.
Together with the Ministry of Utilities Sarawak, Sarawak Energy targets full electrification in Sarawak by 2025, and it is already exporting power to the Indonesian neighbour, West Kalimantan. By 2030, Sarawak Energy plans to incorporate more RE projects such as LSS power to account for 4% of the mix.

Company Background
YB Ventures Berhad (YB), formerly known as Yi-Lai Berhad, is a distinguished manufacturer of tiles that was established in 1990 in Kulai, Johor (listed in May 2002). The Company is the exclusive manufacturer of ALPHA TILES®, which is a major household name in construction, renovation and interior decoration.
In 2020, through its 49%-stake in TechBase System, YB had made a significant milestone by diversifying the Group’s business to include the provision of Information Technology (IT) solutions in the field of blockchain technology solutions and system integration services.
Its JV partner (TechBase Solution Sdn Bhd) has around 11 years of experience in providing IT solutions and offers products ranging from enterprise resource planning (“ERP”) solutions, sales management systems, business productivity solutions and website design and development. Its target clientele ranges from small and medium enterprises to large corporations as well as organisations that need to upgrade or replace existing IT systems.

Investment Merits
1.Venturing into Renewable Energy: We gathered that YB is in an advanced stage of discussion with an experienced partner in Renewable Energy (RE) to set up a collaboration entity. We believe YB is eyeing Solar related projects (circa 100MW and direct negotiation with the state government) in East Malaysia.
It is important to note that direct negotiation projects are able to generate a higher rate of return. YB is likely to be involved in EPCC and will eventually be the asset owner to generate recurring earnings.
With its strong balance sheet (Net cash of RM72mil) and its strength as a listed company (lower borrowing cost), we believe YB will be the ideal partner for RE related business.

2.Core Business is Turning Around: YB Launched its premium tiles product, the Talos Living Tiles, the first negative ion tiles launched in Malaysia.
The launch of Talos Living Tiles is a step-up for the Group as it moves towards the premium segment. Utilising YB Venture’s proprietary ground-breaking Nano Glazing technology, the coated tiles produces and releases negative ions into the air, improving indoor air quality and subsequently bring about a healing effect to the body.
The management is confident that the Group will exceed its RM30.0 million sales target over the next three years, based on the positive feedback from property developers and end-users.

3.Rights Issue to Fuel Its Expansion: To recap, YB proposed rights issues of up to 1,213,082,625 ICULS, on the basis of five (5) ICULS at RM0.04 each for every one (1) existing ordinary share in YB (which will be able to raise up to RM48.5 mil).
Proceed from the rights issue will be utilised to construct four (4) new production lines for its tiles business segment as the Group’s existing manufacturing facilities are currently operating at the peak capacity.
Hence, the new production lines will allow the Group to focus on introducing products that are aligned with the customer buying behaviour as well as to optimise and improve the cost-efficiency for their manufacturing business. After the said expansion, the Group will be able to expand the total production capacity by around 50% from 7.1 mil sqm (8 lines) to 10.7 mil sqm (12 lines).

4.IT Segment Start Contributing Earnings: On top of its existing tiles manufacturing business, YB ventured into IT solutions in the field of blockchain technology solutions and system integration services to boost the Group’s earnings growth.
Through its JVA with TechBase Solution (an experience IT partner that has a proven track record and solid historical financial performance of profit after tax of RM5.9 million on the back of RM11.6 million in its latest full-year results), YB will be focusing on developing and distributing their in-house blockchain technology solutions and system integration services in the domestic market. We believe that YB will be able to recognise its maiden profit in the coming quarter results.
To Acquire another Main Market Listed Co: We were told that YB is close to seal a deal to acquire a stake in a Main Market listed company that would provide synergies to the Group. We believe YB will be announcing the news in Bursa Malaysia and this may boost the share price in the near term.

5.To Acquire another Main Market Listed Co: We were told that YB is close to seal a deal to acquire a stake in a Main Market listed company that would provide synergies to the Group. We believe YB will be announcing the news in Bursa Malaysia and this may boost the share price in the near term.

(1) YB-LR price = RM0.01
(2) Nominal value of LA = RM0.04
(1) + (2) Total purchase price = RM0.05
YB share price = RM0.465
LA Conversion price RM0.48

Assuming YB share appreciate to RM0.61

Scenario A
Investment Return by investing in YB Share
RM0.61 / RM 0.465 Investment return = 31%

Scenario B
Investment Return by investing in YB-LR
YB share price appreciation = RM0.61- RM0.465 = RM0.145
RM0.145 / RM 0.05 = 200%!! (The power of leveraging)
YB-LA will provide the greatest share price gain! Conversion to Mother Share is unnecessary at this point in time.

We think YB ventures could potentially be one of the key RE players in East Malaysia. Based on what we gathered, YB is close to finalising a RE deal in East Malaysia, and investors should expect some great announcements to be made in the near future. Its tile manufacturing business will provide base earnings for the Group to fuel the Group’s expansion in the IT and RE business. Earnings growth from the IT segment will likely be the short-term catalyst for the share price, while diversification into the RE segment will ensure the Group has another earnings boost in the mid-term.


Technical
Based on technical we think that YB worth for a trade as we believe the management will support the share price to ensure the successful of the corporate exercise, technically the share should trade at above RM0.55.

R1, R2, R3
0.53, 0.58, 0.63

S1, S2
0.42, 0.40

Why RE in East Malaysia?
The growth potential of LSS projects in Sabah and Sarawak are huge, especially in the state of Sabah. Malaysia has targeted to increase installed capacity of 1,200 MW of LSS farms whereby 200MW in Sabah and another 1,000 MW is in Peninsular Malaysia. Studies have also shown that the average electricity production for a proposed 5MW power plant is projected to be 8,377MWh annually, available for export in Sabah.
Aside from that, the application of Solar photovoltaic for the grid-connected system over a 21-year project lifetime is also feasible financially. As for Sarawak, the state-owned energy provider, Sarawak Energy, is taking the lead in pushing the adoption of RE in the country.
Together with the Ministry of Utilities Sarawak, Sarawak Energy targets full electrification in Sarawak by 2025, and it is already exporting power to the Indonesian neighbour, West Kalimantan. By 2030, Sarawak Energy plans to incorporate more RE projects such as LSS power to account for 4% of the mix.

Becoming a Renewable Energy Player - YB Ventures Berhad (Ticker: 5048 YB)

Company Background
YB Ventures Berhad (YB), formerly known as Yi-Lai Berhad, is a distinguished manufacturer of tiles that was established in 1990 in Kulai, Johor (listed in May 2002). The Company is the exclusive manufacturer of ALPHA TILES®, which is a major household name in construction, renovation and interior decoration.
In 2020, through its 49%-stake in TechBase System, YB had made a significant milestone by diversifying the Group’s business to include the provision of Information Technology (IT) solutions in the field of blockchain technology solutions and system integration services.
Its JV partner (TechBase Solution Sdn Bhd) has around 11 years of experience in providing IT solutions and offers products ranging from enterprise resource planning (“ERP”) solutions, sales management systems, business productivity solutions and website design and development. Its target clientele ranges from small and medium enterprises to large corporations as well as organisations that need to upgrade or replace existing IT systems.


Investment Merits
1.Venturing into Renewable Energy: We gathered that YB is in an advanced stage of discussion with an experienced partner in Renewable Energy (RE) to set up a collaboration entity. We believe YB is eyeing Solar related projects (circa 100MW and direct negotiation with the state government) in East Malaysia.
It is important to note that direct negotiation projects are able to generate a higher rate of return. YB is likely to be involved in EPCC and will eventually be the asset owner to generate recurring earnings.
With its strong balance sheet (Net cash of RM72mil) and its strength as a listed company (lower borrowing cost), we believe YB will be the ideal partner for RE related business.

2.Core Business is Turning Around: YB Launched its premium tiles product, the Talos Living Tiles, the first negative ion tiles launched in Malaysia.
The launch of Talos Living Tiles is a step-up for the Group as it moves towards the premium segment. Utilising YB Venture’s proprietary ground-breaking Nano Glazing technology, the coated tiles produces and releases negative ions into the air, improving indoor air quality and subsequently bring about a healing effect to the body.
The management is confident that the Group will exceed its RM30.0 million sales target over the next three years, based on the positive feedback from property developers and end-users.

3.Rights Issue to Fuel Its Expansion: To recap, YB proposed rights issues of up to 1,213,082,625 ICULS, on the basis of five (5) ICULS at RM0.04 each for every one (1) existing ordinary share in YB (which will be able to raise up to RM48.5 mil).
Proceed from the rights issue will be utilised to construct four (4) new production lines for its tiles business segment as the Group’s existing manufacturing facilities are currently operating at the peak capacity.
Hence, the new production lines will allow the Group to focus on introducing products that are aligned with the customer buying behaviour as well as to optimise and improve the cost-efficiency for their manufacturing business. After the said expansion, the Group will be able to expand the total production capacity by around 50% from 7.1 mil sqm (8 lines) to 10.7 mil sqm (12 lines).

4.IT Segment Start Contributing Earnings: On top of its existing tiles manufacturing business, YB ventured into IT solutions in the field of blockchain technology solutions and system integration services to boost the Group’s earnings growth.
Through its JVA with TechBase Solution (an experience IT partner that has a proven track record and solid historical financial performance of profit after tax of RM5.9 million on the back of RM11.6 million in its latest full-year results), YB will be focusing on developing and distributing their in-house blockchain technology solutions and system integration services in the domestic market. We believe that YB will be able to recognise its maiden profit in the coming quarter results.

5.To Acquire another Main Market Listed Co: We were told that YB is close to seal a deal to acquire a stake in a Main Market listed company that would provide synergies to the Group. We believe YB will be announcing the news in Bursa Malaysia and this may boost the share price in the near term.


Our View
Subscribe to the Rights Issue to Ride on the Potential Share Price Appreciation

Based on what we gathered from our sources, we are convinced that YB will have a series of major announcements (refer to our write up above) to promote the share price.
We suggest investors to buy the LR on the market to have a better exposure to ride on the potential share price appreciation.
By investing into the LR is equivalent to the investment into Warrants, LR will be able to provide a leverage effect to investment return. Based on our calculation below, the total cost to invest in YB-LR will be RM0.05.

3. A Proven Sponsor: IGB Commercial REIT’s sponsor is one of the largest listed property companies in Malaysia and carries strong branding and success stories of IGB and Mid Valley City. The Sponsor has a strong track record in the property industry, with a number of awards
and recognition being accorded to the Sponsor and its developments over the years.

IPO Note: The King of Office

Our View – Subscribe to the Offer

We think IGB Commercial REIT provides an opportunity to invest in premium asset class, namely the commercial assets in the Mid Valley City and Golden Triangle.

Company Background
IGB Commercial REIT is a REIT established with the principal investment policy of investing, directly or indirectly, in a portfolio of income-producing Real Estate primarily used for commercial purposes in Malaysia and overseas. The investment objective of IGB Commercial REIT is to provide Unitholders with regular and stable distributions, sustainable long-term Unit price and Distributable Income and capital growth, while maintaining an appropriate capital structure.

The Sponsor, Who is IGB?
The sponsor of IGB Commercial REIT is IGB Berhad. IGB Berhad and its group of companies (“IGB Group”) have over 40 years of property development experience. Listed on Bursa Securities since 8 May 2002, IGB Berhad has a market capitalisation of approximately RM2,547.6 million (based on prospectus). In its FYE 2020, the IGB Group generated revenue
of approximately RM1,016.4 million, with a total asset base of approximately RM8,584.8 million.

The principal activities of IGB Group mainly consist of property investment and management, owner and operator of the Subject Properties and malls, hotel operations, property development, construction, information and communication technology services, provision of engineering services for water treatment plants and related services, education, investment holding and management of REIT.

IGB developed Mid Valley City, one (1) of the largest mixed-use developments in Malaysia, and has successfully achieved substantial growth in real estate value. The entire development includes Mid Valley Megamall and The Gardens Mall, the MVC Subject Properties, as well as
a host of hotels and residential components. The Sponsor’s property development arm, TT Developments, has a track record of more than 40 years in the Klang Valley and has been recognised with awards such as the Des Prix Infinitus ASEAN Property Awards Malaysia in
the Best Developer category1. IGB was also awarded The Edge Malaysia Top Property Developers Award in October 2019.

Subject Properties in the Commercial REITS
Located in Mid Valley City
1) Menara IGB & IGB Annexe – an 18-storey office block together with a 2-storey office building annexed thereto, both erected on top of a 5-storey retail podium known as Mid Valley Megamall. Total NLA: 261,993 sq ft.

2) Centrepoint South – a 19-storey office block with an annexed link bridge erected on top of a 5-storey retail podium known as Mid Valley Megamall. Total NLA: 232,237 sq ft.

3) Centrepoint North – a 19-storey office block erected on top of a 5-storey retail podium known as Mid Valley Megamall. Total NLA: 232,051 sq ft.

4) Boulevard Properties – 2 blocks of 11-storey office units known as Blocks 25 and 27 of Boulevard Offices. Total NLA: 32,267 sq ft

5) Gardens South Tower – a 26 storey office block erected on top of an 8 storey retail podium known as The Gardens Mall. Total NLA: 422,381 sq ft.

6) Gardens North Tower – a 26 storey office block erected on top of an 8 storey retail podium known as The Gardens Mall. Total NLA: 425,612 sq ft.

7) Southpoint Properties – a 26 storey office space, 2 storey retail space together with 1,065 car park bays, all located with a 59-storey mixed commercial building known as Menara Southpoint. Total NLA: 515,501 sq ft.

Located in Golden Triangle
1) Menara Tan & Tan – a 25-storey office building together with 2 basements and 543 car park bays. Total NLA: 339,385 sq ft.

2) GTower – a 32-storey office building together with 2 basements and 1,090 car park bays. Total NLA: 746,194 sq ft.

3) Hampshire Place Office – a 28-storey office building together with 286 car park bays. Total NLA: 239,253 sq ft.


Investment Merits
1. Malaysia’s Largest Standalone Office REIT- With an aggregate NLA of approximately 3.4 mil sq ft, IGB Commercial REIT will be the largest standalone office REIT to be listed on Bursa. Its large asset base will enable it to raise significant amounts of capital for future acquisition, thus placing IGB Commercial REIT in a better competitive position to capitalise on future investment opportunities.

2. Properties are Located in Prime Commercial Districts of KL: IGB Commercial REIT provides a unique opportunity to invest in 2 distinct commercial submarkets in KL, namely the Mid Valley City and the Golden Triangle. The Mid Valley City is a well-known integrated urban
development that consists of 2 flagship malls (Mid Valley Megamall and The Garden Mall). The distinct also provide superior connectivity and accessibility to other business districts. On top of that, the Golden Triangle is the preferred office address for businesses due to its
excellent connectivity via public transportation and surrounding the KLCC area.

MAG HOLDINGS BHD x RAKUTEN TRADE
2021 Outlook & Prospects

4 Aug 2021, 8pm

Zoom Webinar ID: 918 4306 9415
https://zoom.us/j/91843069415

MAG Holdings Berhad (Ticker: 0095 MAG)
Market Cap: 270.7 mil
No of Shares: 1,388 mil
Debt to Equity: 13.44%
Net Cash: 108 mil
NAV: RM0.72

Investment Highlight
1. Capacity Expansion Through M&A
2. Venturing into Downstream to Capture Higher Margin
3. Riding on the E-commerce
4. Streamlining Business by Disposing Lose Making Business Unit

Company Background
MAG Holdings Berhad (MAG) formerly known as XingHe Holdings Berhad was a company involved in the edible vegetable oil business in China. However, the Group have successfully diversified into the shrimp aquaculture business after a business diversification and renamed the company to MAG, the acronym for “Malaysian Aquaculture Group”, to better reflect its present principal business in aquaculture.
MAG’s shrimp farms are located in Kampung Wakuba, Tawau Sabah. Kampung Wakuba is well known for its pristine waters, which is ideal for producing outstanding quality shrimps. MAG cultivate Vannamei shrimps in non-pesticidal cured marine ponds and exports them to countries such as Korea, China and Vietnam. With its facilities in Sabah, MAG is one of the largest Aquaculture producers in Malaysia. It is important to note that MAG’s partners collectively have more than 40 years of experience cultivating shrimps. In addition, the Group has stringent biosecurity compliance in place, the utmost priority in the food business.
Investment Merits
1. 1 + 1 >2: Post acquisition of North Cube Sdn Bhd, “NCUBE” (completed on 2 July 2021), MAG has doubled its breeding capacity to 4,000mt/year, from 2,000mt/year. Total asset size increased to 235 cultivation ponds, from the previous 102 ponds. The acquisition also comes with a processing facility with a capacity of 6,000mt/year.
NCUBE acquisition also comes with a profit guarantee of no less then RM18 mil for the 18-month financial period ending 30 June 2022. As both MAG and NCUBE Group are currently involved in the Aquaculture Business, the acquisition will enable both companies to leverage their combined strengths in the industry and create positive synergy.
2. Margin Expansion: We believe post-acquisition of NCUBE will help the Group to increase the utilization rate of its downstream processing plants. The shrimps processing plant will enable the Group to improve profitability and capture a wider market by selling better margins products such as “peeled & deveined” as well as “cooked” prawns.



3. Riding on the E-commerce: With the change of consumer behaviour amid COVID19 pandemic, which has accelerated the shift to e-commerce, the Group planned to ride on the rise of the online store by listing its products on various E-commerce channels to promote its product in the local market. With its strength in the upstream business, we expect the Group to be competitive in terms of pricing.
4. Unloading the Sandbag: Reference is made to the recent announcement of MAG on 30th June 2021, MAG will reduce its stake in the loss-making edible oil business (Henan XingHe Oil and Fat Company Limited, HXOF) from 40.77% to 19.86% with consideration of RM37.8 mil.
The losses in HXOF had caused the Group to register financial losses since 2017. The Group recorded a loss after taxation of RM6.78 mil, RM25.54 mil and RM108.25 mil in financial years 2017, 2018 and 2019 respectively.
The sale proceeds are intended to be used for investments in shrimps aquaculture and other seafood processing business and for OPEX and CAPEX of the Group’s existing shrimps aquaculture business such as on ponds improvement, staff costs and purchase of fries and feeds.
Our View: Add
We are positive to see MAG has finally turnaround its business by diversifying into Aquaculture business through a successful business diversification. We think the acquisition of NCUBE will bring synergy and value accretive to the Group; on the other hand. We note that M&A process can be time-consuming and can be problematic at times.
Management has plans to increase its shrimp breeding capacity to 20,000 mt/ year and to command 35% market share in Malaysia by consolidating small players. The aquaculture business is scarce in Malaysia.
Regional comparable companies are trading at the mean of 18x PE. We think MAG will be able to hit annual revenue of RM120 mil post-acquisition of NCUBE, and by assigning a net profit margin of 25%, we believe fair value of MAG post-acquisition should be around RM0.39. This is based on the existing breeding capacity without taking into consideration of the new farms and new capacity.
Technical
Share price had been remain stable at 20sen level since 2020 September and no see any selling pressure, as Mag can break recent high 21.5sen there is very high chance to break 23sen level.

R1, R2, R3
0.21, 0.23, 0.265
S1, S2
0.19, 0.175

G Capital Berhad (stock code: 7676) has today announced a proposal of rights issue of 1.28 billion Redeemable Convertible Unsecured Loan Stocks (“RCULS”).

Shareholders who own GCAP shares will be entitled to 4 RCULS for every 1 share in GCAP. The issue price per RCULS is RM0.08.

RCULS subscribers can convert the RCULS to GCAP ordinary share by surrending 1 RCULS together with cash of RM0.82. The conversion can only happen after one year of the issue date of the RCULS.

This is an attractive investment. RCULS subscribers will enjoy an interest rate of 5% per year (payable every quarter).

GCAP will utilise most of the proceeds raised to complete its Renewable Energy Projects – Solar PV system (9.4MW) and Mini-hydropower plants projects (43.2MW).

Commissioning of the 52.6MW projects could potentially generate a yearly revenue of RM64 million, and aggregating to RM1.3 billion throughout the concession tenure.

Technical tracker - HLIB Retail Research – 14 July 2021

NCT (RM0.58-Not rated) – A well-known developer with niche expertise in reviving abandoned projects

Equipped with a proven track record of over 20 years, NCT is a dynamic and all-rounded developer that is qualified to embark into different types of development projects: (1) Residential: La Cottage (Sepang), The Glades (Penang), Bandar Salak Perdana (Dengkil), Mahkota Kampar (Kampar), Acacia Residences (Dengkil); (2) Commercial: Salak Perdana Business Park (Dengkil), Ion Vivace (Sg Petani). N-City (Sg Petani); (3) Industrial: The Vortex (Batu Kawan); (4) Hospitality: Grand Ion Delemen, (Genting), Grand Ion Majestic, (Genting), Ion Forte Green City (Ayer Keroh)

NCT is also dubbed as the White Knight developer with niche expertise in rehabilitating and unlocking abandoned mega projects (underserved segment with huge potential). Its expertise in reviving abandoned projects allows sustainability & profitability with higher margins owing to its technical know-how, strong rapport with stakeholders, compelling entry cost, and synergistic in-sourcing capabilities. Some of these notable projects completed over the years were Bandar Salak Perdana (GDV RM118m), Salak Perdana Business Park (GDV RM48m), and Grand Ion Delemen (GDV RM1.2bn).

Promising outlook: Management expects stronger earnings in the coming quarters (from less than RM1m in 1QFY21) and 2022, supported by: (1) The acquisition of Genting Highlands projects (i.e. GIM and GID) expected to provide earnings visibility for the next 2-3 years underpinned by vaccination program & opening of the theme park; (2) Remaining GDV of RM726.3m and unbilled sales of RM375m; (3) Acquisition of another abandoned project in pipeline by end 2021, and (4) Vast future developments amounting RM4bn from mixed development (RM1bn), industrial (RM3bn) and residential (RM400m) segments

NCT is poised for a bullish ascending triangle breakout, holding up well above the support trend line with bottoming up indicators and robust volume yesterday. A successful breakout above RM0.595 will lift share prices higher towards RM0.645-0.73. The collection range is RM0.55-0.58 whilst the cut loss at RM0.52 levels

Collection range: RM0.55-0.56-0.58

Upside targets: RM0.645-0.705-0.73

Cut: RM0.52

DISCLAIMER: https://www.hlebroking.com/v3/disclaimer.aspx

Stock Idea: Scanwolf, Transforming to a Wolf

Scanwolf Corporation Berhad (Ticker: 7239 SCNWOLF)

Expected Holding Period
4 weeks

Investment Highlight
1. Scanwolf Corporation Berhad (Scanwolf) and its subsidiary companies are principally involved in the manufacturing of plastics extrusion products and Property Development in Kampar, Perak.

2. Despite a challenging business environment during the pandemic, Scanwolf recorded an improved 3QFY21 result due to an increase in revenue of both Manufacturing and Property Division.

3. Scanwolf is expanding the production capacity of its existing business while venturing into a new segment which is likely to benefit from the COVID19 pandemic.

4. Issuance of ICULS (2 ICULS for every 2 existing Scanwolf Shares), with an issuance price of RM0.10/ICULS at an exercise price of RM0.30, with 1 FREE warrant for every 2 ICULS subscribed. Ex-date 7 July 2021. Profile of ICULS: Tenure of 5 years, with interest rate of 3% p.a.

Company Background
Listed on the Second Board of Bursa Malaysia in 2007 and subsequently transferred to the Main Board in 2009, Scanwolf Corporation Berhad (Scanwolf) and its subsidiary companies are principally involved in the manufacturing of plastics extrusion products and Property Development in Kampar, Perak.

The Group has plastic extrusion manufacturing plant and warehouse in Tronoh, Perak and a warehouse in Shah Alam, Selangor. Scanwolf is expanding its business into manufacturer of vinyl flooring since first quarter of 2020 and to date, the Group is the biggest manufacturer of furniture edging products in Malaysia.

The Group’s property projects are located close to Universiti Tunku Abdul Rahman, Hospital UTAR, and an integrated bus terminal (Terminal Kampar Putra).

Investment Merits
1. Despite a challenging business environment during the pandemic, Scanwolf recorded an improved 3QFY21 result by reporting a revenue of RM11.8 million, (+RM3.6 million against 3QFY20) as well as a profit before tax ("PBT") of RM0.71 million (vs loss before tax ("LBT") of RM2.45 million in 3QFY20). This was mainly due to an increase in revenue of both Manufacturing and Property Division.

2. Benefitting from the US-China Trade War Furniture Manufacturer in the ASEAN region has been busy due to the order shifted out from China and moved to ASEAN. The Group has since November 2020 received a hike in purchase orders for its plastic edging business from the southern region of Peninsular Malaysia. However, due to the limited production capacity, the Group has had to turn down a high amount of the orders. To accommodate the surge in demand and an order backlog of (400 MT), Scanwolf intends to purchase two (2) new production lines for its plastic edging business (to increase the maximum production capacity by approximately 47%, from 300 MT per month to 440 MT per month). The installation of new production lines is expected to be completed by 31 May 2021 and scheduled to commence operations by 30 June 2021.

3. Expanding its existing luxury vinyl tiles business. Scanwolf’s flooring division has maximum production capacity of 1,100 boxes per month and is operating at 90% capacity, hence the Group intends to add one (1) unit of pressing machine to increase the maximum production capacity by 33%, from 1,100 boxes per month to 1,460 boxes per month.

4. Rehabilitating the Balance Sheet. Scanwolf has announced a series of corporate proposal to rehabilitate its balance sheet. Such proposal which consists of:-

i) Rights Issue of ICULS with Warrants entails the issuance of up to RM10,497,120 nominal value of ICULS at 100% of its nominal value of RM0.10 on the basis of 2 ICULS for every 2 existing Scanwolf Shares held by the Entitled Shareholders together with up to 52,485,600 Warrants on the basis of 1 Warrant for every 2 ICULS subscribed by the Entitled Shareholders.

ii) Creditor Capitalisation

iii) Share Issuance Scheme of up to 15% of the total number of issued Scanwolf Shares.

Our View
Scanwolf is in the midst of transforming from a property developer to a diversified business group which consists of property developer, building materials supplier and plastic film manufacturer. We think such transformation is healthy to the group given the challenging property sector in Malaysia. The new business segment will allow the group to capture the business opportunities from the pandemic. In view that the plastic film manufacturing segment will start to commence its operations from March 2021 onwards, we think Scanwolf is on track to grow its revenue for the upcoming financial years. However, key things to monitor will be the Group’s execution capability on the new business segment as we think the Group might take a longer time to turn the new segment into a profitable. Scanwolf is trading at around 12x PE (annualised its 3QFY21 earnings) which in our opinion is undemanding.

Technical
R1, R2, R3
0.38, 0.41, 0.48

S1, S2
0.30 , 0.275

Stock Idea: Scanwolf, Transforming to a Wolf

Scanwolf Corporation Berhad (Ticker: 7239 SCNWOLF)

Expected Holding Period
4 weeks

Investment Highlight
1. Scanwolf Corporation Berhad (Scanwolf) and its subsidiary companies are principally involved in the manufacturing of plastics extrusion products and Property Development in Kampar, Perak.

2. Despite a challenging business environment during the pandemic, Scanwolf recorded an improved 3QFY21 result due to an increase in revenue of both Manufacturing and Property Division.

3. Scanwolf is expanding the production capacity of its existing business while venturing into a new segment which is likely to benefit from the COVID19 pandemic.

4. Issuance of ICULS (2 ICULS for every 2 existing Scanwolf Shares), with an issuance price of RM0.10/ICULS at an exercise price of RM0.30, with 1 FREE warrant for every 2 ICULS subscribed. Ex-date 7 July 2021. Profile of ICULS: Tenure of 5 years, with interest rate of 3% p.a.

Company Background
Listed on the Second Board of Bursa Malaysia in 2007 and subsequently transferred to the Main Board in 2009, Scanwolf Corporation Berhad (Scanwolf) and its subsidiary companies are principally involved in the manufacturing of plastics extrusion products and Property Development in Kampar, Perak.

The Group has plastic extrusion manufacturing plant and warehouse in Tronoh, Perak and a warehouse in Shah Alam, Selangor. Scanwolf is expanding its business into manufacturer of vinyl flooring since first quarter of 2020 and to date, the Group is the biggest manufacturer of furniture edging products in Malaysia.

The Group’s property projects are located close to Universiti Tunku Abdul Rahman, Hospital UTAR, and an integrated bus terminal (Terminal Kampar Putra).

Investment Merits
1. Despite a challenging business environment during the pandemic, Scanwolf recorded an improved 3QFY21 result by reporting a revenue of RM11.8 million, (+RM3.6 million against 3QFY20) as well as a profit before tax ("PBT") of RM0.71 million (vs loss before tax ("LBT") of RM2.45 million in 3QFY20). This was mainly due to an increase in revenue of both Manufacturing and Property Division.

2. Benefitting from the US-China Trade War Furniture Manufacturer in the ASEAN region has been busy due to the order shifted out from China and moved to ASEAN. The Group has since November 2020 received a hike in purchase orders for its plastic edging business from the southern region of Peninsular Malaysia. However, due to the limited production capacity, the Group has had to turn down a high amount of the orders. To accommodate the surge in demand and an order backlog of (400 MT), Scanwolf intends to purchase two (2) new production lines for its plastic edging business (to increase the maximum production capacity by approximately 47%, from 300 MT per month to 440 MT per month). The installation of new production lines is expected to be completed by 31 May 2021 and scheduled to commence operations by 30 June 2021.

3. Expanding its existing luxury vinyl tiles business. Scanwolf’s flooring division has maximum production capacity of 1,100 boxes per month and is operating at 90% capacity, hence the Group intends to add one (1) unit of pressing machine to increase the maximum production capacity by 33%, from 1,100 boxes per month to 1,460 boxes per month.

4. Rehabilitating the Balance Sheet. Scanwolf has announced a series of corporate proposal to rehabilitate its balance sheet. Such proposal which consists of:-

i) Rights Issue of ICULS with Warrants entails the issuance of up to RM10,497,120 nominal value of ICULS at 100% of its nominal value of RM0.10 on the basis of 2 ICULS for every 2 existing Scanwolf Shares held by the Entitled Shareholders together with up to 52,485,600 Warrants on the basis of 1 Warrant for every 2 ICULS subscribed by the Entitled Shareholders.

ii) Creditor Capitalisation

iii) Share Issuance Scheme of up to 15% of the total number of issued Scanwolf Shares.

Our View
Scanwolf is in the midst of transforming from a property developer to a diversified business group which consists of property developer, building materials supplier and plastic film manufacturer. We think such transformation is healthy to the group given the challenging property sector in Malaysia. The new business segment will allow the group to capture the business opportunities from the pandemic. In view that the plastic film manufacturing segment will start to commence its operations from March 2021 onwards, we think Scanwolf is on track to grow its revenue for the upcoming financial years. However, key things to monitor will be the Group’s execution capability on the new business segment as we think the Group might take a longer time to turn the new segment into a profitable. Scanwolf is trading at around 12x PE (annualised its 3QFY21 earnings) which in our opinion is undemanding.

Technical
R1, R2, R3
0.38, 0.41, 0.48

S1, S2
0.30 , 0.275

Stock Idea: Scanwolf, Transforming to a Wolf

Scanwolf Corporation Berhad (Ticker: 7239 SCNWOLF)

Expected Holding Period
4 weeks

Investment Highlight
1. Scanwolf Corporation Berhad (Scanwolf) and its subsidiary companies are principally involved in the manufacturing of plastics extrusion products and Property Development in Kampar, Perak.

2. Despite a challenging business environment during the pandemic, Scanwolf recorded an improved 3QFY21 result due to an increase in revenue of both Manufacturing and Property Division.

3. Scanwolf is expanding the production capacity of its existing business while venturing into a new segment which is likely to benefit from the COVID19 pandemic.

4. Issuance of ICULS (2 ICULS for every 2 existing Scanwolf Shares), with an issuance price of RM0.10/ICULS at an exercise price of RM0.30, with 1 FREE warrant for every 2 ICULS subscribed. Ex-date 7 July 2021. Profile of ICULS: Tenure of 5 years, with interest rate of 3% p.a.

Company Background
Listed on the Second Board of Bursa Malaysia in 2007 and subsequently transferred to the Main Board in 2009, Scanwolf Corporation Berhad (Scanwolf) and its subsidiary companies are principally involved in the manufacturing of plastics extrusion products and Property Development in Kampar, Perak.

The Group has plastic extrusion manufacturing plant and warehouse in Tronoh, Perak and a warehouse in Shah Alam, Selangor. Scanwolf is expanding its business into manufacturer of vinyl flooring since first quarter of 2020 and to date, the Group is the biggest manufacturer of furniture edging products in Malaysia.

The Group’s property projects are located close to Universiti Tunku Abdul Rahman, Hospital UTAR, and an integrated bus terminal (Terminal Kampar Putra).

Investment Merits
1. Despite a challenging business environment during the pandemic, Scanwolf recorded an improved 3QFY21 result by reporting a revenue of RM11.8 million, (+RM3.6 million against 3QFY20) as well as a profit before tax ("PBT") of RM0.71 million (vs loss before tax ("LBT") of RM2.45 million in 3QFY20). This was mainly due to an increase in revenue of both Manufacturing and Property Division.

2. Benefitting from the US-China Trade War Furniture Manufacturer in the ASEAN region has been busy due to the order shifted out from China and moved to ASEAN. The Group has since November 2020 received a hike in purchase orders for its plastic edging business from the southern region of Peninsular Malaysia. However, due to the limited production capacity, the Group has had to turn down a high amount of the orders. To accommodate the surge in demand and an order backlog of (400 MT), Scanwolf intends to purchase two (2) new production lines for its plastic edging business (to increase the maximum production capacity by approximately 47%, from 300 MT per month to 440 MT per month). The installation of new production lines is expected to be completed by 31 May 2021 and scheduled to commence operations by 30 June 2021.

3. Expanding its existing luxury vinyl tiles business. Scanwolf’s flooring division has maximum production capacity of 1,100 boxes per month and is operating at 90% capacity, hence the Group intends to add one (1) unit of pressing machine to increase the maximum production capacity by 33%, from 1,100 boxes per month to 1,460 boxes per month.

4. Rehabilitating the Balance Sheet. Scanwolf has announced a series of corporate proposal to rehabilitate its balance sheet. Such proposal which consists of:-

i) Rights Issue of ICULS with Warrants entails the issuance of up to RM10,497,120 nominal value of ICULS at 100% of its nominal value of RM0.10 on the basis of 2 ICULS for every 2 existing Scanwolf Shares held by the Entitled Shareholders together with up to 52,485,600 Warrants on the basis of 1 Warrant for every 2 ICULS subscribed by the Entitled Shareholders.

ii) Creditor Capitalisation

iii) Share Issuance Scheme of up to 15% of the total number of issued Scanwolf Shares.

Our View
Scanwolf is in the midst of transforming from a property developer to a diversified business group which consists of property developer, building materials supplier and plastic film manufacturer. We think such transformation is healthy to the group given the challenging property sector in Malaysia. The new business segment will allow the group to capture the business opportunities from the pandemic. In view that the plastic film manufacturing segment will start to commence its operations from March 2021 onwards, we think Scanwolf is on track to grow its revenue for the upcoming financial years. However, key things to monitor will be the Group’s execution capability on the new business segment as we think the Group might take a longer time to turn the new segment into a profitable. Scanwolf is trading at around 12x PE (annualised its 3QFY21 earnings) which in our opinion is undemanding.

Technical
R1, R2, R3
0.38, 0.41, 0.48

S1, S2
0.30 , 0.275

Rakuten Trade and Yong Tai Berhad webinar on 24 June (Thursday) 8pm
Webinar ID : 982 5078 2340

Rakuten Trade and NCT Alliance Berhad, on 23 June 2021 (Wed), at 8.00p.m

Zoom Webinar ID: 977 0025 8990

Yong Tai’s transformation into a robust cash-flow generation company

*Exclusive distributor for Malaysia, ASEAN and Indian Continental countries

*Committed capacity from Shenzhen Kangtai Biological Products Co. Ltd is 10 million doses per year, with another option of 10 million doses, for a period of 5 + 5 years. If Malaysia faces an oversupply situation, they can sell to other ASEAN countries such as Indonesia, Philippines, Sri Lanka. 20 million doses are insignificant as compared to their respective population

*Vaccines obtained NPRA approval to conduct Phase III Clinical Trial, with the arrival of vaccines expected within the next week

*Currently, all approved vaccines in Malaysia have not completed their Phase III trial. All are under Conditional Market Authorisation (CMA). This includes Pfizer, AstraZeneca and Sinovac.

*Tiong Nam will provide the total logistical services, which include transportation, warehouse space and distribution of the vaccine

*Assuming RM5 GP per dose, it will be RM100 million GP to Yong Tai per annum (20 million doses per year).

*Assuming 24% tax rate and net profits of RM76 million. Based on PE of 10x, company is worth RM760 million market cap or RM0.53/share. This is excluding the profits from its gold venture that is kicking off in July 2021.

*Sources are the Encore Melaka which has been a bleed to the company, will see a restructuring to happen very soon, setting the path for Yong Tai to unlock the value. If this happens, Yong Tai will transform into a company with cash cow businesses (vaccine + gold).