So Choivo Capital & john0909 - what're your respective answers?

A minor erection but whether it's sustainable

The guessing game for the 4th qtr 2019 earnings ...

A Loss
B 0 - 50m
C 51 - 100m
D - > 100m

I hate to count the chickens before they hatch or be too optimistic but think this time, we could exceed 100m - D

I'll be damn disappointed if it falls below my expectations. Hoping for the best.

CPO rise is strangely meteoric but who's complaining!

Long wait bro ...

Dividend announcement = April

Ex and Payment dates = Jun

The devil's in the details but in a nutshell ...

BK is primarily driven by CPO prices given the big chunk of dividends it receives from KLK.

However it is somewhat mitigated by the oppositely correlated impact on downstream oleo chemicals that enjoy improved margins at lower CPO.

Then there's the earnings from industrial chemicals and smaller stuff from property development.

BK main man Tan Sri Dato Lee has been picking up a couple of lots but because of trading illiquidity, that was enough for the share to climb precipitously.

Just speculating - Maybe he wants shareholders to pay more for the DRP

WSJ historical prices reveal some interesting stats.

Based on June 94 price of 2.40 vs Dec 2019 price of 16.60, compounded annual gain (excluding the handsome intermittent dividends) = 7.9%!

If we compare June 94 to Dec 2016, then the gain is 9.4%!!

I hope somebody invents a time tunnel.

tq DickyMe

Profits & returns are all huffing & puffing as to how great the business is. It's like someone claiming he's the heavyweight champion. The real deal is when he gets into the ring to prove all his claims.

Likewise any decent accountant can manufacture profits. The real deal is when it's converted to cash & distributed in the form of dividends.

DickyMe - I'm trying to get some info on this erosion which I think is quite possible.

Could you provide some link or reference on this matter?

This is the response to my open letter I got from the management of BK ...

Sorry for the late reply.

BKB has been investing in several property development projects in Australia with further capital commitments and BKB is also looking into other investment opportunities. Besides, BKB Chemical Group is embarking on several projects i.e. building on-site co-generation as reported in last year’s annual report and investing in better technology in its key process in the chlor-alkali operation.

Save for the above, the DRP will provide shareholders the opportunity to enhance their equity participation in the Company at a discounted price over long term.


Best regards,


Goh Swee Eng

Chief Financial Officer/Company Secretary

RM329m cash balance on 30 Sep.

9 months profit at RM148m.

9 months cash generated from operations RM976m.

Liabilities down RM326m (don't look at lease liabilities as they're just change in accounting treatment)

With such glowing numbers, they could easily reward shareholders with 30 sen which cost RM81m

I'm looking forward to a good dividend announcement for the 4th qtr results or else I'm gonna take a flamethrower to the AGM.

DickyMe How shameful. Once this stock traded at more than RM 100 per share, today selling at goreng pisang price.

I doubt it. Even if it had then perhaps there must have been a bonus issue and/or share split.

Gallop on baby!!

TQ Lukey_Greek - so you are referring to packaging of edible oils.

Lukey_Greek - I don't see how an increase in price of Edible oils & fats can be positive for Contracts Manufacturing Division?

I thought it'll be the opposite affect as the cost of input will rise.

AGM not announced yet i understand

I flew AA KL-Sing recently and I can see first hand that the plane is teeming with passengers. Mentally I counted the occupied seats and estimated the revenue from the flight minus the attributable costs.

All I can say is that AA is not charging an arm and a leg which is good for customers & the margin was positive but rather fine for that flight.

Results are good as operational profits improved significantly.

A big chunk of the losses arose from derivatives & FX which is certainly acceptable. Nobody can predict the market direction - This quarter loss, maybe next a gain.

My open letter, emailed to the senior management....

Dear Management,

Share Buyback
As a shareholder, I am very very happy with the Batu Kawan (BK) Management for removing 10% of issued shares. A lot of money, time & effort have been put in this endeavor. As you may be aware, the PE ratio is a relative constant for given company which in the case of BK is 13++.

Going forward, if the total earnings can be maintained, BK share price can be expected to rise which is good news for shareholders. It also means better ROE and dividends per share.

DRP - New Capital for what purpose?
The share buyback implies that BK has returned excess capital. Now with DRP the entire process will be reversed. There'll be a surplus capital coming out of the pockets of shareholders. Does BK need this extra money? What will this new capital be for? BK after all has over the years of existence been conservatively reinvesting a big chunk of yearly profits back into the business.

Perhaps there an intention to privatise BK?

Let's enjoy life
I certainly need the cash from dividends and I'm sure most of the shareholders also want this twice a year cash for enjoyment & settlement of bills. I'm aware I've a choice but I do not want it at the expense of diluting my stake. Dear major shareholders, please let's enjoy life and not plough-back every excess penny that you get.

Getting Richer Without DRP
At this current state of affairs without DRP, I can reasonably infer that going forward, the share price will appreciate for this well-run company by simply maintaining the earnings. Shareholders will get to spend the entire dividend money (or diversify and invest it another company) and without the concern of dilution.

Please do take note. If you have valid reasons for this, I'd like to hear it.

TQ

CPO prices have since increased by a big jump, which should augur well for cash levels and dividends.

I make sure & I tell my kids as well that every time we need fuel go to Petron. (When I held Digi shares, I switched my entire family from Maxis to Digi).

I think the unexplored potential of Petron stations is the basic groceries. May be the management feels that it's too much of an effort for some loose change but Petdag considers it as a significant source of income. Besides the straight forward income, the grocery and petrol pump complement each other.

A Loss : 0
B 0 - 50m - 2 (Sheldon, john 0909)
C 51 - 100m : 2.5 (hock007, damiantreez, Chiovo Capital)
D - > 100m 0.5 (Chiovo Capital)

Looks like John 0909 & I are spot on

Looks like someone's taking my advise really seriously. There's a bump in trading volume.

Rwkl - I see your point on KLK especially on PE basis but not so much on net asset/share basis relative to other plantation cos.

Despite that B. Kawan with its industrial chemical business & Oleochemical via KLK is quite attractive at today's prices.

I fear that this Co has all the ingredients to be taken private namely:

1) 10% of shares taken off the market making it cheaper
2) hardly any trading liquidity
3) under appreciated by the investors (i.e. cheap) - resulting that the major shareholder could acquire the Co for a song

We, the non-controlling interest would then have to give up this prized possession with little compensation

Positive on EPS, all things being equal.

They are not permitted to buy any more.

Agreed untong - it should pay much more dividends in proportion with its earnings. Earnings are all huffing & puffing, which can be manufactured by any decent accountant.

Being able to convert it to cash dividends is the real deal!

The way I look at it - so long as the co generates a profit and Petron reinvests a portion, it's value should increase.

Yes untong PetronM is definitely a very much unsung hero and underappreciated by investors compared to Petdag.

Philip Greta - noted your views - a fresh perspective TQ.

I don't like pension plans either. Even worse are companies with ESOS plans. I avoid such companies.

My biggest reservation of Petron is its group structure - what goes into the listed entity and the unlisted entity is not transparent.

The score to date :

A Loss : 0
B 0 - 50m - 2 (Sheldon, john 0909)
C 51 - 100m : 2.5 (hock007, damiantreez, Chiovo Capital)
D - > 100m 0.5 (Chiovo Capital)

I hope we won't be rudely shocked with a loss like a few quarters ago.

Noted john0909 - i believe that's what your model is saying.

Chiovo Capital & damiantreez - The alternatives given are very broad range of earnings. You should stick your neck out and choose one or else it's as good as guessing between negative to positive infinity.

This co has quite a bit of headwinds going forward - Petronas Pengerang for one.

Choivo Capital C/D - you're pretty optimistic.

I say B

Calling john0909 (& anyone else) ... what's your prediction of profit for the 3rd quarter?

A. Loss (urgh!)
B. 0 - 50m
C. 51 - 100m
D. >100m (wishful thinking)

Chi bai - I wanted to buy but hesitated. Looks like the bus has left!

Wow! A great achievement! The company has reached almost the statutory limit of 10% in share repurchase.

I love this management!

Haha Choivo Capital - a sarcastic remark on flying cars.

I agree to the carbon emission. My take on electric cars is that there are too people here who cannot afford a new car. So they will still be moving around in their old IC vehicles.

So looks like for Choivo, it's do or die. Either you're going to become extremely rich or PN17 case.

Below 5!! a threshold I never thought it could ever cross

888STOCK888 Uncle Tan needs cash to privatise BJLAND, this is just temporary... It will rise again

.... makes sense

whatever happened to the obvious Magnum-Toto arbitrage? Looks like nobody's playing the game. Maybe Magnum is indeed more valuable.

I noticed that this counter is negatively correlated to the market

john0909 @sheldon, .... Not just merely a guesstimate, supported with some data, hence come out with the prediction of 20-23cents eps... i will try few more quarters and see if such direction is correct/reliable or not...

Interesting - let's play the game

john0909 @sheldon, my prediction is correct, what's the prize for me?

john0909 - you're spot-on!! Was is a guesstimate? What crystal ball do you use?

Well done! I'm glad for the results as its beyond my expectation, considering that Brent fell steeply during the quarter which would adversely affect the crack spreads.

The prize is that you get the exclusive right to take me out to dinner at your expense.

An odd counter - when market drops a lot, this counter can somewhat hold and when market leaps up, the counter doesn't move much.

ditto

john0909 @sheldon, likely A... EPS should be around between 20-23cents...

So it's A for you - I hope so.