Posted by probability > 2016-09-24 15:35 | Report Abuse

http://www.thestar.com.my/business/business-news/2016/09/24/ekovest-addresses-critics-on-highway-sale/

Posted by probability > 2016-09-24 15:59 | Report Abuse

“We expect the construction jobs to contribute RM139mil-RM212mil per annum to Ekovest’s financials for the next three years,” UOB Kay Hian says.

Wah...WealthWizard calculation really Chun and conservative! :)

Posted by ronnietan > 2016-09-24 19:50 | Report Abuse

Wizard, Probability, just forwarded UOBKH report to you.

Posted by probability > 2016-09-24 20:36 | Report Abuse

Got it. Thanks ronnietan.

Posted by WealthWizard > 2016-09-24 22:35 | Report Abuse

Thank you, ronnietan, just back from outside & received the report, will put up here later.

Posted by WealthWizard > 2016-09-24 23:07 | Report Abuse

Ekovest is a deeply undervalued contractor and concessionaire. Its recent
announcement of the 40% sale of DUKE 1 & 2 to EPF implicitly values just one of its many assets at RM2.8b, significantly below its RM1.7b market cap. Aside from that, the group was also recently granted a 53.5-year concession to build and operate a new 50km urban expressway, which would support the construction arm’s medium-term profit growth and provide a longer-term boost to valuations and earnings. Initiate with BUY and an SOTP-based target price of RM3.00, implying FY18F PE of 18.2x, supported by a three-year earnings CAGR of 68%.

---------------------------------------------------------------------
Extract from UOBKH Analysis Report on Ekovest with Title: Rise of the Duke
https://www.scribd.com/document/325141281/UOBKH-Ekovest-Rise-of-the-Duke-230916

Posted by WealthWizard > 2016-09-24 23:11 | Report Abuse

We like Ekovest for its:
a) undervalued concession asset whose value has yet to be appreciated,
b) its huge construction orderbook backlog that is significantly above that of other construction companies under our coverage, and
c) the good locations of its landbanks.

Initiate coverage with BUY and target price of RM3.00

Posted by WealthWizard > 2016-09-24 23:13 | Report Abuse

UOBKH Analysis Report on Ekovest with Title: Rise of the Duke
https://www.scribd.com/document/325141281/UOBKH-Ekovest-Rise-of-the-Duke-230916

Special thanks to ronnietan for the great sharing.

Posted by probability > 2016-09-24 23:17 | Report Abuse

'orderbook cover' means Order backlog divided by Mcap?

Posted by WealthWizard > 2016-09-24 23:20 | Report Abuse

No, orderbook cover = total outstanding order book divided by latest year's revenue derived from construction division.

Posted by WealthWizard > 2016-09-24 23:21 | Report Abuse

With same construction speed & without new order, the year of the order can last.

Posted by WealthWizard > 2016-09-24 23:26 | Report Abuse

The orderbook in the report is not correct, MD said in the interview that the current oustanding construction order book stands at RM6.32bil

http://www.thestar.com.my/business/business-news/2016/09/24/ekovest-addresses-critics-on-highway-sale/

Posted by probability > 2016-09-25 00:01 | Report Abuse

thank you so much W-Wizard! :)

Posted by paperplane2016 > 2016-09-25 00:38 | Report Abuse

In another way. It said you can sleep well next 5yrs

Posted by cstrader > 2016-09-25 06:41 | Report Abuse

Take profit at 2.50

Posted by probability > 2016-09-25 11:35 | Report Abuse

paper, looking at the toll business, one can sleep well 'lifelong'...he he

good investment for youngsters. since the toll rates will be hiked, it has assured long term growth rate. Share price can never go down.

Posted by paperplane2016 > 2016-09-25 13:52 | Report Abuse

Yes. I like ekovest due to defensive. I can sleep well even economic crisis happen tomorrow. Next one is keuro. But keuro is 2018. I will buy only next yr.

Posted by moneySIFU > 2016-09-25 15:08 | Report Abuse

Paperplane, it is defensive but with growth stock nature, since still lots of potential not yet surfaced, now only 40% sale of duke 1&2, the following are more to come:

1. Construction of duke 3
2. Materialisation of Unbilled sales from progressive construction of ekocheras property units
3. EkoCheras mall at jalan cheras & next to MRT station
4. Toll operation f duke 1,2 & 3

no like litrak, nothing much to dig, purely defensive.

Posted by Jay > 2016-09-25 20:13 | Report Abuse

thanks for the sharing. ekovest could also be a general election stock and chances of special dividend is good. see datuk lim is close to BN so EPF money to buy Duke, Ekovest pay special dividend, datuk Lim then "contribute" to BN election fund. so after merry go round, EPF money indirectly goes into BN election fund. it's screwed up stuff, but what can we do other than ride along?

Posted by Jay > 2016-09-25 20:28 | Report Abuse

wealthizard, could you look into their earnings prospects for the coming 1-2 years? I think it's clear that it's an deep asset value counter but if they couldn't translate that to earnings, they will still have to rely on disposals to unlock value (which could be in a long time).

Posted by probability > 2016-09-25 20:51 | Report Abuse

hmm...what a criminal mind you have! he he...highly plausible :)

Posted by Jay > Sep 25, 2016 08:13 PM | Report Abuse

thanks for the sharing. ekovest could also be a general election stock and chances of special dividend is good. see datuk lim is close to BN so EPF money to buy Duke, Ekovest pay special dividend, datuk Lim then "contribute" to BN election fund. so after merry go round, EPF money indirectly goes into BN election fund. it's screwed up stuff, but what can we do other than ride along?

Posted by Jay > 2016-09-25 20:51 | Report Abuse

some interesting pointers, since Ekovest is only disposing 40%, under accounting rules, Kesturi will still be a subsidiary and will be "fully" consolidated. which means on paper, the debt amount, interest will remain exactly the same as before. the only difference you will see will be the profit attributable to owners of parent. profit will drop because sharing 40% to outsider but if the RM1.1b is used to repay some debts, then there should be some interest savings

Posted by probability > 2016-09-25 20:57 | Report Abuse

why worry about 40% drop on the Kesturi's earning contribution...when they had sold it at a fair price of EV/EBITDA of ~ 20.

Its definitely interesting to see the savings on interests...Hope WealthWizard come out with all this on Part 2..

Posted by moneySIFU > 2016-09-25 21:38 | Report Abuse

I can't beat them, so I join the ride, disappointed with the politics, now working hard to earn more, so hope to have more choice where to stay in old age.

Posted by moneySIFU > 2016-09-25 21:41 | Report Abuse

WealthWizard said will focus on debts and balance sheet on ekovest, guess he will guide us to look deeply what's inside of ekovest, very much look forward for part 2

Posted by confuse > 2016-09-25 21:57 | Report Abuse

Why EPF so stupid to buy Duke? Must withdraw our EPF money.

Posted by confuse > 2016-09-25 22:08 | Report Abuse

B7 Group Borrowings (Cont’d)
GROUP
AMOUNT REPAYABLE
AFTER ONE YEAR
CURRENT
QUARTER ENDED
30 JUNE 2016
PRECEDING
YEAR ENDED
30 JUNE 2015
RM ‘000 RM ‘000
Bank Term Loans-secured 148,390 136,810
Islamic medium term notes 1,739,405 1,685,359
1,887,795 1,822,169

Posted by confuse > 2016-09-25 22:09 | Report Abuse

Very heavy indebted company. Everywhere in i3 said debts are bad. Why can be good in Ekovest? No wonder dividend so low.

Posted by Jay > 2016-09-25 22:11 | Report Abuse

some questions on your valuation, hope you can help to clarify

1. the 20 times referred to in the article was 20 times EV/EBITDA. but your calculation was 20 times EBIT, which is inconsistent. yes EBITDA should be even higher than EBIT, but EV includes debt which Kesturi has quite a bit. so I think it's misleading just using 20 times EBIT and conclude that it is still undervalued

2.I'm not sure if assuming Duke 2 revenue and costs will be equal as Duke 1 is realistic. Duke 1 is 18km, Duke 2 has 2 links (9km and 7km) so toll rates may not be equal to Duke 1. but then again we all have our limitations in projecting these figures

3. personally I think interest cost probably will increase once Duke 2 is completed. this is because accounting rules allow them to capitalise the Duke 2 interest while it is being constructed. so the interest we see in P/L could be just interest related to Duke 1. Once Duke 2 is completed and revenue starts flowing in, the interest for Duke 2 will be recognised in P/L. 4.875% seems a bit low, Litrak's MTN effective interest is about 6.1% p.a. Ekovest 2014 is also around there

Posted by probability > 2016-09-25 22:11 |

Post removed.Why?

Posted by confuse > 2016-09-25 22:12 | Report Abuse

Interest expense RM 94,785,000. Can go bankrupt if EPF cancel purchase like what happen in Silk Highway.

Posted by Jay > 2016-09-25 22:13 | Report Abuse

confuse, most of their debts are linked to their highways so it's self-financing by itself. have you seen any highways that make losses in Malaysia?

Posted by Jay > 2016-09-25 22:16 | Report Abuse

when government awarded Ekovest Duke Phase 2, they extend the whole concession for Duke 1&2 by 30 years. it's good for Ekovest but why do we have such idiotic government? why extend the Duke 1 concession, unless you tell me Duke 2 is toll-free so to compensate them but Duke 2 is going to have its own toll plaza so just why? government simply go all out to reward cronies and highways are the most obvious and blatant one

Posted by confuse > 2016-09-25 22:19 | Report Abuse

Why not EPF buy Silk Highway which is far cheaper?
http://www.thestar.com.my/business/business-news/2016/09/24/wz-satu-aborts-plan-to-buy-silk-highway/

Posted by Jay > 2016-09-25 22:29 | Report Abuse

ekovest is definitely for long term if full value is to be realised because earnings will take time to come in. the only major risk in the long term I think is political, if one day BN falls (maybe not next election but future ones), just look at how Puncak fare after Selangor fell to Pakatan and Pakatan government decides not to honour unfair contracts awarded previously

Posted by Jay > 2016-09-25 22:34 | Report Abuse

@confuse, not sure by what you mean as cheap. silk expires at 2037, Duke expires at freaking 2069 so absolute value of Duke definitely will be more expensive than Silk

Posted by probability > 2016-09-25 22:40 | Report Abuse

Guys, use the above EBIT and assume a dividend payout ratio of say 40%. Use the long term growth rate of 8% which I see is possible PURELY from the Toll rate hike (3% per annum) and Vehicles utilization rise (5% annum),meaning you don't even need to reinvest from the EBIT - the 60% retention can be taken as safety.

Then, determine its should be Price to EBIT with WACC of 10%.

The P/E deserved is 21.6.

Posted by confuse > 2016-09-25 22:50 | Report Abuse

2.825 billion/368 million= 7.7 can buy 7.7 Silk highway for 1 Duke. Duke 1-34 years concession. Silk-36 years concession. Why EPF fund manager so dumb?

Posted by Icon8 > 2016-09-25 23:00 | Report Abuse

EPF already paid for Duke? If WZ Satu can cancel Silk Highway purchase why not EPF?
http://www.thestar.com.my/business/business-news/2016/09/24/wz-satu-aborts-plan-to-buy-silk-highway/

Posted by paperplane2016 > 2016-09-25 23:14 |

Post removed.Why?

Posted by paperplane2016 > 2016-09-25 23:20 |

Post removed.Why?

Posted by Icon8 > 2016-09-25 23:20 | Report Abuse

Why no answer? Why not EPF buy Silk highway and not Duke?

Posted by confuse > Sep 25, 2016 10:50 PM | Report Abuse
2.825 billion/368 million= 7.7 can buy 7.7 Silk highway for 1 Duke. Duke 1-34 years concession. Silk-36 years concession. Why EPF fund manager so dumb?

http://www.thestar.com.my/business/business-news/2016/09/24/ekovest-addresses-critics-on-highway-sale/
http://www.thestar.com.my/business/business-news/2016/09/24/wz-satu-aborts-plan-to-buy-silk-highway/

Posted by hissyu2 > 2016-09-25 23:21 | Report Abuse

Posted by Icon8 > Sep 25, 2016 11:00 PM | Report Abuse

EPF already paid for Duke? If WZ Satu can cancel Silk Highway purchase why not EPF?
http://www.thestar.com.my/business/business-news/2016/09/24/wz-satu-aborts-plan-to-buy-silk-highway/


please go n check how much wzsatu has la~~ can they afford another 260m debt? EPF? they got billions... nak buy many cincin also no problem

Posted by paperplane2016 > 2016-09-25 23:21 | Report Abuse

Lousy highway give you 100 also no use lah. Then you would also ask why it buy senai dreary tht lousy highway! Downgraded one! More cheap!

Posted by Icon8 > 2016-09-25 23:22 | Report Abuse

If EPF buy wrong company my retirement dividend will be affected sure I concern unless you don't have EPF money.

Posted by paperplane2016 > 2016-09-25 23:40 |

Post removed.Why?

Posted by WealthWizard > 2016-09-26 00:54 | Report Abuse

Icon8, good questions, please call EPF tomorrow to tell them what should they do, better buy Silk, much cheaper.

Also, please tell them don't play play with your retirement fund, you are very concerned now.

Posted by WealthWizard > 2016-09-26 00:57 | Report Abuse

Icon8, I agreed with your statement on Silk is cheaper now, please go ahead to buy silk, wish you good luck.

In case you don't know, please write down the following:

full name is SILK HOLDINGS BERHAD.
the counter code is 5078

Posted by WealthWizard > 2016-09-26 01:33 | Report Abuse

Confuse, my next article will answer your question about high debts, please stay tune. Thank you.

Posted by paperplane2016 > 2016-09-26 01:38 |

Post removed.Why?