Posted by qqq3 > 2019-04-01 11:28 | Report Abuse

Gkent CEO Tan Kay Hock has a chequered past.

Posted by Heavenly PUNTER > 2019-04-01 11:29 | Report Abuse

Unker, how many % confident that GKENT can make a profit from this revised contract amount? Just wondering if GKENT is operationally more efficient than Gamuda to the point that Gamuda can't manage their costs better than Gkent. Thanks

Posted by (Clark GKent) Philip > 2019-04-01 11:29 | Report Abuse

Hi Tracy92,
I am under obligation(to my self) to inform you that you will earn rm3500 or 3% dividend of your purchase price of 1.17. but also note usually after ex dividend, the stock price will usually also drop by 3.5 cents in the short term after dividend ex-date.

>>>>>>
osted by tracy92 > Apr 1, 2019 11:14 AM | Report Abuse

Hi Philip, thanks for ur recommendation. I bot 100,000 units @ 1.17.

Posted by (Clark GKent) Philip > 2019-04-01 13:00 | Report Abuse

Well, if they invited my boss for redesign tender negotiations instead of a GLC bumi company third party, they are in the right track.

Posted by LaoTzeAhSir > 2019-04-01 15:00 | Report Abuse

Great sharing. Tq Mr idol Philip

Posted by Vincent Tan > 2019-04-01 21:02 | Report Abuse

taking up fixed price contract to shows PH they are really capable in railroad construction with efficiency .Although earning margin might be low but if GKENT can complete phase by phase on time , it might be easier for them to get future railroad projects from PH . Company would not stupid to take project that might not benefits them at all,they foreseen more to come not only LRT3 . Also i think much revised amount could be the "undertable for BN" or commission to third parties.

Posted by (Clark GKent) Philip > 2019-04-02 06:32 | Report Abuse

As a project delivery partner before, the lrt3 ballooning costs to 31 billion for a 40 km track( light railway some more) is not part of their scope, as gkent was just monitoring all the other portions done by others. So when other companies like gamuda etc dropped from their awarded contract, you know for sure it was due to corruption. Yes you are right the value is smaller this time around. But I would argue the fixed price contract now is actually more profitable before, since they no longer have to absorb 24% taxes for others, and award bogus work for minister linked subcontractors. The cost savings from managing and doing the full works for entire project with proper run companies will actually be more valuable in the long run.

>>>>>>>>>>

Also i think much revised amount could be the "undertable for BN" or commission to third parties.

Posted by (Clark GKent) Philip > 2019-04-02 06:35 | Report Abuse

As an technical manager who does tenders all the time, I would argue that it is a redesign and cost savings project, and in many ways is almost an entirely new project. The costs are different, the goals of the project is different. Even the people doing it are different.

>>>>>>>>
its more complicated than that. ...its not a fresh contract.
01/04/2019 11:22 AM

Posted by Icon8888 > 2019-04-02 08:01 | Report Abuse

Operation guy talks operation

They can't see things from vantage point of view

Posted by Heavenly PUNTER > 2019-04-02 08:02 | Report Abuse

You need to think from a multidisciplinary perspectives only can become good at investing, I read it from Ricky's article I think!

Posted by AmateurApprentice > 2019-04-02 11:01 | Report Abuse

Philip,

What do you think of Australian mining stock ?

Thanks in advance

Posted by AmateurApprentice > 2019-04-02 13:17 | Report Abuse

I owned a stock, Grange Resources (GRR.AX) since 2017.

This is a high grade iron ore miner (65% FE) (high grade ore produces less pollution in steel making) and the majority of its ore is shipped to China.

The Company :-

1) P/E is 2.81
2) Market Cap - $312M
3) Cash & Receivables - $242M (historical trend shows its receivable is fully paid)
Cash balance increases approx. $9-10M each quarter.
4) Debt - $7M
5) Considering the above - you are buying the whole company for $77M
6) 2018 Revenue - $368M with Net Profit - $112M
4) Business Operations - offtake contracts with Shagang China who are also GRR's
majority shareholder.
Bluescope, Australia largest steelmaker are planning to contract with GRR.
5) Future Prospect - New exploration into North Pit in Savage River and looking for
strategic partner for SouthDown project (projected to contain high volume of
high grade iron ore). Production should increase in Q2 2019.
6) Dividend yield is 7%-10% (depending on entry price) for the last 7 years.

Market Outlook :-

1) Vale Dam collapse in Brazil and Cyclone Veronica in Western Australia shave off
75M tonne of iron ore from the market in 2019. Cyclone Veronica does not affect
GRR as it is located in Tasmania.
2) Near/Medium term view iron ore prices are optimistic
3) Weakness in AUD/USD increases profit margin
4) Long term view - high grade ore demand to increase as it reduces pollution in
steel making, which has China govt's support.

Downside :-

1) Chinese controlled - 3/5 directors were previously Shagang employed.
2) Directors have no significant stock holding, more like a caretaker.
3) Operate like privately owned vessel company as it venture into luxury property
development without minority shareholding approval
4) Stockpiling cash with no plans for expansion/stock repurchase/dividend increment
5) Racism as it is listed in Australian Exchange

This is a penny stock for 5 years now. The other miners has appreciated 100% in the last 5 months while GRR only appreciated 35%.
Due to the supply shortfall and AUD weaknesses, their margin should be higher in Q1 2019 at current production levels.

I appreciate anyone's input to give me some insight that I might have missed out as I cannot make sense of the current stock price. As at today's closing, there are 8M sellers vs 4M buyers.

Thanks in advance.

Posted by (Clark GKent) Philip > 2019-04-02 15:35 | Report Abuse

At least I AM an engineer, unlike fake engineer/ex-investment bankers/ retirees who talk too much story and make up so many ideas in their minds about points of views. And worse, any random guy who disagrees with them gets called stupid and idiot and all sorts horrible names.

Your comments are useless and add no value to the conversation. If you don't have anything constructive to add, the JAKS thread is to the top and left.

>>>>>>

con8888 Operation guy talks operation

They can't see things from vantage point of view
02/04/2019 8:01 AM

Posted by (Clark GKent) Philip > 2019-04-02 17:07 | Report Abuse

Hi amateur apprentice.

For me I try to understand the business that I'm in first and foremost. What industry is it in, what makes it special versus it's competitors etc.

I don't really like the mining industry, as it is more a boom bust cycle usually as the business goes up and down in uncontrolled ways that constantly surprise me.

But may I ask you, why did YOU invest in the stock?

Was it chiefly for the 7% dividends?
Its there any specific growth trigger in the near future that is accountable? ( I wouldn't use rough terms like demand and optimism as specific) unless it leads to firm big orders from some major clients.

Any particular reason you chose grr in terms of competitive advantage? I noticed there is a huge cash pile ( which as minority shareholders you will never see) but are they doing anything with it?

I usually benchmark growth rates with comps like vale, Freeport and Rio tinto n terms of how to imagine my growth triggers for mining companies.

The magic word always seems to be integration.

Posted by AmateurApprentice > 2019-04-02 22:54 | Report Abuse

Hi Philip,

Thanks for the prompt response.

The reason I invest is because the stock was selling at $0.18 while the Cash Balance was $0.20 per share, with no debt. Thus, I am getting the business for free.

Dividends is a plus only because it can be scrap as and when management see fit. (After 2 years, it proved quite a significant amount)

All the analysis above was done after I bought the stock. =p

In terms of growth rate, the closest comparison is Fortescue Metal Group as GRR is a pure iron ore miner. The other miners outlined above has other commodities in their mix.

Even when comparing to Fortescue, it is not an on-par comparison due to :-

1) Fortescue is a big miner
2) has a flamboyant founder
3) they specializes in low grade ore, ie, has very low margin, entirely dependent on economy of scale.

Small miners like GRR mostly bank on quality of the commodity. I am unable to find any other small iron ore miner which are profit-making.

How do I go about roughly estimating growth rates ? Compare to other small miners in other commodities like gold ?

Or do you think I over-analyse a little bit ? Haha

Thanks in advance.

Posted by (Clark GKent) Philip > 2019-04-03 06:07 | Report Abuse

Hi, I think you don't analyse your company enough, to be honest.

As a minority investor, you will never get your "business" for free. The cash balance, cash in hand, assets and etc will not be something that you can be an active part in. As a minority, your only definite part of the company will be is share price increase, dividend yield and share buybacks.

Like your have previously said, other mining companies have bigger share price increase over the longer term. Why is that? Could it be due to rights issue, share buybacks, lower dividends, warrants, bonds etc?

A big part which is often overlooked is the quality of management. I understand it is 42% Chinese owned and managed. Is it shareholder centric? What are the returns on shareholder equity?(ROE) Is it growing it's equity organically in its core business, or is it taking the easy way out ( like many bursa companies) that venture into property development.

And yes you hit the nail in the head, estimating growth rates should be one of the key valuation before you buy the stock.

I like to practise the exercise of Peter lynch in this, which I think is a brilliant guy (read the book one over wall Street). First, SCUTTLEBUTT. Find out from friends or investor relations you know in the mining industry in who the big dog is in Australia. How efficient grr is in remain to that big dog etc. Is the management more capable or just so so.

Then you try to split the company into one of these groups, fast growers, slow growers, stalwarts, turnarounds, cyclicals, asset plays and be clear on the reason you are buying them. Each one has a particular strategy.

Posted by (Clark GKent) Philip > 2019-04-03 06:28 | Report Abuse

And in terms of comparison to other mining companies, what I should have specified was not what they were mining, but how efficiently they are mining it. I used to look at cliffs(NYSE) before. The key metric for commodities has always been, how much did it cost them to dig it out of the ground and sell it, versus how much the market is willing to pay for it. Cliffs was usd1.5 in 2015, a 7 bagger today.

If you notice, this is also how Warren invests in his oil stocks and rewards his executives. The bonuses and compensation plans are based on reducing oil finding costs, not increasing profits and revenues ( which will be high when oil price goes up, and low when the oil price goes down).

I would try to find out something like this for grr and it's high grade ore competitors.

https://www.businessinsider.com.au/iron-ore-breakeven-rates-major-miners-macquarie-bank-2018-1

Some last thoughts.

For me, I'd rather a company that has core competency in iron mining and understands that market industry invest its extra cash in associates doing upstream activities, buy more efficient machines and automation systems, pay their workers better, increase headcount etc rather than venturing into investments they know nothing about ( like property development).

Posted by AmateurApprentice > 2019-04-09 09:49 | Report Abuse

Hi Philip,

Thanks a lot for the beautiful advise. Appreciate it a lot. Thanks again.