Posted by Travestor > 2022-05-25 09:16 | Report Abuse

Any source for the following statement? As I know AEON has had this intention for the longest time but nothing materialized so far.
"....AEON will soon inject all its shopping malls into a new REIT listing..."

Posted by GLNT > 2022-05-25 09:40 | Report Abuse

Just speculation. We should have the SC investigate for misleading statements in i3. Regulation is just too lax here.

Posted by dragon328 > 2022-05-25 10:00 | Report Abuse

Travestor, that was my own forecast from deep research and my contacts. The benefits of injecting the AEON malls into a REIT are so huge that it is a no brainer for AEON to do it sooner or later.
I am making a reasonable forecast that it will happen within this year for the reasons I stated in my 2nd article on AEON published yesterday.

Posted by dragon328 > 2022-05-25 10:05 | Report Abuse

GLNT, I expect people to be skeptical of the idea I put forth in my article. What I did was just to share the huge benefits of doing the corporate exercise, and with good reasoning I was making a forecast that it will happen within this year.
There is a difference between speculating and making a reasonable forecast. Traders speculate on all sorts of things eg. government to bail out Sapura Energy, Serba Dinamik will get away from court charges, steel prices will shoot up further etc.

Value investors do not speculate but make reasonable forecasts. I calculated the odds of it happening vs the risk of putting my money in AEON at current prices, and I found that the downside is very low but upside is very huge.
I am very confident that I will make good money from investing in AEON in coming months, with or without the corporate exercise as its business fundamentals are strong and rebounding fast.

Posted by dragon328 > 2022-05-25 10:10 | Report Abuse

In fact, I recommended this stock when its share price was off its peak and the share price continued sliding down. I have not benefited from the share price movements. You can see that some party is trying to push up the share price to as high as RM1.69 before the Mar qtrly result was out to entice retailers to chase it betting on a good quarterly result. Now some parties are trying to press down the share price to below RM1.50 on grounds that the Mar qtrly result was disappointing. These parties are trying to press down the share price to give impression that no corporate exercise is forthcoming in order for them to collect more mother shares and call warrants at low prices. Who is doing speculative and manipulative actions here?

Posted by skoh888 > 2022-05-25 10:12 | Report Abuse

@dragon 328...totally agree about market being a place for speculation. If not what the heck are we even here? Anybody who sells you the idea of a sure thing well....

Posted by skoh888 > 2022-05-25 10:12 | Report Abuse

keep up the good work...your articles are very good but maybe a bit long? ;)

Posted by dragon328 > 2022-05-25 10:14 | Report Abuse

What I have done is to share my honest opinion on this stock and its huge potential. Now that someone is pressing down the share price is really good for me to add even more at low prices. I do not want to speculate on why these people are so desperately selling down the share, nor when AEON will inject its malls into a REIT, but rather just buy on what I believe in based on its current form of business fundamentals and strong cash flows. When the corporate exercise comes, then I know I will make a lot of money.

Posted by skoh888 > 2022-05-25 10:15 | Report Abuse

I like your attention to detail and would love to read more of your articles. You are not a fan of Technical Analysis? seems like you are a pure fundamentalist?

Posted by dragon328 > 2022-05-25 10:18 | Report Abuse

skoh888, thanks for your support. Yes the articles are a bit long as there is too much to share as background info in the first place. I would like to give readers a full picture of the company in terms of its financials, assets, business segments and prospects.
In the case of AEON, the financials are a bit unique and tricky. It took me quite some time and hard work to dissect its financials into the 2 business segments: (1) retailing and (2) property management services, and then to make a reasonable projection of its cashflows for each of the segments.

Posted by dragon328 > 2022-05-25 10:22 | Report Abuse

You will notice from AEON quarterly reports and Annual Reports that the company itself was not able to clearly seggregate the costs for each of these segments, hence some Unallocated Expenses and a huge lease liabilities payment.
So in order for AEON to inject its malls into a REIT, it will need to first sort out the allocation of these Unallocated Expenses and lease liabilities payments, in order to maximise the cashflows and profits at the REIT and minimise profits at the holding company level to minimise income tax payment (as a REIT does not pay income tax but the holding company pays higher than usual income tax rates).

Posted by dragon328 > 2022-05-25 10:23 | Report Abuse

I do look at technical charts mainly to get a sense of a good timing of entry into a stock or when to take profit for shorter term trades, but I rely more on fundamental analysis to gauge if I buy a stock or not.

Posted by dragon328 > 2022-05-25 10:27 | Report Abuse

I am not good at technical analysis, often got it all wrong. Just like in the case of AEON, one would have expected it to go further after it breached resistance of RM1.65 to close at RM1.66 last Wednesday if he/she looked at the technical chart, but it went down the next day and dropped over 10% in the next few days.
It is hence risky to purely look at the chart to chase a stock as some operator will crash you down, as they have better technical chartists to manipulate the movements of the stocks.

Posted by skoh888 > 2022-05-25 10:28 | Report Abuse

@dragon...got it thanks! any sneak peek at what you are looking at next? ;)

Posted by dragon328 > 2022-05-25 10:29 | Report Abuse

I am looking at IGBB but will see its March qtrly result first before I decide if it is worth a bet.

Posted by dragon328 > 2022-05-25 10:32 | Report Abuse

I pay attention to details as I have been trained in my corporate life then. And I believe one should really study the company aspects well especially its financials in order to have a good understanding of what happened in the company past quarter and to have reasonable confidence to project what will come next.

Posted by dragon328 > 2022-05-25 10:48 | Report Abuse

Once you have done your homework, you will have greater confidence in what you invest in and make better decision to make the right move. Like in the case of AEON, I am adding it while some party presses it down, as I believe that it will rebound once this party exhausts its selling. A deeply undervalued stock will not stay low for too long.
A good example was BJFood. When I first recommended it, it was trading at RM2.00 level and got pressed down to as low as RM1.81 in the following weeks, but after that what happened everybody knows. The share price has more than doubled up to as high as RM4.80.
People were skeptical of my recommendation then as BJFood was reporting dismayed net profit pressed down by high depreciation charges and continued losses in Kenny Rogers. But once Starbucks sales increased after MCO and Kenny Rogers turned around, you can see that net profit jumped by bounds after deducting off fixed depreciation charges. For instance,
Q3FY2022 Q3FY2021
Revenue RM246m RM182m +35%
EBITDA RM83m RM 56m +48%
depreciation (30m) (30m)
EBIT RM 52m RM 26m +>100%

You can see that though revenue increased by 35% only but EBIT jumped over 100% as depreciation charge is fixed (or small increased).
AEON will be a similar case like BJFood but a few times larger as its non-cash depreciation charge for the property management segment is almost RM350 million a year.

Posted by skoh888 > 2022-05-25 10:56 | Report Abuse

yes your BJFood call was excellent. Thanks for that! I bought some at RM3.00

Posted by dragon328 > 2022-05-25 10:56 | Report Abuse

Using the same example as BJFood, lets look at AEON FY2021 financials:

Revenue RM3,630m
EBITDA RM725m
Depreciation (RM465m)
EBIT RM260m
Interest (RM129m)
Pretax Prodit RM131m

Now what if AEON revenue increases by 28% in next 3 years (8% growth p.a.) to RM4,660m by FY2025 as what I forecast in my 2nd article? EBITDA will increase by 28% to RM935m, EBIT will increase 80% to RM470m and pretax profit will jump 177% to RM363m. The compounding effect is amazing.

Posted by skoh888 > 2022-05-25 10:57 | Report Abuse

I think the F&B stocks will do quite well in the current environment. Texchem has also done very well. I am looking at the next F&B stock to buy

Posted by dragon328 > 2022-05-25 10:58 | Report Abuse

Anyway I have sold off my BJfood holdings above RM4.60 and swifted to AEON now.

Posted by skoh888 > 2022-05-25 11:01 | Report Abuse

I was hoping to get RM5.00 for BJfood but will put a stop on the trade at RM4.20 thanks

Posted by dragon328 > 2022-05-25 11:09 | Report Abuse

Travesor, nobody knows when AEON will inject its malls into a REIT, not even its CEO and management. It is dictated by the major shareholder depending on a number of factors - their expansion plan over next 3 years, the capital market conditions, the confidence of the investment banker to solicit interests from cornerstone investors, the proposed valuation, etc.
My advice is that do not speculate on the timing but just accumulate while it is low now. Even though it does not materialise this year, the share price will still go up on improving business outlook.

Posted by dragon328 > 2022-05-25 11:14 | Report Abuse

Why there are so many people lose money in the stock market is because they speculate rather than invest properly. 9 out of 10 retailers who chased Serba Dinamik high to 18 sen after it resumed trading have lost money and I bet none of them understood what really happened inside the company.

Posted by dragon328 > 2022-05-25 11:15 | Report Abuse

If you have done your homework and are confident with the company prospects, you will make money sooner or later. Buy low and sell high. Buy when shorter term traders or speculative parties sell it, and sell it when retailers chase it high like in the case of BJFood.

Posted by Travestor > 2022-05-25 11:21 | Report Abuse

Thanks dragon328 for your efforts of sharing knowledge. It is really up to the reader to digest, analyze, and make own decision. I am still digesting your sharing. :-)

Posted by Travestor > 2022-05-25 12:17 | Report Abuse

If AEON goes ahead with the REIT, "Assuming AEON Bhd sold a 30-49% stake in an IPO of AEON REIT...", so how would AEON shareholders be getting free REIT shares? Wouldn't they need to subscribe to the IPO and pay for it since AEON is selling an x% stake in an IPO?

Posted by dragon328 > 2022-05-25 20:42 | Report Abuse

Travestor, the title was a little misleading. It was meant to say that if AEON injects all its malls into a REIT, the REIT will be worth RM10 billion and AEON will be worth RM12.1 billion in sum-of-parts valuation. Compared to its current market capitalisation of RM2.1 billion, essentially AEON shareholders are getting the new REIT shares for free through indirect holdings of AEON Bhd.

Posted by dragon328 > 2022-05-25 20:48 | Report Abuse

AEON shareholders will not be getting the new REIT shares directly but will get windfall dividends from the listing proceeds and through AEON still holding majority stakes in the REIT. Assuming AEON lists up 30% stakes of the REIT in the IPO and hold 70% majority, then AEON will be receiving RM3.0 billion of cash from listing proceeds and its 70% stakes in the REIT will be worth RM7.0 billion.
If AEON sells 49% stakes in the REIT listing, then it will receive cash proceeds of RM4.9 billion while its 51% stakes in the REIT will be worth RM5.1 billion.
I was assuming that AEON would list up 45% stakes and receive cash proceeds of RM4.5 billion, and assumed that AEON would use RM300m to reduce borrowings and the rest RM4.2 billion to be distributed as special dividend of RM3.00 per share.

Posted by Travestor > 2022-05-25 21:00 | Report Abuse

Thanks dragon328, that's what I thought and now your explanation makes more sense. You might want to consider amending your title.

Posted by dragon328 > 2022-05-26 08:12 | Report Abuse

Title amended. Good suggestion.