Posted by brain > 2017-01-14 16:13 | Report Abuse

Thanks, bsngpg for the correction. Mayb its time I take profit.

Posted by sherlock > 2017-01-14 18:32 | Report Abuse

haha!means management of notion able to control flood,forex movement,and industry downturn,just to work for them?

i really don know whether should laugh or cry when saw such comment@@

Posted by sherlock > 2017-01-16 04:12 | Report Abuse

if excluded RM10m one-off deferred tax expenses,FY2016 EBITDA will be RM63m,i predict EBITDA for FY2017 will increase further to RM68-72m due to strong orders from automotive division and stronger USD.

if we used 5-7x EBITDA as fair valuation,notion's market cap could potentially grow to RM350-490m after one year,if coming results fit my expectation.if you willing to spend more time to study on notion's details,i believe you will very optimistic toward the company prospect like i do.

Posted by brain > 2017-01-16 06:55 | Report Abuse

Sherlock, you are projecting notion at rm1.30 to rm 1.80. Lets hope you right.

Posted by John Lu > 2017-01-16 06:59 | Report Abuse

When 40c, nobody project...haha

Posted by blackout87 > 2017-01-16 08:40 | Report Abuse

Once it rise, suddenly everything changes... Lol.. But notion fits the export theme, the business seems to have turned around as well. Let's hope management doesn't screw it up again.

Posted by blackout87 > 2017-01-16 08:46 | Report Abuse

Ebitda for 2017 is likely going to be substantially higher than 2016. Owing to
1) higher usd at 4.47 in 2017(so far) to 4.1 in 2016. Top line should grow an additional 8%, majority of expenses r in ringgit.easily an additional rm12-15mil ebitda in 2017
2) 30% increase in automotive another tail wind for revenue, maybe another rm5mil ebitda.
3) significantly lower finance costs due to repayment of facilities.
4) additional tailwind if they r able to partly resolve their inventory issues.

This is an optimistic view. At current market cap of rm190mil+, price to ebitda is not even 3x. This is not taking into account that management is trying to break into other sectors to grow the scope of their cnc machining.

Posted by sherlock > 2017-01-16 12:14 | Report Abuse

nice observation blackout87,thats why i still believe notion is very undervalue,i cant find another company which is traded at less than 3x of expected EBITDA.
as for inventory issues,i notice notion's inventory level keep falling for last two year,i believe this is due to management's strategy to reduce inventory level,in order to reduce wastage and write-off.
as at 30.9.2016,inventory already reduced to RM33m.at current level,it is not likely to write-off another RM9.2m again in FY2017,so the write-off amount should reduce significantly going forward.

Posted by sherlock > 2017-01-16 17:08 | Report Abuse

brain,about the RM1.3-1.8 valuation,it is supported by strong EBITDA and equal to 5-7x of EBITDA,i think this is very reasonable valuation,quite conservative indeed,cos if you compare with other peers,5-7x is actually at the lower range of normal valuation.

it might looks too good,but it is true,RM1.3-1.8 is fundamentally supported pricing,unless notion's fundamental deteriorate going forward,otherwise i'll still stick on my view and valuation.

Posted by Val-Elta > 2017-01-16 17:54 | Report Abuse

As usual, i'll give my counter arguments, I like to give opposing views when things are too negative, or too positive.

Since it's too positive... lets talk abt the bad stuffs that people have all suddenly forgotten
1) High directors fees as % of net profit.
2) Risk of new business failures. Silver, HP, total loss. And now they're talking about biomass business.
3) RM will strengthen again, I won't make my investment decision on RM holding above 4.40 for the entire year.
4) HDD is a sunset industry, it can't be avoided... expect no growth in this segment, and at best, for it to maintain at similar level YoY.
5) SLR, i think we all know its a gone case.
6) Automotive, neutral to sunrise a bit, but we still dunno the margin of this product. From my time following notion, SLR is their biggest margin products, so you can see the loss of SLR business really impacted the profit a lot.
7) New business, new business is not so 'exciting' at first I'm also wondering what's the impact of the new business, but assuming the latest Kng research is correct, and from their statement, Quote "On top of that, the group has also ventured into the new Industrial segment - manufacturing parts for household/sport items. Although meaningful contribution will only be seen in FY18"
Sports and household segment? mmmmm... also take note on the FY18 meaningful contribution......
8) Okay, foreign worker levy suddenly U turn from government, delay by 1 year, but next year notion foreign labour costs will increase by ~ 14% (damn, that effected my decision in a way)
9) Slow/Failure to get new business. I've mentioned this all the while as a big problem. Notion management has about 2 years to fill up the CNC machine left idle from the loss of SLR and HDD business, but even until now, they've not been able to keep machine utilization % high. If you have machines not doing anything, logically you will do whatever it takes to get business for them, their slow ability to do so is a concern. Meaning they're not adaptable to changes in business requirements fast enough. As HDD goes into sunset mode, this could be an issue.

Good or neutral points
1) I'm expecting EPS of 1.4-2 cent for the result announced in Feb. So the rally could last until mid March. But even at 2cent eps, that'll translate to a 80cent TP? 10x of FY EPS.

We already seeing USD to RM back at 4.47, could it retreat more? Notion is very dependent on forex gains for their profitability at the moment...

Posted by sherlock > 2017-01-16 18:49 | Report Abuse

it is always good to have argument,atless investors can hear different story.

to me,the director fees seems high mainly due to FY2016 result is not that good.but,if notion's able to achieve EBITDA of RM68-72m,or NP of RM25-30m in FY2017,do you mind directors is paid with RM5-6m salaries per annum?i dont,unless salaries rise significantly going forward.

about new business risk,as you can see after failure in silver business,notion became much cautious in new venture,they invested only less than RM2m in smartphone business,so even the venture is fail,financial impact is negligible .

when talk about HDD,yes,the market is contracting,but notion aldy secure new orders from new customer,so it is more likely that HDD segment still able to grow,atless in coming 1-2 year,not to forget the automotive parts business is grow strongly,management do expect auto business to grow 30% this year,so i do believe there is no issue in growth driver.

about margin issue,if you do notice,automotive business aldy contribute 30% of revenue at FY 2016,while SLR only contribute 21%,if auto business's margin is poor,notion will never achieve RM 63m EBITDA in FY 2016,so i do think auto business able to achieve reasonable margin,even is comparable with SLR.

in fact,the basic demand in SLR segment still strong,even consumer demand is bottoming,but you wont expect commercial photographer to take photo by using smartphone isn't?

forex,yes,it is a major beta,so if you expect RM to strengthen to RM3.5-3.8 level this year,then you should probably avoid notion and any export company.but that is not what i thought,i do not believe RM will strengthen significantly under trump's leadership and normalization of US rate,not to said malaysia might cut OPR further.

when you talk about business,risk is always there,i am positive not because forgot the risk,but positive after analyze all the risk and opportunities,then choose to be positive.

i might be right or wrong,and time will tell.

Posted by Val-Elta > 2017-01-16 19:18 | Report Abuse

Actually... there's a secret to their profitability in Q4 result. I'm surprised nobody noticed that :) excluding that one off item, Notion's Q4 result is actually RM 1 million net profit. Vs 4.6m net profit.

TCF actually repaid some money back to the company in last Q, 3.7m to be exact.
If you exclude that one off gain, notion operation net profit is RM 1m, has anyone really noticed this announcement all the while? With this information, you may relook into their operation net profit assumption.

Source > http://www.bursamalaysia.com/market/listed-companies/company-announcements/5209865

Also, when I opened bursa to check back the TCF repayment announcement, I just saw their director sold and buy back share announcement. Sold at 70.x, BB at 68.x
Source > http://www.bursamalaysia.com/market/listed-companies/company-announcements/5314577

He's actively trading the share leh... normally, we expect that to happen with unseen hands, this is quite interesting to say the least.

Posted by bsngpg > 2017-01-16 19:19 | Report Abuse

Val-Elta: I always like your analysis and follow up on Notion. Thank you. I distrust the mgt because I bought in a lot in 2012 and went thru all the pain and excuses till now.

Posted by Val-Elta > 2017-01-16 19:21 | Report Abuse

You now have a director who will actively trade against you as a minority shareholder, another risk to consider then...

Posted by Val-Elta > 2017-01-16 19:30 | Report Abuse

He was able to 'almost' exactly time the top price to sell, with the dividend announcement coincidence + the Kenanga TP report publication date + his ability to time the top, and swing back at 68. It's interesting indeed..

At this price, there is other shares with equal or even better profit profile, with less risks. That's all I'm saying.

I will be fair if the share price gets around 50-55 cent, I would probably buy back again, but so far, I'm mostly on another board already. As I'm fully invested, I'll stop by less here d... so yeah, I guess this is what I want to say.

Talks about RM1++ is really premature i believe, i'm a fundamental guy, and i always believe TPs should be based on EPS... you will need EPS of 3 sen+ to hit your TP Sherlock, for it to be a sustainable TP.

Posted by brain > 2017-01-16 19:37 | Report Abuse

Lee Tian Yoke, Exec director & head of marketting. Sold 1m at 705 and bought back 1m at 685 the next day. 2c or rm20k profit. Any comments?

Posted by sherlock > 2017-01-16 23:38 | Report Abuse

val-elta,i believe you had misunderstanding the 4rd q profit,cos when TCF repay RM3.7m to notion,it does not affect P&L statement,purely affect B&L,just like you don recognize extra profit when you collect receivable from customer,you just get back what you deserved to get.

so,there is no one-off gain in 4rd q result like what you claimed,RM 4.6m profit is fully derived from business operation,it is real profit.

and you had to really really bear in mind that NP of FY2016 was only RM5.4m,but EBITDA was almost 12x higher at RM63m.that means notion's operation is very profitable,but is currently "hidden" by high level of depreciation charge.you wont notice that if you too focus on EPS,which is derived after deduct every cash and non-cash items.

however,since the plant & machinery is 70-75% depreciated,depreciation charge should reduce further going forward,and then extra EBITDA portion will translate into NP,i estimate in FY 2017,reduce in depreciation charge alone should bring in additional 1.5-2 cen EPS to notion.

in FY2016,depreciation charge was RM34m,this is very abnormal to a company which only generated RM230m revenue a year,but is understandable given notion had spend few hundred million in 2011-2012 to expand their capacity.

unless notion spend more than RM50m capex per year going forward,otherwise we should see the depreciation charge continue to decrease and normalized to RM18-20m in 2-3 year time.that means,additional RM14-16m will be recognize at Net Profit or EPS level each year,not to said if core business bring in another RM20-25m NP(which is quite conservative i believe).

for your information,notion only intent to spend capex of RM25m p.a for next two year.

so,if you do believe EPS of 3 cen is enough for notion to break RM1,then better don simply conclude that RM1 is premature target,cos it can achieve anytime soon and most importantly,it is fundamentally driven.

Posted by sherlock > 2017-01-17 00:01 | Report Abuse

i've been work so hard to study and monitor notion for the past 15 month,and i am strongly believe that we had very good reasons to be optimistic on notion's prospect,even after recent rally,cos the long-term rally might just started,and the valuation still very cheap in term of EBITDA.

Posted by blackout87 > 2017-01-17 10:28 | Report Abuse

There was also a rm3++mil machinery write off.

Posted by Val-Elta > 2017-01-17 10:44 | Report Abuse

Mmmm okay, let's see the quarter result then. My weakness is my fair value is really quite fair, so I could miss out on these big big over 60% gains, or the overpriced levels. This is something I need to train more on :)
Holding for 50% gain is my best record so far, I'll need to aim for more in my next one.

Posted by bsngpg > 2017-01-17 13:58 | Report Abuse

Sold all 9600 free warrants at 0.85 due to imminent expiration.
Still need to hold the suck mother share as it is still in Big Loss.

Posted by dompeilee > 2017-01-17 19:35 | Report Abuse

Whew! Luckily I kept some...

Posted by dompeilee > 2017-01-25 10:02 | Report Abuse

Time for the next round to 90c!!! :D

Posted by BabyTA > 2017-01-25 10:28 | Report Abuse

this seems like a trap. careful

Posted by agcnazriadam > 2017-01-25 10:42 | Report Abuse

Once you make some amount, better let go

Posted by chrisyap > 2017-01-25 10:56 | Report Abuse

Cantek liao..

Posted by VenFx > 2017-01-25 15:56 | Report Abuse

Wow ! All time high again.

Posted by noobbie > 2017-01-25 15:59 | Report Abuse

looking good

Posted by BabyTA > 2017-01-25 16:00 | Report Abuse

this better dont hold, you see history you know. good luck guys

Posted by dompeilee > 2017-01-25 16:07 | Report Abuse

What all time high? This share has traded over 90c before!

Posted by dompeilee > 2017-01-25 17:07 | Report Abuse

Get ready for the first target of 80c! :D

Posted by noobbie > 2017-01-25 17:08 | Report Abuse

told you its good

Posted by Kim > 2017-01-25 17:32 | Report Abuse

Drop by. . Checked in. Hope got angpao CNY! 70 / 73 / 75 - 79/80 as soon as possible.

Posted by sherlock > 2017-01-25 19:55 | Report Abuse

based on MPI's result released today,i am quite confident that when 1st q result release on February,notion gonna surprise most of us.i shall talk more in early February as i am prepare for new year now.

guys,happy chinese new year ya:)

Posted by Kim > 2017-01-25 23:52 | Report Abuse

Up all da way..sweet dream!

Posted by bsngpg > 2017-01-26 07:14 | Report Abuse

Happy Chinese new year to you too. Wishing your optimistic projection on notion comes true at early day of rooster year so that I can write back my long struck capital from 罗四海TCF.

Posted by dompeilee > 2017-01-26 09:41 | Report Abuse

See? I told you 80c was coming ! :D

Posted by noobbie > 2017-01-26 10:20 | Report Abuse

go go go

Posted by noobbie > 2017-01-26 10:24 | Report Abuse

warrant lag for a while..best time to buy for those who missed the boat

Posted by Witty > 2017-01-26 14:00 | Report Abuse

UMA already.

Posted by noobbie > 2017-01-26 14:23 | Report Abuse

look at what happen to ifcamsc after UMA...hahaha

Posted by isano > 2017-01-26 14:56 | Report Abuse

很多人在等它跌，可以撿便宜.

Posted by isano > 2017-01-26 19:33 | Report Abuse

NOTION苦盡甘來

Posted by noobbie > 2017-01-31 11:00 | Report Abuse

see..i told you it will fly after UMA

Posted by sherlock > 2017-02-02 00:50 | Report Abuse

february is important month to notion,where 1st q report,annual report and AGM will take place.i'd made some forecast for 1st Q,which included:

Revenue:RM65-75m
Ebitda:RM16.2-18.7m
Depreciation:RM7-8m
Net Profit:RM7-9m
EPS:2.61-3.35cen

if i was right,we shall see notion at RM1 mark within next 28 days.

Posted by chrisyap > 2017-02-03 09:42 | Report Abuse

may your wish come true .

Posted by char1234 > 2017-02-06 21:18 | Report Abuse

WOW ! EPS at 2.61 ....very, very aggressive...Maybe u r right.They hv started the engine now...

Posted by SAKANA > 2017-02-07 10:03 | Report Abuse

The latest annual report status that, Fong Siling (冷眼) share held 1,200,700

Posted by cheer76 > 2017-02-07 18:09 | Report Abuse

so cool eye got increase or decrease recently?

Posted by ttaniges > 2017-02-08 16:28 | Report Abuse

Sherlock when is the AGM etc for notion?