Benalec Holdings (BHB MK) ----------------------uob kay hian today report Technical BUY with +13.8% potential return Last price : RM0.940 Target Price : RM1.00, RM1.07 Support : RM0.915 Stop-loss: RM0.900 BUY with a target price of RM1.07 with stop loss placed below RM0.900. BHB’s share price advanced higher after the formation of the major support at RM0.850 as the share price leapfrogged the “cloud” convincingly yesterday, which could mark the end of the current consolidation and kick-start a new up-leg hereafter. The emergence of fresh buying interest yesterday in the form of a higher trading volume of 23.6m shares (vs 20-day average of 1.0m) signals a genuine breakout which is also supported by a surge in momentum as flashed by a bullish crossover in Stochastic. With the positive crossover having formed between +DI and ADX, a new uptrend is likely to come through and is expected to rise further once BHB successfully breaches the immediate resistance at RM0.955. We peg our upside target at the previous high of RM1.07 over the medium-term.
Throughout the recent past, CIMB has been the sole advocate of a Sell call on Benalec, irrespective of the number of land deals secured by the company, not to mention the most recent reclamation contract awarded to the company by Boon Siew. The target price of 90 sen suggested by them is ridiculous to say the least; this is biased reporting in anyone's language. I say this because I have read the analyst reports of Affin Bank, AmBank and Kenanga. To enable the members of this blog to arrive at a balanced view, let me reproduce below excerpts of the respective analyst reports. (Because of the length of this posting, I shall break it into 2 parts; the second part comprises Kenanga's analysis.): AmResearch (AmBank):
Investment Highlights
• We maintain our BUY rating on Benalec Holdings with a fair value of RM1.31/share. This pegs the stock at a 45% discount to its estimated sum-of-parts (SOP) value. • Benalec announced on Bursa Malaysia yesterday evening that the group’s wholly-owned unit, Benalec Sdn Bhd, has secured a RM204mil contract (excluding rock revetment works) from the Oriental group in Malacca. • Benalec received a letter of award from Oriental Boon Siew (M) Sdn Bhd to undertake the construction, completion & maintenance of coastal reclamation as well as associated works for Ultra Green under Phase 2A, Phase 3A and Phase 4 in Malacca. • The project would be executed in two stages covering 415 acres. Each stage would be completed within 30 months from the date of site possession. Reclamation works are set to kick off by the third quarter of 2014 with 4Q 2016 being its targeted completion. • This contract appears to be a repeat job from the Oriental group, and underscores Benalec’s solid track record as an integrated marine engineering outfit. • Prior to this, Benalec had previously undertaken previous reclamation works for the Oriental group in Malacca. • More importantly, we believe that this cash job is timely as it beefs up Benalec’s cash flow position ahead of its future prospects, notably in Johor. • Based on a conservative margin of 15% and assuming equal contributions over the next two financial years, we estimate that this new contract would make up 23% and 13% of our FY15F and FY16F net profit forecast, respectively. We leave our earnings forecast unchanged for now. • Beyond Malacca, Benalec is keeping a close eye on other prospective reclamation contracts to replenish its orderbook. Tenders for reclamation works under Phase 1 of Eastern & Oriental’s STP2 project in Penang (384 acres) worth potentially over RM1bil could be called once regulatory approvals are received by 1H 2014. • Be that as it may, Benalec’s key re-rating projects still hinges on its ability to monetise the deep development potential of its concessions in Johor. We gather that efforts to obtain regulatory approvals are gaining traction, with tangible newsflow likely to come towards end-2H 2014.
Based on the above info, it is difficult to understand CIMB's persistent call to sell or reduce, unless there is an agenda which we are not privy to
As promised, the excerpts of Kenanga's analysis are as below:
Benalec Holdings OUTPERFORM ↔ Price: RM0.895 Secured RM204m Construction Contract Target Price: RM1.250 ↔ By Iqbal Zainal l mdiqbal@kenanga.com.my
News Benalec secured a RM203.9m construction contract from Oriental Holdings Bhd (NOT RATED). The project involves construction, completion & maintenance of coastal reclamation and associated works in Malacca covering a total area of approximately 415 acres. The project is scheduled to start in 3Q2014 and is expected to be completed by 4Q2016. The project shall be executed in 2 stages of which Stage 1 covers 275 acres while Stage 2 covers 140 acres. Nonetheless, the works for both stages will be done simultaneously.
Comments
We view the news positively as this project will boost its orderbook significantly to roughly RM400m from RM200m. It is also well within our replenishment orderbook assumption of RM400m in FY15 (the work will start in June 2014 (FY15). Furthermore, the good news is that this contract consideration will be paid in cash (progress billings) by the client. Assuming a 20% pre-tax margin, the project will contribute about RM10.2m to Benalec's net profit every year until FY17. Note that the project value of RM203.9m excludes the revetment works which may be awarded in later part.
Outlook Although its performance may be dampened in the short-term due to some changes in its land sale method, and slower progress of its marine construction, its long-term outlook remains intact due to its active land sale coupled with attractive sea-fronting land concessions in Malacca and Johor (which is expected to start contributions from FY15 onwards, albeit in a gradual manner).
Forecast No change to our earnings estimates.
Rating Maintain OUTPERFORM
Valuation Maintaining our SoP-based TP at RM1.25, at this juncture.
Risks to Our Call Sharp increase in raw material prices. Failure in obtaining Environmental Impact Assessment for its Johor project.
Base on my technical chart and other indication the next level is RM1 (as resistant) if break it should be a good news and happy to every investor that hold till then.
Today can see some selling pressure but the good thing is the buying power is still strong as of now. Not sure if it can hold till end of the day. Wish there are other fund manager or big investor see the potential of the company and continue to buy and accumulate.
As long as today stay at 0.96 or above is still continue the good sign and signal. Let see what it end up later :-)
This posting is addressed to the believers. One big reason why the share price is on the uptrend in tandem with the significant transaction volume seen both yesterday and today is the fact that some big market players are apparently picking up the stock.
From what I can gather, the fund managers have just started to make a beeline for Benalec's HQ, hoping to get an accurate and comprehensive update from the :"horse's mouth", as it were. So, for that matter, are the financial journalists. Meanwhile, I have learnt from the "grapevine" that there are a couple of mega deals in the pipeline, as well as new reclamation concessions being secured by the company in Melaka and Johor. All these very positive developments are obviously drawing the smart investors to this company.
king7, I am not talking about the past one month, I am referring to the last two days and going forward. As to why there are a large number of sellers, the answer is simple. The majority of the sellers are small retail investors. What you should note is that the big players are gobbling them up.
hmmm.... it drop back and reverse does not seem good in short term. even though is +0.01 cents now but the closing price is crucial for it to continue move before it stop to consolidate again.
Benalec Holdings : Melaka is not the game changer. Sell on strength. We do not expect this news to trigger a major re-rating for the stock. We foresee a sustained overhang on the share price. Target price 0.90. Price Call : Sell - CIMB 7th May 2014.
SavvyONe, since the news flooded everywhere and so potential as what you have said why who keep selling ? some more the volume and price trend for the past did not reflected who is just enough of making few percent profit margin only then now take profit. "WHO IS SELLING"
king7, I don't worry about who is selling. I only care about whether it is a viable investment decision for me or not. There are a few tricks that the syndicate players use to consistently accumulate shares in the open market. I happen to know some of these tricks but am not at liberty to share these on this forum. I the meantime, judge for yourself. Time will prove whether I am right or wrong.
King7 in stock market, what you need to learn is to buy low and sell high. Don't read too much about the big buy or sell volume. It how the syndicate styles of play.OK.
The reason I don't really care about who is selling the shares is that, being better informed, I know that the seller(s) is/are going to miss out and buyers at this price will make decent gains.
To complete my earlier posting on analyst reports, the following excerpts are taken from Affin Bank's analysis and are intended for the information of interested parties:
Forecast No change to our earnings estimates.
Rating Maintain OUTPERFORM
Valuation Maintaining our SoP-based TP at RM1.25, at this juncture.
Risks to Our Call Sharp increase in raw material prices. Failure in obtaining Environmental Impact Assessment for its Johor project.
king7: There's a lot of arbitraging going on (either day trade or contra) with retail traders being content if they can get a profit of half a sen to 1 sen.
The market's taken note of Benalec's recent announcements and/or institutionals are getting involved.
You might think that being a share at 95 sen and selling at 95.5 makes so little money but when you factor in a contra player/daytrader is willing to trade say 500,000 shares a day, that's still about RM800-900 for a day's profit which is decent for a professional trader. (okaylah, maybe not decent compared to some of the bigger players :p)
News has been announced and factored in, don't expect the price to increase 50% in one week for a relatively solid company like Benalec. If that's what you're after, you should be looking at warrants/call-warrants although inexperience can cause you to lose your shirt. Or heck, might as well buy Datasonic and pray. XD
If you're unable to take the strain of watching the price act choppily i.e. 93 to 96, back to 94, back to 95.5 etc, perhaps (and I don't mean this as an insult) you should be looking at more blue chip stocks. Everyone wants to make a big gain, but if it's difficult to keep your emotions/fears in check you're honestly better off with something that's a lot more stable with strong recurring income.
Anyway, just my 2 cents worth. As long as you don't end up like a certain lying troll (who I now suspect lost a fair amount of money on this counter - and is extremely bitter about it), it's all good. :)
Another round of share buyback by Benalec today. It show that the Company is really undervalue in share price at this current level, there will be more upside from tomorrow onward, I hope so. Good Evening to all Benalec Investor's and let us meet again tomorrow.
Is sell low n buy high! What tactic? What ever reason also the share holder is the loser in overall. From 1.50 to 0.85 then sell 0.77 for 5 percent then buy back 0.95. Aiyoyo... Ini macam.
king7: If that's your belief than perhaps Benalec might not be the best investment for you? After all if you think that by the Leaw family selling low and Benalec itself buying back shares is not good then perhaps it's time to cash out.
Never mind that others (including me) believe that the Leaw family selling at a discount was to a friendly party for a different reason.
with such a simple no brainer business model where the company creates its own land bank, this stock should be worth 5x more...and yet brothers are squabbling over its wealth - a very unhealthy sign...soon there will be a lot of asset sales BUT....will the minorities shareholders benefit? or how transparent will these 'treasures spit' be done? im sure there will be more than meets the eye....i dont see this stock rising any further than 1.10
Alex Tan, the inevitable consequence of a so-called "family feud" occurring within the company is that the attention of the Authorities, i.e. SC and Bursa, is focused on the company and its management. If there is anything that is "more than meets the eye", the Authorities will certainly come down on the perpetrators like a ton of bricks. Do you think that the current management would be so stupid as to commit transgressions right under the noses of the Authorities?
The company's recent share buyback activities may well be indicative of a strategic corporate manoeuvre. There have been a number of cases where share buybacks were followed later by the subject companies being taken private. There is every likelihood that the majority shareholders of a company like Benalec may reckon that, despite very good financial performance and outstanding potential, the company is still being chronically undervalued, in which case going private can be an exceedingly viable option. So, let's wait and see.
Posed by aciturn on 08/05/2014 08:05----If that's your belief than perhaps Benalec might not be the best investment for you? After all if you think that by the Leaw family selling low and Benalec itself buying back shares is not good then perhaps it's time to cash out.
Never mind that others (including me) believe that the Leaw family selling at a discount was to a friendly party for a different reason.
samsung555, think about it, Seng Hai has spent a good part of his productive life growing the company and at this juncture, he and all the other shareholders have not realised anything close to the true worth of the company. Does it make any sense for him (who is the key driver of the company) to cash up now?
samsung555: Please re-read my earlier posting on possible reasons of why the Leaw family sold the 5%. Specifically under the section "for those who believe in the good".
If it's really a cash out, my reasoning stands. No one would sell the stake and declare the sale via bursa the very same day. It would have made more sense to milk it for what it's worth and clear shares in the open market for the next 7 days, and then make a declaration.
Also if the Leaw family is cashing out....why have there been no further sale of shares since then by then?
This is unless you're like a certain lying troll of course. His style would be tembak himself in the foot first before selling.
Alex Tan: I'm curious where you get the assumption that the stock should be worth 5x more. Is that supposed to be a fundamental statement?
I don't think the process is quite so a "no brainer" operation as you say. Reclaiming the land, that's easy enough with their skillset.
But before you can start reclaiming land:
1) you need the rights/concession to do so either directly from the state government, or from a company who has such rights/concessions. Dealing with state governments is never an easy issue, unless you have some form of kangtao or...other means. 2) you need to get a detailed EIA from the department of environment approved. No EIA means no reclaiming. EIAs these days aren't simply rubber stamped by the department. Re: Tanjung Piai/Pengerang.
You cannot just go, "La la la, I think I will reclaim this spot here" and start to do so or else you'll probably end up behind bars.
It sounds like you just plucked out the 5x figure from the air. Even during the best of times, even without the problems with the brothers, the share price has only been a little 50% higher than what it is now. 5x is a gross exaggeration.
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Benalec Holdings (BHB MK) ----------------------uob kay hian today report
Technical BUY with +13.8% potential return
Last price : RM0.940
Target Price : RM1.00, RM1.07
Support : RM0.915
Stop-loss: RM0.900
BUY with a target price of RM1.07 with stop loss
placed below RM0.900. BHB’s share price
advanced higher after the formation of the major
support at RM0.850 as the share price
leapfrogged the “cloud” convincingly yesterday,
which could mark the end of the current
consolidation and kick-start a new up-leg
hereafter. The emergence of fresh buying interest
yesterday in the form of a higher trading volume
of 23.6m shares (vs 20-day average of 1.0m)
signals a genuine breakout which is also
supported by a surge in momentum as flashed by
a bullish crossover in Stochastic. With the
positive crossover having formed between +DI
and ADX, a new uptrend is likely to come through
and is expected to rise further once BHB
successfully breaches the immediate resistance
at RM0.955. We peg our upside target at the
previous high of RM1.07 over the medium-term.