PROPOSED PRIVATE PLACEMENT OF UP TO 28,517,200 NEW ORDINARY SHARES OF RM0.25 EACH IN SYF TO INDEPENDENT THIRD PARTY INVESTORS TO BE IDENTIFIED
On behalf of the Board of Directors of SYF, M&A Securities Sdn Bhd wishes to announce that the Company proposes to implement a private placement of up to 28,517,200 new ordinary shares of RM0.25 each in SYF to independent third party investors to be identified at a later date.
Further information on the Proposed Private Placement is disclosed in the attachment herein.
SYF Resources (SYF MK) Take Profit. Technical SELL with -17.0% potential downside Last price : RM1.17 Target Price : RM1.06, RM1.00 Resistance : RM1.25 Stop-loss: RM1.27 SELL with a target price of RM1.00 with stoploss above RM1.17. Following our earlier BUY call at the price of RM0.820 on 28 May 14, SYF’s share price made a new high at RM1.32 on 17 Jun 14. Despite our intention to ride along the uptrend, the share price has consolidated within a bearish reversal pattern of “descending triangle” in the past 16 days. Given yesterday’s negative closing below both the 10-day and 21-day SMA lines, weaker short-term sentiment may lead SYF to breach the neckline at RM1.15. A violation of the aforementioned level would place further pressure on the share price which may test the psychological support of RM1.00 afterwards, in line with the weaker momentum as shown by negative MACD and Stochastic readings. Given the uncertainties, we recommend investors lock in the recent gain of 42.0% as a lack of buying interest should push the share price lower. Timeframe: 1-week to 1-month
............duitKWSPkita fully support SYF on coming Friday (1 August 2014)...............
Dear Fighters,
I believe you guys have witnessed the profit taking exercise recently. Lets us pray hard the counter start to pick up from coming Friday(1 August 2014). All just my kindergarten prediction!
SYF Resources (SYF MK) Technical BUY on breakout with +19.0% potential return Last price : RM1.16 (Entry:RM1.21) Target Price : RM1.32, RM1.45 Support : RM1.15 Stop-loss: RM1.13 BUY on breakout of RM1.21 with a target price of RM1.45 and stop-loss at below RM1.13. Following a pullback from the high of RM1.32, SYF has consolidated lower and established a strong support at RM1.15 in the past 10 weeks. Despite still treading sideways, a few accumulation phases can be observed with the slight spike in trading volume since 18 Jun 14. The RSI line has rebounded twice from the 50pt threshold level, which signals the selling pressure has been absorbed. As SYF approaches the “cloud”, we expect the breakout from the recent high of RM1.20 should kick-start a new up-leg and the stock would resume its long-term uptrend bias. Initiate a buy then with a medium-term target peg at RM1.45. Expected Timeframe: 2 weeks to 2 months
MONEY TALK SYF RESOURCES (SYF MK) Re-strategising Its Business Direction A furniture manufacturer, SYF Resources marked a significant return to profitability in FY12 (after five years of consecutive losses). In 9MFY14, it chalked an impressive 47% yoy growth in net profit to RM16m. Its pro-active strategies in expanding upstream capacity (manufacturing of furniture materials) and the upcoming launches of two property development projects (GDV of more than RM400m) could double its earnings over the next four years (earnings CAGR of 20-23% in FY14-18). Management is expected to deliver FY15 and FY16 net profit of RM34m-36m and RM42m-45m respectively. SYF’s current valuation of 7-8x FY16F PE is in line with the industry. However, the stock could trade up to RM1.52-1.63 (based on 10x 2016F PE) as our channel checks suggest that a value-accretive M&A could take place within its furniture segment over the next 6-12 months. KEY HIGHLIGHTS Re-strategised its business direction. SYF is a furniture company traditionally focused on downstream manufacturing. But it has re-strategised to strengthen its upstream segment, following weak demand for furniture exports during the 2008-10 global financial crisis. Progressive expansion and upgrading of its upstream facilities (sawmilling and kiln drying facilities) over the past few years has transformed the company into one of the major players in upstream furniture materials. Management’s decision to venture into property development (through JV basis) in 2012 was also the company’s key turning point. With its first RM84m GDV industrial factory development project in Semenyih, the property division currently contributes 50-55% of SYF’s bottom line. Moving forward, we do see great potential from these two core businesses as the company’s furniture capacity is still in an expansion mode and there are property development projects (more than RM400m GDV) to be launched soon. The company also recently announced a new property development project (RM160m GDV) but this project will only start to contribute from FY17 onwards.
Expecting earnings CAGR of 23% for furniture division in FY14-17. SYF’s upstream segment has an annual production capacity of 100,000m3, with one-third of its products destined for in-house downstream consumption. The company’s selfsufficiency in meeting its in-house demand and the geographical proximity between both its upstream and downstream facilities (in Semenyih, Selangor) allow the company to achieve better cost efficiency and competitiveness vs peers. Furthermore, as an integrated player, SYF is less vulnerable to exchange rate volatility as compared to pure downstream players who are typically more exportoriented and transactions are denominated in the US$. Earnings contribution from the furniture division is expected at RM10m in FY14 and thereafter to grow by a projected CAGR of 23% in FY14-17, driven by higher product penetration into export markets (SYF’s upstream products are mainly sold locally currently) and higher sales of downstream products due to a global market recovery. Expecting maiden bottom line contribution from particle board segment this year. To extract the maximum value from its rubber wood raw material in the upstream segment, SYF has ventured into particle board manufacturing and invested RM30m to construct a new plant in Gemas, Negeri Sembilan, last year. The plant commenced operations in end-13 and is expected to turn profitable with FY14 bottom-line contribution estimated at RM1m-2m (vs a loss of RM1.4m in 9MFY14). While earnings contribution from this segment would be minimal, we understand that the company is in the midst of setting up a second plant to manufacture medium-density fibreboard (MDF) that will double its boards lift production capacity by 2HFY16. We expect positive synergy from this expansion as waste products from its upstream processing operations (mainly saw mill) are fed in as the main raw material for the manufacturing of particle boards, allowing the company to convert wastage into a new revenue stream. Bottom-line contribution from this division is expected at RM6m-7m by FY16 and thereafter, increase to an estimated RM9m in FY17 with the full commissioning of the second plant (assuming average utilisation rate of 80%). Property division: Growing from strength to strength. Through a 80:20 JV basis (SYF, being the developer, is entitled to 80% of the GDV while the land owner JV partner owns the remaining 20% GDV), SYF’s maiden Hi-Tech 5 industrial factory project is on track for completion by next month while its second project, Hi-Tech 6, had been fully taken up and is slated to complete in Dec 14. While SYF is relatively new in property development, its JV partner has experience in the industry. We view such JV model suits SYF’s profile as the company does not have a sizeable landbank for development. Although the sustainability of the property development business could be a concern, we understand SYF has a strong working partnership with its landbank-rich JV partner and it has just recently announced another new JV project (RM160m GDV). Closer look at its upcoming property development projects. Through a JV, SYF intends to develop a 5-acre site in Semenyih, which is strategically located 3km away from University of Nottingham. The integrated development, Kiara Plaza, consists of 304 apartments, 459 SOHO units, 56 retail outlets and 12 shop offices worth a collective GDV of RM325m. Management guided that about 50% of the retail outlets, which are priced at RM1.1m/unit, are booked. We also understand that the company will do a 3+2 years leaseback agreement to control tenancy mix. The site is currently undergoing piling works and the company will launch the SOHO units by this year-end. Assuming a 22-25% net margin and 80% stake, we estimate this project to generate RM57m-65m net profit over the next four years. In addition, SYF will also be launching a residential project at Sungai Long (RM80m GDV) by the end of this year. We estimate this project to generate RM14m-16m over three year, based on similar net margin assumption and equity sharing structure. From FY14, the group’s property division is expected to contribute 40-50% of SYF’s net profit.
Proposing a private placement to improve gearing level and for expansion. SYF recently proposed a private placement which could raise up to RM31m. The proceeds will be used to repay borrowings (60%), factory construction (19%) and for working capital (18%). Its net gearing level will be reduced to 18%, from 32%, assuming it pares down RM19m loans as proposed in its announcement. M&A could be a wild card. While management would continue to grow its furniture business organically, we gather a potential M&A to grow the company’s downstream capacity is on the cards. Given the company’s healthy operating cash flow of RM4m-6m per year and low gearing, we view any potential M&A would not affect the company’s short-term solvency and liquidity. More than meets the eye. SYF’s largest shareholder, Ng Ah Chai, currently owns 57% stake in SYF. He has held the position of CEO since 2005 and had previously been involved in the timber related business since 1985. Meanwhile, Dato’ Sri Chee Hong Leong, who has wide experience in property development is SYF’s 2nd largest shareholder with a 12% stake in the company. Interestingly, Dato Thong Kok Khee, the major shareholder of Insas Bhd, has emerged as the third largest shareholder, after acquiring 27.5m shares (10%) on 18 June in an off-market transaction. We understand that the purpose of this exercise is to help the company meet its public shareholding requirement.
SYF Resources (SYF MK) - Technical BUY on breakout with +19.0% potential return Last price : RM1.16 (Entry:RM1.21) Target Price : RM1.32, RM1.45 Support : RM1.15 Stop-loss: RM1.13 BUY on breakout of RM1.21 with a target price of RM1.45 and stop-loss at below RM1.13. Following a pullback from the high of RM1.32, SYF has consolidated lower and established a strong support at RM1.15 in the past 10 weeks. Despite still treading sideways, a few accumulation phases can be observed with the slight spike in trading volume since 18 Jun 14. The RSI line has rebounded twice from the 50pt threshold level, which signals the selling pressure has been absorbed. As SYF approaches the “cloud”, we expect the breakout from the recent high of RM1.20 should kick-start a new up-leg and the stock would resume its longterm uptrend bias. Initiate a buy then with a medium-term target peg at RM1.45.
Now the bonus issue proposal had been approved by Bursa Securities, so the next step is getting approval from SYF shareholders thru EGM. Just waiting for announcement of EGM date probably by this week... The ex-date of bonus issue will be announced once approval of shareholders is granted via EGM by next month.
TP b4 ex-date of bonus issue is RM 1.50 and above!
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Barbarian
939 posts
Posted by Barbarian > 2014-06-19 01:43 | Report Abuse
Leng chai ler.......