AmInvest maintain BUY recommendation, forecasts and fair value (FV) of RM2.31 based on 18x FY23F EPS. This is at a discount to the average forward 20x PE of leading renewable energy players globally to reflect: (1) KPower being a relatively new player in this space; and (2) its relatively small market value. On the flip side, from a relatively low base, the growth potential of KPower’s earnings is tremendous at >100% and >40% in FY21 and FY22F respectively, based on projections.
I never understood why people think PP is bad. Just like debt, there are good debt and bad debt, it is how you use the PP. As shown in the proposal, majority of the money acquired via the PP will be used to grow the company. If it is used to pay down debt like AirAsia, then run for your life.
What is good PP and bad PP? a bad PP is the one launched by Tony and gang in 2016 / 2017, the reason is to increase their holdings and right after the PP is done, they go on selling most of their airplanes and give it out and dividends. That is a bad PP. This SCIB PP / KPower PP are good PP (Good Debt in property investment term). HumblePie188 explained it best:
As mentioned by humblepie, "During the PP exercise, the share price will be maintained above the PVWAP. Why? If the mother price is trading below PP price, why would you want to pay RM500k per block to subscribe? Just buy from open market will do since it is cheaper. How about post Private Placement. That one I can't comment much. You read back and you will get the answer."
No reason for price to drop, the more it drops the less money the company gets to collect. The goal is to get as much as possible to fund the expansion plan. Therefore the likelihood of it going up is higher than down.
p.s. Everybody saw this coming and have been talking about this since January 2021. Those that wanted to sell would have sold earlier and waiting for this PP announcement to come back in, that is if they are still interested in SCIB / KPower.
I do not see any major fundamental changes in the company, management still performing, no crazy new ventures like gloves or losing money.
In my humble view, for a particular stock, the most important criteria are whether the company can make a profit or not(measured by EPS ). The corporate exercise such as PP, consolation, subdivision, etc. just has a temporary effect. For the case of Kpower, its profit keeps on increasing each Q from 1Q20: 1Q20: 1.24 sen 2Q20: 2.44 3Q20: 3.19 4Q21: 9.23 1Q21: 10.28 2Q21: 11.68 If their EPS continues to grow for the coming Q, this counter is considered an excellent stock, and the price will sooner or later pickup. The 3Q21 report will be released soon, let's see.
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....
Buylow111
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Posted by Buylow111 > 2021-05-02 16:16 | Report Abuse
AmInvest maintain BUY recommendation, forecasts and fair value (FV) of RM2.31 based on 18x FY23F EPS. This is at a discount to the average forward 20x PE of leading renewable energy players globally to reflect: (1) KPower being a relatively new player in this space; and (2) its relatively small market value. On the flip side, from a relatively low base, the growth potential of KPower’s earnings is tremendous at >100% and >40% in FY21 and FY22F respectively, based on projections.