Such huge volume yesterday.... remember CH is IDSS approved shares, probably someone trying to short sell it down... and to a large extent, failed too 3 million shares only managed to push it down 3 bids before recovering. Will be interesting to see the movement when they need to cover their shorts in the coming days.
Looking at the most recent quarterly result, i doubt the company will be able to achieve the same level of profit recorded in FY 17 (of RM30mil). Even if the company managed to achieve a PAT of RM25 mil in FY18 (meaning RM 9.7mil PAT in 4Q18) in terms of valuation the company will still be trading at 15.6x PE which is high relative to other companies in the construction industry.
What is more worrying is its balance sheet. Currently there is a RM492.6 mil debt in the company books and only RM29.4mil cash. This would mean a net debt level of RM463.2 mil or a net gearing level of 112.5%. Given the negative cash flow from operation, i worry that the company might faced difficulties in servicing their loans if interest rates were to increased which would also mean lower profit margin.
The company future growth seems to evolve around the solar energy industry where it hoped to be the main and preferable contractors to the project owners. Management however did not provide any profit target for this segment.
For those that are invested in the company, what is your target profit for FY2019? And from where would the profit comes from?
If you decides to diversified outside of the construction industry, i would recommend you to look at MBMR.
The company is a direct proxy to Perodua via its 22.6% interest. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already at RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17.
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....
chkhooju
1,706 posts
Posted by chkhooju > 2018-03-14 23:11 | Report Abuse
Undervalued? Certainly you must be a big joker. Or, shall I say, CLOWN!