Sunday, 27 September 2015

Chin Well Holding Berhad (Recession Proof Exporter)

Chin Well Holding Berhad (Recession Proof Exporter)

Chin Well Holdings Berhad (CWHB) is a Malaysia-based investment holding company. The Company, through its subsidiaries operates in three segments: fastening products, which include the manufacturing and trading of screws, nuts, bolts and other fastening products; wire products, which include the manufacturing of precision galvanized wire, annealing wire, hard drawn wire, polyvinyl chloride (PVC) wire, bent round bar and BRC wire mesh, and investment holding.

Excluding Malaysia & Vietnam (main factory) which business is dominated in local currency (MYR, VND), Chin Well remaining 74.8% business is export, which is mainly dominated in Euro & USD. A recent appreciation in EURO and USD contributes a positive impact on the company in term of profit margin. While on the other hand, most of their costs are source locally, which promises a better earning prospect for FY16.

Key Statistic (Millions)
Cash and Equivalent
Total Asset
Total Liabilities
Shareholders Fund
Book Value Per share
Net Cash
Cash Per share
Total share outstanding

Key Ratio and Statistics
·         Total Asset RM571.5 million, Total Liabilities RM123.5 million, Total Equities RM448 million
·         Cash Per-Share RM0.19
·         Zero gearing/ Net cash, note that Chin Well finally turn into a net cash company in FY15 (note that, the company make an effort to reduce company gearing yearly)
·         Book Value Per-share RM1.58, Price to book value 0.90 times, which is very low (based on current price 1.42)
·         Reserves which is qualified for 1 for 1 bonus issue
·         Price to earning 10.3 times (based on current price 1.42)
·         Debt to Equity ratio 0.27x
·         Return on Equity 9.3x
·         Dividend Pay-out policy 40%

Chin Well (Completing they cycle of European recovery)
Chin Well business possesses its own defensive unique. In almost every major sector in the economy (automotive, construction, property development, furniture, oil & gas, technology) consumes Chin Well products. Based on the revenue breakdown above, we can see more than 56% of Chin Well products are exported to the European countries. While the extension of EU anti-dumping duty to the china fastener manufacturer for 5 years (March2015- March2020), grant Chin Well a big favor in term of business market share, as it is one of the eight companies in Malaysia that is exempted from this regulations.
The recent drop in the steel price furthermore boosts the company profit margin, as the raw material is accounted for 70% of its production cost. ECB Quantitative Easing, continues to spur European economic growth, and it is deems a great opportunity for the company to position itself for a greater and a better FY16 prospects. 
As according to the Executive Director Tsai Chia Ling, GST effect does them a favor as they could save up 4% of the tax rate as their current sales tax is at 10%. Other than that, according to her, Chin Well Vietnam plant operates at 90% capacity while Malaysia plant 50% capacity, which literally gives them an opportunity to cater their customer upcoming demand.

Chinwel, is a lagging exporter company yet to be discovered, Net cash with good dividend yield and amazing future prospect.

Price 1.40
Target 1.70

Monday, 18 May 2015

Excel Force MSC Berhad
(Defensive yet Attractive)

§  Excel Force MSC Berhad (EFORCE) is currently the market leader in Malaysia for the provision of financial services business solutions. With more than a decade of experience in offering information systems and services to the Banks and Stock-Broking Companies in Malaysia, EFORCE is the first IT Company in Malaysia to provide a total, comprehensive and market-proven business solution for the stock broking industry from Front Office to Back Office. Over the years, EFORCE have built up a considerable number of well-established Stock Broking customers as well as renowned Financial Institutions and have attained approximately 90% of stock broking Public Gallery Display System and 70% of Electronic Client Ordering System market share in Malaysia.

§  Eforce reported a full year FY14 Net Profit of RM8.6 million (-11.24% QOQ, +23.2% YOY). The decrease in net profit QOQ, mainly caused by the disposal of office amounting RM1.6 million (net expenses for bonus issue and warrants).

§  From previous year, Revenue rose to RM21.6 million (+5.8% YOY), mainly attributed by the increase in Application Service Provider (ASP) by RM1.61 million and Application Solution (AS) with a slight boost of RM424 K. On the other hand, Maintenance Segment revenue decreases by RM787 K.

§  Eforce revenue and profit have been growing steadily over the past 5 years in despite of the market volatility.

§  Eforce has been lying on a comfortable growth of average 10.33% CAGR over the past 5 years, and estimated to continue on a modest growth over the coming years.

§  With an improving operational efficiency over years, EFORCE registered a 39.4% profit margin and 19.86% ROE closing FY14 with a tremendous improvement.

§  With the Current Payout Ratio of 60%, and DPS of 2.5 cent for FY14 the estimated Dividend Yield (DY %), is 4.1% based on current price of (RM0.605).

(EFORCE Balance Sheet, figures extracted from Annual Report)
Key Statistic (Millions)

Cash and Equivalent
Total Asset
Shareholders Fund
Book Value Per share
Net Cash
Total share outstanding

Eforce is sitting on a healthy balance sheet with Zero-Gearing, 10 cents cash per-share and currently trading at 2.88 times P/BV

§  Potential for Bonus issue based on the Paid Up Capital and the Retained earnings


§  Existing EFORCE customer (Alliance Investment, Bimb Securities, Hong Leong Investment, Jupiter Securities, Kenanga Investment, Maybank Investment, Malacca Securities, Public Investment, RHB Investment, UOB Kay Hian) already captured 70% market shares of the Electronic Client Ordering System in Malaysia.

§  After a successful penetration in Thailand and Vietnam, next EFORCE will be focusing on the penetration of other Asian region (Hong Kong, Taiwan, Indonesia & China)

§  A bright prospect, as company in focus on enhancement, development, and implementation of their product to existing and new clients.

§  Eforce is sitting on a comfortable economic moat, a sustainable competitive advantage against its competitor N2N Connect.

§  Defensive business model, as changes in economic settings will not have a significant impact on company earnings.

§  Target Price based on Dividend Discount Model Valuation
Current Price: RM0.605
Target Price 1: RM0.69
Target Price 2: RM0.79
Target Price 3: RM0.92

Disclaimer: This is a personal research that reflects personal views and opinion. The full content of this research paper, including any views or opinions presented should be treated for educational purpose only. The author shall not warrant or assume any legal liability or responsibility for the accuracy, completeness or usefulness of any information provided on this site.

Saturday, 20 September 2014

KEN Holdings Berhad

General Review
Looking on the bearish sentiment of the market, it buys me a lot of courage and guts to cut loss on the wrong pick and continue to polish on my analysis. Along the way, I hope that this blog will continue to pack investors with knowledge on their investment journey besides giving a valuable clue on a stock picks. Stay undiscovered; KEN Holdings is under my observation for sometimes. With the double up potential upside in FY2015/2016, it remains attractive, soon to be discovered.

Business Model
Ken Holdings Berhad is a Malaysia based company engaged in investment holding and provision of management services. Through its subsidiaries, the Company operates in two segments: Construction and Property development. Its Construction segment is involved in specialist engineering services, turnkey contracts, building and civil and engineering works, land reclamation, dredging, marine and civil engineering.



2013 Annual Report

-Looking into KEN 2013 annual report, revenue and profit growth remains flat over years; however there is are significant improvement in Profit-Margin wise from FY2009

-KEN Holding stands on a NET-CASH position with ZERO-GEARING

-Total Asset of RM279 million, Total Liability of RM95 million & Total Equity of RM183 million

-Retained-Earning of RM87 million which is qualified to issue Bonus 2 for 1

-NTA of RM0.99 Per-Share

-Market-Capitalisation of 200 Million 

-Unbilled Sales of RM60 Million

List of Properties

 KEN, buying into the future
KEN sits on an average Financial-Statement as to compare to its construction peers. The idea of building a greener rated development surely impresses a lot of investors and buyer, besides a competitive, reasonable rate of prices among competitors. The plan of developing RM2 Billion GDV worth of project in the coming 2 years has attracted a lot of investor’s attention to buy into their future. Currently, KEN has line up 4 hotel and 1 office project namely on, Genting-Highland, Johor-Bahru, Kota-Bharu, Shah-Alam, and Kuala Lumpur respectively in the mix strategy of sales and recurring income. On a recent event, KEN also launches its high-rise condominium (KEN Rimba Condominium 1) which is part of the phase 5 of its KEN Rimba Township Development with the estimate GDV of RM330 Million and to be completed by 2018 followed by KEN Rimba Condominium 2; expected to be launch by end of 2014 or early 2015 with the approximately same amount of GDV. Apart from that, KEN also plans on developing its recent acquired land in Johor-Bahru (KEN JBCC), which carries an estimated GDV of RM1.2 Billion. The 22.78 acres land is strategically located 2.5 Kilometres from Woodlands Checkpoint and the development comprises of retail space, hotel, services suit, office and medical-centre. Earlier, KEN has invested RM120 Million in developing KEN-TTDI (a platinum grade green office tower) which provides them with RM15 Million gross recurring income upon completion in early FY2015.


Upcoming forecast
-Net Cash flow on recurring income from KEN-TTDI 6% of RM120 Million (RM7.2 Million per annum)

-Remaining collection from KEN Rimba Jimbaran Residences of RM10 Million (Assume 20% profit margin on total GDV of RM150 Million) / 3 years

-KEN JBCC with RM1.2 Billion GDV 10-15 years (Assume 20% profit margin in 12.5 years) Net profit of RM19.2 Million per annum

-KEN Rimba Condominium 1 in 3 years (Assume 20% profit margin of total GDV of RM330 Million) Net profit of RM22 Million per annum

-4 hotels and 1 office project with the estimated GDV of RM2 Billion in 15 years (Assume 20% profit margin of total GDV) Net profit of RM26.6 Million per annum

-With the estimated RM85 Million net profit in near term, channelling to 179 Million share-outstanding, which is staggering RM0.47 earning per-share, and assume it is trading at 8 to 10 times fair PE, it will be valued at RM3.76-RM4.70 cents

-Short-Term Target price RM1.50
-Long-Term Target price RM3.00

Monday, 25 August 2014

Land & General Berhad

General Review
On a recent “penny-frenzy” packed with “volume-insanity” in the market tends to draw a quick attention and draft some question mark on a possible outlook of the market. Risk-Taker forever punts more and the most, Risk-Neutral stay sideways and Risk-Adverse tend to shy away from the market. Despite of all and all super-duper superstitious analysis, belief and stories on the market condition, there is one laggard property counter that continues to draw my attention. Overwhelmingly Undervalued, Land & General Berhad has gone through a major restructuring, a successful turn-around under a leadership of Mr. Low Gay Teck (Managing Director), also a former MD of Mayland group.

Business Model
Land & General Berhad is a Malaysia-based company engaged in investment holding and leasing of assets. The Company, along with its subsidiaries, operates in three segments: property, which include investment, management and development of residential and commercial properties; education, which include operation of co-education schooling from kindergarten to secondary education, and others, which include investment holding, land cultivation, management of club activities and dormant companies



Latest Annual Audited Account 2014

-Looking at the latest Income-Statement, Revenue grew almost 127% in FY2014, and the group achieve 125% growth in net income or translated into 12.29 cents (basic EPS) and 8.6 cents (fully diluted EPS). A huge breakthrough in term of Revenue, Profit and Earning Per-Share.

-Looking deeper into the Balance-Sheet, the group stands on a NET-CASH position, with total cash of RM183 million or RM0.30 cents CASH-PERSHARE

-Total borrowing of only RM20 million approximately a 70% decrease in borrowing as to compared to FY2013

-Total Asset of RM742 million, Total Liability of RM196 million & Total Equity of RM545 million

-Retained Earning of RM245 million which is qualified to issue Bonus 3 for 1

-NTA of RM0.76 Pershare

-L&G unbilled sales of RM600 million

Upcoming Catalyst

-Entire 4 phase of development of Damansara-Foresta which is located nearby Bukit-Lanjian Forest Reserve which will be launched separately. Currently L&G will be launching (2nd Phase) with a total GDV of RM800 million

-Upcoming 2nd launching of The-Element Ampang tower (join-venture with Mayland Sdn.Bhd) with a combined GDV of RM788 million

-L&G plans on conversion of 200 acre of golf resort into a residential township in Tunku Jaafar, Seremban with a projected GDV of RM550 million to be launched next year.

-L&G is currently in talk with several owners of prime land in Klang Valley to acquire land or a joint development with a potential GDV of RM1 billion

-L&G to convert its 2492 Acre (1009 Hectares) of Rubber plantation and Oil palm land in Ladang Sungai Jernih, Kerling Hulu Selangor which they bought many years ago at RM0.44 per-square feet or RM19,000 per-acre  into residential development. Once conversion is done, this piece of land value will easily touch up to RM5 per-square feet or RM217,000 per-acre RNAV.

 The land is located somewhere nearby Lebuhraya-Utara-Selatan

-RM217,000 per-acre X 2492 Acre = RM540,764,000
-RM540,764,000 / 612,732,000 (share outstanding) = RM0.88 per-share


With the total of worth of RM3billion GDV in pipeline, L&G will be busy for the next 6 years. Average benchmark of 20% profit margin after tax of average property company, L&G will be looking for annually RM100 million Net-income, channelling to 612 million of share outstanding which Is around RM0.16 cents per-share. Assume it is trading at a 8-10 times fair P/E ratio, it will be valued at RM1.28-RM1.60

-L&G is on a nice uptrend, Support is at 0.620 while resistance is at 0.685

-Short-Term Target price RM0.90
-Long-Term Target price RM1.60