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.

Financials

(Source: malaysianstock.biz)

(Source: klse.i3investor.com)

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.

(KEN RIMBA LOCATION)

(KEN JBCC LOCATION)

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

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

Financials

(Source: malaysiastock.biz)

(Source: klse.i3investor.com)

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 (2^nd Phase) with a total GDV of RM800 million

-Upcoming 2^nd 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

(Source: themalaysianreserve.com)

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

Willowglen MSC Berhad

General Review

Analyzing deep into the trend of technology, there are always counters that caught, whispers into my heart and mind, telling me to explore details and deeper into their business. One of the counters that caught my attention recently is the counter Willowglen MSC Berhad. Under the leadership of Wong Ah Chiew as the Managing Director which is also Tan Sri Ong Leong Huat elder brother, Willowglen continues to grow under a continuous momentum, a gem yet to be revealed.

Business Model

Willowglen MSC Berhad is engaged in the research, development and supply of computer-based control systems. Its supervisory control and data acquisition (SCADA) system is used in security monitoring, building management and environmental control systems.

Financials

(Source: malaysianstock.biz)

(Source: klse.i3investor)

-Growth in revenue of 257% in 10 years (28m to 102m)

-Growth of profit attributable to shareholder from net loss of -2.3 million to net gain 19.3 million

-Growth in Earning-Per Share of -0.94 cents to 7.95 cents

-Good profit margin business (18-20%)

-Net Cash Company with total D/E ratio of 0.2/0.8

-Cash Per-share of 0.17 cents

-10 Malaysian Firms That Made Forbes’ Best Under A Billion - Forbes

(Source: www.businessinsider.my)

Note that 90% of Willow revenue came from the sale and maintenance of SCADA system while the remaining 10% is from the Integrated Monitoring System (IMS). First of all what is SCADA system? SCADA is a system functioned to  perform checking on temperature levels, water levels, oil level and other checks (eg: Taiwan explosion case, SCADA system will be able to pre-detect the presence of pressure and leakage, and hence signal the precaution step). And of course for Integrated Monitoring system (IMF) (eg: remote CCTV) tend to assist them in revenue pile up. With the current 80% of business from Singapore and namely overseas, Willow current order book stands at RM150 million, with the upcoming RM240 million project to tender from both local and overseas.

The Entry Point Projects (EPPs) under the Economic Transformation Programme (ETP) are expected to have an extraordinary favour on the company as 2014 upcoming prospect. The allocation of government’s budget for development expenditure in year 2014 is expected to benefit the infrastructure sector and oil and gas industry. The continuous ETP and 10th Malaysia Plan major projects such as the LRT extensions, KVMRT, Langat 2 water treatments, sewerage treatment and PETRONAS’ proposed Refinery and Petrochemical Integrated Development (RAPID) complex etc will continue to provide opportunities to the Group.

Valuation

-2013 EPS 7.95

- With the estimated minimum 10% growth of EPS for the upcoming years, Using 10 years Discounted Earning Per-Share Method

-Intrinsic value RM1.12

NTA

-Willow is trading at a 230% premium above the NTA

-It is normal for services industries to have low NTA, do not worry as the cash position is very strong

Technical 

Willow has been looking to challenge it's resistance at 0.86, Firm support at 0.82 and 0.795

-Short-Term Target Price RM0.915

-Long-Term Target Price RM1.12

SLP Resources Berhad

General Review

The booming state of popularity in Plastic-Packaging-Industry & Paper-Packaging-Industry had triggered some question mark in most of the investor mind. Companies like SCGM, PPHB and BPPLAS is on an artificial bull steroid to be on the rise. On a promising economy outlook and sentiment, Packaging Industry will continue to gain momentum and shine, unveiling their true value. One of the lagging counter that caught my attention on a potential upside is SLP Resources Berhad.

Business Model

SLP Resources Berhad is a Malaysia Based investment holding company involved in manufacturing and sale of plastic packaging and plastic related products. The company commercialised over 1000 ranges of plastic packaging products internationally, including Japan, Norway, United Kingdom, Australia, Denmark, Germany, Thailand and Indonesia.

Financials

(Source: malaysianstock.biz)

(Source: klse.i3investor.com)

-Taking year 2009 as the base year where company started to get back on track after the severe decline in revenue due to the low average selling price of products. SLP recorded a growth in revenue of 24% in 4 years (130 Million to 160 Million)

-SLP recorded a healthy Profit attributable to shareholder of 70% in 4 years (6.6 Million to 11.2 Million)

-Steady growth of Earning Per Share of 70% in 5 years (2.67 cents to 4.54 cents)

-Total Asset of RM117 Million, Total Liability of RM28 Million and Total Equity of RM89 Million (A low gearing company with D/E ratio of 0.3/0.7)

China which is well favoured for their competitive price sees to lose their competitive advantage on the high price of Polyethylene and rising production cost. With the price of plastic packaging almost on par with Malaysia, we will see most of Malaysian packaging company gaining market share worldwide. On the other hand, Japan, which is one of the Malaysian largest importer of plastic packaging product, seeks to pile up their stocks as the country prepares to increase the consumption tax from 5% to 8% which eventually boost Malaysia packaging industry earnings. SLP Managing Director Kelvin Khaw in his statement says that that SLP is confident to produce 32,000 tonnes of packaging material in 2014 compared to 28,000 tonnes in 2013 which will project the estimated figure of 184 Million in revenue and 12.7 Million in profit (if they able to maintain the profit margin of 6.9% as FY2013) translating into 5.1 cents Earning Per share in FY2014 (more than 10% growth)

(Japan, 25% of SLP total export)

Valuation

-2013 EPS 4.54

- With the estimated minimum 10% growth of EPS for the upcoming years, Using 10 years Discounted Earning Per-Share Method

-Intrinsic value RM0.64

NTA
-SLP is trading at a 40% premium above the NTA

Technical 

SLP has been looking to challenge it's resistance at 0.555, Firm support at 0.495 and 0.475

-Short-Term Target Price RM0.55

-Long-Term Target Price RM0.64

Dominant Enterprise Berhad

General Review

Myanmar is the 5^th largest tropical wood producer and exporter in the Asia-Pacific region. Looking on a tight log supplies due to the Myanmar recent ban on log export (effective on March 31^st 2014), Malaysia, which is also the 3^rd largest and leading exporter in Asia-Pacific will continue to lie on a comfortable position, benefits most of the timber related industry. One of the counters that continue to draw my attention on a possible reversal is Dominant Enterprise Berhad.

Business Model

Dominant Enterprise Berhad is engaged in investment holding and providing management services. The Company operates in three divisions: manufacturing of wood products, distributing of wood products and others. The Company operations are located in Malaysia, Australia, Singapore, United States and European countries, and other Asia-Pacific countries.

Financials

(Source: klse.i3investor)

-Dominant has been recording a strong revenue growth of 234% over 10 years (142 million to 477 million)

- A healthy Growth in Net Profit attributable to shareholder of 167% over 10 years (8.6 Million to 23 million)

-Total Asset of RM278 Million, Total Liability of RM118 Million and Total Equity of RM160 Million

-The latest quarter EPS of 8.99 is partly derived from the fair value adjustment from investment property (6.81 million), excluding the fair value adjustment, the fair EPS would be ( (12.4 million – 6.81 million) / 139 million)) which is around 4 cents.

Zooming closer into the total liability of 118 million, the largest portion of the company borrowing is on “Banker Acceptance”. As described above, Dominant operations are mostly overseas, and Banker Acceptance is one of the crucial instruments used to help them in their business transaction with the unknown party. So, bank acceptance will rather be a healthy liability since both the bank and borrower are liable for the amount that is due. I will attach the picture on how (BA) works.

(How Banker Acceptance Work)

Rising in demand in Logs and timber related product such as plywood especially in Japan and India will continue have a positive impact on the price, with analyst estimates a potential increase of 5 to 7%. 

(Source: theedgemalaysia.com) 13th June 2014

NTA
-Dominant is trading at a 38% discount below the NTA

Valuation

-2014 EPS 12.07 cents (excluding one off gain). With the estimated minimum 10% growth of EPS for the upcoming years, Using 10 years Discounted Earning Per-Share Method

-Intrinsic value RM1.71

- Assume it is trading at 10 times PE, it will be trading at RM1.68

Technical 

Dominant has been looking to challenge it's resistance at 1.25 and 1.30

-Short-Term Target Price RM1.30

-Long-Term Target Price RM1.70