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

Alibaba, GDEX and Efficient

Internet has drastically altered the way in which information is shared. Businesses today are moving towards a generation of trend, in which e-commerce has taken a large portion of the market share, combating the existence of brick and mortar. One of the recent hot news that caught my attention is on Alibaba U.S listing. Under the leadership of Jack-Ma, also the cofounder of Alibaba, this China based business to business marketing site serves more than 79 million member and more than 240 countries.

(Source: forbes.com)

Business Model

(Source: lazure2.wordpress.com)

Alibaba (Simplified Version)

(Source: ft.com)

Pictures that simplifies all of the hardship

- Alibaba Net Income in 2013 is more than Amazon and eBay combined

- Note that Alibaba Gross Merchandise volume in 2013 is $248 Billion, 2.5 times more than Amazon, 3.2 times more than eBay (lets visualize how big the Gross Merchandise volume is)

(Source: World Development Database)

- Extracted from World Development Indicator, World Bank, Measuring Nation GDP

ü  Note that Malaysia Nation GDP level is around $312 Billion

ü  Alibaba Gross Merchandise volume in 2013 ($248 Billion) is more than Greece GDP (241 Billion)

- Alibaba 4 Major Shareholder

ü  Softbank 34.4%

ü  Yahoo 22.6%

ü  Jack Ma 8.9%

ü  Joseph Tsai 3.6%

- Alibaba dominates China Market, Let’s have a look on china total population

(Source: en.wikipedia.org)

GDEX and Efficient E-Solution

(Source: ft.com)

-Alibaba Buys 10% of Singapore Post in the move to expand its business overseas and to create international e-commerce tie-up 

(Source: cimb company report)

-Singapore Post own 27% stake in GDEX and 21% stake in Efficient E-Solutions.

GDEX

(Source: gdexpress.com)

Efficient E-Solution

(Source: efficient.com.my)

-Believing Alibaba will be the largest e-commerce business in the history, expansion of their business will eventually spill over into Singapore & Malaysia. Surprisingly, in Malaysia, there are already few Alibaba office. In long term, I'm expecting a revenue boost in both Gdex and Efficient. Shortly, I’m betting on some price action upon Alibaba listing date (tentatively on 8^th August 2014)

Y.S.P. Southeast Asia Holdings Bhd

General Review

Pharmaceutical and healthcare industries are gaining momentum to be on the rise as time passes. With the pure allocation of RM2.28 billion for Healthcare expenditure in 2014 budget, these sectors seek to remain attractive and dynamic. Naturally defensive, Pharmaceutical and healthcare serves one of the most basic humanity needs in “Maslow Hierarchy of Needs”, despite of the economic settings, regardless of the market sentiments. One of the most innovative and competitive pharmaceutical company that caught my attention recently is Y.S.P. Southeast Asia Holdings Bhd. Under the lead of Dato’ Dr. Lee Fang Hsin, Y.S.P.SAH continue to record steady growth in their business. Slowly but Surely.

Business Model 

Y.S.P.SAH operates in three segments: (Pharmaceutical Trading), which is engaged in the import, export and trading in various kinds of pharmaceutical products, (Pharmaceutical Manufacturing), which is engaged in the manufacturing of pharmaceutical products, and other operations, which is engaged in (Investment holding).

Financials

(Source: malaysianstock.biz)

(Source: klse.i3investor)

- Y.S.P.SAH has been recording a stable Revenue growth of 171% over 10 years (70 million to 190 million)

- A healthy Growth in Net Profit attributable to shareholder of 112% over 10 years (8.3 Million to 16.1 million)

- Total Asset of RM299 Million, Total Liability of RM69 Million and Total Equity of RM230 Million

-Decreasing Liability & Increasing Equity, with the Total D/E ratio (0.3/0.7), (a low gearing company)

-Healthy balance sheet with Cash Pile, Cash-Per-Share of RM0.44 cents

Y.S.P.SAH, with the current synergetic partnership with all its subsidiaries around the world, seeks to strengthen its position in Malaysia and the Southeast Asia region. In addition to the concurrent marketing network in Singapore, Vietnam, Cambodia, Myanmar, Indonesia and Thailand, Y.S.P.SAH is looking forward towards a better financial results. Along the way, Y.S.P.SAH is gaining market share abroad (export to Indonesia was 2.7 times higher in 2013, followed by a 63.2% growth in Philippines, trailled by an increasing sales in Singapore and Cambodia). A new manufacturing plant in Lippo Cikarang- Jawa Barat Indonesia is in progress and to be completed by mid-2014 expected to boost production and penetration. Bear in mind, further penetration in Vietnam, Indonesia, Myanmar and Thailand are expected to boost an explosive results, WHY?

- Vietnam population approximately 92 million (3 times Malaysia population)
- Indonesia population approximately 253 million (8.3 times Malaysia population)
- Mynmar population approximately 54 million (1.8 times Malaysia population)
- Thailand population approximately 67 million (2.2 times Malaysia population)

There have been rumors on Y.S.P.SAH registering a new anti-diabetic product which will be use worldwide. If the rumors came to be true, Y.S.P.SAH will be on the rise soon.

(Lembaga Tabung Haji as one of the Shareholder)

Valuation

-2013 EPS 12.17 cents
With the estimated minimum 10% growth of EPS for the upcoming years, Using 10 years Discounted Earning Per Share Method

-Intrinsic value RM1.80

- Assume it is trading at 15 to 17 times PE, it will be trading at RM1.94 – RM2.19 

NTA
-Y.S.P.SAH is trading at a slight discount below the NTA

(Source: bursamalaysia.com)

Technical 

Y.S.P.SAH has been looking to challenge it's resistance at 1.75 &1.84

-Short-Term Target Price RM1.84

-Long-Term Target Price RM2.00

(Wednesday, 16-7-2014 Ex-date for dividend (0.065))

Selangor Dredging Berhad (SDB)

General Review

Selangor Dredging Berhad, established by the late Mr. Teh Kien Toh in 1962 continues to draw the market attention after a recent price and volume spike. Under the leadership of his daughter, Ms. Teh Lip Kim as a Managing Director (MD), SDB continues to move forward, seeking to be one of the top property players in the market.

Business Model 

Selangor Dredging Berhad businesses are diversified into few segments, which are property development, property Investment, hotel operation, and investment holding.

Financials

(Source: malaysianstock.biz)

(Source: klse.i3investor)

-SDB has been recording a healthy Revenue Growth of 518% in 10 years (61 million to 377 million)

-A steadily increasing profit attributable to shareholder of 785% in 10 years (7.8 million to 62 million)

- A growing Earning-Per-Share of 692% in 10 years (1.84 cents to 14.59 cents)

- Total Asset of Rm1.29 Billion, Total Liability of Rm580 Million and Total Equity of Rm643 Million

-Looking at the recent 2 quarter, SDB manage to breakthrough more than Rm100 million of revenue per quarter suggesting that the company has captured a breakthrough in their business as time passes. Looking into the Total Liability of Rm580 Million, which comprises of (345m secured loan, 180m revolving credit, 55m unsecured loan) which is mostly use in their project development and working capital, I shall say, it falls into the category of healthy debt.

-On the other side, operation of Hotel Maya Kuala Lumpur (which worth Rm150 Million) by SDB, continue to contributes approximately 20-27 million revenue annually to the group making a comfortable stand for SDB. With the full ownership in Wisma-Selangor-Dregging which is worth Rm277 Million, SDB will be standing perfect for those who prefer safe investment.

  Hotel Maya Kuala Lumpur

Wisma Selangor Dredging 

List of SDB ongoing project (Malaysia) -By the sea (Batu ferenggi Penang) GDV Rm230 million -Windows of the park (Cheras) GDV Rm523 million  -Laman & Bayu (Puchong) GDV Rm107 million -The Hub (SS2) GDV Rm337million -SqWhere (Kota Damansara) GDV Rm630 million (Source: sdb.com.my) (Singapore) -Village (Pasir Panjang) GDV SGD 260m (or Rm663 million) -Hijauan on Cavenagh (District 9) GDV SGD 55m (or Rm140 million) -OKIO (Balestier Road) GDV SGD 102m (or Rm260 million) (Source: sdb.com.my) Valuation -Current Rm2.89 billion worth of project being carried out with the estimated project year range of 2013-2017 (5 years) - Taking a minimum of 15% of Net profit margin of the total ongoing project of Rm2.89 billion, it sums up to be Rm433 Million -Rm433 Million earning ÷ 426million total share outstanding = Rm1.01 cents earning ÷ 5years (project range) = 0.20cents annually -Assume it's trading at 8 to 10 times fair PE, it will be trading at Rm1.60-Rm2.00 Discounted EPS Method -2014 EPS 14.59 cents With the estimated minimum 10% growth of EPS for the upcoming years, Using 10years Discounted Earning Per Share Method -Intrinsic value Rm2.06 NTA - SDB is trading at Rm1.10 (50% discount of its NTA which is at Rm1.65) (Source: bursamalaysia.com) Technical  -SDB has been looking to challenge it's resistance at 1.15 (Source: ChartNexus) -Short-Term Target Price Rm1.30 -Long-Term Target Price Rm1.70