KLSE Trackers: August 2014

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

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

Tuesday, 12 August 2014

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

Sunday, 3 August 2014

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)