• RM576 Save up to RM288 with the Yearly Premium Plan (Limited Time Only)
  • RM480 Save up to RM240 with the Yearly Advanced Plan (Limited Time Only)
Subscribe Now
premium Subscription Plan
add free StockBiz
YouTube MS Production

Member Profile

i4value Member StarMember Star
Total Cumulative Posts 522
Joined Aug 2020
Country MALAYSIA
Gender Male

Blogs

Blog TitleTotal PostsLast Published
Investing for Value16527 May 2024


Comments

 User Comments
Corporate

STOCK: IGBB (5606)

Blog 23 May 2024, 9:33:17 AM

Investors in Bursa Malaysia tend to look at earnings rather than assets. This does not make sense when you consider sectors such as utility and real estate where assets play a central role.

 

A case in point is Bursa IGB Berhad, a real estate group with investment properties, hospitality and property development activities.

 

It current trades at RM 2.49 vs its book value of RM 2.98 per share. The 2023 book value of its investment properties was stated as RM 3.9 billion. However, in the Notes to the Accounts, IGBB reported that the fair market value of its investment properties totalled RM 10.7 billion.

 

The realistic asset value is then not what is stated in its book, but has to include what is not captured. On such a basis the asset value should be more than RM 7 per share.

 

So why has the market not recognized this? This is because IBGG latest EPS is only RM 0.23. Of course, the market does not expect IGBB to sell off all the assets and return the money to shareholders. So the market ignores the value of the assets. But what if there are other ways to unlock the value of the assets?

Corporate

STOCK: PETRONM (3042)

Blog 21 May 2024, 3:46:39 PM

Bursa Petron Malaysia is a refinery cum petrol station business. Many believes that electric vehicles would eventually disrupt the petrol station business. But I suspect that it is probable a decade away.

Does this mean that we should no consider investing in Petron Malaysia? Over the past 12 years, the company delivered an average return that was greater than its cost of funds. This is a financially sound company whose performance is affected by crude oil prices.

Taking the performance over the oil price cycle into account, I found that there is a sufficient margin of safety from both the Asset Value and Earnings Power Value.

Unless you have decades of investing horizon, I would think the is a counter worth a look

For more insights go to page 20 of Invest 

Corporate

STOCK: SAPNRG (5218)

Blog 16 May 2024, 1:45:17 PM

As a value investor, I look for turnarounds. These are companies whose market prices had tanked because of some business issues that I considered temporary and could be overcome.

Bursa Malaysia Sapura Energy fitted this bill in 2018 after being the darling of the stock market a few years earlier. It faced declining order books due to the declining oil prices. This is a company where there is a strong correlation between crude oil prices and its performance.

 

Crude oil prices are cyclical and I thought that the company was sound enough to outlast the downtrend leg of the crude oil price cycle.

Over the next few months, I built up my investment to end up with an average share price of RM 0.39 per share.  Sapura had a book value then of RM 0.87 per share with a NTA of RM 0.37 per share. Ya, this is a company with a lot of goodwill and other intangibles.

You would have thought that there was enough margin of safety to ride out the storm. Analysts were projecting target prices above a Ringgit at that juncture.

Anyway, the downtrend leg of the oil cycle lasted longer than anticipated. Sapura continued to bled so that today, it had written off all the intangibles and is trading at RM 0.05 per share.

The company is still looking for a sustainable turn around. And I suspect it will have to undertake a debt and equity restructuring scheme to come back. This means haircuts for creditors and shareholders. This is a bet gone wrong and I will probably not be able to recover my investment.

Moral of the story?

Catching falling knives can be dangerous but if you succeed, you have a multi-bagger. But if you fail, it must be part of a good portfolio so that the gains from the others more than offset the losses you suffer. Sure I have such a portfolio. But this does not stop me from regretting my investment in Sapura Energy.

Corporate

STOCK: CRESBLD (8591)

Blog 10 May 2024, 2:17:58 PM

Crest Builders had a terrible decade with declining top line, bottom line and returns. From 2012 to 2018, the Group achieved an average ROE of 8%. From 2020 to 2023, the average ROE had declined to negative 11%.

This is obviously a company facing a turn around. The good signs are that its construction arm has a RM 2.2 billion order book as of 2022 and its property development arm has RM 2.2 billion gross development value of projects. And it is fianancial ok.

 

Its current losses are due to legacy projects and I think that it may take another 2 to 3 years to completely clean them.  So while it is currently trading at less than half its book value, you will have to wait for the market to re-rate it.

 

For more insights refer to Is Crest Builder a value trap?

Corporate

STOCK: NICE (7139)

Blog 10 May 2024, 1:53:51 PM

Over the past 6 months gold prices have gone up by 18%. How have the Bursa gold related companies performed?

 

The top chart shows the share price gain for the 4 Bursa companies with gold-related businesses. The bottom chart shows that maybe there is still some potential for gold price to go higher.

You can see that except for Niche Capital Emas, the other 3 have outperformed gold and the KLCI. What does this mean for the investor?

 

  • You can of course interpret that Niche Capital Emas and Poh Kong share price has yet to catch up.

 

  • You can also conclude that when gold price goes up, the share price of these companies go up much higher.

 

For more insights go to Are there Bursa proxies for gold?

Corporate

STOCK: BAHVEST (0098)

Blog 09 May 2024, 7:49:52 AM

Over the past 6 months gold prices have gone up by 18%. How have the Bursa gold related companies performed?

 

The top chart shows the share price gain for the 4 Bursa companies with gold-related businesses. The bottom chart shows that maybe there is still some potential for gold price to go higher.

You can see that except for Niche Capital Emas, the other 3 have outperformed gold and the KLCI. What does this mean for the investor?

 

  • You can of course interpret that Niche Capital Emas and Poh Kong share price has yet to catch up.

 

  • You can also conclude that when gold price goes up, the share price of these companies go up much higher.

 

For more insights go to Are there Bursa proxies for gold?

Corporate

STOCK: TOMEI (7230)

Blog 08 May 2024, 8:54:21 AM

Over the past 6 months gold prices have gone up by 18%. How have the Bursa gold related companies performed?

 

The top chart shows the share price gain for the 4 Bursa companies with gold-related businesses. The bottom chart shows that maybe there is still some potential for gold price to go higher.

You can see that except for Niche Capital Emas, the other 3 have outperformed gold and the KLCI. What does this mean for the investor?

  • You can of course interpret that Niche Capital Emas and Poh Kong share price has yet to catch up.
  • You can also conclude that when gold price goes up, the share price of these companies go up much higher.

 

For more insights go to Are there Bursa proxies for gold?

Corporate

STOCK: POHKONG (5080)

Blog 01 May 2024, 12:19:40 PM

From 2001 to 2023, there is a 0.74 correlation between the revenue of Poh Kong and the price of gold. This meant that about half of the changes in Poh Kong’s revenue can be explained by changes in the price of gold.

 

Gold prices have been on an uptrend over the past couple of months. I am not sure whether it will continue to go up further. But I am sure that Poh Kong will have better business results in the short term to mid-term.

The interesting thing is that from a short term (6 months) perspective, there were more than 80% correlation between Poh Kong share price and gold prices during periods of gold price uptrends.

 

For the investor, there are 2 questions when looking at Poh Kong

  • Will gold prices will continue to go up?
  • Have the share price fully captured all the gold price increase?

 

For more insight go to “Is Poh Kong a proxy for gold?” 

Corporate

STOCK: ASIAFLE (7129)

Blog 21 Apr 2024, 10:31:56 AM

We have read stories about how some of the Malaysian media groups “suddenly” have to close down their newspaper operations due digital disruption. Digital disruption does not happen overnight and you would have thought that companies would have years to prepare for this.

 

One good example of a company that took step to anticipate digital disruption is Asia File. This is a global filing company. We all know that digital technology is changing the way we store documents and the demand for files will continue to decline.

 

Asia File recognized this and for the past decade, it had stopped expanding its filing business. Instead it diversified into food and consumer wares about 7 years ago. This have given it a possible non-stationery growth path. But it is not clear whether this can be as big as the stationery business. So the company is still looking for other ventures.

 

This good story is that its stationery business is a cash cow and it is still not clear how long it will take for the demand for files to become negligible. In the meantime, the company is using the cash and time to build up replacement businesses.

 

I am sure you will not read any story about this company suddenly closing down the filing business due to digital disruption. If you want to know more about this, go to page 21 of INVEST

Corporate

STOCK: PRTASCO (5070)

Blog 10 Apr 2024, 9:22:12 AM

Some times companies look for new ventures because the existing ones are not able to scale up. But new venture use up funds.

 

Take the case of Protasco.  The company has reported 11 business segments even though the revenue for 2023 was only about 1 RM billion.

 

You may be forgiven for wondering whether management is just trying many things to see what works. When you look at the chart, you can see that only one segment is driving revenue and earnings.

It suggests that management is trying luck to see what else they can do. The worse part is that several of its historical ventures have lost money.  And there are some which have ended up as legal cases as the company tried to recover what was paid.

 

I would think that it may be better for the company to return the excess funds to shareholders than try luck. Protasco is a cash cow. But the cash is not well deployed.

 

For more insights refer to Is Protasco an investment opportunity?

Corporate

STOCK: EKSONS (9016)

Blog 01 Apr 2024, 12:40:28 PM

Bursa Malaysia Eksons used to have 2 business segments – timber (mfg of veneer and plywood) and property development. But in early 2023, it closed down the timber business. At the same time, there is no new property development projects. The company is merely selling off its stocks of plywood and unsold properties.

 

But the company is cash rich due to the closing down of the timber business. It has RM274 million in cash or cash equivalent (investment securities) as of Dec 2023. But cash can also be a value trap as explained in page 21 of INVEST

Corporate

STOCK: MBSB (1171)

Blog 20 Mar 2024, 7:44:04 AM

Before becoming an Islamic banking group in 2017, MBSB was mainly a property financier. This changed with the acquisition of Asian Finance Bank in 2017 as this propelled MBSB into Malaysia’s second-largest standalone Islamic Bank.

 

But as can be seen from the return charts, this also resulted in reducing its returns from both the ROE and ROA perspective.

Of course this was the combination of lower bottom line with more assets and equity. The point is that if you were a shareholder prior to the transformation, you got lower returns. This is not exactly exciting news for MBSB shareholders.

Corporate

STOCK: CRESNDO (6718)

Blog 16 Mar 2024, 11:10:39 AM

Crescendo’s performance over the past 12 years has been impacted by the soft property market. Despite this environment, the Group managed to be profitable every year. But the property sector is cyclical and with the post-Covid-19 opening of the economy, the bottom of the cycle has been reached.

 

Crescendo's outlook is optimistic. Positioned near vital projects like Iskandar Malaysia and Pengerang Integrated Petroleum Complex, it is poised for growth in demand for both residential and industrial units.

 

Crescendo is currently trading below its Asset Value with more than a 30% margin of safety. As a property company, the Asset Value is a good reflection of its intrinsic value. Have a look at my updated valuation at page 20 in INVEST

Corporate

STOCK: SURIA (6521)

Blog 14 Mar 2024, 11:59:58 AM

You may think that being a privatized port operator for the whole of Sabah would make Suria Capital a company with good returns. Unfortunately over the past 12 years, the company only achieved an average ROE of 6%.

In fact quite a substantial part of its profits came from non-port operations such as property and investments.

 

I think this is because the economic activities in Sabah is not as developed as those in Peninsular Malaysia. While it is a growing economy and it may some time before we see Suria Capital benefiting from this.

 

Moral of the story? This is really a stock for the very long-term investor at the current market price.

Corporate

STOCK: HTPADU (5028)

Blog 12 Mar 2024, 2:26:29 PM

MyEG has now emerged as a new substantial shareholder of Heitech Padu. According to the news, MyEG acquired Heitech for about RM 2.21 per share.

 

Now that we know why there was a run up in the share price for the past few weeks. But from a fundamental perspective, is the current price at RM 3.05 per share justified?

 

This will depend on whether there are projects that MyEG can help to secure for Heitech that would boost Heitech earnings.

 

I last blog about Heitech in 2022 where I compared the performance of a number of ICT companies. The average ROE achieved by Heitech was negative 5 % compared to MyEG average of 31%.

Based on the 2021 book value and assuming that Heitech can match the 31% ROE, we will have an EPS of RM 0.33 per share. So for those excited about Heitech Padu, you can imagine a PE valuation based on this earnings?

 

Are we going into the realm of speculation? The best I can say at this stage is that MyEG price would probably be a floor price but the ceiling would depend on the new business of Heitech.

 

Its historical businesses is not going to give it the earnings multiplier to justify even the floor price. And to achieve the 31% ROE, Heitech has to take care of its historical businesses to ensure that there are not loss making.

 

Corporate

STOCK: OSK (5053)

Blog 08 Mar 2024, 12:07:14 PM

OSK Holdings carried out a corporate exercise in 2014, to merge PJ Development Holdings Berhad  and OSK Property Holdings Berhad into the group. Effectively OSK Holdings is now a property counter with property development & construction, investment properties and some manufacturing as it main operations.

But is this really the case? When you look at its profit profile as shown in the chart, you will find that the bigger contributor over the past 9 years was not from its operations. The non-operating segment - its investments in RHB bank - accounted for a bigger part of its profits.

So, is this a property company or something else? If you are thinking of investing in OSK, shouldn’t you be looking at the performance of the Malaysian banking sector rather than the property sector?

Corporate

STOCK: CSCSTEL (5094)

Blog 05 Mar 2024, 11:22:04 AM

According to Damodaran, projecting the performance of cyclical companies based on the current performance can lead to mis-valuations. He opined that for such companies we should look at the performance over the cycle – the normalized performance

When I carried out such an analysis of CSC Steel, I found that there is still a margin of safety based on its current price. Refer to page 20 of the article 

Corporate

STOCK: EKSONS (9016)

Blog 02 Mar 2024, 9:52:06 AM

You may think that a company with lots of cash can be a good thing. Afterall many would not challenge the mantra that “cash is king”

 

But in the case of Eksons, you may have to think differently. As of the end of 2023, Eksons had about 2/3 of its total assets held in cash and short term securities. The huge cash position is because the company had scaled down its plywood business and its property development business had yet to scale up.

 

So it ended with tons of cash where a significant amount is now invested in securities. Unless they have a Warren Buffett in the company, you should worry about whether this is an effective deployment of cash.

 

My point is that the large cash holding is because of the lack of operations. This large cash holding has been there for many years. I used to think it was a good thing. But if a company is holding onto cash for years, it may not be a good thing. In this case, cash is actually a value trap.

Corporate

STOCK: HTPADU (5028)

Blog 28 Feb 2024, 10:50:15 AM

A month ago, I wrote about the price spike in Heitech Padu and wondered whether it was going to be some news that would provide a quantum leap in business.

The price had jumped from about RM 1.00 per share to RM 1.15 per share. I had some  Heitech shares that I bought sometime back at about RM 1.04 per share and I told myself to exit when the price went up to RM 1.30 per share.

Unfortunately, the high price did not sustain fell to below RM 1.00 per share a week later. I figured that the price spike was just some speculative play. Then just before the Lunar New Year it spiked again to RM 1.20.

This time instead of listening to myself to hold until the price went up to RM 1.30, I thought that I better not miss this round of speculative play. So last Fri I sold it at RM 1.20 per share.

You can imagine my disappointment when the price went as high at RM 1.56 yesterday. I left RM 0.36 per share on the table. What a idiot. Can anyone offer an advise on what to do the next time?

Corporate

STOCK: PTARAS (9598)

Blog 20 Feb 2024, 10:57:57 AM

Pintaras Jaya incurred a loss in 2023 but this is due to a “perfect storm” of lower revenue and higher costs. Its performance in Malaysia over the past few years was affected by the slowdown in the property and construction sector. As such the bulk of the contribution over the past few years has been from its Singapore operations.

As the leading foundation and sub-structure contractor in Malaysia, I expect the

Group to rebuild the Malaysian business. When this happens, I expect the market to re-rate it.

For more insights refer to page 22 of INVEST

123...

Close
New Feature
MS Academy
AI StockMaster. Beat The Market! Checking MS Signal
DETECT REAL-TIME STOCK MOVEMENT
X
(InvestorPro Plan Only)
Complimentary access on Premium Plan*
What is AI StockMaster?
Window Alert On-Screen Alert X
X