Wednesday, 29 October 2014

GTRONIC: The Future Is Still Bright

GTRONIC FY14Q3 Financial Result

GTRONIC (RM mil) FY14Q3 FY14Q2 FY14Q1 FY13Q4 FY13Q3
Revenue 91.1 90.6 83.4 78.5 79.5
PBT 21.8 20.8 17.0 15.0 18.6
PBT% 23.9 23.0 20.4 19.1 23.4
PAT 17.7 17.3 14.1 13.1 15.2






Total Equity 298.3 291.4 272.4 275.2 285.8
Total Assets 362.9 361.2 325.9 338.8 343.8
Trade Receivables 65.9 70.3 60.6 62.4 60.0
Inventories 15.2 13.4 11.1 14.2 17.2
Cash 167.8 169.5 141.0 147.3 148.8






Total Liabilities 64.6 69.8 53.5 63.6 58.1
Trade Payables 16.3 17.2 9.9 18.4 15.6
Other Payables 31.4 32.1 29.8 34.3 32.6
ST Borrowings 8.1 11.5 9.9 5.2 4.8
LT Borrowings 0.0 0.0 0.0 0.0 0.0






Net Cash Flow 20.7 22.6 -6.3 41.5 42.2
Operation 52.4 34.5 13.2 87.5 62.3
Investment -17.0 -10.9 -7.1 -11.2 -9.4
Financing 14.7 -1.0 -12.3 -34.7 -10.7






EPS 6.31 6.17 5.04 4.73 5.51
NAS 1.06 1.04 0.97 0.99 1.03
D/E Ratio net cash net cash net cash net cash net cash


Gtronic's FY14Q3's revenue & net profit are marginally higher by RM0.5mil & RM0.4mil QoQ respectively.

Nine months revenue of RM265.1mil is 9.1% better than RM242.9mil in the corresponding period last year, while net profit improves 24.3% from RM39.5mil to RM49.1mil in the same period.

This is definitely a good result but I actually expected more, as I remember the management mentioned last year that the second half of FY14 will be much better due to shipment of new products to new customers.

Anyway, previously I expected first half of FY14 to be relatively flat but it turned out to be a decent first half.

Gtronic plans to spend as much as RM50mil in FY14 for capital expenditure. So far its cash flow from investment stands at RM17mil. There is still no news regarding any merger or acquisition.

Currently smartphones dominate the market and I feel that wearable devices and some health-related apps & sensors (eg. heart rate, ECG, blood pressure, O2 saturation, blood sugar level etc) will be the next area of growth.




In the near future when someone has chest pain, he or she will place the sensor on his/her chest and send the ECG tracing via smartphone to doctor. 

It seems like Gtronic is keeping up with the pace in the fast-changing technology world by venturing into healthcare wearable market early. Hopefully it can continue to grow and give good dividends in the future.

I'll keep my own target price for Gtronic at RM4.48 base on estimated FY14 net profit of RM70mil and PE 18x, despite "traditionally" weaker Q4. 


Friday, 24 October 2014

Huayang: Marching Toward RM100mil

Huayang FY15Q2 Financial Result

Huayang (RM mil) FY15Q2 FY15Q1 FY14Q4 FY14Q3 FY14Q2
Revenue 139.5 136.5 198.3 129.9 101.2
PBT 35.2 32.6 51.6 27.5 16.7
PBT% 25.2 23.9 26.0 21.2 16.5
PAT 26.0 23.9 37.8 19.7 12.3






Total Equity 436.9 410.9 387.0 362.4 342.8
Total Assets 828.0 811.0 824.2 764.0 664.2
Trade Receivables 68.1 62.6 75.6 51.6 56.2
Prop dev cost 159.5 145.1 142.2 142.0 87.7
Inventories 9.8 10.0 6.1 5.2 4.5
Other Current Assets 157.0 165.6 162.7 150.7 125.9
Cash 43.9 27.0 34.1 16.5 15.7
Bank Overdraft 10.9 15.0 4.9 8.6 1.9






Total Liabilities 391.1 400.0 437.3 401.6 321.4
Trade Payables 120.4 134.5 167.3 99.8 74.8
ST Borrowings 75.9 74.2 60.7 63.2 63.3
LT Borrowings 161.0 165.2 188.7 203.9 150.6






Net Cash Flow 2.7 -18.2 -0.4 -21.7 -15.8
Operation 58.1 26.1 11.1 -51.8 -75.8
Investment -23.9 -11.2 -110.8 -96.8 -20.6
Financing -31.5 -33.2 99.3 126.8 80.5






EPS 9.84 9.07 14.32 7.46 6.23
NAS 1.65 1.56 1.47 1.37 1.73
D/E Ratio 0.47 0.55 0.57 0.72 0.58






Unbilled sales 717.9 756.4 808.1 838.3 558.9


Huayang posted a commendable quarterly result of FY15Q2, with both revenue & net profit inch up 2.2% and 8.8% respectively QoQ.

Half year net profit of RM49.9mil is in line with my rough prediction of RM100mil net profit for its FY15. 

I'll  keep my previous target price of RM3.03 base on projected EPS of 37.8sen and PE ratio of 8x.

Why PE 8x and not 10x? It's nothing other than being  more conservative ahead of expected slowdown in property sector.

Furthermore, even with low PE of 8x, my target price is still higher than those given by most analysts who valuate Huayang base on discounted RNAV.




Anyway, I'll keep the PE of 10x for other property stocks in my portfolio which are Tambun & Matrix.

All 3 property developers mentioned above, together with Scientex, build affordable houses and have townships development, which I think are safer bet in property sector.


       Citywoods @ JB


Huayang has just launched its JB project Citywoods in Sep14. This RM216mil development consists of 2 blocks of 19-storey condominiums with total 417 units priced from RM550 psf.

For its township Bandar University Seri Iskandar in Perak, Huayang plans to launch RM74mil Lavendar 2 in the end of Oct14, which comprises 281 units of DST with price starting from RM244,800 a unit.

Earlier in May14 & Sep14, Ceria 2 (GDV RM36mil, 180 units SST) & D'ecolake (GDV RM31mil, 32 units gated DSSD) were launched and are currently 68% & 32% sold respectively.

Ceria 1 & Lavender 1 (total 538 units) launched last year were fully sold.

There is a plan for a new government hospital in Seri Iskandar township according to Budget 2015. This news will surely enhance property demand in this area.


       BUSI


Huayang plans to launch projects worth RM1.1bil in its FY15 (ends Mac 2015). So far I think it is still yet to officially launch Cube@One South (fully furnished SOHO), Puchong West & new phase in Taman Pulai Hijauan. 

Earlier I mistakenly thought that Cube@One South will be Huayang's last development in One South. Now it seems like there will be another future project "Zeta Residence" right next to Cube.


       Cube & Zeta Residence @ One South


I'm optimistic that Huayang's net profit can reach RM100mil for its FY15. Whether it can continue to grow from this new milestone depends on the success of its future launches.

Huayang's current quarter's net debt/equity ratio drops from 0.55 to 0.47. Its current cash level is the highest in the last 8 quarters. It is still yet to drawdown any amount of cash from the RM250mil Sukuk Murabahah Programme.

I don't mind if Huayang spends more money to buy more strategic land for development.

The management mentioned earlier that they are negotiating an acquisition of land in Bukit Mertajam of Penang. Hopefully investors can hear the good news soon.

Despite market uncertainty at the moment, I'll continue to hold Huayang.

Tuesday, 21 October 2014

My Stock Market Investment Journey

Looking back at my previous history of share trading, I can divide it into 3 phases.

Phase 1 (mid 2006 - mid 2009):
  • Buy good "fundamental" stocks, sell if achieving good profit (10-50% gain).
  • Never thought to hold a stock for long term. 
  • There was no target price and no clear concept of stock value.
  • Buy and sell when the "feel" is right.
  • No time to monitor the stock market.

Phase 2 (mid 2009 - mid 2013):
  • Started to taste the excitement of speculating in stock market (using technical analysis).
  • Allocated half of the fund for speculating, another half for "fundamental stocks".
  • If speculated successfully, usually will sell for little profit.
  • If failed in speculation, usually will cut loss at <10%.
  • If "fundamental" stocks perform well, usually will sell for profit of 10-50%.
  • If "fundamental" stocks perform badly, not willing to cut loss while hoping for a fairy tale turnaround.

Phase 3 (mid 2013 - present):
  • Resist from speculating in stock market
  • Plan for longer term investment in fundamentally sound growth stocks.
  • View buying shares as investing in a business or companies

I can't rule out further change in my stock investment style, perhaps phase 4, phase 5...

Overall, I actually made profit from speculating, even though not much. This is because first, the overall market in that period of time (2009-2013) was good. Secondly, I only speculated on those "fundamental" stocks. Thirdly, I cut loss.

Ironically, my biggest loss in stock market actually came from "investing" in those "fundamental" companies. Now you should know why I put " " for the word fundamental above.

In fact many of those "fundamental" stocks did well and earned me good profit since 2006. However, my stupidity to buy more to average down, and my reluctance to cut loss on just a few of those bad apples almost wiped out all my previous gain.

So, it's not speculating that made me suffer in the stock market.


Below are a few notable examples of my historical transaction:

Phase 1:

  • Bought WCT @ 3.32, Sold @ 4.74 (+43%) in 7 mths (My first ever stock purchased) - WCT share price reached RM10 one year later even with a bonus issue in between!
  • Bought YTL @ 5.30, Sold @ 8.55 (+61%) in 14 mths
  • Bought PBB @ 6.80, Sold @ 8.05 (+18%) in 5 mths
  • Bought IOICORP @ 5.15, Sold @ 7.47 (+45%) in 6 mths
  • Bought Topglov @ 6.35, Sold @ 8.19 (+29%) in 20 mths
  • Collected Mahsing since 2007, Sold all (+45%) in 2011 (My biggest gain in value)

I guess everyone including Ah Cat Ah Dog will do well in this period of time.

       My first ever stock


Phase 2:
  • Collected KNM since 2009, Sold all (-50%) in 2011 for massive loss
  • Collected MEGB since 2010, Sold all (-80%) in 2013 for massive loss (My biggest loss in value)
  • Collected Notion since 2010, Sold all (-40%) in 2013 for massive loss
  • Collected Tambun since 2011, still holding (My biggest paper gain so far)
  • Collected Masteel since 2011, Sold all (-45%) in 2013 for massive loss

       Beware of this


So those in red above are the "Four Big Heavenly King" or “四大天王” that were responsible for wiping out my previous gain. Luckily Tambun does help to ease the bleeding.

Phase 2 was the period of time that I have plenty of time to watch the market live in action in front of a computer. It also marked the worst period in my stock investment journey so far. So, we actually don't need to watch the market everyday to be successful in stock market investment.

For the part of speculation, I can't list out all of them but I think it is best shown in a real example.

When I first bought Amedia at 34sen in 31/1/2012, I thought it was a "fundamentally" strong counter with good prospect.

       A pearl turned stone


Referring to Amedia chart below, I decided to sell after a sudden surge in share price just 2 weeks after I bought it. I was happy with a 20% gain (white arrows).


I bought in again on the very same day near day low and sold all the very next trading day for a quick 8% net gain (blue arrows). 

A day after this I bought again and sold 2 days later for another 9% net gain (pink arrows).

Two weeks later, Amedia's share price dived unexpectedly and very bravely I caught this falling knife. However, its share price did not rebound as I would have expected so I was forced to "invest" for longer term and eventually sold it off at 37.5sen for small 3% net gain (yellow arrows).

After this, Amedia's share price was fried by big sharks to the level of above RM1 in just 4 months, only for it to fall back to the ground in days.


Amedia Buy
Sell
Net Gain (%)
1 31/1/2012 0.34 17/2/2012 0.41 19.5
2 17/2/2012 0.38 20/2/2012 0.42 8.1
3 21/2/2012 0.39 23/2/2012 0.43 9.1
4 07/03/12 0.36 27/4/2012 0.38 3.0


From the time I first bought Amedia to the last time I sold it, its share price has appreciated about 12% (34sen to 38sen). However, I gained almost 40% in this same period of time by speculating on its price movement.

This is the "beauty" of speculation in stock market which is why so many people are venturing into it.

Besides, I also bought my first and also the only call warrants in Mahsing-CB in 2011. I traded it 2 times, and both ended in gain.

Of course there were also failed speculation, but all were not big loss. Some examples:

  • Bought BJCorp @ 1.08, Sold @ 0.985 (-9%) in 1 mth
  • Bought CIMB @ 7.78, Sold @ 7.55 (-3%) in 1 day
  • Bought HSL @ 1.81, Sold @ 1.76 (-3%) in 1 mth
  • Bought Hiaptek @ 0.99, Sold @ 0.99 (-1%) in 3 days
  • Bought Huayang @ 0.985, Sold @ 0.99 (-1%) in 1 mth

       Cut by falling knife


Phase 3:

All my stock transaction in phase 3 have been recorded in this blog.

The major changes in my investment style are:
  • Set financial goals or targets
  • Look deeper into company's balance sheet & cash flow
  • Look for more free investment info online (blogs etc)
  • Set stock target price using PE method
  • Set buy & sell criteria
  • Try to be as disciplined as possible

So far I am satisfied with the outcome of a change in investment style, so no doubt I'll keep to it at the moment.

I'm fully aware that I am in a bull market in which almost everyone does well. There is also a luck component involved in picking up some good stocks early.

Nevertheless, recent market correction has hurt my portfolio to a great extent, and the bearish sentiment might not have finished yet.

Perhaps I should sell to pocket the profit first, but I actually prefer to buy more in a bear market.

.


Everyone has different styles in stock market investment. Two persons who use the same method may have totally different results. So I'm not in a position to tell people what method should they use.

As the purpose of this blog, I'm sharing my journey to readers regarding what had happened to me when using different stock market investment methods. Hopefully readers can learn something from it.

If you're suffering the same fate with me in losing, then at least you know that you're not alone.

If you're doing better than me, then at least you know that you're better than someone else :)