Tuesday, 28 February 2012

XOX: Confirmed A Fairy Tale

While XOX is listed in Bursa in June 2011, it is already half way through the year of 2011. The directors by that time should know how well the company has performed for the first half of the year. At that point of time, they gave a financial performance guidance with a revenue of RM245.9mil and net profit of RM19.7mil. If we look back at the previous financial performance, XOX recorded a revenue of RM20mil and net LOSS of RM16mil in year 2010. The profit guidance is a fairy tale kind of numbers but since it was made half way through year 2011, we just wait and see.

Now comes the FY2011 results. XOX's whole year revenue is at RM66mil and suffers its worse net lost at RM20mil. Speechless...

Revenue (mil) Loss after tax (mil)
2007 - 0.2
2008 - 1.2
2009 8.6 13
2010 20 16
2011 66 20

HDD Sees Light in Hybrid Ultrabook

Hard disc drive (HDD) has a hard time competing with solid state drive (SSD) as a computer storage device, especially with the increasing popularity of tablets such as ipad and galaxy tab over notebook. Everyone is expecting the HDD industry to suffer permanently.

SSD, which is quiet, lighter, faster and has higher performance than HDD, has a major problem: expensive. SSD is priced more than 10x more expensive than HDD per GB. However, with the emergence of Ultrabook by Intel, HDD is expected to breath again.

Ultrabook will put traditional notebook into history. It is much lighter, thinner, faster with longer battery life. It has some crucial advantage over tablet in which in tablet there is no real keyboard and sometimes cannot perform this and cannot support that.

      Ultrabook: strongly pushed by Intel

Ultrabook which starts to hit the market in 2011, initially use mostly 128GB SSD. However, to increase the storage capacity to 500GB-1TB without increasing its cost much, a hybrid storage solution is introduced. In this hybrid of external cache SSD+HDD, a small capacity of cache SSD is incorporated with a large capacity of HDD to increase the overall storage capacity without affecting the speedy SSD performance much. Another technology called hybrid HDD is another different thing under development by Seagate in which the cache SSD is incorporated internally into a HDD.

Some analysts predict that ultrabook with hybrid storage will explode into the market in year 2012. Thus, hybrid storage and HDD demand will get a major boost as well. 

        Figures for HDD in Ultrabook ONLY

      Ultrabook share in notebook

     Notebook share in overall mobile PC

Personally I don't fancy things like ipad, galaxy tab, iphone etc. I don't even own any of those gadgets. I don't think ultrabook will be as popular as the ipad. However, ultrabook will certainly make more people to reconsider the forgotten "notebook". If the forecast of ultrabook demand is right, then HDD industry will surely make its comeback strongly, starting from year 2012.

Sunday, 26 February 2012

EPF Pays 6% For 2011 - Not Bad

EPF (KWSP) recently announced its dividend for year 2011, which is 6%, the highest since year 2000, but lower compared to the time when terrible Asian financial crisis hit around 1997-98. For the whole year of 2011, FBM KLCI rose just 0.8%.

If we look at the historical dividend payout by EPF, the dividends were in the region of 7-8.5% in the 80s and 90s. Of course in those days, the bank's saving interest and fixed deposit interest are high as well. Currently, our money value shrinks and the savings interest/dividend rate also shrink. Are we getting poorer and poorer?

EPF historical dividend:

Year Dividend (%)
80-82 8.00
83-87 8.50
88-94 8.00
1995 7.50
1996 7.70
1997 6.70
1998 6.70
1999 6.84
2000 6.00
2001 5.00
2002 4.25
2003 4.50
2004 4.75
2005 5.00
2006 5.15
2007 5.80
2008 4.50
2009 5.65
2010 5.80
2011 6.00

Saturday, 25 February 2012

MEGB: Hanging By A Thread

After tumbling down from its high of RM4.30 soon after IPO, Masterskill (MEGB) is currently hanging by a thread - from another free fall off the cliff.

We know that a lot of issues have affected Masterskill for the past one year: tightening of PTPTN funding, heavy selling by foreign funds, fierce competition in health education & increased entry requirement for nursing course etc. This week, Masterskill's share price closes at RM1.08, extremely close to its historical low of RM1.06, and now it is just a week before it announces its earning of 2011Q4 to conclude a disappointing year.

Last quarter, Masterskill said that the delay in the schedule of new student intake from June to September has affected its financial performance. Its net profit is only at RM5.5mil in 2011Q3, a massive drop compared to RM26mil in 2010Q3 and RM12mil in 2011Q2. Now, could the September intake give a little boost to its 2011Q4 earning, at least?

Year Active Student
2007 8718
2008 13500
2009 17165
2010 18399
Sep 2011 14250

From Masterskill's active student count chart, if the new student intake has been delayed from June to September, then we can expect a better result for 2011Q4. However, increased administrative cost has played a major part in the drop of its net profit. The increase in degree programmes offered and the start up cost for MBBS will not come cheap.

Anyway, it is predicted that the forthcoming result will not be a very good one. The question is, could it be worse than the street's expectation. If it is, then we can expect a new low for its share price, which may easily break its psychological support at RM1.

     New Bangi University Campus

Earlier this year, Masterskill has announced that it has obtained approval to acquire a 6-storey building in section 19 Petaling Jaya, probably for its business, law, media and hospitality programmes. Besides, it has also received approval from the ministry of higher education to run a new post grad certificate in teaching methodology in its Cheras campus. (Err.. not a popular programme I guess). Masterskill has added more than 10 new programmes in 2011.

MEGB financial results:

RM mil 2010 2011
Rev Profit Rev Profit
Q1 77 27 74 23
Q2 77 22 66 12
Q3 81 26 61 5.5
Q4 81 27 ? ?

I would expect a net profit of RM6-10mil for its 4th quarter. If it is the case, perhaps the worst of Masterskill has passed and I can reconsider buying its shares?

Friday, 24 February 2012

Eye-catching Dividend by UOA Dev

For its 2011Q4, UOA development registered a net profit of RM139mil, which is more than its revenue of RM137mil for the corresponding quarter. This is because UOA Dev has carried out revaluation of its investment properties at the end of last year and the gain of RM113mil is added into its 4th quarter result. Without this one-off gain, UOA dev's profit in this 4th quarter should be around RM30mil, which is not very remarkable.

For the whole financial year of 2011, UOA development recorded a revenue of RM614mil and net profit of RM385mil. With the share issued at 1195.86mil, its EPS will be 32.18 and PE ratio 4.69 base on yesterday's closing share price at RM1.51.

        UOADEV: 50d MA as support?

At the same time, UOA development also proposed a generous dividend of 10sen per share, which give a yield of 6.6% base on its share price of RM1.51 yesterday. The dividend yield is much better than FD rate and should be among the highest in property sector. 

Nevertheless, its share price today seems not responding to the announcement of proposed dividend.

Tuesday, 14 February 2012

Notion: Encouraging Announcement

Further to the announcements made on 11 October 2011 and 23 November 2011, the Board of Directors of the Company wishes to update on the impact to the Group arising from the floods on the operations of Notion Thailand Co. Ltd (“Notion Thailand”) as follows:-
1) Following the dry out by end November 2011, Notion Thailand’s factory located in Ayutthaya had to be cleaned out and all affected stock and inventory were recovered. Work-in-Progress and finished goods were sent back to the Group’s factory located in Klang for cleaning and recovery.
2) Electrical, telecommunication and water supply were fully restored soon after the drying out.
3) The process of insurance claim is still on-going and only expected to be completed by March 2012.
4) Notion Thailand will now recommence operations of anodising and sub-assembly of lens before June 2012 but all support for the Single-lens Reflex (“SLR”) camera segment will be from the main Klang factory. As a result, the financial impact of the loss of revenue to the Group arising from our affected Thai factory will be minimal as Notion Thailand contributed less than 3% to the Group’s revenue.
5) The Group’s business outlook has turned for the better with a strong recovery in January 2012 sales to much higher than pre-flood level. The trend is expected to be upwards for the remainder of the financial year ending 30 September 2012 (“FY2012”) and beyond as the Hard Disk Drive (“HDD”) segment is expected to be in short supply until mid 2013 due to backlog of orders. The average selling price of HDD is expected to remain above pre-flood level for multi-quarters ahead.
6) One of our major HDD customers is reportedly estimating full pre-flood operations by September quarter 2012.
7) With the entrance of 3 new Japanese major customers in the HDD segment and the ramp up in HDD component sales, we expect FY2012’s revenue to grow in strong double digit over FY2011. The sustainability of this new business is expected to be good as the customers’ commitment is assumed to be long term.
8) Meanwhile we expect robust camera orders in February 2012 onwards as the camera segment is expected to be on route to full pre-flood operations by March 2012 while the Auto/Industrial segment remains stable.
The above is internal management’s estimation and is not a forecast or projection and has not been reviewed by our external auditors.
This announcement is dated 10 February 2012.

From this announcement, though the upcoming financial result of 2012Q1 remain tricky, investors can expect a far better result in Q2 contributed by higher revenue, higher margin and insurance compensation. 

With its strong & honest management team, I think Notion Vtec is worth to consider in mid to long term investment, even though the future of HDD is still a concern.

Wednesday, 1 February 2012

MRT: Major Boost For 2012

The Sungai Buloh-Kajang MRT plan has been finalized. The overall line will cover a distance of 51km, with 9.5km underground. There will be 31 stations plus 3 future stations. This RM15 billion project is estimated to be completed in year 2017.

There are 90 packages of jobs to be grabbed for the Sg Buloh-Kajang MRT project, so far about 20 of them has been awarded. In this project, there will be 9 big packages, which include 8 elevated packages and a tunneling package.

      Finalized SBK MRT route and stations

Recently MRT Corp has announced its first two big packages winners, which are IJM Corp and Ahmad Zaki Resources. IJM will be the main contractor for package V5 worth RM974 million, which include the construction and completion of viaduct guideway and the associated works from Maluri to Plaza Phoenix station. AZRB was awarded package V6 worth RM764 million consisting of similar job from Plaza Phoenix to Bandar Tun Hussein Onn station.

According to MRT Corp CEO, the remaining 6 big elevated packages will be released by the middle of 2012 while the single largest tunneling package will be rewarded in April this year. The contenders for the tunneling work are: Gamuda-MMC Corp, Gadang-Hyundai, China’s Sinohydro Group, China Railway Corp and Japan’s Taisei Corp. In this list, only Gamuda-MMC is purely local. Why not award it to local companies since Gamuda-MMC already has vast experience in tunneling work?

      Elevated MRT station

For other elevated packages, the contenders include TRS, WCT, Sunway, Mudajaya, Mitrajaya, Muhibbah, MRCB, Fajarbaru, Gadang, Naim, Loh & Loh etc. Surely those big name construction companies will get a piece of cake each. Besides construction companies, companies that provide material such as cement and steel may also benefit from this big project.

     A magnificent view of PB Damansara station

So, for those who like to buy into news, get prepared for Gamuda/MMC in April and other major construction companies by mid 2012.

Tambun: Rights Shares & Free Warrants

Tambun indah recently proposed rights issue with free warrant together with employees' share option scheme (ESOS). 

It will offer 88,400,000 Rights Shares at an indicative issue price of RM0.50 together with 44,200,000 new free detachable Warrants on the basis of two (2) Rights Shares and one (1) free Warrant for every five (5) existing Shares in Tambun Indah held on the Entitlement Date.

After the rights issue and full exercise of warrants and ESOS, Tambun Indah's outstanding shares will increase from current 221 million to 371.28 million, a 68% increase with significant dilution of EPS.

The fund raised from such exercise will be used to fund several projects in Penang such as  Bandar Tasek Mutiara (Pearl City), Carissa Villas, Kelisa Residence, New Juru Industrial Park and Straits Garden (Jelutong). Pearl Residence, another residential project in Pearl City, is estimated to be launched soon after the success of Pearl garden, Pearl Villa and Pearl Indah. Carissa Villas is a gated & guarded residential development with 42 units of 3 storey terrace houses at Bagan Lallang, Butterwoth.

     Kelisa Residence at Seberang Jaya

Bandar Tasek Mutiara (Pearl City) township (a mixed residential and commercial development) will be developed in phases over a ten (10)-year period with an estimated gross development value (“GDV”) of over RM2.0 billion. The Carissa Villas, Kelisa Residence, New Juru Industrial Park and Straits Garden has an estimated GDV of RM41 million, RM39 million, RM36 million and RM180 million, respectively. The Carissa Villas, Kelisa Residence and New Juru Industrial Park will be developed in phases over a two (2) year period and the Straits Garden will be developed in phases over a three (3)-year period.

If the raised fund is used wisely to increase its profit, then the rights issue is good. If not, then the dilution may make the stock less attractive.