Old Town: Will it get listed?

Old Town White Coffee is seeking approval for listing on 11 July! 

Its financial performance since 2007 looks good indeed.

	2010	2009	2008	2007
Revenue (mil)	255	194	138	79
Net Profit (mil)	32	30	21	11

Base solely on this result, though the profit growth in 2009-2010 slowed down which is a little concern, it can still be an IPO worth applying for.

Old Town's revenue are mainly from its cafe outlets (65%). The rest are from sales of beverage products. Currently it has 183 outlets in Malaysia, Singapore and Indonesia. It just started in Indonesia in 2011. The outlets are either fully owned, partially owned or franchised. The beverage products are exported to countries like US, UK, Canada, China, Japan, Taiwan, Singapore, Indonesia, Thailand & Philippines. Sounds not bad.

    The origin of white coffee

Old Town White Coffee cafe outlets started since 2005. What do you think about the sustainability of its business? I'm not a coffee lover. I do like its Hazelnut coffee, ice-cream toast and the signature butter-kaya toast. Personally I think the food is quite expensive and not very fresh, and they use all foreign workers. In Bukit Mertajam, I can see that there are not many people in the day time but there are quite a lot of them at night.

Initially I thought their business is going downhill but the financial results here say otherwise. Perhaps I need to go to bigger city to have a look. Will Old Town cafe expand to HK, Taiwan or China? Food & Beverage industry is very competitive. Do you think Old Town has the edge to prevail?

Penang water-front projects

It is exciting to see so many water front luxury mega projects in Penang Island, though I can't afford anything there. There are 4 major projects all along the east coast of the island: Seri Tanjung Pinang in the north by E&O, The Light in the center by IJM, Queensbay in the south-east by CP Land, and Southbay in the south by Mahsing. Which is the best one?

    Seri Tanjung Pinang at Tanjong Tokong

    Seri tanjung Pinang: the future?

Queensbay project is the earliest which started since the 1990s' and has been abandoned once before. Now it holds the best shopping complex in Penang but the subsequent launch is slow. Seri Tanjung Pinang is steadily expanding. The Light is in full throttle, all phase 1 residential projects already launched and the construction site is busy. Southbay is currently selling the multi-millions bungalow and may need time to cut the hill.

    The Light masterplan

    The Light phase 1: residential

    The Light phase 2: mixed development

Location wise, The Light and Queensbay are between Geargetown and Bayan Lepas FIZ. Queensbay and Southbay are close to the FIZ and airport. Seri Tanjung Pinang is close to Geargetown & Gurney. Southbay is just next to the 2nd bridge, The Light is next to the 1st bridge, Queensbay is between 2 bridges and Seri Tanjung Pinang is no where near the bridges (but close to the proposed underwater tunnel). All are built on reclaimed land, except Southbay. Seri Tanjung Pinang is exposed to the threat of Tsunami, The Light is at high traffic and hot area, Queensbay is made fresher by Pulau Jerejak and Southbay is green on the hilly area.

    Queensbay masterplan

    Queensbay future sea-front project

Personally I think Queensbay has the most strategic location. The already largest & longest Queensbay mall may have a new wing. It is yet to launch its high rise office building just opposite the mall, which has an elevated pedestrian sky bridge connected to it. If I want to set up an office in Penang, I'd like it be to here. However, the developer is the least known.

    Southbay masterplan

    Southbay city: mixed development

There is one similarity for all these 4 projects: all are expensive!

Blog technical problem

I notice that suddenly I can't post comments in this blog. I'm not sure whether this is the same for others. Not sure whether this is the set up problem or my computer problem as I'm quite new to blogger. I just changed the comment setting to a pop-up window and it seems to work.

Do other authors have the same problem in posting comments, or posting new posts? Anyway, I still hope that all of us can post their view and knowledge about investment here. Just for fun.

Tambun: Ready for growth?

Property is really hot now. People queue up to buy property like buying concert tickets. Almost every new launches being sold out before official launch, particularly in Klang valley and Penang.

There is one property company which I think is worth paying attention to, it's an IPO early this year: Tambun Indah. It is based at penang main land. This company has been very aggresive in recent 2 years, with many new project launches (more than 10!) since 2010 with decent take up rate. It's also busy acquiring new companies and land. It develops the land into a medium to high end properties in a short time after acquiring them. This quick turnover business model makes me think of Mahsing, one of Malaysia's best property developer which is very successful with this approach. Last week Tambun soft launched about 100 shop offices in Bandar Tasek Mutiara. All sold in one week. Current main project at Bandar Tasek Mutiara, Pearl Garden since end 2009 with almost 450 units are >95% sold. While the adjacent new Pearl Villa with 300+ units just launced few months ago are also almost 70-80% sold. Tambun Indah also launched many high-end condos in Butterworth area. Heard that the sales are good as well.

Bandar Tasek Mutiara at Simpang Ampat Penang. See how many future development there.

I believe year 2011 will be a very good and record year for Tambun Indah. I only have Tambun's 2010Q4 financial results. Though it's not accurate to compare a single quarter's result, anyway here are other listed developers' 2010Q4 results who have part of their foot in Penang.

 

	2010Q4 Rev (mil)	2010Q4 PAT (mil)
Tambun	40	25
Ivory	42	11
Hunza	63	10
E&O	41	3
Asas Dunia	17	3
WingTai	88	14
PJDev	145	16
Mahsing	299	31
SPSetia	518	62
IJMLand	255	90
Suncity	341	107

Companies in black are mainly based in Penang while companies in red are not. Tambun Indah is supposed to be the smallest company in this list, which can be partly seen from its revenue. However, it posted a high profit after tax, which is RM25 million in Q4 alone. Actually I'm not sure what constitute the profit in Tambun's 2010Q4, may be there's some one-off special large amount profit. If it's just profit from property sales, the margin is quite incredible (>50%!). Nevertheless, base on the response from its launches that I "see", 2011 will be the best year for Tambun Indah (though 2011Q1 result may not beat 2010Q4).

So I'm eager to see how's Tambun Indah's 2011Q1 results which should be annouced soon. What will be its profit margin? Can the profit better than last quarter? At RM0.705 today which is almost the IPO price, should I buy the share like its MD did for the past few months?

QL: Slow & Steady

There is one company that make more & more money every year since 2004, even during recent recession in 2008. Its share price never really go into a significant downtrend since listed in 2000 (11 years ago!).

This company, QL Resources is not a multi-national or hi-tech company. It's just chicken company - in poultry business, and the management can make it really big. The ROE is persistently above/around 20%, which shows good management in term of increasing shareholders value. No need to write so much, the chart and statistics will tell everything.

     QL financial highlights 2006-2010                                        

     QL monthly share price chart since listed in 2000 (11 years!)    

     QL weekly chart since Jan 2009. Never look back.

It's a common sense that the profit and the share price will not rise forever. There will be time when the company's growth will go plateau and the share price drop. Can this happen in the near future? I'm also keen to know.

QL's business include livestock, marine and palm oil. Even when economy is not good, everyone still need to eat chicken, eggs, fish etc. The company grows mainly through successful acquisition. I think the space for further growth may depend on how successful QL tap into market outside Malaysia. Currently QL has only oil palm plantation in Indonesia. The management seems to plan for venturing into the poultry market in Indonesia & Vietnam. If this plan materialize, then the possibility of continuous revenue and profit growth is high.

QL is currently at RM3.35. It may be a good stock to hold long term. If 2 years ago (1st June 2009), you bought 5000 QL shares at RM2.70 (total capital RM13500) and hold it til today, after bonus issues and share split, now (28th May 2011) you will have 12000 shares at RM3.35 (total capital RM40200). Your investment in just 2 years will gain RM26700 or 200%!

MEGB: Technical

Technically speaking, MEGB has a rather strong support level at RM2.00. Currently this level also act as a support for 100day moving average. The RSI below 30%, sign of oversold. If you are risk taker, then it's a good indicator to buy. However, at today's lunch break, MEGB already breached pass this support level to RM1.95. If this selling trend is unchanged in the afternoon session, then I think the sign of trend reversal may be is still not there and it may drop further. But if buying interest pour in in the afternoon and it closes at or very near RM2, it will form a hammer and the reversal probability is even higher (hammer at support level). To reduce the risk, one may wait to see next trading day's trend and decide whether to buy or not at the end of next trading day.

KNM: disappointing

KNM in the lime light again. This is another stock that I'm still holding and losing.. Bought it back in 2009 when I use only fundamental analysis to select stocks. Apparently my fundamental analysis skill is way out.

In 2009, this is the info I get:

 

Year	Revenue (mil)	Net Profit (mil)
2005	343	41
2006	917	133
2007	1230	188
2008	2528	336

Revenue and net profit grow almost 100% almost every year. It expands so fast mainly thru merger & acquisition. That time before 4:1 consolidation my average is at RM0.77, then came the news of  take over at RM0.90! Very happy. Then the deal collapse, coincide with the economy recession & drop in oil price. So KNM share price dive to a low of RM0.40!

Subsequent financial result:

 

Year	Revenue (mil)	Net Profit (mil)
2005	343	41
2006	917	133
2007	1230	188
2008	2528	336
2009	1821	170
2010	1559	131

The CEO (how to describe him? cunning? manipulator?) review earlier that FY2011 can achieve profit of RM363mil (which is suppose to be a record!). Yesterday 2011Q1 result out: profit only RM19mil, which is only 5% of full year target, and almost a record-low for quarters profit since 2006!

However, I think it's better to look at the revenue and operating profit, as I notice KNM's net profit is largely influenced by taxation. Operating profit also show more clearly how the core business is doing.

 

Revenue (mil)	Q1	Q2	Q3	Q4
2009	525	439	458	398
2010	373	383	418	384
2011	413

 

Operation Profit (mil)	Q1	Q2	Q3	Q4
2009	151	78	42	-68
2010	11	21	54	20
2011	17

If compare QoQ, both revenue and operating profit increase. If compare to last quarter (2010Q4), the revenue rise but the operating profit drop slightly. Seems not too bad, still got some business to do but how soon it will really bottom out is a concern.

This morning alone the share price already drop >10%. Are the investors too panic? Or there's other bad insider news which I'm not aware of? Even though the company came out with a good news immediately (get contract in UZB), it couldn't stop the share to plunge. Chance to speculate??

My view is, to invest long term in this company seems a bit risky, as the cash flow also not good and no strong sign of bottoming out just yet. Safe to accumulate at low? But there are lots of other better stock to put money in. If KNM is going to bottom out soon, then at this moment we can buy at its low. But if not, our money will go to Holland for many years and don't want to come back. Who knows? Only Mr Lee knows.

XOX: Next GPACKET?

I can't believe it, I thought only company that make money can be listed, but apparently I'm wrong.

Look at the next IPO: XOX. IPO at 80c per share. It made loss of 13mil in 2009 and the loss widen to 16mil in 2010. So the company desperately need your money to help them. Would you join in their business?

Well, unless they present an extraordinary business plan, I think most fundamentalist will surely avoid it. I'm lazy to look for their plan. What I assume is that in this highly competitive telecommunication business, small company is hard to survive.

Like most recent IPOs, I think the share price will be up above 80c in the first few days with super high volume, then falling slowly below IPO price. Now I'm very keen to know how much "over subscribed" XOX can achieve!

Masterskill: Buy?

One of the stock I hold is Masterskill. Its share price already down almost 10% in one week, probably due to its Q1 result which is 15% lower QoQ. At this moment the price is still diving, at the moment RM2.02. Sweating....

Should I just hold or accumulate at low? Today CIMB still give a buy call with target price at RM4.48! MEGB start to operate new campus recently in Kuching & JB, which will increase its student count. It will soon start its new course - MBBS in which there will be no more new competitor for this course for years to come, and it just ventures into Indonesia as well. I think the future is still promising for MEGB and expects better earning from subsequent quarters. It gives me a feeling that it's business is expanding: new campus, new courses, new partners.

With the "recession proof" feature of health industry, relatively low PE, good dividend yield and its earning potential, if i have more bullets, I'll consider to accumulate at its support level of RM2 or when there's sign or reversal.

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