Friday 28 October 2011

Frontken in Deutschland

Again, Hohnloser bought Frontken shares. This time he is no loser, he went BIG.

On 25 Oct 2011, Frontken's chairman and managing director Wong Hua Choon disposed 119,750,000 Frontken's shares, trimming his stake substantially from 23.5% to 11.7%. Two days later, Jorg Helmut Hohnloser acquired all those shares which increases its shareholding from 5.2% to 17.1%.

So, currently Hohnloser has become the no.1 shareholder in Frontken.

      Frontken's Global presence

Today in the morning session, Frontken's share price does not fly high. It is battled down 0.5sen at afternoon break. It seems like there is some activity of planned selling in stages. Nevertheless, Frontken's share has gained a hefty 35% in less than a month since bottoming out from its low of 10sen in 3rd Oct 2011.

Why do Wong, who is also the founder of Frontken, choose to give up his pole position in Frontken's shareholding?

Frontken was awarded by THE BRANDLAUREATE for ASIA PACIFIC's Best Brands in the category of Corporate Branding - Engineering in 2010-2011.

Frost & Sullivan 2010 Best Practices Award. South East Asia Technology Innovation Award - Semiconductor Services Market.

Thursday 27 October 2011

KL Metropolis for A World Class KL

KL Metropolis, the next mega project for the Greater KL, is officially launched! It has a GDV of RM15 billion which spreads over 75.5 acres of prime land at Dutamas, sandwiched between the Solaris Mont Kiara and Solaris Dutamas at the site of Matrade HQ. The project was gifted to Naza TTDI back in year 2009 without an open tender, just like giving out the countless APs. Naza TTDI will build the Matrade exhibition center in return.

     KL Metropolis

The master plan consists of 22 office, residential and hotel towers, one landmark tower possibly reaching 100 storeys, two retail centres and an exhibition centre. It is scheduled to be completed in year 2025 in 3 phases.

Phase 1 is expected to start this year until 2015. It comprises a MATRADE exhibition center, 2 residential towers, 2 office towers, 2 hotels and a retail center with a GDV of RM6 billion. The residential towers with 300 condominium units are expected to be launched in early 2012 with a price of RM10,760 per sq meter or RM1000 per sq foot.

Phase 2 with a GDV of RM4 billion between 2015 & 2019 will add further 5 residential towers, 3 office towers, a boutique hotel, a healthcare center and a landmark tower approaching 100 storeys. Whereas phase 3 will be made up of 3 residential towers, 3 office towers and a retail center, with a GDV of RM5 billion.

     KL Metropolis masterplan

US firm of Skidmore, Owings and Merrill was selected following a competition to come up with the masterplan as they were the architects behind London’s Canary Wharf , Singapore’s Marina Bay and Dubai’s Burj al-Khalifa.

The new Matrade convention centre at the KL Metropolis will triple KL’s current convention capacity as it will add about 100,000 sq meters of space upon completion in 2014. Currently KL only had 56,000 sq meters of covered convention space as compared with Guangzhou which has 260,000 sq meters, Singapore which has 250,000 sq meters and Bangkok which has 225,000 sq meters.

     Matrade exhibition center

The building will be linked to the existing Menara Matrade and will have three floors to house 12 exhibition halls, which can accommodate large space exhibitions of heavy industries and advanced technology. It also will house an auditorium, which can accommodate 1,230 people, a multi-purpose hall, meeting rooms and display areas.

With the Platinum Park and this KL Metropolis project on hand, Naza TTDi should be the largest non-listed property developer in Malaysia. Will it be listed in the near future to fund those projects?

Wednesday 19 October 2011

German Boost in Frontken?

Recently, a German called Jorg Helmut Hohnloser has been accumulating Frontken's shares, increasing his stake in the company from 5% to 5.21%, with about 2.2million shares acquired in July & August this year.

Who is this guy? He actually represents Hohnloser group, who is also the sole owner of Germany-based Cleanpart group, which is said to be one of the world leader in surface engineering and coating services for the semiconductor industry.

Originating in semiconductor sector, Cleanpart has evolved into an all-round engineering service provider for advanced submicron applications in the areas of chemical engineering, mechanical engineering, surface engineering and semiconductor process engineering. 

Frontken and Cleanpart seems to offer similar service, one in Asia-pacific and one in US/Europe. Will Hohnloser continue to increase its stake in Frontken to become a strategic partner, or even acquire the company?

Frontken is a real penny stock, even trading as low as 10sen early this month. Is Frontken really that "cheap"?

Lets look at Fronken's past financial performance:

RM mil Revenue Net Profit
2006 72 7.9
2007 105 3.6
2008 131 18.8
2009 137 8.1
2010 147 11.8

Please note that in 2007, Frontken's profit was negatively affected by fire and flood incident, which was compensated by insurance in 2008.

Frontken is said to be a leader in surface metamorphosis technology in Malaysia and Singapore region. It provides cleaning and engineering services to mainly oil & gas, power generation and electronic & semiconductor sectors. The positive point here is that the business seems to be growing, with yearly increase in revenue even though the globe was hit by recession in 2008-09. 

The EPS is only about 1 sen/share, perhaps this makes the stock not attractive. There are not many analysts covering the company I guess. However, Frontken starts to give away its first ever dividend last year (even though only 0.1sen per share) and the dividend payout continues this year.

In 2010, Fronken acquired another 8.1% in Taiwan-based Ares Green technology, who has 6 factories in the mainland China. Frontken now has 51% in Ares Green and it will be used as a vehicle to penetrate the huge China market.

Frontken may also benefit from the booming in solar energy investment in Malaysia. Earlier this year it was reported that Frontken stands a good chance to get the contract of equipment maintenance and surface cleaning for SunPower & Optronics solar cells fabrication plant in Malacca. The plant is expected to start operation only in 2013.

According to Frontken's MD, Frontken Philiipines is pre-qualified by Sun Power to do maintenance job in its solar power plant and Optronics Corp is Ares Green largest client in Taiwan. If Frontken successfully clinch the contract, it is estimated to contribute a recurring income of about RM20million annually to Frontken!

Nevertheless, Frontken's latest 2Q2011 results is rather disappointing. Though its RM46.7mil quarterly revenue is the second highest in history, it recorded a profit before tax of merely RM0.105mil and profit after tax RM0.35mil. The reasons for the poor margin should be the high operating expenses, depreciation and amortisation.

Its cash or equivalents stands at RM27.6mil after 2Q2011 compared to RM34.2mil on 31 Dec 2010. Its current borrowings reduces from RM22mil to RM17mil in the corresponding period while its long term debt stands at around RM49mil.

I am not sure how will Frontken perform in 3Q2011. Can the high operating cost drag it into red? If it is back on track, then it might have a bright future ahead. It is noteworthy that when its share price fell, Frontken bought back its own shares for the first time since being listed, with now 1.8mil shares in treasury. This move may hint that the company is very much undervalued and the management is confident of its future.

Frontken is now trading at 12sen, significantly cheaper than its NTA of 21sen. With a German and the company itself buying its shares, will you follow?

Thursday 13 October 2011

Tambun Indah Lost Major Shareholder: Why?

Back in early September 2011, Tambun Indah saw its third largest shareholder Dato Hong Yeam Wah exits the company completely. Hong disposed all his 19.85 million shares (8.98%) in Tambun Indah. I am not sure why, as I see Tambun Indah as an emerging company in Penang property sector with good potential.

The share price of Tambun Indah was not affected much by the sale. There is no explanation why he did so.

Hong is also a managing director of Tah Wah group, which I personally have not heard of before. Tah Wah group is involved in the sales of Premcourt who own a piece of land in Jelutong to Tambun Indah this year. Tambun Indah will likely develop the land next year into Straits Garden, a mixed development with commercial units and serviced apartment.

Recently Tah Wah launches a development project in Butterworth. I suppose it is their first ever project. It is a mixed development located at Bagan Ajam, comprises 61 units 3 storey shop offices, 138 units gated & guarded 3 storey terrace houses and a hypermarket (Tesco?). There will be another gated & guarded residential project in Bukit Mertajam as well.

     Orange avenue by Tah Wah

Tah Wah group is made up of 10 companies with each holding land banks in Penang. Thus, Tah Wah apparently becomes a competitor to Tambun Indah. Is it the reason why Hong disposed all his shares in Tambun Indah? Conflict of Interest?

Thursday 6 October 2011

Who Own Aston Villa?

When the housing project of "Aston Villa" was launched around 2009 in Bukit Mertajam, a sales gallery with a huge word of "IVORY" was set up on the site. Initially the take up rate was quite promising. 

Aston Villa (not English football club) is a luxury residential project with 3-storey terrace and semi-detached houses with a big land and built-up area. It also contains a row of 4-storey shop offices, and a proposed alfresco F&B outlets space as future development. Its initial price for 3-storey terrace is around RM470,000 about 2 years ago and now it is selling at RM550,000. The semi-D goes above RM800,000 each.

    Aston Villa

From my observation, the construction seems to be in a tortoise pace until recently in 2011, the pace only starts to pick up. I notice that not only Ivory is involved, Dijaya is also the developer of this project, and New Bob Realty is busy selling the remaining units. You can see Aston Villa in Ivory and Dijaya websites.

From the promotion flyer of Aston Villa, it is printed that it is a project by Dijaya, Ivory is the turnkey developer and New Bob is the marketing agent. It just gives me an impression that Dijaya and Ivory do not take this project seriously...

Anyway, is it a good project? Aston Villa is located at the heart of Bukit Mertajam town. If you don't mind the air and noise pollution of a city center, then staying here is quite convenient. However, there is a trend that more and more young people are moving out from the city center to new township at the periphery such as Alma, Bukit Minyak, Juru etc. The streets in BM old town has been dominated by foreign workers especially in weekends and public holidays.

     Retail space

There is a shopping mall BM Plaza adjacent to Aston Villa, which is used as a selling point for Aston Villa. This mall is quickly run out of favour and has been a heaven for foreign workers, especially after the opening of Seberang Perai City featuring Jusco at Bandar Perda. GSC cinema and McDonalds in BM Plaza closed down long ago. Now its anchor tenant The Store supermarket will also leave soon, followed by a few tenants. The buses in the bus terminal there keep on pumping thick black exhaust smoke into the air.

However, if the developer transform this area into an exclusive area and attracts major franchises to its commercial area, Aston Villa could still be a thriving place. But who will do it?

Tuesday 4 October 2011

Mudajaya Year End Sales?

Mudajaya sparks into life again!

After about 2 months of selling pressure, which saw Mudajaya's share price fell almost 50% from RM3.40 to RM1.80, buying interest seems to flock in for the past few days.

Mudajaya has made a big change in its board as the former managing director, Ng stepped down and is replaced by Anto, who is previously a joint MD and has been serving the company for 18 years. Investors may be worry about this changes, as reflected from the sharp drop in its share price.

At the price of about RM2, Mudajaya is deemed to be very cheap at PE of around 5. Its cash is increasing and it has no debt. Not long ago most analyst gave its fair value at RM5-7.

After Janamanjung, there is optimism that Mudajaya will secure more contracts in the subcontract work of power plant extension project, especially Tanjung Bin. The issue of delay in India's project is solved and it is expected to get more projects there.

    Tanjung Bin next?

Recently the company is actively buying back its shares and a few non-executive directors are increasing their stake in the company. There are rumour that Mudajaya may be a target for merger or acquisition due to its attractive price at the moment.

If you look at Mudajaya's share price chart, the volume is significantly higher for the recent 2 months, especially for the past one week. Though it may mean panic selling during this period which has dragged the price down, but it can also be some big players accumulating its shares. When a good stock is more heavily traded compared to before, I think it is usually a good sign.

Mudajaya latest target price:

CIMB 4.81
OSK 2.82

Mudajaya's target price has been cut again and again due to the overall gloomy global economy. However, it is still quite attractive compared to the current share price.

From technical point of view, the MACD is about to crossover, the RSI is below 30% and the volume increases. However, it still hasn't break its downtrend line.

       Mudajaya: still in downtrend

As long as the fear in Euro and US is not settled, any stocks will continue to retreat, including Mudajaya. The best strategy should be buying in stages into a good stock.

More Land for SP Setia

After the acquisition of a 404 ha land in Ulu Langat for a mixed township development worth RM3.5bil, SP Setia has just announced its intention to acquire another piece of land in the area. The said land with a size of 269.3 ha is just adjacent to the earlier acquired land, which is located at Rinching, somewhere between Semenyih, Bangi old town and Beranang. This add up to a total land area of 673.3 ha.

     Possible location of new SP Setia land at Ulu Langat

After the tremendous success of Setia Alam/Eco Park township, SP Setia is planning to duplicate the success in this new township at the Kajang-Semenyih corridor. The place is very near to Negeri Sembilan. Previously people may say that Semenyih is "ulu" and Bangi is too far from KL to have any significance in term of property investment. But now, the tide has come to these area, and also perhaps Dengkil, Banting, Sepang in the near future.

Can SP Setia successfully transform the land into a thriving and happening township? I believe that it can, with its track record, strong financial background, supreme brand name and the link with the government.

The property sector is poised for a downturn in the near future, I wonder when will SP Setia launch the first phase of this new development. The residential units in the township is said to be more "affordable" with the aim to let first time house buyers owning a house. Anyway, if it is going to launch now, I think the respond should still be overwhelming, with people queuing overnight. What to do? It's SP Setia.

    Setia Alam Township

Sunday 2 October 2011

GPacket: Don't Make Shareholders Potong Stim

Though making net loss in 13 of its 14 latest quarters, OSK Ventures still has confidence in Green Packet. Amid of the recent public sell down, OSK Ventures recently acquired 15 million shares of GPacket, to increase its stake in the company from 16.23% to 18.51%.

GPacket has been in the news for the wrong reason for the past 3 years since making a decent start in its listing career. It has plunged into making losses since year 2008. Its share price also slide from RM1.50 to RM0.50 in just two years time.

Recently the public may be thinking more of GPacket again, as they fiercely advertise their P1 4G service on the media, with the new theme of "Potong Stim", after the much debatable "Sudah Potong?" theme few years back.

GPacket looks like a company that leads the latest telecommunication technology in Malaysia. Although they make 10 consecutive quarterly loss, their revenue is actually increasing for 12th consecutive quarters, from RM18mil in 2008Q3 to RM128mil in 2011Q2!

RM mil

Revenue Net Profit
2008 Q1 22 -3
Q2 22 -5
Q3 18 -10
Q4 25 37
2009 Q1 41 -22
Q2 56 -28
Q3 63 -32
Q4 73 -94
2010 Q1 87 -44
Q2 90 -36
Q3 101 -14
Q4 116 -78
2011 Q1 122 -19
Q2 128 -15

After countless empty promises of breakeven by its CEO, can GPacket really turn the table around by next year, and continue to soar from there?

From The Edge


KUALA LUMPUR: OSK TECHNOLOGY Ventures Sdn Bhd raised its shareholding in GREEN PACKET BHD to 18.51% with the recent acquisition of 15 million shares from Sept 23 to 29.

A filing with Bursa Malaysia showed OSK Ventures acquired 7.50 million shares on Sept 23, 2.5 million shares on Sept 26 and five million units the next day.

The recent acquisitions raised its shareholding in the loss-making company to 120.90 million shares or 18.51%.

Green Packet posted losses of RM15.24 million in the second quarter ended June 30, 2011 vs losses of RM18.68 million a year ago. For the first half, net losses were RM34.24 million.