SCIB: Bonus Towards Billion Market Cap

 

A day after I wrote that SCIB does not have the ability to do bonus issue, the company proposed bonus issue and free warrants.

I thought bonus issue can only be done by capitalization of retained earning of a company, but now it seems like it can still be done without it.

SCIB has no retained earning with only accumulated losses before this. Now it has proposed bonus issue of 3 bonus shares for 1 existing share, with 1 free warrants for every 2 shares held after the bonus issue.

So that means if you have 1 SCIB share now, after the exercise you will have 4 SCIB shares and 2 SCIB warrants.

Its outstanding shares will go up from 122.6mil to 490.5mil shares, and there will be about 245mil warrants which have a tenure of 3 years.

SCIB: SERBADK 2.0?

About the same time when acquiring KPower shares, Datuk Abdul Karim of Serba Dinamik emerged as a controlling shareholder of Sarawak Consolidated Industries Berhad (SCIB).

SCIB's share price responded by surging from around 60sen in May19 to RM3.50 in Feb20. Covid-19 bear market dragged it down to RM1 and currently it recovers to RM3 level.

Before the change in major shareholders, SCIB was a struggling loss-making company.

Similar to KPower, I didn't have interest in this kind of loss-making company when the visibility of earning is in doubt.

However, studying KPower in late May20 inevitably brought me to SCIB, and I found that SCIB is an even more exciting company.

Am I A True Value Investor?

The answer is NO. 

Why I say so? Just look at my past completed trades since 2013 in "History" page, will any true value investors invest in companies like Geshen, HHGroup, Jadi, Asiapac, Daya, Complete, Notion & Adventa?

I read and heard from other teachers that in fundamental investment, one should invest in well-established, industry leading type of companies with competitive edge or margin of safety.

In my previous investment portfolio, you won't see any big cap companies and blue chips.

Value investors usually won't invest in loss-making companies with no presentable track records but I still put my money in them.

Super Superb Supermax

For 4 full calendar years from 1st Jan 2016 to 31st Dec 2019, Supermax's TOTAL net profit attributable to shareholders (PATAMI) was RM382mil.

Now, in a single quarter of FY20Q4, it achieves a PATAMI of RM399.6mil which is even higher than previous 4 calendar years combined.

In other words, this 3-months result exceeds previous 48-months results. This is simply mind-boggling and I've never seen anything like that.

Large Scale Solar (LSS): What To Expect

Malaysia targets at least 20% renewable energy consumption by year 2025. Large Scale Solar (LSS) program is one of the projects which plays a crucial role in achieving this target.

At the end of 2016, only 2% energy comes from renewable source.

LSS was first introduced in March 2016. So far 3 rounds of bidding have been completed. Bidding process of LSS4 is currently under way and the result is expected by the end of this year.

Successful bidders have to build, own and operate (BOO) the large solar farms. A power purchase agreement at a fixed rate for 21 years will be signed with TNB.

There are many listed companies planning to diversify and share the cake of this renewable energy business. I read that Vizione, Pestech, OSK and ILB have plans to bid for LSS3.

Of course all of them failed as only one listed company won the bid in LSS3, which was Cypark. 

My Portfolio Jul20

Summary For July 2020

Jul-20
Numbers of stocks	12
Share Sold	Geshen @ 0.53 (all)
	DKSH @ 3.65 (all)
Share Bought	None
Overall 2020
Portfolio Return Jul20	16.61%
KLCI Return Jul20	6.85%
Portfolio Return YTD20	15.39%
KLCI Return YTD20	0.94%

Portfolio @ End of July 2020

Stocks	Avg	Jun20	Jul20	Div20	Jul20%	Overall%
BAUTO	1.92	1.48	1.41	4.2	-4.7	-26.6
DAYA	0.035	0.010	0.015		50.0	-57.1
HIBISCUS	1.05	0.62	0.60		-3.3	-42.8
JAKS	0.88	0.86	0.77		-10.5	-12.5
JHM	1.33	1.34	1.52		13.4	14.3
KPOWER	2.03	2.30	2.60		13.0	28.4
KRONO	0.76	0.535	0.570		6.5	-25.0
LEONFB	0.505	0.310	0.305		-1.6	-39.6
MATRIX	1.42	1.81	1.69	8.50	-8.0	19.0
PRLEXUS	1.15	0.54	0.64		18.5	-44.4
SCIB	2.06	2.13	2.83		32.9	37.4
SCIENTEX	2.735	8.90	9.10	10.0	3.4	232.7

My Portfolio gains 16.6% in July. While this type of gain in one month can be considered as impressive in those "ordinary" days, certainly it seems like a below par performance in current stock market madness where people earn 30% in one day.

Overall year-to-date return turns green for the first time since January.

I successfully trimmed my portfolio in July by disposing 2 stocks at small gain which were Geshen and DKSH, even though both have not reached my initial target price.

I sold Geshen because I don't expect its Q2 to be great and I think it might take longer time than expected to show a turnaround.

Anyway, its FY20Q2 quarter results released last week already turned profitable, even though the profit was minimal and the revenue shrank.

To my surprise, its share price rose more than 50% today. It seems like I don't have a chance to enjoy "limit up" type of experience at the moment...

The disposal of those 2 stocks is to increase my cash position as Warren Buffet said: Be fearful when others are greedy. Definitely greed is rampant at the moment.

It's very obvious that current stock market is dominated by retail investors, mostly punters or speculators who buy & sell just base on news and emotion.

It's herd mentality with fear of losing out. Financial results and valuation method such as PE ratio are not important anymore.

Such short term trading is very effective in current situation and I'd say the majority of speculators have earned big money.

However, sooner or later the party will end. It just needs one event to pull the trigger.

It might happen as soon as this year, or may be in 1 to 2 years time in which it's still a long way to go. So there might still be plenty of time for partying.

Tech stocks with PE ratio of 50 might still go up to 100. Who knows?

Some stocks are flying high for a good reason, such as gloves manufacturing stocks. However, the magnitude of rise in some other stocks are really out of mind.

Anyway, I still follow what I used to do, which is slow and boring... If I'm jobless now, I might trade short term.

SCIB and KPwower have lifted my portfolio in July, while Jaks cut the overall gain. Jaks keep dropping recently but I'm not too worry. I'll just wait for the quarterly report later this month and the outcome of AGM in September.

I plan to dispose a few more stocks and may be add 1 to 2 new members, just waiting for a good timing. Hopefully I can keep the stocks in my portfolio to below 10.

Gunung Berapi Erupts

It's been a flaming hot period now for Gunung since the turn of the year of 2020.

Its CEO and largest shareholder Datuk Syed Abdul Hussin started to pare down his entire 28% stake and exited the company. 

Its second & third largest shareholders Erayear Equity Sdn Bhd and Ooi Hock Lai with 11.8% and 10% stake respectively also ceased to be a substantial shareholder.

It is reported that former owners of Kumpulan Powernet (KPower) led by Datuk Chew Kam Wah will become major shareholders of Gunung, who will change its name to G Capital Berhad.

Kumpulan Powernet was taken over by Serba Dinamik's Datuk Abdul Karim & OHP Ventures's Mustakim Mat Nun last year and the group's name has been changed to K Power (Karim's Power?)

Relatively young Datuk Yap Yee Ping at 45 years old became the new executive director of Gunung, along with Tan Sri Dr Ali.