CMSB: The Undisputed Child of Sarawak

In year 2019, one listed company in Malaysia has an ambitious 5-year target of reaching RM500mil PATAMI by the end of year 2024.

Its PATAMI in 2019 was just RM160mil, which means it has to grow at a CAGR of at least 25% over 5 years to achieve its target.

It is not an easy task for sure.

However, its highest PATAMI was RM265mil in 2018. This makes its RM500mil target looks a bit more within reach. 

It has 1,074mil of ordinary shares, with no future earning dilution except ESOS at the moment.

If it can achieve RM500mil PATAMI, then its EPS will be 46.5sen. 

If we simply give it a PE ratio of 10x, it will be worth RM4.65.

Now its share price is trading at RM1.30. Is it attractive?

Is It Time To Invest In US Stock Market?

At the end of 2020, I was bullish on the stock market in 2021.

It should be a recovery year from the pandemic as Covid-19 vaccines were rolled out in stages.

Now we are approaching the end of year 2021, and it turns out to be a tough year for stock market in Malaysia.

Unless you packed your portfolio with quality tech stocks, it's very likely that you will close year 2021 with a loss.

If you have Genetec or Kobay in your portfolio early in 2021 and hold on to them until now, you will be big winner in 2021.

Genetec rode a rocket from RM1.80 to RM50 while Kobay jumped from RM2.40 to RM18 (adjusted to bonus issue).

I had Genetec in my portfolio at the start of 2021 at a cost of RM1.49, only to have sold them "happily" at RM4.20... 

My Portfolio Nov21

 

Summary For November 2021

Portfolio @ End of Nov21

In November my portfolio suffered 12.6% loss which matched previous heaviest monthly loss in Oct18, apart from a 21.7% Covid-driven slump in Mac20.

The share prices of all 17 stocks dropped in this month. Even in Mac20 rout there was still one stock in my portfolio that stood tall and did not drop, which was Daya at 0.5sen per share. Haha.

KLCI dropped non-stop all the way from 1,600 points in mid October to settle at 1,514 points at the end of November.

The sentiment in Malaysia's stock market started to turn sour after the announcement of Budget 2022.

The drastic drop came in the final few days of November when new variant of Covid-19 Omicron emerged as a "Variant of Concern".

Brent oil price dived USD10 or 12% from USD82 to USD72 in just one day.

Black November: Pessimism Prevails

 

So far this November has not been a good month to most stock market investors.

This is the month when most quarterly financial results will be released, and we know that most results will not be very good.

We have stricter MCO 3.0 lockdown in June & July, and then the Covid-19 new cases surged to peak in August.

Currently there is worry about Covid-19 wave number four after everyone is free to travel across state borders.

New cases stay mostly above 5,000 per day despite close to 80% of the population have been vaccinated.

I sense that the whole stock market is full of pessimism in November. 

The share price response to good financial results was rather muted while a bit of bad results could be punished heavily.

What should be our strategy in such a period of time? 

The Rise & Fall of Transmile: What Can Investors Learn?

If you are long enough in the stock market, surely you would have heard of the scandal of Transmile.

Before I did my research recently about what has happened to Transmile, I knew very little about it. 

I roughly knew that the company owned some airplanes, was related to Robert Kuok and was involved in an accounting scandal. That's all.

As currently the stock market has been overshadowed by alleged accounting fraud issue, I decided to find out what has happened to Transmile.

Perhaps we can learn something from it.

My Portfolio Oct21

 

Summary for October 2021

Portfolio @ End of Oct21

October 2021 was a good month for KLCI which advanced 1.6%. My portfolio has done quite well too with a gain of 6.6%, lifting year-to-date gain to 15%.

Major event in October should be Budget 2022 which was announced on 29 Oct21. Again, it's a budget of distributing money which does not benefit me directly.

The government has increased the stamp duty of share trading from 0.1% to 0.15%. If a trader or investor buy RM10,000 worth of shares, he/she has to pay RM15 stamp duty instead of RM10.

Luckily there was no capital gain tax on profit from stock market trading.

"Prosperity Tax" or "Cukai Makmur" is introduced in which listed companies who earn in excess of RM100mil in year 2022 has to pay 33% tax for profit above RM100mil. Profit below RM100mil will be taxed as usual at 24%.

In my current portfolio, I think only Hibiscus, Jaks, MFCB, Scientex & Supermax fall into this category. It's an one-off tax anyway.

Meanwhile, SST exemption of new vehicles has been extended to the end of June 2022 but House Ownership Campaign (HOC) was not extended beyond 2021.

This is rather a bad news to property sector. Could we see a rush in property purchase before the end of this year? I guess so.

Anyway, RPGT was abolished for the sale of property after 5 years of ownership.

These are the items that are more relevant to me in Budget 2022.

CU Coming Thick and Fast

Since opening up its first CU store in Malaysia on the 1st of April 2021 at Centrepoint Bandar Utama, myNews only manage to open another 3 CU stores in the first 6 months.

This is no thanks to the surging Covid-19 cases which brought us MCO 3.0 in which all renovation jobs were not allowed.

Its initial plan to open 30-35 CU stores this year seems to be in jeopardy.

Nevertheless, the management team of myNews quietly works its socks off to make things happen.

After only 4 CU stores in 6 months, now it's going to open 21 CU stores in one month!

Rhonema: Milk Not Enough

 

Rhonema was listed on the main market of Bursa in December 2016 at an issue price of 75sen.

It is mainly involved in manufacturing and distribution of animal health products to livestock industry, as well as distribution and supply of food ingredients to food manufacturers.

The animal health products include pharmaceuticals, vaccines, feed & feed additives etc, are mainly for the poultry & swine segment. 

In early 2020, the company expanded into the ruminant segment (cow) by acquiring 49% stake in 3 companies.

This acquisition includes a small dairy farming business which produces fresh milk which is sold to wholesalers.

Rhonema mentioned that it has a plan to grow this dairy farming business and did not rule out venturing downstream to have its own brand of fresh milk products in the future.

That's one of the main reasons I decided to invest in Rhonema.

My Portfolio Sep21

 

Summary For September 2021

My Portfolio @ End of Sep21

The performance of the stocks in my portfolio in September is mixed, with nine gains and nine losses.

Overall my portfolio lost 1.2% in this month.

The worst performer is Supermax which suffered a 27.5% drop. I didn't follow its share price closely and was actually quite shocked to realize how low it has gone.

Nevertheless Supermax has a 15-sen dividend ex-ed in Sep21.

Even though I don't have a lot of Supermax shares, it's still a disappointment to me. 

On the other hand, the best performer is DKSH which gains 19% but I also do not own a lot of its shares.

MFCB Into Oleochemicals: Good or Bad?

After its 80%-owned 260MW Don Sahong hydroelectric dam in Laos started operation in 2020, we know for sure that MFCB is becoming and will become a cash cow.

The concession period for the dam is 25 years which is up to 30th September 2045. 

From the most recent FY21Q2 quarter report, the 6-months PBT from its renewable energy segment is RM176.8mil which is almost entirely from Don Sahong with negligible contribution from its solar business.

With the second half of the year expected to contribute more, it's safe to estimate a PBT of RM400mil per year from Don Sahong.

As depreciation and amortization are usually huge for such infrastructure, I guess the operating cash flow from it might be around or even more than RM400mil per year.

What will you do if your company has RM400mil cash coming in consistently every year?

My Portfolio Aug21

 

Summary For August 21

Stock Portfolio @ End of Aug21

In August 2021, Malaysia has a change of government again. The stock market viewed it quite positively in which the KLCI gained 100 points (~7%) from 1,500 to 1,600.

In the same month, our Covid-19 vaccination rate continued to be encouraging but new Covid-19 cases soared and stayed above 20,000 cases per day.

As of today, it's reported that over 65% of adults population are FULLY vaccinated. 

Even though we're not sure whether the vaccines can successfully fence off the virus mutants, we should be able to achieve 80% adult vaccination mark at the end of this month.

Stock market wise, my monthly portfolio return of 3% was beaten by KLCI's 7% gain.

My Portfolio Jul21

 

Summary For July 2021

Stock Portfolio @ End of Jul21

It's another lackluster month for Bursa Malaysia in which the KLCI fell 2.5% in July and went below 1,500 points.

Most of the stocks in my portfolio fell in the month of July but it still managed to register positive gain of 4.2% thanks to SCIB and JHM.

I have sold all my SCIB shares & SCIB-WB when their share price surged in early and then mid July.

Despite the heavy slump in its share price in recent months, my investment in SCIB still gives me a very good return of 185%.

I won't rule out reinvesting in both SCIB & KPower if the outcome of the Serba Dinamik saga is favourable to both companies.

It seems like tech stocks do well in general in this month, and this positive trend might continue for a longer period of time.

The quarterly results of all the tech companies who released their results in July are very impressive, including Vitrox, MI, Unisem, Genetec, Frontken and Aemulus, with only Gtronic not quite up to expectation.

Looking at Genetec's share price at above RM23 now, I can only shake my head in disbelief. Anyway, if I didn't sell earlier at RM4.20, I don't think I can hold its shares until above RM10.

JHM: New Addition to the "Auspicious" BKIP

 

Batu Kawan Industrial Park (BKIP) in southern Penang mainland has been a great success since Boon Siew Honda first moved into it in year 2011.

There is no surprise that the state government has started the planning of BKIP2 located south of BKIP at Byram Nibong Tebal.

Up to today, many global technology giants have set up their facilities in BKIP.

Those companies include Hewlett-Packard, VAT, Jabil Circuit, Broadcom (Avago), Western Digital, Boston Scientific, Haemonitics, Micron, Hotayi, Flex, Lam Research, Bosch Automotive etc.

Apart from international companies, many local technology-related companies have set up their plants in BKIP as well.

Most of them are listed in Bursa Malaysia and their presence in BKIP indicate expansion of their businesses.

So, with increased business volumes and profits, their share prices have gained tremendously since they planned their move into BKIP.

Who are they?

New High Again (Not KLCI), Stay or Leave?

The image above shows the number of Covid-19 cases in the first week of MCO 1.0 in March last year. There was 106 new cases reported on 24th March 2020.

At that time, people were like scared to death and no one dared to come out from their home. Face masks were quickly running out of stock.

We thought that it was very serious when South Korea registered over 500 cases per day, and there was also that terrifying Japan cruise ship cluster.

Time really flies. Now it's already mid July 2021 and the daily new Covid-19 cases in Malaysia has reached a record high of 13,215 on 15th July 2021.

As of today, our accumulated Covid-19 cases has reached 893,323 cases while it's only 175,000 cases for South Korea.

Ironically, now people are not as scared as during March last year.

My Portfolio Jun21

 

Summary For Jun21

Stock Portfolio @ End of Jun21

My Portfolio registered 5.3% loss in the month of June, mainly "contributed" by the huge drop in SCIB, SCIB-WB, and to some extent, JAKS.

Overall year-to-date return has dropped to merely 2.3%.

I have sold part of SCIB's shares again this month at 77.5sen. Initially I planned to sell all of its shares and warrants to wrap up my investment in it, but last minute I changed my mind and sold only half of the remaining mother shares.

However, its share price continue to drop to 50sen, below my average price of 54.5sen

Anyway, SCIB has finally released its FY21Q1 result which was a bit of relief to me even though the result was slightly below my expectation.

So far there is still no mention of any accounting issue by its external auditor KPMG.

Maybulk: Light At The End of The Tunnel?

 

A few years ago, I read an article written by respectable investor "Cold Eye" regarding Maybulk.

It was published in end of year 2018. He opined that dry bulk shipping industry was recovering from 10-year slump and might turn bullish partly contributed by lower supply of bulk carriers.

I think I came across this article only in 2019. I checked Maybulk's recent financial performance and it was all red. Straight away I lost interest in it at that time. 

I didn't study the stock and the industry at all.

Now, after a reader mentioned Maybulk in this blog, I started to look at it again.

Dato Abdul Karim's Stocks: Opportunity or Trap?

It's been three weeks since Serba Dinamik first announced its intention to appoint an independent film to commence a special independent review on its account on 25th May 2021.

Today, finally it has announced the appointment of Ernest & Young as the independent reviewer, together with 3 new independent and non-executive directors.

In the past 3 weeks, Serbadk share price suffered drastic drop from RM1.61 to a low of RM0.54 before rebounded today to close at RM0.745. 

It's a huge 66% drop in just 10 trading days.

SCIB and KPower which are Dato Abdul Karim related stocks are also negatively affected as expected.

SCIB's share price fell 40% from RM1.49 to RM0.88, while KPower dropped 30% from RM1.69 to RM1.18 in 12 trading days.

Are these the lowest share price for those 3 companies before the result of independent review, or will they drop further?

My Portfolio May21

Summary For May 2021

Portfolio @ End of May21

Due to the slump in SCIB share price, my portfolio suffers its heaviest loss in one month at -19% since losing 21.7% in Mac20. 

SCIB was my major holding and made up ~40% of my portfolio. It has contributed massively to my portfolio gain this year but now I have to vomit out those gain.

The big news in the stock market in May should be none other than Serba Dinamik's audit issue.

Serbadk first announced its intention to appoint an independent firm to commence a special independent review on its accounting matters raised by external auditor KPMG on 25th May 2021.

It's then followed by a public holiday, 2 days of trading suspension and 2 days of weekend. 

When trading resumed on the 31 May, its share price straight away limited down.

Krono: Eyes On China

Krono is involved in Enterprise Data Management (EDM) business providing hardware & software solutions to enterprises for data storage & protection as well as EDM managed services.

Before this, Krono has a small presence in China through a 16.67%-owned Quantum China Ltd (QCL). Now it has proposed to acquire the remaining 83.33% of QCL for RM150mil.

Half of the amount will be paid by cash (RM75mil) and the other half will be paid by issuing 110.3mil new Krono shares at 68sen each.

This is the main reason Krono carried out private placement recently by issuing 104.67mil new shares at 66.23sen each to raise RM69.3mil.

So, a total of 215mil new Krono shares are to be issued to fund this acquisition. 

Should existing shareholders of Krono be happy or worry?

Commodity Super Bull Run: Part 2/2

Global commodity price has risen since the middle of 2020, and the rise is getting more pace in year 2021. Here in part 2, I'm making notes on recent commodity price surge on metals. You can refer to part 1 for commodity price on energy and agricultural products.

Steel

Reduction in supply and increase in demand especially from China have pushed steel and iron ore price to multiple year's high in 2021.

       Steel Rebar (CNY/T) 5-years chart

                     Iron ore (USD/T) 10-years chart

China's steel rebar price has reached CNY5500/T (~USD850/T) recently, up more than 60% in one year.

Listed upstream steel companies such as Ann Joo, Lion Ind, Southern Steel & Masteel should benefit from higher selling price of their end products.

Midstream & downstream steel players have to endure higher cost due to high steel price. However, they can increase the price of their products since steel price has gone up. 

For a period of time, they can enjoy super profit margin by utilizing raw material bought earlier at low price and sell at current high market price.

There are a lot of midstream & downstream steel companies listed in Bursa Malaysia, the long list includes Astino, Atta, AYS, Chinwell, Choobee, Chuan, CSCSteel, Dynacia, Emetall, Engtex, Hiaptek, KSSC, LeonFB, LSteel, Lysaght, Melewar, Mycron, Pantech, Prestar, SKBShut, Tashin, Tongher, WZSatu, YKGI, YLI etc.

Commodity Super Bull Run: Part 1/2

Covid-19 pandemic not only sent the price of medical gloves to the sky, it has also resulted in the surge of almost all commodity price.

As we all know, price is the balance between supply and demand. 

In the early stage of the pandemic, demand was expected to drop drastically as there was worldwide lockdown in which movement was restricted and economy came to a halt.

There was fear of unknown at that time and commodities were sold down panically.

However, China as the world's economy powerhouse, managed to contain the pandemic swiftly. Its economy activities rebounded strongly from Q2 of 2020 which resulted in the recovery of demand.

Furthermore, the pandemic has increased the demand of electronic devices, home appliances and furniture etc as many people started to work and study from home.

Low interest rate and various government stimulus packages across the world also encouraged spending on groceries, cars and real properties.

After a shock in early stage, demand slowly crawled back.

As mining, agricultural and manufacturing activities slowed down due to lockdowns, the supply of commodities dropped.

When the demand is higher than pre-Covid level and the supply is significantly lower, the mismatch between supply-demand widens and commodity price shoots up.

My Portfolio Apr21

Summary For April 2021

Stock Portfolio @ End of Apr21

Time flies and we are almost half way through the "recovery year" of 2021.

In the final quarter of year 2020, I was optimistic about recovery from the pandemic in 2021. I visualized that in the middle of 2021, we would lead an almost "normal" life.

However, the reality is far from that. Daily new Covid-19 cases soar pass 3000 now, from 1000+ cases in March.

Perhaps due to the start of vaccination program since February and significant drop in new cases in March, people are getting more slack in adhering to the SOP.

Anyway, the pandemic will be over one day. Year 2021 might be a transition year while 2022 will be a real recovery year in term of our daily activities.

Stock portfolio performance wise, it's a "not bad" month for me in April, as overall portfolio gains 4.56% in a month.

How Underrated Is EUPE?

EUPE is a well-known property developer based in Sungai Petani, Kedah. It has multiple townships development in Sg Petani, Gurun & Padang Serai.

The most notable development is Cinta Sayang Resort & its township with a 18-holes golf course, hotel and water park. 

During previous property market boom in early 2010s, EUPE started to venture into property market in Klang Valley.

In 2011-2012, it announced its plan to acquire lands in Puncak Jalil, Bangsar South & Cheras. The Puncak Jalil land deal which was meant for landed properties was terminated later.

At that time, I had some interest to invest in EUPE as I thought those high-rise projects in KL should carry higher GDVs which would boost its profitability significantly.

However, its first KL project "Novum@Bangsar South" which was initially planned for early 2013, has been delayed to Mac 2016, the time when property market went downhill.

Nevertheless, EUPE's venture into property development in Klang Valley is a successful one.

Sunway, Sunreit or Sunway Belfield?

In September last year, I wrote something about property investment again: When Is The Next Property Boom, after ignoring it for so many years.

One month later, there was another post about property, Property vs Stock Market Investment.

These two posts were written mainly for one person, which was myself. I wrote to convince myself to go ahead with my plan to get another property.

Since the return of HOC (House Ownership Campaign) in Jun20, I started to explore the possibility of investing in a property.

I was actively looking for a good deal and I finally found one new project in Oct20. 

Nice to CU with myNEWS

If you ask me about myNEWS in year 2019. I'd say just forget it.

The only myNEWS store I've seen at that time was the one inside Aeon Bukit Mertajam Shopping Mall in Penang.

It's a small store and most of the time there are no customers inside.

The name is weird too. I thought it's selling newspaper.

To me, convenience store business is highly competitive and has low barrier of entry. That's why I was not interested in 7-11 (SEM) & myNEWS and did not bother to read their financial reports.

In Jan20, a blog reader who is a successful fundamental investor mentioned that he invested in myNEWS. He actually bought a lot of its shares.

That prompted me to study myNEWS's financial reports.

My Portfolio Mac21

Summary for March 2021

Portfolio @ End of Mac21

In general, March 2021 is not a good month in stock market. My portfolio lost 7.1%, mainly due to the decline of my major holdings SCIB & Jaks.

Taking some profit from SCIB earlier in the month helps to reduce the percentage of loss.

I still hold quite a lot of SCIB shares. I believe the company can continue to grow in 2021 and hope that it can achieve its RM2bil market cap target by the end of this year.

Jaks just released a bad quarter result with a shocking RM103mil loss after tax and minority interest in its FY20Q4. Its loss before tax for the quarter is RM183.5mil.

However, there are reversal of disposal gain (RM85.3mil), impairment loss of goodwill (RM52mil) & receivables (RM23.6mil), share grant plan expenses (RM17.1mil) and loss on disposal of investment properties (RM5mil) in this quarter alone.

After deducting all those bigger items above, its actual loss before tax is just RM0.5mil in the quarter which is not too bad.

Tecfast: A Fishy Big Contract?

Recently there are quite a few of small companies getting big contracts worth hundreds of millions to billions of ringgit.

What I know are ARB, Ageson, Anzo, Bioalpha, Vivocom, Kanger, Techfast etc.

Are they for real? While it certainly smell a bit fishy but I'm not going to comment about them since I don't study them in detail.

Readers can check the share price charts and the latest financial results of those companies to decide whether to believe in those companies or not. 

On 15th Mac 2021, Techfast announced that it has entered into a marine fuel oil supply agreement with Wise Marine Pte Ltd.

The value of this 3-year contract is estimated to be a whopping RM2.22 billion, and Tecfast is an ACE-listed company with a market cap of only RM100mil.

Nevertheless, Tecfast is still a profit-making company with zero borrowings.

Low Interest Rate Environment: Buy Buy Buy?

The chart above shows Overnight Policy Rate (OPR) of Malaysia since it was set in year 2004.

Current OPR of 1.75% is at its historical low.

As Malaysia's economy is expected to recover from this year onwards, Bank Negara has decided against lowering the OPR further last week.

I'm not an economy expert but I think 1.75% will be the lowest we can get from this pandemic-induced global recession.

I'll be very happy if the OPR can drop to 1.5% though.

What happened when Malaysia's interest rate dropped in such fashion last time?

My Portfolio Feb21

 Summary For February 2021

Stock Portfolio @ End of Feb21

Feb21 breaks my record of most transactions done in a month since 2013. I made a total of 10 buy/sell transactions.

Nevertheless, my portfolio lost 1% in this month.

Most of the stocks in my portfolio perform well in Feb21, but 3 stocks with big losses (Supermax, SCIB, Rhonema) are adequate to drag the whole portfolio into red, especially SCIB.

SCIB's share price dropped 18.6% this month, which is kind of expected after staging big rally in Jan21. I have sold ~30% of SCIB in early Feb21 to lock in profit while the rest I planned to wait for its FY20Q4 result.

I was a bit disappointed with its FY20Q4 result to be honest, in which its revenue and core net profit do not meet my own expectation.

This is due to slower than expected revenue recognition and I'd expect better revenue for the next quarter.