My Portfolio Sep24

Summary of September 2024

Portfolio @ End of Sep24

In Sep24 my portfolio stayed flat while KLCI dropped 1.8%.

The major story is the continuous slump in the share price of Gtronic, though it only carries a little weight in my portfolio now.

Hibiscus's share price also suffered and it even dropped below RM1.90 at one point. I was tempted to add more of its share but I kept to my earlier "promise" not to do so.

Though I think Hibiscus is quite undervalued, it is volatile and has too many unpredictable factors that can influence its share price.

I'll just treat it as "mini Petronas" kind of dividend stock.

I decided to disposed all Maybulk shares at a loss of 19%, after holding them for slightly more than 3 years.

Obviously this investment is a failure. Initially I planned to wait until its warehouse rental business to start but the date has been postponed.

Again, this is another example of failing to sell early for a decent profit.

Scientex released a good FY24Q4 result with a record high revenue of RM1.17bil and PATAMI of RM135.9mil (EPS 8.76sen). 

Its uninterrupted annual growth is generally on track and furthermore its FY24 achieved a sizable 25% growth in bottom line YoY.

Its property segment continues to shine while packaging segment shows some recovery.

Recently it has completed the purchase of 2 huge tracts of lands in Jawi Penang (708.5 acres) & Muar (1,094 acres). Transaction of the Batang Berjuntai land (826 acres) is expected to be completed within 4th quarter of 2024.

In its final quarter of FY24, Hiaptek registered improved revenue (RM416.6mil) and net profit (RM47.5mil, EPS 2.73sen) QoQ as expected.

Almost all of its profit came from its 27.3% owned Eastern Steel JV, which has contributed RM47.7mil to its PBT.

Its own trading & manufacturing business suffers from lower profit margin despite increasing sales volume.

Overall in FY24, the share of profit from JV increased from RM44.5mil to RM77.3mil. I believe that it could be much more in FY25.

It seems like the JV's HRC plant commissioning will be delayed from Nov24 to Dec24 due to weak steel price. Once ready, it should add more value to Hiaptek in the long term.

The share price of Hiaptek is lackluster for the last 3 months probably due to lower steel price and despite good profit from its JV, there is no cash generated.

According to previous report, based on internal agreement, Eastern Steel plans to distribute 30% of its profit as dividend, which could start as early as 2025.

Eastern steel has contributed RM37.7mil & RM47.7mil to Hiaptek in the last 2 quarters since its capacity expansion.

If Eastern Steel can contribute RM120mil to Hiaptek in FY25, this means its net profit will be RM440mil. A 30% dividend means RM132mil in total or RM36mil to Hiaptek with a 27.3% stake.

Steel price has been weak and trending down since the start of year 2024. It fell through the lowest point since 2020 in mid Aug24.

However, steel price staged a good rebound since mid-Sep24 after the Chinese government announced its stimulus plan to boost its struggling economy especially the property sector.

We are likely to see Hiaptek making loss in its trading/manufacturing side in FY25Q1. Hopefully all these have been factored in its current weak share price.

If steel price reversed its recent uptrend to drop below CNY3000/T, then it will be bad news.

Even though the market seems not too convinced with China's effort to revive its economy, it's better than nothing done.

Malaysia's Budget 2025 will be announced in 2 days time. I read that there will be no major surprise.

There will be no RON95 subsidy cut. Even though the government will spend more over RM400bil for the first time ever, it's mainly operation spending and not development spending.

Cash will be handed out to lower income groups while the salary of civil servants will be raised quite substantially.

Overall, I have a feeling that Malaysia's economy is doing quite well at the moment and hopefully the stock & property market will perform better.