Tambun: RM100mil On Track

Tambun FY14Q2 Financial Result

TAMBUN	FY14Q2	FY14Q1	FY13Q4	FY13Q3	FY13Q2
Revenue	128.0	112.0	118.4	97.1	82.6
PBT	33.1	35.3	36.3	31.2	26.3
PBT%	25.9	31.5	30.7	32.1	31.8
PATAMI	25.4	25.3	22.1	17.2	14.0
Total Equity	351.0	336.0	310.1	273.9	243.1
Total Assets	676.1	596.9	496.9	510.2	475.0
Trade Receivables	106.8	99.1	86.6	83.8	79.8
Prop dev cost	57.2	96.4	125.1	129.6	131.5
Inventories	0.3	0.3	0.3	0.0	0.0
Cash	194.4	142.8	125.9	141.9	117.2
Total Liabilities	323.0	258.7	183.3	185.0	185.9
Trade Payables	102.0	93.1	81.1	74.5	69.7
ST Borrowings	38.3	39.5	24.8	26.4	26.7
LT Borrowings	164.7	116.6	73.3	73.8	80.3
Net Cash Flow	80.6	29.0	24.3	52.5	22.9
Operation	-23.1	-23.0	57.9	32.5	2.0
Investment	2.4	4.1	-21.4	-4.5	-4.2
Financing	101.3	47.9	-12.2	24.5	25.0
EPS	6.34	6.41	6.14	5.22	4.46
NAS	0.86	0.85	0.79	0.82	0.76
D/E Ratio	0.02	0.04	Net cash	Net cash	Net cash

For Tambun's FY14Q2's result, earlier I've mentioned that anything better than FY14Q1 could be a bonus, as I don't expect that it will keep on breaking its record. It finally turns out to be a small bonus.

Compared to preceding quarter, latest revenue increases 14.3% but PBT drops 6.2% while PATAMI rises RM0.1mil. The reason given for lower PBT is "due to provision of RM29.6mil made for supplemental development costs on low cost housing projects as required by the Authorities". I don't quite understand what it means and hope that someone can help to explain.

Anyway, if compared YoY, both revenue and PATAMI jump 55% and 81% respectively. Total PATAMI for the first half of FY14 stands at RM50.7mil.

Sales achieved for 1HFY14 is at RM274mil, which is 55% of management's whole year target of RM500mil.

As a result, unbilled sales increase to RM493mil from RM467mil 3 months ago, with a total on-going GDV of RM1.2bil. Average take-up rate remains good at 81.2%.

After recent acquisition of 209.5 acres freehold land adjacent to its Pearl City for RM150mil (RM16.50 psf), Tambun can add another RM1-1.3bil GDV to its portfolio, pushing its overall GDV to reach approximately RM4.4bil. 

Total bank borrowings increase due to purchase of land but net debt/equity ratio drops slightly to only 2%. Operational cash flow remains negative so far in FY14, I guess it's mainly due to significant drop in property development cost. I'm not too sure what's going on but it should not be too much concern as overall unbilled sales go up this year.

The 4.6sen final single tier dividend has finally been announced and will ex on 2nd Sep. So total dividend for FY13 is 6.6sen which represents slightly over 40% payout ratio. The dividend yield is 2.75% at share price of RM2.40.

If Tambun can achieve RM100mil PATAMI for its FY14, then it could pay at least 10sen dividend (RM40mil) which is still a good 4.2% yield at RM2.40.

As the financial result remains on track, I'll keep my own target price for Tambun at RM2.53.

       Carissa Villas @ Butterworth

In October last year while Ecoworld made an entry into Simpang Ampat area, I wrote "we will likely witness a double storey terrace house of more than RM500k soon in Simpang Ampat area." At that time, a DST house at Pearl City was sold at about RM300-400k.

In May this year, Asas Dunia launched Hijauan Valdor about 2km further south of Simpang Ampat at Sungai Bakap. The price for DST already started from RM550k. If Ecoworld launches its project here next year, could it be at least RM600k for a DST? It doesn't look impossible, does it?

If this is true, Tambun Indah will definitely benefit from it as its Pearl City land was acquired years ago at a cost of about RM11 psf, while the newly acquired land is only at RM16.50 psf. Ecoworld & GUH got their land here at RM40 psf & RM35 psf respectively.

Besides, we might also see non-low-cost high-rise residential projects in Pearl City sooner than expected, especially if its commercial component turns out to be successful.

If the DST is sold at RM500k, a 1,300 sq ft apartment could be sold at RM260k (RM200 psf) which is fairly "affordable". Tambun Indah could get higher GDV for this. However, I think this is unlikely in the next 2 years.

As long as the future of southern Seberang Perai is bright, I will continue to hold Tambun.

Emotions In Stock Market Investment

I came across a short article from yiyezhifu regarding some kind of emotion in investment. I find it quite interesting. If you can't read Chinese, here is the point:

• In investment, the hardest thing to swallow is not losing money, but seeing other people earning more than you.

Your investment portfolio may have generated handsome return, perhaps achieving your target. However, when you browse the investment blogs and find out that there are other people doing better than you, you become unhappy & think that you don't do well enough.

You do a thorough study on a stock and decide to invest in it. This stock performs well and you make a good paper gain. Then you see someone recommends a stock in his/her blog and everyone rushes to buy except you, and that stock gains more than yours in a short period of time. You feel emotionally "imbalance" and frustrated, as those people who do not do their homework seem to be more successful than you.

These feelings may affect you negatively, even though in fact, you have done well and are on the right track.

So why do you need to compare with others?

There are lots of emotion in stock market trading, happy, sad, excited, angry, regretful, frustrated, greedy, fearful, anxious, depressed etc. I guess every investors will experience all these at certain stage.

For most people, when their shares go up, they will be happy & greedy. When their shares go down, they will be sad, anxious & fearful.

However, some people might also feel sad when their shares go up, because they think they don't buy enough!

You hear from a friend that stock X is a good buy. You decide to put your hard-earned money into it.

After you buy stock X, its share price move sideways for months. You feel frustrated and sad, especially when you see other stocks soar in price. 

After a while, you are used to it and claim that you are lucky because you don't put too much money into this lousy stock X. You decide not to invest further in stock X and just let it rot by shifting your radar to other stocks.

Soon after that, share price of stock X fell drastically. You feel anxious & fearful as you lose money. You are reluctant to sell because you don't want to make loss. Your mood is down, you can't concentrate on your work and suffer a few sleepless nights.

Weeks later, stock X makes a recovery in share price to your entry level. You feel optimistic and lucky that you don't sell earlier at a loss. However, you are fearful to put more money in. You plan to sell as soon as there is net paper gain.

After this, stock X suddenly jumps in share price. You make 20% paper gain in a week. You are excited but you don't feel too happy because you think that you don't put enough money into it. You regret that you don't pick up more shares especially when stock X is trading at a low.

You make good paper gain and is supposed to sell for profit. However, greed takes over and you think you should not sell this time as it can go higher. You then buy more shares of stock X as it goes further up.

Unfortunately, stock X retreats and your paper profit shrinks from 50% to 20%. You feel frustrated and regret again. Why don't I sell for a 50% gain? You earn less and are not happy with it. So you decide to hold or even buy more to average down, hoping stock X will rebound to its previous high again.

It turns out that stock X's share price falls further. You see your gain wiped out and turns into paper loss. You go mad as a 50% profit turns to a loss. You are angry, you have bad mood all day long and eventually become depressed.

So you decide to let it rot again, and again and again.

What actually do you want???

I think it is not easy to keep our emotion in check while investing in share market. It takes a lot of time and experience.

The best way to minimize this emotional risk is to buy fundamentally strong stocks, have a clear plan no matter it is for short term or long term, and be disciplined enough in executing the plan.

While it is good to compare our performance with others to see how well we have done, we should not take it too seriously. 

In everything that we do, there are always someone who will do better than us. Besides, there are also many others who perform poorer or are less fortunate than us.

Anyway, it is always easier said than done.

Semiconductors Rally

At the afternoon break of today, share prices of Gtronic & Unisem broke out from its resistance while MPI is also aiming to do so by testing it.

All these 3 companies are semiconductors companies which are picked to excel from overall semiconductors market recovery in the US & Europe.

Both Unisem & MPI are big players who took a massive blow from recent economy slowdown in the western countries, in which their earnings plunged substantially into loss for the past 1-2 years.

Currently they are making a comeback by posting a series of encouraging quarterly results so far. I believe that their results will improve further but the exact figures are hard to predict.

Here is a brief comparison among these 3 companies.

	MPI	UNISEM	GTRONIC
Market Cap (RM mil)	1,349	1,260	1,458
Total shares (mil)	210	674	281
Est FY14 PATAMI (mil)	50	50	70
Est FY14 EPS (sen)	23.8	7.4	24.9
Latest Share Price (RM)	6.43	1.87	5.19
YTD Rise (%)	102	87	64
PE Ratio FY14	27.0	25.3	20.8
NTA (RM)	3.95	1.40	1.04
Last FY Dividend (sen)	15	2	18
DY (%)	2.3	1.1	3.5

Est = Estimated

The estimated figures for FY14 PATAMI is done by myself, which may not be accurate. Perhaps MPI & Unisem can do better than this as their historical earning level are much higher at more than RM100mil a year.

All three has almost similar market cap and exciting future ahead. Projected PE ratio are all above 20 times.

Year-To-Date, MPI's share price has gone up the most at 102%, followed by Unisem (87%) and Gtronic (64%). 

All of them have decent cash flow and balance sheet too, though I think Gtronic is far better than the other two.

Anyway, no one knows whether the share price will head north, south or east after today. There might be lots of traders involved.

Since my shareholding of Gtronic is small, I'd rather hold and hope for exciting news ahead.

More Memories To Batu Kawan

Last week Penang CM has announced that Seagate will invest RM1.05 billion over 5 years to build a manufacturing plant at a 40-acres site at Batu Kawan Industrial Park, with an option to add further 30-acres in the future.

Seagate is a well-known hard disk manufacturer and data storage solutions provider which is listed in Nasdaq & also a S&P 500 component.

Earlier in June, Penang government also announced that another renowned data storage (flash memory) manufacturer SanDisk has already committed to a RM1.2 billion investment in 5 years at a 30-acres site in Batu Kawan as well.

Its manufacturing plant is currently under construction and is expected to start production in Mac 2015. Some 1,000 new jobs could be offered by SanDisk.

Similar to Seagate, SanDisk is also listed in Nasdaq and is part of S&P 500 component.

Besides, it is also reported in June 2014 that Hewlett-Packard (HP) is in the process of finalizing talk with Penang government regarding its investment in Penang. Hopefully we can get the good news soon.

Meanwhile, Penang Development Corporation (PDC) has in May signed an MoU with Temasek & EDIS (Economic Development Innovations Singapore) to form a JV company to develop Penang International Technology Park (PITP - 206 acres) in Batu Kawan & Business Process Outsourcing Prime (BPO Prime) in Bayan Baru at the current PDC building opposite the sPICE.

PDC will hold 51% in the JV with an estimated GDV of RM11.3bil.

This project will be completed over 5-10 years and is expected to generate 25,000 - 30,000 high income & quality jobs.

On the 1st of Mac 2014, the ground breaking ceremony of an IT-BPO Park in Bayan Lepas has been done. This IT-BPO Park and the BPO Prime in Bayan Baru mentioned above are actually two components of RM3.3bil IT-BPO Hub.

The overall IT-BPO Hub comprises 3 components, which are the 74-acre IT-BPO Park in Bayan Lepas next to the airport, the 7-acre BPO Prime in Bayan Baru and a 100,000 square feet Creative Animation Triggers (CAT) in the Georgetown heritage enclave.

It is almost certain that more jobs, especially for professionals, will be offered in Batu Kawan in the near future. So I would expect a huge influx of residents into the southern part of Seberang Perai (SPS).

Besides, it will not be a surprise to see more established education institutions setting up their branches here as knowledge, talent & skill might be painted to this place in the future.

       Batu Kawan affordable homes: Hijau E-Komuniti

Tambun Indah, as the largest listed land owner in this region, will definitely benefit from this development. Other developers within Batu Kawan area such as Malton, GOB & Paramount will be waiting to launch their high-end projects eagerly.

Ecoworld, IJMLand, WingTai, GUH etc with land outside Batu Kawan will also benefit if Batu Kawan flourishes. 

Mahsing's proposed land acquisition in SPS has been called off earlier due to issue by seller. Nevertheless, it has its Southbay project at the other end of Penang second bridge.

I believe that Seberang Perai Selatan will be a mini Iskandar in the making.