Friday, January 30, 2015

SKPRes ... Acquisition Reduce Dependcy On Dyson

Its aggressive expansion drive, including a new factory and acquisition of several plastic mould and product manufacturing units, will boost its coffers.

In addition, low oil prices and weaker ringgit will see bigger orders for the company’s plastic parts and devices because of greater demand for high end home appliance products.

It is expected to complete the acquisitions of several Technic Group’s units involved in design and fabrication, plastic injection and blow moulding, and assembly of plastic products, for a total of rm200 million by 1QFY2015. Its new assembly plant is scheduled to be completed by end March 2015.

The Technic untis produce plastic products for the automotive, electrical and electronics, industrial packaging and consumer packaging sector. With these acquisitions, SKP Res will become Malaysia’s largest integrated plastic component manufacturer.

The latest acquisitions will also provider SKPRes with a more diversified clientele instead of having to depend on solely on Dyson of the UK for the bulk of its business, besides widening its range of services.

It is also expected to benefit from the US economic recovery, which will have a positive impact on its FY2016 earnings.

Some are concerned about the group’s aggressive expansion drive but the company instead used its strong cash position for value creation. The acquisitions were done at reasonable prices and also did not deviate from its core business.

70% of the group Dyson’s products are sold to non EU markets. Furthermore, the economy recovery in the US should benefit SKP Res as 40% of Dyson’s products are going to the US market.

Its new capacity which is expected to be completed by 1QFY2015 will increase its production capacity over three years from Jan 2015. The new capacity will help cater to ramp up in demand for Dyson’s related products.

While orders to fill in the new capacity have yet to be confirmed, lower oil prices and weaker ringgit would attract Dyson to give more orders to SKP Res.

The new production capacity is to cater to Dyson’s new product. SKP Res is now producing two product ranges. In addition, do not discount SKP Res’ ability to secure new contracts.

Dyson, which produces home appliance products targeting the premium markets in developed countries, is SKPRes’ largest client, account for about 55% of its revenue. SKP’s other multinational corporation customers include Panasonic, Pioneer, Sony and HP.

The acquisition of the Technic’s unit is view positively as it allows the company to provide its customers with a larger range of value added services and cites STSM, a well known plastic mould market as an example. The acquisition also provide synergistic benefits.

It is also expected to benefit from economies of scale post acquisition and reduce its concentration risk on Dyson. Expects Dyson to account for only 35% of its total revenue from the current (Jan 2015) 55%.

This will indirectly reduce the group’s dependency on its largest customer. Apart from the single customer risk, revenue will be spread across a larger number of industries, including automotive, oil and gas, F&B and consumer products.

As the PER ratio of the target companies is lower than SKPRes’ implied PER, the acquisition will be earnings accretive to the group. The acquisitions will be satisfied by rm100 million cash and 172.4 million new shares at rm0.58 each.

Observers opine its strong net cash position and good track record in generating operating cash flow do not foresee significant hike in gearing. In the near term, it could potentially turn into a net debt position after the rm100 million cash acquisition and working capital requirement but this should only be short term and it could quickly pay back with its strong cash flow.

The acquisition is a related party transaction as the major shareholder Datuk Gan and family collectively own 70.5% and 68% in SKPREs and Technic Group. Post acquisition, Gan and his family will drop to 68.4%.

For 1HFY2015 ended Sept 30 its net profit rose to rm20.18 million from rm16.42 million a year earlier.

Its 2HFY2015 earnings will accelerate on the back of higher utilization rate from production of higher utilization rate from the production of two new Dyson models which began in early Nov 2014.

It has a minimum payout policy of 50%.

Monday, January 26, 2015

Prestariang ... MLA, Supply Manpower, Operate UM Course.

MLA To Provide MSN software To All Government Agencies …

Prestariang Bhd will provide Microsoft software under a master licensing agreement (MLA) to all government agencies in Malaysia. Its unit Prestariang Systems Sdn Bhd had received a letter of award he Ministry of Finance to be the Microsoft licensing solution partner.

Prestariang will provide Microsoft software under the MLA 2.0 over three years effective from Feb 1, 2015 until Jan 31, 2018.

MLA is an initiative by MoF under the government’s strategic ICT thrust.

The focus of MLA 2.0 is to provide a licensing framework to better manage the procurement and utilisation of software license, streamlined administration and the budgeting of software procurement.

The objective is to enable a Standard Operating Environment (SOE) to be adopted which facilitates Microsoft software procurement, usage, maintenance, support and management by all government agencies.

MOU With MIE To Suply Manpower To O&G Industry …

Earlier Prestariang Bhd has also signed a memorandum of understanding (MOU) with MIE Corporate Holdings Sdn Bhd to form a joint venture company (JVCo) for the supply of manpower - local and foreign - to the oil and gas (O&G) industry, including for the Refinery and Petrochemicals Integrated Development (RAPID) Project in Pengerang, Johor.

Prestariang will take a 51% stake in the proposed JVCo while MIE will hold the remaining 49%.

The proposed JVCo will enable both parties to establish a scalable and profitable position in providing qualified and certified manpower solutions to the O&G industry. This venture will enhance Prestariang’s growth prospects in providing various professional and vocational courses for upskilling and reskilling of human capital in meeting the growing demand of the industry.

MIE Corp, along with its partners, had in September 2014 bagged a USD1.3 billion contract to build a refinery unit on a 6,242-acre RAPID site.

MIE Corp can absorb locally-trained manpower as well as source for foreign skilled manpower for its O&G and related industries’ projects.

When the project is off the ground, it would require mass acquisition of certified and skilled manpower. Prestariang is already established in acquiring, training, skilling, re-skilling, up-skilling, placing and managing local manpower for the O&G and ICT [information and communication technology] industries.

Prestariang expects the MOU to “contribute positively” towards its growth plan.

Operates UM of Computer Science & Engineering Course …

Prestariang operates University Malaysia of Computer Science & Engineering.

There have been slight delays in the potential collaboration of its University Malaysia of Computer Sciensce and Engineering with a local education centric partner. This tie up is crucial in helping to boost enrolment numbers at the university.

It was reported in Oct 2014 that should there be further delays, there will be more downside risks to its FY2015 earnings potential as earnings are currently (Oct 2014) projecting for UNIMY to return to the black by 2015.

Utilization Of Private Placement Proceeds …

The management had remained tight lipped on the utilization of its concluded placement exercise, which raised some rm70 million. This will likely be used to bring in a new recurring earnings stream to the company, given the management’s aim of beefing up its recurring income base. Expect more details to be unveiled in the 1QFY2015.

Sunday, January 25, 2015

Texchem ... Expanding Res Biz, Turnaround Loss Making Div, Benefit From Low Fuel !

It had sold off its 28% stake of Sushi Kin Sdn Bhd to Japanese fast-food restaurant giant Yoshinoya Holdings Co Ltd for RM102.2mil.

The transaction values Sushi Kin, which operates the popular Sushi King Japanese chain, at RM262.3mil. This implies that the remaining 72% stake Texchem holds in Sushi Kin is worth RM188.86mil, which is higher than its curent (25 Jan 2015) market cap of RM164mil.

More interestingly, the entry of Japan listed-Yoshinoya marks a new partnership for Texchem.

The company intended to expand its business by bringing in three new brands to the Malaysian market: Yoshinoya Beef Bowl, Hanamaru Udon and Doutor Coffee.

The proceeds from the sale of the 28% stake will be utilised for the restaurant expansion plans as well as for its working capital.

It expects to invest RM12mil to kick-start the three new brands and estimates the cost of each outlet to be about RM1.5mil.

Texchem and its partner Yoshinoya plans to open Yoshinoya Beef Bowl and Hanamaru Udon not just in Malaysia but also in other regional markets. On top of that, it will continue to grow its Sushi King chain to 103 outlets in 2015 from the existing 89.

It is also planning to open 10 Tim Ho Wan dim sum restaurants in three years. Texchem owns 51% in Dim Sum Delight Sdn Bhd that operates Tim Ho Wan in Malaysia.

With the expansion of its restaurant business, it expects the division to contribute some RM300mil to the group’s topline in 2015 compared with RM150.9mil recorded for the first nine months ended Sep
30, 2014.

The company is focusing on its restaurant division in 2015.

Texchem’s restaurant business is the largest profit contributor to its bottom line for the first nine months of financial year 2014 at RM10.35mil. However, due to losses amounting to RM10.93mil from its polymer engineering division, its profit for the period was dragged down to a mere RM2.45mil.

The company is in the midst of diversifying from consumer products to medical life sciences products for the loss-making division. It targets to turn the division into a profit-making one in 2015 because medical and life sciences products require more stringent certification processes and previously they were still in a gestation period.

Another reason for the losses in the division was the research and development expenses for the diversification of its products.

Its food division, which exports seafood products, is set to benefit from low fuel prices because a huge portion of the cost of fishing activities is attributed to transportation and logistics. The division registered a topline of RM156.77mil and bottomline of RM1.88mil for the nine months period of financial year 2014.

Its industrial segment will also benefit because of lower raw material prices that are derivatives of crude oil. The industrial segment is the company’s biggest income contributor, raking in revenue of RM310.08mil but a thin profit of RM4.2mil, implying a net margin of 1.35%.

As an exporter, Texchem would benefit from the strengthening US dollar. Half of its trade are done in the greenback while another half is in Japanese yen.

The yen too has weakened against the ringgit. The benefits of foreign exchange gains because the strengthening US dollar may offset the weakening yen. The biggest source of imports for the food division is Japan while demand from China had slowed down in 2013.

Wednesday, January 21, 2015

Mitrajaya ...

It is maintaining its order book target of RM1.5bil for 2015. It is, however, looking to focus more on infrastructure projects that will be implemented in the coming year and next (2015 & Beyond).

These include new light rapid transit (LRT) and mass rapid transit lines, the West Coast Expressway and the other highways in the Klang Valley.

Tan is Mitrajaya’s founder and single largest shareholder with a 41% stake.

Mitrajaya has successfully grown its job wins from less than RM100mil a year during financial year 2008 to 2010 to over RM500mil currently (Nov 2014). New job wins year-to-date are at a record RM950mil, surpassing 2013’s high of RM501mil and bringing Mitrajaya’s total order book to about RM1.7bil now (Nov 2014).

Mitrajaya has secured a RM402mil contract to build the main building of a high-rise residential project for UEM Sunrise Group in Mont Kiara. In December 2013, it clinched a sizeable contract worth RM428mil to design and construct the headquarters of the Malaysian Anti-Corruption Commission in Putrajaya.

Mitrajaya stands a good chance of securing another contract worth RM200mil-RM250mil by year-end (2014).

Mitrajaya’s order book implies a strong cover of 7.8 times financial year ended Dec 31, 2013 (FY13) construction revenue versus peers average of 2.1 times, thus, provide a high degree of earnings growth visibility.

Its order book profile is also relatively ‘young’ with 75% comprising jobs that were secured less than a year ago, mitigating cost overrun risks.

Mitrajaya is a likely beneficiary of the rollout of the RM9bil LRT Line 3 announced in Budget 2015 recently given its track record in the ongoing LRT extension works.

Mitrajaya has been selected as one of Syarikat Prasarana Negara Bhd’s nominated subcontractors for the ongoing Ampang and Kelana Jaya LRT extensions. The packages involve works related to five stations worth RM146mil for the Ampang line and two stations valued at RM47mil for the Kelana line.

Construction is Mitrajaya’s key contributor at 64% of revenue as at the end of financial year 2013, followed by property development at 28% and optical healthcare at 6%.

For the second quarter ended June 30, it posted a net profit of RM13.57mil, which is more than double from the RM4.37mil recorded in the previous corresponding quarter.

Mitrajaya’s net gearing is relatively low at 14.8% as of the second quarter ended June 30, 2014. This has come off substantially from its high of 47.5% in FY08. Of its RM73.5mil total debt, 76% is short-term in nature, which is mainly used by the construction division for working capital.

As for its property business, the company has launched the first phase of Wangsa 9 Residency luxury condominiums in Wangsa Maju, Kuala Lumpur. The project has a gross development value of RM680mil. Another nearby project is Infiniti Residences that offers 523 units.

Up next, Mitrajaya is looking to roll out a mixed development in Puchong Prima in 2015. The company is still planning for the project worth RM1.5bil that will comprise a five-storey shopping mall, serviced apartments and a hotel.

These two projects will give its property development income a boost from the 28% contributed in 2013.

Mitrajaya is sitting on a land bank worth RM755mil versus its book value of RM188mil.

Tuesday, January 20, 2015

'Warning' - Fitch Likely Downgrade Mal's Rating !!

Fitch Ratings said it is "more likely than not" to downgrade Malaysia's sovereign rating in its upcoming review in the first half of 2015 on the back of the country's negative outlook.

The government's revision of its fiscal deficit target from 3% to 3.2% of the gross domestic product (GDP) and the reduction of GDP growth forecast for 2015 to 4.5%-5.5% from 5%-6%, was a "reinforcement of the fact that dependence on commodities remains a key credit weakness for Malaysia".

The revisions also showed that the credit profile of the nation remains vulnerable to sharp movements in commodity prices.

While the Prime Minister has stated that fiscal reform and consolidation will continue, the upward revision of the fiscal deficit target, on account of the high share of revenues linked ot petroluem, which remains a structural weakness, highlights that further measures might be required to meet the fiscal consolidation target of achieving a balanced budget by 2020.

These factors are reflected in its 'negative' outlook on the rating of the country.

The negative outlook indicates that Fitch is more likely than not to downgrade the rating of the sovereign.

Fitch expects to review Malaysia's rating during the first half of 2015.

Friday, January 16, 2015

'Like' - Prlexus ..

It is engaged in apparel manufacturing and retailing and outdoor advertising. It owns and operates three garment manufacturing plants in Malaysia and China.

It has a 52% stake in HIQ Media Sdn Bhd which operates Powerscreen, Malaysia’s leading outdoor LED screen advertising company. For July 2013, the garments segment accounted for 97.2% of sales and 98.7% of pre tax profit.

The company exports most of its products. The US accounted for 71% of total sales in FY2013 followed by the EU and Malaysia.

For FY2014 pre tax profit surged 25% to rm24.2 million on the back of a similar rise in sales to rm294 million.

As at end of July 2014, net cash stood at rm23.4 million or rm0.30 per share. Net margin was at a 5 year high of 7.1% in FY2014.

The stock is trading at a low trailing 12 month PER of 7.1 times and 1.4 times book.

Tuesday, January 13, 2015

About MMSV ... Turnaround Story !!!

It designs and manufactures industrial automation as well as precision die sets, jigs and fixtures for the LED and semiconductor production industries.

Its past financial performance has been erratic with losses in 2008, 2009 and 2012. However it appears to have turned the tide since 2013. The company attributes the turnaround to the switch in focus from producing semiconductor material test handlers to customized LED test equipment.

Revenue declined from rm25.7 million in 2010 to rm16.3 million in 2012 before recovering to rm26.7 million in 2013 due to increased orders for custom made machinery in the LED sector.

Growth momentum appears strong from 2014, with half revenue of rm16.5 million already making up 66.7% of the full year revenue in 2013. That translated to stronger net profit of rm4 million for 1HFY2014, amounting to 80% of 2013’s full year profit of rm5 million.

For 1HFY2014 revenue jumped 40% to rm16.5 million while net profit almost doubled from rm2.1 million to rm4.0 million. However it is also worth nothing that in the same period, trade receivables almost tripled to rm12.6 million outpacing a 1.5 times increase in trade payables to rm5.4 million.

At rm0.60 it is trading at 3.9 times its book value of 15.3 sen per share with trailing 12 month PER of 14 times. Its ROE and ROA were high at 32.9% and 32% respectively.

It is liked for its strong CAGR of 32% over FY2013 to FY2016, its net cash position and superior margins of above 24% and high ROE of above 28%.

Its cash on hand has been building since 2010 totaling rm10.1 million as at end 2QFY2014. This translates to rm0.062 per share. It has zero borrowings and is light on assets except for a 55000 ft factory in Penang.

With the company turning around, investors will be keen to see how it plans to grow the business and use its rising cash pile, to either reinvest or return excess cash to shareholders.

The company improving fundamentals seem to be the direct result of a major change in strategic direction initiated three years ago (2011). In 2011, it switched from semiconductors to automation solutions for the LED lighting industry from which it now (Nov 2014) derives about 80% of its revenue.

Products offer by the group include LED testers and automated handlers, which are essential components of the lighting industry.

The LED industry will be the key earnings driver for the company in the coming years from Jan 2015….

The hike in demand will force major LED makers to expand their production capacity which bodes well for automation solution providers such as MMSV. It is believed that Philips Lumileds Lighting Co and OSRAM Licht AG are MMSV’s clients.

It plans to focus on LED manufacturing process with a view to establishing a market in high power LED production.

The company has a diversified customer base with the domestic market accounting for 39% of sales in 2013 followed by the US (35%) and Asia (26%).

Despite that, the company is still exposed to the LED industry’s environment which can be both cyclical and dependent on economic growth.

Monday, January 12, 2015

How Low Can Oil Price Go !!!

The UAE oil minister said oil market oversupply may last months or even years from Jan 2015, but prices could recover if non-Opec producers "act rationally". We are experiencing an obvious oversupply in the market that needs time to be absorbed.

He also said the UAE would not panic over low prices and the market would eventually stabilise itself. Low prices would not delay the country's plans to boost its output capacity to 3.5 million barrels per day (bpd) by 2017.

They have dealt with such fluctuation in the past and they will not panic this time (early Jan 2015). There is a world demand increase on crude oil and believe the market will stabilise itself eventually.

Opec's decision in November 2014 not to cut its output "was supported by all members including the UAE and are confident on the strategic nature of such a decision.

Opec said it was not part of the oversupply and shall not be blamed if other non-Opec countries oversupply the market.

In the present scenario (Jan 2015) of tumbling oil prices amid a supply glut, current (Jan 2015) low oil prices may well be a prelude to global oil shortage as early as 2016.

Currently (06 Jan 2015) there is just 2% more crude oil supply than demand and the price of gasoline is under US$2 per gallon in Texas. If oil supply falls too far, we could see gasoline prices doubling within 18 months.

To put this in perspective, the world currently (Jan 2015) consumes about 93.5 million barrels per day of liquid fuels, with another 17% coming from natural gas liquids ("NGLs") and biofuels.

Since 2005, only North America had been able to add meaningful crude oil supply. Outside of Canada and the United States (including the Gulf of Mexico), the rest of the world's crude oil production netted to a decline of a million barrels per day from December, 2010 to December, 2013. More than half of the OPEC nations were now (Jan 2015) in decline.

It is believed that the current (Jan 2015) low crude oil price could be an overkill and result in the next "Energy Crisis" by early 2016.

In late 2014 Saudi Arabia decided to maintain its crude oil output of about 9.5 million barrels per day despite global over supply of about 1.5 million barrels per day, and the severe financial pain to many other OPEC nations.

The dip will be short-lived in the long history of crude oil price cycles. Oil prices have always bounced back and this is not going to be an exception.

Critics said that oil prices would go lower during the first half of 2015 is based on declining demand in the first half of every year.

Assumed that crude oil prices would remain depressed during the first quarter 2015, then slowly ramp up and accelerate as next winter 2015 approaches. By December 2015, we will see a much tighter oil market and significantly higher prices.

In permitting low oil prices, the Saudis seek to bring the market back into equilibrium.

Estimated that upstream U.S. oil companies would all announce 20% to 50% cuts in capital spending for 2015. We will start seeing the impact on supply at the same time the annual increase in demand kicks in.

Low oil prices will hurt the unhedged upstream companies, but they will hurt the oilfield services sector the most.

If crude oil prices move below US$60 per barrel and stay there for even six months it could prove catastrophic to non-OPEC supply. At some point, OPEC action may become necessary

'Dislike' - TGOFFs

A group of minority shareholders has claimed that the company’s acquisition of an office building in Birmingham requires shareholders’ nod, contrary to the company’s claim it did not needs such approval.

The company spent rm58 million to purchase the Birmingham property. The deal exceeds the maximum 25% threshold and requires TGOFFs to seek shareholders’ approval.

Earlier it had also terminated a proposed asset injection exercise that would have resulted in the company owning a fleet of marine vessels.

Besides this, the MACC is believed to be looking at the company’s acquisition of the remaining 49% stake worth rm34.3 million in Gas Generators Sdn Bhd in Oct 2013.

Instead of diversifying into the property business, it perceives the asset acquisition in the in the UK to be a commercial transaction that would enable it to hedge against currency depreciation. With this in mind, it entered into a put and call option agreement with HB Properties Plc on May 23 2014 to require the latter to purchase all shares in 7 New Market Holdings for 7 million pound.

Listed on ICAP Secutireis and ISDX, HB Properties is involved in real estate investment and development in the UK and SEA. On Aug 2014 the counter was suspended from trading due to delay in submitting its financial statements.

TGOFFs has an order book of rm200 million.

Sunday, January 11, 2015

TekSeng ... A Major Solar Player In Malaysia

It has been principally engaged in the manufacturing and trading of PVC and PP non woven related product.

While strengthening the core business, TekSeng has embarked on a diversification strategy. Since 2012, the company has been engaged in the manufacturing and sales of PV products – solar cells, panels and modules – to capitalize on the growing worldwide demand for clean, efficient and renewable sources of energy.

Its solar business subsidiary, TS Solartech opeatess in Penang Science Park.

On Sept 2014, it had entered into a MOU with Taiwan listed SEC that will invest rm100 million in TS Solartech. In the same deal, SEC also sold two solar cell turnkey lines to TekSeng. A leading German solar power player, Schmid is the technology partner for the new venture. The rm87 million investments for two new production lines would be ready by Feb 2014 and April 2015.

TekSeng expects its solar cell business to contribute more than 50% of group revenue for 2015.

TekSeng will be a beneficiary from trade disputes as the US Intl Trade Commission has imposed anti dumping countervailing duties against China and Taiwan;s solar markets. As such, SEC has roped in TS Solartech as a manufacturing partner to sidestep the trade barriers. TS Solartech will gain immensely from this partnership as Taiwanese solar players are already established globally.

With the injection of SEC’s investment, TekSeng has established itself as a major solar player in Malaysia. TekSeng can then ride on the growing demand for its PV productst.

TekSeng past and current earnings are wholly anchored on the traditional PVC segment.

The company has a dividend payout ratio of at least 30% of the group net profits from financial year 2015 onwards.

One of the risk factors is that prices for PV products are exposed to the vagaries of demand and supply. It also face fluctuations in raw material prices such as resin and silicon wafers too.

It has proposed to undertake a corporate exercise to issue 120 million free bonus warrants with an exercise price of rm0.25. it will raise additional capital when the issued warrants are exercised. This is an attractive proposition to shareholders as the free bonus warrants will lower the cost of acquisition of the shares.

Tuesday, January 6, 2015

Airasia ... Why The Selldown !!!

The selldown is possible due to kneejerk reaction to the likelihood of regulatory action against Indonesia AsiaAsia (IAA) which is being investigated for possible breach in licence terms, following the crash of flight QZ8501.

However, observers said that as final investigation outcome was still pending and AirAsia management suggested there was unlikely to be a licence revocation as IAA was operating within its allocated rights for the Surabaya-Singapore route.

There are concerned that some RM1.3bil in receivables from Indonesia AirAsia (IAA) could be at risk. Aside from reputational risks, there is also the question of indemnity cover for IAA, if it indeed operated unauthorised flights.

An ongoing investigation will determine if IAA had violated its route permit. This will have ramifications on indemnity against claims on the aircraft and other liabilities.

Although AirAsia has a 49% stake in IAA, it will not face a direct liability as it is a separate legal entity.

While AirAsia’s equity stake in IAA has already been written down fully, the latter still has payables of about RM1.3bil to AirAsia, which could be impaired. This amounted to 47 sen per share as at September 2014 or about 24% of its estimated 2014 book value.

While AirAsia has done an admirable job in handling the crisis, there is a reputational risk for the AirAsia group. Collectively, the AirAsia group holds 58% of intra-Asean low-cost carrier (LCC) capacity and about 34% of total intra-ASEAN seat capacity.

This share could erode in the coming months from Jan 2015 if events deteriorate further. At the very least, this could lead to lower loads or lower pricing power.

Nevertheless, following the suspension of the Surabaya-Singapore route, majority of passengers were opting for re-routing via KL, which should have minimal impact as AirAsia operates high frequency flights for both Surabaya-Kuala Lumpur and Kuala Lumpur-Singapore routes.

Airasia now (06 Jan 2015) trades at 10 times financial year 2015 (FY15) forecast earnings.

This isolated incident aside, underlying industry fundamentals are improving (better capacity management, cheaper fuel cost). Airasia is a key proxy to this recovery.

Airasia indicated that there had been “minimal” decline on daily sales (on year-on-year basis) while groupwide, daily sales are actually improving. There is always the possibility of negative yield impact on Airasia’s regional operations as a result of the incident.

Nonetheless, the improved cost dynamics now (Jan 2015) creates more room for Airasia to manage pricing pressure. Every 1% fall in yield can be offset by a 3.6% fall in fuel price. Since its last result (3Q14), fuel price has fallen by 35% and more as crude oil continues plumbing new lows (06 Jan 2015).

Both AirAsia and MAS which suffer two disasters in 2014 did not experience much yield impact. While it seems to be defying the odds, this has to be taken in context with the exceptionally stiff price competition among Malaysian carriers since the first quarter 2013 (1Q13) whereby yields are already at depressed levels, comparable to the 2009 financial crisis, as well as the gradual correction in MAS’ strategy of aggressive capacity deployment”.

MAS yield trends (revenue per passenger mile) continued to improve post 1H14 disasters; it had improved from negative 7.0 in 1Q14 to negative 1.8% in 2Q14.

Monday, January 5, 2015

Dislike' - Evergreen ..

A Johor based company produces wood based products such as medium density fiberboard, particleboard and a wide range of wooden furniture. The company also manufactures downstream products such as paper, veneer, printed, melamine board laminations and knock down furniture.

Its products are mainly exported to Middle East and SEA.

Following weak demand from the Middle East, a supply glut in fiberboard and wood products and rising production and logistic costs, Evergreen fell into the red in 2014 for the first nine since its listing in 2005.

It posted net losses of rm42.8 million in 2013, from net profit of rm32.2 million 2012. This trend continued into 2014, with net losses of rm14.2 million so far for the first nine months of 2014. As its peak, the company chalked up net profit of just under rm120 million in 2007 and 2010.

Its balance sheet has a net gearing of 32.5% with its last dividend paid of 1 sen per share in 2012. No dividends were paid in 2013.

Its outlook are uncertain due to its earnings.

Thursday, January 1, 2015

About Success Transformer

One of Malaysia’s low voltage transformer and industrial lighting manufacturers, has out performed most of its peers with double digits growth in sales and profits for the first half of 2014. Amid a challenging environment faced by the company, it saw its pre tax profit rise 21.4% to rm25.4 million in 1HFY2014 while revenue increased 27.7% to rm189.6 million.

For FY2013 the transformer and lighting segment accounted for 67% of sales with the balance contributed by the process equipment segment. Going forward, the transformer business will expand into niche markets such as IT and marine while SUCCESS also expects higher contribution from LED lighting which is benefiting from increasing demand for energy efficient lighting products.

SUCCESS has seen steady growth over the years. From FY2010 to FY2013 revenue grew by a CAGR of 15.8% to rm322.8 million while pre tax profit increased by a CAGR of 9.3% to rm44.9 million. The local market contributed 83.8% to sales in FY2013 while the rest came from exports.

Its net gearing ratio stands at a manageable 25.1%.

It is currently (28 Dec 2014) trading at a low trailing 12 month PER of 6.4 times and 0.8 times book value.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.