Monday, 22 November 2021

ICAP: Pros and Cons of Share Buyback

Due to the steep and persistent share price to NAV/share discount, share buyback has been a contentious issue at ICAP AGMs. 

Does share buyback make sense for ICAP?



Based on the latest quarterly results (end-August 2021) and assuming that ICAP buys back 10m at RM2.43 (last Friday closing), spending about 5%  of the NAV to perform share buyback will enhance the NAV/share by 2.3%.

While it can enhance the value for shareowners, the downsides are:

i) Lower share trading liquidity due to reduced number of shares, and this may lead to illiquidity discount; and

ii)  Reduced fund size, which means lower fee (in absolute terms) for the fund manager .

What say you?

Tuesday, 12 October 2021

Beli Lokal

Most of the businesses, especially small local businesses are suffering due to Covid pandemic. The government has limited resources to assist these business owners after spending billions battling the pandemic. Therefore, it is crucial that the Rakyat support the local businesses so that they can survive through the challenging time.

For the longer term, supporting local businesses provides job opportunities to the locals and industries along the value chain, including supporting services such as financing, which help to grow our economy.

Besides, buying local products (such as local fruits) or buying from businesses within walking distance from our house/ office is more environmental friendly as it reduces emission of carbon and traffic congestion. 

We have local brands that make us proud. These include:

MYKUALI


  • MyKuali Penang White Curry Noodle rated as Top #1 Best Instant Noodles of All Time 2014 
  • MyKuali Penang Red Tom Yum Goong Noodle rated as Top #1 Best Instant Noodles of All Time 2015
  • MyKuali Penang Hokkien Prawn Noodle rated as Top #2 Best Instant Noodles of All Time 2016
  • MyKuali Penang Hokkien Prawn Soup Rice Bihun rated as Top #1 
  • MyKuali Hokkien Prawn Cup Noodle rated as Top #2 Instant Cup Noodles of All Time 2019/2020
  • MyKuali White Fish Broth Bihun rated as Top #1 Instant Rice Noodles of All Time 2020 
  • MyKuali White Fish Broth Cup Noodle rated as Top #1 Instant Cup Noodles of All Time 2020/2021 

SPRITZER


Clinical trials conducted in UK had shown that SPRITZER, the silica rich natural mineral water is very effective in removing aluminium, a neurotoxin that is linked to Alzheimer's disease from the body through urine.

Spritzer has won World Branding Awards for 2014-2015, 2016, 2017, 2018, 2019, 2020-2021. 

MING 



Ming Thein, Malaysian, is the name, designer behind the brand of the Ming luxury watch. His watch 'Mosaic', which was released last year and sold out, costs SFr 14.500 or about RM65,000 each. He and the brand were featured in Financial Times

 AIRASIA


Thanks to AirAsia, overseas travel has become affordable for Malaysians. 


AirAsia which has strong presence in ASEAN is building a unicorn of Asian super-apps. 

Grab, which has presence in 8 Asean countries, namely Singapore, Indonesia, Malaysia, Cambodia, Myanmar, Philippines, Thailand and Vietnam, and is scheduled to list in US with an estimated market cap of US$40b.

Don't we hope to see a successful Malaysian unicorn? And potentially becoming the biggest listed company in Bursa Malaysia one day?
Heading for a listing on Bursa Malaysia Main Market, Farm Fresh is the only integrated dairy company of scale in Malaysia that produces (i) chilled RTD milk, (ii) ambient RTD milk, (iii) edible yoghurt, and (iv) drinking yoghurt without using reconstituted /recombined milk or milk powder sources for our own FarmFresh branded products.


Farm Fresh's ready-to-drink milk and yoghurt have been gaining market share.
Celebrating its 40th anniversary this year, the Malaysian brand quick service restaurant has more than  500 restaurants in 16 countries, with majority of them located overseas. 

While the entries of Japanese and Korean convenient stores to Malaysia have caused a frenzy among some Malaysians, the owners of Marrybrown introduce Malaysian local delicacies in foreign soil.

It deserves better recognition in the local market.

Other local brands that are worth mentioning include:

Photo by: moonstarbyulie

SUPER RING - Popularised in South Korea by Blackpink's Jisoo and Jennie

KAWAN FOOD - World's first frozen paratha producer with more than 40 years of production experience 
JULIE's - Well-known for its peanut butter biscuits. Its products are exported to over 80 countries. In 2014, it managed to attract Hershey's to collaborate with Julie's to rollout 6 variants of Julie's Hershey's cookies which were sold in all 10 ASEAN countries.

So let's Beli Lokal and build Malaysian brands together! 

A related article by YB Sim Tze Tzin titled 'Development plans must make 'Made in Malaysia' great again'. 

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Thursday, 30 September 2021

Another capital protected grower scheme with a guaranteed yield of 18% to 50%?




Came across another grower scheme on facebook. 

  • CAPITAL PROJECTED 
  • Passive income Low entry from RM10k onwards 
  • High GUARANTEED yield from 18% - 50% 

My points: 

  • 1. Since the project is so secured, why does the company not source financing from the banks as funding cost is much cheaper than guaranteed yield of 18% - 50% to be paid to investors? 
  • 2. Why does the company set the minimum investment amount so low to target small investors? Why not approach the smart high net worth investors to significantly reduce number of accounts to be managed by the company? 
  • 3. If the scheme is so attractive and lucrative, it would have likely been fully and overly subscribed by super-rich and well-connected VIPs. Does such incredible deal come to commoners like you and me? Does the company really have to advertise in the first place? 
  • 4. Where would there be such a big frog hopping around the street? (邊度會有咁大隻蛤乸隨街跳㗎?) 

From a puzzled amateur investor 

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Sunday, 25 July 2021

Is it time to take a relook at United Plantations Berhad?

1) 2Q21 results

2Q21 was a record quarter for UTDPLT in terms of revenue (RM481.9m) and PATAMI (RM135.8m). This was despite the fact that 2Q21 results were dragged by RM34.1m of realised losses on commodities futures contracts.

PE multiple for the stock is 10.5x if we annualise the 2Q PATAMI.

Palm oil prices ranged between RM3,200/MT and RM4,500/MT in 1H21. However, UTDPLT recorded relatively lower average selling price of RM2,967/MT (Malaysia: RM3,020/MT; Indonesia: RM2,751/MT) in 1H21.

This was because UTDPLT practises a forward sale policy. In a rising trend, UTDPLT would record lower average selling price than market average, and vice versa. 

2) Likely higher average CPO selling prices in coming quarters

Given the palm oil price is on an uptrend, UTDPLT is likely to report stronger average selling prices  in coming quarters versus that of 2Q21.

UTDPLT is likely to report stronger average selling prices in coming quarters (vs 2Q21) as UTDPLT's 1H21 average selling price was significantly lower than year-to-date average, even lower than the lowest of year-to-date daily palm oil price.

3) Improved margin of safety after a divergence between CPO price and share price

UTDPLT share price closed at 1-year high of RM15.00 on 21 September 2020 while CPO price closed at RM2,909.50/MT on the same day. Since then, UTDPLT share price has eased to RM13.72 last Friday but the CPO price ended significantly higher at RM4,364.50/MT. Due to the divergence, margin of safety for UTDPLT has improved.


12-month share price performance of UTDPLT.

4) In net cash with minimal borrowing 

As of end-2Q21, it was in a net cash position of RM411.4m, or 7.2% of its existing market cap.

5) Decent dividend yield

Assuming it can maintain FY20 dividend payout of 85sen/share, this will translate into a dividend yield of 6.2%.

6) Most importantly, UTDPLT is a well-run company

a) It recorded a CPO yield of 5.93MT/ha for FY20 (Dec), among the highest in the industry.

IOICORP 4.64MT/ha for FY20 (Jun);

KLK 4.81MT/ha for FY20 (Sep); 

IJM 4.2MT/ha for FY20 (Mar)

Superior CPO yield

b) It has 587km of light railway system within its estates to facilitates an efficient transport of harvested FFB to the palm oil mill for production of high quality palm oil. 

Light rail system within UTDPLT estates

c) The total cost of production including depreciation and additional remuneration/ bonuses is among the lowest in the industry at RM1,235/MT for 2020 and RM1,286/MT for 2019. 

d) On average UTDPLT can harvest 12ha/worker versus industry average of 8ha/worker. 

e) World's first RSPO certified company.

f) Among the earliest to issue annual report. UTDPLT issued FY20 (Dec) annual report on 22 February 2021. As the company is able to issue the annual report within 2 months from the close of the financial year end, Bursa has allowed UTDPLT to dispense the announcement of 4Q results. 

Is it time to relook at United Plantations Berhad?

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Saturday, 3 July 2021

CTOS Digital Berhad vs Credit Bureau Asia Limited

CTOS is en route for listing on Bursa Malaysia Main Market on 19 July 2021. 

There are no Bursa-listed companies that are directly comparable to CTOS. The most comparable listed company could be Credit Bureau Asia listed in Singapore Exchange. 

A brief comparison is made between the two companies.



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Tuesday, 21 July 2020

SCOMNET: 隐形的冠军 (产品篇)

在4月MCO 期间,笔者闲在家里作研究,写了一篇《SCOMNET: 隐形的冠军》,当时SCOMNET 的股价还处于RM0.50-0.60之间,怎知道才三个多月光景,SCOMNET 股价已经涨了超过100 巴仙,而且在六月中旬还两度涨停版,引来大马交易所发出不寻常交投(UMA)的质询,涨势才缓和下来,可说是“ 沉睡十数载,一醒惊天下”!

以7月17日闭市价计算,SCOMNET 的市值已经来到马币8亿,到底SCOMNET 是否仍具备投资价值?笔者试着从SCOMNET 皇冠上的宝石 Supercomal Medical Products (SMP)所生产的医疗产品中寻求一些端倪。

1.Disposable Pressure Transducer (DPT)


DPT 可说是SMP 成立以来的首个主攻产品。SMP 在2010年开始生产DPT,并在2014年以及2017 年进行改良升级。从Edwards 的网站可以发现到,DPT 直到今天依然在手术室/重症监护室 (ICU )被高度使用着,而且DPT 如今更是医治COVID-19 重症病患的辅助医疗器具。

基本上,在手术室/ICU 里,安置在病人身上的DPT会 联接上EV1000 的监测系统,藉此定时测量病人的血压、血温以及血液含氧度。

2.DPT Flotrac



SMP 大约在2014年开始生产DPT Flotrac。此产品的功能与DPT 相似,只是装上了感应器,拥有更高的敏感度以及准确度。与DPT 一样,如今DPT Flotrac 同样被使用在 COVID-19 重症病患的医治上。

3.Electrocardiogram Cable ( ECG 电线)


Scomnet 本来就有生产汽车与电子产品的电线电缆,因此当SMP 成立之后,公司开发医疗使用的ECG电线可说是顺理成章。从上图所示,SMP 所生产的ECG 电线从2014年的5.59百万件到2016年的1千万件,展现惊人的成长。笔者预计,如今SMP 所生产的 ECG 电线可能巳经超过两千万件一年。

4.Disposable Bronchoscope (一次性使用支气管镜)


在SCOMNET 最新的年报里,管理层讨论与分析(MDA)的部分提到公司有生产 Disposable Bronschoscope。这项产品现今有用于Covid-19病患的检查与治疗。SCOMNET 董事经理 James Shiue 在今年股东大会中提到,Disposable Bronchoscope 在一两年前已经推出,在COVID-19 疫情袭虐时期,这项产品的需求量增加了接近40巴仙。

5.D*CLOT HD Embolectomy Catheters ( D*clot HD取血栓导管)


在刚结束不久的股东大会里,SCOMNET 向小股东展示了这项刚获得FDA 批准的新产品。根据老板说,D*Clot HD取血栓导管从研发到面市历时大约4年,可说是SMP 与它的客户呕心呖血之作!

D*Clot HD 的诞生,为心血管阻塞病人提供额外的选择。传统的通波仔 (Angiopasty)手术会为病人血管植入支架 (Stent),手术之后病人必需终生服药。而D*Clot HD 的创新技术,能够为病人清除心血管的血栓,却无需植入支架,病人术后也无需服药。

网上资料显示,在欧美国家,每年接受Angioplasty 手术的病人就大约有2.5 百万人,如果D*Clot HD可以争取到5 到10 巴仙的市场份额,这对提振SCOMNET 的业绩是不容小觑的。

6.D*Clot OTW Embolectomy Catherers ( D*Clot OTW 取血栓导管) 


D*Clot OTW 的功能与D*Clot HD 大致相同。D*Clot OTW 主要是针对下肢血管阻塞的创新疗法,它能成功的去除血栓,打通血管。

从以上SMP所生产的6种主要医疗产品里,笔者发现这些都是一次性使用、用后即弃的产品,而且这些产品的需求是长青的。就拿DPT 为例,该产品在2010年开始投产,直到今天仍然持续成长。老板也在股东大会中表示,客户对 DPT 的需求将在2021 年提高10至15巴仙。根据笔者粗略计算,明年 DPT 的生产量应该会超过两千万支。

从SMP 的产品进化看来,公司拥有強劲的研发团队,而且他们都不满足于现状,并致力于开发更多高技术含量的医疗器械。以 D*Clot HD & OTW 为例,它属于高附加价值的成品医疗器械 ( High Value Added Finished Device,Under Class II)。笔者相信,SMP 可能是大马唯一或者为数极少有能力生产FDA 第2级別 (Class II) 医疗器械的科技公司。

另外,SCOMNET 的董事经理在刚结束的股东大会上回答问题时披露,今年SMP 将会推出3-4样新产品。小股东们听了之后雀跃不已,充满期待,希望这些新产品都同样属于精密、高附加价值的医疗器械,在造福人类的当儿,也能把公司的盈利带往更高的层次。

SMP一路走来,每年生产数千万件的DPT、 ECG Cable 以及其他现有的产品已经能够为公司赚取大约马币两千万的净利润。笔者大胆推测,如果SMP 刚推出的D*Clot HD &OTW  取血栓导管,以及即将推出的新产品能够得到市场的认可,SMP 在数年后的净利可能是现在的好几倍!

股票有两种:一种是买来卖的(Buy to Sell),另一种是买来收的 (Buy to Hold)。对笔者来说,SCOMNET 更象是一支值得买来收藏的股票。


最后说一说 SCOMNET 最新的年报。封面是一朵生机勃勃的太阳花,让人眼前一亮,象是管理层给予投资者的开示:向阳花开,花开富贵,寓意SCOMNET 前景亮丽!(信则有,得永生。再坚持一个三到五年,届时时间便会告诉你答案。)

By External Contributor