Tuesday, 16 September 2014

WILL GHLSYS BOOM BECAUSE OF ALLIBABA SPECTACULAR VALUATION? -by CG


            




















Essense No 1.
GHL WILL NEVER RUN OUT OF SHARES INSTEAD IT HAS SHORTAGE RECENTLY

If the share value were to be allowed to adjust, there are always shares that are available to everybody. Sure, it will be expensive or cheaper, but always available to buyers and seller to match. Price gouging often hurts investors despite their sympathetic intention. Stock prices allowed to change rapidly, yes, they do. Value plunged upon hearing news that the tsunami has hit Japan. Ghlsys value plunged. Upon knowing Ghlsys mergers announced, their shares rocketed. This price swing does not due to supply and demand issues rather than investor irrational behavior that hardly can be explained. Looking at the other side of it, all sellers and buyer can able to match, the demand and supply is efficiently managed by the market. So, when we hear someone saying the price jump just before they buy or the value drops just when the click the button, these are only a misperception.
While they are buyers willing to pay for a lower price, there is also someone willing to sell at that price. The company fundamentals don't change every day, while it may appear to be like price manipulation,its simply marginal traders are trying to do the same thing as others do. If an investor thinks that it is a good time to buy or sell , chances are that others do too. And that's why the price moves are usually adverse, everybody is doing the same thing at the same time. As we invest in a company, I don't spend time trying to beat the market, they are not the one to beat. There are always supply and demand to be matched. Instead, I will try to figure out how news and events will affect the supply and demand to this company and use that knowledge to trade with. And I will profit in return. There is always a hidden message from Ghlsys all the while. It is how we can explore all the available news that they have in their records from day one.If I am looking at the trends recently, the shortage of shares is obvious to me as at today.

Essense No 2.
A PATIENT WAY TO FIND THE HIDDEN FORTUNE AT GHL
Every investors dream is to make a small fortune in the stock market. Are there a short cut around? I have been trying for years. But it is much easier to pick a great stock over the years of long term investing. However, any company that wants to stay successful need a time to build up their business. It must build up their foundation over time, invest in new products, retain their good employees and keep looking for good opportunity that is beneficial to their business. It must continue to grow and bring in revenue year after year. Sounds familiar? Yes, it is. How about time? Will it happen overnight? Of course not. Over the time they will be known. They will make themselves known because they have done things right. How can we take advantage of it? Patience. True, patience will eventually bring huge fortune to the investors. Forget the noises. Pace yourself. While forgetting all the companies that we have never heard of, the meaning of on a gain one day and a drop the next. We can have an option to sleep soundly and smile happily.
I look at a company that are good yesterday, better today and greater tomorrow. There are no guarantees, at least we invest in companies that we know and we understand. The company they are in the right sectors, honest reporting and proven track record of success. In return, they are dedicated building real wealth with us. They are working out day and night while we are watching them grow. Eventually the result may be not only wealth, we have own a part of their business, learned the business and earned every penny in return.
Ghlsys have mentioned in 2012, they will acquire a company in 2013. They have done it. Last year, they said they will double their profits and are trying looking at another acquisition. Will they prove it again?

Essense No 3.
THERE IS A GREAT FORTUNE AT GHL STSTEMS BHD UNDISCOVED
Recently we have witnessed that more and more Chinese giant companies are some actively snapping up opportunities in this region especially in South East Asia. In Malaysia these super rich companies are snapping up lands, buildings, good companies and private Joint ventures. One of the company is Alibaba Group in technology sectors and Country Garden Property in property development. Alibaba itself have been aggressively penetrated South East Asia due to the underdeveloped experience and huge opportunities for these nations to offer a Chinese product in this region. Notable moves that joining the rush is Japanese internet company.
While the government of these nations is encouraging the cashless society, they did not have the speed and benchmark as these giants have, like Alibaba and Tencent can do. To facilitate the buying and selling their products and goods, they have to first set up the ecosystem. Since they are already committed their goals in these countries on their expansion trails, they are well ahead of western company that may be joining the next rush. They have to collaborate with local companies to have an easier access and manners. In the near future, the activities will be more likely to be notable. The first necessary step is to ACQUIRE.

Essense No 4.
THE TRANSITION TO CASHLESS SOCIETY WILL BRING GREAT FORTUNE TO GHLSYS.
Social efficiency will bring tremendous progress to new edge business. Only the best  brainers and best  business corporation will ensure the success of most business sectors in Malaysia. Government can initiate but mostly has failed because it is too complex and hard to penetrate by certain conditions that most people know. Not only MSC has not progressed, most of the corridor that regards to Mission 2020 corridors, is not progressing well because of complex regulation imposed on business societies. MSC is too diversified and outdated. It has stopped chasing the trends. It is mainly used as a platform to realize Mission 2020. To focus on CORE business is very important.
The technology transition is changing fast. Too fast that what we can imagine. The Government has launched many Corridors. Mostly has not progressed well. We all understand why. The only Corridors that are beginning to show results is Iskandar Corridor, Johor. That is also because of the influx of Large Foreign Investors,including Large Chinese Corporation like Country Garden Property and etc. They are very efficient and focus on their core business. They are serious and know what they want. Without their participation, there is no way to find the speed of result and progress in Iskandar, Johor. Technology will change the way we live. That is the future. If you can do and detect something earlier than anyone else,you will have the advantage to be successful.Now that the Titans of the internet has begun theirs acquisition trail, the transition may be faster than what we can imagine.
The migration of cashless societies through technology will set a benchmark to collaborate with the aim of universal social development and progress, not only our Government need to implement it, it must be blended in the ecosystem before the GST program begins. GST cannot be implemented effectively without these mechanisms. The new WAVE IS COMING.

Essense No 5.
GHL GREAT FORTUNE FROM EATING THE LUNCH FROM TRADITIONAL BUSINESSES
Owning the customers, will be key to success in most businesses. A rising tide of internet technology will definitely threaten the traditional businesses. It is a revolution. This is the transition from now to the future lifestyles of new aged population, young generation societies and cashless societies. In the past, we were focusing on traditional business that monopolize the market easily, such as financial and consumer retailer sectors. I have seen the threat as real. Technology innovation will disrupt the industries in the coming years. The scale of impact of changing technology innovation has begun to emerge. They began to eat at the lunch of their dominance. The technology savvy companies have been used to shake up the traditional finance and certain consumer retailers.
They are disrupting their active management industries. Once these INTERNET TITANS launching their financial services into their web platform, there will be more disruption coming to threaten their conservatism. The music of greater prospects of competition is a fortune to innovative technology titans at this moment. Perhaps it is for the traditional businesses to wake up and to improve their services ( instead of customers lining up and stand for hours ) and begin to understand the power of technology can take their lunch away easily now. This fortune is real and is COMING. The ecosystem of technology is penetrating South East Asia. The fortune of this transition is REAL.The UNIQUEcombination of Ghl and E Pay is not only focused on dollars and cents. LOOK BEYOND.

Essense No 6.
WITH MOL VALUED AT RM 2.6 B, GHL WILL HAVE GREATER FORTUNE ! 
What is the difference between MOL and GHL? What is the real value to determine both that bring fortune to the founder of this company? MOL has a revenues of around 400 million as reported in their announcement. But not their profit is seen. So what is the catalyst to differentiate both company's real value? In another way GHL is estimated to announce their revenues in the region around 120 million this financial year. Conservatively. If there are a suprise of upside, it will be even more interesting.This is according to the latest net research report. So, now that both the potential of the technology company has been put in papers. I notice that MOL is valued based on their branding and they are longer in the market compared to the GHL, because their merger aged is around four months and relatively young.
I trust MOL valuation of 18 times more than GHL is acceptable.Because it will indirectly hints the real value of GHLSYS. Nobody is stupid in the financial market. It is the future earnings that dictate the valuation today. Beyond that, all bases for understanding the business and knowledge about the internet technology that will soon make a great impact in the region. This is real and it comes to facts. Nothing is not transparent. Especially with the coming IPO of Alibaba Group that valued at hundreds of times more than these two company mentioned. Yes, of course Alibaba Group is very much larger than both Malaysian company. But there is one factor is the same here, the high expectation of this sector. The Rich and Famous is seeking these type of companies. They shared the same vision. They have confidence in the shift of social responsibility. More and more FOREIGN FUNDS are looking at GHL. Because they are still no nearer competitors at the moment. And they are on the right track. THE TIME WILL COME to prove this. Base on fact and figures. And there will be a huge premium to be tagged on GHLSYS.

Essense No 7.
UNDERSTAND WHAT FORTUNE IS AND YOU WILL RETIRE EARLY
As you are reading this, perhaps you have a same common goal to build up your finances for you and your family. There are plenty of resources that can provide more information and knowledge for everyone to to succesful. A surest way is to build an enormous fortune is to acquire a business that has good characteristics. They are 1. Good returns. 2. Sustainable. 3. Competitive edge. This is only achievable if a person itself has good characteristics and good attitudes to attain the said good fortune. A good character will attain fortunes from a vehicle that will allow them to earn more money than their labor alone could. Didn't notice the pattern? Most of private equity firm started in just this manner. In order to get a true fortune most private entrepreneurs want to own as much of their company as possible. Like Ghlsys Simon Loh. He never sells a single share in his history in Ghl and E-Pay. That is a good example of a good characteristic to build a business. He is confident of the future of his company. Did you ever see a successful businessman ever trade his own company shares?
There are so many successful entity founders wanting to own more than ever. They are real genuine company builders. Their company is worth more than anything else. As the information and knowledge of successful tips are easily available in just a click away, why there are so few of people cannot able to find a good fortune? I have to say that, in order to achieve a fortune , one must have a good characteristic, minus that is will be "misfortune" to oneself. I wish all investors and traders all the best in building a good characteristic in investing and a good attitude in finding the long lasting fortune.

THE END

Saturday, 13 September 2014

Tek Seng: Power Up Toward The Sun - Bursa D

Current hot stock Tek Seng's share price has surged 157% in less than 2 months from 33sen to 85sen.

On 11 Sep 2014, Tek Seng announced that it has entered into an MoU with Taiwan-listed Solartech Energy Corp (SEC), who will invest RM100mil in Tek Seng's 86.1%-owned subsidiary TS Solartech.


TS Solartech @ Penang Science Park

Tek Seng is primarily a manufacturer of PVC & plastic related products. It officially diversified into the manufacturing of solar photovoltaic cells in 2012 through its initially 60%-owned TS Solartech. Apparently Tekseng has increased its stake later to 86.1%.

I have written about Tek Seng earlier in July 2011 when it announced its decision to diversify into solar PV cells. I had a strong intention to bet on this stock, as I thought solar power will become something common like LED and smartphone. I even went to its new factory construction site at Penang Science Park a few times to see its progress.

Tek Seng's initial plan is to start with one production line in the first quarter of 2012, and gradually increase to 6 lines by 2016.

According to The Star report in 2011, TS Solartech is expected to generate RM130mil to RM170mil revenue in year 2012.

If it can achieve RM130mil revenue, and if we assume a conservative net margin of 5%, it will be RM4mil net profit for Tek Seng with 60% stake. This will be more than half of its RM7.1mil net profit from its existing business in 2011.

I did not invest in Tek Seng straight away, as I wish to see the actual contribution from its solar division first.

Tekseng's PVC flooring products

Tek Seng's solar PV cells production started only in June 2012. So for FY2012, it achieved revenue of merely RM0.21mil, which was a far cry from its "expected" revenue of RM130-170mil. It suffered RM7.65mil pre-tax loss as a result.

When TS Solartech contributed fully in FY2013, its revenue increased to RM12.4mil, but pre-tax loss has widened to RM13.9mil.

For the latest first half of FY2014, revenue from solar division jumps significantly to RM20.7mil (cumulative 6 months period), while PBT turns green at RM1.15mil.

However, if it is not because of "other income" of RM6.9mil, its solar division actually still suffers pre-tax loss of RM5.7mil in 1HFY14. I'm not sure what makes up "other income" here.

The good sign is that revenue in solar division has picked up greatly, and the loss has narrowed a bit, though it is still far behind its expected revenue of RM130-170mil.

If TS Solartech achieves greater economies of scale later as it ramps up its production capacity, it can anytime turn the tables in style.
In early March 2013, Tek Seng announced its plan to expand its 60MW plant to 640MW (production capacity) by 2015, with a target of eight production lines by 2016. It is more than 10 times increase in capacity!

It has already spent RM120mil on its plant and will need another RM480mil for expansion. This should be the purpose of SEC's RM100mil investment in the MoU.

Tek Seng is a small company with shareholders equity (net assets) of just RM134.6mil. The investment in its solar division seems to be massive. Even after its share price has more than doubled, its market cap is only at RM200mil.

Anyway, Tek Seng's stake in TS Solartech will drop after the investment by SEC.


Solartech Energy Corp, Taiwan

Nevertheless, it is hard to predict Tek Seng's financial performance and fair value at the moment.

It might have increased its production capacity but I'm not sure regarding the demand of solar PV cells and its factory utilization rate. It was earlier reported that there was an oversupply of solar cells mainly from China, which has caused a drop in its selling price.

For those who have taken position in Tek Seng in the past 1-2 years, they are surely handsomely rewarded from their patience right now.

At current share price of 84.5sen, is Tek Seng still undervalued or overvalued? I don't know. Can its bottom line explode next year? I don't know.

As usual, higher risk higher return. I do not have enough patience and I am not willing to wait and take the risk earlier, so I can only punch my chest now.

Head-To-Head: OSKProp vs Huayang - Bursa D

In contrary to some analysts who do not expect a good year for property sector this year, property sector actually does quite well in term of sales and stock price performance.

Since the beginning of this year I have removed those property stocks from my watchlist. Now I know that it is a mistake. The consolation is, property stocks still take up quite a big percentage in my portfolio.



One of the stock I missed dearly is Huayang.

I think not many investors will deny that Huayang is a great stock to own for long term. I am "craving" for it for quite some time but I don't know why I didn't buy it.

Perhaps when the stock price keeps on breaking new high, it kind of stops you from buying.

I was very tempted to buy its shares when it dropped to below RM2 early this year. However at that time, I think I have to be disciplined enough not to add more property stocks. Furthermore, its high gearing also further strengthen my decision not to buy.

Now I can only regret my stupid decision.



At the same time, OSKProp started to catch my attention after it released its full FY2013 result. Nevertheless, I'm not sure why I did not have any urge to study it further, perhaps because it is also a property stock.

Now OSKProp has already released its financial result for the first half of 2014, and it is just too hard to ignore it.

Both Huayang and OSKProp are small-mid size property developers that are growing at the moment. This can be seen from their latest financial results.

As OSKProp financial year ends on 31 Dec and Huayang on 31 Mac, for easier comparison I will consider Huayang's FY14 to be 2013 and similarly for earlier financial years.





Throughout the last 5 years, in general both Huayang & OSKProp achieve consistent growth in revenue and PATAMI.

However, Huayang's revenue and PATAMI are higher compared to OSKProp, especially its PATAMI.

The PBT margin of both companies are almost similar. So the relatively lower PATAMI for OSKProp might be due to more profit to minority interest (Sutera Damansara is 51% owned), while all recent Huayang's projects are 100%-owned.



Because of bonus issues in 3 consecutive years in 2011, 2012 & 2013, Huayang's EPS is declining slightly for the last 2 years despite increasing PATAMI. Meanwhile OSKProp's EPS is in a steady climb.

How about the future earnings of both companies? We can look into their recent sales figures as this will give some earning visibility for the near future.





OSKProp locked in more new sales compared to Huayang every year for the past 3 years. So, unbilled sales of OSKProp are higher as well.

In the last 3 years combined, OSKProp has generated total new sales of RM2.03bil compared to Huayang's RM1.65bil.

This means that OSKProp's revenue for year 2014 & 2015 will probably overtake Huayang. I predict that OSKProp's PATAMI may also surpass Huayang in 2014. These can be seen from the latest financial results by both companies.

Nonetheless, Huayang can still prevent this with more aggressive new launches in the second half of 2014.



For ROE, Huayang is excellent at above 20% mark, most probably in 2014 as well. However, do expect OSKProp to break above 20% in 2014.



High gearing is Huayang's main "problem" at the moment, due to aggressive landbanking activity since year 2011, especially the purchase of Puchong's land that cost RM158mil.

OSKProp looks like it can become a net cash company if it does not buy land this year.

Table below shows recent land acquisition of OSKProp & Huayang (might not be accurate)
DateLocationSize (acres)Cost (RM mil)Project
OSKProp



Sep 2011Cyberjaya1686.5Pangaea
Feb 2012Shah Alam13.7345.4Gravitas
Sep 2012Bandar Sri Damansara1.0612Opus
May 2013Shah Alam2.9115.2Emira





Huayang



May 2011Kuala Lumpur1.5532Sentrio Suites
Jun 2011Shah Alam3.7313Metia Residence
Aug 2011Johor Bahru2.110.7Citywoods
Apr 2012Hulu Kinta2115.2
Oct 2012Puchong29.2158
Jun 2013Seri Kembangan3.7356.9
Aug 2014Hulu Kinta7.225.1

For the past 3 years, Huayang spends almost 2 times more than OSKProp for land acquisition. OSKProp needs more cash to construct its Atria shopping mall I guess.

In term of dividend, generally Huayang pays more dividend per share due to its superior earning.

However, OSKProp also pays good dividend historically if we look at its dividend payout ratio from net profit. Both OSKProp and Huayang are quite even in dividend payout for the past 3 years at around 40%.

At current share price, Huayang has a decent dividend yield of 5.0% (RM2.42), while OSKProp's dividend yield is at 3.1% (RM2.78).


Metia Residence (Huayang)

As mentioned earlier, base on last 3 years' sales figures, OSKProp might overtake Huayang in term of revenue and profit. However, this will also depend on their respective sales this year and in the future.

Who has a brighter future?

As Huayang has acquired more new lands, it is not a surprise that it plans to launch lots of projects (up to RM1.09bil) for its FY15 which ends in Mac 2015. So far this year it still hasn't officially launch any projects.

The table below shows recent and future new projects launch of OSKProp & Huayang. (might not be accurate)

YearOSKPHuayang
ProjectGDVProjectGDV
2011Mirage By The Lake466Parc (OneSouth)154

Mirage Residence175Gardenz (OneSouth)160

Atria SOFO200






2012Vale (Sutera)
Flexis (OneSouth)183

Paragon (Pangaea)
Pulai Hijauan

Solstice (Pangaea)340






2013Eclipse (Pangaea)398Greenz (OneSouth)194

Almira28 (Sutera)
Metia Residence156

Vale II (Sutera)
Sentrio Suites213





2014Roseville (BPJ)



Gravitas150






TBAEmira250Citywoods248

Opus75The Gardens64

Kepler (Pangaea)338Cube (OneSouth)185



New phase P/Hijauan127



First phase Puchong300



Ridgewood90



Greenview Residence12
TBA = To Be Annouced
BPJ = Bandar Puteri Jaya

It is clear that Huayang depends a lot on its successful One South project in Seri Kembangan, while the near future earning of OSKProp will be hugely supported by its high-GDV Pangaea in Cyberjaya. Both projects will probably enter their last phase this year.

After this, Huayang has Puchong West (GDV RM1.35bil) as One South's successor. However, it seems like OSKProp doesn't have a successor yet for its Pangaea.


Pangaea (OSKP)
OSKProp has small pieces of prime land in Bandar Sri Damansara (Opus) & Shah Alam (Emira), while Huayang matches it with land at Seri Kembangan (Mines South) & Johor Bahru (Citywoods).

Both companies have huge township development. OSKProp has Bandar Puteri Jaya in Sg Petani, with remaining landbank at approximately 1,200 acres. Huayang has ongoing township at Bandar University Seri Iskandar in Perak (about 400 acres remaining) and Taman Pulai Hijauan in Johor (about 92 acres remaining).

Coincidentally, both companies also have lands in Seremban, where OSKProp has 15 acres while Huayang has 35 acres, both freehold.

Besides, Huayang has an ongoing commercial project Senawang Link in Seremban which has 20 acres remaining, as well as more small land parcels in Ipoh for both commercial & residential development. (from latest annual report).


Cube @ One South (Huayang)
Nevertheless, OSKProp recently sold 108 acres of land in its BPJ for RM56mil to PR1MA, and will be given the responsibility to construct 1,395 units affordable houses on it.

Protasco gets similar project worth RM88.1mil earlier this year to construct 1,144 units of PR1MA houses. So I think OSKProp's PR1MA project might worth about RM110mil.

OSKProp expects its Atria Mall (470,000 NLA) at Damansara Jaya to be ready by the end of this year. So it should contribute as a recurring rental income to OSKProp from year 2015, which can more or less "protect" the company from property market slowdown.

Furthermore, OSKProp plans to build the largest shopping mall in Sg Petani in its BPJ which might mean more recurring income in the future.

Belleview Group (not listed) also said that it will build the largest shopping mall in Sg Petani. Who will be larger then?


Atria SOFO & Shopping Complex (OSKP)
Meanwhile for Huayang, its landbanking activity might be limited due to high gearing, even though it has recently taken up a RM250mil Sukuk program. It has to pray that its property projects sell well to generate enough cash to pay the debts.

Anyway, Huayang does not seem to stop here as the management eyes further land acquisition in mainland Penang and Kota Kinabalu.

Development lands are crucial to a property company so I think Huayang's move is good for its shareholders.


Sentrio Suites (Huayang)

Both companies seem to be undervalued at the moment base on fair PE ratio of 10x.

OSKPropHuayang
Current Share Price (RM)2.782.42
Projected PATAMI (mil)100100
Projected EPS (sen)4138
Actual PE12.27.8
Projected PE6.86.4
Diluted Projected PE9.66.4
OSKProp's current actual PE (base on latest full FY result) may be higher but it will drop for sure if its 1HFY14 PATAMI is to be annualized.

The projected PE is base on projected PATAMI of RM100mil for both companies in their next full FY (similar with Tambun!).

At the moment OSKProp and Huayang have paid-up shares of 244mil & 264mil units respectively. OSKProp has 105mil outstanding warrants expires in Aug/2017.


Mirage By The Lake (OSKP)

In term of management team, Huayang has a good one for sure, who has grown the company tremendously besides giving good dividends and bonus issues without diluting shareholder's shares value.

As for OSKProp, I'm not too sure but it can't be too bad as it has successfully raised the company's earning and value to a higher level.

Anyway there is a possibility that OSKProp might be injected into OSK Holdings by its major shareholders. I think this might be a double-edge sword to OSKProp's minor shareholders. If OSKProp is valued cheaply, then it's not good.

In May 2011, OSKProp was attempted to be taken over by major shareholder Ong Leong Huat at 87sen per share. Its share price was traded around 75sen at that time and surged to 79.5sen a day before the announcement.

OSKProp's FY2010's EPS stood at 6.3sen, so 87sen offer price represented a PE ratio of 13.8x. However, its net asset per share at that time was RM1.74.

As a result, the takeover offer didn't go through.

In 2013, Ong also attempted to take over both OSK & OSKVI with offer price significantly lower than their net asset per share. So both have failed as well.

OSKProp's latest net asset per share stands at RM1.87, which is below its share price of RM2.78 at the moment. However, it still has Atria mall & is yet to revalue its land. What should be OSKProp's fair price?

Anyway, OSKProp might not be injected into OSK in the first place.

Is it still safe to invest in property sector now? If it is, OSKProp & Huayang, which one is more attractive? Why not both?

Friday, 11 July 2014

Weida: Property To Stir Excitement - Bursa D

Weida: Property To Stir Excitement


Recently Weida's share price has been pushed up by heavy volume. It seems like 

long term investors are taking position in this stock in anticipation of better 

financial results ahead.


Why better results? It's because Weida's investment in property development starts to 

bear fruits.


In its latest quarter of FY14Q4 which ended in Mac14, Weida registered its first ever 

revenue from property development at RM13.7mil, with a PBT of RM1.1mil.


This comes from the work progress of Urbana Residences @ Ara Damansara which 

was launched in the final quarter of calendar year 2013.


The development with GDV of RM230mil is almost fully sold.
       Urbana Residences: near to LRT extension


So it is only about 6% of the GDV recognized. We can expect Urbana's sales to 


contribute massively to Weida in the next 2 years.


Furthermore, its RM350mil second project at Mont Kiara is on the verge of being 

launched soon. I guess Weida should not have a big problem to do well in Mont 

Kiara. 


It is the last chance before GST.


Both projects are joint-venture in which Weida holds 85% of them. The total GDV of 

RM580mil is quite a huge figure for a small company like Weida.


A 15% net profit margin will produce about RM74mil net profit after minority interest to 


be distributed in the next 3 years or so.



Both Weida & Fitters are very similar - mainly a manufacturer with construction 


business and then venture into property. It's just that Fitters entered property much 

earlier.

       Urbana Residences: Luxurious condominium

These 2 property projects by Weida were already made known to the public last year 


and it is predictable that Weida's share price will rise sooner or later. However, I still 

haven't put my money in it yet...


I notice that in high rise property construction, initial billing progress will be slow and 

little in the first 1-2 years after launch, and will spike in the third year or at least after 

the whole framework of the building is done.


As Urbana was launched in late 2013, I'm thinking to take position only after mid-2015,

unless Weida is extremely undervalued at one point or its other business segment 

are doing extremely well.


However, it seems like other business segment are not performing too well.

WEIDA (RM mil)FY14Q4FY14Q3FY14Q2FY14Q1FY13Q4
Revenue81.580.571.388.096.9
PBT11.34.91.914.03.3
PBT%13.96.12.715.93.4
PATAMI10.51.90.39.955.0






Manu Rev47.550.938.254.244.5
Manu PBT3.16.35.77.12.9
Work Rev16.426.327.628.858.3
Work PBT7.1-0.20.26.76.7
Service Rev4.03.35.55.04.7
Service PBT0.50.9-0.20.5-0.2
Prop Rev13.70.00.0

Prop PBT1.1-1.4-3.5



Weida's quarterly results are quite inconsistent, especially in the work segment just 

like a lot of construction companies.


It delivers a good FY14Q4 quarter result mainly due to contribution from work 

segment, not the maiden profit from property segment.


However, revenue from work segment drops consistently for the past 5 quarters and 

there is no guarantee that it will pick up in the next quarter. We don't know whether 

they are out of contract or it's all because of timing of billings.

WEIDA (RM mil)FY14FY13FY12FY11FY10FY09
Revenue321.4380.6309.7285.9276.2267.9
Revenue growth %-15.622.98.33.53.1
PBT32.030.230.134.528.026.6
PBT%10.07.99.712.110.19.9
PATAMI22.650.825.221.817.215.0
PATAMI growth %-55.5101.615.626.714.7







Manu Rev196.2196.8140.3116.0

Manu PBT23.523.114.115.2

Work Rev93.6184.7141.8142.4

Work PBT12.519.422.922.7

Service Rev17.827.927.427.5

Service PBT1.71.2-0.51.5

Prop Rev13.7




Prop PBT-3.8











EPS17.8040.0019.8717.2113.5511.84
NTA2.862.74





Since 2009, Weida's revenue & PATAMI grow consistently until FY13 when it got a 

special gain from disposal of plantation business.


FY14 was not a good year as PATAMI of RM22.6mil was even lower than FY12's level 

of RM25.2mil.


I anticipate its manufacturing segment to grow convincingly in FY14 amid robust 

property & construction activity in the country but it did not really happen. Contribution 

from work segment also dropped sharply though more telecommunication towers are 

expected to be built in East Malaysia.


I think the new telecommunication towers contract will be very important to Weida, just 

like it is for Instacom.


Perhaps the award of contracts is slow...

In an interview with The Edge in 2013, Weida's MD Datuk Lee has a 5-year plan:
  • RM70mil NET rental income for telecommunication tower
    • FY13: RM19.4mil
    • FY14: RM12.5mil (PBT from work segment)
  • RM60mil concession income for septic sludge treatment
    • FY13: RM1.2mil
    • FY14: RM1.8mil (PBT from service segment)
  • RM400mil revenue of HDPE products
    • FY13: RM196.8mil
    • FY14: RM196.2mil (Revenue from manufacturing segment)

Frankly, I am not too optimistic that the target can be achieved even though 2018 is 

still quite far away, especially the target income for service segment. We may 

experience another financial crisis within this period of time and everything can 

change.
       Trusted & leading brand in Malaysia


Overall, Weida is still a net cash company (after disposal of plantation business) with 

high NTA (RM2.86). At current share price of RM1.80, PE will be 10.6x base on FY14 

EPS of 17sen. Its current ROE is at an unattractive 6.2% though.


It is noteworthy that Weida has made quite a few investment since 2007.It expanded 

overseas into the Middle East by carrying out a sewerage & water treatment plant 

project for Syria government. Unfortunately, Syria was hit by civil war later so it ended 

up with bad debts and the plan to further expanding its presence there was halted.

       Syria - Malaysia - Philippines


In 2007, Weida acquired a significant stake in a property developer Mutiara Goodyear 


and later became its largest shareholder at 13.8%. 


Mutiara Goodyear has a township project over 1,000 acres called Bandar Tasek 

Mutiara in Simpang Ampat, Seberang Perai Selatan of Penang.



Earlier in 2006, the ground breaking ceremony for Penang Second Bridge has been 

done and Simpang Ampat is expected to benefit from the new bridge. This might be 

the reason Weida bought Mutiara Goodyear's shares I guess.


However, Weida sold all its stake in Mutiara Goodyear in 2009, after Penang state fell 

into the hand of opposition in 2008.


Thereafter, Tambun Indah came in and took over the development of Bandar Tasek 

Mutiara and renamed it to Pearl City.


Look at how well Tambun Indah has done in recent years on its Pearl City, aided by 

the completion of new bridge and development of Batu Kawan. Weida just missed a 

golden opportunity to increase the value of its investment by selling early for small 

gain.


       Pearl City: Mutiara Goodyear's development in white


In 2007 as well, Weida also ventured into oil palm plantation in which it acquired 


16,000 acres of land in Sarawak and planted it with oil palm trees.


The palm trees will mature in stages from 2012 onward but Weida decided to sell all 

its stake in the end of 2012, which was the time when the plantation segment was 

expected to contribute to its bottom line.



Furthermore it was also the time when the CPO price was at recent historical low. 

Soon after Weida sold the plantation business, CPO price has reversed its downtrend 

and head upward from early 2013.



MKH also ventured into oil palm plantation business at the same time with Weida 


though MKH has bigger plantation size. Now MKH is starting to taste the exponential 

profits from it.

       Weida sold plantation asset to TH Plant in Oct 2012


So I think Weida has lost the opportunity to earn good recurring income with minimal 


extra cost for the next 20 years.



With the money from disposal of plantation business, Weida diversified into property 

development and has launched its maiden project in the end of 2013. Property is a 

lucrative business but is it too late to join in now?



Anyway, there are still many companies queuing up to share the cake of property boom.



At the moment Weida has one ongoing and one future property development project. 

It is yet to acquire new landbank to extend its property business.


Investors should pray that this time it is not like previous "hangat hangat tahi 

ayam" investment.


For the 5-year plan, I hope the the MD will keep to his words.