BURSA – Fundamental Analysis (24 Apr 2015)

BURSA Analysis:-

Excel – http://1drv.ms/1I1WI64

Notes – http://tinyurl.com/kgowyj6

My View:-

  • Valuation:
    • 10Y-DCF:
      • Good Scenario: 11.4 (Fair value uncertainty: LOW)
      • Base Scenario: 9.28 (Fair value uncertainty: HIGH)
      • Bad Scenario: 7.56 (Fair value uncertainty: VERY HIGH)
      • Ugly Scenario: 6.18 (Fair value uncertainty: EXTREME)
      • At current price (8.98), based on RDCF, assumption of FCFF growth rate in the next 10 years is 5.6%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.372) – Fair value 10.42 (Fair Value Uncertainty: MEDIUM)
        • R4Q (EPS: 0.373) – Fair value 10.47 (Fair Value Uncertainty: MEDIUM)
      • Forward:
        • FY15 (EPS: 0.38) – Fair value 10.65 (Fair Value Uncertainty: MEDIUM)
        • FY16 (EPS: 0.417) – Fair value 11.68 (Fair Value Uncertainty: LOW)
      • EPS applied to reach the current stock price (8.98): 0.32
  • In 2015, retail investors/traders likely to stay on the sideline and become more vigilant with their trading habits given the current choppy market environment.
    • Behavioral finance studies have also shown that investors tend to be more loss averse rather than risk averse, leading to this to effect.
  • Foreigners have been net sellers of Malaysian stocks for the past 6 months and are unlikely to return anytime soon.
  • The increased interest by retail investors, in particular, is a positive sign. Local institutions remain a steady presence in the market, buffering stocks from the worst of the effects of selling by foreign investors.
  • I remain sanguine on the company’s outlook over the longer term. Its business model is also fairly resilient. As mentioned above, recurring and other incomes, including interest income, is sufficient to cover some 91% of total operating expenses.
  • I will continue to hold and accumulate BURSA.
  • There are different views on whether BURSA will give special dividends. For me, BURSA so far has been quite generous in giving dividends. Special dividends will be a good bonus, but no big deal if no special dividends.

Latest Financial – Q1 2015 Financial Report (22 Apr 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4713105

At the time of writing, I owned shares of BURSA.

PBBANK – Fundamental Analysis (23 Apr 2015)

PBBANK Analysis:-

Excel – http://1drv.ms/1EfzYhf

Notes – http://tinyurl.com/popzxf3

My View:-

  • Valuation:
    • Absolute P/TBV:
      • Trailing:
        • FY14 (BPS: 7.674) – Fair value 22.54 (Fair Value Uncertainty: MEDIUM)
        • R4Q (BPS: 7.275) – Fair value 21.37 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY15 (BPS: 7.813) – Fair value 22.95 (Fair Value Uncertainty: MEDIUM)
        • FY16 (BPS: 8.549) – Fair value 25.11 (Fair Value Uncertainty: MEDIUM)
      • BPS applied to reach the current stock price (19.62): 6.679
  • In FY14-FY15, intense competition amongst financial institutions for market share as well as the need for higher capital conservation due to the requirements of Basel III capital framework, will continue to put pressure on pricing of products and return on equity. PBBANK growth will be slowing down, and this is proven from the declining ROE in the past 5 years.
  • Post rights issue exercise and after deduction in interim dividend declared, the Group’s CET1 ratio stands at 10.8%. At 10.8% for Group level, this will be sufficient to cover for the requirements of Basel III on Group’s CET1 ratio of 7% (inclusive of 2.5% capital conservation buffer) as well as a potential implementation of a counter cyclical capital buffer of up to 2.5% by 2019 on Financial Holding Companies.
  • With the full year impact of its enlarged capital after the completion of rights issue coming into effect, ROE will be much lower.
  • Lower dividend payouts in the range of 45-46% is expected
  • For latest Banking sector analysis, please visit http://www.midf.com.my/images/pdf/research-Report/Equity-Beat/2015/Banking-Feb%202015%20BNM%20Stats-MIDF-010415.pdf
  • Looks like valuation of PBBANK is still attractive.

Latest Financial – Q1 2015 Financial Report (20 Apr 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4709641

At the time of writing, I owned shares of PBBANK.

CYPARK – Fundamental Analysis (31 Mar 2015)

CYPARK Analysis:-

Excel – http://1drv.ms/1I0SZq6

Notes – http://tinyurl.com/ornuu2e

My View:-

  • Fair value:
    • Absolute EY%
      • Trailing:
        • FY14 (EPS: 0.208) – Fair value 2.56 (Fair Value Uncertainty: MEDIUM)
        • R4Q (EPS: 0.199) – Fair value 2.45 (Fair Value Uncertainty: MEDIUM)
      • Forward:
        • FY15 (EPS: 0.35) – Fair value 4.3 (Fair Value Uncertainty: LOW)
        • FY16 (EPS: 0.36) – Fair value 4.43 (Fair Value Uncertainty: LOW)
      • EPS applied to reach the current stock price (1.79): 0.146
  • CYPARK’s valuation looks very attractive.
  • This stock will stay in the Watch List. I may buy CYPARK in near future.

Latest Financial – Q1 2015 Financial Report (31 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1919309

At the time of writing, I did not own shares of CYPARK.

KMLOONG – Fundamental Analysis (30 Mar 2015)

KMLOONG Analysis:-

Excel – http://1drv.ms/1xrraUo

Notes – http://tinyurl.com/ofregj3

My View:-

  • Valuation:
    • 5-Y DCF:
      • Good Scenario: 4.58 (Fair value uncertainty: LOW)
      • Base Scenario: 4.02 (Fair value uncertainty: LOW)
      • Bad Scenario: 3.52 (Fair value uncertainty: MEDIUM)
      • Ugly Scenario: 3.07 (Fair value uncertainty: HIGH)
      • At current price (2.78), based on RDCF, assumption of FCFF growth rate in the next 5 years is -5.5%.
      • Considering the factors surrounding this sector and this company, I think the assumed FCF growth may not supported by future earnings. I will take the bad/ugly scenario into consideration.
    • Absolute EY%
      • Trailing:
        • FY15 (EPS: 0.243) – Fair value 3.06 (Fair Value Uncertainty: HIGH)
        • R4Q (EPS: 0.243) – Fair value 3.06 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY16 (EPS: 0.247) – Fair value 3.11 (Fair Value Uncertainty: MEDIUM)
        • FY17 (EPS: 0.268) – Fair value 3.37 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (2.78): 0.221
  • The CPO price moves in a cyclical manner. In a worst case scenario, KMLOONG, a net cash company with a low cost of production and an experienced management team would be able to withstand the turbulence and even take up expansion opportunities.
  • In overall, valuation of KMLOONG is not bad, but less attractive. KMLOONG is a good counter for trading.
  • Unfavourable outcome of a court case made by some natives against its subsidiary, Tetangga Akrab Pelita (Pantu) Sdn Bhd (currently known as Winsome Pelita (Pantu) Sdn Bhd), regarding their customary rights to land. The group has accounted for impairment of assets and provision of contingent liabilities of RM3mil.
  • The FFB production for the current quarter and year-to-date were 77,300 MT and 304,700 MT respectively which were 10% lower and 6% higher comparing the corresponding periods in last year.
  • The plantation operations did not face problem in selling its FFB production as most of the produce was supplied to mills within the Group. Average FFB price was 6% higher for the current year-to-date as compared to last year.
  • I will closely monitor FCPO prices, and consider to buy KMLOONG when only FCPO turns bullish.

Latest Financial – Q4 2015 Financial Report (26 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1914021

At the time of writing, I did not own shares of KMLOONG.

image

HAIO – Fundamental Analysis (25 Mar 2015)

HAIO Analysis:-

Excel – http://1drv.ms/19PyXRz

Notes – http://tinyurl.com/nr8hftv

My View:-

  • Valuation:
    • 5Y DCF:
      • Good Scenario: 2.67 (Fair value uncertainty: MEDIUM)
      • Base Scenario: 2.35 (Fair value uncertainty: HIGH)
      • Bad Scenario: 2.06 (Fair value uncertainty: VERY HIGH)
      • Ugly Scenario: 1.81 (Fair value uncertainty: EXTREME)
      • At current price (2.32), based on RDCF, assumption of FCFF growth rate in the next 5 years is 3.7%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.205) – Fair value 3.25 (Fair Value Uncertainty: LOW)
        • R4Q (EPS: 0.16) – Fair value 2.54 (Fair Value Uncertainty: MEDIUM)
      • Forward:
        • FY15 (EPS: 0.145) – Fair value 2.29 (Fair Value Uncertainty: HIGH)
        • FY16 (EPS: 0.163) – Fair value 2.59 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (2.32): 0.146
    • Both models show that HAIO valuation is not attractive.
  • Despite the current slump in its earnings, coupled with the possibility of longer-than-expected effect from the strategy shift, HAIO’s attractive dividend will be the main catalyst for the stock.
  • Outlook remains challenging with biggest concern on the wholesales division due to the strong USD against MYR. With the USD still staying strong, the Group might face difficulty in sustaining the profitability in this division.
  • Low consumer spending sentiment is also a challenge, but I think this is short term. It is matter of time people get use to GST.
  • I will continue to hold HAIO as I believe that HAIO has the ability to overcome the challenges ahead.

Latest Financial – Q3 2015 Financial Report (24 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1911893

At the time of writing, I owned shares of HAIO.

SCIENTX – Fundamental Analysis (25 Mar 2015)

SCIENTX Analysis:-

Excel – http://1drv.ms/1xfXsBy

Notes – http://tinyurl.com/p6tgmrp

My View:-

  • Valuation:
    • 5Y DCF:
      • Good Scenario: 10.8 (Fair value uncertainty: LOW)
      • Base Scenario: 9.39 (Fair value uncertainty: MEDIUM)
      • Bad Scenario: 8.15 (Fair value uncertainty: MEDIUM)
      • Ugly Scenario: 7.05 (Fair value uncertainty: HIGH)
      • At current price (6.6), based on RDCF, assumption of FCFF growth rate in the next 5 years is 0.3%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.671) – Fair value 5.34 (Fair Value Uncertainty: VERY HIGH)
        • R4Q (EPS: 0.678) – Fair value 5.4 (Fair Value Uncertainty: VERY HIGH)
      • Forward:
        • FY15 (EPS: 0.729) – Fair value 5.8 (Fair Value Uncertainty: VERY HIGH)
        • FY16 (EPS: 0.822) – Fair value 6.54 (Fair Value Uncertainty: HIGH)
      • EPS applied to reach the current stock price (6.6): 0.829
  • The cast polypropylene (CPP) film (extensively used in flexible packaging of food and beverages) plant is expected to commence operations by end-2015. This new product should increase the production capacity in FY15 to sustain the group performance in this industry.
  • 24 Mar 2015 – SCIENTX will be less impacted by weakening of MYR after the company reduced their USD borrowings exposure to 58% as of 2Q15 (vs. 77% in 1Q15).
  • The implementation of GST in April 2015 will give short-term impact on demand for the group.
  • Valuation of SCIENTX is not attractive. In overall, uncertainty of fair values is from MEDIUM to VERY HIGH.

Latest Financial – Q2 2015 Financial Report (23 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1909681

At the time of writing, I did not own shares of SCIENTX.

SKPETRO – Fundamental Analysis (25 Mar 2015)

SKPETRO Analysis:-

Excel – http://1drv.ms/1brOckc

Notes – http://tinyurl.com/nagx3x2

My View:-

  • Valuation:
    • Absolute EY%:
      • Trailing:
        • FY15 (EPS: 0.193) – Fair value 4.43 (Fair Value Uncertainty: LOW)
        • R4Q (EPS: 0.239) – Fair value 5.49 (Fair Value Uncertainty: LOW)
      • Forward:
        • FY16 (EPS: 0.19) – Fair value 4.37 (Fair Value Uncertainty: LOW)
        • FY17 (EPS: 0.212) – Fair value 4.87 (Fair Value Uncertainty: LOW)
      • EPS applied to reach the current stock price (2.3): 0.1
    • As for DCF, as SKPETRO does not disclose details of Operating Cash Flow, I will calculate DCF after SKPETRO releases Annual Report 2015.
  • 25 Mar 2015 – Orderbook remains healthy at approximately RM25.7b, stretching up to year 2024, with approximately RM19b in extension options.
    • 25 Mar 2015 – At the end of FY15 (2.6x of FY15 revenue) with 28% (RM7.3 billion) and 21% (RM5.5 billion) would be burned-out in FY16 and FY17 respectively.
  • Valuation of SKPETRO is very attractive as the company’s locked-in order book remains solid and that its oil fields are still in the black.
  • In FY15, SKPETRO FY15 normalised earnings rose by 6% yoy to RM1,154m
  • The DES and Fab & HUC segments registered topline growth with the exception of OCSS segment. DES segment remains as the key contributor with almost equal PBT contribution from Energy and Drilling.
  • The company has locked-in approximately >RM7b worth of jobs to be executed for FY16. Including revenue contribution from the Energy segment (approximately RM2b per year) and excluding joint-venture project portions, SKPETRO will still need to replenish and execute >RM2b worth of jobs in FY16 to at least match the normalised earnings achieved in FY15.
  • The weak global crude oil price and coupled with Petronas’ capex cut are still the key risks in FY16.
  • Management remains confident to be included in the SC’s May 2015’s Shariah compliant list.
  • I will hold and continue to accumulate SKPETRO.

Latest Financial – Q4 2015 Financial Report (24 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1910805

At the time of writing, I owned shares of SKPETRO.