Google+ Followers

Thursday, 4 August 2016

OCK - Expanding to a Regional Footprint: Asean Player in The Making

Company Profile
OCK is founded and led by Mr. Ooi Chin Koon in year 2000 (OCK Setia Engineering Sdn Bhd) and listed on Bursa Ace Market in year 2012. I guess now you can see where the 'OCK' name come from. =)
From 2000 to 2012, it is not bad for a cool 12 years from 0 to a listed entity right? It took another 2 short years for OCK to upgrade herself from ACE to Main Market (20m PAT in 3-5 years with the latest financial year not less than RM6m PAT).

What OCK do?

Extracted from OCK's Corporate Website:

OCK Group is principally involved in the provision of telecommunication services equipped with the ability to provide full turnkey services. Our service offering comprehensively covers services from all six segments of the telecommunication network services market: network planning, design and optimization, network deployment, network operations and maintenance, energy management, infrastructure management, and other professional services. As a Network Facilities Provider (NFP) Licensee, we are able to build, own and rent telecommunication towers and rooftop structures to the eight telecommunication operators in Malaysia.

Why I am looking at this company?
They are some info I would like to share for this stock.

1. 3x Cash Call in 4 Years 

In a short span of 4 years of listing (2012 to 2016), she already did 2x of cash call and now calling for the 3rd round. The 3rd and latest round of cash call was announced in June 2016. What actually happened?
For a listed company, the main reason for an IPO is to sell/place out min 25% of their enlarged shareholding to raise cash (to meet the minimum 25% public spread). The cash raised should be sufficient to cater for the next few years business expansion purposes.
Surprisingly;

i. 2 years post listing, RM74m was raised through 'Private Placement' on June 2014
ii.  The subsequent year, RM132m was raised though 'Right Issue' on Dec 2015
iii. The following year, they announced the 3rd round of fund raising exercise on June 2016

Extracted from Bursa Malaysia, 'Company Announcement' column;

PROPOSED PRIVATE PLACEMENT OF UP TO 105,632,181 ORDINARY SHARES OF RM0.10 EACH IN OCK REPRESENTING APPROXIMATELY TEN PERCENT (10%) OF THE ISSUED AND PAID-UP SHARE CAPITAL OF OCK ("PROPOSED PRIVATE PLACEMENT").

For a simplistic calculation, let's say I am taking the last closing price @ 5/8/2016 which is RM0.83 and multiply by 105.6m shares, the amount to be raised will be RM87m. (Generally, to do a Placement, PVWAP of 5 days will be used).

Raising so much of funds via Equity do dilute the shares and EPS, moreover it is barely 4 years old in Bursa. Many Investment Managers definitely will raise their eye browse on this. Let's map the chronology of the fund raising:

Fundraising i:

It was being done at the same time /year with the acquisition of PT Putra Telecommunications in Indonesia.
A new venture to overseas business. 

Fundraising ii:






The 2nd cash call  was being done at the same time /year with the acquisition of 920 telecommunications towers contract from Telenor Myanmar. Another new country she ventured in. 

Fundraising iii:






The 3rd cash call  was being done at the same time /year with the acquisition of SEATH (owned 1938 towers in Vietnam. Another new country she is venturing in.

Look at how the money flows as at 1st Quarter of 2016:

For 1st Cash Call:

There is a balance of 16.11% to be used. The mandate to utilize the money has expired on June 2016. I believe OCK has fully utilized the 100% of the 1st cash call for now.

For 2nd cash call:

There is a balance of 87.3% to be used for business expansion which I believe for Myanmar's Project.


What to look at for OCK?

1st Growth Catalyst: Potential Improvement of Earnings from Indonesia & Myanmar

Monies already spend but earnings only started to crystallized. This is to say, monies spend since year 2014 has starting to yield the positive numbers to the top and bottom line of the latest QR Report. For the funds raised in cash call 2 has yet being fully utilized. Believe it will give a further boast in their upcoming QR Reports. The overseas venture done is bearing fruits for her. During the Indonesia acquisition, it was 6000 sites, 2 years later it is 20000 sitess. Not bad at all.

The current weakening of RM against the US dollar is beneficial to her as well. What do you think for the upcoming 2nd, 3rd and 4th Quarter of 2016 numbers would be ? =)

Please refer below of the details highlighted in blue:



2nd Financial Health Analysis


Income Statement
Profit Margin = 7.84% - pass (<5% fail)

Interest Cover = 4.31x - pass (<3x fail)
Profit for the past 4 years = Yes, steadily grow from RM13.15m year listing year 2012 to RM24.75m in year 2015

Balance Sheet
Current Ratio = 3.32x – pass (<1x fail)
Debts to Equity Ratio = 0.59x – pass (>3x fail)

Cash Flow
Positive at least 1 year = Pass - Yes from RM12m (2012) to RM164m (2015)

OCK PASS ALL 6 FINANCIAL HEALTH RATIOS.



3rd. Pricing Analysis

Price to Earnings: 
Using the Rolling 4 Quarters EPS: 3.197 = 0.83/3.197 = 26x (not cheap at all)
Looking at continuous income from Indonesia and Myanmar, it should be better for the few upcoming quarters.

Price to Book Value – 1.95x (not cheap but acceptable)
Dividend Yield – 1.45% (for a company in high expansion mode, any dividends payout is a bonus)

Do look at her Compounded Annual Growth Rate (CAGR) for Revenue and PAT (extracted from Annual Report):









Net profit has tripled for the past 5 years. From a RM9.2m to Rm27.1m. Talking about consistent high growth for her!


4. Catalysts for 2016:

1.       The main catalyst which catches my eyes for possible long term investment:
The consolidation of income from Seath Vietnam. Assuming 2016 yield about the same like 2015: 60% of 2015 PAT of RM7.44m will be around RM4.5m added in to the bottom line.
The additional incoming revenue from Indonesia and Myanmar. Monies raised from the upcoming placement definitely will be a great usage to improve the following few 2016 Quarterly Report results.


Technical Chart Perspective:




She has touched the resistance level @ 0.84 for the 7th time! Talk about long consolidation. Look at the triangle (blue line) recording Higher Low for the last 6x support level. The latest few days closed with a high volume. Something to see for technical chartist?

For those who likes to see for a longer time frame, lets look at below, it might look interesting for you. It is trading at the new high, trying to break the old resistance set in July 2014 ! Wonder what would it be in the near future ? =)






Conclusion & Personal Opinion:

I like the strong management team lead by Mr. OCK and solid fundamental numbers recorded. As now the company has been in the overseas business for the 3rd year, I believe the numbers will be good for the near future. Let's hope that the name OCK also stands for Orang Cepat Kaya.

Potential risks involved are the slowdown in Malaysia economy as most of her revenue currently still in Malaysia and fluctuations on USD currency (Indonesia, Myanmar and Vietnam's Project). For those conservative FA followers, this stock might not be suitable for you as it has a high valuations. I am looking at 'Growth Investing' and not 'Value Investing'. Our perspective and risk tolerance might be different. 


Please like us at our facebook page - Bursa Blue Ocean and complete the survey form and join out telegram group chat room!

Sincerely,

Humble Pie

Disclaimer and Declaration

The information is meant for the members of Bursa Blue Ocean (BBO). Disclosure and distribution of the message without the permission of BBO is prohibited. The full content of the article and write ups are for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss.

Monday, 18 July 2016

GHL Systems Berhad - The Hidden Gem

Company Profile

GHL is led by Mr. Simon Loh (Executive Vice Chairman) who joined in 2010. He spend 2 years to revamp the company till it is profitable and is has been running well since.
There are some interesting info that I like about this company and believe it might be suitable for investors who can tolerate higher valuation stocks.

The GHL AGM was held at 29 June and I was contemplating to either go to Kuala Lumpur Country Club or HSS IPO Launching. Ended up I went to KL Country Club at Bukit Kiara to join her AGM. =)

What GHL System do? 

Extracted from the corporate website:

Provides integrated end-to-end payment solutions encompassing physical and virtual payments on sale and rental basis, including Electronic Data Capture (EDC) terminals compliant to the Europay-Mastercard-Visa (EMV) platform, contactless readers, network access routers, and online payment gateways.

Why I like this company? She fulfilled 3 requirements that I am looking for and has a good growth story. She only failed one of my 4 personal investment requirement.  
1st Growth Potential

She has successfully penetrated the Philippines market in May 2016 for Transaction Payment Acquisition TPA with Rizal Commercial Banking Corp Philippines and targeting to acquire 3000 merchants for 2016. May and June alone, she has successfully acquired 1000 merchants! The new earnings are yet to be captured in the latest QR and the FY End 2016.


2nd Financial Health Analysis


Income Statement
Profit Margin = 5.28% - pass (<5% fail)
4% in year 2014 to 5.28% in year 2015 – increasing for the past 3 years

Interest Cover = 3.55x - pass (<3x fail)

Profit for the past 5 years = Yes, steadily grow from RM4.37m year 2012 to RM11.33m year 2016
(it has made rights and bonus in year 2013 and 2014, so EPS was diluted) 

Balance Sheet
Current Ratio = 1.73x – pass (<1x fail)
Debts to Equity Ratio = 0.55x – pass (>3x fail)

Cash Flow
Positive at least 1 year = Pass - Yes from RM45m to RM59m

The Trade receivables has declined from RM34m to Rm12m which is a positive note. Bank Borrowings dropped from RM26m to Rm 8.8m. A good effort to par down debts and saving the interests cost. The good thing is the cash flow is being managed well. It is at a increasing manner! Please refer below:






GHL PASSED ALL FINANCIAL HEALTH RATIOS



3rd. Pricing Analysis (Failed the Pricing Analysis - High Forward PE)

Price to Earnings 
Using the Rolling 4 Quarters EPS: 1.737 = 0.96/1.737 = 55x (not cheap at all)
Forecast Future PE by using 1st Quarter 2016 and annualized it by X4 = 1.737x4 = 2.68
Forecast Future P/E = 0.96/2.68 X 100 = 35.8x (still very expensive)
Looking at TPA secured in Philippines, it is possible for her to repeat the 1st Quarter 2016 result and might be better.

Price to Book Value – 2.46x (not cheap but acceptable)
Dividend Yield – 0 (don't expect to get anything from her)


4. Catalysts for 2016:

1.       The main catalyst which really catches my eyes for possible long term investment is the penetration into new countries and capturing new TPA market. She is also potentially to embrace to technological change, participating mainly in Fintech technology according to Simon. 

2.       Creador has remained as the major shareholder since Oct 2014 at the entry price of 42 cents. His initial block was at 20 cents and latest filing as at 2015 annual report was 28.42%. Guess what, during the latest AGM, the representative from Creador Ms. Lim Sze Mei (ED for Creador) was sitting with the GHL board. I get some feeling of comfort from this situation knowing most likely Creador will be there for some time in the near future. 





Technical 

From the technical perspective, it has touched the resistance level of 0.96 which is also the wave C. May take a look if you are a keen TA practitioner.



Conclusion & Personal Opinion:

I like the strong management team lead by Mr. Simon and Mr. Kanagaraj. The solid fundamental numbers recorded since Simon took over on year 2010 and revamp the company till it is profitable. With the potential Fintech technology to be explored for e payment, I believe it is a good stock to watch for 2016. Creador stays definitely makes her a sexy stock to watch out.

But mind you, the potential risks involved are the high valuations she has for now. The P/E is at staggering 55x which does not make sensible Pricing Analysis entry. It only has Healthy Financial Ratios but Poor Pricing Analysis. Involvement in overseas business also exposing her to the currency risk. For the rich valuations she has, it is not a company that suitable for low risk takers. You can only rely on the growth stories from her ventures in overseas to offset the rich valuations in the near future.  For those who follow FA Rules strictly, this is not the stock for you. 


Please like us at our facebook page - Bursa Blue Ocean and complete the survey form and join out telegram group chat room!

Sincerely,

Humble Pie

Disclaimer and Declaration

The information is meant for the members of Bursa Blue Ocean (BBO). Disclosure and distribution of the message without the permission of BBO is prohibited. The full content of the article and write ups are for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss.

Friday, 29 January 2016

Humblepie Watchlist for Value Investing as at 29 JAN 2016:


The week has been quite volatile with the last trading day of the month ended with 33 points / 2% up to mark a good window dressing. Net buy from Foreign 706m on 29 Jan. As mentioned earlier yesterday  that the issue from Wan Emdibee is over, money already 'return', RM strengthen and if oil price rebounds, everything will goes back to normal.




For my portfolio, I have sold Inari and Unisem and effectively Reduced my return for Crystalized Profits for an Average of 1.9% per stock from the initial 4.2% per stock. It is equivalent to Money Market interests for 6 months which if you annualized it will be 3.8% (FD Ratefor 1 year). The Paper Gain for Stocks on Hand has dropped from 17.8% to 15.9%. I was not spared from the market volatality.

Selling out Inari & Unisem:
This is a good stock and looking forward for another round of good QR Report (at least for 4Q 2015). A cross check at Bursa announcement, the Director has been selling aggresively since Mid Jan till end Jan 2016 (DS Thong Kok Khee) with no sign of slowing down. Apple as well has issued early warning on first sales decline in a decade earlier last week. Samsung Electronics follow suit and issued a warning on gloomy 2016. I think the Value has changed and I decided to take the hit.
For Unisem, although the Directors is accumulating the shares but it is in a small block. I believe the next 4th QR should be ok looking at our RM/USD FX but I would rather step a side temporary.






What's next?

DOW closed up 396 points on last Friday but Malaysia is celebrating her Federal Day which is a Public Holiday. As the air has been cleared up a bit in Bolehland, I stand neutral on the market and currently analyzing some beaten down stocks with good FA. With the revised Budget announced, there are not much impact to the investors for stocks. I will post up another write up soon! Till then I am looking forward for a rebound on Tuesday for the balance 9 stocks on hand.

Happy Trading

Humblepie

Tuesday, 5 January 2016

MIKRO MSC BERHAD: THE NEXT BIG THING

Company Profile

MIKROB is a listed small cap led and founded by Mr. Yim Yuen Wah in 1997. I found some of the criteria I like in this company and believe it will be her next catalyst.  

What Mikrob do?

Extracted from Annual Report:
Manufacture and sale of analogue, digital, and computer controlled electronic devices for the purpose of protection, monitoring, and programming in electrical systems. Its products include protective relays, such as overcurrent (OC), earth fault (EF), earth leakage, combined OC and EF, voltage and current control, and reverse power relays; digital meters, including ammeters and voltmeters; current transformers; and power factor regulators. Mikro MSC Berhad also provides related technical support and maintenance services.

Why I like this company?

She has fulfill all 4 requirements that I am looking for and has a good growth story.

1st Theme Play
Needless to say, 2nd half 2015 is Export Play and I believe it will be carried forward to 2016 at least for another few months. For year 2015, she has been able to increase the export sales to Vietnam, India, Indonesia and Australia by 67%. The export done is bearing fruits for her. The current weakening of RM against the US dollar is beneficial to the Group because she derived 37% of the revenue of the company in export.

Look at the Cash USD in deposits for year 2014 @ RM 1.6m vs 2015 @ RM5.9m. A jumped of RM4.3m. Bear in mind, the 2015 Annual Report was published for Year End June 2015. The USD sharp spiked up was from July 2015 onwards and started to contribute to 1st Quarter 2016 results.  What do you think for 2nd, 3rd and 4th Quarter of 2016? =)





2nd Financial Health Analysis

 

Income Statement
Profit Margin = 21% - pass (<5% fail)
14% for year 2011 to 21% year 2015 – increasing every year without fail

 
Interest Cover = 127x - pass (<3x fail)
Profit for the past 5 years = Yes, steadily grow from RM3.4m year 2011 to RM8.26m year 2015

Balance Sheet
Current Ratio = 5.4x – pass (<1x fail)
Debts to Equity Ratio = 0.17x – pass (>3x fail)

Cash Flow
Positive at least 1 year = Pass - Yes from RM3.9m to RM8.4m

MIKROB PASS ALL 6 FINANCIAL HEALTH RATIOS!




3rd. Pricing Analysis
Price to Earnings –
Using the Rolling 4 Quarters EPS: 3.084 = 0.415/3.084 = 13.4x (not cheap but acceptable)
Forecast Future PE by using 1st Quarter 2016 and annualized it by X4 = 1.01x4 = 4.04
Forecast Future P/E = 0.415/4.04 X 100 = 10.3x
Looking at current USD/MYR exchange rate, possible for her to repeat the 1st Quarter 2016 result.

Price to Book Value – 2.88x (not cheap but acceptable)
Dividend Yield – 2.67% (for Ace market this is consider good, she has been paying good dividends since 2011 which most Ace could not make it)
Do look at her Compounded Annual Growth Rate (CAGR) for Revenue.  10.6% average for the past 5 years. It looks very good for an Ace counter like her. Most of the main board companies also cannot maintain their CAGR in double digit growth. What makes me even like her more? Look at her CAGR for Profit After Tax (PAT). It is at a staggering 19.4% for the last 5 years! Talking about consistent high growth for her! (extracted from Annual Report)






4. 3 Catalysts for 2016:

1.       The main catalyst which really catches my eyes for possible long term investment is the adoption of M2M (Machine 2 Machine) connectivity and IoT (Internet of Things). MIKROMB is embracing this technological change, not only because it is inevitable but also because it promises new frontiers and rewards.

2.       She just bought a piece of freehold industrial land together with a single storey warehouse, for a total cash consideration of RM11,720,000 for business expansion earlier this month. This was following through with the Private Placement done on 22 Dec 2015 with RM10m raised for their business war chest. Monies raised from the placement definitely will be a great usage to operate the new warehouse in 2016 and improve the following few 2016 Quarterly Report results.   

3.       Potential to be upgraded to Main Board. (this is what I like)
PAT for 2014 = RM 5.6m
PAT for 2015 = RM 8.2m
1st QR 2016 = RM 2.8m (annualized for 4 Quarters will be RM11m)

Under Bursa Main Board listing requirement, latest 3 years PAT must be minimum RM 20m with the latest Financial Year not less than RM6m. Looking at this scenario, she just need another 2 quarters to make it. Theoretically she already strong and fit to join the bigger boys in Main Board.  


Conclusion & Personal Opinion:

I like the strong management team and solid fundamental numbers recorded. As now the market is focusing on export play, I believe with the 3 catalysts she has, it is a good stock to watch for 2016. The potential of upgrading to Main Board and export theme play definitely makes her a sexy stock to watch out.

Potential risks involved are the slowdown in Malaysia economy as she derived about half of her revenue in Malaysia and fluctuations on USD currency.  


Please like us at our facebook page - Bursa Blue Ocean and complete the survey form and join out telegram group chat room!

Sincerely,
Humble Pie
Disclaimer and Declaration
The information is meant for the members of Bursa Blue Ocean (BBO). Disclosure and distribution of the message without the permission of BBO is prohibited. The full content of the article and write ups are for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss.

Sunday, 3 January 2016

Humblepie Watchlist For FA as at 31 Dec 2015:



The year ended with a good effort of window dressing done. From a low of 1629 on 21 Dec to close 1692 on 31 Dec, a rise of 3.9% for a better financial report card. The year of 2015, KLCI recorded a (3.4%) vs my FA profile of 16.5% average per stock. Personally I believe this year will more or less focusing on export industries, oversea construction base who receive monies in USD, companies with strong cash flow to do M&A (good time to phase out your weak competitors and spreading your wings) and companies with strong prudent management team to sail through a challenging 2016.

Industry to avoid / keep in view until further improvement seen in their industry results and market sentiment - oil & gas, property, importers, highly impacted by GST and highly relying on government contracts / awards to name a few.

One thing to note, becareful on companies that recorded on high profits but worse off cash flow and trade receivables. No point if you can do businesses but you dont know how to collect the monies after that. Becareful with companies  that have a problematic Management Team and Bad Track Record. Good times, everyone is happy and no one cares about the  book whether is cooked or genuiene. During the bad times, it is always the best time to see who is swimmming naked.

Those who went through 2007 Subprime Mortage will know the Lehman Brothers, AIG, Citigroup either went bust or bailed out by Uncle Sam. No such thing as too big to fail anymore. It created a history in US Investment Bank World when the world big 5 Investment Banks left with only 2 and 1 being bought over.      

Be prudent with your cash. it is hard earned money and don't gamble it. We shall see many more house keys will be handover in 2016 to 2017 during the DIBS time when buyers buy without collateral from developers. With all the domestic issues ongoing, it will be an exciting year to do good stocks accumulations and perhaps bargain hunting in properties.

Till then Happy Trading!

Regards,

Humblepie

End of Year Message And Appreciation

Dear All Members of BBO Telegram Group,

On behalf of the Management Team, I would like to wish all of you a Happy New Year and Prosperous 2016. It is a time for reflection on things done for 2015:

The BBO Private Telegram Group was started on early October 2015 by a group of professionals and businessman from various investment background. Initially is was a closed group for the selected and invited few to share their investment opinions and research done for the benefit of the members in early 2015. Fast forward 3 months, we have a small family of 700 plus in the Telegram Group as at end 2015 and 2.7k likes in FB Page.

How is BBO Group different compare to the other Groups you are joining?

1. We are run by professionals (members with the background from Corporate Finance, Fund Management, CFO of listed entity, Investment Bankers, Full Time Traders, Savvy Businessman). Posting and info done are base on figures and facts.

2. We do not condone the act of :
i. Pump and Dump Activities
ii. Operators Stocks / Syndicated Activities
iii. False Rumor Spreading and Distribution of Shares
iv. Analysis base on numbers and info pluck from the sky

3. Sharing and analysis done is a mixture of 3 elements:
i. Fundamentals & Tecnical Analysis.
ii. The Listed Company's Management Team (background, success stories and trustworthiness)
ii. Theme Play (are they on the right rotational play & Fund Manager's Radar)

Moving Forward for 1st Half 2016:

1. BBO Technical Trading Team will be doing monthly sharing/education for aspiring Traders who love charts. Tentative date January 2016.
2. Enlarging BBO Working Committee Team for events / roadshows and other BBO Private / Public activities. Tentative  date January 2016
3. Creation of BBO Fundamental Analysis Team. After CNY 2016.
4. BBO Investment Day 2016 - 2nd Quarter 2016.    

We would like to take this opportunity to say thank you for those members who have been contributing consistently on the daily information posting and sharings:

CH Seow, Nuren, Quantum, Ong Ah Sun, Fang, David Ting Ting, Su Kwok Tung, Augustine Bong, Tan Gim Hong, Pinko Heng, Sean Yong, Teo Kim Soon, Selina Loh, Anthony Ng, Steven Lee, D Salman and others that in our BBO telegram Group. Hope to see more of your sharings in 2016!

For BBO Committee Members:

Thank you for your hard work done on year 2015. We have a commentable year as our own investments and group portfolio is above KLCI Index. Let's work hard as a team to achieve a greater 2016. With the current team we have, I believe more people will be benefitted from what we are doing and sharings done.

Till then Happy 2016 and let's start the challenging 2016 year with a positive note and mindset.

Thank you

Regards,

Management Team
BBO Group