Jerneh, Paramount up on insurance biz sale plan

KUALA LUMPUR: Shares of JERNEH ASIA BHD [] and PARAMOUNT CORPORATION BHD [] were among the major gainers in late afternoon trade on Thursday, bucking the weaker market sentiment.

At 3.30pm, Jerneh-WA rose 27 sen to 96.5 sen with 15.1 million units done while the shares climbed 21 sen to RM1.97 with 2.94 million shares transacted. Pramount advanced 14 sen to RM3.05.

Interest in the shares arose after Bank Negara gave Jerneh Asia the approval to start preliminary talks with the relevant parties keen to acquire its entire 80% of its insurance arm Jerneh Insurance Bhd.

The remaining 20% equity interest in Jerneh Insurance is held by Paramount Global Assets Sdn Bhd, a unit of Paramount Corporation Bhd.

JERNEH!!!

InsiderAsia's Model Portfolio — Week 353

Why I Like TA Enterprise Tuesday, September 29, 2009

This is tough, its taking me 2 hours to write this and the bloody stock is moving as I write. Everybody should know TAE and what it does well, its a solid retail client based stockbroker. However, it has failed to broaden its investment banking side of things, and that has always relegated TAE to a discount to other players. The fact that it is not bank backed may have been a huge reason for not being a major player in investment banking. Anyways, that being the case, it has always been a good proxy vehicle whenever the stock market goes on a good run. Its a well managed broking operations with very strong and discipline credit control, and being the largest retail broker gives it a high beta when the market is on an upswing. Even in dull trading days, the financial figures have shown that it can still operate quite profitably as its business model is very much remisier based which has low incremental and operational cost to its structure.

Shares Issued: 1.428bn
52 week High-Low: RM1.40 - RM0.52

As of Monday, it has started to break out from its 52 week high. I was waiting and waiting for the details of the listing of its property arm before I can make a good assessment. You try looking around for research coverage on TAE, there is none bar one (the last one was by Citigroup and that was more than 6 months ago), and even that was just issued yesterday by Hwang-DBS. So, apologies to Hwang-DBS, much of what I am writing is based on a pretty decent research piece from your side.

Why I Like:
a) Its the surprise factor. Not many people realise just how cohesive and attractive TAE's property operations are. It is hard for investors to imagine that a stockbroker can be a decent property player - in fact, to me, they are a much better property player. They have accumulated a highly attractive landbank and also highly attractive hotels for decent investment income. In one fell swoop, you have an investment income side with solid real assets and the other being property development with very attractive landbanks.

b) By listing TA Global, it bring enormous value because as it is TAE is always rated as mainly a stockbroking operation. Following the listing TAE will still own 55% in TA Global but TA Global will suddenly become the country's 5th largest property company. This will allow TA Global to shine and be rated fairly on its own prospects, and with that comes a more proper valuation, which will indirectly benefit TAE anyway.

c) Once on its own, everyone will get to appreciate just how attractive TA Global's landbank is: 6.7 acres within KLCC (which could have a GDV of RM2.5bn); and another 236 acres scattered around Sri Damansara (48 acres), Bukit Bintang (3 acres), Dutamas (3 acres), U-Thant (1.4 acres), Kluang (95 acres) and Serendah (78 acres).

d) The general public were a bit skeptical at first when TAE went into property but just have a look at its completed and partially completed portfolio: Damansara Idaman, Idaman Villas and Idaman Residence. They can deliver solid premium projects, a big badge of honour. So, there is no problem with branding. In fact Damansara Idaman won the CNBC Asia Pacific Property Awards in 2008 for best development. (A bit of dejavu akin to the Mont Kiara projects in the early 90s by the Tong family).

e) I like their investment properties a lot. It is not haphazard or a mishmash of assets but a thought out acquisition strategy. It has acquired 4 major hotels: Radisson Plaza in Sydney for RM233 (97), Westin Hotel in Melbourne for RM389m (09), Aava Whistler in Canada for RM107m (08) and Swissotel in Singapore for RM635m (to be completed by Jan 2010). Besides their Grade A hotels portfolio, they also have two office buildings in Menara TA1 and the Teresan Center in Vancouver.

f) TAE as a whole maintained very good net margins as a group. For the last 7 quarters, net margins was between 24.7% to 48.3%. There was a blip at the height of the subprime implosion (Nov 08-Jan09) where it registered a negative 22.8% margin loss. That was quickly cast aside as their following quarter (Feb 09-Apr 09) saw net margins rebounding back to 42.3%.

g) Following the listing of TA Global, TAE will receive RM230m cash which could give TAE shareholders a special dividend in the months ahead.

h) After all that, the timing is just nice as it is slated to be listed by November 09. The fact that it has broken through its 52 week high cannot hurt.

The proposed listing will see TA Global issuing 4.8bn shares (50 sen). If you are thinking of subscribing its IPO, well forget it, there is no public portion. The only way you can get a piece of the action is to buy and hold TAE shares. TAE shareholders will receive 3 TAE shares and 3 ICPS for every 5 TAE shares held. To make it clearer, if you have 10,000 TAE, which will cost you around RM14,000 you will get 6,000 TA Global shares and 6,000 TA Global ICPS. Hence its really like an IPO if you buy TAE now.

Of course the attraction is at what levels TA Global will list. Hwang-DBS accords a fair value of RM2.10 on TAE, which to me is a bit conservative. I expect TA Global to perform very well upon listing. The projected market cap for TA Global may be around RM2.4bn - RM2.6bn, making it number 5 behind SP Setia (RM4.18bn), UEM Land (RM3.81bn), KLCC Property (RM3.3bn) and IGB (RM2.64bn). In fact I think TA Global will be number 4 once it gets listed as it should easily shove aside IGB.

Being the number 4 player, plus its landbank being a lot more accessible than others, will make it attractive to foreign institutions. Next will be the elevation to be part of FBM-70??? I don't have a price target but I think TAE has no business being at current levels looking at the upcoming developments and I also think Hwang-DBS RM2.10 is a bit conservative.


p/s photo: Tavia Yeung Yi

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
http://malaysiafinance.blogspot.com/2009/09/why-i-like-ta-enterprise.html

Why I Like Success Transformers (A Lot) Tuesday, October 20, 2009

I used to cringe a lot whenever I come across the Cina-apek named companies, literally translated from Chinese into English. Things that sounded OK in Chinese does not translate well into English - remember Wonderful Wire & Cable... Now we have Success Transformers... how not to do well, Success and Transformers the movie... Success Transformers, through its subsidiaries, manufactures and markets electrical and industrial lighting products.The company's products include high-intensity discharge (HID) lighting luminaries, low voltage transformer, automatic voltage stabilizers, battery charger and tester.

It also offers energy saving lumens regulator, phase monitoring relay, reactor and running light controllers.The company primarily operates in Malaysia, where it is headquartered in Sungai Buloh.

The company's key products include the following:
High-intensity discharge (HID) lighting luminaries
Low voltage transformer
Automatic voltage stabilizers
Battery charger and tester
Energy saving lumens regulator
Phase monitoring relay
Reactor
Running light controller

Catalyst #1: Success Transformer Corp Bhd is proposing to list its wholly-owned subsidiary, Seremban Engineering Bhd, on the main market of Bursa Malaysia. In a filing on behalf of the company, RHB Investment Bank Bhd said Success Transformer’s board had approved the proposed flotation comprising several proposals to facilitate the listing exercise. Can reasonably expect some free shares since its a 100% company that is being listed.

Success Transformer Corporation Bhd’s (STC) subsidiary, Seremban Engineering Bhd (SEB), has entered into a cooperation agreement with Affcom Resources Sdn Bhd towards forming a joint venture (JV) company in the oil and gas (O&G) industry. STC said the objective was to incorporate a JV company to undertake the design and fabrication of equipment, refinery, lube oil plant and engineering and any other related activities.

Malaysia-incorporated Affcom is an affiliate to an independent integrated oil company and its activities cover trading, marketing, refining, and O&G fabrication in Malaysia and abroad.

SEB is mainly involved in the manufacturing and fabrication of process equipment such as unfired pressure vessels, heat exchangers, tanks, silos and other machinery or parts, including mechanical works, maintenance and shutdown works. STC said Affcom would provide the expertise in management, consultancy, market information, and any other contribution in the best interest of the mutual business cooperation.

Catalyst #2: Success Transformer Corp Bhd (STC) says its engineering unit currently has some RM30mil worth of projects in hand and is bidding for new jobs worth about RM40mil. Palm oil and waste management industries remain Seremban Engineering Sdn Bhd’s (SESB) main contributors. SESB has started construction work on its seventh factory by end-September. The new factory will focus on the fabrication of process equipment for the food and pharmaceutical industries. SESB’s factory expansions are on track with the 5th factory being operational and the 6th expected to be operational on 2H FY09. On top of that, Seremban Engineering is in the process of setting up another factory to specifically serve the food industry.Seremban’s current workflow consists of pressure vessels for palm oil refineries.

Key customer, a Singapore based design house is farming substantial business to SESB given the latter’s strong execution capabilities. Visibility is seemingly positive with the key customer guiding for constant workflow till the end of the year. With Plant 5 now fully onstream, capacity is further enhanced by 20%.

Catalyst #3: Earnings visibility and sustainability. The company recorded revenues of RM185 million in the fiscal year ended December 2008. Its net profit was RM23.6 million in fiscal 2008. 1H09 revenue was RM97.4m, while RM12.9m was its net profit. Annualise that, the company is making at least 22 sen a share.

Catalyst #4: Operating margins 18%. For a company that has been making EPS in the 15-28 sen region for the past 3 years (on an uptrend), expanding its facility, and operating at that margins, to trade at low single digit PERs is unbelievable. Obviously many investors have not wised up to this company. Taking the free IPO shares in Seremban Engineering, this should be worth RM1.70-1.90 easy.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

http://malaysiafinance.blogspot.com/2009/10/why-i-like-success-transformers-lot.html

Friday, November 20, 2009

Stock Take On Highlighted Counters & Returns

Time to do stock take since I have said the risk-reward ratio has turned sour, plus my 1,280 target for the year has been reached. Hence I will have been more aggressive in reducing positions. Below was the link to the previous stock take:

http://malaysiafinance.blogspot.com/2009/10/stock-take-on-recommendations-returns.html

http://malaysiafinance.blogspot.com/2009/10/1260-to-1285-before-year-is-over.html


IJM Land, in at 1.81, supposed to wait for the 30% before, now 2.62... 44% take half profit, let the rest ride... but have a stop-loss(gain) at 2.50. Now at 2.27, stop-loss gain triggered, out of stock at 2.50.

CIMB, in at 10.30, now at 12.44... 20%, will hold for the 30%.
Breached 13.00, very close to 30%, enough for now. Out.

QL Resources, in at 3.34, now at 3.46... wait for bonus.
Closed at 3.89, 16% gain, not enough, this one is safe enough to hold for its bonus.

Sep 7: Kurnia Asia 0.58, went to 0.76 (+31%), now at 0.70, took half profit, let the rest ride, stop-loss (gain) at 0.64.
Closed at 0.72, riding to 0.76 two weeks back. Up stop-loss gain to 0.69.

Sep 16: TAS Offshore: in 0.78, had a run to 0.89, back to 0.80, still ok.
Dwindled to 0.76, cut loss here, seems not to be panning out as I thought.
Sep 17: Ann Joo, in 2.30, now at 2.70, +17%, will wait for 3.00.
Closed at 2.89, so close to my 3.00, but cannot be too fixated some times, take all profit, can't complain with 25% in 2 months.

Sep 28: Hock Seng Lee, in 1.02, went to 1.20, now at 1.15, can wait till Budget news out then sell.
Excellent results, trying to recover, closed at 1.15. Not going to wait as the anticipated catalysts have appeared and the stock is finding it hard to scale up, too many stale sellers waiting above 1.20. Out.

Sep 29: TAE, in 1.45, hold for TA Global exercise.
Still comfortable with this, thinks that TA Global will fly and so too will TAE.

Oct 7: Evergreen, in 1.01, now 1.07, some ways to go.
Went above 1.50 strongly, 40-50% gain in 2 months, what more you want, out for now even though I think this is good to 1.80 but risk-reward not that good and had to reduce stocks.

Oct 8: CSC Steel, in 1.08, now 1.23 (+13.8%), strong accumulation by institutional funds, will keep.
Took my 30% or thereabouts at 1.38. Out for now.

Oct 9: BRDB, in 1.72, now 1.90, small position, will wait till volume breaks out.
Volume breakout never came, looks like a need to hold for a few more months, owing to big picture not that conducive, out.

Oct 12: Fajarbaru.
In at 1.20, did try to move but sluggish much like HSL, cut.

Oct 14: Weida.
In at 0.76, also sluggish 0.67, cut loss.

Oct 16: Efficient e-Solutions. In at 0.235, went up a bit, but back down 20.5, cut at 0.22.

Though not a "Why I Like" stock, I did mention Magna Prima as a stock to watch, it has gone from low 2.00 to above 3.00 since then, no position.

Oct 20: Success Transformers.
In at 1.18, went to 1.32. Close at 1.21. Took 1/3 profit at 1.30. Will hold for Seremban Engineering IPO.

Oct 26: Notion VTec.
In at 0.505, 5 into one exercise. Now holding at 2.57. This one I will hold for the placement announcement and mid term.

Nov 6: Salcon. In at 0.565, sold 1/3 at 0.605. Holding well, will keep the rest for my 30%.

Nov 13: Inch Kenneth.
In at 0.445. Volatile, sold 1/3 at 0.52. Closed at 0.475. Recent posting, will hold.

Nov 17: Supportive. In at 1.03. Also volatile, sold 1/3 at 1.14. Closed at 1.09. Recent posting, will hold.

The above were views on stocks and sectors that I like, not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

http://malaysiafinance.blogspot.com/2009/11/stock-take-on-highlighted-counters.html

Monday, November 23, 2009 Why I Like Kim Hin (A Lot)

Another one which is part of the recovery story. This is is even better that the couple that I have featured recently. Kim Hin had a troublesome spot a few years back but has "revamped its thinking and strategy" to be a an out-and-out transparent, diligent and professional company. The first couple of years, not many believe that the tiger has changed its stripes. I have been monitoring the company, on and off, and I must say, I am giving it near full marks. They did not simply play their shares anymore like before. I mean, look at the 52 week high-low, its just 84 sen and 1.15.

Its been moving this morning and I am already typing as fast as I could. Please do not think that I am whacking the shares before posting. Kim Hin Industry is an investment holding company engaged in manufacturing and distribution of ceramic floor, homogeneous and monoporosa tiles. The company through its subsidiaries is involved activities that include trading of building materials, property letting, property and investment holding; and wholesale and retail of ceramic tiles. Kim Hin primarily operates in Malaysia, China and Australia. It is headquartered in Sarawak. The company recorded revenues of MYR251.5 million in the fiscal year ended December 2008. Its net profit was MYR4.2 million in fiscal 2008. Thats fine and dandy because it was the difficult 2008. To even come out in the positive is an achievement to cost control and product acceptance.

Basically, there is only one big catalyst:

For the 2Q ended June 2009, its revenue was RM63m and net profit was RM9.48m (note that the whole of 2008 its net profit was just RM4.2m. The !Q2009 was still difficult for them, the carry on effects of the financial crisis, which saw only a net profit of RM1.37m.

Those who monitor quarterly results (they should, especially when you are looking for srong recovery stocks) will note that they released their 3Q2009 figures on 18 Nov. It was outstanding. Revenue was RM65.3m and net profit was RM11.9m!!! If you take in the first 9 months of 2009, its total net profit came to RM19.82m or a net EPS of 13.77 sen. If you assume they make a similar sum for 4Q 2009, basically you can add another 6 sen to the figure, making it a net EPS of 20.77 sen.

Now 20.77 sen is very significant for a stock that trades below RM1.30. A PER of around 6x. Its net asset per share is RM3.08. Its got RM87.2m cash in bank, and about RM40m in liabilities. All that will become very significant when you consider they only have 154.9m shares. That translates into:

Net cash per share of 30 sen
Net tangible asset of RM3.08
Share price below RM1.30
Net EPS (likely) for 2009 of 20 sen

In a recovery, this stock should see a similar surge in business over the next 2 years at least. The stock and figures sell by itself.

The above were views on stocks and sectors that I like, not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

http://malaysiafinance.blogspot.com/2009/11/why-i-like-kim-hin-lot.html