Sunday 11 March 2018

Hibiscus Petroleum Berhad - Still can go higher?

Hibiscus Petroleum Berhad is the first listed independently oil and gas exploration and production company. Hibiscus acquired 50% interest and joint-operatorship of the Anasuria Cluster of oil & gas fields located in the British sector of the North Sea.

Prospect
-Acquired 50% participating interest in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract.
-Exploration & development in the Bass Strait of Australia
-2018 and 2019 is estimated to deliver up to 5,000 barrels per day (Anasuria)

Recent Updates
On 22 December 2017, SEA Hibiscus, Petronas, the sellers and PCSB entered into a novation agreement for the assignment and transfer of the entire Interest of the Sellers in the 2011 North Sabah EOR PSC to SEA Hibiscus effective 31 March 2018.
The proposed acquisition of the 2011 North Sabah EOR PSC has the potential to:-
-Increase the oil production output of the Group by a factor of up to three times. (Which is around 9,000 barrel per day)
-Provide the group with a second revenue stream. This can help Hibiscus to not only depend on the Anasuria Cluster.
-Allow the group strengthen its technical and operational capabilities.

Factors that affect Anasuria performance
i)Oil price of the Brent crude oil benchmark at approximately the time of a scheduled offtake from the Anasuria FPSO.
ii)Gas price for the Cook field and Guillemot A, Teal and Teal South fields
iii)Exchange rate of the RM and:-
    - United States Dollar: For the revenue of the group and valuation of Anasuria
    - British Pound: FOr the majority costs in Anasuria


Q2 2018 Review
Hibiscus net profit rose 3.4% to RM 11 million YOY on higher revenue and lower expenses. Revenue for the group rose 21% to RM 76 million YOY. This result even QOQ and YOY increase but investor expected more from it. The revenue and net profit for this quarter is lower due to lower average uptime and lower average production rate as a result of planned offshore turnaround and unplanned event. There is planned offshore turnaround which is 16 days of total shutdown in October 2017. The unplanned event which is temporary interruption in production of cook-P1 well and temporary failure of gas compression facility. The group has stated that all technical issues have been resolved, with wells and facilities currently performing at expected levels. The higher average operational expenditure in Q2 compared to the previous quarter is due to lower daily oil production rate.




Opinions
Using the latest 4 quarter result, the EPS is 2.5sen. The P/E ratio will be 35.6 using the closing price of RM 0.89 (9/3/2018). After Hibiscus successfully acquired 50% participating interest in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract, the oil production will be reaching around 9,000 barrel per day. Just estimate that Hibiscus net profit can increase 2x, the P/E ratio will be 17.8. If Hibiscus able to increase it's net profit 3x by reducing it's operational cost and higher production, the P/E ratio will be 11.9. All this haven't include if the crude oil price can increase to above USD 70 per barrel. From my opinion, I think that Hibiscus share price can break new high after successfully acquired 50% participating interest in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract together with crude oil price breaking new high. All this above is just my opinions and predictions. :)

Technical Analysis
Brent crude oil - short term support will be USD 60.8 - USD 61.8
Hibiscus Petroleum Berhad - Support RM0.865, RM 0.76 , Resistance RM 1.06



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This is NOT a buy or sell call.
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Tuesday 30 January 2018

MGB BERHAD - Previously as ML GLOBAL BERHAD (update)

As at 30 September 2017, the Group's outstanding construction order book is approximately RM2.36 billion. The construction order book increased RM290 million compared to the previous quarter. This shows that the group is currently active tendering for construction work.

Using the order book of RM2.36 billion which have to be done in 3 years time, each quarter will have revenue of approximately RM 197 milliom. With profit margin of 5.5% (estimate), the net profit will be RM10.835 million. (EPS=2.36 cents)

Using the current price of RM 1.63 (as at 30/1/2018), the forward PE ratio will be 17.27 (RM 1.63 divide by RM 0.0944).

All this estimation above is without considering the contribution from property segment. Property segment, being the new segment to the Group since early June 2017, has contributed 21% to the rise of the revenue. 

Recently, MGB Berhad is acquiring property development firm Multi Court Development Sdn Bhd for RM2.8 million. Multi Court owns a 9.35-hectare land in Batu Pahat, Johor on which a Unit Perumahan Penjawat Awam 1 Malaysia (PPA1M) project will be developed with an estimation gross development value of RM93.5 million. By doing this, MGB Berhad maybe will be getting more project from PPA1M. 

This is just a short update from my previous post (http://drinvestment789.blogspot.my/2017/06/7-things-about-ml-global-bhd-mgb-7595.html).

DISCLAIMER

Everything above is for sharing purpose only.
This is NOT a buy or sell call.
BUY OR SELL AT YOUR OWN RISK !!!

We have no responsibility on anything upon reading this article.

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Sunday 2 July 2017

Chin Hin Group Berhad - A Growing Company



Chin Hin Group Berhad is an integrated builders conglomerate that provides building materials and services to the construction and building industries.



HISTORY

In 1974, Datuk Seri Chiau Beng Teik took over his father’s hardware shop in Alor Setar, Kedah named “Chop Chin Hin”. Through hard work and perseverance, the group has evolved from a small hardware shop into one of the largest building material distributor in Malaysia. Chin Hin has expanded into the  supply of ready mixed concrete in Malaysia. In 2009, Datuk Seri Chiau Beng Teik’s son, Chiau Haw Choon joined the management team. Under his administration, the group decided to expand into production of AAC block, steel mesh and metal roofing systems. After the group entered the market on 8 March 2016, he announced five acquisitions, respectively, a 18.55 acres of land in Bidor, a 51 acres of land in Kota Tinggi, Midah Industries Sdn Bhd (fire doors), Epic Diversity Sdn Bhd (lock business) and Mi Polymer Concrete Pipes Sdn Bhd.

MANAGEMENT TEAM
1) Datuk Seri Chiau Beng Teik - Deputy Group Executive Chairman. Have 69.72% direct and indirect interest (This data is until 31 March 2017, from annual report 2016)
2) Chiau Haw Choon - Group Managing Director. Have 60% indirect interest (This data is until 31 March 2017, from annual report 2016)

BUSINESS SECTORS
1) Distribution of Building Materials - One of the largest in the country with an annual turnover of exceeding RM 600 million. A wide variety of building materials include transportation and sales of cement, stone bricks, steel bar, planks, tiles, iron, toilet utensils and other building materials.
2) Supply of Ready Mix Concrete through multiple Points of Sales throughout the country
3) Manufacturing of Building / Construction Product
  1. Pre-cast Concrete Products
  • Capacity increased to 300,000 metric tonnes in 2017 ( contribute starts in Q1 2017)
  • Production capacity increase 45,000 precast concrete in Kota Tinggi (contribute starts in Q1 2018)
  • By year end 2018, precast concrete should be able to produce around 60,000 metric tonne per annum in Kota Tinggi. G-Cast Concrete Sdn Bhd in Serendah’s production capacity increase from 60,000 mt per annum to 144,000 mt per annum by Q3 2018.
  1. Autoclaved Aerated Concrete (AAC) - AAC block should be the upcoming “star” products for Chin Hin. After few years of market education, many contractors have started to adopt Starken AAC as a substitute for traditional bricks and mortar.
  • Production capacity increase 420,000 meter cube AAC in Kota Tinggi (contribute starts in Q1 2018)
  1. Wire Mesh Products
  • This can increase the wire mesh’s capacity from 6,000 to 8,000 metric tonnes per month (contributes start in Q1 2017)
  1. Metal Roofing Systems
  2. Fire-rated door (Midah Industries Sdn Bhd)
  • Capacity of 60,000 units of fire door per annum at Semenyih factory
  1. Door locks, miscellaneous architectural hardware accessories (Epic Diversiy Sdn Bhd)
  2. Concrete Piping (Mi Polymer Concrete Pipes Sdn Bhd)
  • With 20,000 tonnes per annum currently running at 100% capacity in Batu Pahat
  • Mi Polymer Concrete Pipes Sdn Bhd increase it’s production capacity from 40,000 mt per annum to 40,000 mt per annum. Complete by Q2 2018
  1. Solar Panels
  • In FY 2016, Chin Hin was granted certification by the Sustainable Energy Development Authority of Malaysia with a total of 2,245MW Feed in Tariff. The Group has gross income of RM 2.14 million in FY 2016 from its electrical production capacity of 2,245 kWh. The Group currently hold an existing 21-year agreement whereby the company will deliver and sell to TNB.

*Expansion that going on
*Expansion through private placement

POINT ABOUT COMPANY
1) Construction industry still maintain its positive growth momentum. The Stimulus effect of the various infrastructure projects such as Tun Razak Exchange, Mass Rapid Transit Second Line “MRT2”, Light Rail Transit Line 3, Bandar Malaysia, Perumahan Rakyat 1 Malaysia (PR1MA) and the People’s Housing Programme (PPR)

2) Chin Hin adopted CRM solutions. CRM solutions is to manage customer orders and analyse and identify insights into an individual customer’s buying patterns. This will empower the group to better meet customer’s requirements by preparing orders in advance or by improving customised bunding options to meet their requirement. The CRM solutions was implemented in stages over the last quarter of FY 2016.

3) Chin Hin is optimistic on precast concrete order from the government since they are involved in the Langat Centralised Sewerage Treatment Plant (CSTP). The Government aims to increase the efficiency and production of water and sewerage services by expanding  and upgrading such services particularly in the rural areas.

4) The management believes that the new acquisition will contribute significantly to the earning of the group in 2017. The management also mention that the profit margin for fire doors is high. With that, the profit margin for the trading segment will be increase.

5) Can go into Singapore’s market. The production line in Johor is interchangeable between AAC Block and wall panels. The wall panels is well established in overseas market, especially in Singapore. Singapore has accepted Starken’s wall panel for their government’s affordable housing project.

CONCLUSION
Chin Hin is now on going expanding stage. Chin Hin is also having fund raising through proposed private placement of up to 10% of the issued shares ( up to 50,588,800 new ordinary shares) in Chin Hin for expansion purpose.The fund will be utilised on expansion (mentioned above) (34%) , repayment of debt (39%) , working capital purposes (9%) , future expansion purpose (16%) and expenses for the private placement (2%). No. of shares after private placement will be 556,476,800 shares.


NormalAfter deducting one off revaluation surplusAfter private placementAfter private placement & after deducting one off revaluation surplus
Net Profit 47,843,00034,073,00047,843,00034,073,000
No. of shares505,888,000505,888,000556,476,800556,476,800
EPS (cents)9.466.748.66.12
Price1.31.31.31.3
P/E13.7419.2915.1221.24



DISCLAIMER

Everything above is for sharing purpose only.
This is NOT a buy or sell call.
BUY OR SELL AT YOUR OWN RISK !!!


We have no responsibility on anything upon reading this article.

Wednesday 7 June 2017

7 Things about ML GLOBAL BHD (MGB) (7595)

MLGLOBAL (MGB) (7595) - ML GLOBAL BHD

#On 11 March 2016, MGB successfully uplifted by Bursa Malaysia from being classified as PN17 company. PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia.
#On 11 April 2016, LBS Bina Group Berhad (LBS) hade takeover offer for the company after it raised its stake to 50.92% from 31.95%. Accordingly, MGB became subsidiary of LBS.
#On 14 September 2016, MGB acquire the entire issued and paid up share capital of MITC Engineering Sdn Bhd (MITCE) with RM 300 million.
#On November 2016, MGB completed acquire MITCE, the outstanding order book for MITCE is around RM 1 billion.

1) Have RM 2 billion order book which have to be done in 3 years time. So roughly calculate, each quarter will have revenue of  RM 166 million. With profit margin of 6%, the net profit will be RM 9.96 million. (EPS = 2.71 cents)

2) If PE=10, (2.71 x 4 quarters) 10.84 cents, price should be at RM 1.08. If PE=15, (2.71 x 4 quarters) 10.84 cents, price should be at RM 1.63.

3) Things to increase value for Mlglobal is increase order book or increase profit margin. If profit margin is higher, then net profit should be higher, price should be higher. :)

4) LBS is the biggest shareholder of Mlglobal with 55.3%. LBS will be the one giving more contract to Mlglobal.

5) Mlglobal will be investing RM 40 million to buy IBS system which would make the construction process cheaper and faster. This will also increase profit margin for the company.

6) Mlgloal is currently bidding for another RM 1 billion project. 20% of the project is from LBS.

7)Risk that will impact the performance of MGB is :-
a) Shortage of labor and new levy fee policy
b) Single customer risk. It was noted that 70% of the contracts were awarded by LBS.
c) Financial risk which mainly on commodity price risk and fluctuation of the Malaysia Ringgit which will reduce the profit margins of the group.

Conclusion:
This is the stock that more on capital gain because MGB doesn't give any dividend. MGB can categorize as growth stock.

DISCLAIMER

Everything above is for sharing purpose only.
This is NOT a buy or sell call.
BUY OR SELL AT YOUR OWN RISK !!!

We have no responsibility on anything upon reading this article.

Tuesday 4 April 2017

OCK GROUP BHD

BACKGROUND
OCK Group Bhd is founded by Mr. Ooi Chin Koon and listed on 2012. Mr Ooi graduated from Trine University, Indiana, United States of America, Bachelor's Degree in Electrical and Electronics Engineering in 1996. He began his career in 1992 as an Electrical Engineer at Cobrain Holding Sdn Bhd. In 1999, he founded OCK Setia Engineering Services as sole propretorship and later expanded the business with the incorporation of OCK Setia Engineering Sdn Bhd in 2000.

OCK Group has ventured into four major business:-
1) Telecomunication Network Services
     -Cover services in all six segments of the telecommunication network services market:-
       a)network planning
       b)design and optimization
       c)network deployment
       d)network operations and maintenance
       e)energy management
       f)infrastructure management
    -Have Network Facilities Provider (NFP) licensee (able to build, own and rent telecommunication towers and rooftop structures to the telecommunication operators in Malaysia)
    -More than 90% of the revenue came from this segment.

2) Green Energy and Power Solutions
    -This industry increasing rapidly in Malaysia
    -Actively constructing solar farms
    -Supplying power generation equipment for commercial, retail and factory buildings
    -Installation, commissioning and testing services

3) M&E Engineering Services
    -Provides mechanical and electrical services to housing development projects, commercial high-rise buildings, factories, infrastructures, airports, medical centres and hotels.
    -Providing project management, supply and installation of most mechanical and electrical services.

4) Trading of telecommunication


   Annually Earning

Year (31 Dec)
2013
2014
2015
2016
Revenue(‘000)
150,258
187,490
318,574
407,111
Net Profit (‘000)
12,902
16,358
24,679
25,799
Profit Margin (%)
8.59
8.72
7.75
6.34
EPS (RM)
0.048
0.0475
0.0457
0.031
DPS (RM)
0
0
0.006
0
DPR(%)
0
0
13.13
0
ROE (%)
7.12
5.45
4.53
3.16
Price (31 Dec)
0.463
0.698
0.67
0.76
P/E (31 Dec)
9.65
14.69
14.66
24.52
NTA (RM)
0.29
0.35
0.44
0.50
Price to book value
1.6
1.99
1.52
1.52


Revenue and net profit for OCK Group Bhd increased continuously from year 2013 to year 2016. Even though net profit increase but EPS decrease. This is because they carried out private placement, bonus issue and right issue in year 2014 to 2016. OCK utilize the fund from private placement and right issue on expanding their business overseas. In year 2014, OCK acquire PT Putra Telecommunications in Indonesia. In 2015, OCK acquire 920 telecommunication towers contract from Telenor Myanmar. In 2016, OCK acquire SEATH which owned 1938 towers in Vietnam.Profit from SEATH should be start showing out in Q1 2017.

  Net Cash/ Net Debt (Annually)

Year (31 Dec)
2013
2014
2015
2016
Total Cash (‘000)
24,920
73,762
163,821
127,288
Total Debt (‘000)
60,435
64,488
89,648
146,245
Net Cash/ (Net Debt)
(35,515)
9,274
74,173
(18,957)

On 31 Dec 2016, OCK is currently net debt ( total debt more than total cash). For a company which is expanding their business, net debt is acceptable.Cash flow from operating activities is showing positive which means they earn their money from their core business. Total fund used on purchase of property, plant and equipment from 2012 to 2016 is
Year
RM
2012
6.572
2013
34.271
2014
4.735
2015
22.569
2016
318.907



   Quarterly Earning

Quarter
31 Mac 2016
30 Jun 2016
30 Sept 2016
31 Dec 2016
Revenue (‘000)
78,443
114,011
101,919
112,738
Net Profit (‘000)
3,710
5,457
5,457
11,175
Profit Margin (%)
4.73
4.79
5.35
9.91
EPS(cents)
0.47
0.69
0.66
1.28
Total EPS (4QR)
4.46
4.18
3.91
3.1
Price
0.775
0.81
0.795
0.76
P/E
17.38
19.38
20.33
24.52
NTA(cents)
0.44
0.44
0.48
0.5
Price to book value
1.76
1.84
1.66
1.52

  Net Cash/Net Debt (Quarterly)

Quarter
31 Mac 2016
30 Jun 2016
30 Sept 2016
31 Dec 2016
Total Cash (‘000)
139,555
120,617
137,369
127,288
Total Debt (‘000)
81,974
96,173
140,819
146,245
Net Cash/ (Net Debt)
57,581
24,444
(3,450)
(18,957)

Share capital changes in year 2014,2015 and 2016
2014

2015

2016


PROSPECT
OCK and its local partner King Royal Technologies Co Ltd in Yangon, Myanmar managed to successfully build over 600 telecom towers.
OCK's 60% subsidiary, OCK Vietnam Towers Pte Ltd completed the acquisition of Southeast Asia Telecommunications Holdings Pte Ltd (Seath), which is Vietnam's largest independent tower company. Sealth owns 1,983 telecom towers in Vietnam.


CONCLUSION
With RM 0.92 (closing price on 3/4/2017), PE ratio is 29.68 which is consider overvalue. Price to book value will be 1.84 which is also consider overvalue.From my opnion, if OCK can achieve 30% growth of net profit in Year 2017, then it can be still acceptable for P/E and P/B ratio.Is it still able to buy now? I don’t know! This is a company that are not giving out dividends. So if you are looking for dividend company, this is not the company. If you are looking for growing company, OCK is the company that u looking for.

DISCLAIMER

Everything above is for sharing purpose only.
This is NOT a buy or sell call.
BUY OR SELL AT YOUR OWN RISK !!!

We have no responsibility on anything upon reading this article.
     

Hibiscus Petroleum Berhad - Still can go higher?

Hibiscus Petroleum Berhad is the first listed independently oil and gas exploration and production company. Hibiscus acquired 50% interest a...