#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 !!!
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