Favorite Links

Thursday, October 31, 2013

Sarawak Cable - Seals the 500kV deal BUY


- Sarawak Cable Bhd told Bursa Malaysia yesterday that its wholly-owned unit, Trenergy Infrastructure, has received the letter of awards for two packages of the 500kV transmission line worth RM619mil.

- The awards follow the letters of intent that was given out earlier on 30 Aug 2013 for the said two packages.

- The packages comprise transmission works for the Mapai-Lachau and Lachau-Tondong lines worth RM353mil and RM266mil respectively.

- Work for both projects is expected to commence on 15 November 2013, with a completion period of 23 months and 26 months for Mapai-Lachau and Lachau-Tondong lines respectively.

- We expect significant contributions from the project in FY14F-FY15F.

- Sarawak Cable had won a significant amount of the 500kV job (packages worth a total of RM1.2bil) out of the six that were awarded.

- The other successful bidders were:- (i) Toshiba Transmission & Distribution System Asia Sdn Bhd-Xian Electric Engineering (Similajau-Mapai and Mapai-Oya lines); (ii) KEC International Ltd (Mambong-Entiggan substation extension); and (iii) Pestech Sdn Bhd (Mapai substation project).

- Together with the 132kV Tudan-Miri airport job it secured in June, S Cable has won a total of RM650mil new transmission jobs this year.

- Potential jobs in the near term include the Tanjung Manis-Bintulu and Manbong-Kalimantan lines worth a total of ~RM400mil.

- Cable is trading at an alluring core FD PEs of 6x-11x for FY14F-15F. Maintain BUY.

Integrax - Powering Future Earnings


We  think  investors  have  not  priced  in  the  certainty  of  throughput volume  from  Tenaga’s  power  plants  in  2015  and  2017,  which  is  an additional  6m  tonnes  of  coal  combined  annually  to  the  current  7m tonnes.  With  throughput  doubling,  the  FY12-18  projected  earnings CAGR of 12.5% will generate MYR63.5m in annual cash flow. We initiate coverage on Integrax with a BUY call and a DCF-derived FV of MYR2.32.

  • Malaysia’s deep water port.  Integrax is the port operator for  the  Lekir Bulk  Terminal  (LBT)  and  Lumut  Maritime  Terminal  (LMT)  –  both  are located in Lumut, Perak,  but are separate from each other. Combined, the  terminals  handled  10.16m  tonnes  in  FY12,  growing  at  an  average 4.5%  annually  over  the  past  few  years.  LBT,  which  is  80%-owned  by Integrax,  derives  its  revenue  solely  from  Tenaga  Nasional  (TNB  MK, BUY,  FV:  MYR10.13),  while  LMT  is  a  50%-owned  associate,  which Integrax earns dividends from.
  • 2015 a year to look forward to.  Integrax’s FY14 earnings are expected to grow 7% on the back of higher volume contribution from both LBT and LMT. The company is only expected to post double-digit earnings growth in  FY15 and FY18, driven by a surge in volume from LBT following the commencement of Tenaga’s new power plants  –  M4 on 31 March 2015 and  M5  on  1  Oct  2017.  Each  of  these  plants  will  boost  the  annual volume  of  coal  imports  by  an  additional  3m  tonnes.  From  2012-2018, Integrax could easily register an earnings CAGR of 12.5%.
  • High cash with no debt. Integrax is backed by a strong cash position of MYR118m  with  no  borrowings.  Assuming  its  business  and  client  base remain  unchanged  (we  have  factored  these  into  our  model),  we anticipate that its cash pile could balloon to MYR352m by 2018. Capex will be very minimal  –  at around MYR18m annually, which will be offset by annual dividends of at least MYR11m from LMT.
  • Initiate with  a BUY. We derive a DCF-based FV of MYR2.32 per share, based  on  a  10%  discount  to  its  DCF,  implying  a  FY14F  P/E  of  15.5x which  we  deem  reasonable.  The  established  listed  container  ports  in Malaysia are currently trading at 18-21x FY14 P/Es.
Company Background
Brief  history.  In  1993,  the  company’s  founding  shareholders,  Halim  Rasip  Group and  the  Perak  State  Economic  Development  Corporation  (PKNP),  entered  into  a public  private  smart  partnership.  The  partnership,  aimed  at  developing  a  strategic port  to  act  as  a  catalyst  to  stimulate  industrial  development  in  Perak,  led  to  the development of Lumut Maritime Terminal SB (LMT) and Lumut Port Industrial Park (LPIP) in 1995, and subsequently, Lekir Bulk Terminal SB (LBT) in 2000. All these three assets in Lumut were subsequently injected into Integrax.

Lumut’s  port  operator.  Integrax  is  the  port  operator  for  Lekir  Bulk  Terminal  and Lumut Maritime Terminal, both of which are located in Lumut but are separate from each  other.  Both  ports  serve  trade  within  South-East  Asia,  Myanmar,  Bangladesh,
India, Sri Lanka, Pakistan and further towards the Far East, Australia/Pacific, Africa/ Middle East and the EU.
Malaysia’s deepest port with Tenaga as anchor tenant.  The Lekir Bulk Terminal (LBT)  is  80%-owned  by  Integrax,  with  the  remaining  20%  held  by  Malakoff. Designed to handle dry  bulk and liquid bulk, it is  Malaysia’s  deepest port by  berth depth, with a minimum water depth of 20m at all times. This enables the terminal to accommodate dry bulk cargoes up to 200,000 DWT (deadweight tonnage) carried by Handymax, Panamax  and  Capemax  ships. LBT is capable of accommodating three ships at any one time and is able to carry out ship-to-ship cargo transfer. To handle dry bulk, the port is equipped with two grab ship unloaders with a 1,500 tonne  per hour rated capacity feeding two import conveyors. Each conveyor has a 3,800 tonne per  hour  rated  capacity,  and  is  integrated  with  a  transfer  station  system  with alternative routing capability. To handle liquid bulk, the port has pipeline wayleaves and tank areas available for direct vessel-to-plant/tank transfer. Currently, LBT solely serves  the  intended  anchor customer  it  was  built  for  –  Tenaga  Nasional  Bhd.  The port facilitates the unloading of imported coal, bringing in a total of 7m tonnes of coal (as  of  FY12)  to  the  nearby  Sultan  Azlan  Shah  coal -fired  power  station  with  the current utilisation rate of 97%.
Meanwhile,  Lumut  Maritime  Terminal  (LMT)  is  50%-owned  by  Integrax  (less  one golden share), with the remaining stake held by Perak Corp, which in turn is 52.9% controlled  by  PKNP,  the  strategic  partner  of  Integrax.  It  is  a  common  user  port designed  and  equipped  to  handle  dry  bulk,  liquid  bulk,  containers,  and  all conventional  and  project  cargo  catering  to  the  shipment  needs  of  the  Lumut  Port Industrial Park. Wholly-owned by LMT, the industrial park is a 1,000-acre industrial estate located next to LMT’s facilities, and about 90% of that landbank has been sold to various industrial users over the years. The industrial zone houses industrial users such as oil and gas, steel fabricators, shipyards and palm oil companies. The depth of LMT’s two berths is much shallower - with a minimum depth of 9m and a maximum of 12m during high tide, with accessibility limited to vessels of not more than 35,000 DWT.  It  also  has  a  barge  berth,  capable  of  handling  barges  up  to  8,000  DWT. Serving a variety of customers, LMT’s FY12 throughput of 3.13m tonnes consisted of dry bulk (limestone, coal, cement, clinker, pet coke and animal feed among others), which  made up  63.3%  of  total  throughput,  and  liquid bulk  (palm  oil  and  petroleum products), which comprised 29.1% of throughput. We estimate LMT’s utilisation rate at around 90%.
A privately-owned port. Unlike major port operators in Port Klang and Bintulu Port, which are held by a state port authority,  Integrax’s  two ports are privately held and hence not subject to any concession terms.
Management. As a port operator with a stable business, we think management plays a  crucial  role  in  driving  new  businesses.  CEO  Mr  Azman  Shah  Mohd  Yusof,  who joined the company recently, has vast experience in the corporate sector as well as an entrepreneurial track record. Integrax co-founder Mr Amin Halim Rasip, who has been  involved  in  various  businesses  as  an  entrepreneur  for  more  than  27  years, started out as a ship owner and later entered the O&G industry.
Shareholders.  Tenaga,  Integrax’s  anchor  tenant,  is  the  largest  major  shareholder with  a  22.1%  stake.  The  utility  company’s  entry  as  a  shareholder  in  March  2011 brought an end to a management tussle between two founders – brothers Harun and Halim Rasip  (then the company’s co-CEOs)  –  from whom Tenaga bought its stake. Perbadanan  Kemajuan  Negeri  Perak,  the  state  partner  of  the  Lumut  port  project, owns a 15.7% stake.
Source: RHB

YTL Power International - Lowest bidder for 2,000MW coal-fired power plant


- We maintain HOLD on YTL Power International (YTLP), but with a higher fair value of RM1.86/share due to the removal of a 15% discount to our unchanged sum-of-parts value of RM1.86/share.

- The Edge Financial Daily reported today that the YTLP has submitted the lowest bid at 22 sen/kWh for the Energy Commission’s tender of Project 3B involving a 2,000MW greenfield coal-fired power plant.

- YTLP, which submitted the bid with Ranhill Power, has proposed Tanjung Tohor in Johor as the site for the new plant which is expected to cost RM12bil and scheduled to be commissioned in stages in October 2018 and April 2019.

- While its lowest bid positions YTLP as the leading contender, The Edge reported that the proposal may have some compliance issue due to its engineering, procurement and construction partner. We suspect YTLP’s technical partner is Marubeni Corp, which has a 15% equity stake in the 1,220MW PT Jawa power plant.

- The other bidders for the tender were Tenaga Nasional, MMC Corp’s Malakoff Corp, Formis Resources and 1Malaysia Development. The second closest bid was 1MDB’s proposal at a brownfield site at Jimah, Negeri Sembilan, which apparently does not appear to be in compliance with the terms for a greenfield site.

- Malakoff, which proposed Pulau Carey in Selangor, submitted a bid at 26 sen/kWh. Surprisingly, Tenaga’s bid at Tanjung Hantu, Segari in Perak turned out to be the most expensive at 28 sen/kWh.

- If YTLP successfully secures this power purchase agreement (PPA), it should significantly improve the stock’s prospects given that its current PPAs for the Paka and Pasir Gudang power plants expire in September 2015.

- Assuming project IRR at 9%, interest cost at 6% and debt:equity ratio of 80:20, we estimate that this project could add 29 sen or 16% to YTLP’s current SOP.

- Upon full completion, we estimate that the project could add RM440mil to the group’s net profit, or 33% of FY16F earnings. But note that YTLP may not have a full 100% equity stake in the project given the presence of its jointventure partner Ranhill Power.

- However, we highlight that any earnings impact will only commence in FY19F onwards. Hence, we maintain our FY14F-FY15F assumptions for now pending an official announcement by the Energy Commission.

- Additionally, the capex commitments together with other overseas investments may continue to constrain YTLP’s dividend policies, with no distribution declared since 1QFY13. The stock currently trades at a fair FY14F PE of 11x within its three-year diluted PE band of 10x-16x.

Independent Power Producer (IPP) YTL Power International Bhd is said to have submitted the lowest price for the 2,000MW coal-fired power plant under a tender called by the Energy Comission (EC). If it is successful in its bid, it would mark the comeback of YTL Power into the national electricity scene after two decades.

According to industry sources, YTL Power's bid of just over 25 sen per kilowatt hour (kwh) was teh lowest in the tender called under programme Track 3B. The next closest bid is said to have come from 1MDB which needs to win the job to boost the proposed listing of its energy division. But its bid is said to be marginally more expensive than YTL Power's proposal.
However, YTL Power is not in the clear yet as the EC would evaluate other factors, according to sources. YTL Power's bid may have compliance issues with its engineering, procurement and construction (EPC) partner, some industry players said, without elaborating. Surprisingly, Tenaga Nasional Bhd put in the most expensive bid for Track 3B, despite previously outbidding the IPP's in earlier tenders. (Financial Daily)

We are surprised by this piece of news as we had previously ruled out YTL Power's emergence as one of the winners for Track 3B, given TNB's dominance and advantages. Secondly, we had expected 1MDB to win the bid, assuming TNB failed to secure it. However, assuming this is true, we believe this is positive for YTL Power as it implies that it would continue to be a Malaysian IPP play post expiry of the PPA's in 2015. While it is not so positive for TNB, we believe it does not have a significant negative impact on future earnings as at the end of the day, the cost for it to purchase the power from YTL Power is still lower than its own bid.

















如同一纸婚约 过来人谈申请奖学金



根 据公共服务委员会(Public Service Commission,简称PSC)2009年数据,当年本地约1万5000名A水准和IB学生中,就有2500人申请PSC奖学金。如果加上本地数十个 政府和私人机构及学府所提供的奖学金,本地每年奖学金申请者人数可说是相当惊人。







  不是谁第一个约你出去 你就和谁结婚





王 翔乐说:“在形形色色的奖学金面前,选择一个适合自己的奖学金尤为重要。很多人在选择奖学金时,往往只注意到其带来在读书期间的益处,以及毕业后的服务期 长度,却忽略了最重要的一点,那就是自己日后职业选择的问题。若选择不当,不仅对自己的未来不负责任,也会占用其他真正对这项工作有兴趣的人才的机会。”


2010年,他在入 学后不久便申请到新大吴氏基金奖学金:“经由这项奖学金作为桥梁,我很开心可以遇见很多志同道合的朋友,也获得了进一步认识世界及体验新事物的机会。”王 翔乐去年参加了一个海外社会公益项目,并成为新大社会企业项目“The Sustainable Shop”的主要推手。






  面对诱惑 曾忘了初衷


  University College London Slade School of Fine Art纯艺术本科课程三年级,教育部海外奖学金得主




王 茉与《爆米花》真诚分享了一段心路历程:在求学过程中,王茉在极负盛名的Slade学院展现出不俗的艺术才华,很受其个人主管教授,也是Slade本科学 院院长的青睐。而诸多著名收藏家和博物馆馆长,甚至像Paul Smith这样的品牌设计师,也经常去那里交流并且赞助学生项目,所有学生都跃跃欲试,似乎每个人都有一炮走红的可能。




英 国的求学生活,也让王茉对本地和欧美教育体制的区别陷入思考:“新加坡学生和英国学生在对待学业方面有着思维上的区别。简单来说,在新加坡,学生们需要一 个平台来评估自己的能力,去证明自己。在学校里,我们通过成绩来体现能力;而毕业之后,奖学金机构又再一次提供我们一个可以评估自己价值和能力的机会。”










“不 过,比一般新人受瞩目,是把双刃剑。表现好时,大家会注意到;但出错时,也较难遮掩。奖学金只是个敲门砖,并不直接决定所得到的评估。若奖学金得主的工作 态度恶劣,不愿虚心学习,或是整天愁眉不展、消极待日,这样的奖学金得主非但不会受重视,反而会被视为‘赶不走的瘟神’。”

在服务期满 后,洪艺菁选择继续留任。她说:“继续留下来,主要原因是报馆给了我不断学习和接受新挑战的机会。我的做法是每年做规划,明确下一年里要完成些什么,例如 争取到多少项独家报道,参与策划哪些大型报道,如何提升自己,栽培多少新人,如何改善机构等等。我往往能够靠努力去达成目标,因此每年都过得非常充实。





“为了更了解自己的强项、性格和兴趣,不妨参考一些较专业的职业规划性格测试,如Myers-Briggs Type Indicator、Gallup Strength Finder。”



  越做越不开心 最终毁约












  · 教育部



· 新加坡科技研究局(A*STAR)

新 加坡科技研究局研究生学院(A*STAR Graduate Academy)执行署长林健伟博士说,早在申请新科研之前,中学和初院学生就已经可以通过Youth Science Programme等,在大学研究试验室里体验研究人员的工作。成功获得新科研奖学金的学生,将参加pre-departure项目,包括各类室外探险活 动,培养多项个人技能,发掘领导潜质等。




  · 公共服务委员会(PSC)



第 二点就是要看学生是否真心想要为公共事业服务。一个粗略的指标是看他在学校是否积极参与社区服务计划(Community Involvement Programme,CIP)。他参加的原因是什么?是真心为有需要的人服务,还是仅仅为了履历表上光鲜?很多人以为面试当中,只要给出政治正确的答案, 就会让考官青睐。遗憾的是,这样的后果往往是,考官会质疑你的人格。


  · 新加坡报业控股

新加坡报业控股(Singapore Press Holdings,简称SPH)人力资源集团经理章秀英说:“除了成绩等方面,SPH的遴选过程还包括笔试、初次面试、实习和最终面试。





在 五花八门的本科奖学金当中,尽管政经、理工科目仍然是主流,但本地已经出现一些奖学金,为有意从事医科、艺术及媒体等领域的人才提供机会,比如媒体发展管 理局推出的媒体教育计划(Media Education Scheme),艺理会提供的海外奖学金,陈宗瑞奖学金(Chen Chong Swee Art Scholarship)等。


另外,一些机构也提供没有服务期要求的奖学 金(bond-free scholarship),包括华侨银行本地奖学金、陆淑佳奖学金(Loke Cheng Kim)。新加坡管理学院的“Richard KM Eu本科奖学金”和“游保生奖学金”(SIM-You Poh Seng Scholarship,为研究生提供),允许奖学金得主负笈国内外任何受批准的优秀学府。另外,本地大学也都为就读本校的学生,提供多种没有服务期要求 的奖学金。


如果想去国外知名大学深造,也不妨考虑非本地机构提供的奖学金。盖茨基金会提供的盖茨剑桥奖学金(Gates Cambridge Scholarship),为英国剑桥大学学生提供丰厚奖学金。

日本立命馆亚洲太平洋大学(Ritsumeikan Asia Pacific University)也为有意去该校主修商业管理或社会科学的学生提供奖学金。台湾政府也提供“台湾奖学金”及“华语文奖学金”,供新加坡公民申请。

打房措施将引发3现象 产业发展商买家或出走


(吉隆坡30日讯)地产顾问公司莱坊(Knight Frank)认为,2014年预算案宣布的打房措施,将引来3现象浮现,包括房产发展商和买家出走海外、房产价格转至缓慢增长、市场投资焦点从住宅转向商业项目。
虽提高价格门槛 外资买家不受影响

Instacom, OCK seen as favourites for new telco towers


PETALING JAYA: Two small-cap, ACE Market stocks have emerged as the favourites to ride on the RM1.5bil roll-out of 1,000 telecom transmission towers in rural and under-served areas throughout the country.
The shares and warrants of telco infrastructure contractors Instacom Group Bhdand OCK Group Bhd saw heavy trading after several surprise incentives were announced last Friday to boost Internet coverage under Budget 2014.
Instaco-WB, which was quoted for trading on Sept 9, gained one sen at the close yesterday to 16 sen on volume of 47.22 million units, after hitting an all-time high of 17 sen.
It was the second most active stock across the local bourse. Its underlying share finished half a sen higher to 31.5 sen with 22.38 million shares changing hands.
OCK also rose four sen to 81 sen on trade of 4.17 million shares. The counter was up 65% for the year and 125% since its debut on July 17, 2012.
Instacom CEO Anne Kung told StarBiz over the phone that the Sarawak-based company was keen to participate in round two of the Universal Service Provision (USP)-funded towers, the majority of which are likely to be constructed in Sabah and Sarawak, given the lack of telco infrastructure in both states.
The firm, Sabah and Sarawak’s largest contractor for towers, had built some 1,200 towers under phase 1 of the USP tower roll-out, Kung said.
The USP fund was set up in 2002 to promote equal access to ICT infrastructure throughout Malaysia, especially in remote locations that are not considered economically feasible to commercial telcos.
It is not known how the new towers would be allocated between the Peninsula, Sabah and Sarawak, but going by Budget 2014’s stated goal of ramping up mobile internet coverage in under-penetrated markets, the bulk of the investment will probably be channelled towards East Malaysia. 
“We will get more clarity after the Malaysian Communications and Multimedia Commission (MCMC) opens the project for tender,” Kung said, adding that implementation would only begin next year.
Based on the first round of tenders, MCMC will invite Network Facility Provider (NFP) licensees, which Instacom holds, to bid for tower construction jobs. 
Transfer of tower ownership to the NFP licensees will only be made after the infrastructure is commercially viable, according to Kung.
Instacom has an orderbook of RM300mil, contributed mostly by a RM205mil contract it won from 1M Utama Sdn Bhd earlier this year to supply, install, test and commission telco infrastructure and engineering works in Sarawak. The award was said to be linked to the Education Ministry’s 1Bestarinet project. 
Despite the jobs it already has in hand, Kung said Instacom would not be stretched too thin if it clinched work for new telco infrastructure as it had the capacity to build out several hundred transmission towers a year.
The engineering-and-construction firm also intends to take part in fibre-laying jobs for phase 2 of the high speed broadband (HSBB) expansion, for which the Government has committed RM1.8bil under Budget 2014.
OCK managing director Sam Ooi did not respond to calls from StarBiz at press time as he was travelling overseas.

China GDP figures wrong by US$610bil: report


BEIJING: China's economy would be at least 3.7 trillion yuan (US$610bil) bigger than Beijing thinks if the country's local government statistics were to be believed, state media reported Wednesday.
The Economic Information Daily tallied up gross domestic product (GDP) data from 28 of mainland China's 31 provincial-level authorities, and arrived at 42.4 trillion yuan for the first nine months of the year.
But the figure for the whole country, already announced by Beijing, is 3.7 trillion yuan lower.
The discrepancy – which has been in place for more than two decades – has been widening rapidly in recent years, the Economic Information Daily said.
The reliability of Chinese economic data has long been in doubt as local officials tend to massage the figures upwards in pursuit of promotion and the newspaper, which is run by the official Xinhua news agency, pointed to the same problem.
"Some regions may have inflated the statistics due to their distorted perception of achievements, given the fact that the performance assessment of local governments is often linked with GDP growth," the report quoted an unnamed National Bureau of Statistics official as saying.
China's Premier Li Keqiang said in 2007, when he was the governor of Liaoning province, that some Chinese data was "man-made", according to a confidential memo released by the WikiLeaks website in 2010.
He told US diplomats that he focused on only three figures – electricity consumption, rail cargo volume and the amount of loans issued – to evaluate his region's economy, the leaked document showed.
Chinese President Xi Jinping said in June that officials' performance evaluations must not be based "simply on GDP growth rate" but take into account factors such as the environment and improving people's well-being – AFP.

SINO GRANDNESS: UOB Kay Hian Upbeat Post-Europe Roadshow


Analyst: Brandon Ng, CFA (left)

We hosted Sino Grandness’s VP of Investor Relations to a roadshow in Europe.

Most clients were impressed by the company’s strong earnings track record and outlook, coupled with specific share price catalysts, such as its Garden Fresh listing. Other positive developments include the introduction of a new line of snack foods under its non-beverage division, which could be a positive long-term catalyst.


 Maintain BUY with a higher target price of S$1.02. Our target price assumes the listing of GF will go through in 2014, and a holding company discount of 20% on its stake in GF and a 5.0x 2015F PE valuation on its remaining businesses. We believe there could be further upside after the re-rating of its close comparable Huiyuan Juice.

Investment highlights

Parry Ng, Sino Grandness' VP for investor relations, presented to fund managers in Europe recently and will next be speaking at a Standard Chartered conference in Singapore (31 Oct) and a Goldman Sachs conference in HK (5 Nov). NextInsight file photo Roadshow’s positives. Funds that were new to SGF were impressed with its earnings track record of the company and the execution of the growth initiatives for GF. SGF recorded a net profit CAGR of 49.4% in 2008-12, driven by strong sales and improving margins. The company has also evolved from being a pure export OEM producer for overseas hypermarkets to a FMCG bottled juice producer for domestic sales.

Funds that have invested in SGF are eagerly waiting for the development of GF’s listing on an approved exchange. We expect the listing of GF by Oct 14, which coincides with the maturity date of the Rmb100m convertible bonds issued in 2011.

 Trade show reinforces our belief in the company. We also visited one of the tradeshows in Wuhan, China and saw no direct competitor to its core loquat juice products. The company also introduced new packaging for its loquat juices in canned and tetra packs.

Sino Grandness has introduced a variety of packaging, including soft pack (above), for its loquat juice. Photo: CompanyWhile SGF has also ventured into snack products such as dried mushrooms, lotus seeds and red dates, we remain conservative and have not factored in any upside from this venture is still very preliminary. Nevertheless, prospects could be interesting if SGF can leverage on its strengthening distribution network to grow the snacks division.

 We now expect earnings to exceed our initial forecast. We have increased our net profit forecasts for 2013 and 2014 by 4.4% and 7.5% respectively, having seen the growth potential of the company as it expands its distribution network, creates new packaging to cater to different markets and improves margins by producing the juices using internal facilities rather than using external OEMs.

 We also raised our target price by 10.9% as we now expect GF’s earnings to exceed Rmb250m for 2013. This would result in SGF’s stake in GF becoming higher due to lower dilution from the conversion of the two outstanding CBs.

Currently, the company is still trading at an undemanding valuation of 5.1x 2013F PE, vs Hong Kong-listed peers’ at 30.7x.

SIM LIAN: "Why I Like This Old And Family-Controlled Business"


Written by The Millennium
Wednesday, 30 October 2013 13:23

My investing style is more of Graham/Schloss and a bit of Buffett. I generally like to invest in assets at a discount than in their earnings potential. I tend to look at old family-controlled companies, with low levels of debts and constant generation of free cash flow. Dividend payments are the norm in such companies as the Board will usually pay out dividends to family members, and minority shareholders will stand to gain as well.

Investing in assets at a discount does not mean simply finding low P/B. There are many more important factors to take into consideration.

I avoid all China companies, and any company making consistent losses.

I recommend books such as The Intelligent Investor (Benjamin Graham), Common Stocks and Uncommon Profits (Philip Fisher), There's Always Something to Do (Peter Cundill), One Up On Wall Street (Peter Lynch).

Learning to ignore the noise and holding steadfast to your investments is also important. After doing research and deploying capital, it is simply a waiting game. This leads me to the point of diversification. There is the need to have adequate capital preservation methods and diversification helps.

Sim Lian's track record. Charts: FT.comI HAVE HELD on to Sim Lian Group shares for about 8 months now. I was initially attracted by its dividend yield and high ROE.

Sim Lian, which has a history of about 35 years, is one of the stronger property developer-cum-contractor companies in Singapore.

Its revenues and net profits have grown with the CAGR of net profits after tax being 31% for the last 7 years.

The company, which now has a market cap of nearly S$1 billion, has been regularly paying dividends and has an average payout ratio of 25% of earnings.

Sim Lian paid out special dividends of 2.5c + 5c (7.5c total) last year (2012) when the EPS hit a high of 24.75 c, resulting in a yield of 8.5%.

However, the dividend for 2013 fell to 4.6 cents due to lower profits, but it is still at a decent yield of 5.2% at the current stock price of 89 cents.

Sim Lian has also amassed a huge cash holding of $343 million, as a result of its generation of free cash flow.

Currently, the company is in slight net debt.

However, due to its purchase of a land parcel at Venture Avenue for $700 million in March 2013 and a freehold building in Australia for $70 million in Sept 2013, the gearing level will increase.

This increased debt level can be paid for by the company's numerous projects such as Waterview, Centrale 8, Parc Vera, Tampines Trilliant, and the recently released-for-sale Hillion Residences attaining TOP in the next few years.

We can thus expect the debt to be paid down with these incoming revenues. There could even be higher dividends for shareholders.

The company stopped offering scrip dividends this year after doing so for the last 2 years. This shows that management is confident of their cash flow and debt level.

Note that the company's controlling Kuik family and management own about 80% of the shares and thus their interest is strongly aligned with minority shareholders.

The high ownership by the Kuiks, however, probably account for the low liquidity of the stock.

Besides Singapore, Sim Lian also has property projects in Malaysia and has ventured into Australia this year. Certainly, the company is trying to expand and seek opportunities.

Sim Lian shares have gained more than 100% since the start of 2012, inclusive of 12.1 cents of dividends. Chart:

Venture Avenue project

This new project is in a good location as it is near Jurong East MRT, Jcube, JEM and Big Box, Jurong Country Club, Westgate, and IMM.

In the vicinity is also the Ng Teng Fong General Hospital which is currently being constructed and will open in 2014.

Low Keng Huat is partnering Genting Singapore to build a hotel in the same area too.

There will be strong traffic and retail options in this Jurong Gateway precinct which is being developed into a bustling hub.

Paya Lebar Square is undergoing construction and is almost fully sold with a decent profit. Venture Avenue is expected to enjoy similar success.

Sim Lian is trading at a rather reasonable price of around 89 cents, which is considerably cheaper than its peers such as Lian Beng, Chip Eng Seng, Yongnam, Wee Hur, and BBR.

Sim Lian also has research coverage by S&P. And these reports indicate bright prospects for the company.

The main risks are the rising cost of construction and materials, and the possibility of rising interest rates.

All companies will be affected, but those with strong fundamentals like Sim Lian will be more resilient and recover faster.

Wednesday, October 30, 2013

Instacom vs OCK vs RA


Wednesday, 25 September 
Currently there are 3 companies listed in ACE market that are involved in telecommunication infrastructures design, build, upgrade and maintenance work. With the ever increasing demand of higher mobile data & internet speed, these companies are expected to reap some benefits in the future.
Instacom Group (listed Oct 2012) & OCK Group (listed July 2012) are the main players which generates consistent revenue & profit, while R&A Telecommunication Group is not doing well.
Between Instacom & OCK, who is better? If you ask Instacom this question, surely it will tell you that it itself is better, so is OCK.
Lets check the balance sheet of the latest financial period ended 30th June 2013 for all 3 companies.
For market capitalization, both Instacom & OCK are quite close with about RM200 million, while RA is way behind at RM39.6 million.
 Share price (24/9/13)0.2850.7050.045 
 Total shares (mil)702.2284.9879.0 
 Market cap (mil)200.1200.939.6 
 Net asset/share0.220.240.10 
 Total Assets (mil)266.3149.9113.4 
 Total Equity (mil)152.463.484.7 
 Total Liabilities (mil)113.886.428.7 
 Total Borrowing (mil)80.859.511.1 
 Non current10.117.80.94 
 Debt/Equity ratio0.520.940.13 
 Dividend yield (%)01.40 
The NTA for both Instacom (22sen) & OCK (24sen) are also quite similar. However, debt to equity ratio for Instacom (0.52) is much better than OCK (0.94), which means OCK raises most of its business fund through interest-bearing debts rather than from shareholders.
Only OCK paid dividend for FY2012, which is 1sen per share, or 1.4% yield at share price of 70.5sen.
For financial performance, since we only have 3 quarters of results for Instacom now, I will only compare the latest 3 quarterly financial results for these 3 companies.
 RM milInstacomOCKRA 
From the table above, it is clear that RA is having a hard time. For Instacom, its revenue and net profit are in an increasing trend, while OCK is up and down. Instacom has caught and even surpassed OCK for its most recent revenue.
The net profit margin for Instacom is quite remarkable, which is 20-30% for the last 3 quarters. OCK PAT margin is just 7-10%.
Anyway, OCK is not purely a "telecommunication infrastructure" company. It also involves in green energy & power solution and mechanical engineering service business. For FY13Q2, its telecommunication segment which generates higher margin contributes 61% of total revenue and 81% of total net profit.
To compare the EPS and PE ratio of these stocks, I will estimate the FY13Q3 results using the average of past 3 quarters. With this calculation, the FY13Q3 net profit for Instacom, OCK & RA will be RM7mil, RM 2.9mil & RM-0.8mil respectively. Thus the estimated last 4 quarters net profit will be RM28mil, RM11.5mil & RM-1.7mil.
 Est net profit 4Qs28.011.5-1.7 
 EPS (Sen)3.994.04-0.19 
 Share price (24/9/13)0.2850.7050.045 
It seems like Instacom is undervalued and OCK is over-valued at the moment. If given a fair PE of 10x, Instacom's target price should be 40sen.
Of course this kind of earning estimation may not be accurate. Instacom seems to be in a growing mode and probably will earn more next quarter. OCK may produce some surprise as it has successfully put a leg into Myanmar market.
For jobs in East Malaysia, apart from Weida, Sarawak-based Instacom may have the winning edge for logistic reason. For jobs in West Malaysia, it is for all to grab.
At the moment, it looks like Instacom has a better prospect compared to OCK. Anyway, if you think that such business is worth investing in, you should invest at your own risk.

Kimlun Corporation - Sells Nilai land for RM46.5mil BUY


- We maintain BUY on Kimlun Corporation Bhd with a fair value of RM3.22/share – a 20% discount to our SOPderived value of RM4.03/share.

- Kimlun yesterday announced on Bursa Malaysia that its wholly-owned unit, Kimlun Land Sdn Bhd, has entered into a sales and purchase agreement to dispose nine parcels of agriculture land in Nilai for RM46.5mil.

- The buyer of the nine parcels of land, measuring 17.3 ha, is Bina Plastics Sdn Bhd.

- Kimlun said the disposal would help it unlock the value of its land bank and free up capital tied to the disposed property.

- Kimlun intends to use RM18.8mil (40%) from the proceeds to repay borrowings, and RM26.8mil (57%) for working capital.

- We view the disposal positively as it would help reduce Kimlun’s gearing, albeit marginally. Recall that the group is looking to invest RM35mil-RM40mil this year to upgrade its Johor plant and to purchase construction-related machineries. As at end-June, it has a net gearing of 0.6x.

- The Nilai land was previously earmarked for industrial development with an intended GDV of RM120mil-RM130mil, following the conversion of land title (from agriculture). Kimlun is expecting a gain of RM10.7mil from the disposal.

- With the disposal, capital can now be channelled towards the development of its maiden property project, HYVE in Cyberjaya (GDV: RM240mil) and its existing jobs at hand.

- To recap, HYVE was launched in Feb with a 70% take-up rate thus far. The project is expected to be completed in 2016 but we only expect meaningful contributions from next year onwards.

- Meanwhile, the civil contracts worth SGD1.1bil for the Thomson MRT line have been awarded this month, with the tunnel lining segment package worth SGD100mil (RM250mil) expected to be awarded by year-end.

- We like Kimlun as a proxy to the surge of construction jobs in Iskandar Malaysia and MRT jobs in Singapore and the Klang Valley.

- While earnings are expected to be muted in the 2H due to compressed margins, we see earnings accretion in FY14FFY15F, boosted by a record RM1.1bil of new job wins this year.

Source: AmeSecurities

Tuesday, October 29, 2013

HuaYang to gain from affordable housing


KUALA LUMPUR (Oct 29): Kenanga Research has maintained its outperform
call on Hua Yang Bhd with target price (TP) of RM2.91, as it may net
future gains from the affordable housing segment.

Following a briefing by the company yesterday, the research house in a
note today said it believes Hua Yang's RM620 million sales target for
FY14E is achievable, buoyed by more than RM1 billion worth of property

鈥淗ua Yang continues to be one of our favourite property developers as it
is one of the few to focus on the affordable housing market which will
enjoy resilient demand for years to come.

鈥淲e also believe that it will not be impacted by the recent Budget 2014
property cooling measures as Hua Yang does not have any exposure to
DIBS,鈥?it said.

Hence, the research house reckons that the pool of mass home buyers will
continue to grow prior to GST implementation as affordability becomes an
overbearing issue.

Kenanga Research noted that a total RM1 billion GDV worth of projects
will be launched this year which includes six new projects with total
GDV of RM690 million (e.g. Sentrio Suites, Metia Residences, The
Gardens@Polo Park, Jalan Abdul Samad@Johor, Ridgewood@Bercham Permai and
Anjung Bercham Megah, Perak).

The breakdown between Klang Valley and other regions will be 43:57, it

Assuming a conservative take-up rate of 70% on the RM1 billion GDV, the
research house believes its sales projections for FY14E of RM613 million
(+52% year-on-year) are realistic.

However, it has revised down its GP margin for FY14E by 1ppt to 32% due
to higher construction cost resulting from labour shortage.

The company's management highlighted its intention to maintain GP above
30% and believes that the labour cost issue would be moderate after
completion of public infrastructure, typically the biggest component of
any project, it said.

It has also maintain earnings estimates for FY14E and FY15E of RM77
million and RM112 million respectively.

It noted that the estimates for FY14E is achievable supported by
stronger billings in 2H14, which will be driven mainly by projects that
are near to completion such as Parc@OneSouth.

The research house added that substructure works are underway for some
of the upcoming new project launches, which mean billings will be
immediate upon SPA sales.

Triyards wins 2 contracts worth US$59 mil

Triyards Holdings, the offshore vessel fabrication and engineering solutions provider to the oil and gas (O&G) industry, said it has won two contracts worth an additional US$59 million, including its 10th Self-Elevating Unit (SEU) order.

The SEU order is with an Asian-based client and is for Triyards’’ BH 335, which has a leg length of more than 100m, and is capable of working in water depths of up to 70m.

It can accommodate 160 personnel. It will be fitted with heavy-lift equipment manufactured from Triyards’ in Houston. The other contract is for the construction of a turret for a Floating Storage Offloading (FSO) in Indonesia.

TRIYARDS: Unappreciated, Trading Below IPO Price


Observer2, a seasoned investor, has highlighted Triyards Holdings in our NextInsight forum. Below is a compilation of his posts and some readers' response:
Background: TRIYARDS provides cutting-edge engineering, fabrication and ship construction solutions for the offshore and marine industries worldwide. TRIYARDS also focuses on the construction of technologically advanced, high-specification customised offshore support vessels, such as self-elevating units.

Triyards' IPO took place last year with an issue price of 80 cents. Photo: annual report
Observer2 (12 Sep 2013): The recent market pull back has brought Triyards Hldgs’ valuation and share price to a rather attractive level.

However, the stock has drawn little interest from investors.

Below are some salient data on the stock:

No of Issued Shares: 295M; 

Major Holder: EZRA – 67%

52-week High: 95 cts; Low: 60 cts; 

NAV: 46 cts

FY 12(end-Aug) EPS: 14.9 cts(US)
FY 13 Est. EPS: 10 cts(US); 

Estimated PE: 5.5x @ 69 cts

Those who have an interest in stocks in the Oil & Gas sector may like to take a closer look at this one. 

The write-up in the following link provides a very informative and valuable insight into the business of Triyards –

A good commentary of Triyards’ 3Q13 results was made by Singapore Business Review

NRA Capital also has coverage of this stock with a target price of 97 cts. 

It considered Triyards as a “mini Keppel Shipyard in the making”. 

As all stocks have risks factors, it is important that investors should do their own homework before putting money into any stocks [DYODD]

Vested [accumulating from 72 to 62 cts].

Reck (12 Sep 2013): TQ Observer.  It looks undervalued .... but me don't understand self-elevating unit (SEU), Premium Class 400 HPHT and what not.

Observer2 (13 Sept 2013): Reck – I would view Triyards as offering very attractive value at under 70 cts; somewhat similar to Kreuz at around 40 cts in Nov/Dec 2012 – quiet with low turnover and interest. 

Whether the stock is going to do well or not depends a lot on its management and the company’s ability to grow its revenue and profits if its share price is to rise to greater heights.

Triyards is due to release its full-year results next month and we will have a better understanding of how the company is progressing.

Although it is not so easy for laymen like us to understand well the SEU and its industry, we can have a fair idea of the role that Triyards is playing. 

Triyards’ CEO, Wong Bheet Huan, has this to say of Triyards’ SEU – "Our SEUs serve to fill a gap in the industry - oil players operating offshore platforms look for alternatives to service platforms, while the larger rigs produced by the big two yards in Singapore and China are too costly.

"This is where our SEUs come in - we provide a cost effective solution to operators who need smaller SEUs to service the shallow platforms and we are able to do so at less than half the price."

Viva (13 Sept 2013): Your recommendation is quite zhun! Now 72.5 cents (+5 cents). Are you from the oil & gas industry?

Observer2 (13 Sept 2013): Hi, Viva, I am not from the oil & gas industry. 

Triyards’ share price moves up probably because of the surge in price of its mother share, Ezra - (on speculation that Samsung Heavy Industry is interested in making a takeover bid). 

I expect a re-rating of Triyards’ share price only after it releases its full year results next month, hopefully with a declaration of a maiden dividend. 

Triyards is becoming a prize possession for Ezra. 

Its net profit for FY 12 was US$44M as compared to Ezra’s nett profit of US$65M. That might have accounted for Samsung to be interested in taking over the mother as it can also own two-third of the daughter as well.

Observer2 (24 Oct 2013): Triyards has announced a full-year net profit of US$31.4M and a dividend of 2 cents(S). 

EPS - 10.6 cts(US) or 13 cts(S) based on 295M shares

PE - 5x at 65 cts

I would consider the stock as very undervalued; and very overdue for a re-rating in its share price as the result is also above many analysts’ expectation -See press release in