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Monday, February 29, 2016

Ewein - Transforming Penang

Ewein - Transforming Penang
Author: bonescythe | Publish date: Mon, 29 Feb 2016, 02:18 AM | >> Read article in Blog website

Ewein Berhad (Ewein - 7249) is known for it's metal sheet fabrication, designing and fabrication of precision moulds, tools and dies, as well as plastic injection business. However, the group had started to embark into property development and construction since Year 2011 in order to enhance the revenue and profitability of the group.

As a start, Ewein had bought over Menara IJM Land in Penang, receiving rental income from the fully tenanted building. Under their property portfolio is also Fort Cornwallis which is generating revenue from the rental, car park, and ticketing income.

However, bigger plans are ahead of Ewein under the helm of Dato Ewe Swee Kheng. The City Of Dreams - A brand new image for Penang, is a multi billion ringgit development that is going to attract multiple investor in the global arena into Penang's booming potential.

Transforming Dream to Reality

The first maiden project that Ewein undertook involving 572 units of luxury service apartments at the prime land of Bandar Tanjong Pinang, carrying a GDV of RM 800 million. At an average price of RM 1172 psf, the project had saw more than 1200 applicants that had put forward interest in owning a piece of the project that offer a direct sea view.

With the project almost sold out, and construction for this project had commenced and will be contributing towards the bottom line of Ewein for the next 3 years.

Penang is slated for bigger transformation process with the entrance of Consortium Zenith BUCG (CZBUCG) in developing and constructing the RM 6.3 billion undersea tunnel that connects Butterworth to Gurney Drive. In return, Penang government will pay CZBUCG with 110 acres of prime seafront land at Bandar Tanjung Pinang, of which 50 acres of land will be sale of Ewein Zenith (60% owned by Ewein Berhad, 40% owned by Consortium Zenith) in order to develop a one stop wellness destination from a synergy of health, healing, recuperation and entertainment area.

This mega development that Ewein Zenith is developing will carry a massive GDV of RM 13.9 billion, which includes wellness apartments, retirement and healthcare wellness residential suits, serviced apartments with wellness facilities, resort suites and ambulatory services. This massive development is the top champion in the Malaysia EPP 10 for Wellness Resort.

Providing a great sea view with great connectivity in an integrated wellness resort and tourism hub in Penang which is free from natural disaster such as earthquake and typhoons, that is what most baby boomers are looking forward for their retirement.

While the massive construction and development held by Consortium Zenith BUCG had not saw any listed entity involved, Ewein will be the closest link towards any spill over project that will be awarded in the future. However, the recent project award to Vivocom (formerly known as Instaco) will put both Ewein and Vivocom as the closest linked listed entity that had direct dealing with the CZBUCG for any future projects.


Ewein is an interesting counter to be look upon for a long period, considering the growth potential of the company in the property and construction arena in Penang.

Technically, Ewein had saw consolidation at the region of RM 1.10. Ewein is looking to see a revenue of more than RM 100m for FYE 2015, boosted from construction billing and stronger orders from it's metal fabrication and plastic injection business.
A stronger quarter will definitely set Ewein northward bound again, with a target of RM 1.50.

Can Padini continue to beat the odds?

Can Padini continue to beat the odds?

Author: Tan KW | Publish date: Mon, 29 Feb 2016, 10:59 AM

By Gho Chee Yuan / The Edge Financial Daily | February 29, 2016 : 9:57 AM MYT

This article first appeared in The Edge Financial Daily, on February 29, 2016.

KUALA LUMPUR: The retailing industry has been smarting from the implementation of the goods and services tax since last April, with revenue falling, impacting earnings. Going by the record low consumer sentiment index of 63.8 points in December — not to mention that consumer prices in January rose 3.5% from a year earlier — consumer spending may well remain weak, going forward.

However, for local retail groups like Padini Holdings Bhd and Jerasia Capital Bhd — the latter is the distributor of the Mango brand of outfits — their earnings have remained relatively strong despite the headwinds.

Padini’s quarterly profit, for one, doubled in its latest second quarter ended Dec 31, 2015 (2QFY16) to RM33.07 million from RM16.21 million a year ago, thanks to the continued expansion of its distribution network, which saw 13 Padini Concept Stores and Brand Outlet stores opening between the end of 2QFY15 and 2QFY16.

Nevertheless, there remains a concern that consumers will continue to tighten their belts amid the less-than-rosy economic climate. But Padini, whose share price has gained as much as 79 sen or 58.1%, while its earnings seem the least impacted, appears unfazed.

It closed seven sen or 3.37% higher at RM2.15 last Friday, valuing it at RM1.4 billion. Just a few days earlier, the stock hit its record high of RM2.18 on Feb 23.

Analysts, by and large, think Padini’s near-term earnings prospects remain positive. “The company’s near-term earnings growth will be supported by its existing outlets and new openings. We believe the aggressive store expansion and its pricing strategies could boost its earnings growth onwards,” a local bank-backed research firm analyst told The Edge Financial Daily when contacted.

Padini expects to add another five new stores — two Padini Concept Stores and three Brands Outlet stores — by the end of its FY16 ending June 30 — one in Ipoh, Perak, with two each in Kota Baru, Kelantan, and Shah Alam, Selangor, according to Padini executive director Chan Kwai Heng in an email to The Edge Financial Daily.

“We will continue with policies that will drive top-line growth, while holding prices steady. The distribution network must be expanded not just in size, but also in geographical and market reach,” Chan said.

But some cautioned that earnings growth for Padini may be less exciting going forward, as the company’s margin is expected to face pressure due to heated competition and higher input costs. Chan, however, is confident that falling margins can be compensated by higher sales through the group’s push for top-line growth.

Meanwhile, in terms of valuations, some analysts view that Padini is now fairly valued.

“Padini is currently trading at 12.9 times of its price-earnings ratio and we believe the current valuation is fair and has been reflected in the share price given the share price rally since last year,” one analyst said. Further, he estimated that Padini’s earnings will ease off in 4QFY16, as he reasoned that the quarter “is a seasonally slower quarter for retailers”.

Kenanga Research, however, thinks better things are yet to come for Padini. In a Feb 24 note, the research house said Padini will be well-positioned to ride on the up-wave with the advantage of a wider store reach when macroeconomic headwinds simmer down, and consumer sentiment recovers.

“Due to better-than-expected results and outlook, we are upgrading our estimated increase in same-store-sales growth (SSSG) for the Padini brands to 22.8% in FY16 from our pre-revised SSSG of 18.8%. This improves our FY16 and FY17 net profits by 3.3% and 2.8%,” it said.

As such, though the research house maintained its “market perform” call on Padini, it raised its target price (TP) to RM2.21 from RM1.82.

AllianceDBS Research, however, downgraded Padini to “hold” from “buy”, given that the stock has hit its TP of RM2.16 in the strong run-up of its share price recently.

While it acknowledged that Padini had posted strong 2QFY16 results, it noted that its gross profit margin for 2QFY16 had dropped to 40% (1QFY16: 46%, 2QFY15: 41%) due to an extensive discounting during the year-end sales promotion period, and more expensive merchandise brought in due to the weaker ringgit.

“We believe the strong 2QFY16 results will leave room for consensus to upgrade its FY16 earnings forecasts. Nonetheless, we deem the results to be within our expectations, as we expect weaker second-half (2HFY16) results relative to 1HFY16. As such, we are maintaining our FY16/FY17 earnings estimates,” it said. Key risks, it added, are weaker-than-expected consumer spending and an increasingly competitive industry landscape.

Sarawak Cable - Finishing to a record year

Sarawak Cable - Finishing to a record year

Author: kltrader   |   Publish date: Mon, 29 Feb 2016, 12:18 PM 


  • SCable reported 4QFY15 results with revenue of RM423m (+353% YoY, +10% QoQ) and core earnings of RM11m (4QFY14: -82m loss, +145% QoQ).
  • Full year FY15 core earnings totalled RM40m, compared to a -RM79m loss in FY14 (after stripping out negative goodwill of RM103m from the acquisition of Leader Universal)


  • FY15 core earnings was inline with our forecast (+3%) and consensus (-1%).


  • Final dividend of 5 sen was declared, doubling up from the 2.5 sen last year.


  • Stark improvement. SCable’s significant results turnaround YoY was due to the maiden contribution to the cable division from the acquisition of Leader Universal. The core loss last year was largely due to impairment charges (RM24m) on its construction arm Trenergy Infra due to cost overruns.
  • Electrifying prospects. SCable has tendered for over RM1bn in transmission line jobs. We understand that parentco Sarawak Energy will roll out another RM600m in 500kV transmission lines next year. In our view, SCable is in a polar positon to secure this job given its track record with the current 500kV line. SCable is also aiming to supply 275kV cables for RAPID (including construction) and 132kV cables for the MRT 2 (Line 1 was also supplied by them).
  • Indirect beneficiary of Pan Borneo. The impending roll out of the Pan Borneo Highway (Sarawak stretch) should indirectly benefit SCable as it intends to supply guardrails and lamp poles via its structural steel arm, Sawarja Timur.


  • High net gearing (due to acquisitions) at 162%. Efforts to reduce net gearing include a recent proposed 10% private placement and sale of its helicopter aerial services (APL).


  • No changes as the results were inline.


  • Maintain BUY, TP: RM2.49
  • SCable has strong growth potential driven by acquisitions, superior orderbook cover and a new earnings stream from its hydro plant.
  • The impending Sarawak Election, touted to be in April, is an added booster as investors scavenge for such plays.
  • SCable is also a cheaper proxy to Sarawak’s growth theme with P/E valuations at a 50% discount to CMS.


  • Our SOP based TP of RM2.75 implies FY16-17 P/E of 13.1x and 10.4x respectively.
Source: Hong Leong Investment Bank Research - 29 Feb 2016

ViTrox Corp - Recess is over, time to work

“Cabin crew, prepare for take-off”

Following a strong 4Q15, management expects another busy quarter backed by a solid order backlog. 3-month average book-to-bill ratio also improved to 1.4x (12-month high). Solid orders at both the MVS and ABI divisions came from a sizeable number of clients globally. We see upside to our forecasts should order momentum sustains into 2Q16. For now, our forecasts and MYR3.80 TP (13.5x CY17 EPS) are unchanged. Exciting times are ahead with stronger earnings visibility; reiterate BUY.
2015 core earnings was actually within expectations

Management guided that 4Q15 reported net profit included a MYR5.7m provision for tax (not disclosed in the results announcement) which will likely be claimed back due to its renewed pioneer status (delayed due to a necessary amendment to the official document). Stripping off the tax provision, 2015 core earnings would have hit MYR51m (+2% YoY); in line with our forecast of MYR52m.
A record high 1Q16 in the making?

New qualifications by two of the world’s top 10 EMS players recently have translated to stronger orders. As at 19 Feb, purchase orders have hit MYR32m while order backlog stands strong at MYR26m vs MYR17m a quarter ago; we expect 1Q16 revenue to hit MYR55m-60m (+c.20% QoQ, +1.5x YoY). The MVS-T division (27%/12% of FY14/15 revenue) expects to deliver 12-15 units in 1Q16 vs just 18 units in 2015. Chunky orders were also seen at the ABI division in 1Q16. Typically, 1Q has been the weakest quarter for ViTrox (1Q revenue makes up average 16% of annual revenue over the last 3 years), indicating even stronger quarters ahead.
Playing the cards right

As a leading automated vision equipment maker strategically located in Penang, ViTrox may also benefit from multi-billion FDIs into Penang and Batu Kawan by technology MNCs such as Osram and SanDisk. ViTrox’s ventures into data analytics should strengthen recurring revenue for the group (2015 service income: +66% YoY to MYR17.4m/11% of group revenue). Valuations are undemanding at 10.7x FY16 ex-cash PER. BUY.

Source: Maybank Research - 29 Feb 2016


2016-02-27 16:52

吉隆坡27日訊)美德再也(MITRA,9571,主板建筑組)獲PJ Mid


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2016-02-27 16:58



根據行業觀察家指出,蘋果公司在2016年首季減少iPhone 6S及iPhone 6的30%產量,加上全球半導體銷售市場預計將低迷,半導體銷售增長預計將由雙位數萎縮至個位數。

友力森(UNISEM,5005,主板科技組)董事經理謝聖德通過電郵,向The Edge表示,相信市場放緩是暫時性的。





另外,分析員也表示,如果馬幣兌美元維持在目前的水平,加上新產品的推出,半導體業者將能持續其顯著的盈利增長。(星洲日報/財經‧The Edge專版)

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MRT2 30亿工程将颁发 传IJM双威建筑嘉登领跑

MRT2 30亿工程将颁发 传IJM双威建筑嘉登领跑

财经 2016-02-28 08:34


《The Edge》引述消息报道,上述配套总值30亿令吉,预计会在3月初至中旬颁出。


据悉,捷运机构(MRT Corp)预计会在3月初至中旬,颁发至少两项MRT2主要配套,每个配套值15亿令吉。















AmInvestment retains Buy for Kimlun with higher fair value

KUALA LUMPUR: AmInvestment is retaining its Buy call on construction company Kimlun Corp Bhd with a higher fair value of RM2.28 a share from RM2 a share earlier, pegged at 10 times FY16F price-to-earnings.

It said on Monday that Kimlun reported core earnings of RM71mil for FY15 – up 110% from RM34mil a year earlier. Earnings surpassed both the research house and market expectations by 6% and 21% respectively.

Kimlun saw a marked improvement in pretax margin to 8.9% vs. 5% last year due mainly to the execution of better margin projects as well as low material and fuel prices.

Hence, Kimlun showcased a strong bottomline despite a 13% decline in revenue.

Sequentially, revenue fell 4% to RM232mil. Nevertheless, profit rose 9% as profit before tax margin improved 0.5ppt to 11.5%.

Kimlun proposed a final single-tier dividend of 5.8 sen/share – representing a 25% PATMI payout (FY14: 3.8 sen).

All in, gross margins for the respective construction and manufacturing divisions saw considerable improvements. Notably, Kimlun has been embarking on projects which require less specialist works, which helped to improve its construction margins.

AmInvestment pointed out Kimlun also benefited from a forex gain of RM6.3mil from the group’s sales to Singapore.

As at end-Dec, the group had an outstanding construction and manufacturing order books of RM900mil and RM170mil, respectively.

Last year, the group secured RM750mil worth of new construction jobs. This year, management is hoping to secure RM700mil- RM800mil (excluding highways) worth of jobs for its construction on the back of a strong tender book of more than RM1bil (50% in KlangValley, 50% in Johor).

“Prospects include work packages for RAPID (mainly infrastructure and support buildings), Pan Borneo highway, SUKE, DASH as well as landed properties in Johor.

“Kimlun is expected to supply segmental box girders (SBG) and tunnel lining segments (TLS) products for the KVMRT2 given its track record (KVRMRT1 supply: RM270mil) and available capacity at its Senawang plant (~30% utilisation rate),” it said

Apart from that, Kimlun is looking to supply products for the Thomson and Eastern MRT lines in Singapore.

Hyve’s has a take-up rate of 80% with unbilled sales amounting to RM11mil. The project will be completed in 1Q. Contributions to the division moving forward will mainly come from its recentlylaunched landed homes project in Pontian (GDV: RM48mil).

AmInvestment has an FY16F order book replenishment target of RM650mil and RM250mil for its construction and manufacturing arms, respectively.

“Given the prospects in Johor and Klang Valley, we are optimistic that Kimlun will be able replenish its order book.

“We believe margins are sustainable given the current low material and fuel prices as well as job mix; the stronger Singapore dollar will also benefit Kimlun. To this end, we have adjusted our PBT margin assumption slightly upwards to ~10% (from 9% earlier) – resulting in 14% increase for FY16F earnings. Maintain Buy,” it said.

Sunday, February 28, 2016

How To Be Happy: 5 Secrets Backed By Research


We all wanna be happier, right?
Thing is, depression is at epic levels. More people are unhappy and they’re getting miserable at an even younger age.

From Happier: Learn the Secrets to Daily Joy and Lasting Fulfillment:
In the United States, rates of depression are ten times higher today than they were in the 1960s, and the average age for the onset of depression is fourteen and a half compared to twenty-nine and a half in 1960.
You don’t want to be part of this trend. Neither do I. So I called an expert to get some answers…
Tal Ben-Shahar taught the most popular class at Harvard University — and it was all about happiness. He’s also the bestselling author of a number of books including Happier: Learn the Secrets to Daily Joy and Lasting Fulfillment.
Tal’s going to teach you and I what creates happiness in the big picture, what makes home and work more joyful, daily rituals you can use to boost good feelings, and the happiness mistakes you don’t even know you’re making.
Let’s get to it…

1) You Need Pleasure… And Meaning

Pleasure makes you happy. (Deep insight, huh?) Many of us just stop there, chasing things that feel good. But that’s only half the recipe.
The research shows we also need meaning. A purpose that has significance to us. When you combine pleasure and meaning, you’ve got happiness.
From Happier: Learn the Secrets to Daily Joy and Lasting Fulfillment:
To experience a sense of purpose, the goals we set for ourselves need to be intrinsically meaningful. We could set ourselves the goal of scoring top grades in college or owning a large house, yet still feel empty. To live a meaningful life, we must have a self-generated purpose that possesses personal significance rather than one that is dictated by society’s standards and expectations.
(For more on how to find what is meaningful for you, click here.)
So what about happiness at work? To find the perfect career, you need to add one more thing: your strengths.
The perfect job for you is one that is pleasurable to do, has a purpose you believe in, and lets you do things you’re good at. Here’s Tal:
If I find both meaning and pleasure at work, that will contribute to my happiness, but that’s not enough for long-term satisfaction because we also want to feel confident. We also want to feel like we’re good at what we do. We also want to improve and get better. That’s part of our nature. If we think about our strengths, about what we’re good at, where our talents reside, and then find the overlap between those and what makes us happy, that’s the ideal scenario.
Sound like a tall order? Keep in mind that it’s all about your feelings, not what someone else thinks.
Research shows hospital cleaners found their jobs meaningful when they saw themselves as contributing to sick people getting better, not as a bunch of menial tasks.
(To learn how to be happier and more successful, click here.)
Okay, so we know what makes a happy life… Now how can we use these ideas to get happier?

2) Map Your Life

Ever look down at the clock and get stunned by how much time you spend on email? Tal says we’re really bad at judging how we spend our time. And we’re even worse about doing what really makes us happy.
So the first step is to really keep track. Try writing down what you do every hour for a few days. Then ask yourself if those things were pleasurable, meaningful or let you use your strengths. Here’s Tal:
When you actually map your day, you write, “This is what I did between 11 and 12,” and then you evaluate what you did. Evaluate it on the dimension of meaning, evaluate on the dimension of pleasure, evaluate on the dimension of strength.
Now you can see which of your activities are contributing to your happiness, which are taking away from it and how much time you spend on each.
You might think the next step would be to go in and fix what’s broken. And you’d be wrong. You actually want to do the reverse.
It’s called, “appreciative inquiry.” Find the things that make you happy and first focus on doing them more. Later you can focus on doing the bad stuff less. Here’s Tal:
What appreciative inquiry says is that actually if you want to fulfill the potential, you need to start with appreciative questions, such as “What is working? What’s going well in your life?” Build on what is going well, then also deal with the things that are not going well.
Looking at how you really spend your time and maximizing the good moments sounds simple, but we usually trust our very fallible memories and don’t proactively try to increase the good on our calendars.
As Nobel Prize winning psychologist Daniel Kahneman said:
Time-use may be the determinant of well-being that is the most susceptible to improvement.
(To learn the four rituals neuroscience says will make you happier, click here.)
So using your time the right way can make you happier. So what are you doing wrong that you need to change?

3) “No Pain, No Gain” Is A Myth

Many of us believe that anything that produces serious results has to be hard work. I have good news: Tal says that’s wrong.
We’re happiest when we do stuff that leads to good things but when we enjoy the process as well. You may have heard of this state: it’s called “flow.”
It’s when our skills and challenges are balanced and we become immersed in what we’re doing. Here’s Tal:
If you look at the most successful people, they work very hard, there’s no question about it. However, that hard work doesn’t need to be painful work. Once I have a goal, I can really focus on the here and now. I can focus on my practice, be in what the psychologists called “flow.”
The best goals are means and ends. Tal compares a “drowning” model to a “lovemaking” model. In the former we struggle with something and at the end we gasp for breath, feel better and mistake that for happiness.
In the lovemaking model, (without, um, getting too specific) we enjoy the process and the end result.
These are the type of activities we enjoy most and should seek out. Spend as much time as possible on your “want-to” list, and try to spend less time doing those awful “have-to” activities.
(To learn the 8 things the happiest people do every day, click here.)
This all sounds nice but how do we figure out the “want-to” activities that will engage us the most which are actually productive, and not merely obvious leisure?

4) What Would You Do If No One Would Judge You?

Imagine someone cast a spell on you so that no one would see what you were doing or the results of your efforts. What would you choose to do if you weren’t being judged?
Tal says answering this question can help you discover the activities you will truly find enjoyable in the moment and that can lead to “flow”:
From now on and for the rest of your life no one will know what you’re doing. No one will know about the amazing things that you do for others, no one will know about how rich you are, no one will know about how successful you are, how many people you reach, no one but you alone will know about the things you do. In such a world where a spell of anonymity has been cast on you, what would you do? The reason this exercise is important is because it helps us distill the essence of what truly matters to us independent of what other people think. It doesn’t mean that that is the way we need to lead our lives, but it can give us a sense of direction about what truly matters to us.
We spend so much time worried about what other people think and trying to impress them that we end up doing a lot of stuff that doesn’t really make us happy.
Step back for a second and think about what you really want to be doing with your time.
(To learn how to get people to like you — from an FBI behavior expert, click here.)
Okay, all of the previous ideas have been big picture. What little things should we do every day to boost happiness?

5) Doing Beats Knowing – Use Rituals

Many people believe that if we know the right thing to do, we’ll do it. (These people have never been on a diet.)
Knowing is nice, but it’s doing that really matters. And here Tal says science can learn something from religion. Religions are big on rituals.
Believers know the prayers but it’s not enough to know them, you have to say them regularly. Anything we want to do to improve our life needs to be a ritual — a habit —  if it’s really going to create change.
So what rituals does Tal recommend for happiness?
1 – Exercise
It doesn’t just keep you healthy and attractive. Studies show it’s as effective as antidepressants in keeping you smiling. Here’s Tal:
The research coming out on physical exercise is mind-boggling. Not just for physical health, we know that, but also for mental health. It’s as powerful as our most powerful psychiatric medication — without the side effects. When it comes to dealing with anxiety or depression or attention-deficit disorder, really more and more psychologists are calling physical exercise the wonder drug. We don’t need to do a lot of it. Even as little as three 30-minute sessions a week of running or brisk walking can help.
2 – Spend Time With Friends
The number one predictor of happiness is how much quality time you spend with the people you love. Here’s Tal:
The number one predictor of happiness is quality time we spend with people we care about and who care about us. Unfortunately, a thousand friends on Facebook are no substitute for that one BFF. We need that real intimate connection.
3 – Express Gratitude
Say thanks. Send “thank you” texts and emails. Don’t take things for granted that you are very lucky to have. Here’s Tal:
Expressing gratitude to others with a gratitude letter, but also just expressing gratitude to ourselves, being grateful for what we have, is vital.
4 – Meditate
No, you don’t have to sit on a mountaintop and say a mantra. Meditation and mindfulness are simple things we can do every day. Here’s Tal:
Five minutes a day of just closing your eyes and breathing deeply or listening to your favorite music with your eyes closed, that can go a long way toward making you happier.
Don’t just read these things. Make them a habit. A daily ritual. As the poet John Dryden said:
We first make our habits and then our habits make us.
(To learn the 7 step morning ritual that will make you happy all day, click here.)
Alright, let’s round all these ideas up and learn the final secret to a happier life…

Sum Up

Here’s what Tal had to say about how to be happy:
  • You need pleasure and meaning. Feeling good is important but we also need a purpose.
  • Map your life. Note where your time goes and ask if it’s making you happy. Then do more of the good stuff.
  • “No pain, no gain” is a myth. We’re happiest doing things where we enjoy the process, not just the results.
  • What would you do if no one would judge you? This question can point you in the right direction.
  • Doing beats knowing. Use rituals. Don’t just read these ideas. Make them into habits.
Maybe you don’t feel so great right now. Tal says that’s okay. Do you dream of a perfect life that’s all ups, no downs? Never gonna happen. And that’s alright.
Be compassionate with yourself. Life is rich and varied. Give yourself permission to be human. Every day won’t be great but we can make more of them better if we try. Here’s Tal:
First, the foundation of a happy life is what I’ve come to call giving ourselves the permission to be human. To experience the full gamut of human emotions. That’s what a happy life is about. It’s a life where we have difficulties and dark places and hardships, and where we celebrate and express gratitude and love.
Start making one of these things into a habit right now: send someone a bit of gratitude. Send a “thank you” text or email to that person who did something nice for you recently.
Gratitude is the best habit to start out with because it’s easy and it’s very efficient…

You actually make two people happy.

Jack Ma

Jack Ma, the founder of Alibaba and one of the richest man in the world recently said this:

“The worse people to serve are the Poor people.

Give them free, they think it’s a trap.
Tell them it’s a small investment, they’ll say can’t earn much.
Tell them to come in big, they’ll say no money.
Tell them try new things, they’ll say no experience.
Tell them it’s traditional business, they’ll say hard to do.
Tell them it’s a new business model, they’ll say it’s MLM.
Tell them to run a shop, they’ll say no freedom.
Tell them run new business, they’ll say no expertise.

They do have somethings in common: They love to ask google, listen to friends who are as hopeless as them, they think more than an university professor and do less than a blind man.

Just ask them, what can they do. They won’t be able to answer you.

My conclusion: Instead of your heart beats faster, why not you just act faster a bit; instead of just thinking about it, why not do something about it. Poor people fail because on one common behaviour: Their Whole Life is About Waiting.”

Opinion: What the curiously strong Dow Transports say about stocks

Opinion: What the curiously strong Dow Transports say about stocks

By Mark Hulbert

Published: Feb 17, 2016 5:24 a.m. ET

The Transports and the broader Dow Industrials are diverging, which is a bullish sign

CHAPEL HILL, N.C. (MarketWatch) — One of the most bullish sub-surface developments in the stock market is the surprising strength of the Dow Jones Transportation Average.

Whereas the broader Dow Jones Industrial Average DJIA, -0.34% has fallen 1.6% in February, the Dow Transports DJT, +0.48% are sitting on a 4.4% gain. (See the chart at the top of this column.) It’s unusual for a divergence this large — 6 percentage points — to materialize over so short a period.

One reason this divergence is bullish: The Transports tend to be a decent leading indicator. A recent case in point came in mid-December: That’s when I wrote that the Transports were “unusually weak.” As we know now, the broad market at that time was about to suffer a 10%-plus correction.

This is just one data point, of course, but there is more systematic evidence that supports the notion that the transportation sector is a good leading indicator. Consider a study conducted by the Bureau of Transportation Statistics in the U.S. Department of Transportation, titled “The Freight Transportation Services Index as a Leading Economic Indicator.” The study’s authors concluded that this index over the past three decades “led slowdowns in the economy by an average of four to five months.”

Another perspective on the Dow Transports come from the Dow Theory, the oldest market-timing system that remains in widespread use. Dow Theorists believe that the market trends most likely to continue are those in which both the Dow Industrials and the Dow Transports are participating. Divergences, known as “non-confirmations” in Dow Theory parlance, indicate a possible change in trend.

To be sure, the last two weeks’ divergence will need to persist for some time longer in order to persuade the Dow theorists I monitor to issue a “buy” signal. Both Jack Schannep, editor of, and Richard Moroney, editor of Dow Theory Forecasts, remain bearish for now, for example.

In the meantime, though, pay close attention to the Dow Transports. If they continue to outperform the Dow Industrials, you should give an increasing benefit of the doubt to the bullish case.

Saturday, February 27, 2016

林木生集团 盈利展望明朗










分析:JF Apex 证券

Testing times for test equipment makers

Slowing demand for smart devices affect Penang-based manufacturers

THE semiconductor test equipment and smart sensor manufacturers in Penang are experiencing a soft first quarter following two consecutive good first quarters in 2014 and 2015.

The slowdown started in the fourth quarter of 2015 due to the weakening of Asian currencies, delay in the release of smart devices with fresh features, and a challenging economic environment.

Globetronics Technology Bhd expects a softer first quarter for 2016 due to the slowing down in the demand for smart devices.

Group chief executive officer Datuk Heng Huck Lee tells StarBizWeek this is due to the restrained replacement rate of smart phones in Asia and the slow growth of gross domestic product in the region.

“The factors responsible for the slower replacement rate of smart phones include weakened Asian currencies and the lack of new breakthrough features in premium smartphones.

“As a result, there is a 20% decline in the demand for premium smartphones, which has impacted the semiconductor component and equipment segments, which include sensor and test equipment manufacturers, in the region,” says Heng.

Heng: ‘The factors responsible for the slower replacement rate of smartphones include weakened Asian currencies.’

The trend may extend to the second quarter, according to Heng.

“We anticipate the release of smart phones in the mid-range and premium categories with fresh features in the late second quarter or early third quarter of 2016,” he says.

Heng says after two consecutive good first quarters in 2014 and 2015, the industry had expected the first quarter this year to perform.

“The signs of slowing down came as a surprise in the late fourth quarter 2015, portending a weak first quarter in 2016.

“The group’s first quarter will be softer than the previous year corresponding period and the fourth quarter of 2015,” he says.

According to Heng, the group is allocating about RM35mil as capital expenditure for 2016 to release new products and sensors in the second and third quarters.

“One of the new products will commence commercial production in the second quarter, while the other three would in the third and fourth quarter.

“We expect the group’s orders for sensors to recover and surge in the second half 2016.

“For the fiscal year 2015, we expect another record year for the group,” he says.

China factor

Moving ahead, Heng says a serious challenge to semiconductor component manufacturers will come from manufacturers in China .

“Currently China produces only about 10% of the semiconductor components used in smart devices, telecommunication, and computing products, and imports the remaining 90%.

“However, starting in 2015, the Chinese government will provide financial incentives of about US$20bil to US$50bil to ramp the production of locally produced semiconductor components.

Chuah: ‘The deliveries for the first half 2016 are mostly from the backlogged orders from the fourth quarter.’

“This will reduce China’s imports of semiconductor components and raise exports of semiconductor components from China to compete in the market,” Heng says.

MMS Ventures Bhd anticipates a slowdown in the first quarter 2016 as the signs were already present in the fourth quarter 2015. Group managing director TK Sia says there was already a slowdown in orders for the group’s semiconductor test equipment used for checking light-emitting diode (LED) products used in the automotive, general lighting, and smart device segments.

“For the first quarter 2016, orders are projected to decline by 10% to 15% compared with the previous year corresponding period.

“So far, we have received about RM15mil worth of orders to be delivered in the first and second quarters of 2016.

“We expect business to pick up in the second and third quarters, based on customers’ feed back and order projections for the second half of 2016,” he says.

Due to the slowdown in the final quarter of 2015, MMS Ventures expects revenue for its 2015 fiscal year ended December 2015 to contract by about 15% compared to 2014.

According to Sia, the 2016 year would be flat against 2015.

“We quote about 70% of our sales in US dollars, which more than offset the 20% of imported raw materials quoted in US dollars,” he says.

MMS test-equipment are priced between US$50,000 to US$100,000 per unit, depending on features and models.

“Korean and Japanese made test-equipment are priced about 30% higher,” he says.

Pentamaster Corp Bhd executive chairman CB Chuah says the slowdown in the fourth quarter led to deferred delivery of semiconductor test equipment to customers.

“The deliveries for the first half 2016 are mostly from the backlogged orders from the fourth quarter. We expect pick-up in sales in the third quarter of 2016,” Chuah adds.

According to a report in Research and Markets, the global smart sensors market is expected to reach at US$9.22bil in 2018, growing at a compounded annual growth rate of 11.53% from the period 2014-2020.

“The growth of the market is fuelled by increasing adoption in automobile sector.

“It has emerged as one of the top contributors in the overall market size due to increase in the number of vehicles by emerging economies.

“Some of the benefits associated with these sensors are scalability, reliability and cost effectiveness.

“These are widely used in industries like aerospace and defence, automotive, consumer electronics and others.

“Sports segment is recognised as one of the emerging sectors for smart sensors market,” the report says.

According to a Gartner research house report released in January 2016, the worldwide semiconductor capital spending is expected to decline 4.7% in 2016 to US$59.4bil.

This is down from the 3.3% growth predicted in Gartner’s previous quarter’s forecast.

“The 2016 outlook for the semiconductor manufacturing equipment market reflects a bleaker outlook for end-user electronics demand and the world economic environment,” says David Christensen, senior research analyst at Gartner.

“Capital investment policies of leading semiconductor vendors have remained cautious against the background of sluggish electronics demand. However, the long-term outlook shows a return to growth, although the wafer-level manufacturing equipment market is expected to enter a gentle down cycle in 2016 due to the loss of the supply and demand balance in the DRAM market,” he says.

The bearish market sentiment and the continued upward trajectory of the greenback followed by the devaluation of the China’s renmimbi in August last year have left shares of semiconductor and technology stocks tumbling.

Among the major stocks that declined on the local stock exchange include Malaysian Pacific Industries Bhd, followed by Inari Amertron Bhd, Unisem Bhd and KESM Industries Bhd.

Since January, shares of MPI tumbled the most at 26.98%, followed by Inari Amertron 13.16%, KESM 13.08% and Unisem 7.41%.

Fortress Capital CEO Thomas Yong says semiconductor stocks performed relatively well in 2015, with stock price gain ranging from 30% to over 100% and this was supported by strong earnings growth.

Apart from higher global demand driven by higher smartphone shipments, Yong says the main factor that has contributed to the robust earnings growth for semiconductor firms is the weakening of the ringgit that softened by about 22% in 2015.

But, the stock prices may stay soft after seeing a strong performance last year, according to Yong.

That said, factors like the currency fluctuations will likely drive the direction of the stock prices, he says.

Going forward, with the increasing applications of semiconductors into telecommunication devices, automative, medical and consumer devices as well as Internet of Things, he says semiconductor sales are less volatile compared to the past where sales rely profoundly on the market for PCs and smartphones.

“As such, semiconductor sales are likely to be closely correlated with the economic growth, which is likely to slow down in the near term,” he notes.

Meanwhile, Areca Capital CEO Danny Wong Teck Meng says the downward trend in semiconductor stocks are related to demand for smartphones that is seen to be tapering off, apart from the US dollar showing a reversal effect.

“This may not favour firms with exports in US dollar.”

JP Apex Research says industrial production index (IPI) would continue to grow at a moderate pace of 2.6% y-o-y amid weaker manufacturing data posted by China in January 2015.

“Electrical and electronics products sustained their uptrend despite negative performance in semiconductor sales, while a continued downtrend was observed in mining, dragged by negative expansion in the subsectors,” it says, adding that higher growth in electrical and electronics products will continue to support IPI expansion.

The IPI continued to show improvement on a quarterly basis after its fourth-quarter 2015 performance increased by 2.9% y-o-y, backed by positive growth in manufacturing and the electricity index.

20大马股息王 10年沒虧過

20大马股息王 10年沒虧過

Author: ss20_20 | Publish date: Wed, 24 Feb 2016, 01:42 PM





































 在考量一連串企業活動后,該公司10年前經調整股價僅82.5仙,比2月17日閉市價4.99令吉,飆漲了5倍。 | 24 Feb 2016

CB Industrial Product - Strong FY15 Results

CB Industrial Product - Strong FY15 Results

Author: kiasutrader   |   Publish date: Thu, 25 Feb 2016, 09:58 AM 



Actual vs. Expectations

CB Industrial Product (CBIP)’s FY15core net profit (CNP*) of RM99.1m beat expectations at 121% of consensus forecast (RM82.0m) and 123% of our forecast (RM80.3m).
This was largely due to margin expansion on favourable exchange rates in the Palm Oil Mill Equipment (POME) segment and better cost management in the Retrofitting Special Purpose Vehicle (RSPV) segment.


A special dividend of 4.0 sen was announced for FY15A DPS of 10.0 sen, above our 6.0 sen dividend forecast. This implies a 53% payout ratio and 4.7% dividend yield for the year.

Key Results Highlights

YoY,FY15 CNP rose 4% on stronger POME PBT (+24% to RM114.2m) due to favourable exchange rates, particularly seen in 4Q15. RSPV segment also recorded stronger PBT (+28% to RM25.8m) on better cost management. Note that FY15 tax was 26% compared to 9% in FY14 due to expiry of pioneer tax status; hence, PBT improvement (+28% to RM139.6m) was stronger than CNP improvement.
QoQ,4Q15 CNP jumped 242% as POME PBT rose 135% to RM44.1m on better forex rates, while RSPV PBT rose 562% on cost management and higher project delivery.


We are optimistic on the POME segment as rising CPO prices should improve orders. Meanwhile, the strong USD should benefit existing sales as we gather that c.40% of CBIP’s orderbook is denominated in USD.

Change to Forecasts

No change to our FY16E forecasts as we introduce our FY17E CNP of RM125.1m.


Maintain OUTPERFORM We believe CBIP holds good upside potential with better earnings visibility due to its orderbook-based earnings. We also like CBIP for its strong balance sheet with net cash of RM177.2m or 33.7 sen per share.


No change to our TP of RM2.49 as we maintain a Fwd. PER of 11.7x on FY16E EPS of 21.3 sen. Our target Fwd. PER of 11.7x is based on +0.5SD, reflecting the POME segment’s robust orderbook status with earnings that are less volatile compared to the plantation sector

Risks to Our Call

Lower-than-expected margin for POME division.
Lower-than-expected sales or margin from RSPV division.
Source: Kenanga Research - 25 Feb 2016

(fayeTan) - The Art Of Cutting Your Losses by Ken Hawkins

(fayeTan) - The Art Of Cutting Your Losses by Ken Hawkins

Author: fayeTan   |   Publish date: Thu, 25 Feb 2016, 10:45 AM 

Super volatile market so far in 2016. In view of the very volatile market in the first two months of 2016, some investors may already have negative return in their portfolio. Should you stay invested or should you cut loss? For me, I am setting a rule of 5% maximum loss in which I will do a review on whether anything wrong with my previous decision or whether there is any fundamental change.
Most of the time, I will CUT LOSS at 5% loss. Depending on your risk appetite, you may set your own trigger at 10%, 20% or 30%.
Good article about CUTTING LOSS below. It is written by Ken Hawkins (founder of Ohow Investor Consultants, a private investment office. He is a Canadian with 25 years of working experience in investment industry). Full article below. It is also accessible at
***************************************Begin of article******************************************************************************
One of the most enduring sayings on Wall Street is "Cut your losses short and let your winners run." Sage advice, but many investors still appear to do the opposite, selling stocks after a small gain only to watch them head higher, or holding a stock with a small loss, only to see it worsen.
No one will deliberately buy a stock they believe will go down in price and be worth less than what they paid for it. However, buying stocks that drop in value is inherent to the nature of investing. The objective, therefore, is not to avoid losses, but to minimize the losses. Realizing a capital loss before it gets out of hand separates successful investors from the rest. In this article, we'll help you stand out from the crowd and show you how to identify when you should make your move.
Reasons Investors Hold Stocks With Large Unrealized Losses
In spite of the logic for cutting losses short, many small investors are still left holding the proverbial bag. They inevitably end up with a number of stock positions with large unrealized capital losses. At best, it's "dead" money; at worst, it drops further in value and never recovers. Typically, investors believe that the reason they have so many large, unrealized losses is because they bought the stock at the wrong time or it was a matter of bad luck. Rarely do they believe it is because of their own behavioral biases.
Let's look at a few of these biases:
  • Stocks Always Bounce Back - Don't They?
    A glance at a long-term chart of any major stock index will see a line that moves from the lower-left corner to the upper right. The stock market, over any long time period, will always make new highs. Knowing that the stock market will go higher, investors mistakenly assume that their stocks will eventually bounce back. However, a stock index is made up of successful companies. It is an index of winners. Those less successful stocks may have been part of an index at one time, but if they've dropped significantly in value, they will eventually be replaced by more successful companies. The indexes are always being replenished by dropping the losers and replacing them with winners. Looking at the major indexes tends to overstate the resiliency of the average stock, which does not necessarily bounce back. In fact, many companies never regain their past highs and some gobankrupt.
  • Investors Do Not Like Admitting They've Made a Mistake
    By avoiding selling a stock at a loss, many investors do not have to admit to themselves that they've made a judgment error. Under the false illusion that it is not a loss until the stock is sold, they elect to continue to hold a losing position. In doing so, they avoid the regret of a bad choice. After a stock suffers a loss, many investors plan to hold onto it until it returns to its purchase price. They intend to sell the stock once they recover thispaper loss. This means they will break even, and "erase" their mistake. Unfortunately, many of these same stocks will continue to slide.
  • Neglect
    When stock portfolios are doing well, investors often tend to them like well-maintained gardens. They show great interest in managing their investments and harvesting the fruits of their labor. However, when their stocks are holding steady or are dropping in value, especially for long time periods, many investors lose interest. As a result, these well-maintained stock portfolios start showing signs of neglect. Rather than weeding out the losers, many investors do nothing at all. Inertia takes over and, instead of pruning their losses, they often let them grow out of control.
  • Hope Springs Eternal
    Hope is the belief in the possibility of a positive outcome, even though there is some evidence to the contrary. Hope is also one of the primary theological virtues in various religious traditions. Although hope has its place in theology, it does not belong in the cold hard reality of the stock market. In spite of continuing bad news, investors will steadfastly hold onto their losing stocks, based only on the faint hope that they will at least return to the purchase price. The decision to hold is not based on rational analysis or a well-thought-out strategy; and unfortunately, wishing and hoping that a stock will go up does not make it happen.
Realizing Capital Losses
Often you just have to bite the bullet and sell your stock at a loss before those losses get bigger. The first thing to understand is that hope is not a strategy. An investor has to have a logical reason to hold a losing position. The second point is, what you paid for a stock is irrelevant to its future direction. The stock will go up or down based on forces in the stock market, the stock's underlying fundamentals and its future prospects.
Let's look at a few ways of assuring a small loss does not become "dead" money or turn into a much larger loss.
  • Have an Investment Strategy
    Having a written investment strategy with a set of rules both for buying and selling stocks will provide the discipline to sell stocks before the losses blossom. The strategy could be based on fundamental, technical orquantitative factors.
  • Have Reasons to Sell a Stock
    An investor generally has quite a few reasons why he or she bought a stock, but typically no set boundaries for when to sell it. Don't let this happen to you. Set reasons to sell stocks, and sell them when these things occur. The reason could be as simple as: "Sell if bad news is released about corporate developments or a price target."
  • Set Stop Losses
    Having a stop-loss order on shares that you own, particularly the more volatile stocks, has been a mainstay of advice on this subject. The stop-loss order prevents your emotions from taking over and will limit your losses.
  • Would You Buy the Stock Now?
    On a regular basis, review every stock you hold and ask yourself the simple question: "If I did not own this stock, would I buy it today?" If the answer is a resounding "No", then it should be sold.
Tax-Loss Harvesting Strategies 
tax-loss harvesting strategy is used to realize capital losses on a regular basis and provides some discipline against holding losing stocks for extended time periods. To put your stock sales in a more positive light, remember that you receive tax credits that can be used to offset taxes on your capital gains.
Taking corrective action before your losses worsen is always a good strategy. In investing, avoiding losses entirely may not be possible; successful investors accept this and try to minimize their losses rather than avoid them. Selling a stock at a loss and receiving a tax credit is one benefit you will receive. Selling these "dogs" has another advantage too - you will not be reminded of your past mistake every time you look at your investment statement.
***************************************End of article******************************************************************************

Inari Amertron - Moving beyond comfort zone

Inari Amertron - Moving beyond comfort zone

Author: kltrader | Publish date: Thu, 25 Feb 2016, 12:48 PM

New pursuits to diversify revenue base

Management is more focused on its growth engines for FY17 and guided that the current soft patch affecting its RF division is temporary. While no specific details were divulged on its recent plant acquisition, we are positive on this purchase. Against these backdrops, we adjust our FY16/17/18 forecasts by -10%/+3%/+5%. Correspondingly, our TP is marginally raised to MYR4.30 (+4%) on unchanged 17x CY17 PER. BUY.
Brace for potential 15-20% lower profits in 3QFY16

Post yesterday‘s analyst briefing, we cut our FY16 net profit forecast by 10% to account for Inari’s RF division’s deferment in shipment by its client. Nonetheless, shipment should resume in 4QFY16 in preparation of a major smartphone launch in Sep 2016. We understand that up to 25% of end-1HFY16’s inventories are finished products available to ship out. Beyond FY16, we remain excited over Inari’s growth potential anchored on potential new ventures with its newly-acquired P-21 plant. As such, we tweak our FY17/18 net profit forecasts up by 3%/5%, having imputed job wins which offset softer RF revenue assuming a lower plant utilisation rate of 85% (from 90%). We also raised our FY16/17/18 capex assumption to MYR150m/200m/100m from MYR110m/100m/50m.
Expect P-21 to contribute in FY17 onwards

Based on track records, Inari was able to commence production in its new plants within 9-12 months, on a gradual basis. Management expects to start populating parts of P-21 with some equipment within the next 3 months to begin test production. While no specific client details and revenue targets were disclosed, we conservatively impute job wins worth MYR150m/300m into our FY17/18 earnings forecasts.
More room to grow

Inari’s unutilized 5.05-acre land in Batu Kawan Industrial Park offers further growth opportunities (i.e. backend semiconductor jobs for Osram’s EUR1b investment in Kulim) which has not been imputed into our earnings forecasts. BUY Inari for its growth potential (20% 3-year earnings CAGR) and inexpensive valuations (0.8x PEG).

Source: Maybank Research - 25 Feb 2016

AirAsia is MER’s top pick in the Malaysian aviation sector

AirAsia is MER’s top pick in the Malaysian aviation sector

Author: kltrader   |   Publish date: Thu, 25 Feb 2016, 04:32 PM 

Recently, Malindo Air announced that they will be moving their jet operations to Kuala Lumpur International Airport (KLIA) from the KLIA2 terminal starting from March 15. The move is in line with their effort to better serve the customers with the airline evolving to a full service airline.

Macquarie Equities Research (MER) released a research report on Monday (22 Feb), expressing its positive views on this development as the other Malaysian-based airlines including AirAsia can concentrate on their core businesses. MER also mentions the various benefits AirAsia may have from this event while reiterating the short-haul low cost airline as its top pick. Read on excerpt from a research report titled “A more rational market”…

  • MER sees Malindo Air’s decision to evolve into a full service airline and Malaysia Airlines’ capacity cut as positive for the Malaysian aviation sector. Importantly, MER’s random checks of fares suggest a more rationale pricing environment. While the weaker Ringgit may hurt outbound traffic, MER continues to like AirAsia as it benefits from passenger trade-down. AirAsia is trading at 7.5x 17E EV/EBITDAR, below its average trading multiple of 8.9x. MER’s target price (TP) for AirAsia implies 89% upside from current share price.

  • Malaysia Airlines capacity cuts – positive. MER has identified several routes where AirAsia and AirAsia X should gain market share on the back of Malaysia Airlines’ capacity cut. MER expects load factors of airlines to improve and reduce excess capacity in the market. Also, Malaysia Airlines 30% seat cut to Australia bodes well for AirAsia X. In FY14, the Australian business generated negative EBITDAR from previously 44% of total FY12A EBITDAR for AirAsia X.

  • Malindo Air evolving into a full service airline – positive. MER views the development positively, as the four key Malaysian-based airlines can focus on their core segments – Malaysia Airlines (medium to long-haul full service), Malindo (short-haul full service), AirAsia (short-haul low cost) and AirAsia X (long-haul low cost). Both Malindo and Malaysia Airlines were the cause of lower yields for AirAsia in 2013. Also, post Malindo's move to KLIA main terminal, MER estimates the AirAsia group of airlines will have 95% (from 84%) of seat capacity out of KLIA2, which charges a lower passenger airport tax than KLIA main terminal.

  • More rational pricing environment – positive. MER’s random checks on fares on AirAsia and AirAsia X key routes show that Malaysia Airlines and Malindo ticket prices are at a premium to AirAsia and AirAsia X ticket prices. This should support AirAsia’s load factors, especially as down-trading takes place.

  • MER reiterates AirAsia as its top pick in the Malaysian aviation sector on (1) it is a beneficiary of passenger down-trading; (2) a more conducive operating environment, with clearer market segmentation post Malindo’s decision to become a full service airline; and (3) upside risk from more incoming Chinese tourists to Malaysia due to its highest market share on Malaysia-China routes, driven by having the highest number of routes.

  • AirAsia is currently trading at a 13% discount to its net fleet asset value of RM1.57 and 47% discount to MER’s sum-of-part (SOP) TP of RM2.59.

  • MER estimates Malaysia Airports can garner a profit after tax (PAT) uplift of ~RM25m (~11% of 17E PAT) on the back of Malindo’s move to KLIA main terminal.

  • MER rates AirAsia X as Neutral, as we remain cautious over its ability to sustain profits for four consecutive quarters in 2016.

Source: Macquarie Research - 25 Feb 2016



Author: Tan KW | Publish date: Thu, 25 Feb 2016, 05:15 PM

2016-02-25 17:09













Author: Tan KW | Publish date: Thu, 25 Feb 2016, 05:15 PM

2016-02-25 16:27












Singapore lawyers warn of 1998-like pain as debt defaults spread

Singapore lawyers warn of 1998-like pain as debt defaults spread

Author: Tan KW | Publish date: Thu, 25 Feb 2016, 05:30 PM

FEB 23, 201610:44 AM

[SINGAPORE] Rajah & Tann Singapore LLP, South-east Asia’s largest law firm, reckons the region’s rising bond defaults will inflict as much pain on creditors as the financial crises of 2008 and 1998.

As distress spreads from shipping to mining and retail to construction industries, the law firm said in an interview that recovery rates will be similar to those seen in the global credit meltdown and Asian financial crisis. Secured creditors recover only less than 33 US cents on the dollar from insolvencies in East and South Asia, compared with more than 80 US cents in the US, according to World Bank studies. Rival law firm Hogan Lovells US LLP said in an interview that regional banks will likely boost sales of bad loans in coming months.

“The trough in the mining cycle seems to be continuing and some say it will be a while more before any significant recovery is expected,” said Sim Kwan Kiat, Rajah & Tann’s head of restructuring and insolvency based in Singapore. “From experience, the lower end of the spectrum for recovery rates this time round in 2016 is unlikely to be much different from those in 2008 or 1997-98.”

Bad loans in Singapore rose to a six-year high in 2015. Rating firms last month placed energy and mining companies globally on review for downgrades, the Baltic index of shipping rates last week reached the lowest since its 1985 inception and Singapore home sales had the worst start to a year since 2009.

Energy firms dominated 112 global bond defaults last year, according to Standard & Poor’s, as the slowest Chinese growth in two decades helped drive prices for commodities from oil to iron ore and coal to multi-year lows. In South-east Asia, Indonesia’s PT Berau Coal Energy and PT Trikomsel Oke and Thailand’s Sahaviriya Steel Industries Pcl have missed bond and loan repayments. Sembcorp Marine Ltd, the world’s second-largest oil-rig builder, had its first quarterly loss in at least 12 years as clients cancelled orders.

Berau Coal flagged the depth of distress in regional credit markets when it bought back US$150 million of bonds at 30.3 US cents in December. That’s the lowest since China’s Asia Aluminum Holdings Ltd repurchased notes at 22.5 US cents before it collapsed in March 2009. The price of distressed buybacks in Asia since 2008 averaged 48 US cents on the dollar, Bloomberg data show.

Offshore investors have challenged PT Bakrie Telecom’s restructuring in US courts, saying their principal would be trimmed to between seven and 19 US cents on the dollar under the Indonesian firm’s local proposal. In 2009, bondholders recovered under seven US cents on the dollar from the failure of Singapore-listed Celestial Nutrifoods Ltd and Asia Aluminum Holdings, according to estimates by Greenwich, Connecticut-based Gramercy Funds Management LLC.
More Work

Rajah & Tann has seen as much as a 30 per cent rise in restructuring and insolvency work over the past two years, Mr Sim said. His firm was involved in cases related to marine fuel supplier OW Bunker A/S, New Delhi-based contractor Punj Lloyd Ltd, China Fishery Group Ltd and Bakrie Telecom.

Sim sees similar trends to the shipping industry emerging throughout the region, following the slump in oil and gas prices, and predicts that construction will continue to see tough times. After a steady stream of restructuring mandates focused on commodities, coal and oil producers, Hogan Lovells is starting to see signs of stress in the retail industry, said Shaun Langhorne, a restructuring partner based in Singapore.

The creditworthiness of Asia’s junk-rated borrowers has weakened as investors sought the highest risk premium in four years to own their debt. The spread over government securities jumped to 904 basis points earlier this month from as low as 596 basis points in May and was last at 863 basis points, according to a Bank of America Merrill Lynch index.

Ructions in Asia’s credit markets have wiped out more than US$11 billion of junk-bond value from the peak in April last year, while Moody’s Investors Service said in January the negative rating trend for Asia’s non-bank corporates can only worsen in 2016.

DBS Group Holdings Ltd, South-east Asia’s biggest bank, liquidated some bad loans in December, chief executive officer Piyush Gupta said on Monday. Rival lender United Overseas Bank Ltd last week said delinquencies may come from the oil and gas sector with S$1 billion of loans tied to exploration companies.

“It’s not just the oil and gas, it’s the larger commodity super-cycle that’s obviously coming off,” Mr Gupta said. With regards to bad loans in the offshore marine sector, “we were able to monetize 60 percent of the collateral in the fourth quarter; we took no big write-off, the residual amount of the loans went into nonperforming assets", he said.

The 376 listed companies in South-east Asia have accumulated US$100 billion of debt tied to the steel, metals, mining and energy sectors based on their latest filings, Bloomberg-compiled data show. While that fell from US$108 billion a year earlier, it’s surged from US$47 billion in 2009.

Hogan Lovells expects “banks in the region to be scrutinising their loan book and looking at ways to rationalise”, Mr Langhorne said. “The bundling of nonperforming loans for disposal is likely to be a trend in the coming months.”


(Icon) Thong Guan (7) - A Tsunami Of Profit

(Icon) Thong Guan (7) - A Tsunami Of Profit

Author: Icon8888 | Publish date: Thu, 25 Feb 2016, 10:21 PM

(Icon8888 is all smile today)

1. Excellent Results

Thong Guan released its December 2015 quarterly result today with EPS of 9.8 sen per quarter (after factoring in full conversion of ICULS).

The EPS of 9.8 sen is very closed to my forecast of 9.4 sen. Please refer to this article.

2. Balance Sheets Continue to Improve

In March 2015 quarter, net cash was RM0.2 mil. It has now increased to RM52.3 mil. Based on 158 mil shares, net cash per share is 33 sen.

3. Interesting Insights From Cash Flow Statement

So far, I have written 6 articles about Thong Guan. But I have never discussed its cashflow in detail.

Dear readers, there is one piece of very interesting information embedded in the cashflow statement below. Do you manage to spot it ? I give you 2 minutes.

Ok, time's up.

The interesting information is that from 2014 until 2015, the group has only spent RM55 mil on capex.

What is the implication ?

Thong Guan has stated numerous time that during the period from 2014 until 2016, the group will be spending RM100 mil on capex. As such, the RM55 mil capex so far is only half way through.

If you still don't get it - the recent earning explosion is caused by half of the capex only. What will happen after the entire RM100 mil was fully spent ? It is time to stretch your imagination !!!

Previously, if you tell people that Thong Guan can make RM60 mil per annum, people will say you are crazy. This is because in the past 10 years, Thong Guan's profit hovered around RM20 mil to RM30 mil.

But with this latest quarter's net profit of RM15.5 mil, most people will readily accept that RM60 mil can be the norm (let's just say that strong USD will be here for the next few years - which is my view).

But now with this latest insight gained from analysing the cashflow statement, I would like to be the first one to plant the flag - should we revise upwards our expectation and aim for earnings of at least RM70 mil ? (EPS of 44 sen based on 158 mil shares)

The possibility is there. However, as usual, only time can tell.

My optimisim does not exist in vacuum - the following article dated 26 June 2015 contains details of 2016 capex.

As stated in the article above, the group will be spending RM35 mil on capex in 2016 to produce nano layered strecth flm and stretch hood. These two new products will be KEY CONTRIBUTORS TO GROUP REVENUE IN TWO YEARS.

Sounds like big impact projects !!!

Just in case you wonder what is strecth hood, this is how it looked like.

4. Noodle Division Will Be The New Star Performer

If you think that whatever I wrote above is already sizzling hot, just wait until you read about its noodle division. In the latest quarterly report, the company has some positive things to say about this division :-

If you are scratching your head wondering what is happening in the noodle division, you must have missed out this latest article dated 11 February 2016 :-

KUALA LUMPUR: Kedah-based packaging group Thong Guan Industries Bhd plans to work with its Chinese partner, the COFCO group, to tap the organic noodles market in China, and eventually spin off its food and beverage (F&B) and other consumable product business, which is deemed to have a better margin, profit and valuation than its core packaging business, in three years.

The group, which is expecting double-digit growth in both its top and bottom lines for the financial year ending Dec 31, 2016 (FY16), underpinned by continued expansion, is also on the hunt for merger and acquisition opportunities to grow its packaging segment.

In the planned organic noodles venture, Thong Guan executive director Ang See Meng, son of group managing director Datuk Ang Poon Chuan, told The Edge Financial Daily recently that COFCO, which stands for China National Cereals, Oils and Foodstuffs Corp, had shown its interest in jointly participating in the business.

One of China’s state-owned food processing holding companies, COFCO is also China’s largest food processing, manufacturer and trading group.

“We have not decided on the joint-venture details. It could be equity participation in Everprosper Food Industries Sdn Bhd, a new subsidiary of ours, which includes all related subsidiaries, or another new company we will form. It depends on the project size [of the organic instant noodles venture],” See Meng said.

According to See Meng, not many companies make organic noodles now and the margin is higher compared with conventional noodles. COFCO, he said, has expressed its interest in taking up at least a 40% stake in the venture, which he expects to take off sometime this year.

“Our discussions with COFCO are still ongoing. They see [the] potential in organic noodles for babies and organic instant noodles, and would like the noodles to be sold online. They also said Chinese consumers prefer imported food. We have visited them in Beijing twice so far. They are planning a visit after the Chinese New Year,” See Meng said.

The new venture will need certification papers from the Chinese government before it can mass-produce organic noodles for the Chinese market. “They (COFCO) have agreed to supply us organic flour in order for us to get the organic certification from China,” See Meng shared.

See Meng believes Thong Guan has the capability to export organic noodles worldwide and be the first to export organic noodles for consumption by Chinese babies, which are deemed a billion-dollar business.

The group’s noodles are now exported to 10 countries. China makes up about 10% of its total noodle sales — relatively small as the group only started supplying its noodles to COFCO two months ago. With the new organic noodle venture, Thong Guan expects the Chinese market to contribute at least 70% of its total noodle sales in two years.

“I believe there will be more orders, especially when we start providing organic noodles,” See Meng said, adding that besides COFCO, Thong Guan also gets orders from other Chinese companies. The group is now looking at setting up a branch and warehouse in Shuzhou to cater to growing demand.

With the planned venture and capacity expansion, Thong Guan expects revenue contribution from its F&B and other consumable product segment to grow to 30% in two to three years. The F&B and other consumable product segment makes up about 10% to 15% of group revenue now, but contributes about 30% of its profit. Its core plastic packaging segment, meanwhile, contributes about 85% of the group’s revenue, but 70% of its profit. Clearly, the margin is higher in the non-core segment.

“Our packaging division is stable and we are one of the largest in Asia. We want to realise more value from our F&B and other consumable product segment, so that it can stand alone and generate more value for shareholders,” See Meng said.

Thus, the group will eventually spin off its F&B and other consumable product segment as the market has not priced in the value of the segment of the group, hidden as it is below the plastic packaging segment.

“We definitely plan to list it as [a] separate entity in two to three years. It won’t necessarily be in Malaysia, as we hope to hedge the risk [of being only in one market]. For an industrial packaging company, the fair valuation is only between eight and 10 times P/E (price/earnings). But for F&B and other consumables, the market will give us more than 10 times P/E,” he added.

As for the M&A hunt for its packaging business, Thong Guan is now talking with two packaging firms, one each in Malaysia and Vietnam.

“The prices are still high now, so we are waiting for a more suitable time. We are talking, but it may take a while,” said See Meng, without giving a specific time frame for when the talks will come to an end.

Meanwhile, this year will mark the group’s last phase of its three-year RM100 million capital expenditure plan that began in 2014. The group spent RM60 million in the last two years. The remaining RM30 million will be used this year to expand its noodle business, fund a new polyvinyl chloride line and initiate its five-layer blown film stretch hood line.

“With the machinery we put in over the past two years, we are looking at double-digit growth for FY16,” said See Meng, adding that 2016 will be a better year for the group.

Thong Guan’s net profit grew 2.6 times to RM11.26 million in the third quarter ended Sept 30, 2015, from RM4.92 million a year ago. For the cumulative nine-month period (9MFY15), the group’s net profit rose 6.16% to RM22.99 million from RM21.65 million in 9MFY14. The improvement was mainly due to higher margins from exports.

Its shares closed down six sen or 2% at RM2.94 yesterday, valuing it at RM309.5 million.


For your information, COFCO is no kicimeow company. It is a State Owned Enterprise and is the largest food trading and distribution company in China. It handles a wide variety of agricultural produce including edible oil, wheat, rice, sugar, tea, milk, etc.

Appendix - Thong Guan's Organic Noodles Partner - COFCO