Tong’s Value Investing Portfolio: Added Homeritz to the portfolio

By Tong's Value Investing Portfolio / The Edge Malaysia   | February 26, 2015 : 3:03 PM MYT   

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STOCKS on the local bourse came under renewed selling pressure last week. The benchmark FBM KLCI closed 21.82 points lower at 1,781.30, giving back part of gains from the previous weeks. Still, it did manage to finish in positive territory for the first trading month of 2015. The benchmark index is up 1.6% for the year-to-date.

Foreign investors remain net sellers with local institutional funds stepping in to buffer the fallout. Notably, retail investors are generally more cautious. I am still fairly upbeat on the stock market over the coming few weeks, but purely from a short-term trading perspective.

To be sure, there is a marked increase in volatility in global markets, led by Wall Street. However, recent moves by central banks suggest global interest rates will stay low for a prolonged period. This is positive for risky assets including equities.

Central banks have certainly been hogging the headlines in recent days. First, the Swiss National Bank shocked financial markets by abandoning its currency peg to the euro. Then the European Central Bank (ECB) surprised with a bigger than expected quantitative easing (QE) programme, totalling 1.1 trillion euros, after months of speculations. The Bank of Japan (BOJ) has already announced an expanded QE last October.

Both the ECB and BOJ are aiming to devalue their currencies to boost flagging growth and fight off the threat of deflation, which is being compounded by cheap oil.

A currency war is now in full swing. Central banks from Denmark to India and China have all announced cuts to interest rates. The Monetary Authority of Singapore is the latest to join the fray, reducing the slope of its policy band to slow the appreciation of the Singapore dollar.

The latest January statement from the US Federal Reserve was a bit more confusing to investors. On the one hand, it gave an upbeat assessment on the economy and labour market, which suggests it is on track to hike rates around mid-year. On the other hand, it also mentioned taking into account financial and international developments when deciding on the timing for raising rates, which seems to hint at a delay.

Uncertainties mean we are likely to see more volatility, in both the currency and stock markets in the days ahead.

Regardless, the greenback’s uptrend is intact, supported by strengthening US economy, expectations of rising rates and as a safe haven. The ringgit continued to weaken against the US dollar, trading around 3.625 at the point of writing — down 3.5% in just one month.

In other developments, oil prices appear to be consolidating between the US$45-US$50 per barrel range in the absence of fresh leads. Meanwhile, the new anti-austerity government in Greece is raising some concerns. Though the eurozone has implemented stronger safety net since 2012, fallout in a worst-case Greece exit will still roil financial markets.

Stocks in my portfolio closed mostly lower for the week, mirroring the broader market’s losses. Total value of my portfolio was down 0.43% but remains up 4.7% since inception. My portfolio continues to outperform FBM KLCI, which has fallen by 2.6% over the same period.

Followers of my portfolio will recall that I intended to buy all of InsiderAsia’s Top 10 recommendations for 2015 at the start of the year. However, the stocks all rallied immediately after the list was published (in the January 5th issue). I have been waiting for some price corrections to buy. Table 1 shows that all the stocks are still trading at prices well above the levels on January 2.

Share prices for Homeritz ( Financial Dashboard) rallied as high as RM1.11 but fell back to 0.97 sen at the end of last week. This was after the company released weaker than expected results for 1QFYAug15 where pre-tax profit fell 21.8% on the back of 6.5% decline in sales. Margins were affected by higher leather raw material prices and lower utilisation.

Nevertheless, I believe its longer-term outlook remains intact. The weakening of the ringgit since end-November is positive for Homeritz’s margins — almost all of its sales are exported. Demand is expected grow at a steady pace.

Homeritz’s balance sheet remains strong with net cash of RM47 million. This will support its minimum 40% payout policy. Dividends totalled 5.1 sen per share in the last financial year or equivalent to roughly 50% of profits, and translating into net yield of 4.8%.

I bought 15,000 shares in Homeritz at 98 sen per share. I also disposed of all my holdings in BP Plastics, whose shares have not performed as expected. Following these transactions, my portfolio is about 75% invested.

This article first appeared in The Edge Malaysia Weekly, on February 2 - 8 , 2015.

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Pesona WC oh Pesona WC

Another discounted Warrant at 11%.

Conversion 0.25

Mother 0.98

Pesona WC current price: 0.61

Another TRAP same as ASIABIO-WA and TAKASO WB

8311WC    PESONA-WC    PESONA METRO HOLDINGS BERHAD - WARRANTS

Profile for Warrants

Instrument Type : Warrants Description : Issuance of free warrants in PMHB ("Warrants") on the basis of one (1) Warrant for every two (2) existing ordinary shares of RM0.25 each in PMHB held at 5.00 P.M on 23 January 2015 ("Free Warrants Issue") Listing Date : 04/02/2015 Issue Date : 28/01/2015 Issue/ Ask Price : Not Applicable Issue Size in Unit : 255,101,224 Maturity Date : 27/01/2020 Revised Maturity Date : Exercise/Conversion Period : 5.00 Year(s) Revised Exercise/Conversion Period : Exercise/ Strike/ Conversion Price : MYR 0.2500 Revised Exercise/ Strike/ Conversion Price : Exercise/ Conversion Ratio : 1:1 Revised Exercise/ Conversion Ratio : Mode of Satisfaction of Exercise/Conversion Price : Cash Settlement Type/ Convertible into : Physical (Shares) Remarks : The warrants are issued to the entitled shareholder of PMHB on the basis of one (1) Warrant for every two (2) ordinary shares of RM0.25 each in PMHB ("PMHB Share(s)") held at 5.00p.m. on 23 January 2015. Each Warrant carries the entitlement to subscribe for one (1) new PMHB Share at the exercise price (as indicated above) and at any time during the exercise period (as indicated above) ("Exercise Period") subject to the adjustments in accordance with the provisions of the deed poll dated 9 January 2015 constituting the Warrants. Any Warrant not exercised during the Exercise Period will thereafter lapse and cease to be valid for any purpose. This announcement is dated 30 January 2015

30/01/2015   07:00 AM

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Ibhd oh Ibhd

This Iberhad damn kanasai,

after right issue, share price go down to the drains.

I kena IBHD LB, bought at 0.55 now 0.45. damn kanasai.

IBHD Quarter Report History

Date	Financial Year	No.	Financial Quarter	Revenue (RM,000)	Profit Before Tax (RM,000)	Net Profit (RM,000)	Earning Per Share (Cent)	Dividend (Cent)	NTA (RM)	Trend
25/02/2015	31/12/2014	4	31/12/2014	68,162	17,984	13,665	1.38	0.00	1.040
13/11/2014	31/12/2014	3	30/09/2014	77,389	17,416	14,237	6.23	0.00	1.200
08/08/2014	31/12/2014	2	30/06/2014	70,649	25,684	19,406	17.02	0.00	2.120
29/05/2014	31/12/2014	1	31/03/2014	44,914	8,359	6,103	5.35	0.00	1.950
28/02/2014	31/12/2013	4	31/12/2013	55,662	36,197	29,578	25.95	0.06	1.900
18/11/2013	31/12/2013	3	30/09/2013	35,538	3,689	2,677	2.35	0.00	1.640
21/08/2013	31/12/2013	2	30/06/2013	33,802	8,015	6,788	5.95	0.00	1.620
13/05/2013	31/12/2013	1	31/03/2013	27,146	5,082	4,925	4.32	0.00	1.560
31/01/2013	31/12/2012	4	31/12/2012	30,738	10,120	9,078	7.96	0.04	1.560
22/11/2012	31/12/2012	3	30/09/2012	16,324	4,198	3,952	3.71	0.00	1.580
27/08/2012	31/12/2012	2	30/06/2012	10,941	3,085	2,969	2.80	0.00	1.550
29/05/2012	31/12/2012	1	31/03/2012	8,650	834	819	0.77	0.00	1.530

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1MDB oh 1MDB

Why so many questions have been ask but no ANSWER???

Where is the ACCOUNTABILITY????

No to RM3b cash injection into 1MDB

By Cynthia Blemin / The Edge Financial Daily   | February 24, 2015 : 9:48 AM MYT   

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) should not be given any cash injection of as much as RM3 billion by the government as based on its FY14 financial accounts, the state investment company should have at least RM7 billion cash in its coffers, said an opposition lawmaker.

“I am not surprised they (1MDB) have no money, and yet they [appear on paper to] have money,” DAP National Publicity Secretary and Petaling Jaya Utara Member of Parliament Tony Pua told a news conference on 1MDB yesterday.

Based on 1MDB’s financial accounts for the year ended March 31, 2014 (FY14), Pua said on paper 1MDB should have RM3.5 billion in cash. 

He pointed out that the RM3.5 billion in cash does not include the US$1.103 billion that was purportedly redeemed from its investments in Cayman Islands. Based on Pua’s calculation, once totalled up, 1MDB should have a larger sum of cash in hand of nearly RM7 billion. 

“Based on these numbers they (1MDB) have [reported], they shouldn’t have any problems with their financial cash flow. However, they [seemed to have] massive cash flow problems.

“They have a lot of assets in liquid investment form which they are supposed to sell and take back the money.

“Take note that 1MDB already has some RM42 billion in loans,” Pua said, adding that 1MDB also reported to have some RM12 billion in assets, classified as level three, as stated in its FY13 financial accounts.

Pua was commenting on a report by The Edge Financial Daily yesterday that 1MDB may require a cash injection of RM3 billion from its owner, the Ministry of Finance (MoF). This is in addition to the financial assistance provided by T Ananda Krishnan to settle its RM2 billion debt to banks.

Responding to the report, 1MDB president and group executive director Arul Kanda Kandasamy said the company had on Feb 18, 2015 announced the outcome of its strategic review “in which we emphasised that 1MDB will seek refinancing from the best available sources”.

“We further stated that our 100% shareholder, the MoF will be involved, as relevant and as required, in the interests of maximising shareholder value,” Arul said in a statement yesterday. 

“We will continue to issue official announcements relating to our business, the implementation of our strategic review, and our financing arrangements when appropriate and relevant to do so,” he added.

Earlier, Pua pointed out that Arul had never denied that 1MDB got the RM2 billion loan from Ananda, but had merely dismissed media reports as speculation.

Arul announced on Feb 13 that 1MDB had settled the RM2 billion owed to the consortium led by Malayan Banking Bhd ( Financial Dashboard) and RHB Bank Bhd ( Financial Dashboard), but he did not explain how 1MDB had raised the money, he said.

Pua demanded that Arul show proof of the whereabouts of a purported US$488 million profit from its joint venture (JV) with PetroSaudi International Ltd.

“Arul proudly announced that 1MDB had made US$488 million of profit from the Petrosaudi transaction but what we have at hand is at least US$1.1 billion “missing” in unknown whereabouts. The next question to ask is hence, where exactly is this US$488 million of “paper” profit Arul was talking about?” said Pua.

He was referring to Arul’s claims on Feb 21 that a JV with the Saudi Arabian company six years ago had earned it a profit of US$488 million (RM1.78 billion) in 2013.

It was also reported that 1MDB had put US$1 billion into the JV with PetroSaudi, a company with an allegedly sketchy track record, to subscribe to 40% of the latter’s new shares.

In 1MDB’s audited accounts ended March 31, 2010, the company had supposedly sold off its 40% stake in 1MDB PetroSaudi Ltd.

“They sold the shares for US$1.2 billion. Except they did not take back the money. Instead, they lent back the money to 1MDB PetroSaudi Ltd in the form of Murabaha notes or Islamic loans.

“Why would you exit a JV with a company and then turn around and loan it money?” asked Pua.

“[Also,] immediately after the signing of the agreement, 1MDB Petrosaudi repaid in full the US$700 million of advances to PetroSaudi, using the newly received funds from 1MDB,” alleged Pua.

“Even [former prime minister Tun] Dr Mahathir [Mohamad] wants to know where is the money but until today there is no proof,” said Pua, noting that 1MDB could show proof by getting a reliable bank statement to show where the money was parked, preferably in cash and not in some dubious assets.

The exposed JV and Arul now gave stronger reasons to ask if the US$1 billion investment, which was suddenly converted into a loan on the very last day in the March 2010 financial year, was in fact a cover-up of the JV scam, Pua said.

This article first appeared in The Edge Financial Daily, on February 24, 2015.

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Integrax, Perak Corp, Tenaga, Coastal Contracts, Shangri-La, MRCB, Pharmaniaga, Perdana Petroleum, MFM, Sime Darby and Kulim

By Ahmad Naqib Idris / theedgemarkets.com   | February 23, 2015 : 9:24 PM MYT   

KUALA LUMPUR (Feb 23): Based on corporate announcements and newsflow today, companies that may be in focus tomorrow could include: Integrax Bhd ( Financial Dashboard), Perak Corp Bhd ( Financial Dashboard), Tenaga Nasional Bhd ( Financial Dashboard), Coastal Contracts Bhd ( Financial Dashboard), Shangri-La Hotels (Malaysia) Bhd ( Financial Dashboard), Malaysian Resources Corp Bhd (MRCB) ( Financial Dashboard), Pharmaniaga Holdings Bhd ( Financial Dashboard), Perdana Petroleum Bhd ( Financial Dashboard), Malayan Flour Mills Bhd (MFM) ( Financial Dashboard), Sime Darby Bhd ( Financial Dashboard) and Kulim (Malaysia) Bhd ( Financial Dashboard).

Integrax Bhd's second largest shareholder Perak Corp Bhd (fundamental: 1.9; valuation: 1.2) is not selling its 15.74% stake (47.34 million shares) in Integrax to Tenaga Nasional Bhd, if the utility giant does not up its offer of RM2.75 per Integrax (fundamental: 1.65; valuation: 0.6) share to RM3.25 apiece.

This latest development could further erode Tenaga’s (fundamental: 1.3; valuation: 1.8) hope to take over the port operator, given Integrax’s co-founder and biggest shareholder Amin Halim Rasip, who holds a 23.15% stake, has already rejected Tenaga’s offer and has consequently bought more shares in Integrax.

Perak Corp’s filing with Bursa Malaysia today said its rejection was made after reviewing the independent advice circular by M&A Securities Sdn Bhd — which viewed Tenaga’s offer as “not fair” but “reasonable” — and receiving the recommendation of its appointed adviser Affin Hwang Investment Bank Bhd.

Coastal Contracts Bhd’s wholly-owned subsidiary, Coastal Offshore (Labuan) Pte Ltd, has sold two units of offshore support vessels (OSV) for approximately RM197 million, bringing its order book to-date to RM2.81 billion, of which RM1.46 billion is from vessel sales.

In a filing with Bursa Malaysia, Coastal Contracts (fundamental: 2.6, valuation: 1.8) said the vessels were sold to its new customers in Mexico for deliveries in 2015 and 2017, like all its other vessels.

The company notes the revenue stream from these vessels are expected to contribute positively to the top and bottom line performance of Coastal Group for the financial years ending Dec 31, 2015, and Dec 31, 2017.

Shangri-La Hotels (Malaysia) Bhd saw an 85% plunge in its net profit to RM9.95 million for its fourth quarter ended December 31, 2014 (4QFY14), from RM67.76 million in the previous corresponding quarter, bringing its earnings per share to 2.26 sen, from 15.4 sen previously.

The hotel operator’s quarterly revenue fell 5% to RM125.05 million, from RM131.74 million in the year before, its filing to Bursa Malaysia showed today.

The weaker financials notwithstanding, the group has declared a final single-tier dividend of 9 sen per share for the period ended Dec 31, down from the 15 sen in the previous year, payable on June 30, 2015. This brings its FY14 dividends to 12 sen per share, compared to 18 sen in FY13.

For the full FY14, Shangri-La’s (fundamental: 2.15; valuation: 2.10) net profit dropped 39% year-on-year (y-o-y) to RM79.34 million, from RM130.37 million; while cumulative revenue was slightly higher at RM513.68 million, compared to RM511.23 million a year earlier.

Malaysian Resources Corp Bhd (MRCB) dipped into the red, posting a net loss of RM5.28 million for its fourth quarter ended Dec 31, 2014, compared to net profit of RM2.22 million in the same quarter the year before.

Its revenue jumped 32% to RM487.17 million, from RM369.0 million in the previous year.

For the year, MRCB (fundamental: 0.45; valuation: 0.60) returned to black, reporting net profit of RM152.63 million, compared to its net loss of RM109.13 million a year earlier.

Cumulative revenue soared 61% year-on-year (y-o-y) to RM1.51 billion, from RM940.91 million.

Pharmaniaga Holdings Bhd’s net profit for the fourth quarter ended Dec 31, 2014 jumped 76% to RM36.69 million, from RM20.81 million a year earlier, on the back of a 10% increase in revenue to RM627.1 million, versus RM567.86 million previously.

Pharmaniaga (fundamental: 0.75; valuation: 2.10) also declared a dividend of 12 sen per share. For the financial year ended Dec 31, Pharmaniaga’s net profit surged to RM93.84 million, from RM55.2 millionl; revenue rose to RM2.12 billion, from RM1.95 billion.

Perdana Petroleum Bhd’s (fundamental: 1.15; valuation: 1.80) net profit declined 31% to RM15.01 million for the financial quarter ended Dec 31, 2014, from RM21.89 million in the previous year’s same quarter.

Revenue for the quarter fell slightly to RM77.55 million, down 1% from RM78.04 million in the year before.

For the financial year ended Dec 31, net profit jumped 42% year-on-year (y-o-y) to RM88.05 million, from RM61.66 million; while revenue increased 26% to RM347.22 million, from RM274.65 million.

Malayan Flour Mills Bhd (MFM) reported a 79.88% drop in its net profit for the fourth quarter ended Dec 31, 2014 (4QFY14) to RM4.64 million, from RM23.09 million a year ago, mainly due to lower profit margins in both flour and trading in the grains segment, as well as the poultry integration segment.

MFM (fundamental: 1.1; valuation: 1.8) also reported a 9.28% drop in revenue to RM574.14 million in 4QFY14, from RM632.89 million in 4QFY13, due to lower sales in the poultry integration segment.

Earnings per share (EPS) for 4QFY14 was lower at 0.86 sen, from 4.29 sen in 4QFY13.

For the full year ended Dec 31, 2014 (FY14), MFM reported a 1.19% increase in net profit to RM67.78 million, from RM66.98 million in FY13. However, revenue fell by a marginal 0.84% to RM2.29 billion, from RM2.31 billion in FY13, due to lower sales for the poultry integration segment.

MFM also declared a second interim dividend of 3.5 sen per share for FY14, payable on March 25. This brings its total dividend for the year to 6.5 sen per share.

Sime Darby Bhd’s offer to take over New Britain Palm Oil Ltd (NBPOL) at £7.15 (RM39.25) cash per share, has turned unconditional and is due to be completed by the first half of 2015.

In a filing with Bursa Malaysia today, Kulim (Malaysia) Bhd (fundamental: 0.65; valuation: 1.2) said Sime Darby (fundamental: 1.3; valuation: 1.3) had on Feb 18, 2015 (last Wednesday), announced the offer was free of all conditions specified in Section 12.1 of the offer document, and is now unconditional.

The privatisation of UK and Papua New Guinea-listed NBPOL will see Sime Darby delisting NBPOL from the UK bourse.

The acquisition of NBPOL includes Kulim's 48.97% stake in NBPOL.

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