To recap on recent development by Theta Edge since my first coverage on this “soon to be blue chip” company.

1) Theta and Dnex are still in battle for NIISE. 

2) Theta appointed Tan Sri Rahman bin Mamat of Dnex and Datuk Dayang Sadiah binti Abang Bohan an Ex-Director-General UKAS to strengthen their pillar.

3) Theta Edge unit wins RM673.8mil IoT contract through its subsidiary, Theta Telecoms Sdn Bhd by the Ampang Jaya Municipal Council

Guys, let me take this opportunity to groom my skill in analysing the recent awarded project.

Assuming this project to be quoted on the committed cost of work over the concession period, which in this case - the work cost quoted is RM673.8M.

The revenue however should depend on what type of work done (in normal case). To estimate, the revenue can be calculated as follows:

1. If the target EBITDA is assumed at 35%, this means the RM673.8M is 65% of revenue.

2. ⁠Total revenue therefore is calculated as RM673.8M / 0.65 or RM1.036B. 

3. ⁠EBITDA at 35% of Revenue is RM362.2M over 20 years period or RM18.1M per annum.

4. ⁠Assuming PAT per annum is around RM12M / 118M that will be RM0.102 in EPS.

5. ⁠At PE 10X = share price is RM1.02 and at PE 20X = share price RM2.04

6. ⁠Bear in mind that the above price was before normal annual PAT. If we assume normal annual PAT before this contract is similar to last year PAT of about RM10M, the revised PAT is RM22M / 118M or EPS RM0.186.

7. ⁠At PE 10X = share price is RM1.86 and at PE 20X = share price is RM3.72

Bear in mind the above is before Niise? Can imagine what it would be after Niise? *Mind blowing*

The impact of acquisition

New “jockey” named as “REDTONE” reported has arrived to accelerate the wild move of the dark horse, Theta. As reported by The Edge on 12th of July, Redtone has acquired a total of 8.4 million shares, representing a 7.12% stake in Theta Edge Bhd from the open market for about RM13.93 million cash and this makes Redtone the fourth largest shareholder after Lembaga Tabung Haji, Threadstone and Inter Pacific. 

As we all know both offering similar services, so why would Redtone acquired stake in Theta? Since there are many projects already plan out in paving the way through digital transformation, this strategic interest will aid both companies to maximise potential of technical expertise, resources, and industrial knowledge to enhance their investment in IT and telco sector. 

The arrival of Redtone, definitely will contribute to positive growth and momentum to Theta Edge. With Redtone’s single largest shareholder is our current YDPA (based on annual report) and of course Tan Sri Vincent Tan, this gonna be exciting and a good sign for Theta to win NIISE and the Johor Public Transport System (ART). Wow!

Other Redtone’s shareholder as per listed below: 

Based on shareholder list recorded on Malaysiastockbiz website, Inter-Pacific Equity Nominees Sdn Bhd has acquired Theta 5.88 million units (4.99%) in April and making the total share they have now 9.4%. We have not known yet who acquired Theta via Inter Pac nominees but we do know that Berjaya Group owns 71% stake in Inter-Pacific Asset Management. Just think about how much actually billionaire tycoon Tan Sri Vincent Tan stakes in Theta? These prominent line-up of shareholders (Tabung Haji, Threadstone, Inter-Pacific and Redtone) is expecting to give a boost to the company.

To all Theta Edge shareholder, wear your helmet now coz the race about to start! 

Let’s do price projection just based on what has been announced. Redtone’s aggregate price is RM1.66 in Theta. As far as I observe once Vincent Tan acquired, the stock has never gone backward (for example, SALCON BERHAD has been steadily uptrend since acquisition). So next price of Theta will be????? 

The company just announced recent awarded project with MPAJ on top of other projects announced last year and more groundbreaking announcement coming soon. Maybe another two, three or more projects coming? This makes Theta busy in capitalizing the market. We can assume the continuation of another long journey.

Analyst from Nanyang newspaper in recent issue highlighted that Theta’s price is forming triangle and stands firmly above SMA. Index RSI is at 63.03. The share price may continue the breakout in the short term and look forward for a hurdle between RM2.20-2.30. Current support level is between RM1.79-RM1.69. 

I wish all the best to theta. 

Let’s take the popcorn and watch the show!

Regards,

Lily of the Valley