Investhor's Mighty Hammer of Wisdom
APPARELLY, THIS STOCK IS ATTRACTING ATTENTION !!!
Investhor
Publish date: Sat, 25 Apr 2020, 11:26 AM
Investhor
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This is a blog I created as an information sharing to all the BSKL community. Hopefully it will bring benefit any of you in some way.
All the posts I make in my blog are purely my own personal opinion and shall not be regarded as a buy/sell call for the said counter.
Every investor is responsible to make their own decisions for their investments.
All the posts I make in my blog are purely my own personal opinion and shall not be regarded as a buy/sell call for the said counter.
Every investor is responsible to make their own decisions for their investments.
Hi to all fellow investors and traders !
Today I would like to share my thoughts the following counter:
MESB BERHAD OR MESB (Code 7234, MAIN Market, Consumer Products & Services - Personal Goods)
Some basic info on this company:
i. Number of shares float : 91.1 million
ii. Market Cap : RM 26.87 million
iii. Last closing price : 29.5c
iv. MESB is a company focusing on apparel (men & women) and accessories (e.g. wallets, handbags). Some of the brands they are selling are : ALAIN DELON, PIERRE CARDIN, GIOSSARDI, GIAMAX, LOUIS FERAUD, CROCODILE, DUCATI and JEEP SPIRIT.
v. They are also doing ONLINE SALES via website in addition to brick & mortar stores and malls. Their website (a lot of sales right now, those of you looking for bargain may visit):
MESB - APPARELLY, THIS STOCK IS ATTRACTING ATTENTION !!!
1. Fundamentally Strong & Undervalued (Low PE Ratio)
Refer below image extract of their latest 3 years QR :
A few observations:
i. Latest QR FEB2020, Revenue was on the high side at RM 53.75 million .
ii. Net Profit of RM 3 million (EPS 3.69) which was a 3 year high. Based on this earnings, the full year EPS should be 3.69c X 4 = 14.76c. However, we should be discounting the COVID19 effect on business, therefore let's say we take a discount of 50%, implies a full year EPS of 7.38c. At current price, it is still merely trading at 4X Forward PE, which is still on the low side.
iii. Taking a 7-8X Forward PE (50% discounted due to COVID19), would impute a fair price of between 51 - 59c.
iii. NTA at RM 1.04. Current closing price of 29.5c means a 74.5c DISCOUNT to its company NTA.
2. Further Look at NTA - High Net Cash Position, Asset > Liabilities
Refer below the breakdown of financial position of its NTA as of latest FEB2020 QR :
A few observations:
i. The cash position of this company of RM 28.15 million represents Net Cash Per Share of 30.9c. THE NET CASH ITSELF IS HIGHER THAN ITS LATEST CLOSING PRICE !!!
ii. Total assets stood at RM 167.4 million, versus liability of RM 72.55 million (a WHOPPING difference of RM 94.85 million)
Based on the above, it seems that the company is more than able to sustain itself in the current COVID19 pandemic situation as it has sufficient cash pile.
3. Technical Analysis - V_Shape Recovery, Pending Breakout Above 30c
Let's take a look at the daily chart of MESB:
A few observations below:
i) MESB was at recent high of 53c in OCT 2019 when there were rumors of major shareholders buying up shares to secure board seats. Since that failed attempt, price went uptrend. During latest March 2020 flash crash, price went to low of 15.5c, however the selling volume was small
ii) Volume started to surge to 12.6 million on 20th April 2020 (14% volume from total float), where the price jumped from 24.5c to 32.5c high, and ended up closing at 31c
iii) The past few trading days, saw significant volume maintained on a daily basis
iv) EMA14 and EMA43 has been crossed, however pending to cross EMA200 at 30c and EMA365 at 32c to confirm bullish direction
v) MACD, stochastics and RSI showing upward momentum
4. TECHNICAL ANALYSIS - Homily Chart - Red Chips Maintaining Position, Green Chips Reducing
Let's take a look at the 60 minutes chart of MESB, using Homily software:
A few observations below:
i) Recent retracement in price, shows that red position are still maining their position in the stock
ii) After retracement had finished, price started to trend upwards again, and green chips are seen reducing (weak holders such as contra players have sold off to longer term shareholders)
iii) Current momentum shows that red chips holders, are expecting higher prices in future
CONCLUSION
Based on my opinion, MESB should be given attention, based on below:
i. Fundamentally Undervalued, Trading at Low PE
ii. NTA RM 1.04, where 30c is in net cash, strong position to sustain in COVID19 pandemic
iii. TA - shows V Shape Recovery and Pending breakout above 30c
iv. TA - Homily Chart indicating red chips expecting higher prices
Thanks for reading and see you in the next post.
THE ABOVE IS NOT A BUY OR SELL CALL AND IS ONLY A PERSONAL OPINION ARTICLE AS A SHARING TO BSKL COMMUNITY MEMBERS.
Yours Truly,
INVESTHOR
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Discussions
Be the first to like this. Showing 13 of 13 comments
Esquel Group to cease operations in Malaysia after 50 years
By Marina Emmanuel - April 16, 2020 @ 4:39pm
GEORGE TOWN: Over five decades after it established an investment presence in Malaysia, Hong Kong-based textile and garment manufacturer, Esquel Group is shuttering its operations here.
The company, which touts itself as the world’s largest woven shirt-maker, is expected to part ways with over 2,000 of its Malaysian staff in Penang and Kelantan.
The company has a global headcount exceeding 50,000 with manufacturing facilities in countries such as Vietnam and Sri Lanka.
The New Straits Times sighted a notice on the closure of Esquel Malaysia, which stated that both the factories here would close on June 12.
“Although we have been operating at a loss since 2015, together with your hard work, we have transformed Esquel Malaysia into a 100 per cent localised company with consistent growth in production scale at our Kelantan factory, making it the company with the largest female workforce in the state,” Esquel Malaysia Sdn Bhd general manager Edward Ho said in a letter to all Malaysian employees.
“However, the sudden outbreak of the Covid-19 pandemic has plunged the world into a standstill.
“While dominant Esquel Group Malaysia’s (EGM) output is shipped to the US market, all of our customers have temporarily closed their retail business since March.
“EGM, on one hand, cannot operate under a country-wide Movement Control Order. Our customers, on the other hand, have to put their current orders and future allocations to EGM on hold.
“With the pandemic situation worldwide keep worsening, we simply do not have enough upcoming orders to sustain EGM’s continued operations,” he added.
In its heyday, the Esquel Malaysia (Kelantan) Sdn Bhd boasted a global client list such as Ralph Lauren, Brooks Brothers, Land’s End, Tommy Hilfiger, Hugo Boss, Fred Perry, Marks and Spencer, Banana Republic and J. Crew.
In 2007, Esquel Group, which also produced branded cotton shirts for Burberry, Nike, Lacoste and Nautica, reinvested US$6 million in its Penang facility after an eight-year absence.
At the time, it was announced that the upgrading of the Bayan Lepas facility was to accommodate the bulk of the company’s manufacturing operations which would be transferred from China.
“While we continue observing the MCO (until April 28) in the meantime, both Penang and Kelantan factories will resume working from April 29 to June 12,” Ho said in his letter.
“During this special time, our top priority is the health of you, your family and your welfare.
“A compensation package has been approved by the management of the Esquel Group for your entitled benefits as well as salary payment up to your last day of service, or accordingly to your notice period, whichever is longer,” he added.
##https://www.nst.com.my/business/2020/04/584913/esquel-group-cease-operations-malaysia-after-50-years
2020-04-26 00:20
Nobody has mood to shop online much. People tend to spend more money on food or groceries! Nothing excitement about this company!
Better get on this stock below! EXCITING STORY, HUGE UNDERVALUED BASED ON FORWARD PER AND GONNA A SPIKE RALLY!
https://klse.i3investor.com/m/blog/fatprofitstock/2020-04-25-story-h1506132918-FORGET_GLOVE_RELATED_PLAY_THIS_STOCK_CAN_RALLY_A_SPIKE_EVEN_MORE.jsp
2020-04-26 01:09
Diehard go promote your Minetech in Minetech forum. Everybody knows you are caught in Minetech.
2020-04-26 01:29
The covid19 cases are reducing in Malaysia and business will be back to usual for this company soon enough
Before things are back to normal, this is where you get bargain price..if you like to chase high, then wait for economy to reopen, the price won’t be so cheap anymore (applies to most industries affected by covid19)
2020-04-26 06:17
@FoolsGold - yes brilliang idea !!! Hope the management can work on something like this to cater to changing market demand
2020-04-26 08:39
It is true company is selling at less than net cash position (even after considering their warrant which is a surprise).
But I would say the downside is whether the cash position will still be the same for its coming quarter. None of their retail outlets are operating since MCO and no doubt this will drain their cash very fast indeed. So dont buy thinking this is fool proof.
2020-04-26 10:17
Unbelievable, 50 years operation famous textiles & garments company also can close shop & cease operation, Esquel Group....
Some more, this company also dealing with variety famous products....
..."In its heyday, the Esquel Malaysia (Kelantan) Sdn Bhd boasted a global client list such as Ralph Lauren, Brooks Brothers, Land’s End, Tommy Hilfiger, Hugo Boss, Fred Perry, Marks and Spencer, Banana Republic and J. Crew.
In 2007, Esquel Group, which also produced branded cotton shirts for Burberry, Nike, Lacoste and Nautica, reinvested US$6 million in its Penang facility after an eight-year absence."......
##https://www.nst.com.my/business/2020/04/584913/esquel-group-cease-operations-malaysia-after-50-years
2020-04-26 10:26
Please do not mislead. It is not in net cash position but net borrowings of RM494K.
It is stupid to annualize December quarter's EPS.
2020-04-26 23:16
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pendekar
It's "apparently", not "apparelly"
2020-04-25 13:59