Ewein Berhad (“EWEIN”)

Brief Background

In Dec 2013, EWEIN joint ventured with Consortium Zenith BUCG Sdn Bhd to form Ewein Zenith Sdn Bhd. By this JV, EWEIN officially diversified into property development sector and slowly shift the Group’s main revenue contribution from precision mould business to property development.

In the coming 5-6 years, “City of Dreams” will be its main source of income. This project is supported by Penang Government and it is also a part of Entry Point Project 10 under the Economic Transformation Programme.

Currently, EWEIN is on track to achieve full-year pre-tax profit of MYR20m from its maiden property project, City of Dreams.  

Its net profit for its past 4 years (16 quarters) are as below. Its property development segment was only started to contribute at FY15Q3.

MYR50m sales from City of Dreams

In Mar 2016, the four-day StarProperty.my Fair at Sunway Carnival Mall in Seberang Jaya ended with indications that the property market was still healthy.

13 developers showcased over MYR2.2b worth of properties at the fair!

FYI, Zeon Properties is the marketing agent for COD and Starhill. If what he said is true, City of Dreams will be generating MYR50m sales for EWEIN in first quarter of 2016!

Please refer the link below for full article.

http://www.thestar.com.my/news/nation/2016/03/28/buying-homes-on-the-upscale-again-people-showing-keen-interest-in-integrated-mixeddevelopment-projec/

The above is the brief calculation of contribution of EWEIN’s property development in FY16Q1.

It started off with an estimated revenue of MYR50m, which mentioned by Zeon Properties. After deducted the commission paid (3-5%) to them, EWEIN will have a gross revenue of MYR47.5m. With a net profit margin of 20% for a property developer, EWEIN will have an estimated profit of MYR9.5m.

However, this profit will not be totally contributed to EWEIN. It still needs to be share with its partner, Consortium Zenith BUCG, which is up to 40% stake. Overall, the remaining profit MYR5.7m belongs to EWEIN.

Do take note that, it still hasn’t taken EWEIN’s manufacturing of precision metal segment into account yet.

Based on its past result, let’s assume EWEIN’s manufacturing segment will contribute MYR0.5m in FY16Q1.

Overall, based on my estimation, EWEIN is estimated to deliver MYR6.2m in FY16Q1!

Director’s Shareholding

EWEIN’s group managing director, Dato’ Ewe Swee Kheng, had been actively collected EWEIN’s shares from open market recently.

A table of its open market acquisition had been computed as below.

As we can see that, in Apr 2016 itself, Dato’ Ewe had been collecting EWEIN shares for 13 times! The price which he collected was in the range of MYR0.92 to MYR0.985.  The overall average entry price for each share is MYR0.947. The total amount is up to approximately MYR500m!

Dato’ Ewe had stopped its collection in May 2016. EWEIN will be releasing its FY16Q1 result by end of May 2016. Based on its activities above, I strongly believe Dato’ Ewe is looking good at EWEIN’s future prospect and upcoming result.

Technical Chart

EWEIN shares price had dropped from its peak MYR1.52 to MYR0.91 in 4 months time, which equivalent to a drop of 40%!

However, it seems that EWEIN had found its bottom at the level of 0.91. In addition with massive acquisition by Dato’ Ewe at average price MYR0.947, I strongly believe 0.91 is a very strong support level.

Recently, there is a huge buy in volume in EWEIN too.

Since we know the downside of EWEIN is limited, lets it upside do the rest of the job.

In short term, I believe EWEIN will able to move up and test its resistance level 1.10.

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