Actually there is no secrets, the title is just to attract readers.

Average earnings of Protasco over the last 5 years actually about RM40m p.a..

Protasco has potential because of the following reasons (assuming their core of RM40m p.a. is sustainable, mainly comes from the maintenance of roads):

1. DeCentrum is their NEW line of biz.  GDV of RM10billion. Just take a net profit of say, 20%, it will be about RM2 billion, say over 20 years, it will contribute about RM100m p.a. [A more conservative approach is say RM70-80m].  There is further upside to this land near Uniten, Bangi, is the proposed MRT Line 2, will have a station at Uniten.  The land has been fully settled.

2. Protasco has construction projects for low cost housing for Government, about RM500m and other project to-date of another RM200m. Give it a net 10% net profit margin, say for 5 years, you will get about RM14m p.a. for next 5 years. [A more conservative approach will give it, say, about RM10m]. NEW major construction works.

3. Protasco bought a land about RM40m in Iskandar for cash, near Gelang Patah, for future development. Say, a conservative GDV of RM300m, for 8 years, it will produce about RM7.5m p.a. Another NEW biz.

4. Protasco has a JV with Nextnation, to develop a piece of land in Cyberjaya for about RM400m (I remember read it from somewhere).  Say, in the JV, Protasco will get about 10% (normally, in the market, when one party provide the land, it will get 30% of the GDV, the developer will get 70%).  Hence, Protasco portion of GDV is RM280m, profit of say 20% for 8 years, it will contribute about RM7m p.a. [subject to finalisation of the MOU]

5. Oil and gas, Protasco has acquired about RM72m in a oil and gas company in Indonesia, with a profit guarantee on the cost of investment.  Assuming it is for 5 years, a profit of about RM14.4m p.a.

6. Protasco has its own construction arm, hence, they can control their cost of construction better and also make a small margin from the contruction works profits can be kept within the Group.

7. Protasco has a strong cash position.

CONCLUSION

With the sustained core biz, maintenance of roads remain, about say RM40m, additional or NEW earnings from item 1-6, they can bring in about additional earnings of RM108.5m p.a. (70+10+7.5+7+14).  Say, a long term earnings of RM120-140m and PE of say 12 times, you will get market capitalisation of RM1.4billion.  At the moment, it is about RM630m (RM1.90).  

I believe, there is sufficient margin of safety here.

[Disclaimer - it is my personal opinion, and it is a free opinion, please do your research.  You are responsible for your own investments]

24 July 2014 - dropped to RM1.80 due to sale from directors. Time to accumulate? Unless, something adversely effect the fundamental structure of the Group.  No news, other than directors' sale.  At 1.80, dividend yield is 5.5% p.a. if 10sen dividend is declared.

8 Aug 2014 - announced oil and gas purchased cancelled.  To recover deposit either cash or sale of secured shares, no details is given, share priced dropped to RM1.68 on 12 Aug 2014.  Dividend yield is about 6.0% at this price.  Should we panic, not necessary,  only item no. 5 is canceled, not a major adverse events (unless unable to to collect back deposits). 

14 August 2014 - By now, lots of investors, speculators of this stock (including non investors/speculators and armchair experts) are cursing this stock, dropping from RM2.10 to RM1.65 (about 27% dropped).  Well, of course, not all bought at high, but for those whose investment dropped at least 20% in a short span of a month would reconsider their investment in Protasco, did I made a mistake? While other stocks went up, did I miss an opportunity?  Well, for me, it depends from which perspective you look at it (i.e. what price did you buy and what is your tolerable level).  Has the FUNDAMENTAL adversely effected.  Well, the disposal of shares by Directors, more than 10 million stocks did not help, so did the announcement on cancellation of the proposed oil and gas deal.  Adding salt to the wound, most of the share are sold just days before the cancellation of oil and gas deal.  

It is not wrong for investors or speculators to enquire and concern, have we been taken for a ride?  But did the investors complain when the price went up from 90 sen to RM2.10 in about 6 months?  Of course, the reason behind the selling by directors will never be known, unless you are the director, like guessing, why did Robin Williams takes his own life?  Have anyone dig deep to find out why it went up more than double in a short time?  Well, you can speculate, but still you will never know the truth.  That is how the stock market works (It doesn't owe an explanation to anyone, it is just the ticker moving up and down).  The losers will always find reasons to blame this or that, for sure, but think deeper, the stock price fluctuate according to the sentiment of the investors/speculators on making decisions.  You may ask, why didn't the investors find fault when it goes up so high so fast, but when it drop, investors is quick to start blamming.  Why didn't the investor blame why it went up so fast and don't allow them to accumulate more?

Well, knowingly or unknowingly, the up and down is actually in the hands of investors or speculators.  Of course, you can cry MANIPULATIONS, no one will pity you.  So you are at a cross road AGAIN, buy, sell or hold?  There is no one to blame in stock market, no one put a gun to your head to buy, and no one put gun to your head to sell or to hold.  RATIONALISE will be the answer.  Check it against the fundamental again, did the Group loss its "gem assets" or earning power?  If yes, swift action must be taken.  If no, what should we do?  DID THE EARLIER ESTIMATED INTRINSIC VALUE DROPPED A LOT after the two announcements, if the answer is no, then there is no worry in the drop, isn't it.  Actually the most disappointing thing is actually if there is a "FRAUD by MANAGEMENT" in the company, for that, you can be sure the price will never recover.  Let assume it is not, but there are SIGN that major shareholders take advantage of the market of INSIDER INFO, then, our Bursa or SC should look into it, but, this is like asking why did the Malaysia Government does not catch those CORRUPTED leader? Is it because they are one of the culprits?

I remember Coastal, during its early stage after listing, price went up and down.  Sometime dropped more than 20%, then, now, looking back, it doubled.  Sometimes we do wonder, did the stock played us?  So it depends on your expectation (bottom line), and your investment risk profile.  Although some filled up the risk profile form saying that he or she can take 25% dropped in share price, when it comes to reality, one will definitely doubt his own judgement.  SO WHAT NEXT.  Only you can figure out, no one out there will figure out for you.  You control the decision, right or wrong.  

Sept 03, 2014

Up down up down.  Went up to 1.82 few weeks ago, down to 1.65 last week.  Went up again today to 1.80. Fundamentally, no major changes.  Somebody must be accumulating, volume today is 9m vs average 2m.  With DY around 6% p.a., down side should be limited.  RHB's latest FV about 2.43, personally, I believe it should be around 3.00 due to potential earning growth is there, a matter of timing.