ABOUT SILK

This week's The Edge mentioned SILK bondholders' may throw a spanner into its sale of Kajang Ring Road.  

Earlier SILK announce to sell Kajang Ring Road for RM395m together with sukuk loan of about RM831m, giving it a total value of RM1.26billion.  I thought that was a reasonably good deal for SILK.  Interest savings from the sukuk loan of 8% may be substantial, and the cash of RM395m could be allocated to more OSVs.  

Anyway, this exercise is INCOMPLETE at the moment, pending agreement from the bondholders.  So it is hanging.

IF the SALE FAIL.....  what should SILK value like?

IF the SALE COMPLETE..... what should SILK value like?

We shall wait for further information on this exercise.  Until then, of course, we can estimate the value.  

To be continue.......................

8% x RM831m = RM66m

10% x RM395m = RM39m (LT)

If sale can be completed, I believe SILK should worth more.  Upside of another 30 to 40 sen perhaps.  

If the sale failed, the value of SILK is almost there 10% plus minus.  

(Disclaimer: My personal opinion, not an investment advice to buy, sell or hold, merely a rough estimate of potential value)

ABOUT BURSA

Previous blog, I have mentioned about Bursa's value at the moment is slightly above mean.  This is not the main issue, the main issue is actually the liquidity of the market and the concern of household debt burden effect.  Some of my client or investor ask me, since the market is near the higher end, should we enter the market?

My answer is yes if you can find an UNDERVALUE STOCK with potential growth and is not significantly effected if NYSE drop 20-30%, and it is within your diversified portfolio (Cash, Equity or Property).

The next question is equally important, if you have already invested say RM500k, should you load more or reduce it?  Same answer, stay within your exposure you always wanted and if you find an UNDERVALUED STOCK with potential growth, why wait.

Of course, the difference now vs 18 months ago, there are less UNDERVALUED STOCKS, harder to find and you have slightly more bargaining power since the market is correcting.  

Some choose to invest, out of its total EQUITY, stays in 40% cash or even 50% cash.  To me, as long as you can find a stock within your criteria, you can accumulate slowly.  As usual, we will NEVER be one hundred percent sure where the market heading, hence, no harm keeping some cash.  If your NET WORTH continue to improve, I think should maintained 33% (or more, depend on risk) into EQUITY.  Because, the silent killer is behind our back all the time.............. INFLATION.  My personal view, about 7-8% p.a.  So, STAY INVESTED, but if really run out of great stocks to buy, well, can always stay aside for short while.  REMEMBER, a good stock may not stay undervalued for long time.