Based on interview of Mr Loh Eng Chun (Executive Director) with The Edge which was published on Page 27 of the June 22-28 Issue, we have now more updated and relevant information that will give shareholders for clarity. Key points are:
1) Higher than normal net profit margin expected for Q2 and Q3 at least (contributed by the higher ASP of PP non-woven fabric especially in April and May).
2) Their PP non-woven segment currently going at full capacity but expecting to double their capacity sometime in Q3 this year (contribution comes earlier than what I have previously expected)
3) PP non-woven segment contributed 30% of revenue in Q1 and expected to be about 70% for Q2. From this new information, we're able to know exactly the sales for this segment in Q1 and better estimate for the rest of the year.
4) He confirms my previous assumption of a dividend payout this year given the good performance.
5) Currently, majority of sales for this PP non-woven segment are for the domestic market and their customers are the medical and mask players, although they have started to sell to North America and Europe too.

As such, it seems FY2020 will indeed be a bumper year for them and my previous estimate were indeed far too conservative. Assuming the information to be accurate, we can now assume EPS for FY2020 to hit 12sen, and they will most likely distribute 3.5sen dividend for the year in my opinion. At last closing price of 0.59 on 19 June 2020, it is currently trading at less than 5x FY20 earnings and potentially about 6% dividend yield. So go figure out your own TP from here :)

I don't think there is an online link to the article, you may need to get your hand on the physical or digital copy of the latest issue of TheEdge Weekly for it. Key points are:
1) Higher than normal net profit margin expected for Q2 and Q3 at least (contributed by the higher ASP of PP non-woven fabric especially in April and May).
2) Their PP non-woven segment currently going at full capacity but expecting to double their capacity sometime in Q3 this year (contribution comes earlier than what I previously expected)
3) PP non-woven segment contributed 30% of revenue in Q1 and expected to be about 70% for Q2. From this new information, we're able to know exactly the sales for this segment in Q1 and better estimate for the rest of the year.
4) He confirms my previous assumption of a dividend payout this year given the good performance.
5) Currently, majority of sales for this PP non-woven segment are for the domestic market and their customers are the medical and mask players, although they have started to sell to North America and Europe too.

Based on the new information provided in the interview, it seems FY2020 will indeed be a bumper year for them and my previous estimate were indeed far too conservative. Assuming the information to be accurate, we can now assume EPS for FY2020 to hit 12sen, and they will most likely distribute 3.5sen dividend for the year in my opinion. At last closing price of 0.59 on 19 June 2020, it is trading at less than 5x FY20 earnings and potentially about 6% dividend yield. So go figure out your own TP from here :)

It’s important to understand our investment timeframe before panic buying or selling. It is unfortunate for those who bought above 0.60 this morning including myself since the price now is significantly cheaper. But we need to understand that short term price fluctuations are caused by many factors like market sentiment which is out of our control and it does not change the fundamental growth prospects of the company in the medium/long term.

Different ppl have different entry point and timeframes. It would be understandable for a swing trader who bought at 0.30 to sell at 0.6 with a 100% profit or a contra player who sell even at a loss as market sentiment and momentum turns weak. So if we’re clear about our objective of investing in the company’s business prospects in the medium term, we’ll then be free from the emotions attached, and not be reactive to the price movements. Instead, if we have a clear understanding of the company’s business and valuation, we can exploit the irrational price swings to maximize our profit. Let’s not be fearful when nothing really changes, and let time do the talking. Good luck guys!

Thank you sellers! Got it cheap at 0.61!!

Thanks! First time writing a blog post and I find it really helps me understand the company better. Will try and do more if I find any interesting topics / companies to write about :) You keep up the good work too! Cheers

I completely missed the glovemakers' bandwagon. But let's not argue whether Comfort or Topglove is better. At this juncture and current prices, I've got a better recommendation with Tekseng (7200). Do check out my first blog post below. Feedback and comments are more than welcomed.

https://klse.i3investor.com/blogs/ahairytraderblog/2020-06-14-story-h1508786110-TEK_SENG_7200_Sell_on_News_or_Limit_Up.jsp

My in-depth analysis on TEKSENG below:

https://klse.i3investor.com/blogs/ahairytraderblog/2020-06-14-story-h1508786110-TEK_SENG_7200_Sell_on_News_or_Limit_Up.jsp

Please refer to below my blog post with analysis and rationale of my TP. Hope it helps some of you make an informed decision. Cheers!

https://klse.i3investor.com/blogs/ahairytraderblog/2020-06-14-story-h1508786110-TEK_SENG_7200_Sell_on_News_or_Limit_Up.jsp

Based on all the information we have now, and after accounting for the excellent Q1 report, 60sen shall be the low we'll see for a very long time. I'm looking at a conservative TP of RM1.40-1.50 after thorough research the past 2 nights on the company and the industry. Will try to do up a detailed post on my rationale by tonight for everyone's reference.

Come come join the party!

https://klse.i3investor.com/servlets/ptres/40111.jsp

30++% upside!

Just compared it to Ecoworld, ecoworld-wa is trading at premium of 70%, while currently Ewint-wa trading at approx 40+%.

Both are only expiring at 2022 and banking on the management of these companies. EWI is arguably more unpredictable as projects have not proved to bring in profits. But this unpredictability is also on the upside, hence should be priced into the premium of the warrant.

I foresee the gap to actually converge, so my bet is on ewint-wa to close between 45-50sen today!

Market drop but FBMKLCI-HB fell..... =.=

Dali from Malaysia Finance blog recommended BORNOIL on BFM today...

Last transacted price of mother share was RM2.27. For sharing, warrant pricing and their premiums as at 12.30pm are as follows:

CV: RM0.09 (17.2% premium with implied price of RM2.66)
CW: RM0.08 (16.3% premium with implied price of RM2.64)
CX: RM0.105 (8.6% premium with implied price of RM2.465)
CY: RM0.185 (18.3% premium with implied price of RM2.685)

Now that momentum is relatively weaker...gd to collect more SUPERMX-CX which is still priced at lowest premium compared to other warrants. While other warrants are pricing supermx at RM2.6x...CX still pricing supermx at RM2.4x.

This wave looking like tsunami since past couple of days....unstoppable.....

Finally almost back at where we were before the insider trading scandal! =)

You are welcome Alex Chong...

However, do note that trading warrants is very risky...While you stand to gain a lot more than buying the mother share, you are also exposed to risk of losing a lot more if the trade goes in the opposite direction....

Try and understand the mechanics of options and warrants as much as you can before starting it....Personally I love the excitement, love comparing different warrants and going for the best deal, love the rewards,BUT I also have to be always ready to take the hit...

Trade with care!

Kudos to johnmasino for the detailed analysis on supermax...

Based on EPS21.41sen for FY2014 in his analysis and an even more conservative PE of 15x, this would translate to a TP of RM3.21.

The TP of RM3.21 translates to warrant pricings as follows:

CV: RM0.225 (200% gain from last price of RM0.075)
CW: RM0.27 (350% from last price of RM0.06)
CX: RM0.35 (288% from last price of RM0.09)
CY: RM0.7 (352% from last price of 0.155)

Hi Alex Chong

As it will take a lot more time and effort to provide a full-blown and clear explanation about structured warrants, I will probably provide you with a follow-up post later on if I'm less busy at work. In a nutshell, the concept of warrants are just like options. You can try reading up on options to start with.

Instead I'll provide the full table and workings for SUPERMX warrants and see if you can figure out something from it:

Exercise Price / Warrant Price / Conversion Ratio / Implied Price*
CV: 2.30 / 0.075 / 4 / 2.60
CW: 2.40 / 0.055 / 3 / 2.565
CX: 2.15 / 0.090 / 3 / 2.425
CY: 2.50 / 0.145 / 1 / 2.645

*Implied Price = Exercise Price + (Warrant Price x Conversion Ratio)


Mother Price / Premium^ / Expiry Date
CV: 2.19 / 18.72% / 11/8/2015
CW: 2.19 / 17.12% / 12/5/2015
CX: 2.19 / 10.50% / 30/9/2015
CY: 2.19 / 20.78% / 1/7/2015

^Premium (%) = (Implied Price - Mother Price)/ Mother Price


The above may look alien to investors new to warrants, hopefully I will have the time, and after some research, provide a clear explanation to all those that are interested.

Cheers

Go for SUPERMX-CX to leverage on Supermax current momentum!

At Supermax's current share price of RM2.17 (as of writing),the premium and expiry date for its warrants are as follows:

SUPERMX-CV: 19.82% 11/8/2015
SUPERMX-CW: 18.20% 12/5/2015
SUPERMX-CX: 10.83% 30/9/2015
SUPERMX-CY: 21.89% 1/7/2015

While SUPERMX-CY has been the most active warrant the past few days, it has been played up and overvalued relative to the rest with a premium of 21.89%.

On the other hand, SUPERMX-CX action is still relatively subdued although its premium is significantly lower at 10.83%. What's more, its expiry date is the longest and about 9 months more to go. Theoretically, rational investors should be pricing CX at the highest premium relative to the other warrants!

If CX is to normalise to a premium that is similar to the rest (say about 19%), it would mean a price of RM0.145 which is a whopping 70% gain from the current price of 0.085.


Disclaimer:

I do own shares of CX warrants. Above is my proposition and I feel the current pricing is not justifiable and presents a good arbitrage opportunity. Nonetheless, play at your own risk. Just my2cents.

Got out first thing in the morning too, change in auditors most likely a sign of doom. Although price is higher now, glad that I'm out, at least can sleep well at night.

Hi AC Gan, I do not have the Maybank Report may I know what is their basis setting the TP at 0.49?

From what I can see from their latest quarterly report, they will probably be able to make EPS of at least 7 cents this financial year.

So a conservative 10x PE will give a TP of RM0.70.

In addition, they have already met the profit track record for Main Board Listing, we should expect them to apply to transfer to Main Board in a year's time.

Hi Harvard57,

Sorry have to correct you that the conversion ratio for RHBCAP-CQ is 8:1 instead of 4:1.So it is currently trading at a small premium of about 1.1% at current price of RM9.04 and warrant price of RM0.245. But I definitely agree with you that CQ is worth taking the risk at this juncture.

Newspaper articles has stated that the merger deal is likely to get done at 1.75x book value, which values RHBCAP at approx RM13. Just assuming that RHBCAP will trade at about 1.5x book value in the next few months will position it at about RM11.25, which translate to a warrant (CQ) price of approx RM0.50 (DOUBLE of current price).

Only setback is that the expiry of the warrant is 3 October 2014, which leaves roughly 3 months to trade.

Still, it's a very worthwhile risk to take in my opinion.


For more risk adverse amongst you, just whack RHBCAP mother share, still trading at 1.2x book value at current price of 9.04. Guaranteed money, just have to be patient and wait for the deal to firm up.

Thank you for pointing out valuemaster...

That was one of the reason why i wasn't sure for the Indonesia land whether will it be an outright disposal or other sort of corporate exercise.

Having done further research into it, this is my interpretation now:

It seems like the land is owned by Indonesian government and not TADMAX. However, TADMAX's two 90% owned subsidiary (which they acquired in 2011), holds the concession rights to undertake timber logging and oil palm plantation for 35 years for their 40,000 ha of land each (upon issuance of approval).

Based on the independent valuation report submitted to Bursa at the time of acquiring the two subsidiaries back in October 2011, the estimated income receivable from extractable timber on the said land
was RM872.7 million per year for 6 years.

Assuming income from oil palm plantation only come in from year 10 onwards and peak at year 16, a quick calculation on my side give it a valuation of at least RM1.5 billion (using conservative numbers). To put things into perspective, 80,000 ha is almost equivalent to the combined planted area of IJM Plantations Berhad and Sarawak Plantation Berhad. Due to their 90% shareholdings and potential JV of some sort with experienced oil palm companies, 50% of the RM1.5 billion already give it a price tag of RM750 million, which is equivalent to approx RM2/share.

Of course that is assuming that TADMAX obtains all the approvals in a timely and orderly manner.

Without taking into account the future disposal or other corporate exercises relating to the Indonesian land, I arrive at my short term TP of RM0.85 (approx 8% discount from NA of 0.93 after disposal of Klang land to 1MDB)

But longer term, market should price in the possible land disposal or any corporate exercise at some sort for its land in Indonesia. Mid-long term TP = approx RM1.50

Cheers, just my 2 cents

As bro nagachan pointed out, investors prob not satisfied that 80% of proceeds are used to repay bank borrowings...and some may be thinking that the rumoured RM1 billion land deal why now only RM317 million???

These two are separate land deals. This disposal itself will leave the company very close to zero borrowings and still sitting on the 80,000 hectares land in Indonesia, which is the true jewel of TADMAX.

But I've gotta thank all the short-sighted traders who sold off today,otherwise I would not have the opportunity to to collect more at 0.57 :)

Come HUAT together!

What you guys waiting for???

Another chance for all to collect...after the day traders finished selling....easily 20 cents free money!!!

BUY BUY BUY

As per the announcement, the Net Asset subsequent to the disposal is equivalent to RM0.92 and you have a clean company with around RM30m cash with almost zero borrowings. This is just the tip of the iceberg....

Based on the company's 2012 Annual Report, its 80,000 hectares of plantation land in Indonesia is only valued at RM67m in its books, which currently contributes about only 0.18/share.

(i) Quoting an article from theStar published on 15 Feb 2014, "Costs have risen for agricultural leasehold land from US$1,400 to US$1,800 per hectare in some provinces (in Indonesia)". Being on the very conservative side and take US$ 1,600 (approx RM5,300 per ha), the disposal of the Indonesian land (if go through) should worth approx RM424 million or about RM1.14/share,

Translating to an NTA of approx RM1.89!

(ii) In fact, if using the numbers in the article published on NST on 6 Feb, they could probably sell the land for as much as US$200 million to the right buyer. Using this valuation, the land is worth RM1.77/share,

Translating to an NTA of approx RM2.52!


While this disposal to 1MDB is very likely to proceed without much hiccups, there is still a 1.5 year period to complete the disposal. Putting a time discount of 8% to the NTA of RM0.92 = approx RM0.845 (my 1st TP for the next few trading days)

Thereafter, using the average of my 2 scenarios for the disposal of Indonesia 80,000 ha land, would translate to a NTA of RM2.20. Applying a 30% discount for the possibility of the deal not materialising or taking longer than expected, I arrive at my 2nd TP at RM1.54 probably in 3-6 months time.


I believe there is much more room to go up, and should be able to reach 0.845 in the next few trading days. For those who missed the boat, there should be some selling pressure from days traders who would "sell on news",so hopefully you guys can come onboard soon!


Just my 2 cents, good luck to all!