The management may think that the RM1.3 billion offer for Caring was a little too low, and SEM could get better valuation even if it lists up Caring as a separate listing, by expanding its network into Sarawak and increasing total pharmacy outlets towards 250 or more.

As said before, even there is no deal on Caring now, SEM is still grossly undervalued at RM2.00 level, given that the value of Caring has emerged with proposals from Japanese groups back in July and interests from US private equity funds, and its core convenient store business is charging ahead

I was right yesterday that SEM share price would need to take a breather, but did not expect such a big correction. Support at 2.00. I suspect it needs to consolidate the gains for a while before it resumes uptrend, all depending on whether a deal is coming or not

amazing that company share buyback is still aggressive, after share price has gone up 50%.

It seems like the uptrend is just half way to eventually RM3.20, now taking a breather. It needs a good news to drive it up again.

With or without the Caring deal now, it does not matter too much, as SEM can continue growing Caring into a bigger animal.

The Edge reported last weekend that Caring was close to sealing a deal to buy over a pharmacy chain in Sarawak with some 15 outlets there, that would increase Caring outlets by over 7% straightaway (and hence valuation) and give it an instant foothold in Sarawak.

SEM could even consider spinning off Caring to a separate listing later if it cannot not get the required valuation of RM1.5-1.8 billion now. By continued improvements and expansion, Caring could expand to over 300 outlets in next few years and valuation will definitely jump to over RM2.5 billion then.

Another day of good gains!

Tonight go to 7-11 again to buy ice-cream

SEM plans to have a total of 130 7-Cafe by end of 2022, soon this will come to Perak and other states. Next year I hope to see at least 500 7-Cafe outlets which will help to grow revenue by double digits

7-11 can have high growth in many years to come, both from expansion of new outlets and converting existing convenient store format into 7-Cafe format which enjoys almost double transaction of RM12.00 per head.

Just imagine if SEM converts most of its 2,400 convenient stores into 7-Cafe format, revenue will just double, with even higher profit margin of 3.9% as seen in Q2FY2022 compared to 1.8% in H1FY2021

I was hoping to collect towards 1.02 but it looks like no chance for now, so just buy at 1.12

Nepo, I trust you. I have also added. This is a well managed company with tremendous growth over many years to come.

profit takers fail to press it down, SEM maintains at 2.29-2.30. Hope for a strong close again with double digit gain today

I thought I would need to wait till 4.50pm for SEM to touch 2.30, but it looks like it is a combination of retailers / insiders chasing and company share buyback in the morning to push it high.

Could there be a lunch time announcement?

Enjoy your breakfast at 7 Cafe!!

I enjoy my white coffee at home while watching SEM notching up another 10 sen, nice morning

Haha I shall buy bread and slurpee drinks from 7-11 instead of ice-cream from Family Mart.

Too bad, there is no 7-Cafe in Ipoh yet, so I have not visited any, otherwise will have my afternoon tea there too

Another good show today!!

Lets continue the steady climb to RM2.50 - 3.00.

but for now, it looks like SEM is facing more resistance as share price inches up further. Lets hope for a strong closing

Surprise will come if SEM receives an offer higher than the RM1.3 billion price tag offered by the American private equity fund. If it indeed gets an offer within the requested range of RM1.5-1.8 billion, it will add 12 sen to 30 sen upside to SEM

It does look like your target of RM3.00 is not a distant possibility.

Based on CIMB's report today on SEM, the company is expected to register improved net profits of RM105-108 million every year for FY2023-2024 after disposing off Caring at RM1.3 billion (net proceeds of RM975 million).

I think CIMB has over-stated the interest savings, so I expect SEM net profit should come in at RM90 million level after disposal of Caring, giving EPS of 7.5 sen.

Pegging it at a PER of 30x (slightly lower than its 5-year mean PER of 31.1x), SEM will be worth RM0.075 x 30 = RM2.25 per share for its convenient store business.

Plus the RM975 million proceeds from disposal of Caring, SEM should be worth RM2.25 + RM0.79 = RM3.04 per share.

I do see similarity in share price trend of SEM as what BJFood has demonstrated in past few months. BJFood share price first jumped up from about RM2.00 level when it announced surprisingly good quarterly earnings, then all the way to RM4.80 within a few months, added with company share buyback along the way offsetting director's selling.

SEM share price broke up RM1.56 when the news of the company getting an offer for Caring Pharmacy came out in the market. The company also started aggressive share buyback knowing that the company share is grossly undervalued below RM2.00. Then we saw the news of a director wanting to deal with company shares.

haha pang72, you are even more bullish than I am. My 1st target is 2.50, hopefully to be reached in next 2 weeks, judging by the way it is going up and the aggressive share buyback

Come 2023, the company should have spare cashflows to pare down borrowings gradually as capex slows to a normal RM20-30m a year:

Operating cashflows RM 104 m
minus interest expense (12) m
minus capex (25) m
free cash flows RM 67 m

Capex in H1 FY2022 indeed jumped up high to RM133 million, mainly for the Bidor bus terminal, I think. With strong operating cashflows expected for 2H FY2022, likely to be RM52m - RM6m (interest expense) = RM46 million which may be sufficient to fund the remaining capex for Bidor terminal, I hope.

Notwithstanding a decent PE ratio, Ptrans has quite strong operating cashflows, i.e. RM52.2 million for 6 months ended 30 Jun 2022, annualised to RM104.5 million.

Interest expense for H1 FY2022 amounted to RM6.05 million, annualised to RM12.1 million. So interest service cover will come to 104.5/12.1 = 8.7x very comfortable.

Ptrans may need to accumulate some cash for debt repayment when the current sukuk expires, not sure when but at least 3 years away. Can consider partial repayment and roll over the sukuk for another longer tenor then.

Again last minute push to close at day high 2.02.

OK I will stop doing premature selling, lets wait for 1st target RM2.50

aiya so strong, broke up 2.00

when will it pause?

I am not sure how it will go from here, after having shot up 40 sen in a week.

As it is half way up based on my own target, I suspect it may need to take a breather before climbing up further.

The news is not yet out, just that SEM has received an offer at RM1.3 billion but it has not accepted, holding on for higher offer at RM1.5-1.8 billion. I am sure its share price will reach RM2.50 once it announces an offer above RM1.5 billion.

it is not all bad lah. Even though I also touched on the PFF concern, but the latest 2 quarterly results have shown less dependence on PFF income and more from rentals at bus terminals

@dompeilee, your patience will eventually be rewarded when you pick the right stock.

I also bought Uchitech around RM1.30 in 2014 and made double within 2 years. It was giving 11-12 sen dividend every year then, yielding almost 9%. It was a no brainer.

I also bought Padini at around RM1.35 around the same time when Padini was giving 10-12 sen dividend, yielding also 8%-9%. I sold off too early above RM3.00-3.30 before it went to touch RM6.00.

Furthermore, the idea came just when I heard about the border re-opening of Japan and I do love skiing, and Hokkaido is certainly a place to visit for the good quality snow, for the fresh seafood and for Japanese culture experience

@trader808, glad that you like the article. It did take me few days of work to compile data and do necessary calculations to make up a workable plan that most investors can understand

I posted this article right after the previous surge on 30 Sept

https://klse.i3investor.com/web/blog/detail/dragon328/2022-10-02-story-h1650023261-YTL_The_Journey_Continues_to_the_Land_of_Rising_Sun

Incidentally, there has been a big surge by thousands in readership of this article in past 2 days. I guess my article has managed to circulate to the hand of some fund managers

It happened once before on 30 Sept with share price last minute pushed up to 0.58 too with total volume of 17.5m traded on the day, but there was no announcement of company share buyback after that. This shows that the huge buy-up was done by a large investor or a fund

sometimes the company announces the share buyback the following day noon time. Lets see

Just now last minute volume was over 19 million shares

@dompeilee, that is for EPF disposal on 17 Oct

another good show today, just half way up. First target is RM2.50.

Company embarks on aggressive share buyback, indicating a good deal is coming soon

YTL share is grossly undervalued, the last minute buy up should either be company share buyback or EPF adding positions.

@Noni, Tun M is a gone case. YTL has never relied on this old man for growth. Most of its prime assets are actually in overseas AAA-rated countries such as the UK, Singapore and Japan.

However, YTL is still competitive in local scene, having bagged one of the digital bank licences.

Uncertain times now, too many moving parts. Unpredictable things may happen over next few months. Be cautious in trading. Bottom fish YTL for long term investment.

Luckily I have collected enough at 1.55 level. I already gave hints last month after SEM announced the strong quarterly result, it would be the next BJFood.
I only had small positions in BJFood collected around RM2.00 then it shot up like mad to as high as RM5.00. Now after splits, it is testing previous high again.

Another day of good show!

well done, 5th consecutive day of gains!

The received offer of RM1.3 billion for Caring is worth almost 80 sen for SEM's 75% stakes. Today up only 8 sen, still long long way to go up

US PE fund Carlyle is making an offer to buy over Caring Pharmacy from SEM at RM1.3 billion, still a bit lower than the desired valuation of RM1.5-1.8 billion that SEM is looking for.
But with Caring Pharmacy taking over JOM Pharma and adding another 15 outlets to its staple, valuation will no doubt increase over time and sooner or later exceed the minimum RM1.5 billion valuation

This RHB analyst still could not see the potential of MCement, same for many investors unfortunately

Something is wrong as Genting share price keeps dropping despite the announcement of promising data from TauRX. Most investors are not convinced that it can get US FDA approval?

Newspaper reported that the telco stakeholders would be able to appoint 3 directors to DNB. YTLP with 20% stakes should be able to appoint one director in.

tonywong8, I am not too sure, but first getting a 20% stake will enable YTLPower to equity account of DNB future profits (getting anything less will not make it possible). DNB being the only body rolling out the 5G backbone in the country will likely be able to generate some reasonable returns on its investment, as private telcos own a collective 65% stakes and would not make it to lose money. The 5G service fees will be structured such that DNB will be able to make a high single digit return on investment, I think.
Secondly, being one of the larger shareholders, YTL will be able to participate in future decision and policy of DNB and the 5G industry as a whole, taking some advantage to protect its interests and to ensure level playing ground for all 5G service providers.

The total amount of debts is itself not scary, but if a company does not have positive operating cashflows to service the debt, then even if its total debt is small, the company will still go bankrupt even though on paper it reports high accounting profit (like Serba Dinamik).

You should not be too worried of taking debts, otherwise you will have to pay all cash to buy a house.
But for a company, the cost of equity is always higher than the cost of debt, so it is more capital efficient to gear up when the company acquires an asset. The key thing is that the asset being acquired must yield returns higher than the cost of debt.

With total assets in excess of RM72 billion and positive operating cashflows of over RM1.5 billion a year, what makes you think that YTL cannot survive?
A simple analogy - if a person buys a freehold property for RM720,000 and borrows RM294,000 from banks. He has annual income of RM35,000 and needs to pay bank instalments of RM12,500 every year. If the freehold property continues to appreciate in value and his income gradually increases over year, will he go bankrupt?

You also need to look at YTL's operating cashflows (before capex and working capital changes) which are strong: RM1,641 million in FY2022 and RM1,593 million in FY2021. Operating cashflows before debt service amounted to about RM3.5 billion in FY2022 & FY2021, providing a interest cover ratio of 2.9x which is way above norms.