@Observatory, ya the dividend is unexpected. I thought Media still had a large amount of negative reserves and could not declare dividend, but I was wrong.

The latest quarterly result just blows off expectation. Net profit jumped up 2.8x from Sept qtr to RM29m. It could have been higher if not for an impairment item of RM18m.

Full year free cash flows amounted to RM138m or 12.5 sen per share. Capex is minima at RM8m excluding the one-off payment of RM118m to buy back its corporate office building in Bangsar.

If there is no restriction on dividend distribution due to negative reserves, then Media would be able to declare 100% of earnings as dividend or 5.0 sen per share or RM55m, leaving it with balance cash flows of RM75m p.a.adding to its already-strong nett cash balance of RM188m.

Other stocks with strong cash flows are AEON, DKSH, Media Prima and YTL Power. You may take a look at them. Each has some issue of their own and hence share prices are still at depressed level. Only DKSH has run up after reporting 2 quarters of strong earnings and cashflows.

On its debt level, I do not think we should add in lease liabilities which are mainly long term asset lease / rental commitments. To me these are more of operational cost nature than debt nature.

The debts have been pared down to RM192m. Assuming 5% interest p.a., borrowing interest costs may come up to RM9.6m a year. With free cash flows over RM100m per year, interest cover ratio will be well over 10x, very comfortable.

That is why I thought the company does not need to carry out aggressive debt repayments in coming months.

@ Observatory, ya free cash flows are usually defined as operating cash flows after capex. But if a company is embarking on aggressive expansion, I tend to exclude the expansion capex to see how a normal year free cash flows will look like.

How I derived free cash flow of RM116m before capex? I simply used the operating cash flows of RM165.4m minus interest costs of RM13.5m minus payment of principal portion of lease liabilities of RM34,6m minus hire purchase payment of RM1.0m.

I just used the entire amount of interest costs of RM13.5m which has included both the interest portion of lease liabilities and interest costs of bank borrowings. Both interest cost items need to be deducted from operating cash flows.

Even we allocate RM90m of expansion capex for 2022, the company will still have RM140m of free cash flows for debt repayment and dividend distributions, or 36 sen of FCF or 11% of current share price.

Late last year when I calculated out the FCF before this exceptional quarterly result, I estimated operating cash flows of RM160m-180m before capex. I assumed capex of RM60m, leaving FCF of RM100-120m or 25-30 sen per share. The share price then was trading at about RM2.00, so FCF was estimated at 12.5%-15.0% of share price making it a steal.

On short term share price movements, I expect some further upside to RM3.60-3.80 supported by company share buyback. On the flip side, major shareholder Vincent Tan has been selling its stakes together with other directors.

So there will be downside risks after the almost 70% surge in share price in past few weeks. Trade with caution!

@Observatory, it is good to hear from you again in this forum.

My estimates for BJFood gross margin is 48%, not too far from your 50%. I calculated that the fixed costs were about RM35m per quarter plus depreciation & amortisation charges of RM29m = RM64m slightly lower than your RM69m per quarter.

The key to the 3.5x increase in net profit for 2QFY2022 was obviously the 50% increase in revenue in 2QFY2022 compared to 1QFY2022. The reasons given were higher priced products, Christmas seasonal promotions and re-opening of economy after covid cases went down from Oct 2021. Nonetheless, the quantum of revenue increase still took everyone by surprise, hence the limit up of share price after result announcement.

I do not think Kenny Rogers contributed much profit after turning around so it was likely to be much higher mobility of customers in Q2 supported by continued strong sales from drive-thru and takeaways.

If this is really the factor, then we may expect lower earnings in coming Q3 and Q4. Maybank IB said that Jan 2022 sales had come down c.10%, so earnings may take a larger hit. Q4 will be worse as there will be one month of puasa before Hari Raya.

Yet, BJFood earnings for FY2022 will still be remarkable and more so on its cash flows. It generated about RM116m of free cash flows (before capex) in H1FY2022 which was exceptionally strong. The company managed to pare down borrowings in 1H by RM116.88m to just RM191m.

Just imagine that if 2H earnings can maintain at RM50m, full year cash flows may exceed RM230m which may be used for expansion and debt repayments. Assuming an average of RM70m will be used for expansion, then there will be RM160m free cash flows available for dividends.

The current debt level is quite optimal hence further debt repayment will not be as aggressive as in 1HFY2022. Free cash flows may be over 40 sen per share!

Lousy management, no long term vision, poor project execution, no cost control, heavy directors' fees, related party transactions to squeeze cash out of company, useless company to invest in.

No use even it can get another RM5 billion worth of new projects, most will result in heavy losses for the company while project managers cream off fat fat commission and tips.

@Johnzhang, agree that there will unlikely be much production increase of CPO in 2022. As long as CPO prices remain above RM5,000 per tonne throughout 2022, I would be very happy and am sure analysts will upgrade plantation stocks when average CPO prices remain above RM5,000 until April 2022.

Patience pays off for you. Well done!


Posted by Johnzhang > Feb 10, 2022 3:45 PM | Report Abuse

@Dragon328, to be accurate I only said CPO will stay at high level as supply of all edible oils are affected by climate change , labour issue and lack of investment in the past few years while demand continue to grow . As long as there is NO bumper harvest for the competing oil crops, mainly soya, canola and sunflower seed, which is likely the case due to frequent wild weather swing, CPO will stay well above the past average level benefiting oil palm growers . I think there will be NO production increase for CPO in 2022 too. CPO can not continue to go up to the sky . Price level will find its equilibrium level one day and I believe the equilibrium level is much higher than the average of past 5 years .

Current CPO spot and futures prices are very high above RM5,000/MT and retail investors like Calvin and John Zhang keep saying CPO prices will continue going up.

But why are the forecast average CPO prices for 2022 by all local analysts so low:

CIMB - RM3,600/MT
MBB - RM3,200/MT
Affin - RM3,300/MT
HLB - RM3,500/MT
Kenanga - RM3,500/MT

The average CPO YTD Feb is well above RM5,500/MT. In order to achieve an annual average of RM3,500/MT for 2022, the CPO prices will need to drop to RM3,100/MT for the 10 months from March to Dec 2022.

How likely would that be?


Posted by calvintaneng > Feb 10, 2022 1:55 PM | Report Abuse

Palm oil production down

Canada canola oil failed

Right now Brazil too much rain and Argentina too dry impact soybean

All three Vege oil production got shortfall

Unlike steel or crude oil there is no way to ramp up production

What will happen then

Answer is only two

1. Very very high prices for palm oil, canola oil and soyoil

All screaming with Colossal once in a century profits

2. World famine

Then palm oil will be as expensive as liquid gold

Why is there so much selling pressure at 0.79 - 0.80?

Take profit lah and sell to 0.63 for me to pick up more.

This is not a penny goreng stock. It will attract institutional funds to buy for long term investments. Weak holders and speculative retailers may take profit for 3-5 sen tiny profit and will likely miss out on the next explosive rerating moves.

I reckon that YTLPI could use RM810 million from cash proceeds to pay a special dividend of 10 sen per share, then remaining RM2.2 billion to pare down debts and reduce interest costs by RM100 million a year (still higher than the associate earnings of RM72m).

Share price should surge to at least RM0.72-0.75 in near term.

Some may think that YTLPI earnings may drop after the disposal as the associate's earnings of RM72m a year will be gone, but in fact YTLPI net profit will increase due to lower interest costs.

YTLPI will receive cash of RM3.0 billion after disposal, which will help to reduce nett borrowings. If average interest cost is 5.0% p.a., then the disposal proceeds will help to reduce interest cost by RM150 million a year. If interest cost is 4.0% p.a., then annual interest cost saving will amount to RM120 million which will be higher than the earnings contribution from Electranet.

You may think this is a one day show only. The share price is strong today on knee jerk reactions to the disposal news. But it could be the start of a strong re-rating phase that may push it to the RM0.90-1.00 level in next few months, especially once its Jordan power station achieves commercial operations.

If dividends improve to 7.0 sen by FY2024, it will not be a surprise for share price to catch up to RM1.00 still based on a 7% dividend yield.

If no further disposal of assets, YTLPI earnings are expected to rise from RM399m (EPS 5.0 sen) in FY2022 to RM638m (EPS 7.9 sen) in FY2023 and RM727m (EPS 9.0 sen) for FY2024 according to projections from Maybank IB.

These include contributions from the new Jordan power plant that will post earnings of over RM100m in first full year operations and increasing every year to as high as RM500m few years later as external debts are pared down and interest costs coming down.

PER valuation is going down to 7x and dividend yields at 7.5% assuming dividends maintained at 5.0 sen going forward.

With capex for Jordan power plant is coming to the tail end, free cash flows will improve as Jordan contributions pour in. There is a potential for dividends to improve to 6.0 sen in FY2023 and 7.0 sen in FY2024 pegged at 80% profit distribution.

minus out the nett debt of RM21.6 billion, YTLPI should be worth at least RM21.2 bn + RM12.6 bn - RM21.6 bn = RM12.2 billion or RM1.50 per share.

Electranet contributed about AUD23.9m profit after tax to YTLPI every year, hence the disposal of Electranet at RM3.057 billion values it at 42x PER.

The 100%-owned Wessex Waters contributes about RM500 million profit after tax to YTLPI every year. Just imagine valuing it at the same valuation of Electranet will give Wessex a value of RM21.2 billion or RM2.62 per share of YTLPI.

The 100%-owned PowerSeraya contributes about RM300 million profit after tax for YTLPI every year. Using the same valuation will give a value of RM12.6 billion of RM1.55 per share of YTLPI.

Not mentioning of other assets like the 45%-owned Jordan new power plant that will contribute over RM100 million profit every year after commercial operations later this year and potentially the proposed 500MW solar power plant at Kulai, YTLPI is deeply undervalued.

In the absence of high content costs and additional licence & royalty fees, Astro Q4 earnings should be much better with the reopening of almost all economic sectors from Nov.

Hope it can register net profit of over RM150 million in Q4 then. Operating cash flows are strong and will enable a 4th dividend of 1.5 sen plus final dividend of 2.0 sen, making full year dividends of 8.0 sen yielding over 8.0%. Safe bet at RM0.96.

This Q3 result is not bad lah with only a small drop of 5% in TV subscription revenue from last year, compared to almost 10% drop p.a. in past 5 years. Q3 earning was dragged down by higher content costs (due to major sports events) and royalty fee compared to last year.

Earnings in this Q3 are 21% higher than Q2 thought August was still in lockdown. Radio earning was dragged down by higher marketing expenses, licence and royalty fees compared to Q2, which I hope will not recur in Q4.

Media Prima at RM0.45 is too cheap to be ignored. Its latest quarterly results show that its operating cash flows before working capital changes and capex topped RM150 million for the first 9 months of 2021. With minimal capex going forward, its free cash flows may exceed RM170 million or 15 sen per share every year, adding to its nett cash position of RM263 million as of 30 Sept 2021.

By Dec 2022, Media at RM0.45 will be almost fully backed by nett cash of RM490 million with free cash flows of RM170 million every year. Real cash cow!!

Not being able to post long comments here is just a small frustration. A much bigger frustration is to see a great company that I have been following for years going nowhere with its management not creating values for its shareholders anymore but focusing on short term gains for themselves and parent company.

I choose to sell off all my Daibochi holdings at RM2.71 in the open market rather than accepting the offer from Scientex.

I switch to other companies with better management.

I am afraid such a company management will not be generating good values for the company shareholders in long run, with such corporate mentality and such a parent company tying its hands in managing the company.

I am really disgruntled by the privatisation manaeuvres of Scientex and despise the cooperation by Daibochi management to only fulfill the agenda of its parent company, failing to protect the value of its other shareholders.

One would imagine what sort of affordable houses one would get from a developer who always want to win it all. And how would Daibochi continue to win the trust and maintain good relationship with its long term MNCs if it tries to win it all?

It somehow shows similar corporate culture in the parent itself, trying to win it all and not creating any win-win situation for stakeholders. I reckon that companies with such corporate mindset will not prevail in long run.

The privatisation saga is not bringing any good to Daibochi shareholders but indirectly revealed the narrow-minded corporate mindset and compromised integrity of the management.

or they think the fair value of the company should be just at RM2.10 level and Scientxx is really dumb in offering RM2.70.

It has come to an impression that the management of Daibochi thinks that the RM100m capex expansion is a complete waste of shareholders' money and will not bring any good to the company in future,

In trying to impress the top boss, the management of Daibochi has overdone it in suppressing the fair value of the company.

can only post one sentence by sentence

this is frustrating. Posting many times still not successful.

I have the same feeling. Looking at the desperate moves and pathetic valuation by the IA, I doubt there will be any revised offer at all.


Posted by Syndicates > Oct 15, 2021 10:37 AM | Report Abuse

this boss is stingy. if there's revision of offer, he might wait till another 6 months to do it so that he will be free from obligation to pay additional price to those who have accepted the offer in this round.

Somehow my previous posts got all blocked.

@observatory, many thanks for the relentless effort to analyse the numbers behind the IA fair value.

I missed out on the terminal value of RM539.68 in my rushed calculations yesterday. I agree with your derived number of RM57.883m for FY2026 FCFE.

My guess of the numbers for FCFE in FY2022-2026 may come out more or less like what you had below. The common trick that might have been used was to deduct the operational cashflows of the company in FY2022-2023/2024 by the announced capex figure of RM100m to get a depressed set of free cashflows for the front years.

Again, to me any such basis is wrong for a number of reasons:
1) a majority part of the RM100m capex has been spent in FY2020-FY2021 before the takeover offer was made by Scientex, i.e. RM25.7m in FY2020 and RM64.0m in FY2021 ended July. There should not be much major capex left for FY2022-2024

2) In the DCF calculation, it is fair to deduct the operational cashflows by capex spent to derive the free cashflows. However, it does not appear to me that any benefit of the expansion capex has been reflected in the IA's cashflow projections. The implied FCFE of RM57.883m in FY2026 is even lower than the actual operational cashflows of RM70m in FY2021A. This is totally unreasonable as it suggests that the planned expansion plan by the management of Daibochi would be simply punitive in wasting shareholders' money without generating any higher returns in future.

3) If the intention of the IA was to derive the fair value of the company at current state (without any major expansion), they should have just used the normal maintenance capex of the company which averaged less than RM10m every year. It has somewhat become highly punitive to include the major capex of RM100m but not any benefit (increased earnings) of the capex in the calculations of the fair value.


______________________________________________________________________
So for illustration purpose, I massage the numbers to assume major capex spending for three more years (!), and after that, with magic, there is a 180% jump in FCF in Year 4. This is what I get:

(In million RM)
Year FCFE FCFE @PV
FY22 20.000 18.488
FY23 20.000 16.941
FY24 20.000 15.524
FY25 56.000 39.830
FY26 57.883 37.725
Total N/A 128.506

It appears to me that the Independent Advisor might have taken some of the expansion capex in reducing the free cash flows of the company in the calculation of the fair value.

My estimate is a capex amount of RM20-23m that has been used in suppressing the annual free cash flows of the company. This basis is totally fraud. The reason of embarking on an expansion plan is naturally to grow the company earnings and cash flows in future years, but the expansion capex incurred in FY2020-2021 has been used to its advantage of reducing the projected annual free cash flows for FY2022-2026 in the fair value calculations.

So cheeky yet clumsy!!

I just reworked out the fair value using the assumed cost of equity Ke of 9.13% and perpetuity growth rate, g of 2.0% and the stated formulae in the Independent Advisor report. To get the stated fair value of RM668m, they have assumed annual free cash flows of less than RM50m:

FCFE FY2022 2023 2024 2025 2026
RM m 47.3 48.3 49.2 50.2 51.2

Present Value of projected FCFE = FCFE / (1 + Ke)5 = RM190.2m
Present Value of Terminal Value = FCFE for FY2026 * (1 + g) / (Ke - g) * 1 / (1 + Ke)4.9 = RM477.4m

Fair Value = RM190.2m + 477.4m = RM667.6m

As I pointed out earlier, Daibochi's free cash flows for FY2021 already amounted to RM70m based on its Q4FY2021 quarterly results.

It is hence totally unreasonable to assume annual free cashflows of below RM50m for FY2022 - 2026, even lower than actual FY2021 FCF. The Independent Advisor has also clearly ignored the ongoing expansion plan and the potential earnings growth in next few years.

If I rework the fair value with assumed FCFE of RM70m for FY2022 then increasing 2% p.a. to FY2026, the fair value will be RM987.9m or RM3.01 per share.

If I assume the current expansion will result in 25% higher FCF for FY2022 and 50% higher FCF for FY2023 then increasing at 2.0% p.a. to FY2026, then the fair value would be RM1,439m or RM4.39 per share.

Investors pls beware of the huge disparity in valuation by tweaking the assumptions and do not take the face value given by Indenpendent Advisor as granted.

There is nothing much to analyse in the Independent Adviser report. There is a vaccuum of information in how they derived the fair value.

The only info stated is the assumed cost of equity of 9.13% and perpetuity growth rate of 2.0%-2.5%, both are within ballpark estimates. However, there was nothing mentioned on assumptions made in the projected free cash flows of the company and how many years of FCFE was taken into account in the calculation of the present value.

It is totally unclear as to whether the Independent Advisor has taken into account the planned expansion in their projected free cash flows. If they had just taken the free cash flows of the company in the past 2 years to project a nominal growth of 2.0%-2.5% for the next few years, then it will understate the expansion growth effort of the company.

Can please share UOB reports on SOP here?

I did not manage to sell any daibochi-wb at 40 sen lah, that was only 100 shares traded at 40 sen last week. I sold most at 0.34-0.365 but still keep some till year end. This balance wb is considered free already.

Ya I pay more attention on a company cash flows rather than its accounting profits. How much cash a company has and how much cash it can generate sustainably will determine how much this company is worth. As we are just minority investors in the listed company, our tangible returns are in the form of dividend distributions or capital repayment by the company we invest in.

On the other hand, the accounting profit of a company can be easily distorted by many non-cash items like depreciation, amortisation, deferred taxation etc. A company may have very high accounting profits and low PE ratio but no cash, just like in the case of Serba Dinamik. What was the point of investing in such a company with increasing debts though reporting record profits in past few years? Same for other companies that report extraordinary profits by having mark-to-market adjustment gains from revaluing its assets. Minority shareholders get nothing benefit until the company can monetise the assets or convert the accounting profits into real cash and reward shareholders with handsome dividends.

What we should be looking for is a company with good management and an enviable business that can generate sustainable cash flows over years. A good management can innovate and create higher shareholders' value for the company. An enviable business typically has certain consumer monopoly that can withstand competition and does not require heavy capital expenditure every year to sustain its operations.

In particular, I am always on the look out for companies with sustainable annual free cash flows of at least 15% of its market capitalisation. For instance, Media Prima trading at RM0.190 had a FCF/Price ratio of over 50% with projected annual cash flows of at least 10 sen. MHB at RM0.44 had a FCF/Price ratio of 15% with projected free cash flows of 6.0 sen per share. DKSH was good at RM3.00 with FCF of RM1.00 per share.

I am looking at BJFood now. Based on its latest quarterly results, its free cash flows may top RM100 million for this FY or over 30 sen per share. At RM2.02, it fits into my investment criteria. The only issue with this company is how much capex it would spend to expand its retail Starbucks or Kenny Rogers outlets and whether it would be well spent. If it plans to open 25 new outlets, it may set it back with at least RM50m of capex and free cash flows may drop by half.

Thanks @observatory.

I was just lucky enough to grab wb weeks before the Scientex takeover offer came and managed to realise >100% profit gains in one month.

But that was not my original intention of buying daibochi-wb. I was prepared to hold it until year end to see if daibochi would reach RM3.00 and wb to RM0.50-0.60.

Anyway all is not wasted. Thanks to Scientex offer for me to take some quick profit first and get back some capital money to buy other under-valued stocks.

In fact, this daibochi-wb was not my biggest gain this year. I had bigger gains in Media Prima when I spotted this hugely undervalued stock at RM0.19 in late Nov last year. Media reported a turnaround in its quarterly result ended Sep 2021 and I found out that its operational cash flows might exceed 10 sen per share after the turnaround. With nett cash of 18 sen per share then and projected free cash flows of 10-11 sen per share every year forward, it was a no brainer to grab as much as possible at RM0.190. I managed to sell progressively as it surged up due to aggressive buying by Johari in the open market and disposed all my holdings by RM0.745.

Another quick gain was made when Maybank raised its target price for MHB to RM0.85 on 4th March 2021 when it was trading at RM0.44. I checked that MHB had nett cash of RM0.25 per share then and projected free cash flows of almost 6.0 sen per share, it was a damned good buy at 44 sen a piece. I grabbed plenty and manged to sell all by 80 sen within 2 months.

Latest one is DKSH that I mentioned before. It is giving me almost 90% gain now within 2 months.

My point is that you will never go wrong by picking stocks with strong cash flows. Just need to be patient. Sometimes luck plays a key factor in determining how fast you may make the desired gains.

@iknownuts, thanks for the note on warrant.

I do not have much daibochi wb left in my portfolio but more mother shares for long term holding.

What possible news that pushed it to new high today?

aiyo this has to drag on for another 3 weeks to 25th Oct.

No need to waste time on this and better focus on other counters.

Ok got it, thanks.

I was misled by the timeline in the CIMB report.


Posted by iknownuts > Oct 4, 2021 1:07 PM | Report Abuse

https://www.bursamalaysia.com/market_information/announcements/company...

If you accept the offer from scientex via this method, if there are any subsequent increased scientex offer, you will also get the increased price

@iknownuts, are you sure today is the day Scientex first accepts offer from the public?

I reproduce the wordings from CIMB analyst's report dated 14 Sept for reference:

[ Other salient details of Scientex’s takeover offer
Takeover offer lapses in three weeks if no extension granted
 Scientex will get to compulsorily acquire the remaining Daibochi shares it does not have when its ownership in Daibochi reaches 97.2%. Section 222(1) of the Capital Markets and Services Act 2007 (CMSA) permits the offeror to compulsorily buy the target company’s shares it still does not hold once it already has 90% of the shares it did not own prior to the takeover offer.
 The first expiration date to accept Scientex’s offer is 4 Oct 2021, being the 21st day after the notice of the unconditional voluntary takeover offer was first tabled.
 If Scientex wants to extend the offer’s expiration date, it will have to inform Bursa Malaysia by 2 Oct 2021 – or two days before the first expiration date.
However, the takeover offer cannot go past 60 days of the offer date (Friday,
12 Nov 2021).]

However, when I cross check on the Notification from UOB dated 20 Sept, clause 4.5 (a) says that "..the Offer will remain open for acceptance from the Posting Date for a period of not less than 21 days ...".
Clause 4.3 says ".. the Offer will be made in conjunction with the posting of the Offer Document ("Posting Date"), which will not be later than 21 days from the date of this Notice.

Now, I do not know exactly when the Posting Date is set to be. If UOB posted out the Offer Document on 20 Sept, then the Offer shall expire on 11th Oct the earliest. If the Posting Date was set at the 21st day from the Notice, then the Posting Date shall be 11th Oct and the Offer shall expire latest by 25th Oct. Right?


Posted by iknownuts > Oct 4, 2021 1:02 PM | Report Abuse

Adoi pls, dont simply spew misleading info again. Today is the day the offer document goes out la. Means today is also the day scientex first accepts offer from the public

Again, pls post responsibily…

As @observatory pointed out, Daibochi share price is likely to settle higher than the RM2.3-RM2.4 pre-announcement level given Daibochi’s hidden value gets wider recognition now.

As liquidity will be thin after a few more percentage of Daibochi shares have been mopped up by Scientex and funds from the open market, share price volatility will only increase. A bad news would move the share price by 5%-10% easily and a good news would make it surge over 10%-30% in a single day of tradings.

As long as fundamentals have not changed, lower share trading liquidity is not an issue to me as I do not buy in millions. I had success in picking up DKSH below RM3.00 though its free floats are lower than 20% with DKSH parent holding over 75% of this listed entity in Bursa. Patience pays off handsomely by riding on its expansion plan from two years ago by M&A and investments in internal cost optimisation projects.

DKSH announced a good set of results for quarter ended June 2021 and investors chased it high by over 80% in few weeks. Why are funds and investors so upbeat on DKSH? Again, I will resort to cash flows analysis to explain why this is a real gem. DKSH operational cash flows are so strong that it managed to pare down RM100 million of debts with just 6 months of operational cash flows and declare a 10 sen dividend. Its paid-up capital is low at 168 million shares, so its annual operational cash flows could top RM200 million. With minimal ongoing capex, it would be able to declare high dividends once its debts are pared down to manageable levels. With projected EPS of 60 sen and free cash flows above RM1.00 per share, DKSH may declare dividends up to 60 sen a year. For a dividend yield of 7.0%, DKSH may be worth RM8.57. For a dividend yield of 5.0%, DKSH may be worth RM12.00.

Now look back at Daibochi. It has quite similar situation as DKSH:
1) a strong parent with over 60% stakes
2) involved in consumer food & beverage product chain
3) long term business partner to consumer F&B giants like Nestle
4) embarking on expansion plan though organically and potential benefits to be realised in next 2 years
5) has potential to embark on internal cost optimisation projects to improve EBITDA margin with synergy support from Scientex in areas like raw material procurement, factory operational efficiency, inventory optimisation, stronger negotiation power with customers & suppliers
6) strong operating cash flows of 32 sen per share potentially when the 60% capacity expansion plan is successful, and hence potential high dividend payouts for many years to come
7) low liquidity
8) wider recognition of its potential among investment community

In the next few days, Scientex will need to make announcements on how much acceptance it has received for the privatisation offer, including any from the institutional funds.

It is anybody's guess now as to whether Scientex would raise the offer price. Scientex could well walk away with 66%+ stakes and get on with life, and hence there is a real risk for Daibochi share price to fall to RM2.30-2.50 level in short term.

Investors need to consider the potential risk of losing +/-10% capital if not accepting the offer, and balance the risk with potential rewards of holding it for long term.

Today 4th Oct 2021 is the last day to accept the take over offer from Scientex. Given that Scientex did not announce any extension of the offer by 2nd Oct, the current privatisation offer will not be extended so today is the last day to submit your acceptance form to Scientex. I do not know the exact procedure of submission as I do not have any intention to accept the offer, hence do not bother reading the procedure.