i hope our government is now aware that malaysia is in the crosshair of the usa-china geopolitic confrontation!

Malaysia is right at melaka straits, THE central chokepoint for shipping between west and east. Malaysia is crucial to USA's efforts to contain China. That's what these attacks on Malaysia's top companies are all about - TO PRESSURE MALAYSIA TO SIDE WITH USA'S GAMEPLAN TO CONTAIN CHINA!!

BY THE WAY, IF ITS TRUE 8.4BIL,DO YOU THINK IT IS A PROUD THING TO SHOW ,FOR SUCH HIGH DEBTS COMPANY? EVEN WORST A CONMAN COMPANY THAT ALLIES WITH SCAMMERS @ greatinvestor

While the figure is still high, the trend is obvious - it is being reduced at roughly 700-800m per year.
Armada is a going-concern business.
Adding back the one-off impairment charges, underlying profits for 2019 is actually RM280m or 4.8sen EPS

@nicholas

Don't mislead investors here with your statement that debts has increased further.

In fact, net debt has been REDUCED by almost 800 million from 9.2B as at end-2018 to 8.4B now

@mikekim

Re. your earnings estimate of RM90m for Q4, I agree. And I would like to add one point to that:

Annualise, that implies RM360m profits, but analysts' reports are putting in only average RM350m profit for 2020.
With OSV division recovering, better Kraken contributions and lower finance costs as borrowings got pared down, I won't be surprised 2020 earnings will come in closer to RM400m.
This suggest 6.8sen EPS and roughly 70-80 sen target price based on PE of 10-12x.

https://www.offshore-mag.com/field-development/article/14074747/new-offshore-investment-cycle-emerging

Above article shows that offshore investment is embarking on a new up-cycle.

This bodes well for Armada's OSV division from this year on. And after repairing its finances in 1-2 years' time, Armada can then bid more aggressively for new FPSO projects for future growth.

All in, Armada can only get better!

Investsuccess,

What's so funny?

EPF buying..... Maybe a deal is being discussed?

One easy way for Armada to alleviate its liquidity problem and boost investor confidence is:

Issue a RM 1 billion convertible bond to EPF, at, say, 5% coupon, and convertible only on the fifth year at 35 sen a share.

EPF gets a 5% yield yearly, and reap capital gains 5 years later when Armada should be out of the woods by then. A win-win .

To be fair, Armada should also issue free 5-year warrants, exerciseable at 35 sen, to all shareholders.

EPF buying..... Maybe a deal is being discussed?

One easy way for Armada to alleviate its liquidity problem and boost investor confidence is:

Issue a RM 1 billion convertible bond to EPF, at, say, 5% coupon, and convertible only on the fifth year at 35 sen a share.

EPF gets a 5% yield yearly, and reap capital gains 5 years later when Armada should be out of the woods by then. A win-win .

To be fair, Armada should also issue free 5-year warrants, exerciseable at 35 sen, to all shareholders.

@chilting,

Thanks for the heads up on Armada kraken production flows.

Teoct,

What's the anasuria vendor tax rate when prices exceed USD75?

Well, I believe Kraken is the last piece of the puzzle which will pave the way for BA to refinance its overall loan structure, thus alleviating a liquidity crunch.

Olembendo's acceptance was positive, BUT lurking behind that milestone then were Kraken's problems.

@shpok Final acceptance is VERY important because

1. They will get their full charter rate compared to (probably) 70% of full rate now.
2. They can reclassify their short term loans on Kraken FPSO to long term lease.
With this, they can start negotiating to refinance their other loans to a longer term structure, thus alleviating their liquidity problem.

Based on observed tanker movements into the Kraken oilfield lately, the implied production rate is roughly 40,000 bpd. This compared to 29k in May and 33k in June. So there is clear ongoing improvements in production at Kraken FPSO.

Results are bad, but worst is over.. because Kraken new agreement signed which pave the way for Final Acceptance

@stock kingdom

Thanks for the link to find chicken prices.
But, how to access the website to get other prices? Like eggs?
Thanks

@mikekim

Read your posts and impressed with your depth of analysis and resourcefulness in getting relevent info from the internet.

Lately I have been reading Enquest's chat forum and the info I gleaned there is that tanker loadings at kraken is getting more frequent and of bigger capacities. Some of the chatters there are speculating that from the movement of tankers, kraken could possibly be doing 40k barrels per day, up from 30+k bpd in 1st and 2nd quarters.

However, full capacity of 50k bpd will have to wait until DC4 is hooked up, which could happen soon apparently (fingers crossed!)

So don't set yourself a september dateline... the final acceptance might only happen in October!

@anthem... you are right that he's a Malaysian. My bad.

But the crucial point, to me, are -

1. He had held his shares since 2012 and his cost is 62.5 sen. He is unlikely to sell below 80 sen unless he is suddenly in dire financial position.

2. he probably has less than 60m shares by now. And even if he wants to sell everything, the market should be able to absorb it easily over 2-3 weeks

3. He is not a director or insider.

4. His intention to sell lately is probably known to Hibiscus operator(s), thus the subdue price performance while they gradually absorb his selling.

MOST IMPORTANTLY,

1. oil prices are firm and some people are saying it will rise further through the year as higher demand will offset rising US shale production.

2. Hibiscus, with the Sabah concession added in, will see rising production in the next 2-3 years, just in time to catch the uptrend in oil prices.

SHARE DISPOSAL BY ZULKEFLI ABDAH

This guy is Middle-eastern, and got into Hibiscus during its IPO in 2011 at RM 0.75 a share. After converting his entitled warrants at RM 0.50 a share in 2014, he ended up with 94m shares at average RM 0.625.

Did some minor add-ons in the interim, and only started selling in earnest since March this year.

Per the latest announcement, he would have reduced his holdings to 70m shares as at yesterday.

Based on today's volume, I wouldn't be surprised he sold more shares today, maybe another 10-15m, leaving 55-60m .

@nikicheong

The interest costs is most likely based on FULL costing, Here's why:

1. Interest expense rose quickly from RM64m in Q1 to RM133m in Q3 as FPSOs are brought into production

2. It is the normal conventional accounting treatment for production assets

3. At RM 133m per quarter, the interest expense implies a 4.3% p.a. rate on Armada's gross loan of RM 12 bn. This ties in with Armada's weighted cost of funds of circa. 4%

Based on last 5 years' record, 3rdQ results should be out this week, most likely wed or thurs

@harlem... We have concentrated on coke but overlook the IMPORTANCE of Huaan by-products.......

Great job harlem! Continue to post information you glean from the chinese press/websites and post /interprete them here. This helps us who are not chineses-educated.

Very good results, but what I like most is this statement by the company to the effect that ---

1) China govt is strictly enforcing anti-pollution policies, thereby mothballing old, polluting steel plants
2) Above result in a better supply-demand balance in the industry, with a more sustainable margin all round
3) Huaan is a beneficiary of the above trends because its plants are compliant with the new pollution standards

First time in a long while, Huaan sounded in a positive note:-
".... The above situation augurs well for those subsisting and compliant plants (such as ours) as operating environment .... improve.... and favourable in the years to come"

My interpretation: the turnaround witnessed in the last 2 quarters is SUSTAINABLE!!

EPF shareholdings:

Since early this month, EPF has been consistently buying Armada, raising its stake by 10m shares to 342m shares or 5.8% now, over roughly 13 trading days.

Historically, EPF held a peak 8-9% of Armada during 2014-2015.
Subsequently it pared its stake down in 2016 until it reached its nadir in early 2017 at just below 5% as bad news engulfed Armada.

Here is my HOPE - EPF will gradually build up its stake back to 8-9% as Armada's operations stabilise and start embarking on growth, albeit in a slow, gradual manner (due to a stretched balance sheet and only moderate industry conditions) under the new management

To achieve a 9% stake, EPF will have to buy a further 176m shares.!

JUST MY HOPE & WISH!

cth0712,

2200 is the physical spot price whereas 1982 is the Oct '17 futures price.

The futures price that we normally see on Dalian Futures Exchange is the active Jan2018 futures price which stood at RMB 1921 yesterday, but rose today to 1945, up 24.

As for Huaan's business, the critical price is the difference in coke and coal pricing. The differential, while off its highs of 900++, is still at a lucrative 800 roughly.

Based on my studies, Q1 and Q2 price differential were roughly 450 and 600 respectively.
Q3 is likely to average 800.

This suggest Q3 profits will most likely surpass Q2 figures.

Hopefully, Huaan has locked in the lucrative price differential available in the futures market recently for its Q4 production as well, thus ensuring very good Q4 profits too!!

dompeilee..... even if they didn't lock in the futures differential, it is almost certain 3rd results will be better than 2nd quarter.

I am just hoping they locked in the RMB 900+ margin for their 4th quarter production as well.

Then full year profits may come in at RM80+ million or EPS of 7 sen minimum.

PE of 7x, will give target price of around 50 sen!!

I hope Huaan fully utilise the opportunity in the futures markets to lock in the RMB 900+ differential in coke and coal prices for their 3rd and 4th quarter sales.

Then we are assured that the company will report bumper profits in at least the next 2 quarters!!

Lukesharewalker Basically it's the forward earnings, look at GenM for example .......

Totally agree. While analysts' earnings projections for FY2017 range from RM200-400m , for next year they are in the range of RM400-700m.
Using the average of the above range, this year's EPS is 5.1, rising to 9.4 sen next year.

nikicheong Walao I just read the Maybank report for Q2 2017. Not sure what to think of it.

Niki,

I believe the Maybank analyst has omitted the 30% tax on the one-off RM85m profits. Thus, taking this tax effect into account, the CORE proift would have been RM60m - still a slightly disappointing figure.

The main culprit was a very much higher interest expense as previously capitalised costs are expensed now

Serena717 ----- Target Price set by brokers are normally for a 12 month period.

http://www.theedgemarkets.com/article/improved-2h-results-expected-lotte-chemical-titan

Above link will direct to a report by TA Securities.
Target Price now reduced to RM6.88.... still representing 56% upside.

probability no its not sustainable as the refining margins is increasing..
12/07/2017 18:53

Prob... Assuming it's not sustainable... it's a bit mischievous of Icon8888 to annualise Q1 2017 earnings, and come out with a headline "...1.5x PER...", isn't it?

A word of caution: Are the last two quarters' profits sustainable?

I suspect earnings were boosted by inventory profits during a period of rising crude oil prices.
The coming quarter's earnings will be crucial given it coincide with falling oil prices.

Technical charts are useful as a GUIDE to short term price movements, IF interpreted correctly.
The problem is there are too many TA practitioners who talk like experts and gave TA a bad reputation.

My 2 sen worth.

Joshua,

CIMB has a target price of 92 sen, based on conservatve assumptions.

But it also put out Sum-of-Parts valuation of ranging from 1.00 to 1.20 (roughly) under more optimistic scenarios.

In CIMB's latest report, they made the following forecast for BA:

FY 2017 Earnings RM 340m EPS 5.8 sen
FY 2018 Earnings RM 891m EPS 15.2 sen
FY 2019 Earnings RM 743m EPS 12.6 sen

Their estimates would represent 50-80% higher than most of the existing forecasts put out by the other brokers.

Would the other brokers reassess their own estimates? Will this start a re-rating process?

Thanks SHEEP. Your info were most helpful.

Despite the fact that supplementary payments for the Kraken delay will stretch for a longer period than I anticipated, it does not detract the fact that:

New revenue streams will more than offset them such that BA will still likely show strong earnings increment in future quarters.

To put these payments in perspective, they amount to only US$65m over two years against a total Kraken revenue stream of US$1400m over 8 years.

Hello SHEEP:

I went to look at the Sep 22, 2016 postings in BA, but I couldn't find the above post. Where can I find the source info? Thanks in advance.

Most analysts are lukewarm on the results., a case of once bitten twice shy -many of them had over-estimated BA's earnings previously.

However, based on 1st quarter report, the operating earnings should have been roughly RM65m , after netting off exceptional items.

Further, earnings were also exceptionally depressed by additional payments for the Kraken delay.

Hence, I am convinced that most analysts are now under-estimating the turnaround in BA's potential.

Like earlier said by fellow investors here, a short term catalyst for re-rating BA would be confirmation of 1st oil by Kraken, which is just 3-4 weeks away.

I am a buyer at these levels...

Nikicheong... on your "holding company discount" question:

Currently the market is putting a zero value on AA's interests in Philippines and indonesia.

So by listing them, some market value will surface, even after discounting these values at the holding company level.

Mycron is unfairly sold down because of the collapse in long-steel companies such as annjoo, lionind and ssteel on the back of possibility that anti-dumping duties may not be extended beyond April for long-steel products.

However Mycron is into flat steel which anti-dumping duties is already confirmed to be effective for 5 years to 2021.

So this sell down is an opportunity to buy.

NIGEL LOW, I am with you!!

I suspect KYY is quietly reducing his holdings in liihen in the past 2 months to cater for his jaks purchases. Hopefully he has substantially completed this exercise give that he can't further buy too much of jaks now.

VG and R3, both of you have contributed immensely to this forum over the past couple of weeks.

R3 - by highlighting the potential risks inherent in an airline business in general and in AA in particular.

VG- by clarifying and rebutting most of those highlighted risks with solid data.

Overall, at current prices, I believe AA is worth the risk.

Thank you guys and a profitable 2017 to all!

VG, great clarification on today's Star article.

With capacity yield closed to 90%, some expansion by AA is inevitable. Coinciding with competitors' aggressive expansion, we will see yields deteriorating from 2nd half 2017 thru 1st half 2018, across the ASEAN space.

However, I believe the market has already substantially discounted this scenario with AA now trading on 5x 2016 earnings.

Assuming a 30% downturn its its 2017 EPS, then AA is trading on 6.5x PE, still very cheap.

An added bonus is the potential sale of AAC and the resultant special dividends which some analysts speculate could amount to 90sen a share.

icon, if you are still holding airasia, then you would have broken the golden rule!
Based on most analyst projections, AA will report lower earnings next year, albeit from a very high 2016 profit base.

At this price maximum paper loss is 13 sen (50% correction level), but upside is 130 sen (target 3.60 comprising 90sen special dividend and 9x 2017 fully diluted EPS of 30 sen.

Starperformer is talking about the past and present situation (2014-2016 for Hevea) and Dolly is talking about the future (2017- 2018 for evergreen).

Both are right in their own way.

BUT, stockmarket looks to the future......

Therefore, Evergreen must execute well their transformation in order to justify Dolly's (and mine too, hehe) faith in Evergreen's shares.

A good assessment, and I suspect, a true reflection, of the underlying circumstances of what transpired during Mycron's recent whack-down.

The next question is - WHO was buying during the whack-down. Hmmmm.....

Good job, buddy.

densim.

It's highly unlikely megasteel will be able to get a white knight. Here's why -

1. Its plant is not competitive due to high electricity costs
2. Tenaga unlikely to lower its electricity price to just one customer.
3. The government must have done a thorough investigation in rejecting megasteel's request for more protection. It is unlikely to reverse its decision, especially if the new owner is a foreigner.

hewiester,

play smart. sell on the way up and don't look back.

Lien....but what is the point of profits if minorities cannot share in it?
07/12/2016 19:44 -

Stockman - I noticed you are a CSC supporter. I actually own both counters.

However, given Mycron's greater price correction, it is now trading at a substantial discount to CSC, and therefore present an equally compelling buy opportunity.