This is far from fear, fear is when CPO price drop close to production costs. During the early 2000, CPO price drop close to production cost of RM700 per tonne. Today's production cost, say around RM1500 per tonne? So, no fear as yet. Of course, best time is when CPO drop close to production costs, that comes once every 10-20 years?

At 9.30am, REACH warrants high is 29sen, now is about 20sen. Btw, what is the exercise price?

When other BLUE chips correct and market running out of ideas, IOIPG will be a good alternative, because they have strong cash flow, margin and brand. Hopefully it comes soon.

pick up gradually. One (with good track record) Fund Manager recommended when it was 1.87. The earnings projected is about RM115m in 2016 (with order book in hand). PE is only 3.7x in 2016. Good to buy and hold until it double. For those who bought at 80sen, bravo.

MIDF lowered TP from RM2.90 to RM2.69.

Analyst has never emphasise on the contribution from this deal anyway. The focus is always on contribution and potential from De Centrum and other construction projects. The coming results will determine the potential growth.

I mean blessing in disguise? Getting back in full the RM78m if fully paid? Interesting.

could the termination of the oil and gas deal be a blessing a disguise?

Since late May, OKA sold about 11.5m, and TPY sold in July about 4.5m. Total amount sold by both is about RM32m. Not exactly sure how much TPY and OKA original cost, they hv it since 2012/3, their cost I guess is around RM1.00. So, they make about RM16m PURE PROFIT with a bit of dividend. No major adverse development in fundamental other than adjustment of launching in DeCentrum taking into account the property slowdown and delay in Government projects. Delay in earning streams, perhaps.

@davors, I remember reading somewhere that Protasco has written off its investment in Libya about RM40 million few years ago. Please double check.

IOIPG's land was acquired long time ago, hence, price are low.

Sorry wmliang, Uniten belongs to TNB and IUKL belongs to Protasco. They are 1.9km away from each other. The MRT Line 2, indicates Uniten as one of the station, not sure the how far from IUKL. TeyPorYee, my apology, you are right, you are the expert man!

Uniten, is a university belongs to Protasco, which is on their 100 acres of land.

In near term (one or two years), contribution from oil and gas is insignificant. The main contributor to the growth is De Centrum. MRT Line 2, one of the station is Uniten, smack in the 100 acres land Protasco owned. Upside should be good.

Guessing game is always hard. Why directors sell? What was the intention? Does the fundamental change after the selling? Who bought it? Why someone bought it? Did the MD sell a lot too? Only the seller (intention) and buyer (intention) know, the rest, we can guess whatever we want. We can debate until the cows come home and we will not get the answer. So, do not waste time speculating. Any announcements that effect the fundamental?

Thanks Michael. That part I already know. Do share.

Fund manager said Gadang is a small IJM. It may take a few years before it grows up. It had a about 5300 ha oil palm planted in Sabah, which I think when matured, worth easily RM500mil. But that will takes a few years later. The market cap is only RM433 mil now, all from its constructions biz and sustainable order for a least 3 years. So, accumulate gradually. Buy.

Thanks for sharing and good input. Small world, I use to worked in Mulpha in 1994 in the corporate advisory services division, peak price was RM10 plus. In Mulpha, I have fun the most of my entire career (perhaps I was young) My big boss missed that opportunity to sell above RM10, would have allowed him for early retirement from the ESOS. Well, that is how market works, the learning never stops because the share markets is very dynamics, it changes over the years, sometime we cannot use the same principles to apply on it.

In 1993, there is T+7 and easy to get margin account, that is why the market went crazy. Many of my peers left the market, only few die hard fella like me, taking it as a game.

Nobody can be right in investment all the time. As long as you have 70% win on your side, that will be ok. Hence, once you hold a undervalued stock with potential earnings growth and sustainable, hold on to it tight until it reaches or surpass its intrinsic value. Therefore lately, I do not see many UNDERVALUED stocks with these characteristics other than Protasco and Silk.

Similarly, iCapital.biz has been very selling more than buying and has cash position of RM208 million and only 50% invested. Sadly, it is also selling at about 20% below its NAV for last 5 years or more. Market is very strange, it used to trade above NAV prior to 2008, what change? I will consider iCapital when the share market crashes (i.e. drop 20-50%), because, as normal investor behaviour, they will panic and run out of idea to invest, so, where else is a better place than our friend iCapital. I also notice, during 2008 crisis, plantation stocks barely drop.

I have read many articles saying the real economy is currently DIVORCED from the financial paper market. One observation I made is, GDP of Malaysia grow about 4.75% p.a. compounding over last 8 years, however, KLCI has went up 11% p.a. compounding over the same 8 years. Now, logically this is quite a big gap, but LIQUIDITY is one of the main issue causing this DIVORCE. You can say that LIQUIDITY is the mistresses that some hubbies are sleeping with until the affair is known by their wives and in financial terms, we called it CRISIS

Problem about this is, like LIQUIDITY, sometimes the wives just let it be until they cannot tolerate it anymore, CRISIS will come. This phenomena is very obvious, it is a matter of time before the volcano erupts. Therefore, always keep some special funds aside to take opportunity or hedge it now, and increase your hedge (short the market) over the next few years.

Btw, I am not here to send fear into investors, because I am substantially invested as well, but I do hedge.

Protasco should consider a 1 for 1 bonus issue while the market still take it positively. It will be a good time to do it as the earnings is growing at double digits. Share holders likes stocks just below RM1.00. The distorted mentality is, it is cheap and it works all the time.

Once the price it up, what Protasco can do is just to deliver the results and surplus its own projections and the market will love this stocks. Just like how Sunrise previously done it, most launches allow owner to make 20% capital gain upon completion, the, the company will have loyal customers, grab up any launches without much questions. Same rule apply to stock. Give some sweeteners to the investors, more will come to support.

Its not easy to find a counter that can give you 15-20% p.a. for 8 years or more. I believe, Protasco can do that for the next 3-4 years unless it double faster than that.

Another good opportunity to accumulate. Hopefully this is not the last opportunity. At this price, dividend yield about 5% exclude the free warrant. Analyst expect an earning surge of 40% for 2014. Post 2014, we can expect 15% growth as well. Lets monitor their results.

I look at CBIP as EXISTING BUSINESS (whatever it has up to 2013) and NEW POTENTIAL BUSINESS. Its existing business is doing well with double digit growth, mainly the downstream of palm oil biz. The NEW POTENTIAL BUSINESS is the upstream, cultivation of palm oil. But this is a very slow and long term biz. You may even want to wait a few years, until they have announced they have planted 30,000 ha before you buy this counter. At the moment, they planted only 6000 ha, another 4 years to go.

So, if you buy know, your focus will be on the EXISTING BUSINESS. So you have to evaluate the growth potential. As for the NEW POTENTIAL BUSINESS, if you like it, you can enter in 3-4 years time, it is going to be quite huge. So, during this 3-4 years time, if the CPO price is below say RM2300 per tonne, I believe you can accumulate safely, the growth of this palm oil will almost look exactly like TSH Resources today, 20% growth in CPO production for the following 3-5 years. TSH has grown from RM1.0b to RM2.5b in 2-3 years, share price from RM1.50 (2011) to today, RM3.50.

My experience of switching from one good counter to another better counter is not easy. What is the probability of selling a good counter at the right time and buying another better one at the right time.

The probability is low. Most of the time, people who exited will not reenter the same counter (they thought they got the best price earlier), and when the counter goes up higher than their earlier sale price, they will leave it alone, and this counter will continue to go higher and higher and significantly in the next 3-6 months, then only they realise, they missed the boat. That is my experience, hope it does not happen to others (especially selling a good counter which is not fully value yet, unless he think otherwise)

For those who bought in Jan 2013, the price is RM1.00. Dividend up to 30 June 2014 (is about 15sen) and today's price is RM1.96. Total gain in 18 months = dividend gain + capital gain = 15% + 96% = 111% in 18 months.

So, the question is say at RM1.96, over the next 18 months, can it goes up another 100%? I believe it can double to RM3.92 in 36 months, not including the dividend p.a. of about 5% p.a., so giving you a CAGR of 24% (exclude dividend).

Even if it takes 4 years, the CAGR is about 18% p.a. and if you include dividend, the average CAGR is 23%. Worst case, if it takes 5 years, you will get 19% p.a. (including dividend).

At the moment, the market cap is about RM650m, it will not be difficult for it to double when you can expect average earning growth of about 20% p.a. over next 3-4 years.

interesting, RHB expects earnings to improved by 43% in FY2014 or RM69m (2013 earnings is RM48). That is quite impressive. If it continue to grow around 15-20% from 2014, it will reach RM100m by 2016 and the market cap should be at least RM1.2bil.

Is the latest announcement on the QA negative or positive to SONA. Based on the "lack of detail", the SONA share price is punished by heavy selling from 60 sen to 48 sen in a week.

So, it is conclusive SONA got a bad deal? Well, until the detail SPA is announced, investors/traders tend to be on conservative side. Anyway, is there value in the acquisition? Surely the BOD has evaluated the project or proper due diligence has been made before signing the finalised agreement. The investment involved is RM900 plus million, and if the BOD make a mistake, it will be detrimental to SONA and the management "reputation". So the question is, if you are the management, would you make want to make that mistake? Of course not!

So, at 48sen, is it a bargain? Well, to me, how much confidence we have with the BOD and management, if we do not have that, we should not invest in SONA at whatsoever price, I guess.

Besides water, highway and electricity, hmm… there are other industries such as auto, air transport, ports, education, construction, property, banks, central bank (forex), immigration, sugar, rice, media, plantation. Surely I have missed out on something!

At today's price, it is a good bargain. This has not include the free warrant (1:10) and year end another dividend. The MD expect earning growth of 15%. It is a conservative figure, the sale of property in Bangi is great. SOLD OUT!

Disposal of toll
1. SILK HOLDING no longer need to consolidate the losses on toll (say RM11m)
2. GAIN on reinvestment of RM395m

Catalyst 1

At the moment, generally investors are not very optimistic about property market. However, Protasco has advantages, it bought the land (in Bangi) at a very cheap price and fully paid (provide good margin) and the price had moved up due to MRT Line 2 proposal.

It is a long term project i.e. 10-20 years, and the speed of the development is under Protasco's control (another advantage) and they are in construction biz as well, another advantage.

Hence, it is a potential for Protasco, at the moment, analyst give it a value of RM400m (20% discount of RNAV of RM500m). I believe there is still upside as years goes by when the MRT line 2 construction is ongoing.

Plus land in Johor, yet to announce anything (land fully paid) + JV for property development in Cyberjaya.

Catalyst 2

The full potential of the Oil and Gas sector's value is not included in the analyst report. MIDF only gives it a value of RM4.9m. The upside is there, need to review it regularly. Profits is guaranteed, downside is limited.

Catalyst 3

Major road maintenance contract coming up soon, in Borneo and P. Malaysia (up to RM1.7bil). Yet to be included in the projections.

CONCLUSION

All the above improve its intrinsic value over the next few years, while maintaining its road maintenance biz and growing as well. Upside of >50% is possible over next 2-3 years.

I did a comparison between Pintaras Jaya vs Protasco (both construction related), both market capitalisation today is RM700m. Average earning p.a. based on last 10 years RM23.8m (Pin) vs RM35.2m (Pro).

Share price comparison from 2009 to 2014 (highest) 1.15 to 6.28 = 5.5x (Pin) and 0.80 to 2.10 = 2.6x (Pro).

Pin shareholders did a lot better than Protasco shareholders since 2009 to 2014 because the share price has went up to about 5.5x vs 2.6x. Dividend yield for both companies, average p.a. based on last 10 years is 6.8%(Pin) vs 7.5% (Pro).

With potential earnings growth for Protasco, lets see if it could catch up with Pintaras in the next few years. Of course, this is not the best comparison (not exact same biz). For Pro to catch up to 5.5x, the share price should touch about RM4.40 per share. If their earnings can goes up to RM120-140m p.a. next 3 to 4 years, I believe it is very possible. At 2.05 today, potential upside is still there.

To thecall, thanks, I have read that, the comments are too general. I will wait for the finalised SPA to look at the detail impact on earnings, NTA per share as well as any changes in shareholdings and gearing.

Anyone has the latest analyst report on SILK after the announcement of disposal of toll road? Care to share?

The government spend RM7.2billion on consultant for the education blueprint that cannot be executed (instead of and entered into a RM6 billion computer contract for students in all schools which is not functioning effectively or not working at all. Such a wastage. NEP has been replaced by a whopping allocation of RM31billion to a new Bumiputra economic power plan. The last I check Malaysia comprised of about 65% bumi and 35% no-bumi. Can the government be transparent about the scholarship given out, how much and how many to bumi and non-bumi for past 10 years. Is this a secret? Are we really that equitable? Can we list down how many ministers/deputy ministers send their kids to local tertiary education?

i believe the correct question to ask is, even we do not have any shares before today, is the stocks UNDERVALUE and has a sustainable growth and a reasonable potential gain.

I hv written quite a bit on this stock (@manutdchampion - please read my dashboard). It depends on your target return p.a. If it is within your target, then it is worth adding. The average dividend yield at RM2.10, say each year is 10-12sen, next 3 years, you will get about 15%. How much do you expect in capital gain? Say for 3 years, you expect about 10% p.a., next June 2015, say you get 2.31 and June 2016 you get 2.53 and by June 2017 you get 2.88, your CAGR is average about 15% p.a.

So, do you think it can achieve RM2.88 in 3 years. (MIDF target price of RM2.90 in a year). So, your expectation is very conservative. I personally like to average up, especially more good news that can translate into new earnings. Of course, we need to monitor it if they can achieve what they set out to do regularly.

Error in typo, dividend yield 7.6% + 9.5% = 17.1% + capital gain of 21% = total 38% in 2 years (not 28%).

Should we continue to accumulate at 2.10 if we think Protasco can achieve RM2.90 in 2 years time, i.e. 30.6.2016? 38% for 2 years of investment, I think it is good. MIDF gives a conservative target price of RM2.90. I believe, with 2 years horizon, it should worth about RM2.90 to RM3.30, not including any new development that can add in NEW/ADDITIONAL earnings.

With 6 sen and 1 free warrant (for every 10 shares), and another expected dividend by Dec, say another 6 sen, assuming each warrant worth 40sen, or each share get 4sen, total dividend by end of 2014 is 16sen divided by today's price, 210sen, a net yield of 7.6%.

Let's say 2015 and 2016 you get dividend of 20sen, another 9.5%. You only need the share price to go up another 21% to make a total of 28%. So, if the share price goes to RM2.54 in two years time, it is a home run.

In short, RM2.10 it is still great value to it. (Some got it few years back, at 90sen, some at 165sen, some 190sen). So, is 210sen still a bargain? I believe so.

The market has not rerate Protasco based on its Property and O&G potential. That could double its market cap. when the results materialised.

Average SILK's oil and gas sector, the PBT is about RM40m (19 vessels for FY2013).

For FY 2014, additional earnings from:

a) SILK bought 49% in 4 OSVs and add 2 more OSVs to become 21 vessels.

b) Sale of SILK for RM400m cash, can bring in earnings if used to repay debt, and

c) sale of equity in SILK Highway SB, losses from the toll is also no longer need to be consolidated (FY2013 is about RM16m).

So far, analysts have not work out the new earnings based on the above, it could be very significant. Using Perdana and Alam, PE of 13 and 12x, or market cap of RM1.4b and RM1.2b, I believe SILK can go above RM1.0b to RM1.2b.

Thanks wmliang. It is good news, the SOHO & Residences are sold out during this trying times for property markets. Once the MRT line 2 is officially announced, next launch will be better.

MIB wrote an article on SILK in The Edge this week. However, I believe, the fair value of this company should be around RM1.20 to RM1.50. Earnings from OSVs and savings from interest expenses, should have a recurring earnings of more than RM80m in the next 2-3 years.

Upside for this stocks:

1. Oil and gas, better than expected (of course it can goes both ways, but it is guaranteed)
2. JV with Nextnation - RM400m development in Cyberjaya
3. Potential development in Iskandar (land bought lately)
4. De Centrum (major project RM10bil - takes 10-20 years), at the moment, contribution from property development is less than 20%.
5. Construction projects in hand RM700m, includes RM500m for low cost housing development
6. Increasing road maintenance projects (projected), which at the moment contribute 70%.
7. Land revaluation upward due to MRT Line 2 station near Uniten.

Director bought about RM3m at RM1.94 lately (although not important).

Just a quick check on Wellcall and Presbhd, the PE is more than 10x. Both have done the bonus issue (i believe).

1. SILK Holdings Berhad is selling 100% equity of SILK Sdn Bhd for RM398m. One assumption is that, in the SILK Sdn Bhd, all loans are included. However, bear in mind, SILK Holdings Berhad also has ICULS issued, that may be dilute the shareholding of SILK Holding Berhad. (take note)

2. The acquisition of 4 OSVs of 49% definitely is a good deal.

Correction, toll has 23 year remaining. Analyst used discounting rate of 9.2% to derive NPV of RM389m. Should wait for the finalised SPA to reevaluate the position. Until then, 90sen, is still undervalued. Analyst mentioned, majority of the OSVs are contracted for long term (5 years), some 3 years. Hence, profits for next 2-3 years is sustainable.

OSV biz remain = say around RM350m, the only different, earlier, the analyst gives a NPV value of the Silk of about RM400m. Now, if the sale is completed, instead of holding a cash flow that eventually gives an NPV of RM400m (over the next 27 years), it got the NPV cash today. So, SILK Holding will not enjoy the slow incremental net cash flow for next 30 years.

Original
OSV biz + Toll biz = 350 + 400 = 750

Revised
OSV biz + CASH = 350 + 400 = 750

So, actually the question here is, it it better to hold a toll road (slow net inflow for next 27 years) or hold CASH.

If CASH,
a. Say they pay back a loan of 8.0% p.a., the additional earnings before tax will be about RM32m.

b. If, the company used the cash to invest in OSV or other biz that gives a return of >12% p.a., then, of course, this alternative is better.

So, the question is what are they going to use the extra cash for. We will need to review the finalised SPA. At this point of time, the valuation remain at about RM750m and the market cap it only RM440m, upside of 70% or value at about RM1.30-1.50. Maintain buy.

On Silk, I was writing about it when it was around 60sen. Today it is about 91sen.

Prices and fundamentals do not react in linear way. That is why we have some stocks which are undervalued. Looking at its gearing, Silk is under pressure to clear its current liabilities, after it spends about RM140m buying new OSVs and increasing its equity in some of the OSVs. Their cash position is unable to clear the current outstanding loan of RM149m.

So, interesting, lets see what happen tomorrow.

1Q profit is up 116% from RM4.9m to RM10.6m. Management expected better result this year. Last day for dividend of 6sen is 27 June 2014, another month to go. The company has spend about RM72m for the oil and gas in Indonesia and another RM31m in a new piece of land for development.

However, management has in April, conservatively expecting the earnings growth of 15% for 2014. Chances are good they can exceed that. Actually one analyst expect it to double in 3 years time (including 2014).

Price seems to stagnant for about a month, closing at RM1.95.

Few catalysts that will materialise (bring in additional earnings):
1. Oil and gas new earnings
2. Construction for government housing RM580m contract
3. DeCentrum progressing well