http://www.intellecpoint.com/2020/06/why-are-some-highways-are-less.html

To get some perspective, PLUS revenue in 2010 was 3.3bil, gross profit was 2.3bil, servicing 750m interest expense p.a.

My estimation for WCE is at least 1/4-1/3 of these figures. What is 250m interest expense to them?
As at latest quarter ended 31/12/2022, their cash and equivalent was 580m, GSL credit line left with about 100m, term loan credit line left with about 100m also, of course expecting more dilution from RCPS and RUMS etc to get addtional cash if needed, and slight help from 4 opened section of toll. I think right issue is not needed looking at rate of cash flow drain.

https://tradingeconomics.com/malaysia/government-bond-yield

here are some indications on MGS interest rate.

should look at MNRB 10 years+ chart. Its biz is quite cyclical. Their dividend is not as high though. At current price of 1.42 we are not sure which part of cycle it is in now. (similar to Hengyuan).

Btw i will KIV Allianz as i feel uncomfortable on life insurers as they are holding alot of government&corporate bonds. The bond market at current stage look risky to me. It may hurt their investment portfolio in near term.

Hi yuwen, thank you. Appreciate it. Good to know that the profit from life insurance wont be significant in initial years but it will snowball on multiple years.

Hi Pinky, it already show some small success on motor insurance biz, hope can replicate on more profitable fire insurance biz.

“ The group was one of the panel of insurers for Pos Malaysia (Pos) until the execution of a new agreement in October 2019. The agreement now places Allianz as the preferred insurer for Pos. This is a step-up in collaboration compared to other competitors that remain on the panel of insurers for Pos. The new arrangement has bolstered the premium growth for general insurance in 6M20 which beat the industry’s with a contribution of RM90mil (circa 8.0%) to AGIC’s total GWP of RM1.14bil.

The increase in premiums was a significant improvement over 6M19’s RM20mil generated through Pos. Close to 100% of the premiums are motor insurance with private cars and motorcycles owners renewing their insurance under Allianz.
Presently, the mix of motor insurance through Pos is made up of 70–80% private cars and 20–30% motorcycles. The types of motor insurance offered through Pos include: i) comprehensive; ii) third-party fire and theft; and iii) third- party insurance.
Moving forward, the group plans to expand the insurance products sold through Pos to include non-motor. We see this as an opportunity for AGIC to further increase its growth in premiums in the future, thus sustaining a higher growth in GWP over the industry.“

Source:
https://www.amequities.com.my/documents/20126/0/Allianz+Malaysia+201001.pdf/df686fc9-78f4-cb96-4166-bf87ed8f39a7?t=1601514203447

Thanks for the info. I am not industry practitioner so i can only read and scuttlebutt surface info from here and there hehe. Always get confused by life insurance terms. Hope the premium growth slow down is short term event and they can catch up after mco lifted.

can i understand NBV as the portion of fund belongs to insurers? excluding life fund belongs to policyholders?

You are welcomed.

btw there are few bad things i observed from Allianz
1) The ICPS thingy. They always get 1.2x dividend compared to ordinary shareholders..
2) I have not much clue about the performance of their non-motor general insurance. Seems like not their focus. I can foresee fire class biz is not easy to expand nowadays as many their takaful/conventional competitors have strong bank partners.
3) Their life insurance market share shrink quite noticebly during mco year 2020. Also their ILP plan premium growth is below industry benchmark. Not sure is due to their fund is underperforming or their agent prefer to sell traditional plan or other factors.

Hi sorry to confuse you. What i meant is motor class was notoriously unprofitable biz for insurers. But most insurers cannot letgo motor portfolio because it is still the biggest segment in General insurance industry. (Perhaps only LPI able to selectively underwrite motor policies cox they having biggest fire class biz in Malaysia thanks to their parent :) ). So even though it may be underwriting loss from motor class, but since cash are collected upfront, insurers can earn investment income from the float and hope it can recoup the losses after accounted for all losses many years later. Also they can do cross selling for fire class biz so that fire insurance can cross subsidies motor insurance.

I suggest you to read up on agm minutes from year 2016 onwards, many good info right there;
https://www.allianz.com.my/investor-updates

for example,
On 130% minimum Capital Adequacy Ratio, life insurer prefer ILP plan (over traditional plan) as it is less capital intensive and manageable margin (it is like PDP vs Turnkey contractor in construction industry); (page 6, 2016 agm q&a)
https://www.allianz.com.my/documents/144671/271262/42nd+Annual+General+Meeting+Minutes+2016.pdf/150dc0c2-e6db-4598-b7e6-33da0850aa05

On motor class biz profitability; (page 9, 2018 agm q&a)
https://www.allianz.com.my/documents/144671/221983/44th+AGM+Minutes.pdf/27b1eea7-8abd-41d4-8e89-1e11c021359b

On potential impact from motor detariffication; (page 2,3, 2017 agm q&a)
https://www.allianz.com.my/documents/144671/279668/43rd+Annual+General+Meeting+Minutes+2017.pdf/ba2305b2-de1b-49e4-9c20-f132fdee8b51

Some info on the general insurance in Malaysia here;
https://faberconsulting.ch/files/faber/pdf-pulse-reports/MIH_2019_Final_Web_version.pdf

To cut long story short, why i am positive on Allianz over LPI;
1) as yuwei mentioned on the potential of life insurance (malaysia life insurance penetration is only 45-54%, still got many room to grow), and also the growth potentials from insurance fund spread etc..
2) I see improving claim ratio from motor class post motor detariffication (Allianz is biggest player in Malaysia),based on their 2019 onwards claim ratio and industry player opinions. Also helped by less motor claims in 2020, 2021 mcos. Why? before detariffcation motor class was notoriously lossmaking. If being the biggest player wont benefit how those smaller players survive on further motor tariff decline :)
3) Fire class insurance yet to go detariffication. So i foresee fire insurance wont be as profitable as before post fire detariffication. In my view negative for LPI long term though impact maybe limited as their stickiness to the loan profile.

https://www.theedgemarkets.com/article/newsbreak-bank-negara-extends-timeline-fire-insurance-detariffication

Just an idea on how bad the loss ratio of motor insurance in Malaysia in 2016,2017.
https://www.bnm.gov.my/documents/20124/761688/BNM_Periodic+Updates+on+Development+of+Liberalisation+of+The+Motor+Tariff_March_2018.pdf/3ca0a0c0-0718-777d-f530-9d2acba30c60?t=1580976245828

Hi i think you need to understand the nature of general insurance business is different with life insurance biz.

Allianz is life+general (mainly motor)
LPI is general only (mainly fire)
MNRB is takaful+general(mainly reinsurance)

To put it simple, general insurance is different with life insurance in these few aspects;
1) general insurance has to account for unearned premium.
2) general insurance claims is different from life insurance as their claims amount are not specified in exact amount but based on damage while in life insurance you will get fixed sum assured.
3) it is harder to predict property/casualty claims. For example just refer to MNRB losses few years back when there was Thailand flood/Kuantan flood etc, or MH370 plane insurance etc.
4) in general insurance, there is something called IBNR (Incurred but not reported), and it takes many years to established the exact claim amount. Just refer to Allianz annual report 2019 note 39.2. They still need to account for claims liabilities for policies underwritten in year 2012 (up to 7 years). But insurance co. no longer receive premium from policies in 2012.

So i think it is normal for general insurance to have strong financials and needs more equities. But why some insurance co. still like motor insurance biz? Because of the cash flow.

When i heard “this time is different”, it is time to walkaway.

lol.. still projecting profits >2bil after 2021? Seems like some people forget topglove annual profit was less than 500mil before pandemic.

Jtiasa will give you best return on CPO run. Good company doesnt mean good return as it could already priced in.

This quarter cant tell anything meaningful as some sessions just opened, some sessions going to open next quarter, half of the quarter no interstate travel due to MCO, limited construction/property activities during MCO etc

Do expect Q3,Q4 2020 got much higher interest expenses as more sessions are opening.

"The WCE Project is divided into 11 sections of which Section 8 (Hutan Melintang - Teluk Intan) opened for traffic on 31 May 2019 followed by Sections 9 (Kampung Lekir – Changkat Cermin) and 10 (Changkat Cermin – Beruas) on 23 September 2019. On 10 December 2019, Section 5 (Bandar Bukit Raja to Kapar) was also opened for traffic. To-date, a total of 4 out of 11 sections have been opened for traffic and commenced tolling."

Having said that i am optimistic of the traffic of WCE as well as WCE management;
https://www.thestar.com.my/business/business-news/2020/01/11/in-high-g...
"Thirdly, the four sections of the WCE opened so far have seen traffic volumes which are “more promising than expected”, says Neoh."

The real traffic only comes when they open sessions connecting port lumut/port klang, selangor part, and when all the sessions fully connected from interchange that connects to NSE.

Announcement coming from XOX
https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3072254

acceptable result, will continue to hold
Few things i noticed in the latest quarter results;
1) their specialty chemicals started to contribute (from Da Vinci) about 5-6% of revenue but contributes about 18% of last year corresponding quarter profit (30% for current quarter), which is very good if they expand more on this segment, much more resilient and high margin than their O&D segment

2) their fertilizer&methanol segment as resilient as usual, lower plant utilization due to higher turnaround, expect better performance next quarter as urea price is higher as of now.

3) their O&D segment barely breakeven this quarter, with 100% plant utilization! the report mentioned about some deferment of shipment due to COVID 19 port control, not sure to what extend it affects the sales volume.

Most petrochemical products price dropped in April but recovered in May, methanol price is bad, Urea price is higher, lets see how it goes next few quarters, but i am hopeful for longer term (3-5 years), if they expand more and more on specialty chemicals, also RAPID commencement.

sold all petronm at 4.70 (at 20% loss). I am thinking petronm with refinery business on top of petrol station will be affected more compared to petdag. The dividend pre covid already reduced to 12sen, which is disappointing..

We always appreciate people's sharing but as time goes on we will automatic filter which "tips" to have a serious look or not.

Normally tips with disclaimer is not enough, we appreciate tips that come with "risk of the call", when to sell/sell when what what happens etc, best with trackable portfolio (like felicity) and stories that backing each numbers.

I always refrain myself from buying furniture stocks, testing equipment etc etc players with none recurring biz (not many people will buy furnitures every year, how i know the client of the testing companies have done enough with their testing? etc)

Yea, i think should be one of the few companies least affected by COVID, government payor for LRT3 projects. First batch bought at 0.835, after that added more at 0.47, 0.535; Average about 0.60. Expect minimum 3c payout, giving at least 5% yield :)
Cant appreciate more on dividends at this trying times.

Thanks for sharing.
Is the size of each positions relative to your relative confidence on their business competitive advantage or expected return%.?

For PCHEM,what do you think of their growth trajectory after RAPID project? Da Vinci management guided will contribute about only 5% to the earnings when fully consolidated.
Latest analyst Q&A they mentioned about why they need to conserve so many cash instead of increase the dividend payout after Pengerang project, it is for some plant upgrade in Pengerang,may need as much as 2-3bil USD in 2-3 years,related to specialty chemicals, e.g intermediaries for gloves manufacturing etc. I am curious what is the prospect like for them to spend so much

low oil price with low petrochemical price is bad for PCHEM,having said that most petrochemicals price looking to stabilize in Q1 2020; not to mention there are somesizeable one-off expenses in this quarter.Lets see the impact of COVID19 virus in next 2 quarters first before adding more,if the price drop to IPO price i dont mind adding more first before next 2 quarters results! That's fun to be able to buy at IPO price after 9 years~

almost IPO price,30-40 sen more :)

RM 5.04 IPO price 9 years ago; see if will drop to this price ;)

just get the 7sen dividend next month first before going in another batch in next quarter result, expect not good also

added more at 5.85

For example; Uber;
some view it as car service company, then there is Intrinsic value A
some view it as car ownership company,/ logistic company/ payment apps etc; then there will be Intrinsic value B/C/D/etc

So to me what is valuable opinion about a company is; what is the company look like in his mind, towards the future, not just a set of numbers, PE, growth yoy, ROE, etc
Then only we try to relate to the intrinsic value following these 3 rationality tests;
Possible? Plausible? Probable?

Lets look back at QL;
Possible? Why not, they are in Vietnam, Indonesia, Malaysia, first two market are very populous, with low egg consumption, etc

Plausible? in simple words, is the company doing right things to get there
here comes the iron triangle of value narratives, between growth, risk and reinvestment
1) is the company reinvesting enough given their growth? seems yes
2) is the company taking risks reflective of how much and where they are growing?
i don't know
3） is the risk company taken consistent with their reinvestment strategy? i don't know

Probable?
here is the last part to get to Intrinsic value, the DCF is a better tools here,because_PE_tells_little_about_what_price_is_good_entry_price_as_the_PE_always_change_and_there_is_no_close_comparison_from_the_competitors

hahaha this is classic fighting between numbers and narratives person
kc 70% number, 30% narrative
icon 50% number, 50% narrative
choivo 35% number, 65% narrative
philip 10% number, 90% narrative

i dont know why so many people have qualms on QL's PE.. (maybe philip face problem ;P)
in fact the last time he bought QL was 6.80, which has rise 20% to today's price 8.40.
6.8 was deemed undervalued, 8.40 is considered fair value, so he bought with about 20% mos in mind. Although i personally hope he can share his latest version of Intrinsic value on QL (last time shared was about 15-25), but when come to think about it, he don't have to, and it make little value add to the discussions, because when the narratives about a company change, its intrinsic value change. See this;
http://people.stern.nyu.edu/adamodar/pdfiles/country/narrative&numbers.pdf

PCHEM is blessed geographically, supply side (sister co. agreement), demand side (free trade agreement within SEA and with CHINA vs Japan/Korea),growing demand on petrochemicals products in the region; cash rich, government supported, i am not worried hehehe

ouch.. only bought 25% of my intended position... suddenly rise so fast

Thanks for sharing.
The 2 main reasons i bought PETRONM was
1） they expand the market share fast
2) they repaid their borrowings fast
The only things are i not sure about are the calculations on valuation, but here we have a good reference hah！

Currently the few concerns are;
1) hedging cost, is it going up in next few years
2) any huge depreciation coming
3）how soon is EURO 6 compliance coming
4) PENGERANG impact ? i am not sure about this
5) commercial jet fuel demand is hit due to coronavirus, how big is the impact

I always like to relate PCHEM with PETRONM as both are oil downstream, i have both in my portfolio, with PCHEM twice bigger size than PETRONM due to its predictability. But i believe if PETRONM can up their retail market share close to 30% it will hit another level of critical mass. Will add more slowly.

good ROE (>12%), cash rich (30-40% of mkt cap), generous dividend payout
smell like Padini when it was 1.60

Bought some at 0.835
current price just too attractive, worth it even only for water meter biz and mrt job.
not to mention dividend coming in another 2months hehehe

They need to resolve their power purchase agreement and lenders resolution plan first.
For PPA so far only unit 1 secured longer term PPA,the following 550mW only had PPA for 3 years.

Looking to sell some other shares to go into this one.
Except for LRT3, most of the projects are going to finish in year 2020.
http://www.georgekent.net/projects-reference/

If there are new jobs to be tendered or announced, this should be the year to renew some of their orderbooks. Even without new order, there are enough of meat from LRT3 project alone until year 2024. The order book size of LRT3 is much bigger than LRT extension project they got in the past.

By year 2024 i think they will be able to grow their water meter business quite abit, and most importantly, the dividends and share buyback will do no harm for holding it :)

Who knows some day in 2020 they will get rail project job from overseas or water sewerage/dam/hsr/ecrl/ptmp projects within Malaysia

Earning growth/revenue growth is always the most important thing to consider, learnt it the hard way~

Dividend payout ratio, ROC, Cash flow, ROE, etc are there to help validate the quality of earnings and confirm whether the earning growth is sustainable or oneoff.

If a company paid 100% of its earnings, or even 120% and you are sure that he can still grow its earnings for the following many years, why not?

Don't easily say no to anything just looking at single metric

I think one of the stock pick from Ricky must be Scientex

I like the way you value the company hahaha
Thats the reason i more incline towards dividend play in BURSA, i find many companies that dont pay good dividends not credible..tsktsktsk

Bought some @ 5.01, avg cost @ 5.9, to make it above FD rate div yield
3.3% at 20sen/share @ 20% payout (60mil payout)

Dividend should be more than achievable given 300m+ net cash level and 9months operating cash flow of 265 mil before working capital changes, despite spending 300m+ for PPE 9months period.

Haha no point predicting quarters profit as there are too many moving parts. I just looking at sales volume, cash level and PPE spending. For annual i will look at retail market shares.

Next year the PPE spending should be lesser i guess. See this
https://www.theedgemarkets.com/article/petron-awards-us132m-diesel-refining-plant-job-south-korean-petrochemical-firm

Somehow PETRONM is similar to AIRASIA; 20% net operaing profit dividend payout, heavy capex, cyclical.

I view it as "forced to" reinvest just to comply. Unless they will see higher margin after the refinery upgrade. Unless most of it are spent on more retail stations opening.

Hving said that i take back my words on little revenue growth on PETRONM. Currently their retail station market share is 21-22%, i see there is some room of growth, maybe will get to 30% market share, in 5 years time hopefully,this is the most important figure i monitor every year.

I like Icon8888 open minded and humble, most importantly willing to share :)

I dont know about moat but i do know those companies like Airbus/Boeing, Adobe/Microsoft do have global moat. If i open an airline company, where else i buy airplane other than Airbus/Boeing?
If i open a company need softwares to install on the PCs, wherelse i go other than Adobe/Microsoft etc.Same goes to TSMC hehehe, Such companies are really not easy to find in Malaysia market.

I believe in business world if there is no growth,the value will be destructed over time. 逆水行舟，不进则退。 So growth is always no.1 priority then only how much to pay for it :)

Btw what is the difference of TSMC listed in Taiwan and listed in NYSE?

crack spread increase 10% today, PETRONM price drop 2% today hmm
price getting attractive

https://www.tradingview.com/symbols/NYMEX-D1N1%21/

I am hoping when PETRONM can stop spending on capex or at least some rest
20sen div for 5.2 DY is 3.85%，@20% payout only
last 10 years their highest payout is only 38%, i am hoping the days they can get their div payout to 50%, then the DY could reach 7%~so at current price it is a good entry haha

few good things i noticed;
recent quarter (ended June 2019) they had paid off all their borrowings (with help cash received from government subsidies), not sure when they stop spending cash for acquisition of PPE (Jan-June about 257mil spent)
Crack spread is climbing up since Jan 2019~~

Hahaha i think should be the other way round? we retailers are the one benefiting from these round RCPS

We do no need to commit large sum of monies last few years during construction period, now we can join the train at much lower price, and towards completion in 1-2 years? hehehe

when are we able to know the results of the excess RCPS application?

My mistake, just realized the equity injection is already at 1.95bil, 4.74bil debt including 2.24bil GSL, with debt equity ratio 80:20 they still have room to raise more debt, but given most cost elevation is from land aquisition(now in final stage with chance to recover some amounts), construction cost itself seems to be some savings according to the announcement; i think debt will most likely stay at similar level.

4.7bil debt @ 5%, etc the breakeven revenue need around 600mil

I think each shareholders will have different goal in mind when they pour monies into this project
for IJM they could be also benefiting by earning from constructing and maintaining the highways, other than just toll collection
for Tan Sri Surin given the amount of monies already commited, it is only wise to show confidence by commiting whatever rights needed. Maybe his concern is more on wealth preservation? Instead of putting monies into FD and have to worry about interest rate getting lower each year. Also i am sure he will have better exit plan compared to retailers like us, in case someone wants to purchase sizeable stakes, maybe EPF/PNB etc will purchase 25-40% of it in 3-5 years.. who knows~~ Hard assets like concessionaires more of than 10 years are always very attractive to funds like EPF, in inflationary/deflationary environment maybe? who knows.

I mean each investors will have different entry price, different objectives and purpose, which may not be the same with retailers like us. Btw i am subscribing the RCPS as well as the excesses as i see the price is attractive. But at the same time i prefer to have some figures to do check and balance few years down the road, to see plan for good exit plan :)

Given more than 6bil debt repayment @6% 50years repayment; and using PLUS maintenance cost as a benchmark, i think they need roughly 650mil revenue to breakeven, if the annual revenue can reach 800mil and above , it will be really juicy for the shareholders :)

I am more interested to know
1) why PETDAG command PE of more than 25 with lower DY but PETRONM is only 7ish with higher DY, maybe they will get PE15-20 if they split their refinery business out? Is it the intention of their major shareholders in PH to combine the refinery and retail entity
2) Given the limited revenue upside, is there a chance PETRONM hit a significant lower cost base in future when they reach certain number of petrol stations or critical mass etc. is the opening of RAPID pengerang net beneficial to PETRONM? or only good for PETDAG
3) How much/how long they need to spend cash on upgrading the refinery plant to make it whatever EURO 4/5/6/7... compliance? i am not too sure the ROI of the CAPEX they spent worthwhile or they should just import more refined petrol from other countries

High? before india IPP firing the price was above RM1, now all 4 plants started COD and all receivables and equity account already fully written off, no more losses from associates in coming quarters.

Someone wants to buy PLUS 100% equity at 3bil ringgit and promise 20% toll rate reduction, with only 30years remaining concession, and KHAZANAH says they were offering a much lower price than PLUS' real value
now WCE market cap only 300+mil with 60 years concessions, am i missing something?

is PLUS highway that valuable?

https://www.thestar.com.my/business/business-news/2019/10/06/khazanah-says-not-selling-plus

More so when RAPID commence its operations, they will have more flexibility on product mix ; e.g if the price of one petrochemicals product is not good, they will just sell more on other petrochemicals product that have better price.less concern on feedstocks supplies too.

as for over supply, soft demand etc i think there always had these kind of news every year, price of petrochemicals goes up and down. IMO for PCHEM the effect is not as severely impacted from these due to 70% of their Revenue comes from SEA where they are having the logistic advantage, 68% of revenue are Term customers means the effect of price will be more or less smoothen throughout the term contracts. Also there are so many different petrochemicals products, prices of some products soft doesnt mean all products price are low. For the most recent quarters, the price of O&D are very bad but it was somewhat mitigated by good price of F&M, F&M profits was 35% now become 50% of profits contributed.