The immediate effects of this outage in this affected Plant is about 50 to 60% of the Company sales revenue but with the fast recovery plan, Notion will have restored 75% of the outage progressively within 5 months and the balance within another 3 months. But of course the full restoration of structure and Certificate of Fitness may take up to a year.
The new high volume manufacture of a lifestyle consumer product and another tubing project, are not affected by this fire as the new production lines are planned for in the Southern region. There may be a slight delay in the planned production as manpower is focused on the Klang plant to recover quickly.
Downgrade to MP with a more conservative TP of RM0.73 (from RM1.55). We prefer to stick on the conservative side for now given the major disruption to its production capacity which could lead to the uncertainty in earnings visibility. With 0.65x FY18E PBV being ascribed (which is the group’s 5-year average PBV), our TP is now at RM0.73 from RM1.55 which implied FY18E PER of 15.5x.
"Notion has adequate insurance coverage - RM350 million for property damage, RM217 million for business interruption up to 18 months. Preliminary estimate of the loss is about RM150 to 200 million. Once we gain access to the site we shall be able to assess the extent of damage and provide a more accurate estimate of loss.
Meanwhile, Notion is ordering and sourcing for emergency replacement CNCs and quality control equipment. The Company will discuss with customers’ team, on Notion’s current stock of Finished Goods, availability of spare CNCs, spare factory space and possibility of either renting or buying any existing CNC s that can help Notion recover faster."
...above emergency restoration probably need 1-2 months to stabilize...can help half the damage after that ... profit sure got hit but at least has built the safer net .... now is to judge at what price range is considered the base for recovery :P (classic example of risk and opportunity)
More than half of the capacity is lost in the fire and insurance take at least 12months to complete with investigation and claim. At least two quarters result will be affect and also lost of business opportunity during peak period. Be caution.
Be Careful. Insurers always look to minimise their exposure. The Loss Adjuster may be working with the company as stated, but the objectives are different. Insurers want to see what they can avoid paying for, or mitigate their cost, as opposed to the company, who'd like to maximise compensation paid under the policy. If there are any non-compliance issues picked up that were critical to the cover, then the claim could be compromised and the pay-out reduced. One always needs to be careful when insurance claims come into play, because at the moment, the company have declared that they have adequate cover in place for damage and consequential losses, but it is too early to tell what will be covered under the policy and the Insurers have not yet come out to confirm that the claim will be humoured. Just a head's up that's all.
Notion may goes to 0.80 as the fire is just a temporary loss..after that sure can get compensation by insurance company..now is a best time to purchase the shares..mid term sure will back to the previous price 0.90 ...it is a good company wowwwww...
Probably sideways a while now, in the absence of any further news. IMO it's highly dangerous to assume insurance will cover all losses. That is the "best case scenario" now and with all news out, look where the price has settled (largely inline with the Kenanga Research downgrade estimate).
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
lkwah86
259 posts
Posted by lkwah86 > 2017-10-23 10:40 | Report Abuse
The immediate effects of this outage in this affected Plant is about 50 to 60% of the Company sales revenue but with the fast recovery plan, Notion will have restored 75% of the outage progressively within 5 months and the balance within another 3 months. But of course the full restoration of structure and Certificate of Fitness may take up to a year.