Posted by commonsense > 2019-04-01 10:49 | Report Abuse

Hi moneykj,

As mentioned in my comments on the company back in February, I believe Orion is still a very speculative play stock given that the company’s valuation is a bit high when compared to its bottom line. The RM3.5mil recorded in 1H19 was mainly due to a RM1.4mil reversal of impairment allowance and a RM0.7mil writeback of allowance relating to liquidated ascertained damanges.
Excluding these 2 non-recurring items, Orion 1H19 profit would have only been around RM1.5mil. Assuming similar results for the 2H19, the company is currently trading at a very high PE of 42.3x.

However, the company has a potentially lucrative arrangement with Sukaniaga Sdn Bhd (of which Orion owns 10% interest).

On October 2018, Sukaniaga has a service level agreement to develop the E Angkasa Az Zahara loan application system for MyAngkasa Holdings, a wholly own subsidiary of Angkatan Koperasi Kebangsaan Malaysia (not sure if it was based on open tender of direct award). Sukaniaga will earns a fee for its service based on the volume of loans and loans amount that it processed and approve under the system. The system will be developed (and actually operate) by Ganda Integrasi (which is a wholly own subsidiary of Orion). Ganda will earn 85% of what Sukaniaga received as fees for the system.

Currently Orion is proposing to acquire another 10% interest of Sukaniaga Sdn Bhd for RM10mil (valuing the company at RM100mil) from THO Travel Sdn Bhd. Upon completion the company will hold 20% interest in Sukaniaga. Effectively upon completion of the additional 10% interest of Sukaniaga, Ganda will have a total of 85% + (20% x 15%) = 88% rights to the fees paid for the loan system.

If you ask me, the deal with Angkasa is a bit dodgy given that Sukaniaga is actually receiving 15% of the service fees for just winning the contract. Effectively, it would have been a lot cheaper for Angakasa to directly award the contract to Orion. Sukaniaga has a share capital of only RM100k. Shareholders of Sukaniaga consist of mainly Ahmad Khir Bin Dato Haji Khairuddin (22.5%), Titian Kotamas (57.5%), Ganda Integrasi (10%) and THO Travel (10%). From here you can see that the shareholders of THO Travel (Sheikh Ahmad Nafiq Bin Sheikh A Rahman and Nor Fariza) will already make a very high profit of almost RM10mil for their initial investment of only RM10k in Sukaniaga.

Orion has proposed for a private placement exercise to raised approximately RM27mil of which the usages of the proceeds are:
1) Acquisition of 10% of Sukaniaga from THO Travel. RM10mil
2) Development of theMyAzZahra system: RM16mil
3) Expense for Private placement. RM950k.

Please take note, in their earlier announcement back in January the estimated proceeds to be raised was only around RM17mil. And out of this, only RM3.2mil was for the development of the system. Refer to page 3 of January announcement (http://www.bursamalaysia.com/market/listed-companies/company-announcements/6027073). Now the cost of development has suddenly gone up to RM17.8mil (of which RM16mil is from the private placement). Not sure how the cost can suddenly go up by 6 times in just a span of 2 months. Investors should question the directors on this during the EGM on 15th Apr. Anyway, given the actual cost of development is considerably low (if you take out Sukaniaga out of the equation, that’s already a 15% savings), I just feel that there might be a potential review of the contract awarded by Angkasa to Sukaniaga by the government (as what had happened with Prestariang with their Skin contract). Investors need to take note.

to continue....

Posted by commonsense > 2019-04-01 10:50 | Report Abuse

Hi moneykj,

second part...

For MBMR, the reason to invest into the company is mainly on its very undemanding valuation and very strong fundemantals (P&L, Balance sheet and Cash Flow). At the current share price the company is only being valued at a PE of 6.5x (based on FY18 RM165mil profit to shareholders) and a PB of only 0.7x.

That being said, I am still projecting a profit growth in FY19 vs the RM165mil achieve in FY18. The catalysts for the growths are:
1) Still high demand for the new Myvi

2) Sales of SUV Aruz. As of February, the sales is already at 3,400 units with bookings of more than 14,000 unit. The best part is that 85% of the sales and bookings are for the higher end version which commands better profit margin for Perodua.

3) Future uplift in sales from the newly revamp Alza sometime in 2H19.

4) Sales to UMW Toyota Motor. Please take note that the Toyota Rush is actually being manufacture by Perodua. The engine of the new Vios is also currently being manufacture by Perodua as well.

5) Improvement in sales of automotive component divisions. As mentioned MBMR is the biggest manufacturer of locally assemble automotive component in Malaysia. Given the new SST structure, a lot of brands have decided to start sourcing their automotive parts components locally in order to reduce the cost from higher SST and import duty.

6) The potential disposal of OMI Alloy Sdn Bhd (the alloy wheel business) which will immediately increase the company’s profit, strengthen its balance sheet and free up MBMR’s cash flow. In FY17 OMIA recorded a core net loss of around RM30mil. I would assume the losses in FY18 was still in the RM20mil level. As an example, MBMR core profit to shareholder would have been around RM180mil in FY18 if we were to exclude OMIA result.

I think MBMR would be able to achieve the RM200mil profit to shareholder target in FY19. Even if profit only reaches RM185 mil in FY19, at the current share price, the company would still be valued at a mere 6x PE, the lowest in the industry even though it has a direct exposure to Perodua. Most of the time, market leaders normally command a premium vs the industry average. In MBMR case, they are actually trading at a discount of 60% (based on industry average of 15x PE) which is weird.

Regards and good luck on your investment in Orion. Will take a look on Redtone later.

Posted by OhYES > 2019-04-02 16:25 | Report Abuse

good to have commensense here

Posted by Nicholasming91 > 2019-04-02 16:38 | Report Abuse

Chill lah . Mbmr and drb will excel. Umw , honda , nissan those will be left out alrdy. Nissan sales increase due to the Van NV200 very good sales

Posted by Icon8888 > 2019-04-02 16:46 | Report Abuse

No 350 no sell

Maybe 4

Posted by Sebastian Sted Power > 2019-04-02 16:51 | Report Abuse

Uncle Icon, can start write (Icon) MBM Resources (3) liao

Posted by cchin > 2019-04-02 20:58 | Report Abuse

Should hit 4.00 before the next quarter report

Posted by Sebastian Sted Power > 2019-04-03 09:21 | Report Abuse

Just paid RM500 book new Aruz. If hit RM3.8 i might get a FOC aruz. Hahaha!!!

Posted by Sebastian Sted Power > 2019-04-03 12:55 | Report Abuse

as solid as rock. Buying rate more than 90%++

Posted by siowyf8888 > 2019-04-03 16:13 | Report Abuse

Hi yongch, can share more details on share buy back?

Posted by shpg22 > 2019-04-03 16:39 | Report Abuse

Someone keep promoting MBMR like its the only company listed on bursa. Sounds familiar like last time KESM. What happen to KESM now is a good lesson to learn.

Posted by Richard Lee > 2019-04-03 16:48 | Report Abuse

@ship22, is that same idiot promoting MBMR and KESM? KESM is too mysterious to understand but MBMR quite easy.

See see look look surrounding car can liao. So i support MBMR

Posted by Richard Lee > 2019-04-03 16:53 | Report Abuse

nothing wrong to promote your favorite counters. But but please la dont be parasite promote and blow cow at other people counter i3. kacau kacau only

Posted by cchin > 2019-04-03 19:13 | Report Abuse

The Board of Diretcors of MBMR is pleased to annouce that the Company is proposing a final single-tier dividend of 6.0 sen per ordinary share in respect of the financial year ended 31 December 2018, subject to the shareholders' approval at the forthcoming Annual General Meeting.



The dividend entitlment date and payment date will be announced later.

Posted by aikinlai > 2019-04-03 20:06 | Report Abuse

Where u get a rumous boss want to privatise it?

Posted by Sebastian Sted Power > 2019-04-03 21:34 | Report Abuse

rumour blow cow only. They no money pay for privatisation because the offer price need to be higher than NTA only shareholders willing to sell

Posted by Sebastian Sted Power > 2019-04-04 07:22 | Report Abuse

Book Aruz but need wait 8weeks! Branch manager told me if can't wait then just withdraw and he will refund the booking fee to me. Wakakaka! Very arrogant but I like it.

Found that now perodua now no longer give any rebate or promotion on all the cars. Myvi waiting queue also about 6weeks. No doubt what this year new myvi and Aruz will make MBMR GREAT great ever in historical

Posted by Hafid > 2019-04-04 13:58 | Report Abuse

The Board of Diretcors of MBMR is pleased to annouce that the Company is proposing a final single-tier dividend of 6.0 sen per ordinary share in respect of the financial year ended 31 December 2018, subject to the shareholders' approval at the forthcoming Annual General Meeting.



The dividend entitlment date and payment date will be announced later.

Posted by Icon8888 > 2019-04-04 14:46 | Report Abuse

these few days the buyers have turned very assertive, because they know that with successful conclusion of US China trade talk, the market will be entering a bullish phase. So there is no more time to collect slowly. It is buy now or never

Posted by Sebastian Sted Power > 2019-04-04 15:09 | Report Abuse

icon uncle, JAKS can masuk kah?

Posted by Richard Lee > 2019-04-04 15:20 | Report Abuse

i love you ICON8888. I start masuk this counter after read Earning At All Time High While Share Price At All Time Low

Posted by yongch > 2019-04-04 15:50 | Report Abuse

Hahaha...tks GOD finally reach my target 3.0!!!!although dividend 6cents Sorry ya everyone got to start disposed little and little coz hold too much liao!!!!kikikiki...tonight Shangri la lo!!!!!tp3.15!!!Heng Ah!Ong Ah!!Huat Ah!!!

Posted by Hafid > 2019-04-04 16:16 | Report Abuse

volume is big

Posted by OhYES > 2019-04-04 16:23 | Report Abuse

Sabar Sabar

Posted by commonsense > 2019-04-05 10:19 | Report Abuse

I think a lot of investors have yet to appreciate the full implication of the recent 6 sens dividend announcement made earlier this week. The 6 sens would bring the total payout for FY18 to 12 sens or almost 30% dividend payout from FY18 profit. The 12 sens dividend is also quadruple of the total dividend payment made from FY17 profit.

As mentioned in my previous posting, management strategy in prior years was mainly focusing on reducing the company debt from their balance sheet. They had managed to decrease the debt from a high of RM550 mil in FY12 to now only RM145 mil as of Dec 2018 (most of the existing debt are actually trading related debt which is being backed by the company’s inventories and trade receivables). Given the current strength of the company’s balance sheet couple with higher free cash flow generation, investors should expect a higher dividend payment in the future.

Another positive catalyst would be the disposal of OMIA (alloy wheel division) which will free up the company’s working capital even further and result in a higher free cash flow. Hopefully when this happens, management will reward shareholders with higher dividend payout (if they decide to pay 50% of the annual profit that would already bump up the dividend to at least 20 sens per share).

Anyway, at the current price, MBMR is still the cheapest automotive company in Bursa with PE of only 7x vs the industry average of around 15x PE. For me this does not make much sense given the company direct exposure to Perodua who is the market leader in Malaysia (normally that would carry a premium vs the industry average). I am expecting MBMR to achieve a profit of RM200mil in FY19. But even if the profit was only RM185mil, MBMR would still be only trading at a mere 6.2x PE. As a comparison, UMW (another company with exposure to Perodua) is currently trading at a PE multiple of almost 20x.

Regards.

Posted by OhYES > 2019-04-05 14:10 | Report Abuse

Well said commonsense

Posted by cchin > 2019-04-05 16:40 | Report Abuse

When is the next AGM?

Posted by commonsense > 2019-04-05 16:43 | Report Abuse

Hi cchin,

Normally just before 1Q19 announcement. So end May. Last year it was on 24th May 18.

Regards.

Posted by cchin > 2019-04-05 16:54 | Report Abuse

thanks commonsense

Posted by Hafid > 2019-04-08 05:47 | Report Abuse

Because umw have more business. Mbmr the other business is lousy. So that,s why share price cannot have 20x pe

Posted by stockholm999 > 2019-04-09 10:31 | Report Abuse

why drop today omg

Posted by OhYES > 2019-04-09 13:14 | Report Abuse

drop small small Naik more more

Posted by nckcm > 2019-04-09 13:15 | Report Abuse

Will consolidate

Posted by calvintaneng > 2019-04-09 16:01 | Report Abuse

Commonsense better sell mbmr now and buy mj perak as Proton Suv will impact perodua sales

Posted by OhYES > 2019-04-10 09:15 | Report Abuse

steady dont talk wait for mbmr action

Posted by Sebastian Sted Power > 2019-04-11 16:24 | Report Abuse

this counter quite unique. When ppl up then it's drop; when ppl drop then it's up

Posted by yongch > 2019-04-11 18:09 | Report Abuse

Wahaha..against hit 3.0!!!no choice but tmrw need to dispose more and more...kikikiki...shiok!shiok!!shiok!!!tonight Shangri la against!!!tp3.0!!!!

Posted by Icon8888 > 2019-04-11 18:22 | Report Abuse

Why dispose ? Should be guided by PE mah

If EPS 40 Sen should aim for RM4 to 5 right ?

(Scratching my head)

Posted by nckcm > 2019-04-11 18:24 | Report Abuse

So they can keep sell to retailers la abothen.. then drop back again.. but forming a cup and handle.. can buy cheaper later

Posted by Sebastian Sted Power > 2019-04-12 00:01 | Report Abuse

2019 EPS confirm 50-60 (very likely every QR easily hit 12-15 with new myvi and aruz)

Posted by limcs > 2019-04-12 08:21 | Report Abuse

Sebastian Sted Power ...confirm ? you have crystal ball ?
http://astrologyfutureeye.com/fortune-tellers/crystal-ball

Posted by OhYES > 2019-04-12 09:27 | Report Abuse

why sell when it can go higher? look at the RSi, MACD, candle, short term mid term and long term trend --> all strong bullish

Posted by Icon8888 > 2019-04-12 13:42 | Report Abuse

3rd national car unlikely to affect MBM

I have thought about this issue before

dont believe me ? look at perodua shareholding structure

it is a PNB company

goverment will never do anything to hurt perodua

Posted by Icon8888 > 2019-04-12 13:53 | Report Abuse

you are entitled to your opinion

your wallet will later tell you whether you are right or wrong

if you like proton you should buy drb

Posted by Raginglord > 2019-04-12 14:15 | Report Abuse

I deleted my post bcou doesnt serve anything.
Happy investing.

Posted by Icon8888 > 2019-04-12 16:15 | Report Abuse

I bought more today

Posted by cchin > 2019-04-12 17:11 | Report Abuse

Me too

Posted by Icon8888 > 2019-04-16 09:44 | Report Abuse

See you at 4

With a bit of luck , 5

Posted by PureBULL . > 2019-04-16 09:59 | Report Abuse

Like TAKAFUL, MBMR's the real steady eddy winning stock this year n beyond...

Posted by Sebastian Sted Power > 2019-04-16 14:41 | Report Abuse

best part is the EPF dump more but the price fly higher