Wednesday, 8 June 2016

JAYCORP - Potentially a good dividend yield stock?



For the past 5 years, JAYCORP has been quite generous in dividend payouts, with an average dividend payout ratio of 74%.

It recorded strong growth in EPS in 1HFY16. The 6 months earnings have already exceeded full year earnings achieved in FY14 and FY15.

If we annualise the EPS and assume a dividend payout of 50%, this translates into DPS of 8.45sen. At current share price of RM1.04, it offers an attractive dividend yield of 8.1%.

Annualise the EPS, the stock is trading at an undemanding PE multiple of 6.2x

As of Jan-16, it was in a net cash position of RM6.1m.

Saturday, 28 May 2016

It is shocking that Tan Teng Boo missed the big picture


Tan Teng Boo was pessimistic about the economy of Malaysia. He sees the possibility of FBMKLCI dipping below 1,000 points in medium term.

In Capital Dynamics' newsletter dated 29 Jan 2016, he commented "MRT project is near completion with no viable large scale infrastructure projects imminent".

But... didn't he notice the following before the issuance of the newsletter dated 29 Jan 2016,

i) MMC-GAMUDA JV was appointed as the PDP for MRT line 2? (Bursa announcement dated 29 October 2014)
ii) Execution of PDP agreement for MRT line 2? (Bursa announcement dated 13 July 2015)
iii) NST artcile "Advance works for MRT Line 2 ongoing" published on 23 February 2016, just about a week before Tan Teng Boo's article
iv) Article by The Star dated 20 February 2016, saying MRT line 2 would be completed by 2022, published slightly more than a week before Tan Teng Boo's article.

MRT line 2 is expected to cost about RM28b to RM30b, the single largest construction project being implemented in Malaysia.

Besides MRT line 2, another mega project, Pan Borneo Highway was launched in 2015. (source)

On top of that, MRCB-GKENT JV was appointed as the PDP for RM9b LRT line 3 in September 2015. (source)

How could Mr Tan, which based in KL was so ignorant about the development in Malaysia and missed the information which is publicly available?

Separately, he has been complaining the distance between KLIA and KL city centre. To quote him, “Why was Sepang chosen to house the Kuala Lumpur International Airport (KLIA) and not Subang? The KLIA is 80km from Kuala Lumpur. Today the KLIA is the furthest airport from the city centre in the world." (Source)

However, if we "google map", the distance is about 60km. Which is right? Did Mr Tan get his fact right?

Capital Dynamics claims it is an independent fund management and investment advisory house. I wonder how this could be achieved. If he finds a very attractive stock in Bursa Malaysia, but the trading of the stock is not liquid, do you think Capital Dynamics will write about the stock in his newsletter before the funds under his management have accumulated sufficient amount of shares?

Sunday, 22 May 2016

Are you a high networth individual?

Based on Securities Commission Malaysia's guidelines, a high networth individual is defined as:

An individual whose total net personal assets, or total net joint assets with his or her spouse, exceeds RM3 million or its equivalent in foreign currencies, excluding the value of the individual’s primary residence.

An individual who has a gross annual income exceeding RM300,000 or its equivalent in foreign currencies per annum in the preceding 12 months.

An individual who, jointly with his or her spouse, has a gross annual income of RM400,000 or its equivalent in foreign currencies per annum in the preceding 12 months.

Source: http://www.sc.com.my/wp-content/uploads/eng/html/resources/guidelines/Sales_Practice_Guidelines_March2013.pdf

Wednesday, 4 May 2016

Notice Of Person Ceasing To Be A Substantial Shareholder

Some blog postings highlighted a high profile investor filed the notice ceasing to be a substantial shareholder in a company very late after he has ceased to be a substantial shareholder.

Not very familiar with companies regulations but based on section 69G of Companies Act 1965,

Section 69G. Person who ceases to be substantial shareholder to notify company.
(1) A person who ceases to be a substantial shareholder in a company shall give notice in writing to the company stating his name and the date on which he ceased to be a substantial shareholder and full particulars of the circumstances by reason of which he ceased to be a substantial shareholder.

(2) The notice shall be given within seven days after the person ceased to be a substantial shareholder.

Form 29C

However, Securities Industries Acts 1983 allow 2 weeks to serve notice on substantial shareholdings and ceasing to be a substantial shareholders

http://www.sc.com.my/wp-content/uploads/eng/html/resources/guidelines/siasireg98.pdf

Sunday, 1 May 2016

Update on SPACs liquidation

CLIQ made an announcement last Friday, providing update on liquidation of the SPAC.

It reasoned why the SPAC is winding up the company pursuant to Section 218(1)(h) of the Companies Act 1965.

To me, the most important point in the announcement was paragraph 5(ii) where it stated:

The Liquidators will be permitted to make payment to and/or to take such necessary steps to meet the requirements as are provided for under Article 61C(7) of the Company’s Articles and to make a substantial interim payment to entitled shareholders.
I would not consider CLIQ as it is possibly involved in a judicial review which may drag the liquidation process. For SONA, it probably offers a return of 9% or more p.a. if a substantial interim payment is made to entitled shareholders, based on previous closing price of 44sen/share.

Tuesday, 26 April 2016

Why are people still buying SONA-WA?

Sona has 3 months left before the SPAC expires.

i) It is tough to find another asset, make submission for the proposed acquisition and obtain SC's approval within such a short period

ii) Sona's independent director Datuk Mohamed Khadar Merican has said that Sona did not have plans to submit another proposal as management is aware that a few substantial shareholders are "yield investors", who are not keen on the oil assets.

iii) Even if there is another proposed acquisition, would the voting pattern swing drastically from an overwhelming NO?

Why people are buying SONA-WA when it is becoming "toilet paper"?

Sunday, 20 March 2016

Will the proposed acquisition by Sona go through?

Updated on 22 March 2016

For the deal to go through, the proposed acquisition requires approval of at least 75% of the total value of issued Sona shares held by all holders of Sona shares present and voting. The initial investors, holding 28,571,500 shares, are permitted to vote.

Credit Suisse holds 173,582,200 Sona shares (12.305%) and is crucial to the outcome of the EGM.

We saw Credit Suisse re-emerged as a substantial shareholder in Cliq (announcement dated 2 March 2016) after the company said it would soon be resolving the process towards its liquidation and returning monies in the trust account to the entitled shareholders. We can conclude that Credit Suisse is a yield investor in the case of Cliq, and probably in the case of Sona as well.

Assuming Credit Suisse is a yield investor and would vote against the Sona's proposed acquisition, what is the chance of the proposed acquisition going through?

Assuming all entitled shareholders vote (total 1,128,571,500 shares), it requires approval of at least 846,428,625 shares. Assuming Credit Suisse votes against and for the deal to go through, it requires 88.6% of approval from the remaining 954,989,300 shares. The required approval rate would be higher as it is unlikely that all entitled shareholders would vote.

I see the situation unfavourable to the management and initial investors. Let's see the outcome.

Saturday, 23 January 2016

GHLSYS, KOMARK, then TPC?

Similarities between GHLSYS and KOMARK:

1. Change in major shareholder(s)
2. Change in management team
3. Did not do so well financially before the change in major shareholder(s) and management team
4. Undertook rights issue after change in major shareholder(s) and management team
5. Underwent restructuring
6. Share price performed-well post rights-issue
7. Improvement is financial performance

Similar trend is observed in TPC:
1. Change in major shareholder (HUATLAI, largest egg producers in Malaysia)
2. Change in management team. Currently led by Huat Lai's MD
3. Did not performed well previously
4. Rights issue with free warrants were listed on 22 Jan 2016
5. Underwent PN17 regularisation plan
6. Share price holding up well on the first day of listing of rights shares and free warrants.
7. Turned profitable in FY15. Required 2 consecutive profitable quarters after the completion of regularisation plan to be lifted from PN17.

Current its market cap is only RM70m. The newly listed warrants (exercise price: 20sen/warrant) is traded at a premium of 10%, which I think is minimal for a low price warrant (18.5sen), and having  tenure of 5 years.

I have included the warrants in my watchlist.