Economy Impact of TPPA to Malaysia 2015 PWC report

I managed to find below important link of TPPA study which i believe is a good reference for investment decision.

Study on Potential Economic Impact of TPPA on the Malaysian Economy and Selected Key Economic Sectors

Contents Economic Impact of the Trans-Pacific Partnership Agreement
1 About the Study 1

2 Executive Summary 7
2.1 Key findings 9
2.2 Overall economy 10
2.3 Sectoral analysis 17
2.4 Thematic Issues 42
2.5 Conclusion 51

3 Background on TPPA 53

4 Potential Impact on Malaysia Based on CGE Modelling 59

5 Sectoral Analysis 71
5.1 Electrical and electronics 75
5.2 Oil and gas 93
5.3 Palm oil 113
5.4 Construction 129
5.5 Textile 143
5.6 Retail 173
5.7 Automotive 191
5.8 Pharmaceutical 205
5.9 Wood and wood products 215
5.10 Plastic and plastic products 227

Have a nice day

YiStock

Mudajaya - Obvious Winner for MRT 2 ?

Below i extracted from MRT CORP website and list of winner for MRT 1

From above MRT 1 winner list, SunCon and AZRB has already been awarded for MRT 2.

I believe Mudajaya, Gadang & Muhibbah Engineering will be awarded with MRT 2 Viaduct Project too.

By the way, what is Viaduct?

It is the high trestle bridge




Cheers,

YiStock

Mudajaya - The Geese Started Producing Golden Eggs (2)

MUDAJAYA GROUP BERHAD

Left 3 years, Right 3 years. Finally the geese has started laying golden eggs!

I caught this golden goose. 

Despite lot of "rumous" spreading in the forum saying that RKM powergen Unit 1 & 2 have been ready months ago, the management of Mudajaya didn't make any annoucement. 

Then only on 17 March, they put out this annoucement: 

OTHERS MUDAJAYA GROUP BERHAD ("MUDAJAYA") R.K.M Powergen Private Limited : 4 x 360 MW Coal Based Independent Power Plant Project in India ("IPP Project")

MUDAJAYA GROUP BERHAD

Type	Announcement
Subject	OTHERS
Description	MUDAJAYA GROUP BERHAD ("MUDAJAYA") R.K.M Powergen Private Limited : 4 x 360 MW Coal Based Independent Power Plant Project in India ("IPP Project")
We refer to our announcements dated 31 October 2006 and 13 May 2009 in relation to  Mudajaya Corporation Berhad’s investment in R.K.M Powergen Private Limited ("RKM"). As for the sale of power to the Chhattisgarh State Electricity Board and PTC India Limited as announced on 31 October 2006 and 13 May 2009 pursuant to the Power Purchase Agreements (“PPAs”) respectively, the terms are being renegotiated by both RKM and the relevant parties which have yet to be finalised. For Phase 1 of the IPP Project comprising Unit 1, the Board of Directors of Mudajaya is pleased to announce that its 26% owned associated company, RKM in India has notified Mudajaya Corporation Berhad on 16 March 2016 that it has entered into a PPA for 25 years with several power distribution companies in the State of Uttar Pradesh on 15 March 2016 for the sale of 350 MW where the commercial delivery is targeted for October 2016.  However, both parties are in discussion for an early supply of electricity as allowed under the PPA, and RKM is confident that in anticipation of the higher demand for power during the summer period, Unit 1 will commence commercial delivery soon. The power plant has a total capacity of 1,440 MW consisting of 4 generating units of 360 MW each with the development phases comprising Phase 1 (Unit 1) and Phase 2 (Units 2, 3 and 4).  RKM has also confirmed on 16 March 2016 that Units 1 and 2 have achieved the commercial operation date and are ready to commence the sale of power. The negotiation for the PPA for Unit 2 is in progress and is expected to be concluded soon.  Units 3 and 4 are still work in progress. The successful commissioning and commercial operations of Units 1 and 2 mark a significant milestone for the Group’s participation in the power sector in India after lengthy delays. This announcement is dated 17 March 2016.

-----------------------------------------------------------------------------------------------------------------------------------------------------

In above annoucement, the management highlighted that the selling of power will only in Oct 2016.

Personally i think The management acknowledged the long delay of the power plant, therefore, they become VERY CAREFUL when making any annoucement. Perhaps they want to be VERY VERY VERY sure things really going well.

I did a search in India from the website of "CENTRAL ELECTRICITY AUTHORITY"

I found below:

From above report, i pretty sure that Unit I & II has achieved its COD target. In fact, it has STARTED generating power! 

Thanks Angel

Cheers, YiStock

31 March 2016

MUDAJAYA - Who Dare to Catch this Golden Goose?

MUDAJAYA GROUP BERHAD

 SINCE 1965
I first came accross Mudajaya when it was heavily debated in i3 for seriously quite some time. As it involved a group of investors questioning the credibility of KYY who has recommended this company back in 2012 (?), all due to the India IPP project which has been delayed, delayed...and delayed.. If you want to know a little more about the past history, you may refer to KYY's blog. 
As a mature investors, i think is our routine to read all available info and digest it our own.
A very kind Angel, who has highlighted several important points from recent AGM, which spark my interest to look into this company. Here are her links:
http://klse.i3investor.com/blogs/kianweiaritcles/78647.jsp
http://klse.i3investor.com/blogs/kianweiaritcles/78700.jsp
http://klse.i3investor.com/blogs/kianweiaritcles/78714.jsp

THE STORY:
First, i try to google see where is the power station located. It is located at Uchipinda Village, India


"According to a 2014 ICRA investment report on the project, the delays were "due to land compensation related issues and later due to delay in securing funding for cost overruns," as well as with problems in coal block allocation. The project cost had been revised to Rs. 8981 crore from Rs. 6654 crore, and the planned commissioning was 2015."
So, now we rougly know what are the likely reason causing the thing to delay in early stages. 
Now, Let look at the cost:

budget: 665,361 lacs
latest: 1,037,733 lacs
up to year2012-13, budget used 549,214 lacs, balance 116,147 lac
year 13 - 14 , over budgeted by 255,521 lacs
year 14 -15 march, over budgeted by 119,057 lacs
Balance to latest estimate over budgeted cost: 113,941 lacs <== to appear in FY 2015 Q3 to Q4?? I do not know.

WHAT INTEREST ME?

1) Unit 1 is ready 
2) Unit 2,3, 4 almost complete?
3) If the hen are ready to lay golden egg, why not wait for a little while? THis is my thought. 

What Puzzle Me?


When the IPP are still on footing stage..share at all time high...But when the concrete building are up and unit 1 ready to run...the share price at all time low !!!

Yes, because of bad financial report!
Well, if i would to relate the above figures with the over budgeted cost above, the timing seem quite tally. But i do not know if the loss is really due to india as Angle did mentioned that cost over run is for "local" project. 

INDIA
The prospect, India is coming up at 7% GDP growth. Pace very similar with China


The demand for electricity: HIGH


Coal fired Thermal IPP still the main focus:



I noticed this: Mudajaya power plant is right fall at plan-12th (2012 - 2016)



But, i notice also some over achieved target as per below. Probably this is also part of the reason contributing to the delay for unit-1 commission date.

As of August 2015, Mudajaya power plant has still not commissioned yet as per below:

==> Plan target by March 2016, 2 units up running!
Again, plan can be delayed again. ..
But the great news is, it is certainly in the plan: Can see Unit-1 in the list below


If you love to read all related info, you may refer to the link below:
http://www.cea.nic.in/new_website/reports/monthly/executivesummary/2015/exe_summary-08.pd
http://www.cea.nic.in/new_website/reports/monthly/generation/2015/August/tentative/opm_07.pdf
http://www.cea.nic.in/new_website/reports/quarterly/tpmii_quarterly_review/2015/tpmii_qr-07.pdf
http://www.sourcewatch.org/index.php/Uchpinda_power_station#cite_note-3

My conclusion: 
I do not know if you agree with me with the above investment strategy:: To buy a fallen Angel, and hope it will turn Angel again! "Just give her a little more time!" - I'm saying this to myself and thanks Angel. :-)

Cheers
YiStock
24 Oct 2015

PLEASE TAKE NOTE THAT THIS IS NOT A RECOMMEDATION TO BUY!!!!! 

 

ALL FIGURES and PICTURES / DATA PENDING VERIFICATION!!! I'm not insider and i do not know if my assumption is reliable or not. Thank you

GKENT - Really A Gem??

When i wrote this, i expect i will be again cursed by many. But, please, my intention is good. So please pardon me. Furthermore, i'm also not very sure if my guestimate is correct of not.

Now, let begin.

Gkent has released latest set of result. A "FANTASTIC RESULT" indeed. But, i' cautioned. I will provide my reason below.

Brief History:

Gkent is another Old Giant, just like Thong Guan and Tien Wah, founded since 1936. It has 2 main division: the water meter and the engineering segment. The engineering division has been the main contributor to company's bottom line, thanks to LRT extension work awarded to Gkent in year 2012.

Some Major Contracts Awarded:

Date	Project	Amount (RM)
July 2012	LRT extension work - 44 months (completed)	955.8 mil + 128.6 mil
Oct 2014	Hospital Kuala Lipis - by April 2017	57 mil
Sept 2015	LRT 3 (PDP) - 2016 to 2020	4,500 mil
Sept 2015	Hong Kong Water Meter - 2015 - ??	31.9 mil

Based on above, i try to add the total engineering work (prior to LRT 3 and exclude water meter) which stood at approximately 1,141.4 mil.

Then,

I try to tabulate past 4 years of annual report. Reason is i want to see whether LRT extension work which worth at 955.8 mil + 128.6 (optional) has finished its contribution or not.

		Infra/ engineering (RM)	Metering (RM)	Total	Infra %	Meter %
Jan 2013	Revenue	149.6 mil	127.2 mil
	Segment Profit	28.5 mil	15.0 mil	43.5 mil	65.5%	34.5%
Jan 2014	Revenue	390.7 mil	115.6 mil
	Segment Profit	44.8 mil	18.0 mil	62.8 mil	71.3%	28.7%
Jan 2015	Revenue	256.5 mil	96.7 mil
	Segment Profit	32.5 mil	19.2 mil	51.7 mil	62.9%	37.1%
Jan 2016	Revenue	432 mil	105.4 mil
	Segment Profit	60.8 mil	23.6 mil	84.4 mil	72%	28%
	TOTAL REVENUE	1,228.8 mil

(1) Based on above table, i guess the LRT extension work awarded in July 2012 for 44 months (which is approximately 3 1/2 years) may have ended in Jan 2016.

(2) If my guestimate is correct, the latest Q4 FY2016 annoucement has concluded the last part of Revenue & Earning for 2012 LRT extension work. In another word, the contribution of LRT extension work may have come to the end. 

(3) From the past 4 years Metering Result, it growth steadily from 15 mil to 23.6 mil annualy. Based on latest Jan 2016 segment profit ratio, water meter has contributed 28% and engineering has contributed 72%. I think is fair for me to use the same 28% & 72% to translate the NET Profit Contribution both segment from full year of about RM 50.3 million. 

So, 

Engineering Segment = 50.3 x 72% = 36.2 mil / 300,410,000 shares = 12.05 sen EPS annually

Water Segment = 50.3 x 28% = 14.08 mi / 300,410,000 shares = 4.68 sen EPS annually 

Since the contribution for LRT extension work has ended, the 12.05 sen should be excluded from future estimation of EPS.

Now,

Let add in LRT 3 project which will contribute from 2016 - 2020 for approximately 5 years. Hospital kuala lipis contract will end in one year time, therefore, i take it out from calculation.

For Gkent engineering segment,

i roughly put the order book at RM 4,500 mil for 5 years.

For easy calculation, i used 6% as net margin (which in actual i believe is lower eventhough Gkent act as project delivery partner)

Annnual Sales = 4,500 mil / 5 years = RM 900 mil

Annual Profit 900 mil x 6% = RM 54.0 mil 

Annual EPS 54.3 mil/ 300,410.000 = 18.1 sen EPS per year 

For Gkent meter segment, it gives 4.68 sen EPS per year

Total EPS per year = 22.8 sen 

If PE is 10, the share price is worth RM 2.28 per share. 

At current share price of RM 1.80, there maybe some room of profit if based on latest financial result.

However, IF MY GUESTIMATE IS CORRECT, the room for share price appreciation maybe limited for Gkent when future EPS can only be achieved at 22.8 sen per year.

To add salt onto the wound, for large scale long term infra project, lesser profit during the early part of the project, and more profit recognised towards the end of 5 years contract (i suspect this is the reason why the 22% operating margin is recorded in Q4 2016), the EPS of 22.8 sen may be achieveable only from 2018 onwards? Maybe..I am not very sure either.

Anyway, above are just my speculative guestimate. I may be right, may be wrong. 

Furthermore, Gkent may acquire more projects in the future. So, please treat this article for reading pleasure only. It is definately not a buy/ sell recommendation.

cheers,

YiStock

29th March 2016

COMCORP - Too Many "?"

Comcorp - Lots of "?" - YiStock

Author: YiStock   |   Publish date: Sat, 26 Mar 2016, 12:01 PM 

---

H
Happy Weakend. 
Comcorp was among the highly traded stock yesterday due to "impressive" quarter report released just the day before. As "usual", they released incomplete Q report on 24th March 2015, just like when they released an incomplete quarter report back on 17 Dec 2015.
However, there is a key different here, on 18 Dec 2015, there was a trading halt on 19th Dec 2015 where the "completed" Q report was released before commencing of trading session. But such trading halt is not initiated yesterday prior to market open. In fact, the trading volume was fanstasticly high. 46.8 million vs total outstanding shares of 140 million. 
Anyway, above is not what i trying to understand. 
I'm still learning on analising the financial report, there are still many areas which i failed to link together to capture all the possible tail sign of opportunity and threat. 
Comcorp's latest Q report is one example that i need help from many expert out there to help me to link the data to have clearer picture of what is going on.

Based on above latest Q 4 report, (the company itself has "red" those figures)
1) there is a RM 13.4 million "Other Income" which is new in this quarter. However, YTD total RM 37.5 million does not seem tally with Q1, Q2 & Q3 where the "Other Income - excluding interest income)" is only at RM 0.159 mil ; RM 0.341 mil & RM 0.289 mil respectively. There is a big shortage different of RM 23.3 mil for 4 quarters.
2) also in recent quarter report, they are crediting "NEGATIVE" Interest Expenses. Is there a typo error?
If there is typo, then not so bad. Because 13.4 million - 8.9 million = RM 4.5 million net Other Income which may/ may not be seen again in coming quarters. In another word, this quarter result of RM 6.106 million has included this RM 4.5 million which is not seen in previous quarter. I usually put this other "one-off" non-recurrence income/ exceptional income.
If it is not typo, that sum will top up to "Other Income" which essentially become 13.4+8.9 = RM 22.3 million (non-recurring?). I do occasionally saw "negative" Tax which i interprete as tax refund. I am confused on this part. Seriously confused.
3) Based on NOTE B7, the company highlight that they didnt dispose any investment or property during the quarter. And they didnt clarify where the "Other Income" is from?
4) Interest Expenses of RM 8.9 million is also way too high compared to previous many quarters.
5) NOTE B11, is there a typo too? Hire Purchase become RM 78.5 million??

Obvious Opportunity:
-Company to continue proper on the manufacturing part due to weak ringgit
-The Enegegy segment is likely contributing start from May 2016
Obvious Threat:
- Company has 2 consecutive years of NEGATIVE FREE CASH FLOW.
-The question marks remain question marks.

I did not buy into the share eventhough seeing the share price rocketing. I was expecting a trading halt but it didnt happen.

Expert please offer help. I will buy into it when above are cleared.

Cheers,
YiStock

TIEN WAH - Message from Latest Audited Report

Tien Wah has on today 22 March 2016 released it audited 2015 financial report.

From the latest report, there are 2 issues that we can conclude.

(1) There will be No Impact by the restructuring exercise of main customer, BAT as Tien Wah will still supply to BAT malaysia via regional factory.

(2) Net NEGATIVE USD Exposure of Tien Wah which Tien Wah will benefit from "Strengthening" of Ringgit 

Cheers!

KIM LUN - Transforming

Kimlun is a Johor based construction company listed in Bursa Malaysia on 25 Jun 2010. The business of Kimlun consist of 3 main segment: Construction, Manufacturing & Property Development. Brief History: Started as construction company in 1970s, the company focus was primary the main or subcontractor for other reputable developers as well as civil works for public amenities in Malaysia. It also manufacture precast concrete products via its wholly subsidiary SPC Industries Sdn Bhd. since 2002. Subsequently in year 2011, the company had diversified into property development itself to build and sell property projects in Iskandar Malaysia.  Based on announcement in year 2012, Kimlun received its first Segment Box Girder project worth RM 223 million from MRT Corporation Malaysia for the MRT project from Sungai Buloh to Kajang. However, Kimlun has long established it expertise in supplying precast concrete products, mainly precast tunnel linings, and precast pipes, to Singapore LTA and PUB back in 2005. For the past 3 years, i didn't pay much attention to this company simply due to its high debt level. I remember my sifu has used kimlun as one of example when trying to explain Dupont's ROE to us. When the property sector within Iskandar Malaysia region showed sign of slow down since 2014, this stock was basically "frozen" in the fridge. Key Financial Highlight (1): Income Statement Recently having meeting with one of my friend familiar with the industry, i started to look at Kim Lun. I didn't buy into it until the announcement of Q4' 2015 result. Below key financial figures for Kimlun from 2012 to 2015: Kimlun NOPAT was rather flat from year 2012 to 2015. However, it achieved a total of RM 70.7 million for FY 15, this is 58% higher than what it achieved in FY 2014. According to the management, the better result was due to better margin for both manufacturing and construction projects. I tried to break the segment report for past 8 quarters into individual item and i noticed the margin of both construction and manufacturing segment are indeed much much better compared to before. Important Observation: 1) The margin for construction has grown from 6.42% to 9.3%. 2) The margin for manufacturing has grown more than double from 14.4% to 33.8%. I believe this is due to better economy of scale. 3) The income contribution from precast product has surpassed construction segment for the 1st time. I see this as a good move. According to local report, Kimlun is one of the 2 major supplier of precast SBG and TLS in Malaysia. I believe this give them a special niche and such specialty enable them to enjoy better product margin compared to highly competitive construction segment. Financial Highlight (2): Balance Sheet and Cash Flow Statement Important Observation: 1) Improving cash level, asset, EBIT 2) Noted CAPEX was pretty big in 2012 Key Analysis: Key Ratio: Important Observation: (1) Kim Lun is improving its balance sheet. Financial Leverage was a concern last time, but it is improving. I hope it will improve further. (2) Interest coverage of 11 times. (3) + FCF is noticed for 2 consecutive years. (4) Not a class A balance sheet but not that bad i guess. Valuation: At current share price of RM 1.81, Kimlun is certainly not an expensive pick based on it current order book of RM 1.4 billion (inclusive of recent win on Pan Borneo Highway).  Below i extracted from 2 Research Report. Kim Lun is focus a lot into infra works.  Hong Leong: Highlights Pan Borneo award... Yesterday, we attended Kimlun’s investor’s briefing which was represented by its CEO, Mr Sim Tian Liang and CFO, Ms Vennessa Yam. Subsequently, it was announced that the 70:30 JV between Zecon (not - rated) and Kimlun was awarded a package of the Pan Borneo Highway (PBH) from the Serian roundabout to Pantu Junction worth RM1.46bn (Kimlun’s share: RM438m). ...providing the boost. This contract significantly boosts Kimlun’s orderbook by 47% to RM1.4bn, implying a cover ratio of 1.6x on FY15 construction revenue. Job wins have been strong YTD at RM711m, almost matching FY15 full year sum of RM750m. Management is targeting another RM300-500m in new job wins for the remainder of FY16. Countering the slowdown. Management highlights that the slowdown at Iskandar has impacted high rise buildings the hardest. To counter this, Kimlun is tapping on other segments such as affordable housing, factories and industrial buildings. This appears to be paying off with RM270m worth of building related jobs secured YTD. Hitting harder on infra. Kimlun has also started to tender more aggressively within the infra space, evidenced by its recent win of the PBH package. It has submitted its bid for the Central Spine Road (RM8bn) both as a main and subcontractor. Apart from that, it has also been invited by Prolintas to bid for the 8 work packages involving the DASH (RM4.2bn) and SUKE (RM4.3bn) highways. These highway packages have been excluded from management’s new jobs win target. Prequalified for MRT2. Kimlun has submitted its bid to supply segmental box girders (SBG) for the MRT2 while tenders for the tunnel lining segments (TLS) have yet to be called. For MRT1, Kimlun managed to secure 50% of the SBG (RM223m) and TLS (RM48m) requirements. We expect this to be no different for MRT2 as Kimlun’s plant in Senawang is strategically located for logistical reasons and has sufficient capacity. Kenanga: Outlook As of FY15, its outstanding orderbook for construction and manufacturing stands at RM0.94b and RM0.17b, respectively. That said, their JV venture has unbilled sales of RM11.0m from the HYVE project, providing a visibility of 1 – 1.5 year. Outlook remains bright as more upcoming jobs are expected from: (i) governmental affordable housing jobs whereby >70% of IBS components compliance are requirements for these jobs, (ii) railway's material supply jobs, i.e. SBG and TLS to KVMRT2/LRT3, and (iii) Singapore MRT line extension and other sewerage projects. Our replenishment target for FY16 stands at RM700m which we deem achievable considering that KIMLUN has achieved slightly >RM600m in FY15. Based on above 2 research house, the news on KVMRT2/LRT 3 has been the key focus on most research house.  However, I'm also very keen to look into Singapore Projects. Below tables shows some of the past project won by Kim Lun. Majority of its were from Singapore Government Sectors. In fact, Kim Lun "repeatedly" win projects from Singapore. There is one part which hardly touch by research house is the DTSS phase II project which Kim Lun has involved in Phase I.  In 2014 annual report, Kim Lun has touched on the outlook of project in Singapore.  Based on above, i did a search to Singapore LTA and PUB website for the latest info. I see tremendous opportunity for Kim Lun especially:  (1) Cross Island Line  (http://www.lta.gov.sg/content/ltaweb/en/public-transport/projects/cross-island-line.html) This is a massive project which Environmental Impact Assessment (EIA) has completed the environment impact study. Spanning Singapore, the Cross Island Line (CRL) will be about 50km in length and is targeted to complete around 2030. Basically, either route chosen, the project will be massive. i) Direct alignment - 2km tunnel below the CCNR - Approximately 40m deep - No physical structure on the surface level ii) Skirting alignment - 9km under homes and businesses - Supporting ventilation facilities on the surface level (2) Deep Tunnel Sewerage System Phase II, 2016 (DTSS II) http://www.pub.gov.sg/dtss/Pages/default.aspx DTSS Phase 2 comprises: - A 30km long South Tunne - 70km of link sewers to cover the western part of Singapore, including the downtown area and major upcoming developments such as Tengah Town What Else? Kim Lun's wholly owned subsidiary KL Building Materials S/B has recently acquired 51% of Rock Projects S/B. The company has entered into agreement with koperasi Pena: "RPSB had on 3 September 2015 entered into a Quarry Operation Agreement (“QOA”) with Koperasi Pena (“Koperasi”), which has secured the conditional approval from Jabatan Perhutanan Negeri Johor on quarry extraction on part of Kompartmen 16, Gunung Pulai Forest Reserve measuring 50 acres (“Land”) (“the Approval”), on 17 February 2015. The conditions imposed in the Approval include: (i) the obtainment of the Minor Licence (“ML”) and Use Permit (“UP”) required for the implementation of the scope of works under the QOA, under the National Forestry Act 1984 Johor (“NFA”); (ii) compliance with all conditions to be imposed in the UP; (iii) the obtainment of the approval of Environment Impact Assessment (“EIA Approval”); and (iv) Replanting of the Land" The profit that generated from above 50 acres (is pretty huge) above project, 65% will goes to Rock Project, 35% will goes to Koperasi Pena. From the 65%, KimLun will be getting 51%.  This will become another source of income for Kim Lun on top of current Sri Pulai Quarry.  The 50 acres should be sufficient to supply to Kim Lun for the next many year's project Conclusion: I like Kim Lun due to: (1) Improving balance sheet (2) Order book at RM 1.4 billion which give earning visibility of 1 year to 2 (3) Aggressively tendering the infra project both in Malaysia and Singapore. (4) Improving margin for the project. (5) Manufacturing with better margin now play equal role. (6) Valuation is certainly not expensive.