Oscar's Portfolio - 23/09/2014

SELL SUNWAY (5211) at 3.61 for 200 units.

Gain - 8.18%

Review from CIMB

Target RM3.85 (Stock Rating: ADD)

Sunway's proposal to relist its construction arm was a positive surprise. While the listing exercise would further unlock value, the main appeal is the potential special cash dividend distributable to existing Sunway shareholders. We estimate a base-case of 20-30 sen/share, which translates to an attractive yield of 6-9% excluding normal dividends. This will materialise in FY15 given the IPO timing of 2Q15. We estimate a 5-6% dilution to FY15-16 EPS arising from the almost halved stake in the list-co, but dilution to RNAV is largely offset by the proceeds raised. We raise our RNAV-based target price as we update for SunReit's market cap and land values (still based on a 20% discount). Maintain Add. The special cash dividend is the key catalyst.

What Happened 

Sunway Bhd has announced plans to re-list Sunway Construction. The deal structure comprises a dividend-in-specie of the listco's shares to Sunway shareholders and an offer-f0r-sale (OFS). Post IPO, Sunway Bhd's stake in the list-co Sunway Construction Group (SCG) will decline from 100% to a minimum of 51%. IPO details should be available in 1Q15 and listing is targeted for 2Q15. A "substantial portion" of the listing proceeds will be "rewarded" to Sunway's existing shareholders as special cash dividends, Sunway Bhd said. 

What We Think 

While the IPO plans for SCG was a surprise, we are overall positive about this move as it would enable Sunway to unlock the value of its construction arm. However, we expect the main appeal arising from the listing plans of SCG to be the potential cash dividends for Sunway Bhd's shareholders. Based on our sensitivity analysis, Sunway Bhd should be able to pay out a minimum of 20-30 sen/share in special dividends, on top of the normal dividends of 10 sen p.a. For the listco SCG, it will be profiled as a pure contractor with an outstanding order book of RM3.4bn, with growth driven mainly by domestic jobs. Construction constitutes 60% of SCG's net profit while precast concrete products make up the balance. 

What You Should Do 

Accumulate ahead of the IPO exercise. Our estimate of the potential DPS translates to a dividend yield of 6-9% for FY15, excluding normal DPS. This immediately puts Sunway ahead of other contractors under our coverage that currently offer between 3 and 6%. The dividend angle adds on to the likely strong job flows over the next few months. The group's aggressive target of at least RM1bn worth of contracts by year-end is still within reach.

Oscar's Portfolio - 19/09/2014

AEONCR (5139) AEON CREDIT SERVICE (M) BHD

AEONCR just declared an Interim single tier dividend of 27.40 sen per ordinary share of RM0.50 each for the financial year ending 20 February 2015 on 18/09/2014

Will the company go for bonus issue again to improve the stock's liquidity?

EPS is improving each quarter which makes me want to buy this stock at RM16.00, guess I can only buy 100 units with balance fund I have. 

PMETAL or AEONCR? 

Oscar's Portfolio - Weekly Performance

My portfolio increased while regional market continued to fall.

Portfolio valued up 1.43% while FBM KLCI fell by 1.87% since last week.

No transaction for the last 2 tradings.

PMETAL still at radar.

I am using JStock to keep track all my transactions

The apps is free and user-friendly. Download the apps now

Screenshot of the apps.

Oscar's Portfolio - 17/09/2014

Answer: PMETAL(8869)

Recommended by KENANGA

Riding on aluminium price recovery. We hold a bullish view on aluminium prices, premised on the increasing popularity of aluminium in the auto industry as a steel alternative, growing demand in emerging markets, and declining global production rates. Thus, we expect aluminium prices to increase to an average of USD1900/MT (+3%) in FY14E and USD2100/MT (+11%) in FY15E. Based on our sensitivity analysis, every USD100/MT increase in aluminum prices could directly translate into a 5% increase in Press Metal (PMETAL)’s bottom line. Hence, we believe PMETAL should benefit directly from the higher price trend as 97% of revenue is derived from its Manufacturing & Trading (M&T) division, which sells aluminum ingots, billets and extrusion products.

Margin expansion in M&T division to drive earnings growth. We are expecting M&T division’s margin to expand significantly by 4.5 times to 8.6% (from 1.9% in FY13). Note that the large quantum of growth is due to a low base effect in FY13 as a result of the Mukah plant shutdown which depressed FY13 earnings. Our margin expectation is on the conservative side, as it is similar to the FY12 level of 8.6%, even though margin should see improvement vs. FY12 due to the new and higher energy-efficient Samalaju plant. As for FY15, we expect PBT margin improvement to 9.2% as the Group is embarking on additional logistics upgrades, which should lower average manufacturing cost per MT. Furthermore, the company is targeting to increase its alloyed aluminum production to 40% by FY16E, which commands a better price premium with minimal additional capex. Overall, we expect the margin expansion to flow straight to bottom line as M&T division contributed 97% of PMETAL’s revenue and 99% of PBT in FY13.

Expect FY14E revenue to surge 25% due to capacity expansion. On top of margin expansion, we are also expecting superior revenue growth of 25% to RM3.9b in FY14E on additional capacity expansion. PMETAL has continued to ramp up production at the Samalaju plant by 33% to its full rated capacity of 320k MT/year of aluminum production. We expect the newly-added capacity to boost revenue immediately. This is because each ‘potline’ consists of about 150 aluminium smelting pots which are operated as a batch. The smelting process runs continuously with each pot producing almost 3 MT of aluminium per day. Hence PMETAL’s new expansion should enjoy optimal capacity utilization from the new potline upon commencement of operations. As for FY15E, we expect revenue growth of 16% to RM4.5b, driven mainly by rising aluminium prices and a shift towards value-add alloyed aluminium products, which command a 15-20% price premium above the market price of aluminum.

Sustainable operating margin due to attractive electricity cost. Based on our estimates, PMETAL has a higher-than-average expected FY14E operating margin of 10.8% compared to its regional peers’ average FY14E margin of 4.5%. The margin advantage is due to the attractive electricity costs compared to other aluminium smelters in the region. We expect the high margin trend to be sustainable as the Power Purchase Agreement (PPA) signed between PMETAL and Sarawak Energy (Sesco) in 2011 should be effective for another 22 years. Lastly, we note that PMETAL’s subsidiary Press Metal Bintulu (PMB), which operates the Samalaju smelter, may get an additional 5 years extension for its pioneer status upon expiry in Dec 17 (the current extension started Jan 13).

Trading Buy with a Target Price of RM8.87 based on a target Fwd. P/E of 14.5x on FY15E EPS of 61 sen. Our Fwd. P/E is based on a 5% premium to FBM Mid 70 Index FY15E Fwd. P/E of 13.8x. We believe our benchmark is appropriate as the average FBM Mid 70 (FBM70) market cap of RM4.6b is comparable to PMETAL’s current market cap of RM4.0b. Our premium is justified by strong FY14E-FY15E expected earnings growth of 91%-28%, well exceeding FBM70’s expected 16%-6% growth. At our current TP, we expect a potential total return of 24.1% (21.7% upside, 2.5% dividend yield) which warrants a trading buy recommendation.

Oscar's Portfolio - 15/09/2014

FBM KLCI drop more than 12 points today.  

I didn't perform any transaction today but planning to purchase the stock below with the remaining cash. People call "SAI LANG".

Below is their latest quarter result. Know the answer?

Answer will be reveal the next trading day.

Happy Malaysia Day.

Oscar's Portfolio - 12/09/2014

Buying SUNWAY (5211) at 3.21 for 200 units.


Latest result:

Oscar's Portfolio - 11/09/2014

Buying BONIA (9288) at 1.13 for 500 units.

BONIA opened 21 boutiques and 134 counters this year which ending up a total of 164 boutiques and 1120 counters. I am confident that BONIA is in recovery mode and with its regional expansion to Indonesia (high growth with the populations). It is worth to look at.

Latest result:

Stock Invest For The First Day

This is to record my first investment to Bursa Malaysia. Initial investment will be RM3000.00 and as of today the FBM KLCI is at 1878.85

I am going to post all my transactions over here.

Wish me luck and I wish you all the best for reading this blog.