I Love Starbucks

Company Background – Berjaya Food Berhad (“BFood”)

BIZD_MM_1609_p5a_32p.JPG

BFood engages in the development and operation of the Starbucks, Kenny Rogers Roasters and Jollibean Foods café and restaurant chains.
Technically Speaking 
Bfood_tech.png
Oversold positions are seen as well as it has reached the lower bound of Bollinger Band. Strong support line at RM1.80, we may potentially see an upward rebound from the support line.

Fundamentally Speaking
BFood_Fundamental.png
Based on the above simple desktop analysis, the current equity value is estimated to be approx. RM1.70 and it is expected to increase to RM1.90 by end Apr 2017 (based on annual expected return of 12.0%).

Analysts‘ Current Target Price

Bfood_target.png

At current trading P/E in excess of 25.0x , it is definitely not cheap. However, given the fact that it is in oversold position as well as the price has been supported by the numerous Buy calls by analysts, this may represent potential trading opportunities.

DISCLAIMER: ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Temporarily No Power?

Company Background – PWRoot

Power Root Home1-750x750.jpg

Power Root Berhad, through its subsidiaries, engages in the manufacture and distribution of beverage products primarily in Malaysia. It provides ready-to-drink (RTD) coffee, RTD tea, RTD chocolate malt drinks, RTD cereal, and energydrinks. The company markets its products primarily under the Alicafe, Perl Cafe, Oligo, Alitea, and Power Root brand names. It also distributes health and beauty products. Power Root Berhad also exports its products to 18 countries, including Singapore, the United States, the Republic of Taiwan, South Korea, Brunei, the United Arab Emirates, the Republic of China, Bahrain, Qatar, Oman, the Kingdom of Saudi Arabia, Indonesia, Syria, Kuwait, Yemen, Jordan, Egypt, and Lebanon, as well as re-exports its products through overseas distributors/traders to Sudan, Australia, the United Kingdom, and the Philippines. The company was formerly known as Natural Bio Resources Berhad and changed its name to Power Root Berhad in July 2010. Power Root Berhad was incorporated in 2006 and is headquartered in Masai, Malaysia.

Declining Price Trend?

PWROOT_price.png

It appears that PWRoot is “lacking power” as it is currently facing downward price pressure with support lines at RM1.78 and RM1.38. Nevertheless, PWRoot is a fundamentally strong consumer company with financial strength:

 

Trend Trailing 12M
Dec 2015
Full Year
Mar 2015
Full Year
Feb 2014
Full Year
Feb 2013
Per Share Data (Adjusted)
[+] Earnings Per Share (EPS) – Adjusted [RM]
(Earnings/Latest Number Of Shares)
0.18668 0.14172 0.12751 0.11309
[+] Net Asset Value (NAV) Per Share – Adjusted [RM]
((Shareholders’ Equity – Other Share Capital)/Latest Number Of Shares)
0.7824 0.7595 0.7259 0.6709
[+] Net Tangible Asset (NTA) Per Share – Adjusted [RM]
((Shareholders’ Equity – Other Share Capital – Intangible Assets)/Latest Number Of Shares)
0.7663 0.7434 0.7084 0.6534
Valuation Ratios (Adjusted)
[+] Price Earnings Ratio (PER) – Adjusted
(Price/Adjusted EPS)
11.30 14.89 16.55 18.66
[+] Price/NAV – Adjusted
(Price/Adjusted NAV)
2.6969 2.7780 2.9069 3.1449
[+] Price/NTA – Adjusted
(Price/Adjusted NTA)
2.7537 2.8384 2.9788 3.2295
[+] Price/Revenue – Adjusted
(Price x Latest Number Of Shares/Revenue)
1.692 1.674 2.091 2.296
[+] Price/Operating Cash Flow – Adjusted
(Price x Latest Number Of Shares/Operating Cash Flow)
10.027 9.510 16.894 27.916
[+] Price/Free Cash Flow – Adjusted
(Price x Latest Number Of Shares/Free Cash Flow)
10.876 11.335 19.983 52.741
[+] Dividend Yield – Adjusted [%]
(Gross Dividend Per Share/Price)
5.924 4.728 4.223 3.274
[+] Dividend Yield incl Special Dividend – Adjusted [%]
(Total Dividend Per Share/Price)
5.924 4.728 4.223 3.274

Analysts’ Price Target

Date Open Price Target Price Upside / Downside Price Call Source
23/12/2015 2.75 3.10 +0.35 (12.73%) TRADING BUY KENANGA

If PWRoot continues to maintain its strong business and financial fundamentals, it is not unreasonable to assume PWRoot’s share price will rebound in the long run.

DISCLAIMER: THIS SITE IS FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Do You Drink Ho Yan Hor?

Company Background – Hovid Berhad

hyh.jpg

Their globalization corporation stemmed from a humble herbal stall. Along with its rich heritage, Hovid (formerly known as Ho Yan Hor) carries with her years of invaluable experience in the pharmaceutical industry. Dating back to 1945 when the business was first established, Hovid’s only commodity was Ho Yan Hor herbal Tea, concoted by its founder, Dr. Ho Kai Cheong. The popularity of the tea soon made it a household name in Malaysia.

Current Price Trend – Hovid Berhad

Hovid_BB.png

Since Dec 15, its share price has trended lower, currently at the edge of the lower bound of the Bollinger Band. Consequently, this may lead to potential rebound in the share price. In respect of analysts’ price target of Hovid, this ranges from RM0.43 till RM0.555 (based on year 2015):

Hovid_PT.png

It appears that there is room for potential price appreciation for Hovid.

Trading Opportunities Using Hovid Warrant (“Hovid-WB”)

One way of capitalising on the potential rebound of Hovid is to trade via its warrants Hovid-WB, which are currently trading at zero warrant premium:

Price (MYR) 0.1800 Implied Gearing 1.766 Conversion Ratio 1 Share : 1 Warrant(s)
Premium (%) 0 Simple Gearing 1.766 Expiry Date

(Countdown)

05 Jun 2018 (759 days)
Outstanding Warrants 330,398,629 Underlyings (Price) HOVID (0.415)
Listing Date
Exchange Code 7213WB.MY ISIN Code MYL7213WBS61

Based on a simple desktop analysis, the following relationship is established between the share prices of Hovid-WB and Hovid:

Hovid_RR.png

Based on the above statistical relationship:

Share price (Hovid-CB) = -0.09811 + 0.8244 x (Share Price of Hovid)

Hovid_F.png

Currently, it appears that Hovid-CB’s share price of RM0.235 is relatively lower than its forecast value of RM0.244, with a 95%-confidence interval of RM.213 – RM0.275.

If Hovid’s share price increases from its current price of RM0.415 to:

  1. RM0.43: Hovid-CB -> RM0.26
  2. RM0.45: Hovid-CB -> RM0.27
  3. RM0.48: Hovid-CB -> RM0.30
  4. RM0.51: Hovid-CB -> RM0.32
  5. RM0.55: Hovid-CB -> RM0.36

The good thing is that Hovid-CB expires in Jun 2018 (approx. 2 years from now). Ample time to ride through the market volatility. However, we need to be mindful of the  impacts  resulting from the implementation of TPPA on the pharmaceutical sector (http://www.theborneopost.com/2015/10/15/tpp-to-impact-pharmaceutical-sector/).

DISCLAIMER: THIS SITE IS FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Where is FBMKLCI heading now?

Fundamentally, it is relatively expensive at 1,673 (at a trading P/E of more than 18.0 times). Technically, where is it now?

FBMKLCI has been a bull rallying from its double bottom in 2009 till Aug 2014, when its long term upward trend was broken.

KLCI_1_break.png

From another angle, we see the moving average bearish cross whereby 50D MA crosses below 200D MA towards the end of year 2015, signalling further downside risk.

KLCI_2_goldencross.png

Personally, if FBMKLCI trades below the support line of RM1,503, we should expect further weakness in the index. We may also see potential trading range bound of  RM1,503 – RM1,718 in the short-medium term.KLCI_3_support & resistance.png

If FBMKLCI trends below the critical threshold of 1,500, this shall be lower than the lower bound as per statistical prediction from Tradingeconomics.com:

malaysia-stock-market-forecast@2x.png

Forecast Actual Q2/16 Q3/16 Q4/16 Q1/17 2020 Unit
Stock Market 1673 1680 1630 1570 1540 2140 points
Malaysia Stock Market (FTSE KLCI) forecasts are projected using an autoregressive integrated moving average (ARIMA) model calibrated using our analysts expectations. We model the past behaviour of Malaysia Stock Market (FTSE KLCI) using vast amounts of historical data and we adjust the coefficients of the econometric model by taking into account our analysts assessments and future expectations. The forecast for – Malaysia Stock Market (FTSE KLCI) – was last predicted on Sunday, May 1, 2016.

Source: http://www.tradingeconomics.com/malaysia/stock-market/forecast

 

DISCLAIMER: THIS SITE IS FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Time to enter SKPetro?

Today’s headlines: Seadrill exits company by selling 8.2% stake for $195 million

KUALA LUMPUR (NewsRise) –Bermuda-based deep-water drilling contractor Seadrill said it has sold its entire stake in Malaysia’s largest oil and gas service provider SapuraKencana Petroleum for $195 million.

Seadrill sold its remaining 490 million shares, equivalent to 8.2% stake in SapuraKencana, and proceeds from the share sale will provide “additional liquidity” and funds for “general corporate purposes,” the company said in a brief statement on its website.

 The exit of Seadrill, widely-seen as a strategic partner of SapuraKencana, may dent investor sentiment in the short-term though the move was driven mostly by Seadrill’s need to secure cash to service debt amid persistent weakness in the oil and gas sector, analysts said.

“The sale of SapuraKencana shares near the historical low is not entirely surprising given Seadrill is facing pressure to conserve cash,” said Kenanga Investment Bank analyst Sean Lim. “We gather that the transaction is done” at 1.58 ringgit apiece, a discount of 10.7% to the last traded price of 1.77 ringgit.

Seadrill was SapuraKencana’s second-largest shareholder with more than 12% stake when it was listed in 2012 following the merger of SapuraCrest Petroleum and Kencana Petroleum. Seadrill had halved its stake shortly after SapuraKencana’s listing.

A year later, the two companies moved to combine their tender rig businesses in an 8.78 billion ringgit exercise, expanding SapuraKencana’s presence further to Angola, Equatorial Guinea, Trinidad and Tobago. Seadrill last sold 3.8% stake in SapuraKencana in 2014.

The rapid decline in oil prices since mid-2014 however prompted the world’s oil majors to scale back or halt expansion of their exploration and production activities, weighing on demand for services of SapuraKencana and Seadrill.

“Seadrill has a huge accumulation of borrowings and poor cashflow backlog, given the need to sustain debt obligations [amid] persistent weakness in the rig chartering industry,” UOB Kay Hian said in an investors note.

By June, Seadrill would need to restructure loans and bonds worth $11 billion. “Therefore, it is not surprising that it has to dispose of its investments in SapuraKencana, even if the disposal values fall below the blended costs of investment,” the brokerage said.

Though Brent, the global benchmark for crude oil prices, has risen 27% so far this year, prices were still over 60% lower than its peak in June 2014. 

http://asia.nikkei.com/Business/AC/Seadrill-exits-company-by-selling-8.2-stake-for-195-million

 

With this new development, SKPetro dropped 7.34% to RM1.64, dragging FBMKLCI index as well. However, it is the right time to enter into SKPetro?

Performed an updated statistical analysis to assess the relationship between the share price of SKPetro and movements in Brent Crude Oil:

SKPetro_ModelResults_28042016.png

Based on the above relationship, let’s do a quick comparison between the actual and forecast share price of SKPetro:

SKpetro_forecastvsactual_apr2016.png

At brent crude price of USD47.34 (as of 28 Apr 2016), the current share price of SKPetro (RM1.64) appears relatively undervalued if compared to its forecast share price of RM2.2054, with a 95%-confidence interval range of between RM0.9160 –   RM3.4948

What are analysts’ current target price for SKPetro?

Date Open Price Target Price Price Call Source
28/04/2016 1.63 1.93 HOLD KENANGA
28/03/2016 1.89 1.88 SELL TA
28/03/2016 1.89 2.42 BUY RHB-OSK
28/03/2016 1.89 2.72 BUY MIDF
28/03/2016 1.89 1.93 HOLD KENANGA
28/03/2016 1.89 2.75 BUY JF APEX
28/03/2016 1.89 1.81 SELL HLG
22/02/2016 1.94 2.38 BUY KENANGA
11/02/2016 1.77 1.80 HOLD MACQUARIE GROUP
05/02/2016 1.85 1.65 SELL TA

Despite the analysis above, we should wait for SKPetro’s next quarterly result whether there is any further impairment in the assets of this company.

 

 

DISCLAIMER: THIS SITE IS FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Year 2023

Today, the FBMKLCI  dropped below the crucial threshold of 1,700 points due to prevailing negative sentiments surrounding the default of Government-linked investment fund, 1MDB in paying its interest due. Ringgit closed lower too. There is simply too much volatility in the current investing environment. Personally, I foresee that the volatility will continue to increase over the next 1-2 years in view of growing uncertainties with domestic and international front. Nevertheless, we can’t stop investing because of fear. We should always take a longer term view when comes to investing. One such instrument that may be considered by investors for the purpose of long term investing is the call warrant issued by Malaysian-listed BIMB Holdings Berhad. This long-dated call warrant will expire in the year of 2023 and some of its terms are summarised as follows:

Exercise Price (MYR) 4.7200 Implied Gearing a 7.647 Conversion Ratio 1 Share : 1 Warrant(s)
Premium (%) 32.115 Simple Gearing 11.265 Expiry Date b (Countdown) 04 Dec 2023 (2,777 days)
Outstanding Warrants c 426,715,878 Underlying (Price) BIMB (3.830)
Exchange Code 5258WA.MY ISIN Code MYL5258WAXC6

Let’s do a quick desktop analysis to assess whether BIMB’s warrants (“BIMB-W”) are relatively overvalued or undervalued. A simple regression analysis is performed between the price of BIMB-W and its mother share, BIMB:

BIMBW-model.png

Based on the above statistical relationship:

Const -1.74
BIMB 0.54640
-25% -20% -15% -10% 0% 10% 15% 20% 25%
BIMB 2.87 3.06 3.26 3.45 3.83 4.21 4.40 4.60 4.79
BIMB-W (forecast) 0.00 0.00 0.04 0.15 0.36 0.56 0.67 0.77 0.88
BIMB-W (actual) – 26 April 2016 0.34

BIMBW_forecast.png

Currently, BIMB-W appears to be fairly valued with a forecast value of RM0.36 against actual value of RM0.34. The 95%-confidence interval for forecast value of BIMB-W is between 0.160 and 0.552.

From a different perspective, this desktop analysis shows that that when BIMB (mother share) ever reaches RM3.18, the value of BIMB-W is expected to approximate zero or in another word, the capping warrant premium for BIMB-W is 48.2% (based on the exercise price of RM4.72). We should expect BIMB-W to reverse downward when its warrant premium approximates 48.2%.

The good thing about using longer-dated warrants (or options) is that the value will not be impacted significantly by its time decay property.

What are analysts’ current target price on BIMB?

Date Open Price Target Price Price Call Source
25/03/2016 3.75 4.10 HOLD RHB-OSK
08/03/2016 3.65 3.68 HOLD ALLIANCE
03/03/2016 3.69 4.10 BUY RHB-OSK
03/03/2016 3.69 4.22 BUY MIDF
03/03/2016 3.69 3.90 HOLD MAYBANK
03/03/2016 3.69 4.30 HOLD KENANGA
03/03/2016 3.69 3.85 HOLD ALLIANCE
01/03/2016 3.60 4.22 BUY MIDF
29/02/2016 3.57 3.90 HOLD MAYBANK
29/02/2016 3.57 4.07 HOLD KENANGA

 

 

 

 

DISCLAIMER: THIS SITE IS FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

The Irrational Market (Part 2)

Despite negative economic data / news, Malaysia’s FBMKLCI continues its climb, breaching its historical high price-to-earnings PE of 18x.
  

It was not the fundamentals that drove the increase in the index but for the inflow of foreign funds resulting from a delay in US rate hikes as well as negative yield global environment.

Deep inside, there are inherent problems associated with Malaysia. Slowing economy, rising unemployment, rising household debt & non-performing loans, etc. 
What happen next: wait for May, when most ListCos will report their Q1 results. Expect to see a deepening crisis in the making….

DISCLAIMER: THIS SITE IS FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.