Do You Believe That The Export Market Will Continue To Grow?

News extract: KUALA LUMPUR — Malaysia’s exports in June expanded 10% year on year to 73.1 billion ringgit ($17 billion), slower than the 32.5% growth logged a month before, on reduced shipments across major products. In the first half of 2017, exports grew 21% to 451 billion ringgit while imports increased 23% to 408 billion ringgit. Nomura Group said the export slowdown is temporary and things should pick up in July as demand remains robust across the region. Malaysia’s export performance fell in line with its peers in the region such as Singapore’s 8% and Thailand’s 12% growth, according to UOB Group. “We continue to expect moderating export growth going into the second half of 2017 amid ebbing momentum in Asia’s manufacturing activity,” wrote UOB’s Julia Goh in a research note. 

My question to you : Do you believe that the export market will continue to grow?

Continue reading “Do You Believe That The Export Market Will Continue To Grow?”

Believing The IPO Story

Newly-listed Ranhill Holdings Berhad (“Ranhill”) closed at RM1.01 on its debut day (down from its IPO price of RM1.20 per share). Initial IPO price was set at RM1.70 per share but was subsequently revised down to RM1.20 per share. http://www.dealstreetasia.com/stories/malaysia-ranhill-makes-soft-market-debut-optimistic-of-prospects-34375/

Possible reasons that could explain such poor debut:

Potential Upside?

Are we going through another failed IPO? I beg to differ in this case, as it is backed by stable cashflows & long term power & water concession assets. Hence, we should assess the counter based on its potential dividend yield. Yield is a very important consideration considering there is a prevailing global trend towards negative yield / interest rate. The Star reports : “At its price of RM1.01, Ranhill’s shares are now trading at a projected dividend yield of between 6.5% and 7.7% for financial year 2016 (FY16).”  http://www.thestar.com.my/business/business-news/2016/03/17/ranhill-in-lacklustre-debut/

Public Research has a target fair value of RM1.25 (revised) pegged to this counter. http://www.thesundaily.my/news/1722210

We also saw some support coming from some institutional buyers (e.g LTH) which have been accumulating the counter:

No Announcement Date Company Title
1 28 Mar 2016 RANHILL HOLDINGS BERHAD Changes in Sub. S-hldr’s Int. (29B) – LEMBAGA TABUNG HAJI

2 25 Mar 2016 RANHILL HOLDINGS BERHAD Changes in Sub. S-hldr’s Int. (29B) – LEMBAGA TABUNG HAJI

3 25 Mar 2016 RANHILL HOLDINGS BERHAD Changes in Sub. S-hldr’s Int. (29B) – LEMBAGA TABUNG HAJI

Would the rebound continue?

As of today, Ranhill rebounded from its low of RM1.01 to RM1.10 (current). Personally, the dividend yield range of 5.0% – 5.5% would cap the maximum price range of Ranhill. Assuming a forecast dividend of RM0.065 /share, we are looking at a potential range of RM1.18 – RM1.30

Another important consideration is that there could be potential volatility in the share price of Ranhill once the lockup arrangements with selling shareholders / investors expire 180 days from the listing date (16 March 2016) (http://www.bursamalaysia.com/market/listed-companies/company-announcements/4963809)

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