Just for Laughs

One day, Jimmy Jones was walking down Main Street when he saw his buddy Bubba driving a brand new pickup.Bubba pulled up to him with a wide grin. 
"Bubba, where'd you git that truck?"   "Tammie give it to me." Bubba replied. "She give it to ya?
"I know'd she wuz kinda sweet on ya,but a new truck?" 

"Well, Jimmy Jones, let me tell you what happened. 
We wuz drivin' out on County Road 6, in the middle of nowheres. Tammie pulled off the road, put the truck in 4-wheel drive, and headed into the woods. She parked the truck, got out,threw off all her clothes and said, 'Bubba, take whatever you want.' 

So I took the truck!" 





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Four brothers left home for college, and they became successful doctors and lawyers. One evening, they chatted after having dinner together. They discussed the 85th birthday gifts they were able to give their elderly mother who moved to Florida .

The first said, "You know I had a big house built for Mama."

The second said, And I had a large theater built in the house."

The third said, "And I had my Mercedes dealer deliver an SL600 to her."

The fourth said, "You know how  Mama loved reading the Bible and you know she can't read anymore because she can't see very well. I met this preacher who told me about a parrot who could recite the entire Bible. It took ten preachers almost 8 years to teach him. I had to pledge to contribute $50,000 a year for five years to the church, but it was worth it. Mama only has to name the chapter and verse, and the parrot will recite it."

The other brothers were impressed. After the celebration Mama sent out her Thank You notes.

She wrote: Milton , the house you built is so huge that I live in only one room, but I have to clean the whole house. Thanks anyway."

"Michael, you gave me an expensive theater with Dolby sound and it can hold 50 people, but all of my friends are dead, I've lost my hearing, and I'm nearly blind. I'll never use it. Thank you for the gesture just the same."

"Marvin, I am too old to travel. I stay home; I have my groceries delivered, so I never use the Mercedes.The thought was good. Thanks."

"Dearest Melvin, you were the only son to have the good sense to give a little thought to your gift. The chicken was delicious. Thank you so much."

Love,
Mama

Which type of Investor are you ?

A good friend of mine once asked me this simple but very pertinent question

Is there a one size fits all style of trading or investing in the stock market ? Interesting question considering that we all know that there are countless methods ranging from the software based "scientifically" packaged to the rule of thumb guess work style adopted by many. 

That said I would like to add my 2 sen worth as follows....

Instead of deciding on any one style it may be better to categorise stocks according to their historical movement trends  and only then decide on the best method to apply....A practical but realistic approach may be as follows...

Heavy weights ( blue chips ) : These are fund managers favourite haunts and hence the the fundamental analysis based method may be most suitable. Changes in performance  ( profits /div yields ) will affect the share price. So it is only logical one should pay close attention to such data and analyst writeups...

Growth stocks : These "aspiring " counters are plentiful and are the favourites of middle level investors, mainly individuals who love a good story line and will lap up well researched reports. As the mix between mid term players and short term opportunists are quite balanced here ,the best suited method could include a combination of technical analysis, fundamental analysis and other momentum based techniques...

Lower liners ( speculative ) : These are the volume kings and form the main stay of top 20s day in day out. Being mainly retail based and where price movement not necessarily driven by fundamentals nor corporate developments, momentum or trend based trading methods are most suitable. Imagine trying to apply fundamental analysis on a PE 100 stock and trying to "justify " its share price climb...You either join the band wagon or sit out the bulk of the trading action everyday in a bear and quiet market as is the case now....

In short it may make sense to know the type of trader or investor you are before you worry too much of the trading methodology.

The above is an article by Chris Choo of Jupiter Securities. Chris will be holding a talk on "Price Action Technique" in selecting winning stocks for intraday and short term trading this coming December 15 (Saturday) from 9am to 1pm at Jupiter Securities Sdn Bhd, Level 9, Menara Olympia. Contact customer service for more information.

AIRASIA - Good Buy or Goodbye

AirAsia’s 3QFY12 net profit stands at RM163.9 mil, dropped by 10.4% compared to the previous year. The decline was mainly attributed to the higher start-up losses in its Japan and Philippines associates and delayed recognition of airport incentives which amounted to RM22m in 3QFY11. In other parts, Thai AirAsia reported an increase in net profit of +3%yoy to THB199.1m and contributed RM9.0m to the group in 3QFY12.

According to management, the group will launch more new routes and increase frequencies on a few routes for FY13 upon taking delivery of 28 A320 aircraft in 2013 (+7 from 21 aircrafts guided previously), which will be deployed in Malaysia (10), Thailand (9) and Indonesia (9). Next year, the group will add 4-5 aircrafts for AirAsia Japan and 3 aircrafts for AirAsia Philippines.

November 2012 Call and Target Price by Research Houses

MIDF  -  Maintain BUY with unchanged target price of RM3.84

TA  -  Maintain BUY with a revised lower target price of RM3.50

RHB  -  Upgraded to OUTPERFORM with fair value of RM3.61

OSK  -  Maintain BUY call with a target price of RM3.39

KENANGA  -  Maintain BUY call with a lower target price of RM3.07

HWANGDBS  -  Maintain HOLD with a targer price of RM2.90

CIMB  -  Maintain HOLD with a target price of RM3.00

AMMB  -  Maintain HOLD with an unchanged fair value of RM2.80

Will the entry of Malindo Airways in 2013 pose a significant treat to AirAsia. It is a fact that there is a certain over reaction by the market to the Malindo news which causes the stock price to dive. AirAsia reiterated that low cost is its key weapon against any new competitor.

AirAsia is last traded at RM2.83.

KLSE - Coffee Talk

Looks like another dreadful day ahead. The KLCI is back above 1600 pts eventhough most of the 2nd liners are zzzzzzzz. Somehow, our KLCI never fails to perform better compared to other countries. Reasoning is simple. There are over a thousand counters in KLSE but the CI is only made up of 30 big stocks and a few big moves on these stocks will bring the CI rallying up. Very smart move .... Malaysia Boleh.

Tiger was down by more than 10% this morning with about 30 mil shares done. We see some upside activity back into Astro after some recent positive coverage by analyst and press. Its still trading below its IPO price. Other than that, the market is generally flat.

CLASSROOM - Cut or Hold

Sometimes the best offense is a great defense. Understanding the importance of capital preservation is primary in any stock investment. There is no way to win all the time, so we need to have a strong predetermined defense to protect against large losses in any unforseen circumstances (such as market crashes, wrong investment decisions, speculations etc.) which, sad to say happens too often these days. The secret to winning in the stock market is to lose the least amount possible when we made the wrong decisions or in event of a drastic market change due to factors beyond our control. No matter how smart we think we are or how good we believe the information or analysis is, we simply are not going to be right all the time.

When we think about selling a stock, the first thing we do (i'm pretty sure all of us does the same thing) is to look at the records to see what price we paid for the stock. We may sell if there is a good profit. If it is a loss, most of us would rather wait than to take the loss. There is an undying belief that as long as we hold on to the stock, the loss is not incurred. Though we logically understands that this is totally naive thinking but for most investors (including yours truly), the HOPE that the price might come back up at least enough to break even is too strong to let go. After all, we didn't invest in the market to lose money.

The question is, what if the price keeps dropping ?. Should we buy more (get stuck with more shares) to average down ?. There are several key factors to consider before putting more money into the stock. Firstly, we need to know what triggers the initial investment. Is it due to fundamental or speculative reason. It will be more risky if it is the latter as most speculative counters are just hit and runs (if you know what i mean). But then again, fundamental counters can also be speculative. A good judgmental call would be, would you buy the stock at the current price if you are NOT holding any ?. If the answer is a firm NO, then there should be no reason to put more money into averaging down. Cost averaging is considered a good long term investment practise (more so if the price drop is due to broad market forces and not company performance related) for quality/blue chip stocks as you are buying it at a discounted value. A good stock will always rebound from its low, it is just a question of time.

There is an old investment saying "take your losses quickly and profits slowly", yet most investors get emotionally confused and take their profits quickly and their losses slowly. Its in the case of "once beaten, twice shy".

MAS in Spotlight - For the WRONG reason

Good news !!!  MAS announced a profit before tax of RM39.103 million for the 3Q ended Sept 2012, after 6 consecutive quarters of losses. Its Group Chief Executive Officer, Ahmad Jauhari Yahya said revenue initiatives have started to gain traction in the market, and combined with the improved utilisation of the fleet and manpower, the airline is beginning to see RESULTS of all this HARD WORK.

Bad news !!!  Proposed reduction of RM0.90 of the par value of each existing ordinary share of RM1.00 each, proposed reduction of share premium account to be utilised towards setting off against the accumulated losses of MAS and to undertake a renounceable rights issue of new shares to raise gross proceeds of up to RM3,100 million (RM1334 mil for working capital, RM986 mil for capex, RM777 mil for repayment of borrowings).

Rationale !!! To show a stronger financial position moving forward and to improve liquidity and financial flexibility. (in short, to clean up the books).

Just when you thought it's safe to jump back to the water,  the share plummeted to an all time low of 80 sens before closing at 84 sens. Further downside is still anticipated in the next few days. Among the significant sellers for the past 2 months, EPF disposes off more than 14+  million shares in the month of Oct and another 12+ million shares in Nov.

The share traded at its highest point in Feb 2012 when it announced a collaboration with AirAsia which did not materialize. Being a GLC, the counter had been a total flop and a major letdown. So, how do MAS reward and cool down its die hard investors. By giving some sweetener in the form of FREE flight vouchers (call them if you did not received) to compensate for all their LOSSES. Vouchers are NOT exchangeable for CASH.

Will this corporate exercise help MAS to recover and regain its past glory, will it be taken private or will this only prolong to inevitable death of MAS. If the business does not improve, losses will still be accumulated. Only time will tell.

Meanwhile, i'll leave you with a song by Eric Clapton - Tears in Heaven. This song was written in memory of his 4 1/2 years old son who died in a tragic accident when he fell out of an open bedroom window of the 53rd floor of a Manhattan apartment building.

Market Summary

Equities in KLSE began the week on a cautious note as uncertainty crept back into the market. The KLCI extends its losses for the 5th consecutive days. At 12.30 pm, the KLCI fell 8.15 points to 1599.73, slipped below the 1,600 support barrier. Losers led gainers by 477 to 143 while 273 remains unchanged with a total volume of 580 mil shares valued at RM575 mil. The KLCI had been trending down since early November.

On political front, the upcoming 13th general election is anticipated to be very closely contested and the results could go either way, with BN return to Federal Power or Pakatan Rakyat replacing BN to break Umno hegemony to form the central government in Putrajaya. Umno youth chief Khairy Jamaludin is confident that BN's performance in the 13th general election will fare better and will win with a higher majority than 2008.

Overseas, political turmoil in Egypt entered its fourth day Monday, after President Mohammed Morsi’s surprise power-grabbing decree galvanized the opposition and set off rounds of street violence, at a time when the nation needs unity to make difficult economic decisions. Egypt’s economy was already in trouble, with foreign reserves having fallen 40 percent since the uprising and growth projected to be less than 2 percent this year.
The market sentiment is anticipated to remain weak till the end of 2012. It is advisable to trade cautiously and protect your capital during this period. Don't get overly stressed. Chill out.

Below is a lovely song by Eric Clapton - Wonderful Tonight

HIAP HUAT - An Impressive Debut

The much awaited listing of HIAP HUAT got off from to a flying start with the share being the TOP GAINER and most actively traded in Bursa Malaysia today.

The waste recycling group's share opened at 32 sens or 12 sens above its IPO price of 20 sens, for a 60% impressive gain. The were 16 mil shares transacted at the start of the trade. This is a classic example of how an IPO should be. It looks good not just for the Group but for investors and the market as well. Such strong apetite is a reflection of confidence in the Group's business.

The counter traded at a high of 37 sens before the weak market sentiment weighs it down. It ended the day at 25 sens or 25 % above its IPO price with a total 195 mil shares traded. With such a high trading gap, investors who timed the purchase and sales right will rake in some good profit margin.

The strong start out of the gate no doubt bodes well for the company. The cash raised from the IPO issue will be used to boost up its growth and expansion plan for existing and to tap on new market opportunities overseas as indicated in the prospectus.

HIAP HUAT - A GRAND ENTRY TO KLSE

Nothing gets the blood of an ardent investor pumping like the prospect of a new IPO which clearly indicates huge market demands. In this case, we are talking about Hiap Huat Holdings Berhad , which recently saw an oversubscription of its public portion of 5 million shares by a whopping 136.10 times. For those of you who managed to get a piece of the pie, some decent 'ANG POW' money should be going into your pocket next week. Fret not for others as there are ample opportunities to pick up from the market when it opens.

In this article, we will look at some salient points into the company's business as well as its future plans, which should also shed some light to the reason behind such strong interest in its IPO.

Hiap Huat’s principal activity is in the niche business of collecting, recycling, re-refining and producing recycled products from waste oil, waste solvent and used drums and containers that they are licensed to collect, treat and process. It boast a 17 years proven track record in the oil recycling industry and is recognized as the top 3 major players (by way of revenue) in Malaysia in year 2011. The group's recycled end products are sold under their own "AF1", "Top Up", "NEKKO", "Cap Rumah" and "Flag" brand names, contributing about 82% of the Groups Financial Period Ended 2012 revenue.

The Group was recognized and awarded an accredition by Moody's International Certification.

The Group has 8 wholly owned subsidiaries under its umbrella, namely, Hiap Huat Chemicals Sdn Bhd, Transada Chemicals Sdn Bhd, Topmark Petroleum Products Sdn Bhd, Xia Fa Hardware Sdn Bhd, CNT Hardware and Petroleum Sdn Bhd, Hiap Huat Petroleum Sdn Bhd, Hiap Huat Services Sdn Bhd and Hiap Huat Chemicals (Labuan) Sdn Bhd. It has its headquarters located centrally in Kepong, Selangor and has 2 treatment plants located in Bentong, Pahang and Gopeng, Perak, with total existing capacity of 51 million litres for waste oil and 15 million litres for waste solvent. It had also invested some RM25 million to setup the thrid treatment plant in Pulau Indah, Westport which is expected to start production in the first quarter of next year. Mr Chan Say Hwa, the Group Managing Director indicated that with the introduction of the third treatment plant, the production capacity should be doubled and also hope to increase the Group's market share which currently stands at about 20% to 26%.

Zulkifly Zakaria, Hiap Huat's independent non-executive chairman, said in his speech at the prospectus launch, “We have always capitalised on our ability to identify the potential in the oil recycling industry and this makes us different from our peers. Today, Hiap Huat has grown into one of the few businesses in the oil recycling industry that is equipped with the capabilities to produce and market finished recycled products that can be directly used by end consumers. This success further reinforces our strength as an integrated licensed waste oil recycler.”

As to the Financials, the Group posted a healthy Profit After Tax (PAT) of  RM2.74 million against a revenue of RM18.285 million FPE 2012 with an indicative Gross Profit Margin of 41.52% and a PAT of 14.99%. The main revenue contributors (more than 50%) are from recycled fuel oil and recycled lubricant products with 95% of the revenue predominantly derived from Malaysia.

Moving forward, the Group had also identified several key strategic initiatives that it will implement post listing to support its future growth plans.

1..  Increase in Production Capacities

2.  Expanding & Reinforcing the Group's Supply Chain

3.  Setting up of Pulau Indah Production Plant to be completed and operational by 1st quarter of 2013

4.  Oversea Market expansion to Indonesia, Vietnam, Myanmar and Indonesia

The Group is expected to raise a gross proceed of 17 million for its public issue. The proceeds are expected to be utilized in the following manner.

The Major Shareholders are :

Chan Say Hwa  -  20.82 %

Soo Kit Lin - 20.82%

Chan Ban Hin - 17.85%

Hiap Huat will have a market capitalization of RM66,660,266 upon listing, based on a total enlarge issue of 333,301,330 shares at RM0.20 per share.

I have a good gut feeling that the stock will show a strong debut on its listing day, in consideration of the following factors :

a)  Hiap Huat has a proven track record of 17 years and is ranked among the top 3 major players in the oil recycling industry in Malaysia in 2011 in terms of revenue
b)  90+% of the Group's revenue is currently derived from Malaysia. With the oversea's expansion plan, we can look forward to a substancial increase in revenue and profit in the near future.
c)  a strong Management team with expertise in oil-recycling business
d)  massive oversubscription of its public share offering

The stock will be listed on 26th Nov 2012 under the stock name HHHCORP.

HIAP HUAT - UPCOMING COVERAGE

I will be featuring an in-depth article on HIAP HUAT this week.

This counter was oversubscribed by an overwhelming 136.10 times on the public portion of 5 million shares. In addition, the private placement amounting of 80 million shares and offer for sale of 50 million shares were all successfully taken up, making this perhaps the HOTTEST IPO counter this year.

HIAP HUAT will officially be listed on ACE MARKET on the 26th November 2012.

FREE SEMINAR - Intra Day Training

There will be a free training session on the techniques of intra-day trading. Details as below.

Topic : TIPS ON PROFITABLE INTRA DAY TRADING
Date : Friday 12th Oct 2012
Time : 8 pm
Address : Unit 809 Block A, Lift lobby 3, Damansara Intan, No 1 Jalan SS20/27, 47400 PJ

Seats are limited. For those who are interested to attend, please contact Chris Choo at 012-2322751 for registration. Mentioned that you got the information from this blog.

Stocks to Watch - 0069 INSTACOM

A rare Sarawak company taking over the listing vehicle of I-Power. At the pre-suspension price of 9 sen, the counter is slated to start trading at an equiv of 36 sen. Instacom will take over the listing and starts trading on Monday 8th October. The telco infra company is the biggest of its kind in Malaysia and virtually dominates all telco infra works for all telcos in East Malaysia. Instacom had been invited by leading global providers of telecommunication equipment and network solutions such as Huawei and ZTE Corp, to install their equipment in the Philippines, Cambodia and Vietnam as well. The listing will catapult the company to a bigger and elevated platform of earnings capacity. Read earlier posting on I-Power to Morph into Instacom.

This article was extracted from www.malaysiafinance.blogspot.com.

I-POWER to Morph Into Instacom Engineering, Possibly the Best RTO this Year

HOT NEWS.  This exciting article (below) was extracted from malaysiafinance.blogspot.com, one of the most prominent financial and investment blog in Malaysia. Based on the author's fair valuation (refer Conclusion last para), there is an upside profit potential of 12.5% to 62.5% (calculated based on the current I-Power price of 8c which is equivalent to 32c ex).

I-POWER TO MORPH INTO INSTACOM, POSSIBLY THE BEST RTO THIS YEAR

Haven't been writing much about stocks over the last month because there was nothing much to write home about. At the back of my mind, I had been following the fortunes of I-Power, which is going through a RTO with the injection of Instacom. Instacom is a company I came across last year while looking for candidates to go for an IPO listing.

For an RTO to work well, the new asset coming in has to be "good and sustainable". I regarded Instacom a year ago as a "jewel of sorts", but they chose the RTO route instead of a normal IPO (which would have taken a lot longer, and more hurdles to hump over). Next, the valuation of the existing counter, and the cleaning up of that counter has to be done well. To be followed by a fair valuation of the asset being injected. A RTO could go bad if any of the above factors go haywire.

The final proposal (approved) looks to fit all 3 criteria. Firstly, I-Power shareholders will see their shares being given a 3:2 bonus, to be immediately followed by a 10 into 1 reduction. Which is to say, the current price of 8 sen, if you bought 100,000 shares = RM8,000.

The calculation would be :

100,000 I-Power shares @ 8 sen = RM8,000
Bonus 3:2 = 150,000 bonus shares
Total shares after bonus: 250,000
10 into 1 capital reduction: 25,000 (Instacom shares)
Actual cost of Instacom shares: RM8,000 / 25,000 = 32 sen

The pre and post prices for the exercise would be:

I-Power           Instacom
7.0 sen            28 sen
7.5 sen            30 sen
8.0 sen            32 sen
8.5 sen            34 sen
9.0 sen            36 sen
9.5 sen            38 sen
10 sen             40 sen

The Injection of Instacom

Instakom Engineering Sdn Bhd (principally involved in the telecommunication sector), a company which is principally involved in the following:-

• Turnkey Finance and Build;
• Radio Frequency Design;
• Drive-test, Post Processing, Analysis and Optimisation of Coverage;
• End to End infrastructure Build (Site Acquisition, Technical Site Survey ("TSS"), Local Council/ Authority Liaison/ Tower & Cabin works);
• Equipment Installation, Commissioning & Integration and Upgrading 2G to 3G/ 4G/ Long Term Evolution ("LTE");
• Managed Services Operations & Maintenance;
• Fixed Network Solutions (includes outside plant, open trenching, micro-trenching, Horizontal Directional Drilling ("HDD") and Optical fiber installation); and
• Fabrication of Steel Structures and Materials.

The purchase consideration is RM102,000,000 to be satisfied entirely by the issuance of 510,000,000 new Consolidated Shares at an issue price of RM0.20 per Consolidated Share. The deal also comes with :

1. Profit guarantee RM15m for 2012 and RM15m for 2013 (total RM30m) and that guarantee is pledged with new shares issued to “vendor shareholders” as collateral.
2. For YE2011, the company made an after tax profit of RM9.9m, and management is confident based on orders on hand and pipelines of tenders submitted that the 2012 PG of RM15m will be comfortably met

The financials of the company (as extracted from the announcement):-

                                               FYE 2008         FYE 2009         FYE 2010         1H 30JUNE
Revenue (RM'000)                      54,045             40290                47402                39,041
Profit Before Tax (RM'000)           3,011              1,033                 4,311                 5,594
Profit After Tax (RM'000)             2,019                 707                 3,474                 4,195
Shareholders Funds (RM'000)       6,689              7,396               10,887                15,083
Borrowings (RM'000)               130,260           138,945            121,236               115,209 
Gearing Ratioo (Times)                 19.47               18.79                11.14                     7.64

3. In fact for the first quarter of 2012, the company’s reported a PAT of RM4.16m on revenues of RM20m, annualising at PAT of RM16.64m. Based on such financials, Instakom can easily upgrade to the Main Board from ACE within 24 months, which would augurs well for the counter in terms of interest from fund managers, financial institutions and retail traders, as well as coverage from analysts.
4. With the orders on hand and pipeline of tenders submitted, the company has set a PAT target of RM20m for the full year ended 2012. Assuming the PAT target of RM20m is achieved, with the current shares base of 702m shares, the  EPS (earnings per share) would come in at 2.8 sen.

Sustained Interest Pre-Exercise

If you look at the price chart of I-Power, you can surmise that there has been very steady accumulation of I-Power shares PRIOR to the exercise going ex-all, which is not very common at all. If you infer from likely net EPS figure of 2.8 sen, that implies the following PER for Instakom:

Instacom     Current PER
30 sen            10.7x
35 sen            12.5x
40 sen            14.2x
45 sen            16x
50 sen            17.8x

Key Positives

a) Instacom has a prudent cash management trait, and to me that is a very important aspect in gauging management's strategic ability in deployment and effective margins focus. For YE2011, the company recorded net cash inflow from operations of RM11.9million and overall net cash inflow of RM2 million. As at YE2011, the company has RM11.6million in its coffers to sustain current operations and to finance future expansions and growth plans.

b) Instacom is easily the best managed and most dependable telco services backbone operator in the country by a proverbial mile. Just ask the insiders, ask anyone senior at Maxis, Celcom, etc... Needless to say, the rapid changes from 2G to 3G to 4G and so on will only work towards Instacom's favour. Instacom is the biggest player in East Malaysia in its particular subsector of the telco industry, and with the big players such as Maxis, Celcom and Digi focusing on expanding their coverage in the Borneo states, Instacom is primed to capture a big slice of such business opportunities. In particular with MCMC driving the expansion of telephony and broadband coverage in East Malaysia.

c) Its the right time for them to be listed as their growth has been stalled by the cap on capital. This business requires capital guarantees at times when securing projects. By being listed, they would not have to turn away some of the projects coming their way (which I came to know about when talking to the company a year ago), and believe you me, they had to turn away substantial projects with decent margins, which is why I am keen on this RTO. Thus I think the 2.8 sen EPS for current year is trifling, and they should have no problem getting that up to 3.5 sen to 4.0 sen next year, which may explain some of the hectic accumulation of I-Power shares even at current levels.

d) The telco industry is unique in the sense that there exists only a select few major players at the first tier level such as TM, Celcom, Digi and Maxis whilst the 2nd tier players include the likes of YTLe, U-Mobile, P1 and Redtone. At the principal level of equipment manufacturer and supplier, its even more exclusive, confined to mega players like Nokia-Siemens, Ericcson, Hua Wei and ZTL. This is most advantageous to Instacom as they only have to deal with established reputable players who are not only good paymasters, but who employ the best professionals to run solid businesses with a clear future direction and sound growth strategy worldwide.

The Drivers

One usually can tell how far a company will go by the quality and calibre of its leadership and management team. This is one aspect I must say gives me considerable confidence in Instacom, having had the chance to meet with them a few times over 12 months ago – its well balanced, complimentary and highly experienced, able, proven and cohesive top management team.

The three original founders of Ann Kung, Thomas Ngu and Wong complement each other.

Anne Kung Soo Ching, a Malaysian aged 50, is the  chief executive officer  of Instakom  responsible for strategic development, finance and administration and has been involved in the telecommunication industry for more than eight years.  She holds a Bachelor of Laws (Honours) Degree from the London School of Economics and Political Science, University of London. She has been called to Lincolns Inn in London and the High Court of Borneo in 1984. Prior to joining Instacom, she was the Finance Director of Quality Concrete Sdn Bhd in 1992 before assuming the position of Executive Director in Quality Concrete Holdings Berhad (the listed entity of Quality Concrete Sdn Bhd) in 1996. She has served as the Chairperson of the manufacturing sub-committee of Sarawak Chamber of Commerce & Industry since 1998. She is a member of the SOCSO Appeal Board Member and Industrial Tribunal since 2004. In addition, she is also a member of the Malaysian Institute of Accountants and the Institute of Chartered Accountants in England & Wales.

Ngu Sing Hieng, a Malaysian aged 48, is the director of sales and project management of Instacom, possesses more than 20 years of experience working in the industry. He has been the Executive Director of Instacom since the incorporation of Instacom. He holds a Bachelor of Engineering Degree in Electrical Engineering from the University of New South Wales, Australia. He was a graduate member of the Institute of Electrical and Electronics Engineers, United States of America and the Association of Professional Engineer, Australia. Prior to joining Instacom, he was the director of Tennas Komunikasi Indah Sdn Bhd. He has also served in various companies such as Skypage Communications, Sydney (as programmer and Unix System Administrator), Answer Services (NZ) Ltd (as System Engineer) and Hager Elektronik Sdn Bhd (as General Manager).

Wong Say Khim, a Malaysian aged 48, is the director of operations of Instacom. He has 21 years of experience in civil, mechanical and electrical contracting works and installation of telecommunication towers and cabins. He has been involved in projects awarded by Sapura Telecommunications Berhad, DiGi Telecommunications Sdn Bhd and Maxis Mobile Sdn Bhd for the erection and installations of telecommunication towers and related civil works.

Conclusion

It should be an exciting counter and judging from the fundamentals and sustained collection, I think Instacom should trade between 36 sen-52 sen on an ex-basis and still be within fair valuation range.

IPOWER - Salient Points of Coporate Exercise

The Group is undergoing a major corporate exercise of  a reverse takeover by Instacom and the Group will effectively changed its name from I-Power Berhad to Instacom Group Berhad. For the benefit of investors, i highlighed the salient points below and how it would affect your shareholdings upon completion of the corporate exercise.

1..   The scheme involves an acquistion by I-Power of the entire issued and paid-up share capital of Instacom comprising 4,500,000 Instacom shares for a purchase consideration of RM102,000,000 to be satisfied entirely by the issuance of 501,000,000 new Consolidated Shares at an issued price of RM0.20 per Consolidated Share after the Share Consolidation.

Note : The new shares are issued at RM0.20 and not RM0.10. This means that the cost to Instacom shareholders is RM0.20 per share.

2..   Share Consolidation and Bonus Issue
a)    Consolidation of 10 Ordinary Shares of RM0.01 each into 1 Ordinary Share of RM0.10 each in I-Power after the Share Capital Reduction
b)    Bonus Issue of new Consolidated Shares to be credited as fully paid up to the existing shareholders of I-Power on the basis of 3 Bonus Shares for every 2 existing Consolidated Shares held

Note : It is important for investors to understand how the Share Consolidation and Bonus Issue works and how it would affect your existing shareholdings and your shareholding costs. Refer to example below.

For ease of computation, we take the assumtion that you had 100,000 shares which you bougth at 8c (total cost of investment RM8,000). Upon Share Consolidation (completion of 2a above), you will be left with 10,000 shares. Of this balance of 10,000 shares, you are entitled to an additional of 15,000 FREE Bonus Shares (refer 2b above - for every 2 Consolidated Shares you get 3 Bonus Shares).

Therefore in totality, for every 100,000 I-Power shares that you own today, you will get 25,000 new Instacom Shares upon completion of the Corporate Exercise. Based on your total cost of investment of RM8,000, your new cost of per share of Instacom is 8,000/25,000 = 32c.

FGV - A Great Mid to Long Term Investment

FGV had shed off 15% of its value since listing day. It touch the high of 5.55 a few days upon listing and since then, it had been all the way down. Today, it touch an oversold position of 4.52 before bouncing back. At the current price, it offers a great entry for mid to long term investors, with a potential capital gain of 30% or more that comes with a decent dividend payout. With election just around the corner, i believe the counter should claw its way back and past its ipo glory. FGV is the world’s third largest oil palm planter with access to 7% of global CPO supply via 49%-associate.

The latest financials shows the Group's revenue rose sharply to Rm3.5bn as the group switch to recognising sales of CPO. However, the net profit declined by 4.9% QoQ and 33.3% YoY to RM186 million. As of 2Q12, the Group's balance sheet stands strong with a cash pile of RM6.0bn.

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According to a Business Times report recently, the Group is currently planning a joint venture with a local partner to buy an initial 30,000ha of land in Myanmar to plant sugarcane and oil palm. Other potential Asean countries that are also being considered are Malaysia, Indonesia and Cambodia

Below are recent price targets by Research Houses, with the exception of ECM, all of them give FGV a fair value above RM5.0.

29/8/2012            Target Price :   RM 5.39         ALLIANCE
29/8/2012            Target Price :   RM 5.80         BIMB
29/8/2012            Target Price :   RM 4.85         ECM LIBRA
29/8/2012            Target Price :   RM 5.27         MIDF
29/8/2012            Target Price :   RM 5.44         PUBLIC BANK
29/8/2012            Target Price :   RM 5.36         TA
06/9/2012            Target Price :   RM 5.05         HWANGDBS

NEXTNATION - Market Darling or Just Goreng

For the past one week, the counter had seen tremendous trading volume, both ordinary shares and warrants. Speculations are rife that this counter will be the next market darling, rumours indicating a target price above 30c. It touch a high of 18c on 3rd Sept with 175.65 million shares traded before trending back to a low of 11.5c. What are the reasons that caused the recent price movement ?

On business development end, the Group recently announced on 30th August that its wholly owned subsidiary, Nextnation Datacity Sdn Bhd (NDSB) had on 29 August 2012 entered into a Memorandum of Understanding ("MOU - valid for 12 months") with PT Graha Tunas Makmur (PTGTM) to collaborate with the objective of jointly developing all that piece of land identified as Lot P58 held under HSD 7817 PT 42830, Mukim Dengkil, Daerah Sepang, Selangor Darul Ehsan, measuring approximately 5.906 acres ("the Land"), in an exercise to be led by NDSB (hereinafter referred to as the "Proposed Collaboration"). NDSB had entered into a Sale and Purchase Agreement with Cyberview Sdn Bhd on 10 April 2012 for the acquisition of the Land.

The Proposed Collaboration is to enable to parties to study and evaluate the commercial feasibility of a joint development of the Land into a mixed property development, incorporating a proposed data centre, corporate office and other commercial and retail space that can be supported by prevailing market demand in the Cyberjaya area, which is estimated to have a gross development value of approximately RM80 million. This project, if successfully executed, should provide the Group group with an opportunity to further enhance its business and contribute positively to the Group's financial in the near future.

Nextnation Datacity Sdn. Bhd, had on 5 September 2012 accepted a banking facility of RM14.82 million (“Banking Facility”) from CIMB Islamic Bank Berhad (“the Bank”), to part finance 80% of the purchase priceof RM18,523,105.92 for the acquisition of a piece of a vacant freehold enterprise lot held under P58, HS(D)28897, PT42830, Mukim of Dengkil, District of Sepang, Selangor Darul Ehsan.

On trading front, Fast Global Investment Limited is seen to be taking some profits during the past few days, which could raised some concern among investors.

3/9/2012     Disposed 67,000,000 warrants and ceased to be substancial shareholder
3/9/2012     Disposed 5,000,000 ordinary shares
28/9/2012   Disposed 500,000 ordinary shares
27/8/2012   Disposed 3,341,400 ordinary shares
27/8/2012   Disposed 1,479,000 warrants
24/8/2012   Disposed 3,000,000 ordinary shares
24/8/2012   Disposed 1,000,000 warrants

Below shows the major Shareholders and their Shareholdings as at a particular date.

• Tey Por Yee holds 95,837,500 ordinary shares (inclusive direct and indirect interest) - based on announcement dated 9/8/2012
• See Poh Yee holds 86,410,000 ordinary shares (inclusive direct and indirect interest) - based on shareholdings disclosed on Reports and Financial Statements dated 30/4/2012
• Fast Global Investment Limited, Singapore (incorporated in Anguilla) holds 35,856,000 ordinary shares as at 3/9/2012

The following are some organizations who had taken up Private Placement on the Group's shares this year.

• PT Nusantara Rising Rich, Indonesia holds 29,500,000 ordinary shares and 44,250,000 warrants as at 4/7/2012 (Shares acquired via Private Placement on 26/6/2012)
• Telecity Investment Limited (incorporated in British Virgin Islands) holds 28,000,000 ordinary shares and 42,000,000 warrants as at 12/6/2012 (Shares acquired via Private Placement on 1/6/2012)
• Nutox Limited, Hong Kong (incorporated in British Virgin Islands) holds 32,016,600 ordinary shares and 48,024,900 warrants as at 25/5/2012 (Shares acquired via Private Placement on 17/5/2012)

To all punters and investors alike, market darling or goreng is insignificant as long as the share price goes up. As the chinese saying, the cat that catch the mouse is a good cat, irregardless whether it is black or white.

INGENS - What Went Wrong (WWW)

Ingenuity Solutions Berhad (ISB) created a PANIC in yesterday's trade, chopping off almost 36% of its value in a single day. Its amazing how a counter can rally from 12c to 51c and back to 22.5c in less than 30 trading days. With such a swing, there will be many who make good money and equally there will be some who lost a great deal too.

Reviewing the massive drop, i asked myself, what triggers it ?. After all, there wasn't any bad news or detrimental announcements that warrants the collapse. Or maybe, did i missed out something ?

Below is an extraction of the announcement made recently by ISB on the offer received from Ninetology.

"On 29th August 2012, ISB received a restrictive offer from Ninetology, to purchase all and not partial of the shares held by following at an offer price of RM0.55 per share.

Chin Boon Long  -   65,800,732 shares

Firstwide Success Sdn. Bhd.   -   98,496,924 shares

Landasan Simfoni Sdn. Bhd.   -   25,500,000 shares

Titanium Hallmark Sdn. Bhd.   -  24,500,000 shares

This offer will automatically expired on the 11th September 2012 (14 days from the date of letter) . The offer will only be executed on the premise that all and not one or some of the abovenamed persons accepts the offer unconditionally."

With an offer of RM0.55 per share, it will be silly for ISB shareholders to short sell themselves at the current price level. Anyone who purchase at the current price will expect to profit more than 100% should the deal goes through. The question is, do you think the 4 shareholders will accept the lucrative offer ?.

The last sentence of the offer letter is of utmost importance. It states that "in order for the offer to go through, ALL and NOT ONE or SOME of the 4 shareholders above must accept the offer UNCONDITIONALLY".

There are 2 major factors to addressed for the deal to go through. Firstly, ALL the 4 shareholders must accept the offer of RM0.55 per share, which i don't see why they won't accept such an attractive valuation. Secondly, (this is more critical) they must accept the offer UNCONDITIONALLY. This is a very generic, open and unclear statement. There's no explainations on any sort of conditions. As minority shareholders, we expect to have a clearer picture of the deal which will allow us to make a more judgmental decision. Saying so, we won't have to wait too long for the decision as September 11 (does the date sounds familiar 911) is just around the corner. Two things will most likely happen. The price will shoot up to 50c if the deal is ON or the price will collapse further (possible below 13c) if the deal is OFF. 

The upcoming AGM (Annual General Meeting) on 20th September could be a good platform for shareholders to better understand the company, to mingle around with the Directors or to seek clarification on any matters. For those who wish to attend, the venue is at Tioman Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur.

COMING SOON - DON'T MISS OUT

Articles to be posted this week.

1.  NEXTNATION - Market Darling or Just Goreng
2.  1UTOPIA - Building up a Good Momentum

Make sure you logon to checkout the post or register your email and the article will be send to you mailbox directly.

PASUKHAS - A STAR Performer

IMPRESSIVE IMPRESSIVE IMPRESSIVE ......  What more can shareholders hope for. Open at 27c and surge to a high of 46.5c in less than half an hour, an increase of 34.5c over the IPO price of 12c. At this price, the Group's market capitalization just shot up to more than RM120 million from RM35.4 million. Shareholders should be laughing their way to the bank. Big ang pows for those who managed to get a piece of the IPO subscription. This is only the 1st trading day. How much more can it go ?

INGENS - A Revisit

On August 23, I posted an article regarding "INGENS - Riding the waves" when the mother share was riding high at 51c and the warrant at 19c. Since then, in a mere 5 trading days, the mother share has lost 16c (31.4%) and the warrant had given back 8c (42%) of its initial value. Has it reach its bottom or will it still plummet lower ?.

I am sure that there are people (traders, punters, investors) who made tons of money when the stock was rallying up from 12.5c to 51c (especially those who exercise the Rights Issue at 10c and got all the FREE warrants) and there are also a handful of people who lost substantial money when the stock came tumbling down. For those who are still holding, a big decision has yet to be made.

Should you :

1) hold on to the shares (hopefully one day it will recover above your buying price)
2) sell and cut your losses (bite the bullet and count your losses)
3) buy more to average down your cost (investing more money into it)

It is a difficult decision and a tough call that only you can and should make. Personally, I had been in this situation before and had made the wrong call (for 2 particular counters). Eventually the counters got delisted and i am still holding the unlisted stock until today. So much for the bad experience. Don't get me wrong, I am not implying in any way that INGENS will get into the same route. According to the INGENS BOD's announcement and their financials, the company is potentially in the growth stage with substancial increased in revenue and profits.

I did highlight in my earlier article about the risk of exercising the warrants, paying much attention to the exercise period. If you had bought the warrants at 19c and you intend to go through the warrant exercise, at today's mother share price of 35c, you still have a small upside buffer of 6c as your total cost of exercise is 19c+10c which is 29c. Bear in mind that the 6c buffer is not a lot of comfort considering that the mother share had dropped 16c in just 5 trading days.

Like I said "Everyone's trading style and apetite for risk and rewards is different". This kind of stocks provides lots of volatility and lots of upside when the trade is timed right and if timed wrongly, you could be losing a chunk of your savings. Do consult your investment advisor for their advice.

PASUKHAS - an IPO Overview

Investors are always on the hunt for a quick capital gain opportunity, especially in new listing counters. Today, we are taking a look at Pasukhas, a Mechanical and Engineering company en route to a listing  on ACE market of Bursa Malaysia on August 29. The Group had been in the industry for 27 years and had successfully completed over 500 projects across Malaysia, Indonesia, Sri Lanka, Jamaica and the Gulf Cooperation council countries.

Pasukhas Group's listing exercise involves a total public issue of 90 million shares at 12c per share (raising a total of RM10.8 million) of which 55 million is by way of private placement to identified investors (which had been successfully taken up), 10 million to the public and the balance 25 million to eligible directors and employees. The public portion of 10 million shares had been oversubscribed 74.04 times, which indicates a very high market interest and demand. 

For its last financial year ended December 31 2011, the Group's revenue fell to RM25.82 million from RM40.48 million in 2010 and RM46.41 million in 2009. Similarly, the Group's net profit declined to RM1.23 million from RM3.89 million in 2010 and RM4.29 million in 2009. For the financial period ended 31st March 2012 (1st Quarter result), the Group posted a revenue of RM5.2 million and a net profit of RM0.77 million.

Pasukhas's performance could certainly be better. From the comparative financials for the 3 years, it clearly indicates a trending down in revenue and profitability. Saying so, the decrease in revenue could be due to factors/constraints such as undeployed projects on hand (justified by the RM68 million order book), lack of funds in capitalizing opportunities / market expansion and others. In such case, the listing of Pasukhas and having access to additional market funds will do much good for the business in the future. The Group targets to bid for some RM100 million worth of jobs oversea next year. Its has a healthy order book of RM68 million which can last the group for at least 18 months. Amid the weaker results, investors with a longer-term growth horizon could see it as a buying opportunity.

Upon listing at IPO price of 12c, Pasukhas will have a market capitalization of RM35.4 million. With such huge public portion oversubscription and the successful placement of the other balance of shares, I do not foresee any downside risk to the IPO price. Instead, I predict that the upside drive will be huge in the 1st half session of trading, possibly driving the stock upwards towards 18c (a potential 50% upside on IPO price). With strong market forces and support momentum in the next couple of trading days, the stock could even see a high of 30c.

For those who managed to get a piece of the 10 million public shares, they should be looking forward to some big ang pows and for the unsuccessful, there's always an opportunity to punt the market when it opens. It will definitely stay as one of the top ten counters for next few trading days. The stock name will be traded under PASUKGB.

This article is not an encouragement or call to buy or sell any securities. Personally, I did not subscribe to the IPO shares (with much regret now) but MAY be doing some small punting when it opens (depending on the price).

TAKASO - A Promising Start

TAKASO Resources Berhad hit its highest price today, closing at 21.5c. Could this be the start of a short term rally?. Possibly so, since it just completed a private placement 13,522,000 new shares at 25c each in early August.

In order to paint a clearer picture, let us take a look at the recent financials for the period ending 30/4/2012 (9 months accumulated) in comparison with the preceeding year 2011.

Revenue 2011  :  13.19 million
Revenue 2012  :  24.74 million
My Opinion : This is very impressive as the company registered a revenue increased of 87%

Net Asset Per Share 2011  :  27c
Net Asset Per Share 2012  :  30c
My Opinion : Inline with the increased in revenue, the net asset per share had also increased from 27c to o30c. At the current stock price level of 21.5c, the company is still trading below its net asset per share.

Current Asset 2011  :  27.83 million
Current Asset 2012  :  41.86 million
My Opinion : This shows a healthy business growth. The 2 main factors attributed to the increase in Current Asset arises from an increase in Sales (with receivables increase from 4.04 to 17.67 million) and its Cash position (0.62 million to 17 million).

Current Liabilities 2011  :  16.70 million
Current Liabilities 2012  :  14.81 million
My Opinion : Looks healthy as there is also a slight decrease in liabilities arising from payment of short term borrowings and settlement of some trade payables.

From the financials, it seems that the company is preparing itself to move to the next level of growth. I would not be surprised if the stock moves up to trade within the range of 25c to 28c within the next 2 weeks. I predict that it will test a strong resistance at 30c level. If the company can deliver a good Q4 financial, then we might see the share price testing 40c.

Bear in mind that the stock had touch a high of 70c in August 2011 (one year ago). It is in everyone's mind and anyone's guesses whether it will break last year's high. For all you believers out there, keep your fingers crossed and hold on to your stocks. Do bear in mind that the stock also drastically touch its lowest point (11.5c) less than 2 months later after hitting its high last year. So, this play is considered highly volatile. The timing of entry and exit is crucial. The stock had been trending down since February 2012. Saying so, i do believe that a rebound is pretty likely to happen.
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INGENS - Riding the waves

There isn't a day that goes by on KLSE that certain penny stocks didn't experience massive upward spikes. Traders who got in at the right timing (before the price hike) are banking in ridiculous money on a regular basis. The return can be hundreds of percent, in some cases exceeding thousand.

Just take a look at some of the movers that rock the market in the past 12 months.

HARVEST - from 8c to a high of RM2.14, which skyrocketed by an unbelievable 2,675%. An investment of RM1,000 at 8c would give you a return of RM26,750. The stock had since dropped and last traded at 45c.

NICORP - from 6c to a high of 75c, a significant 1,250% increased in less than a month. The stock is last traded at 31c.

Recently, there is a new counter (INGENS) that hits the spotlight. The mother share rallied from 12.5c to a high of 51c in just 2 weeks. The Group also did a Rights Issue exercise.

"RENOUNCEABLE RIGHTS ISSUE OF UP TO 291,175,040 NEW ORDINARY SHARES OF RM0.10 EACH IN INGENUITY SOLUTIONS BERHAD ("ISB SHARES") ("RIGHTS SHARES") ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) EXISTING ISB SHARE TOGETHER WITH UP TO 218,381,280 FREE DETACHABLE WARRANTS ("WARRANTS") ON THE BASIS OF THREE (3) WARRANTS FOR EVERY FOUR (4) RIGHTS SHARES HELD AS AT 5.00 P.M. ON 23 JUNE 2011, AT AN ISSUE PRICE OF RM0.10 PER RIGHTS SHARE".

A total of 218.38 million FREE Warrants was listed on 22nd July 2012. Investors who subscribe to the Rights Issue are making substancial gains and laughing their way to the bank. The warrants traded at a high of 24.5c and last traded at 16c at friday's close 24th August. It is trading at a huge discount to the current price of the mother share at 44.5c. The conversion price is pegged at 10c. The total price for conversion is 26c, which is still cheaper than buying the mother share at its current price. So, should investors rush to buy the warrants ?. If you have faith that the mother share will hold around this price or will not drop below your conversion price by the time you exercise your shares, then it could be worth a bet. Do take caution and  consideration that the exercise period (the time you submit until the time your share is listed) might take weeks to complete. Please check with your financial adviser/share registrar for advice on warrant exercise procedures.

Will INGENS will be another HARVEST or NICORP (with 1000+% gain) ?. What is the main reason for this run ?. Is there a solid growth story for the business towards the longer term?. Will the share price be able to sustain or move higher from this level ?.

If I can still recall, the rally started from a rumour that our Prime Minister's son is taking a 10% stake in the company. Of course this is not a substanciated fact but it does help to push up the share to a certain extent.

Looking at the latest financials, the Group posted an impressive 1st quarter revenue of RM129.85 million, representing an improvement of RM127.02 million to the corresponding period in the preceeding year. The increase is mainly attributed to new ICT distribution business (Vistavision Resources Sdn Bhd) that the company acquired recently.With this increase in revenue, the Group registered a pre-tax profit of RM3.7 million as compared to a net loss of RM0.36 million in the previous quarter. The ICT distibution business accounts for RM1.83 million of the profit and the balance from Enterprise Systems. The Group should be looking forward to a more sustainable revenue model in the Group's ICT distribution business which would boost up the bottom line favorably.

The Group also set an internal target to achieved a sales turnover of RM800 million with a profit of RM12.5 million for the new financial year ending 31st March 2013 and the management team believes (no certainty and not reviewed by external auditors) that it can be achieved based on the 1 quarter's result assumption.

Is it game over yet for INGENS ? Some says "YES" and some says "The game had JUST STARTED". Everyone's trading style and apetite for risk and rewards is different. That's what keeps the market alive and interesting. As for my views, i'm not recommending investing long term in this kind of stocks as it can be very speculative and risky. The odds for picking the long term winners aren't great. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right and if timed wrongly, you could be losing a chunk of your savings.

With such amazing % gains in penny stocks, you don’t even have to catch the entire move at the lowest price to make outsized returns when trading.