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Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Wednesday, January 24, 2018

Apparently Upside Limited !!!

Business Involved …
HuaAn is a producer of metallurgical coke.

It has been listed on the Main Board of Bursa Malaysia for more than 10 years.

Its business is production and sale of metallurgical coke ("Coke"). Coke contributes 79% to the revenue (21% from other by products).

HUAAN business is supported by its 1.8 million tones per annum production plant in Linyi City, Shandong Province, China.

What is Coke? The producer buys coal and process it into COKE. The demand for COKE is from the steel industry as it is an important input in the steelmaking process. The process is called blast furnace.

Financial Highlight

For 3QFY17 ended Sept 2017, it posted a net profit of RM34.147 mil vs. RM10.2m loss last year. EPS is at 3.04sen (vs. negative 0.91 sen in 3QFY16). Reason for the earnings surge is mainly due to better average coke price of RMB2,043 per tonne in 3QFY17 and higher sales volume of 210,000 tonnes.

As at Sept 2017 its cash and short term investment stood at RM22.13 million, total debt stood at RM25.36 million.

In 9M17, HUAAN already make 4.91 sen of EPS. Lets assume a full year FY17 EPS of 6.00 sen (A small 1.09 sen for 4Q17 which should be achievable).

What about FY18? Most conservative scenario = 6.11 sen (assuming only 2% earnings growth in FY18). Bullish scenario = 6.90 sen (assuming 15% earnings growth).

The Company is worth at least 6.75x PE. The 6.75x PE is at 25% discount against ANNJOO and MASTEEL (both trading at historical PE of 9x till 23 Jan 2018/).

Most conservative scenario = 6.25x PE * 6.11 sen = 38 sen

Bullish scenario = 6.25x PE * 6.90 sen = 43 sen.

Monday, January 15, 2018

JAKS (Lower Gearings, Vietnam Power Plant Project)

It is aligning its business portfolio after the loss-making property development venture that was hit hard by the slowdown.

Jaks Resources will focus on construction and its power generation in Vietnam. However, the group did not set a timeline to cease its property development business.

Jaks Resources shareholders have given the greenlight to dispose of four parcels of land measuring 5.99ha within the Sungai Penaga Industrial Park in Subang Jaya for RM167.59 million cash. The land sale will translate into an estimated net gain of RM97.1 million. The proceeds from the exercise will be used mainly to pare down the group's debts by RM100 million and lower its gearing to a "comfortable level" of 0.6 times.

It has one last project, which is the Pacific Star mixed development in Section 13, Petaling Jaya.
jaks chart
Jaks Resources is still working to dispose of its Evolve Concept Mall in Ara Damansara, citing weak market conditions as among the reasons for its difficulty in securing a buyer.

In Vietnam, Jaks Resources is involved in a US$1.87 billion 1,200MW build-operate-transfer (BOT) coal-fired thermal power plant project in Hai Duong, together with integrated power engineering service provider China Power Engineering Consulting Group Co Ltd (CPECC). The joint venture involves Jaks Resources holding 30% share while the remaining 70% is held by CPECC.

Jaks Resources currently (Dec 2017) recognises about 80% of its overall group profit from the construction of the Vietnam power plant, which it expects to be completed and begin operations in 2020.

Apart from its Vietnam venture, Jaks Resources will continue tendering for Malaysia-based construction projects in areas. Jaks Resources is not eyeing transit-oriented projects such as the Mass Rapid Transit Corp (MRT) and Light Rail Transit (LRT) packages.

As of September 2017, the group has an outstanding orderbook of RM850 million for local construction jobs alone. Including the Vietnam IPP, Jaks Resources is committed to RM2.6 billion worth of projects.

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