Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Thursday, January 4, 2018

MMAG (0034)

'Like' - MMAG (Ex GDEX CEO & MAXIS VP Running The Show).

MMAG Holdings Berhad (Formerly known as Ingenuity Consolidated Berhad) is a "Total Business ICT Solutions Provider".

There is nothing to shout about except bloodshed in year 2012 when its share price collapsed. Furthermore, ICT biz operate under extremely thin margin environment (look at ECS income statement) and short product life span. Most investors will avoid company operate under such difficult condition.

The Turning Point:

In year 2015, a RTO took place and we see WONG ENG SU, the former Chief Operating Officer of Gdex, together with Jeff Chong, Maxis’ former vice-president of Mobility Products and International Service emerged as substantial shareholders, bought over the share held by former owner, Chin Boon Long & wife Tan Swee Ying. The later has since resigned.

The company name has been change to MMAG and a series of restructuring took place which both Wong & Jeff Chong wishing to turn around the company from a pure ICT focus company to  (1) Last mile delivery, logistic and ware housing specialist and (2) Mobile distributing and Leasing service provider.

It is not difficult to guess since Wong Eng Su has 15 years of experience in GDEX while Jeff Chong has more than 15 year experience in telecommunication industry under Maxis and Digi.

Financial Highlight

Key Observation

1) ICT segment

Continue bleeding and the restructuring still going on under this segment by Jeff Chong.

2) Courier Service Segment

This segment was introduced in Sept 2015 when Wong Eng Su took over MMAG. Total FY 2015 revenue was RM 755k. It has since then grow nearly 400% in a year to RM 3.457 million in just 1 year. The segment is not in profit yet and this is quite common for every new venture during initial stages.

What To Shout About?

(1) MMAG had done a cash call via Rights Issue with free warrant + ICPS. Let see below how much cash they will raise and what are the plan they have? (Maximum Scenario)

Cash in Company: RM10197805;

Max Fund To Be Raised From Rights @ RM0.25: RM36958539

Max Fund To Be Raised From ICPS @ RM0.15: RM30366831

Number of Shares: 455502463

The total share upon completion of the cash call will increased MMAG cash level from RM10.2 mil (Include the special bumiputra issue) to RM77.5 mil. This is equivalent to RM 0.17 per share, not include MMAG-WA & MMAG-PA which will mature in 5 year. This is huge sum of money for business expansion program.

(2) The Business Expansion Plan

Logistic & Courier Segment - Allocation RM 40.4 million.

A 131,132 sf warehouse cum office has been built on a piece of land leased from Acer which is expected to be completed in Nov 2017.

The second part is to expand the courier fleet from 20 fleets to 100 fleets with 15 more new branches nation wide. However, media reported that the company has already grew the fleet from 20 to 70 fleet and staff force has grew from 30 to 220 staffs now.

ICT & Mobile Phone segment - Allocation RM 32.7 mil.

MMAG has plan to be key distributor for mobile phones in Malaysia while maintaining the normal pc/ laptop distributor.

Conclusion …

Its balance sheet is healthy and plus massive cash in flow from cash call.

MMAG is now a courier & logistic focus player.

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