Hibiscus - buy or sell?

Hibiscus plummeted 0.14 sen (12.17%) on last Friday after the release of 4th quarter report

I grabbed the opportunity to add more as it was obviously oversold

I could think of several reasons why Hibiscus is dumpped

All investors are expecting Hibiscus to deliver a spectacular quarter result following the acquisition of PSC Sabah, in fact, the negative goodwill jack up profit again, there was no oil sold from Anasuria, higher expenses and higher tax, which in turn disappointing the investors, and cause the panic selling.

Profit of 98.7m is largely driven by a negative goodwill

no oil sold by Anasuria

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Do bear in mind,  although there was no oil sold by Anasuria in this quarter, 15.8m tax charged because of tax regime in UK

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Why I chose to add more?

Over the past two years, it has been the practice of the Company to conduct at least one cargo offtake on a quarterly basis. In the Current Quarter, the Company did not conduct a crude oil offtake. The offtake was deferred to 2 July 2018 to ensure the overall safety and smooth running of operations whilst the drilling of the GUA-P2 side track well was ongoing. As of the date of this report, the Company has successfully completed two crude oil offtakes (524,432 bbls) for the financial quarter ending 30 September 2018 (“1Q 19”). This is expected to contribute favourably to our financial performance for 1Q 19 - extracted from quarter report

FY19 will undoubtedly be a more exciting year as there will be full contribution from the North Sabah asset and higher levels of production from both assets at a combined value of about 9,500bbls/day, coupled with the steady-state in crude oil prices at USD60-70/bbl.  - extracted from PublicInvest Research

Anasuria's average uptime has steadily improved to 94%
North Sabah's average uptime =96%

Brent crude stay above 70 for Jun & July

Brent crude oil prices would be sustainable at current price levels given:

• Strong global oil demand growth, particularly from China and India

• The prolonged period (2015 to 2017) of minimal investment in exploration and development projects

• Higher oil supply disruption risk with rising geopolitical tensions in the Middle East region

• Continuing production decline in Venezuela and supply disruption in Libya

• Strong compliance of OPEC and their partners to agreed levels of supply cuts causing stockpiles to shrink in volume

• Reinstitution of sanctions by the United States of America on Iran which could affect oil supply

-extracted from quarter result

Technical Outlook

sell-off with high volume on Friday is not a good sign, but i think it's good as it managed to wash away most of the speculators and the margin kaki

immediate support at 0.93
cut loss point at 0.90
major resistance 1


dont forget the risk

Kindly refer to research done by Publicinvest Research for more figure and forecast.


Disclaimer: it isn't a buying or selling recommendation, your money, your decision

A Brief Market Analysis

KLCI

KLCI is still in an uptrend, looks good as it's well supported by our "national team"

FBM70

FBM70 is moving lower since Jan 18, broke below 200 SMA today and is expected to trend lower

small caps

SMALLCAP is dropping since Jan 18, from 18090 to 14593 (around 20%),
many retail investors are trapped here, it is getting lower day by day, and it needs lots of patience to wait until it reverses to uptrend


GE14 & Trade War are currently controlling the emotions of  investors, dont try to catch the falling knive
strategy: cash is king now, holding around 70% cash, I will be back after GE14

from: http://www.solvingforgeny.com

Disclaimer: it isn't a buying or selling recommendation, your money, your decision

ROI IN 2017

Portfolio on 29 Dec 2017

Total ROI in 2017 = 42.53% (including dividend), managed to achieve goal set in the beginning of the year (2016 review)

As u can see, from green to red, Gadang & Gamuda-We significantly affects the overall return of my portfolio as i bet big on them. Fortunately, all my steel-related counters help to lift up my return, Vitrox unexpectedly breaks 100% gain mark within 8 -month time. In 2017, I made handsome returns by selling all my shares in Choobee & Ekovest-WB, and incurred some losses in Prolexus. Not much transaction done in this year, as i was too busy with my new career and house moving, wish i could have more time to spend on investment this year :)

Target set in 2018  = double my investment fund


Plans

• need to trim my portfolio as cash on hand (investment fund) left around 7%
• pump in more cash into investment fund by controlling my spending 
• write at least an investment-related article each month

taken from https://blogs.wf.com/

Disclaimer: it isn't a buying recommendation, your money, your decision

Ekovest : catch the falling knife?

source: The Star

I did expect there will be spillover effect to Ekovest, but i cant imagine that it hit limit-down (max decline 30%) to 1.01, before closing down RM1.17 today, with 230.13m shares transacted.

Im thinking what's wrong with those so called investors (or speculators)? losing their mind and selling like there is no tomorrow!!! my friends asked me whether i am selling my Ekovest-WB or not, i reply them that im going to buy on weakness, why sell? Ekovest, at this point, to me, is still a good company with strong fundamentals & bright prospect, and i dont see any direct impact of Bandar Malaysia deal to Ekovest currently

I have sold 70% of Ekovest-WB when it hit all time high in march, market was crazily chasing after Lim Kang Hoo related counters at that time ( IWC proposed merger with IWH), and i knew Ekovest should not worth that much at that time, but in deep i know Ekovest is going to be a legendary company in 5-year time, so i sold 70% to lock in my profit and the rest is free shares to me (my avg price) and i dont have to worry if it is going to plunge, and can probably buy back during a big correction.

Technical Outlook

breakdown with super high volume, and the price drop below 200sma, definitely not a good signal. Falling knife? i cant precisely predict how low it can drop further, so i will just buy batch by batch, mother share is apparently more appealing at this point since son is trading at premium of 22.65%

p.s.: trading of IWCITY has been suspended until Friday, so Monday it could negatively affect the price of counters linked to Lim Kang Hoo again

Disclaimer: it is not a buying recommendation, your money, your decision

MPI: fairly valued? (part 2)

forecast P&L by TA Research

pls read (here) to understand more about semiconductor industry ~~
let's get straight to the point

STRENGTHS & OPPORTUNITIES

Growing Automotive Segment

The global automotive semiconductor market is expected grow at a CAGR of 6.4% from 2017 to 2022. MPI is well prepared to grow its Automotive contribution from 24% of group revenue in FY16 to 50% over the next 2-4 years. Well positioned, MPI already has existing coverage of 7 out of the top 10 automotive suppliers (TA Research). MPI mentioned that leading Automotive technologies that are used for safety features have  passed the stringent qualification stage and will see more meaningful earnings fruition in the coming quarters (Kenanga Research). Exposure to Automotive is good due to high barriers of entry and stable recurring income.

Completion of Automation

According TA Research on 20 Apr 2017, MPI has completed its investments in vision inspection equipment. However, immediate cost savings are unlikely to be realised, as the 519 workers are redirected to different roles to support expansion plans. 4QFY17 capex is expected to be minimal.

Global Leader in MLP

MPI is among the top producers of micro leadframe package  in the world. To grab more market share, MPI spending a lot in CAPEX and R&D to improve the features of its MLP as well as increased production efficiency through reducing floor space and headcount, and shortening assembly cycle time.

Exposure to Stable Automotive & Industrial segments

MPI has relatively larger exposure to the automotive and industrial segments as compared to its peers, growth in these segments is typically more stable over time because of longer product life cycles.

Margin Improvement

MPI has been targeting high-margin portfolios for leaded high-density packages, MLP, and test

services which contribute around 85% of sales.

Potential M&A 

MPI is actively looking for automotive related acquisition targets to acquire technologies to expand its existing capabilities, which is in line with its plans to grow automotive segment. With net cash of RM419.7m, M&A related activities can be done easily.

Beneficiary of Depreciating Ringgit 

Benefiting from stronger USD, although MPI typically hedges 50% of its net USD exposure 12 months forward. Sales are mainly denominated in USD, but only 50-60% of costs (mainly raw materials) are denominated in USD. 

Source: AllianceDBS Research

WEAKNESSES & THREATS

Cyclical Nature of Smartphones & Tablets market

A major slowdown in the smartphones sales (possibly due to high market penetration), will hurt MPI, contribution from the smartphone segment is still significant at the moment (around 40%)

Sharp Depreciation of USD (which is unlikely)

Depreciation of the USD would affect its earnings as sales are mainly denominated in USD

Global semiconductor outlook

MPI is a general OSAT player but with a more diverse customer base, it does not have excessive exposure to a single large customer. As such, its fortunes are generally tied to the outlook for global semiconductor sales. Its price and valuation are affected by the performance of other listed OSAT players, which are mostly based in Taiwan (ermm, im not familiar with taiwan market).

Source: AllianceDBS Research

for reference only, info outdated, cant get the latest at the moment

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source: http://www.malaysiastock.biz

Profit increased substantially over the last 4 years in tandem with consistent growth of revenue. Profit margin has been improving over the years. High ROIC & ROE, high profit margin and is expected to improve further due to larger exposure to automotive and value added products, cash position is superb and dont have any long term borrowings as per Q3 report, with net cash of RM419.7m, acquisition related activities can be done easily. MPI is now trading at the acceptable EBIT multiple of 8.34 and P/E of 12.91.
According to projected earnings by TA Research, P/E of MPI for FY17=12.15, FY18=9.89, which is very attractive if and only if the earnings can be achieved :)

In a nutshell, MPI is expected to grow with in tandem with the recovery of semiconductor industry. Larger exposure to automotive is good due to high barriers of entry and stable recurring income, which can offset the cyclical nature of communication sector and decreasing demand in PC. Any automotive related acquisition would be great to boost its earnings to the next level. I will monitor closely on its automotive's revenue contribution as it is critical to its future growth. To me, the downside risk is limited, and im willing to buy more during weakness :)



Disclaimer: it is not a buying recommendation, your money, your decision