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Friday, July 29, 2016

FIBON Berhad - A neglected quality counter

1. Company Background

FIBON Bhd is principally engaged in the business of investment holding.The principal activities are the formulation, manufacturing and sales of polymer matrix fiber composite materials and products for the Electrical, Electronic, Petrochemical and Automotive industries. It deals in manufacturing and sales of electrical insulators, electrical enclosures and meter boards. Fibon bhd is based in Johor Darul Takzim, Malaysia.




2. Financial Performance


In the current quarter ended 31 May 2016, the Group registered higher revenue of RM4,806,000 compared to previous corresponding quarter ended 31 May 2015 of RM3,511,000 as a result of both increase in manufacturing and trading sales. 

Profit before tax has increased from RM1,611,000 to RM1,810,000 as a result of higher sales and higher other income.   

Despite facing various general economic challenges, the Board of Directors of Fibon Berhad is of the opinion that the performance of the Group for the financial year ending 31 May 2017 will not be severely affected.



    3. Basic FA












    Fibon has a healthy balance sheet since listing. It never had to borrow any money as there is adequate amount of free cash flow every year. Total equity attributed to shareholders has been increasing every year . Its cash holding also increases every year.  

    In recent quarter, the cash holding is RM28.26 Million or around half of market capitalization. If we exclude the cash holding, the adjusted PE will be 5.87 instead of current 11.65. The business quality is undeniably  good with net profit margin at 31%. 

    At the price of 59.5 sen, the adjusted PE ratio is 5.87 and Enterprise value/ EBIT is trading below 5 (which is very attractive). This may be due to its small market capitalization and hence not a liquid stock. There are also not much analysts covering this company. 
    EPS : 5.11
    NTA :0.43
    PE    : 11.65
    ROE :12.08
    Net income margin: 31%
    M.Capitalization: RM58M
    EBIT         : 6.8M
    Deposit/cash : 28.26M
    Short term bank borrowing: 0
    T.Asset    : RM44.3M
    T.Liability: RM2.57
    T. Equity  :RM41.8
    Current Ratio: 25.72
    DY:1.65%
    EV: 29.7




      4. Basic TA






      After good quarter earning, we can see that buying volume is increasing (circle in above chart) with Volume EMA above average volume. Currently, for moving average, Fibon is above 20d EMA, 70d sma and 200d sma which shows bullish sign.

      For above chart, the trading price for Fibon is close to upper band which shows buyer's interest is relatively strong. Parabolic indicator also shows Fibon on uptrending trend with strong Force Index to reinforce bullish trend. 

      In conclusion, Fibon is just on early up-trending phase and there is likely further upside for its share price.

      5. Catalyst



      Electricity Demand is Growing
      According to market research firm NRG Expert, the demand of electricity is growing, hence demand for cables, insulators, transmission towers will also be growing with it. The increase in the global energy demand are encouraging the demand for electrical insulator for power transmission and distribution application. The electrical insulator market is projected to grow at a CAGR of 6.5% in between 2014 to 2019.

      On the local outlook, the massive development in Johor, ranging from property to massive industrial development continue to push the demand in building related components, such as cabling, piping, insulation and wiring.

      With Fibon stationed at Johor, it will stand to benefit from all these massive development. Continuation of infrastructure upgrade in Singapore will also continue to benefit Fibon.


      For recent news, FIBON Group has decided to expand into the service sector (acquisition of BEEPS), as a service platform for the exports of unregistered used vehicles from Japan to the worldwide market.

      6.  Ownership Summary

      For ownership summary, we can note that insider tightly controls 83% of total share and public shareholding less than 10%. One may wonder on why not much funds are interested in investing in  Fibon?  Small cap with low liquidity probably? 









      7. Valuation: 

      Based on EV/EBIT=8  projection:       FV= RM0.85
      (Projection is based on 10% minimum growth)



      (22.5*EPS*Book value per share)^0.5 :RM 0.7

      TP:   RM0.78 ( from above average) 


      8. Strategy

      Based on current price (30 July 2016),

      Entry                  :RM0.595
      TP                       :RM0.78
      Stop loss          :   Below RM0.55 (with high volume)

      Potential gain  : 44%
      Potential loss  : 7.6%



      information contained herein
      Disclaimer: This is a personal weblog, reflecting my personal views and not the views of anyone or any organization, which I may be affiliated to. All information provided here, including recommendations (if any), should be treated for informational purposes only. The author should not be held liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.



      Saturday, July 9, 2016

      Stocks Say Goodbye to Brexit Losses As They Near All Time Highs





      It’s like Brexit never even happened.

      U.S. stocks rallied Friday after the June jobs report came in much better than expected, with the Dow Jones Industrial Average recovering all the ground it lost during the Brexit selloff.
      By mid-afternoon, the Dow Jones index was up 220 points, rising more than 1%, and climbed back above 18,000 for the first time since the U.K. voted to leave the European Union. So far this year, Dow Jones stocks have risen about 4% (and 6% since their post-Brexit lows), though they still remain below their all time highs. At 18,120, the Dow is nearly 200 points below its record closing price of 18,312 on May 19, 2015.
      The S&P 500 and Nasdaq also rose more than 1% each on Friday. S&P 500 stocks have gained 4% year to date, while the Nasdaq is still down more than 1% in 2016.
      Investors cheered the jobs report showing that the U.S. added 287,000 jobs in June, exceeding economists’ expectations by more than 100,000 jobs.
      Almost all Dow Jones stocks rose on Friday, with equipment manufacturer Caterpillar  CAT 3.09%  in the lead, up almost 3%. Shares of American Express  AXP 2.81%  and Goldman Sachs  GS 2.30%  gained nearly as much, bouncing back after a particularly harsh beating following Brexit.
      Meanwhile, gun stocks such as Smith & Wesson  SWHC 2.72%  also approached new highs after the shooting of Dallas police officers sparked a renewed gun control debate.
      On the flip side, the only stocks to fall during the day were those that had been among the few winners after the British vote. Walmart  WMT 0.42% , which was the only stock to rise immediately following Brexit, fell slightly after the jobs report. Johnson & Johnson  JNJ 0.28% , whose dividend and U.S.-focused business had lured investors amid the economic uncertainty over the past weeks, traded down Friday morning, but recovered in the afternoon.
      Source: http://fortune.com/

      Wednesday, July 6, 2016

      PENTAMASTER CORP - Next gem in the making

      1. Company Background

      Pentamaster Corporation Berhad is a Malaysia-based company engaged in investment holding and provision of management services.

      Through its subsidiaries, the Company operates in five segments: designing and installation of automation systems and contract manufacturing; manufacturing of automated and semi-automated machinery and equipment; designing and manufacturing of precision machinery components; development and implementation of information technology system, and designing and manufacturing of automated testing equipment and test and measurement system.manufacturing.
      2. Financial Performance


                           


      In term of net profit, PENTA was able to turn from net loss in year 2012 to net profit of MYR4.65m in year 2014. If we look at recent few quarter result, there is significant growth of EPS.  Coming quarter is expected to be good judging from track record from last few year.

      For latest quarter report, the group recorded higher revenue at RM28.6 million in the current quarter as compared to RM19.3 million registered in the corresponding quarter last year.

      The higher revenue recorded was mainly due to increase in sales from automated equipment operating segment and revenue contribution from smart control solution system which was partially offset by the lower revenue from automated manufacturing solution operating segment.

      Due to the higher revenue achieved and better product mix secured, the Group recorded a higher profit before tax of RM4.2 million in the current quarter as compared to the pre-tax profit of RM1.4 million in the previous corresponding quarter.




      3. Basic FA



      Basically, Penta had improved its fundamental in this recent years, by implementing below actions:

      • Disposal of its loss making subsidiaries
      • Acquisition of Origo to diversify into property project management
      • Acquisition of land to build a new plant for expansion
      EPS : 9.96
      NTA :0.576
      PE    : 7.8
      ROE :16.28
      Net income margin: 14.4%
      M.Capitalization: RM107M
      EBIT         : 17.5M
      Deposit/cash : 16.9M
      Short term bank borrowing: RM175K
      T.Asset    : RM105.7M
      T.Liability: RM21.6M
      T. Equity  :RM84.1M
      EY: 17%




      4. Basic TA



      After good quarter earning, we can see that buying volume is increasing with Volume EMA above average volume. Currently, for moving average, Penta is above 20d EMA, 70d sma and 200d sma which shows bullish sign.

      For above chart, the trading price for Penta is close to upper band which shows buyer's interest is relatively strong. Parabolic indicator also shows Penta on uptrending trend with strong Force Index to reinforce bullish trend. Stochastic indicator is currently neutral, no overbought or no oversold. 

      In conclusion, it is pretty obvious that Penta is on strong uptrend at the moment.



      5.  Ownership Summary

      For ownership summary, we can note that insider & public made up of  around 96% of total share. One may wonder on why not much funds are interested in investing in Pentamaster?  Small cap with low liquidity or erratic earning? 



      6. Valuation: 

      Based on projected PE 10.5  : 0.974 x 10.5=  RM1.03
      (PE 10.5 is derived from 30% discount from sector PE at 15 judging from Penta smaller market cap)

      Based on EV/EBIT=8  projection:       FV= RM1.05
      (Projection is based on 10% minimum growth)


      (22.5*EPS*Book value per share)^0.5 :RM1.12

      7. Strategy

      Based on current price (7July 2016),

      Entry :RM0.78
      TP    :RM1.1
      Breakout:  RM0.82, RM0.90
      Stop loss:   < RM0.73 
      Short term TP: RM0.90

      Potential gain : 41%
      Potential loss  : 6.8%


      Related Article


      Pentamaster gets RM45mil orders, for delivery in H1



      information contained herein
      Disclaimer: This is a personal weblog, reflecting my personal views and not the views of anyone or any organization, which I may be affiliated to. All information provided here, including recommendations (if any), should be treated for informational purposes only. The author should not be held liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.






      Saturday, February 13, 2016

      9 sneaky psychology tricks companies use to get you to buy stuff

                                             sale sign store
      From Facebook ads to TV commercials, you’re constantly being bombarded by people trying to sell you stuff.
      And marketers may not be scientists, but they’ve mastered the art of using your psychology against you. By exploiting your vulnerability to different style of propaganda, companies can trick you into buying more stuff and paying more for it.
      We’ve scoured the research on some of the strategies marketers use to lure in consumers, so you can catch them in their own game:

      Priming

      It’s well-known in psychology that being exposed to one idea or concept can affect your response to another, related thing. For example, you’re more likely to recognize a word like “tasty” after seeing a picture of a delicious meal than after a picture of a garbage dump. 
      In a 2002 study, researchers measured how a webpage’s background influenced consumers looking to buy a car. When the background was green with pennies on it, customers spent more time perusing the cost info, but when the background was red with flames, they spent more time looking at the safety section.

      The decoy effect

      Sometimes, a company will include an additional price option just to make you think you’re getting a deal.
      Duke professor of psychology and behavioral economics Dan Ariely did a study of a marketing strategy used by The Economist, as he described in a TED talk. The magazine offered three subscriptions: an online subscription for $59, a print subscription for $125, and a print-and-online subscription for $125.
      When Ariely offered 100 students the three options, most students picked the online-print combo, since it seemed like the best deal. But when he took out the print-only option, most students picked the cheaper, online-only one.

      The illusion of scarcity

      People are more likely to desire things if they seem like scarce resources. 
      In a classic study in 1975, researchers showed 200 people two identical cookie jars, except one had 10 cookies and the other had just two. Surprisingly, people rated the cookies in the empty jar as more valuable.
      Today, airlines and other companies use the scarcity principle all the time (think “only a few tickets left at this price!”). 

      Loss aversion

      Ever wonder why companies offer free trials? The reason links back to the results from 1990 study conducted by Nobel-winning psychologist and behavioral economist Daniel Kahneman and his colleagues.
      The group ultimately found that people are more likely to act when they have something to lose, as opposed to gaining the same thing. That’s why companies offer free trials, so customers will want to keep subscribing after the trial period is over.
      In the study, Kahneman and his colleagues gave people mugs, chocolate, or nothing. People then had the option of keeping their items or trading with someone else.
      About 86% of those given mugs chose to keep their mugs, whereas only half of those who started with nothing chose mugs, and just 10% of people given chocolate traded for them.

      Reciprocity

      As psychologist Robert Cialdini writes in his book “Influence: The Psychology of Persuasion,” if someone does something for you, you’re more likely to want to do something for them. Simply put: you scratch my back, I’ll scratch yours.
      Cialdini has found that when a restaurant server brings the check with one mint, people will tip 3.3% higher than normal. And with two mints, they’ll tip a whopping 20% more!
      Think about that the next time you go out to eat.

      Social proof


      Basically, people tend to do something simply because other people are doing it (a.k.a. going with the herd).
      Psychologist Robert Cialdini writes in his book that this is why TV sitcoms used canned laughter, which makes you think something is funny just because you hear other people laughing at it.
      Or take social media — people or brands will often buy “ghost followers” who aren’t real people, to make others think they have a large following.

      Anchoring

      i
      Anchoring refers to the notion that people will make decisions that rely too heavily on the first piece of information they get.
      For example, a 2011 study revealed how anchoring affects salary negotiations. Participants gave candidates a higher salary offer when they suggested an implausibly high salary than when they suggested a realistic one.
      Companies often use this tactic with sales, where they set an “anchor” price and show you how much the product has been marked down. For instance, you may be willing to pay $50 for a new shirt if it’s been discounted from $100, even if it’s more money than you would usually pay.

      The Baader-Meinhof Phenomenon


      Also known as the frequency illusion, this is the effect where you see something once, and suddenly you start seeing it everywhere. And companies use this to their advantage to sell you products.
      According to Pacific Standard, the term Baader-Meinhof phenomenon was invented in 1994 by an online commenter, who heard the name of the ultra-left-wing German terrorist group twice in a 24-hour period. Stanford linguistics professor Arnold Zwicky coined the term “frequency illusion” in 2006.
      It comes down to two things. When you first come across a new word, thing, or idea, you unconsciously start noticing it because of something called “selective attention.” Then, each time you see it is additional proof that it’s everywhere, a phenomenon known as confirmation bias.

      The power of anecdote


      People like stories. It’s that simple.
      Psychologists Christopher Chabris and Daniel Simons, authors of “The Invisible Gorilla,” say we value stories over statistics because individual examples stick in our brains better.
      Research suggests that the reason stories are so persuasive is that they transport us to a place where we’re more likely to believe in something. Other research shows that people who seek out emotional situations and ones who enjoy thinking were both likely to be transported by stories.
      Maybe that’s why so many ads feature customer testimonials, because they tell a story we can identify with.

      Source:  http://www.businessinsider.my

      Monday, February 1, 2016

      RM20k salary for a family is not enough in Klang Valley ?






      RM20k not enough (don’t love own kids version)
      Income = RM20,000
      RM20,000 – RM2,000 (EPF) = RM18,000
      RM18,000 – RM3,500 (Tax) = RM14,500
      RM14,500 – RM2,000 (1 god car and one Iriz for husband and wife, around 140k, installment around 2k for 5 years loan) = RM12,500
      2014-Proton-Iriz

      RM12,500 – RM4,500 (House, PJ terrace house is 1M these days, loan 900k or 4.5k a month) = RM8,000

      RM8,000 – RM1,000 (Public school for 2 kids since we hate our kids and want them to be stupid. But we still provide tuition and other classes for the 2 brats) = RM7,000
      RM7,000 – RM1,000 (Mom is housewife so cook at home save money. Ikat perut since we hate our family) = RM6,000
      home cook food malaysia
      RM6,000 – RM2,000 (Give parents and parents in-law money 2k monthly) = RM4,000
      RM4,000 – RM500 (Astro, internet, ipon = RM500, lets share phone plan…cheaper plan also save money yo) = RM3,500
      RM3,500 – RM200 (Children pocket money) = RM3,200
      RM3,200 – RM1,000 (Car, petrol, toll and maintenance) = RM2,200
      BHPetrol-RON95
      RM2,200 – RM1,000 (Wife pocket money) = RM1,200
      RM1,200 – RM500 (Holiday once a year within SEA , RM6k for 4 people or RM500 monthly) = RM700
      RM700 – RM200 (Electric and Water Bill) = RM500
      RM500 – RM500 (Misc expenses) = RM0
      Savings = RM0
      Pity, save kao kao and mistreat own kids pun not enough.

      Source: http://www.funnymalaysia.net/

      FOREX 4U