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%


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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.

Koon Yew Yin's Share Investment Strategies

How I started investing in shares?

In 1983 I had my heart bypass surgery in London. While recuperating in Harley Street Hospital, I read from the newspaper that the Hong Kong stock market crashed because Margret Thatcher, the British Prime Minister failed to secure the extension of British rule of Hong Kong. The British had a 99 years lease of Hong Kong and a part of Kowloon. The lease was expiring and the Chinese Communists would soon take over.

Everyone was afraid and everything was on cheap sale. The stock market crashed. 
At that time, I did not know how to select shares basing on the fundamental criteria of value investing. I did not know how to invest for long term or short term or timing the market to hit and run. I just bought shares that went down the most in terms of percentages. You can say that I started blindly.

As soon as China agreed to offer 50 years extension of capitalist system, the Hong Kong stock market rebounded and I sold all the shares I bought initially with more than 200% profit. With all the proceeds, I bought HSBC and other better known shares. After about 2 years, I made so much money that I bought 46% of the small stock broking company in Hong Kong that gave me margin finance which help me make more profit. 
   
After this short experience in Hong Kong, I decided to retire as Managing Director of Mudajaya and be my own boss. Why should I work so hard when it is so easy to make money from the stock market? Moreover, all my profit is tax free and I don’t have any management problem. I do not need to deal with people which I find most difficult. 
    
After my retirement, I have more free time to read. I have learned the investment philosophy of Warren Buffet, Peter Lynch, Benjamin Graham and others. I found the best book is called “Valuegrowth Investing” by Glen Arnold. 
   
What is value growth investing? It means that the best stock to buy must be undervalued and it has strong profit growth prospect.

What is long term investment?

If I ask you all what long-term investing mean to you. I might get many different answers. Some may say 10 to 20 years, while others may consider five years to be a long-term investment. Individuals might have a shorter concept of long term, while institutions may perceive long term to mean a time far out in the future. This variation in interpretations can lead to variable investment styles.

For investors in the stock market, it is a general rule to assume that long-term assets should not be needed in the three- to five-year range. This provides a cushion of time to allow for markets to carry through their normal cycles. However, what's even more important than how you define long term is how you design the strategy you use to make long-term investments. This means deciding between passive and active management.

Long-Term Strategies

Investors have different styles of investing, but they can basically be divided into two camps: active management and passive management. Buy-and-hold strategies - in which the investor may use an active strategy to select securities but then lock them in to hold them long term - are generally considered to be passive in nature.

Active Management

On the opposite side of the spectrum, numerous active management techniques allow you to shuffle assets and allocations around in an attempt to increase overall returns. There is, however, a strategy that combines a little active management with the passive style. A simple way to look at this combination of strategies is to think of a backyard garden. While you may plant different crops for different results, you will always take the time to cultivate the crops to ensure a successful harvest. Similarly, a portfolio can be cultivated along the way without taking on a time-consuming or potentially risky active strategy.

Market Timing 

When it comes to market timing, there are many people for it and many people against it. The biggest proponents of market timing are the companies that claim to be able to successfully time the market. However, while there are firms that have proved to be successful at timing the market, they tend to move in and out of the spotlight, while long-term investors like Peter Lynch and Warren Buffett tend to be remembered for their styles. Studies have shown that most day traders cannot outperform the market index because of the transaction cost.

The Bottom Line

If volatility and investors' emotions were removed completely from the investment process, it is clear that passive, long-term (20 years or more) investing without any attempts to time the market would be the superior choice. In reality, however, just like with a garden, a portfolio can be cultivated without compromising its passive nature. Historically, there have been some obvious dramatic turns in the market that have provided opportunities for investors to cash in or buy in.


My investment style

Basically my style is a mixture of all the above mentioned strategy including the use of margin finance to increase my profit. With due respect to professional fund managers, they consider current earning EPS the most important criterion. But, I consider future profit growth prospect is more important. For example, Jaya Tiasa which has very poor current earning but it has tremendous profit growth prospect. That is why it has gone up about 30% in the last few months. 

It is easier for me to explain by showing you the shares I own and how I manage them. In view of the sustainable palm oil price increase in the near future, most of my investment are plantation shares eg Jaya Tiasa, Kulim, TH Plantations and Sarawak Plantations. Besides plantation, I have about 20% worth of my total investment on Mudajaya, MFCB and Success Transformers. I have only 7 counters so that I can closely keep track of them.

All my shares are pledged for margin finance. I normally use up to about 80% of the allowable limit.

How do I use Price Charts

I do not use charts to trade frequently. I only look at the long term price charts to buy shares that have been depressed for a long time. For example, Kulim is now selling at around Rm 3.50 which is lower than the average price in the last 3 years. This is simply not logical. It the last 3 years, Kulim’s plantation land especially those in Johore must have appreciated in value. Moreover, Kulim would have planted more oil palms and also made profit in the last 3years. I believe the price of Kulim will soon be re rated.

How I take advantage of the share price fluctuation

It is important to note that any share cannot continuously go up or come down for whatever reason. I must take advantage of this phenomenon to make money. For example, I have sold some Jaya Tiasa because it has gone up 30% within a few months so that I have funds to buy Kulim, TH Plantations and Sarawak Plantations which have been depressed for a long time. Jaya Tiasa is still my largest holding.
   
Please note that all the shares I bought are meant for long term. But it does not mean that I cannot sell them to get money to reduce my borrowing or to buy some other shares which are relatively cheaper.
Those who wish to know more about my investment style or have questions to ask, please attend my seminar on 1^st June as according to my announcement.

EPF/KWSP -Top 30 Equity Investments Listed On Bursa Malaysia

List Of Top 30 Equity Investments Listed On Bursa Malaysia By Quarter As At 31 December 2011

No.	Share	% Holdings
1.	Msian Building Society Bhd	65.50%
2.	RHB Capital Bhd	44.99%
3.	Msian Resources Corp Bhd	42.21%
4.	Media Prima Bhd	18.68%
5.	Shell Refining Co. Bhd	17.03%
6.	Digi.Com Bhd	16.72%
7.	IJM Corporation Bhd	15.51%
8.	WCT Bhd	15.46%
9.	Dialog Group Bhd	15.08%
10.	AMMB Holdings Bhd	14.83%
11.	Tenaga Nasional Bhd	14.42%
12.	Genting Plantations Bhd	14.14%
13.	Sime Darby Bhd	13.75%
14.	Axiata Group Bhd	13.35%
15.	UMW Holdings Bhd	13.23%
16.	KPJ Healthcare Bhd	12.99%
17.	Star Publication (M) Bhd	12.93%
18.	United Plantations Bhd	12.91%
19.	CIMB Group Holdings Bhd	12.91%
20.	Petronas Chemical Group Bhd	12.89%
21.	SP Setia Bhd	12.63%
22.	Petronas Gas Bhd	12.58%
23.	Kuala Lumpur Kepong Bhd	12.49%
24.	Axis Real Estate Investment Bhd	12.47%
25.	Cycle & Carriage Bintang Bhd	12.38%
26.	Alliance Financial Group Bhd	12.38%
27.	Malayan Banking Berhad	12.34%
28.	IJM Plantation Bhd	12.29%
29.	Hong Leong Bank Bhd	12.29%
30.	Telekom (M) Bhd	12.09%

Source: EPF Malaysia

Buy Genting shares: HwangDBS 2012

Genting Bhd, which controls Asia’s second-biggest gaming company by market value, said fourth- quarter profit jumped 66 per cent, with maiden revenue contributions from its New York City casino.


Net income surged to RM772.9 million, or 20.94 sen a share, for the three months ended December 31, from RM465.4 million , or 12.57 sen per share, a year earlier, the company said in a filing to the Kuala Lumpur stock exchange yesterday.

Revenue climbed 24 per cent to RM5.06 billion on increased takings at its core Singapore, Malaysia and UK casinos and gaming resorts.

“The growth in the global gaming industry in 2011 was driven by key Asian markets,” the group said in its statement.

“The economic challenges in Europe and the U.S. continue to cloud the short-term outlook of the Asian economies. Uncertain economic climate also presents some potentially attractive investment opportunities” for Genting Singapore Plc, it said.

The Kuala Lumpur-based group is extending its overseas reach from its roots as owner of Malaysia’s only casino resort. It opened a casino at the Aqueduct Racetrack in New York City last quarter, where it also plans to build the country’s biggest convention center. 

Its Genting Malaysia Bhd. unit has also pitched proposals for a US$3.8 billion casino-and-hotel project in Miami. It’s already the UK’s biggest casino operator and owns Resorts World Sentosa, one of Singapore’s two gaming resorts.

Genting rose 0.6 per cent to RM10.60 at 11.15 am in Kuala Lumpur trading, tracking a similar gain in the FTSE Bursa Malaysia KLCI Index. 

The stock has fallen 3.8 per cent this year and trades at about 13 times estimated earnings, compared with the 21-times average for 16 gambling operations companies worldwide tracked by Bloomberg.

“Genting is the cheapest gaming stock in the world with resilient base earnings from gaming, plantation and power segments,” Yee Mei Hui, analyst at HwangDBS Vickers Research Sdn Bhd wrote in a note to clients today. 

She kept a “buy” rating on the stock with RM13.70 price target. - Bloomberg

Giving real-estate agents knowledge and a sense of professionalism

THE Malaysian Institute of Estate Agents (MIEA) aims to offer more training programmes and courses to enhance the level of professionalism of real-estate agents in the country.

It recently held a two-day seminar on the Certified International Property Specialist (CIPS) to enhance the knowledge of its members.

“The CIPS is an internationally-recognised course and it's being promoted aggressively in other countries, such as Indonesia, Singapore and Thailand. The seminar is to provide our agents with the know-how on how to sell properties internationally,” MIEA president Nixon Paul tellsStarBizWeek.

Nixon: ‘We’re getting quite a number of professionals coming into this profession. The estate-agent profession is viewed positively as a long-term career path.’

Incidentally, selling property abroad is also the theme for MIEA's Malaysian Annual Real Estate Convention 2012 (MAREC 12) next month.

Themed Property Investment The Way Forward, Nixon says the MIEA decided on this topic because it felt that property investment was relevant and has become a very big part of estate agents' daily business activities.

“There are a lot of cross-border sales taking place these days. You have a lot of Singaporeans buying property in Malaysia because property prices over there have gone crazy! The biggest beneficiary has been Iskandar (in Johor).”

“There have also been many purchasers from Bangladesh, surprisingly. It's true, when you think of Bangladeshis, you imagine them being poor. But the rich are very rich,” he says.

Nixon says there has also been an increase in Indonesian buyers.

“We've seen a slowdown from European and American buyers because of the economic situation in their countries.”

The convention, which will be held on March 3 and 4 at the Sime DarbyConvention Centre, will feature distinguished speakers such as RAM Holdings Bhd group chief economist Dr Yeah Kim Leng.

MAREC 12 will also be the first time that such a convention will be made open to the public.

“We're opening it to the public because we feel that the issues discussed are relevant to them.”

Nixon personally believes that the property investment opportunities are outside the Klang Valley.

“This is because the entry-level (for property) is so much lower in other states,” he says.

Nixon adds that Islamic finance would also be a topic that would be discussed at MAREC 12.

“There have been many developments within Islamic finance that have made property investment a lot more attractive. It (Islamic finance) has grown over the years and there is a lot about it the general public is not awareof.

“There will also be a lot of estate agents there and it will be a good networking platform for the public.”

This weekend, the MIEA is organising a seminar on property investment. “Investors need to be aware of their exit strategy when to get out of their investments. You have short-term investors and long-term ones, who have different views,” Nixon says.

He also says plans are in the pipeline to have social network-related training programmes for its estate agents.

“The global environment is changing so quickly that it's becoming hard to keep up! Before, people placed advertisements, then it progressed to websites. Now, its social networking platforms such as Twitter, Facebook!

“By raising the level of professionalism of our agents, they can also generate better income.”

Nixon says the MIEA, through its various training initiatives, hopes to be able to reach out to members located in states outside the Klang Valley. According to him, the MIEA currently had around 700 estate agents, with the bulk of its members located within the Klang Valley.

“We need to reach out to our members who are in the other states. So far, response has been good. At our recent CIPS seminar, about 60% of our participants were from outside the Klang Valley area.”

Nixon says the MIEA also wants to attract more professionals into the profession.

“Today, we're getting quite a number of professionals, such as lawyers and accountants, coming into this profession. The estate-agent profession is viewed positively as a long-term career path.

“We hope to attract more professionals into this line to increase the level of professionalism and with better service we can better serve the market,” he says.

On another note, Nixon says the public should conduct a check on the background of a particular estate agency before engaging their services.

“There are a number off illegal agents out in the market and when you engage one, it doesn't hurt to call up the number on their card and check with their office to determine if they are legitimate.

Source: Staronline

2012 Malaysia Property market to see 10% growth

 
KUALA LUMPUR: The property market is expected to see 10 per cent growth in transaction value this year from over RM40 billion last year, according to property consultant CH William Talhar & Wong Sdn Bhd.
Managing director Foo Gee Jen said the growth is slightly lower compared to 11 per cent last year, adding the appreciation in market value is mainly driven by cost rather than demand.

"The higher land value, shortage of labour and rise in building material prices rather than buyers' demand prompted our forecast value," he said.

He said the property market would stay buoyant on the back of the strong housing property segment, with the growth mainly contributed by demand from the young population.

Speaking at a media briefing on the outlook for the property sector today, he said office rentals would remain stagnant or decline for older buildings but there would be higher asking rentals for newly completed buildings with green certification and Multimedia Super Corridor status.

With over 0.74 million sq m of new office space expected to enter the market this year, there will be a very competitive office leasing environment, he said.

"Hence, older buildings will face pressure from declining occupancies as tenants seek newer, better quality offices," he added.

For the condominium sector, Foo said luxury condominiums could face the threat of oversupply in the future. On new non-landed developments, he said a total of 13,716 units in 47 developments are currently under construction, with about 2,900 units to be completed this year.

"With the average occupancy rate at 68 per cent, this gives some pressure on the developers, whose current focus is more on smaller and more affordable unit sizes of 46.5 to 93.0 sq m," he said.

Selling prices range from RM9,136 to RM21,520 per sq m in the KLCC area, and RM7,532 to RM10,760 per sq m in the Mont' Kiara/Sri Hartamas and Kenny Hills areas, he added.

However, he said, sales of new housing developments are expected to be sustained this year due to the low interest and unemployment rates and attractive financing packages.

He said the take-up rate will be maintained at last year's rate, with the House Price Index at 11.4 per cent for Kuala Lumpur and 9.6 per cent for Selangor.

"Last year, the landed residential sector showed strong movement on the supply side while demand was correspondingly positive, with most new launches recording high sales rates of between 60 and 70 per cent," he added. - BERNAMA