Jakarta Composite Index (JCI)
JCI broke below 3,400-level support yesterday and fell lower to 3,346 this morning. When looking for a pattern, it has formed a triple top, followed by a breakdown below support. Despite the breakdown, JCI is reaching the projected decline soon around 3,300-level while its RSI looks set for a soft-landing around 25 level-point.
Stock Exchange of Thai Index (SET)
The outlook for SET is quite worrying as it has dropped by more than 4% today, the worst among the ASEAN countries. Obviously, the index is near to the next support at 950-level, once broken next will be 900. Yet, when I was writing this, SET has returned to green zone at 969.7 compared with open at 968.15.
Philippine Stock Exchange (PSEi)
Apparently, PSEi has rebounded before everyone did.
Overall, the selling pressure by foreign funds may come to an end. Yet, investors should be alert and be aware of the Chinese New Year effect as many people may exit for New Year “Ang Pow”. Technically, FBM KLCI is reaching an upward sloping support around 1,533-level while RSI has flatten at 50-point-level. If index successfully rebounds on 1,533, next resistance is at 1,575.
• MRCB@RM2.18
Catalyst: New contract, Acquisition of land, 10MP, ETP, 4th quarter result is coming up. It should be around February 2011.
Technical: Bounded between RM2.00 and RM2.17 and just broke above the resistance today. Next resistance at RM2.25
Average Consensus Target Price: RM2.25, representing only 2.7% upside.
• Steelmakers in Asia may be forced to pay as much as 33% more for hard coking coal after the worst floods in 50 years in Australia's Queensland state. Prices may increase to $270 a metric ton for 3-m contracts starting April 1. (Source: Bloomberg)
The only listed company on Bursa that has principal activities of production and sale of metallurgical coke is HUAAN. Its business operation is located at Linyi City, Shandong Province, China. It may be benefited from the rising coking coal price.
But Too bad! Average consensus Target price, RM0.36 is below the current share price at RM0.385. Please also note that steel industry is not one of the top gems at this timing.
Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.
• Public issue of 32 mil new ordinary shares of RM0.50 each comprising of:
1. 11.05 mil for Malaysian Public
2. 11.05 mil for eligible directors, employees and etc
3. 9.9 mil identified investors via private placement
• Issue and offer price of RM0.70per ordinary share
• Offer sale of 22.1 mil shares made available for application by bumiputra investors
• Closing date of the application for IPO shares: 6 January 2011
• Listing date: 18 January 2010
• Utilization of Proceeds: Out of 22.4 mil, 12.7 mil will spend on working capital, 7.1 mil on repayment of bank borrowings and 2.6 mil on listing expenses, which represents approximately 57%, 31.7% and 11.6% respectively. 1.2 mil of working capital will be spent on operating and marketing expenses and the rest will go to construction cost. 3.2 mil will repay the borrowings for Intanasia and 3.9 mil for TID development.
Background
• Involved in property development, investment holding and operation of car park as well as project and construction management in mainland Penang.
• The founder of the company is the managing director Ir. The Kiak Seng.
• Incorporation in 1994 as Tambun Indah S/B
• The company product was the 1st guarded & gated community and the 1st landed strata scheme property
• Structure of the group:
- Cenderaman - 100%
- Langstone – 100%
- Denmas Development - 100%
- Perquest – 100%
- Denmas – 100%
- Tokoh Edaran – 100%
- Epiland – 100%
- Tambun Indah Development – 70%
- Hong hong – 100%
- Tambun Indah S/B – 100%
- Intanasia – 100%
- TID Development – 100%
- Juru Heights – 100%
- TKS Land – 100% - CBD Land – 50%
- Jasnia – 100%
- Zipac – 100%
Highlights
• Purpose of listing: enable the group to gain recognition and further enhance reputation and image in order to expand the business and to move in line with the big players in the local market.
• Catalyst: Building the second Penang bridge, which connect Batu Maung and Batu Kawan, is regarded a catalyst to add value to the company since its products are near to the bridge.
• Dividend policy: The Company has a progressive dividend policy of distributing 40% to 60% of their PAT attributable to shareholders excluding non-recurrent items.
• Net Cash: Cash & cash equivalents – Short & long term debt = 26.947 (pre IPO), 46.747 (post IPO), where most developers in Penang island have higher gearing ratios.
• Instead of marketing the Company’s products, I would prefer to compare it with its peers.
Price
Mkt Cap
P/NTA
BPS
Total debt /C.Equity
Div Yield
P/E
Ivory
1.17
217m
1.26
0.93
95.44%
0%
9.64
Hunzpty
1.71
332m
0.79
2.18
21.14%
3.26%
4.20
E&O
1.31
1.09b
0.95
1.38
90.34%
2.90%
20.03
Tambun Indah
0.70
154m
1.4
0.58
10.32%
6-7%
~5.5-6
• Assuming products’ location, value, quality among these companies remains constant, what would you think about these 4 companies purely based on the figures above.
• First, for safety purposes, I’d look at debt. Somehow, Ivory, Hunzpty and E&O have higher gross gearing compared with Tambun Indah. In such circumstances, the concern of the Company using its IPO proceeds to repay borrowing will no longer an issue. With Net cash on hand, Tambun Indah is considered as healthy and has lower loan default risk.
• Since Tambun Indah has the highest price to NTA among the peers, the important question is whether the premium is worthy or not? Under the circumstance where in that fact that Penang Island is short of affordable properties to new generation, second thing comes to my mind is whether people will compensate them with cheaper property and bigger space if the only condition is that they have to live far away from the heart of the city – You will never know – it depends. However, there is a risk there. Hopefully, someone can answer. I’m not sure whether the second link bridge has been officially approved. If not, the properties may have a hard time to turn hands. If yes, everything will be in place.
Results:
• I wouldn’t spend time on result since the figure below tells it all.
Income Statement Ratios
2007
2008
2009
2010
Gross Profit Margin (%)
27.50%
29.99%
31.99%
35.24%
EBITDA Margin (%)
28.11%
27.53%
30.54%
32.85%
EBIT Margin (%)
27.94%
27.40%
30.36%
32.74%
PBT Margin (%)
27.81%
27.34%
29.76%
32.74%
PAT Margin (%)
20.15%
18.63%
23.56%
24.60%
Net Profit Margin (%)
20.15%
18.63%
23.56%
24.60%
Effective tax rate (%)
27.56%
31.88%
20.83%
24.84%
Comments:
Fundamentally sounds, catalyst remains uncertain. Listing date is on 18 Jan 2011. I believe retailers will think “as long as not China stocks, not making shoes, everything will go during IPO.” No support for this statement, but it’s just purely a sentence that I regularly heard from others. Well, 18 Jan is about 2 weeks before the CNY and subscription for the IPO is closing today. For those who have sent in their subscription form, Good Luck! For those who didn’t send, we can only sit and wait for the performance of the stock.
Source: the Company's Prospectus
Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.
