TEXCHEM Resources Berhad (3)

If you all noticed of my blog, you would see that this is the thrid time Texchem is being blog by me again.
Yes, this is the 3rd article on Texchem.
And now this time is about the sales 70% of Texchem Fumakilla to Fumakilla Japan @ 42million USD.
This has significantly help on the debt/MTN of Texchem which is RM200million.
I still insist in this company will return back to its previous glory time.
I bought some of its share @ 67sen today.
Will accumulate more in future

I m back

After a long break after my final exam., I has been work in a semiconductor company in the past six months.
Anyhow, I do not feel the excitement and challenge that stock market that did gave me previously. I decided to back to blog and if have any chance, I might jump into this field( hope anyone can recommend me a job in financial).

I been followed closely on the stock market recently. I found there is an rally; thats big enough. However, I did not join into it, instead I am still looking into good fundamental penny stocks, that really will give you super generous returns in long term investment strategy.

I will pick out some stocks in the near future for analysis.
See you all then.

Offer is out. RM7.10 apiece for EONCAP shares

Long awaited offer is out. Hong Leong bank offer RM7.10 cash for a share in EONCAP make the deal worth RM4.9 billion. The deal does not come with a share conversion option, which signify shareholders cannot convert their existing EONCAP shares to HLB shares. I consider this as a lose to existing shareholders. If the deal is successful, this will create the 4th largest bank in domestic front in Malaysia, surpassing RHB, currently is the no4.
According the announcement, 7.10 is arised from premium of 31.5% to the 180-day volume weighted average price ("VWAP") of EON Capital shares as at 16 December 2009.This is no fair enough because they use 180VWAP instead of 30VWAP,because the past 6 months is the tough time for financial sector and dampened by economy crisis. And secondly, calculation are as at 16 DEC, which is a month ago, they ignore the current performance and transformation by EON bank and those bought its share recently.
RM7.10 is just merely 1.4times Price to Book value of EONCAP as EONCAP has more than RM5 book value per share. In comparison when CIMB bought the Southern Bank, CIMB paid 2.1times PBV. 1.4 times PBV is perhaps among the lowest offer after the consolidation of local banks in the past.
Frankly speaking, I have bought few lot of EONCAP before this. I was not speculating, but after taking into acount the strong balance sheet, reputation, transformation done, growth prospect of EONCAP and careful research and study has been carried.
I am not happy with the price, and there is no option given to us to choose between share conversion and cash. With RM7.10, I actually has make money from it. But I not satisfied when HLB is a way of far undervalueing EONCAP.
I will going to vote against the propose merge in the coming EONCAP EGM in coming weeks!
Hope those face the same fate will join me.
Thank You.

EONCAP

EONCAP is the holding company of EON bank which has strong position in car loan lending activity. Recently, the board has entered into talk with Hong Leong bank in which latter has granted permission from bank negara to start the talk in effort to acquire smaller rival in the country. The only obstacle would be from Primus Pacific which controlled the EONCAP board. Primus has paid RM 9.55 per share to acquired 20 % of EONCAP in 2007.

It is likely Quek will only pay RM8 per share for EONCAP which equivalent to 1.6 times Price to Book value (PBv). Therefore, Primus will try their best to stop the acquisition.

HLB buy EONCAP

HLB boss, Quek has obtained the permission from Bank Negara to start negotiation both with shareholder and board of directors of EONCAP in the effort to buy over EON bank. If negotiations bear fruit, this will make the merged entity become country 4th largest bank; both in term of asset's value and market capitalisation. This is a good new for the country's banking sector as Bank Negara will awarding some lisenses to foreign banks and moving to liberalisation of our banking and finance sector. However, the thing that matters now would be how much EON bank worths? And how much HLB or indeed Quek would like to pay now? The answer would be quite simple and obvious! When Quek start to obtain the permission from Bank Negara, he on that time should has confident enough that this transaction would be fruitful. The only obstacle would be from the single largest shareholder: Primus Pacific which bought EONCAP at RM9.55 per share few years back! Other shareholders have no problem with the deal. Those agreed for the deal is holding more than 50% shares currently and this will help to boost this transaction! Based on past M&A in banking, for example Bumiputra Commerce(current CIMB) bank bought over Southern bank at 2 times Price to Book Value(PBV). According to latest quarterly result of EONCAP, its NTA is at RM5 per share, this would make EONCAP valued at RM10 per share. However, I do not think Quek would pay for such a high amount. The fair value should between 1.5 times PBV to 2 times PBV. Lets take the medium value; 1.75 times, this would valued EONCAP at RM8.75 per share! The acquisition might carry out in 2 options, pay cash and exchange to HLB share. In latter scenario, the conversion ratio might at 1:1. This conversion ratio is lower than the cash option because this will dilute the Quek shareholding and very likely he would not let it happen because Quek is in cash rich position. Based on the closing price of EONCAP at around RM7, there is still a possible uptrend of 25%. Target buy for this stock until it break the RM8.50 level.

Hidden Gems in Bursa Malaysia

There are a lot of investing opportunities arise especially when Dubai World announced to delay its interest payment and plans to restructure its debts with bankers. Dubai World had sink in a situation where it is not afford to pay back its loan.
Personally thinking, I am confident that this would not affects the recovery trend of global economy. I still believe global economies will have positive growth in 2010. The reason behind is that, goverments around the globe will keep pumping tonnes of cash into so called'stimulus package' to get rid of negative growth of GDP.
And therefore, future will be better. This time will be the best time to invest in stock market especially for those who miss out the first wave of recovery of the market after the market sinks to its low as much as 50% after the meltdown of financial in Walstreet.
I have studied few stock that i think would be gives satifactory returns in the next few years. The first would be GenM. GenM is holding more than RM1 cash per share as at 3Q FYE2009 and it adds 20sen per year. It pays out 7 sen divendend per year and is in growing trend. Fair value at the moment will be around RM3.50(RM1 cash+ 10xPE2009).
In another scenario, LION group share prices had performed badly except Parkson. Lion group incuding LIONDIV, LIONCOR, LIONIND, LIONFIB and Parkson. I would not elaborate on Parkson since this stock performs quite satisfactory. The other Lion companies have similarities whereby they have a high figure of NTA excpt LIONCOR due to bad performance of AMSTEEL. When we buy those shares, we are actually buying in discounted manner. For example, LIONDIV, the holding company, it has RM1.83 of NTA but its share price is only RM0.41, well below its par of RM0.50. Any positive corporate exercises of Lion group will benefits this stock since LIONDIV is the holding company of Lion group.
The other example would be LIONIND and LIONFIB where they have NTA of RM3.83 and RM4.28 respectively. Given the fact that globa steel price is in recovery mode, Lion group will be able to turnaround in the near term.

TEXCHEM Resources Berhad (2)

Today Nov 20, Texchem share price is closed at 0.96, an increase of 3 sen from my first posting(0.93). This equal to 3.2% of increment. This indicates that this stock is towards a rally state after hits its low at 89sen few months ago and stays at around 90sen level for quite a long time:approximately 4 months. My view on it remains: it is a good long term buy, by having a diversified range of businesses. On top of that, Texchem has a very good management team. As a proof, it disposed the Seapack Sdn Bhd following it's heavy looses due to the ban of seafood export to Europe imposed by European Union(EU) on Malaysian seafood. Texchem also disposed Texchem Consumers Sdn Bhd which distribute the Jordone brand toothbrush and Halls sweet in Malaysia. Texchem group operates few subsidiaries in Vietnam, Thailand, Singapore which promotes other source of income to the group. This enhanced the group viability in this tough economy condition and diverge the group's risks by not just operate solely in one country. In future, the management might spilt off the Sushi King division from the group and list it on KLSE.
This is based on:
1.Sushi King has built a strong brand among Malaysians.
2.Sushi King receiving recognisation awards yearly including 'Gold Bull Award'
3.Sushi King generates strong cash flow and profit growing steadily.
4. Ease of management if split off, and for the need of future expansion.
Based on the latest 3 quarters segmental result:
1. Industrial division:profit of 6.3 million
2. Packaging division:loss of 3.6 million
3.Family Care division:profit of 4.9 million
4.Food division:profit of 5.6 million.
It still very worth to buy Texchem now and keep it until it fruitful. Target price is RM1.60