Malton Bhd ('Malton') is involved in construction, project management & property development. Malton is well-known for being the project manager for the development of The Pavillion, Kuala Lumpur. For more on the group's activities, go here.
Pertinent, Unrelated Developments
Lately, Malton's major shareholder, Desmond Lim made news when his private company, Urusharta Cemerlang KL) Sdn Bhd acquired a small parcel of land (measuring 0.7 acre) near The Pavilion for RM210 million. The land was acquired at a whopping price of RM7210 psf- a new benchmark for KL commercial land.
Desmond Lim is also linked to a consortium, which consists of 1Malaysia Development Bhd (1MDB) and Lembaga Tabung Angkatan Tentera (LTAT), that has received approval in principle to redevelope the Sungai Besi Royal Malaysian Air Force (RMAF) base. Go here for more details.
Desmond Lim's high profile could be a good thing as well as being a liability. This in turn could have a negative impact on Malton.
Financial Performance & Position
Malton is a profitable company, which reported a net profit of RM21.9 million on a turnover of RM346.9 million for FYJune2010. Its financial position is satisfactory, with current ratio at 2.3 times and bank borrowings to shareholders' funds of 0.3 time as at 30/6/2010.
Valuation
With FYJune2010 EPS of 6.27 sen & current price of RM0.60, Malton is trading at a OE of 9.6 times. At this PE multiple, Malton- a mid-size construction-cum-property group- is deemed fully valued.
Technical Outlook
Malton is currently testing its horizontal resistance at RM0.60 after it broke above its downtrend line at RM0.48-0.50 two weeks ago. If Malton can break above teh RM0.60 resistance, it may test higher levels at RM0.80 & then RM1.00-1.10.
Chart: Malton's monthly chart as at Oct 1, 2010_plotted on log scale (Source: Tradesignum)
Conclusion
Based strictly on technical consideration, Malton could be a trading BUY. A good entry is either at RM0.55 (on pullback) or when it has broken above the RM0.60 mark.
17 comments:
Hi Alex,
Can I have your comments on Jerneh after it has signed a Share Purchase Agreement yesterday. From the proforma in table B of its announcement yday, the Nett Asset per share is suppossedly RM4. It's share is now hovering about RM3. As the deal will be concluded by end December, it is a good buy now?
Hi Arsenal,
At a Price to book of 0.72 time, Jerneh does not look expensive. Is it cheap?
The question that you have to consider is how would Jerneh's financial performance be like after the sale of JIB? For 1H2010, JIB achieved a net profit of RM15.948 million. For the same period, Jerneh recorded a net profit of RM22.453 million. After adjusting for MI, JIB contributed 56.8% of Jerneh's bottom-line. Going forward, Jerneh's net profit would be less than half of what it was before. What you will have is a company with market capitalization of RM520 million but a net profit of RM20 million.
Based on this, I think Jerneh will trade around the RM3.00 level for sometimes. The only thing to look forward to is a big dividend announcement or a new business injection.
Hi Alex!
From reliable sources.
I heard that there will be a GO done next year for Jerneh Bhd.
Hence, the only thing to look forward to is the special dividend.
If you have the holding period, it is worth holding until January next year. I believe there will be another announcement regarding its goals and objectives. Most likely they will choose the GO option.
On another note.
Do you mind commenting on HWGB please? : )
And i am happy with my SP Setia that we discussed about 1 month ago. Thanks.
Good day Alex,
What is the prospect of INCKEN?
Thanks in advance for advice.
Hi Alex,
Can you please comment whether the private placement by P&O is a positive new to their share price?
Is it a good buy now?
Hi jeremy tan
HWGB is a loss-making company. It made a 'profit' of RM15.42 million in 1Q2010 when it reduced its stake in an associate, CVM Mineral Ltd. The dilution of its stake in this loss-making associate yielded a 'profit'- as in making less loss because it has a smaller stake in CVM. This is a one-off 'profit'. In addition, CVM's magnesium smelting plant has just commenced operation, which may or may not report profit in the future.
Chartwise, HWGB seems to have broken above a long-term downtrend line at RM0.22. Its immediate strong horizontal resistance is at RM0.30 & then at RM0.37. Since it has finally broken above its long-term downtrend line, HWGB's outlook is mildly bullish. It could be a trading BUY based strictly on technical consideration.
Hi solomon
INCKEN may have broken above its long-term downtrend line at RM0.60 in August. Its immediate horizontal resistance is at RM0.70 and then at RM0.80 & RM1.00.
Malaysia-Finance has a good write-up on this stock in November last year (go here). Please check it out.
Hi staind
I don't know what to make of the private placement by P&O. It is placing 5.25 million shares at RM0.99 each. This is only a small portion of the proposed 10% private placement that had been approved.
The questions to ask are:
1) Why do you want to raise funds via private placement & not via Rights Issue? The latter is fairer to the existing shareholders. The answer could be cost, speed & the small quantum of the funds to be raised.
2) Why is the private placement parceled out into smaller trenches? Are interested investors so hard to come by?
3) What would the parties who are negotiating to takeover the company feel about the private placement? Surely, this would increase the transaction price & makes the deal more expensive for the potential buyer.
I consider the news to be mildly negative.
Hi Alex,
What do you think about Dialog now? TP for long term & Short? It awarded a contract worth RM60mil from Petronas CARIGALI.
Hope you may give some advise.
Thanks.
Hi @h Tong
Dialog may have broken above its long-term downtrend line at RM1.15. Its immediate resistance is at RM1.20 & then at RM1.35 & RM1.40.
Hi Alex,
What do you think about TENAGA?
Thanks
Hi Alex,
How about VS Industry?
Hi chweelin_teo
For 4Q2010, VS's net profit increased q-o-q from RM6.5 million to RM9.3 million while turnover soared from RM193 million to RM250 million. For Fy2010, its EPS increased to 14 sen from 3 sen previously.
VS has broken to the upside of a flag formation at RM1.30-33. Its next strong resistance levels are at RM1.80 & RM2.00.
Based on positive financial performance & technical outlook, VS could be a good trading stock.
Hi AC
I've commented on Tenaga earlier. Tenaga is a stock that is hard to predict. On paper, it looks good, with good growth & a likely tariff hike. It even announced a bonus issue, which should get many retail investors jumping on their feet. Yet, it's a stock that has disappointed many, time & time again.
The only people holding a lot of Tenaga are the fund managers who cannot afford not to have it. For the rest of us, it is a stock that we tend to watch with disinterest. However, if you have the patience (which is a great virtue to have as an investor), you can get into Tenaga now for reasons noted above.
Hi Alex,
Thanks for your opinion.
I managed to buy 1,000 shares of TENAGA at RM8.83.
Hi Alex.
Good review on malton. Now, that it had breached 0.70 for a while and moving around 0.685, what do you think of its prospect?
Better to hold or lock in-profit..hmm...
How about E&O? any push up for this?
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