Wednesday, January 18, 2012

BJFood is likely to continue its uptrend

BJFood was listed in March ay an IPO price of RM0.51. For the 6-month ended 31/10/2011, it reported a net profit of RM4.5 million on a turnover of RM38 million. Annualized EPS is about 6.3 sen. At the current price of RM1.09, the stock is trading at a PE of 17 times.

BJFood had announced two substantial corporate developments, as follows:
- Proposed acquisition of Berjaya Starbucks Coffee Company Sdn Bhd for RM71.698 million; &
- Proposed JV to set up Kenny Rogers Roasters business in Indonesia (a 51%-stake costing RM1.91 million).

To finance the Starbucks acquisition, BJFood has also proposed a Rights Issue of 4 shares (with 4 free warrants) for every 5 shares owned at a price to be determined later. For more on the Starbucks acquisition & Rights Issue, go here. For more on the Indonesia JV, go here.

In the past few days, BJFood has been trying to break free of the horizontal line at RM1.03. Today, it gained 4 sen to close at RM1.09, albeit on a volume of 4024 board lots. It looks like the stock may continue to rise steadily & test its recent high at RM1.17.

Based on the bullish breakout at RM1.03, BJFood could be a good trading BUY or medium-term investment. The stock falls under the consumer theme play that I had written about earlier.

Chart 1: BJFood's daily chart as at Jan 18, 2012 (Source: Quickcharts)

Chart 2: BJFood's weekly chart as at Jan 18, 2012 (Source: Quickcharts)


Anonymous said...

Hi Alex

Just to update exchange share between YTL and YTL cement, Bursa already granted approval for listing of new YTL corp share and waive the need to conduct EGM.

I think to whole exercise already half way through, pending to approval from SC and Miti, as Yeoh family almost certain will opt to exchange their 3% holding, thus triggering 50% threshold, resulting exchange become unconditional.

Current gap of 10% discount based on YTL cement 4.32 and YTL corp 1.50 at ratio of 3.17, is unjustified as once the exercise become unconditional, investor will soon get YTL corp within 14day, i think the more modest discount should peg to current YTL cement from 10% to 5%. What do you think?

Alex Lu said...

Hi Hng,

From a layman point of view, you should buy YTLCement & exchange for YTLCorp.

However, I just got off the line from an investor who was lamenting about giving up his YTLCement, which he prefers over YTLCorp. YTLCement is a direct beneficiary of upcoming mega projects while YTLCorp's earning is more diversified. YTLCorp may suffer from a possible drop in earning contribution from YTLPower.

Anonymous said...

Hi Alex

I totally agree that YTL cement valuation is much more attractive than YTL corp, in which YTL cmenet trade at (PE of 9.7x; price/book value : 0.97) vs, YTL corp PE of 13.4x; price/book: 1.43).

Nonetheless, market seem pressing YTL cement harder than YTL corp, sending YTL cement share (RM 4.32) to lower than its offer price of RM 4.45, in contrast, market force look up on YTL corp (RM 1.50) giving higher that its offer price of RM 1.42, resulting exchange discount of more than 10% based on ratio 1 YTL cement: 3.17 YTL corp !?

I think the exchange definitely will take place, as triggering threshold of 50% is certain. The only thing is that whether or not YTL corp manage to secure more than 90% acceptance, which then trigger MGO and delisting of YTL cement. If not, YTL cement remain listing but have to comply 25% public spread, which if investor opt to exchange can sell back YTL corp, reaping 10% return and buyback later YTL cement to continue enjoy its growth under gov transformation plan.