Friday, 2 September 2016

The savior for SCABLE after hitting the 52 week low?

The Sarawak Cable Berhad share price hit its lowest on Tuesday, 30th August 2016. It is definitely not good for a listed company to be at its lowest price compared to the whole of last year. The SCABLE results for the first and second quarter can be deemed disappointing but at times business has its ups and downs. 

The good news and maybe the revival of the SCABLE share price was released yesterday by the Group Managing Director and Chief Executive Officer Aaron Toh Chee Ching has indicated that the power cable supply contract, which is estimated to be worth between RM80mil and RM100mil, could be signed this month. The full article from The Star newspapers can be accessed from here.

With the release of the potential contract signing yesterday, the SCABLE share rose by 2 cents to close at 1.25. Although the increase of the mere 2 cents would not mean too much but it does mean a lot for the SCABLE counter. I believe it is the revival of the confidence for the investors and the share price after dropping to its lowest after the Sarawak elections.

For all the investors of SCABLE, hopefully the good news and signing of the contract comes fast. It might be Friday and the market be sluggish a bit but hopefully with this piece of news, the investors will still be keen with this counter. Would you want to invest in this counter after the release of the news?

All the best and happy trading!

Sunday, 28 August 2016

The Future of Sarawak Cable [SCABLE]

The quarter results for SCABLE was released last week and it definitely did not look good for the company. The profit dipped more than 50% and there was certainly a few factors which caused the company that downfall.

According to Hong Leong Bank Investment Research, the outcome was as follows.
  • SCABLE reported 2QFY16 results with revenue of RM346.2m (+14% YoY, -5% QoQ) and earnings of RM4.9m (-58% YoY, +38% QoQ).
  • 2Q results were lower YoY due to margin compression for both the cable and construction division. The QoQ improvement resulted from the cable division swinging back to profitability.
  • Cumulative 1H earnings summed to RM8.5m, falling -64% YoY.

The highlights for SCABLE
  • Cables recovering. The cable division returned to the black in 2Q with PBT of RM7.3m vs loss of -RM3.7m in the previous quarter due to delayed orders from Tenaga. New orders from Tenaga have started contributing in 2Q and should further improve in 2H but likely at a slower rate than what we had earlier envisaged.
  • Weak margins for construction. 1H construction PBT margins suffered a YoY contraction from 10.7% to 4.4%. This was due to certain variation orders which have yet to be approved but its costs were recognised upfront.
  • Hopeful for more contracts. SCable has tendered for over RM1bn in transmission line projects. We understand that parent-co Sarawak Energy will roll out another RM600m in 500kV transmission lines next year. In our view, SCable is in a decent position to secure this job given its track record with the current 500kV line. SCable is also aiming to supply 275kV cables for RAPID (including construction) and 132kV cables for the MRT2 (MRT1 was also supplied by them).

For further information, you can read up on the full report here.

The quarter results were released on Tuesday, 23-Aug-2016. The share prices fell 3.10% the following day after the results were made known to the public. The drastic fall of 4 cents in a day pulled the share price to close at 1.25.

To many, the outcome from the second quarter is well below par and many would have expected that this company would be doing well and gaining more local contracts after the Sarawak election. There was not much movement for the share price on Thursday, 25-Aug-2016 till around 3.41pm when there was more selling and it dragged the share down to its opening value at 1.25. The share closed weaker with a loss of 1 cent to close at 1.24 or 0.80% down for the day.

With the HLIB research released to the public and the sentiments did not seem positive, the share price of the SCABLE share seems to drop further as HLIB forecasted the TP at 1.30. Things started off slow on Friday and even slower for SCABLE. Things however got a bit interesting at around 4.15pm when the buying started to kick in and eventually moved the share price up 4 cents or 3.23% to close at 1.28.

In my opinion, this is a money making company and the first half of 2016 might not be favourable to them thus far. There is lots of opportunities for new contracts and more work from Tenaga Nasional to say the least. The sharp buying at the end of Friday might be a bounce back or will it be the right beginning for the SCABLE company? I would feel in these couple of months, the target price for the SCABLE share will be hovering around 1.40 and if the new contracts were to be announced by the company, we should see the share price around 1.55. I believe with the Sarawak Elections a few months back, there is a fair bit of expectation by the investors on this share. For me, it is still worth the investment and there should be good profits in the next half of 2016.

Happy Trading!

Wednesday, 24 August 2016

What's the future for Magnum Berhad?

It was published by The Star newspapers on Friday, 19-August-2016 regarding the loss for Magnum Berhad. The net profit dipped 63% and according to Magnum, it was due to a high payout for Q2 2016. So with such a high payout, what's the future for this particular counter? Would it still be that attractive for investment? You can read the full newspaper article or directly from the link below.

Magnum net profit dips to RM21.84mil in second quarter

PETALING JAYA: Magnum Bhd reported a lower net profit of RM21.84mil for the second quarter ended June 30, 2016 (Q2’16), owing to a lower contribution from the gaming division arising from exceptionally high payouts.

The number forecast operator’s revenue for the quarter amounted to RM625.78mil. In comparison, Magnum recorded a net profit of RM59.83mil on the back of RM647.13mil in revenue during the same period a year ago.

In a filing with Bursa Malaysia, Magnum noted that its gaming division’s sales had declined by RM21.1mil during the quarter, as it continued to face intense competition from illegal operators and weakness in consumer spending.

For Q2’16, the segment reported a pre-tax profit of RM34mil, or a substantial decline from the RM86.5mil achieved the year before.

According to Magnum, several factors have led to lower gaming sales. Among them are increasing activity by illegal operators, weak consumer spending, and the effects of recognising revenue net of the goods and services tax on gaming supply for six months this year compared to three months from April to June a year ago.

Additionally, the relatively low 4D Jackpot prize pool owing to a higher number of Jackpot strikes during the period had also impacted overall sales, it said.

Meanwhile, its investment holding division has returned to the black with a pre-tax profit of RM3.3mil for the quarter, compared with a pre-tax loss of RM2.4mil a year ago.

The improvement was mainly attributed to the fair value gain of quoted investments registered in the quarter, as opposed to a fair value loss position recognised in the previous corresponding quarter.

You could check out the report from Public Investment Bank regarding their views on the Magnum Berhad share below.

Public Investment Bank - Magnum Berhad

The Magnum Berhad shares closed at 2.47 on Thursday, 18-August-2016. As of 23-August-2016, the share price is 2.35 and it's clearly seen that the investors are not too happy with such a huge dip in the profit. There was a report saying that the investors are still willing to stay on with Magnum Berhad as the share price was seen to jump up 2 cents on Monday to close at 2.40. This is a share that I'll be monitoring and hopefully in the near future, I shall have more news on Magnum Berhad.

Happy Trading!

Tuesday, 23 August 2016

The Olympics is Over!

We shall now be heading over to Japan for Olympics in year 2020! From what we have experienced in Rio, I'm sure Japan will outdo them easily.

The part whereby they showed that the Olympics 2020 will be held in Japan was definitely a fantastic way to close off the Olympics. If you have missed that opportunity to see how the Japanese have done it, check out the video below.

What a ingenious way to showcase what the Japanese could be offering cum 2020! I can't wait for sure but somehow it's gonna be a long 4 years before we get there!