Keladi Maju Berhad (6769) Keladi

Business Summary:

Keladi Maju Berhad engages in the property development and investment holding businesses in Malaysia. The company develops residential and commercial properties. It also engages in the cultivation and sale of oil palm fruits. The company is based in Kuala Lumpur, Malaysia.

Property Division

The property division focus on the north region of Malaysia. Company currently active in the Kedah property development. The projects included as following:

Taman Mahsuri, comprising mixed residential and commercial properties (85% Ocupational Certificate completed, also the main income source for the 2007 financial year with around RM40 million), remaining 524 units of mixed residential and commercial properties laucnhed in the same financial year, will be completed by next financial year.

Taman Mutiara, 72 units shop houses launch in the 2007 financial year.

Taman Cili, 48 units terrace houses & 18 units of semi-D houses launch in the 2006 financial year.

Taman Lagenda (Taman Mahsuri 2), is a mixed development project comprising 4136 units of mixed residential and commercial properties. First batch of 1125 units houses and 82 units shop houses will be developed and launch during 2007 financial year. The remaining will contribute to the next financial year.

Plantation Division

Oil palm plantation, currently fresh fruit production increase significantly 44% to 13709 metric tons compare to 9533 metric tons last financial year. This division contributes RM2.7 millions of pre-tax profit for the 2006 financial year.

Property Management Division

Rental from housing stock and office space in Wisma Keladi contributed RM1.6 millions for the 2006 financial year.


Financial Performance:

Years 2003 2004 2005 2006 2007 Average
ROE 4.82 6.59 7.08 8.22 9.82 7.36 < 10
ROA 4.25 5.81 6.31 6.54 8.46 7.22 < 10

Total Liabilities : Equity = 7.6 : 92.4 (Strong performance)
D/E Ratio = 0
P/E Ratio = 6.9
DY = 61.2

Average Revenue growth rate = -3.33% (5 years)
Average Earnings growth rate = 76.71% (5 years)

Supporting Value:

1. NTA (as at Oct 2007)= RM0.22 = RM 0.22(current price as at 31/12/2007)

2. The management level staff starting to increase company share.

3. No long-long term dept.

4. More than RM45million cash on hand. (rich cash flow)

5. Kulim is one of the famous industrial & ICT area in Kedah, many famous manufacturers and companies build their plant at there. A combanition of commercial properties (such as factories and shop lots) plus residential properties from Keladi Maju Berhad is a good strategy to ensure the demand of the residential housing, because with the rent or sell of especially factory has create a demand of residential housing as well for that area. The increasing demand of residential housing will also create a demand for the shop lots as well.

6. Although the average ROE for Keladi Maju not exceed 10%, but it shows a 5 years consistent increase. It also shows an improvement of the efficiency of the management team and company strategy.



7. The incresing prices for palm oil will directly improve the performance of plantation division in the near future.

8. In view of the removal of the real property gain tax (RPGT), expecting high buying interest on its residential and commercial properties.

9. Northern Corridor Economic Region (NCER) (Malay: Wilayah Ekonomi Koridor Utara) is a new economic development corridor in Malaysia. This programme is a Government initiative to accelerate economic growth and elevate income levels in the north of Penisular Malaysia - encompassing the states of Perlis, Kedah, Pulau Pinang and the north of Perak. The property industry in the north region will benefited from the project as well.

10. Thanks to the government new policy, EPF holders can withdraw their savings from their account 2 to part finance their first or second house. It will increase the demand of the property investment industry.

11. Remaining 2929 units of residential and commercial property development for Taman Lagenda not yet take into account in the 2007 financial year. It will be a big income contribution for next financial year. There are also remaining 55 units of mixed properties in Taman Mahsuri, 36 units of factoriesvvin Kawasan Perindustrian Makmur and 24 units of houses launched in Taman Cili are not take into account in the same financial year.

Upcoming Projects:

1. In FY08, the company is planning to launch 1,125 and 82 units of residential and commercial properties respectively in Taman Lagenda. The new project is located at Padang Serai (Kulim) and is an extension of Taman Mahsuri. We have already factored in the projected contributions from Taman Lagenda in our earnings model.

2. The management plan to purchase lands in the Klang Valley area, in order for the company to start their property development in Klang Valley.

Project Risk:

1. Risks to our recommendation and target price include a slump in property demand in Kulim and/or CPO prices. Being a geographically focused mass developer implies that KM’s earnings hinge heavily on the economic condition of a single region.

2. The increasing material cost around the world will affect the profit margin of the company.


Conclusion:

Keladi Maju Berhad is a company with strong cash flow with very low debt ratio. The company currently achieve a 5 years increasing in the ROE. It had showed an improvement effeciecy of the management team. The company also benefited from the increasing CPO price in the market. With the new government policy and project is also a great affect on the property industry in the future. As a conclusion, Keladi Maju Berhad is an affordable and a undervalue stock for the young investor in the current market.

Undervalue Stock

在现今的牛市股票市场里，大部分公司的股价都已超过公司的原有价值或超值了。许多股项的p/e值已超过KLCI的平均p/e,15.有些股项的p/e值更远超KLCI平均p/e的一到两倍。有此可见，可选股项已大受限制了。

而对长期投资者或基本投资者来说，就必须更选择性的研究并找出市场里被牛市所遗漏的“珍珠”，进行投资，让资产增值。

被选的股项必须能抗通膨利率的侵蚀，能在熊市中安然度过，保护投资者的资本与财产。因此管理层的素质是非常重要。他们必须在市场萎缩时或公司面临困境时护航，保持公司盈利，或找寻更好的投资方向，让公司度过难关。这也是为什么巴菲特先生那么注重一间公司管理层素质的原因。（通过ROE值也能让我们观察出管理层的效率）

本人会陆续为大家发掘更多的“珍珠”。希望大家也能给于意见，互相学习。

谢！

Mega First Corporation Berhad (3069) MFCB

Business Summary:

Mega First Corporation through its subsidiaries, builds, owns, and operates power plants. It also involves in the engineering, design, and manufacture of components for automotive, transportation, building, and security industries. The company also engages in quarrying limestone, and manufacturing and trading of fine calcium carbonate powder and lime based products. In addition, it engages in the property management and development operations; and trades in building and construction materials, and food and beverages. Further, the company provides maintenance services for power plants, management consultancy services, and secretarial services. It operates in the People's Republic of China, Malaysia, the United Kingdom, and South Africa. Mega First Corporation is based in Kuala Lumpur, Malaysia.

Power Division

Mega First Corporation currently owns two power plants, one at Shaoxing China (60%), another one at Tawau (51%). The power division contribute 90% of the net income for 2006 financial year.

Property Division

Mega First Corporation is also involved in developing residential properties, namely Taman Bertam Jaya in Malacca and Taman Mawar in Sepang, Selangor. This division also joint venture with IJM in the "PJ8" project (beside the Federal High Way, near to PJ Hilton). This division also involve in the shophouse project at Greenhouse, Ipoh.

Engineering Division

Through its subsidiaries in Malaysia, UK and South Africa, MFCB is engaged in the engineering, designing and manufacturing of automotive and transport components and the manufacturing and trading of security seals. (This division remain weak, internal restucturing exercise in progress)

Limestone Division

The company undertakes quarrying activities and is involved in the manufacture of quicklime, hydrated lime and calcium carbonate products via its 99.6% owned subsidiary, Syarikat Cheng Sun Quarry Sdn Bhd and its 38.5% owned associate, Rock Chemical Industries (Malaysia) Bhd.


Financial Performance:

Years 2002 2003 2004 2005 2006 Average
ROE 12.58 11.84 11.78 11.17 14.65 12.40 > 10
ROA 4.46 4.49 4.32 4.58 6.78 4.92< 10

Total Liabilitiees : Equity = 34 : 66
D/E Ratio = 0.11
P/E Ratio = 7.01
DY = 3.6
Average Revenue growth rate = 32.54% > 10 (5 years)
Average Earnings growth rate = 18.35% > 10 (5 years)


Supporting Value:

1. NTA (as at 30/9/2007) = RM1.48 > RM 1.38 (current price as at 27/12/2007)

2. Share buyback starting from March of 2007 until present.

3. The management level staff especially the director level of MFCB constantly increasing or acquired their shares in MFCB.

4. MFCB constantly come out with Employee Share Option Scheme in year 2007.

5. MFCB have a strong management team who have experience background in utility, property & other field. (can also refer to the strong ROE)

6. RM100million cash on hand. (rich cash flow)

7. Pickup in the property sector.


Upcoming Project:

1. Mega First Corporation is considering taking in a partner to undertake the proposed RM1.05 billion hydroelectric project in Laos given the huge cost involved. The Laos plant is expected to supply power to the Thailand, Cambodia and Vietnam power grids due to its location in southern Laos. It would be set up on a build, operate and transfer basis for a 25 to 30 year concession period. Mega First had already signed a memorandum of understanding with the Laos government for a 240mw hydroelectric power plant along the Mekong River. The feasibility studies are being finalised with a report to be out very soon.

Though operating in places such as Cambodia or Laos could be deem as risky, and may explain why there are not many institutional followers of the stock: not many are aware that the controlling shareholders (Goh family) have been running a huge beer brewing and distribution business from Cambodia for the longest time. Hence its like operating from their backyard.


2. Mega First Corporation was also reactivating feasibility studies on its 50:50 copper mine JV with Australian mining company Perilya Ltd in Ranau, Sabah. The copper mine project had had been shelved some five to six years ago as world copper prices then did not make it feasible. With the current high prices, feasibility studies would be undertaken on setting up a mine in Ranau.


Project Risk:

1. The Don Sahong dam project in Laos is a project that the Laos people strongly oppose, as the dam will block fish migrations from Laos to Cambodia and negatively impact the lives of hundreds of thousands of people.If this project goes ahead, it will face fierce opposition from local people, as well as people in the neighbouring countries of Thailand and Cambodia, which will also be negatively impacted by the project. It will be the first mainstream Mekong River dam ever built outside of China, and so will have many serious negative impacts.
www.worldfishcenter.org/resource_centre/DonSahong-final.pdf

2. The reactivating of the copper mine cost RM349 million. It will be a huge investmen & burden for the corporation.


Conclusion:

Mega First Corporation is a company which recover from a huge dept 4 to 5 years ago. The corporation currently achieve a 5 years ROE of above 10%, with a healthy cash flow. It had showed a high effeciecy of the management team. This is one of consideration as a fundamental investor. The stability growth of the power, limestone and property divisions, Mega First Corporation will achieve a good result in the coming year. (Especailly the property division, PJ8 will be launch by mid-end of 2008 & the upcoming projects, assume that the power division contribution remain the same). As a conclusion, Mega First Corporation is a undervalue stock in the current market.

招揽志同道合的基本投资者

在现今的股票市场里很难找到一群能够互相分享的基本投资者。希望通过此博客能够招揽同道合的基本投资者，组织成一只强大的投资团队，大家互相指导与学习，向财务自由的目标迈进。

注：若发现此博客的分析有误请给于珍贵的意见或分析。此博客的所有分析只供参考。