iPhone Winning Corporate Users

Those who have the iPhone will know what I am talking about. Once you have it, you'd never want to use any other phone. I survived the Blackberry sentence for 2 years, its no fun. The iPhone is the best ever, its a lot of fun, and its like having an iPod as well. Buy the docker/player and you have a good sound system while charging your phone as well. The iPhone's strength is also its main weakness. As app downloads are managed exclusively through the iTunes Store, IT managers can't centralise installation and security updates as with other software. Unlike Blackberry or Windows Mobile devices, each phone must be updated by its end user, even if update prompts are pushed to the device. But, the pull factors of iPhone are so great that more and more senior execs are pushing their IT department to cave in.

Gartner: The uber cool iPhone is making inroads into the business market with new enterprise applications making it hard for IT managers to swim against the phone's popularity tide.

It is now deployed or being piloted by more than 70 per cent of Fortune 100 companies, according to Peter Oppenheimer, Apple's chief financial officer.

“We're continuing to see a rapidly growing number of enterprise CIOs who have now added the iPhone to their approved device list. This penetration has doubled since the iPhone 3GS first shipped this past (US) summer,” he said at the company's first quarter results presentation on Jan 25.

Yellowfin's iPhone app for business.

According to Gartner, the iPhone operating system is now the third most popular in the world commanding 17 per cent of the smartphone market, behind Nokia's Symbian with 44.6 per cent and Research in Motion (RIM) with 20 per cent.

Glen Rabie, chief executive of business intelligence software maker Yellowfin, says corporations are surrendering to the iPhone's appeal.

Apple's OS share rose 4.2 per cent in the year to October 2009, behind RIM's 4.9 per cent, at the expense of Symbian and Microsoft's Windows Mobile which lost 5.1 and 3.2 per cent respectively. Google's newcomer Android managed to capture 3.5 per cent market share in its first year.

Much of the rise of Apple's share stems from consumer uptake; nevertheless its use in enterprise environments is rising.

“We've certainly seen a massive uptake of the iPhone by the enterprise. Executives just want it and are telling the IT people to just make it work. There are cases where all executives have iPhones and the rest of the staff have Blackberries. Slowly it filters down,” Rabie says.

Yellowfin counts Telstra, Levi's and government agencies as clients. It recently joined the likes of Salesforce.com in launching an iPhone app to allow access to it server-based business intelligence packages.

“The iPhone has built a mindset to make everything simpler. Each app only does one thing, which is good because people just do what they need to do,” Rabie says.

Apps v Security

The iPhone's strength is also its main weakness. As app downloads are managed exclusively through the iTunes Store, IT managers can't centralise installation and security updates as with other software. Unlike Blackberry or Windows Mobile devices, each phone must be updated by its end user, even if update prompts are pushed to the device.

“In my view that's the only thing that is holding it back,” Rabie says.

At the same time, RIM which has a strong enterprise foothold precisely because of its security and all-in-one infrastructure is not letting the app fever pass it by. It recently launched its own app store App World, allowing Blackberry users to search for and download apps directly from a central website, rather than having to search through software vendors' sites or wait for their IT managers to do it.

Small business no brainer

David Campbell, owner for David Campbell Building in Sydney, has a fleet of seven iPhones which staff use on construction sites. They are trialling a “Tradies App” developed by the company to aid onsite supervisors to compile a daily site diary, document variations and issue sub-contractor agreements and purchase orders on the spot. He hopes the app will be available through iTunes soon, maybe even bringing in some extra revenue.

“We had Blackberries and Treos before, but they don't stack up in the ease of use for the guys,” Campbell says.

Enterprise Requirements

While end users and small businesses value user experience more, enterprise IT managers have a different wish list. Anthony Petts, sales and marketing manager, HTC which manufacturers Windows Mobile and Android phones, says they want:

- email exchange functionality

- centralised security

- calendar and contact synchronisation

- keyboard input

- a range of hardware models to suit different staff levels/requirements

“When I ask people why they want an iPhone they say because it's the latest. There's hype, buzz and a notion of status affecting the buying decision, but in the enterprise when they look at security and functionality (other phones) become a real consideration for them,” Petts says.

Predictions

Gartner predicts it's Android, not iPhone, that will overtake RIM as second biggest smartphone OS in the world by 2012. Windows Mobile will manage to maintain its market share although suffering greater pressure from open source despite the Marketplace app store launch.

However, Petts believes Microsoft will strengthen its grip on the Australian smartphone enterprise market with Windows Mobile 6.5 and HTC's own HD2.

He says the phone combines the finger-sensitive (capacitive) screen that iPhone and Android users prefer with the accuracy of stylus-driven (resistive) screen the enterprise demands.

“We've had very strong enterprise coverage with Windows Mobile predominantly from a security and infrastructure point of view. If companies have Microsoft Exchange set up, there's nothing else they need to do and they'll have all the security that comes with that. No additional investment, no need for another server and they can add Microsoft Sharepoint and Office to it to keep it in the family,” Petts says.

Top smartphone hardware vendors, Asia Pacific (unit sales)

Nokia - 75.3 per cent market share (down from 79.9 per cent in Q1 2009)

Apple - 8.1 per cent (from 3.8 per cent)

HTC - 6 per cent (from 4.6 per cent)

RIM - 3.6 per cent (from 2.9 per cent)

Samsung - 2.9 per cent (from 2.4 per cent)

Source: Gartner, Q3 2009.

p/s photos: Christina Chan Hau Mun

JCY, Subscribe Or Just Buy Notion Vtec?

The sole shareholder of JCY, Mr. Yong Yoon Kiong, is offering for sale 25.95% of his shareholdings in JCY, consists of 520m shares in an IPO to investors. Of the 520m shares on offer, 470m shares will be offered to institutional investors and 60m shares will be offered to employees and the Malaysian public. The indicative offer price at RM2.00 per share is approximately 20x FY09 P/E. The Retail Offering closes on Feb 8th while the Institutional Offering closes on Feb 10th. Listing for JCY will commence on Feb 25th.

JCY International is one of the world’s largest global precision engineering manufacturers of HDD (hard disk drive) components. It supplies base plates, top covers, actuators, and antidiscs to Seagate and Western Digital, the two leading global HDD manufacturers (26.8% and 31.5% market share respectively). JCY competes on cost and economies of scale, and does this by placing their factories in strategic locations in Malaysia, Thailand and China to be close to their customers. By producing multiple components, JCY has been able to consistently achieve EBITDA margins of 15-16% and ROE levels of above 20%.

Interesting Points To Consider When Compared To Notion Vtec - I have chosen to compare with Notion Vtec because their product range and client base are quite similar, and both are well managed as they both put up the industry's highest ROE at 26% :

a) At RM2.00 JCY has a market cap of RM4.099bn while Notion's market cap is only RM460m. JCY is almost 10x bigger than Notion. The way I look at it, it is a lot easier for Notion to reach RM1bn in market cap than for JCY to reach RM6bn in market cap. If Notion reaches RM1bn, that is a 117% surge, while for JCY to reach RM6bn is only a 50% gain.

b) When you note that both parties have gung-ho clientele, it is hard not to see Notion catching up to JCY's size fast.

c) JCY's is coming in at a historical valuation of 19.8x PER while Notion is now valued at 11.7x current PER. The argument goes that JCY will see a significant 20%-30% jump in EPS in 2010. That is all very well and dandy to give that estimate - if that is really the case, why not list at the end of 2010 and show us the money, don't ask us to believe that there is money at the end of the rainbow.

d) One form of metrics comparison which makes JCY look OK is Price/Sales. JCY's figure is 2.3x while Notion's higher at 2.7x. But when you consider Price/Book Value, JCY looks out of whack again at 5.1x, because Notion's figure at just 2.6x.

e) JCY is in a slightly net cash position of around 2.5 sen per share. Notion is in debt a bit but that's to be expected for a company trying to expand and grow its capacity. In fact, this is even more depressing for JCY as it shows that it has "little room for expansion".

My verdict: I would not be subscribing, I see it settling at RM1.80 following the listing. So difficult to see much upside, if there is any at all considering its RM2.00. If its not a growth stock, then it will be a dividend stock - that would be the support level. For 2009 and 2010(e), the company made RM202m and is slated to make RM207m respectively. That translates into an EPS 10 sen. I will be generous and ascribe profits to grow by 20% for year ending Sep 2010 = EPS 12 sen, and that they will pay 50% of profits as dividends = 6 sen. Assuming a dividend yield of 3.3% = RM1.80, the stock will find plenty of support at that level. I expect Notion to close the gap as more investors start focusing on the outlook and fundamentals of this industry.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

p/s photos: Annie Lau Sum Yau

Michaelangelo's David Tour de USA

Michaelangelo's David was sent to the USA on a loan tour ....

After two years, David was returned to Italy ....

His Proud Sponsors were:

Verdict On New Petronas CEO

It was going to be a critical decision, although nobody in the mainstream media would dare to admit the repercussions and consequences if we made a not so "correct" choice. Petronas is not just a company, it basically sustains a large portion of the country's fortunes and livelihood. Imagine if we were not oil rich or Petronas was just one tenth the size it is now - I wonder where would we fund our infrastructure and fiscal budget.

Mahathir threw a spanner into the works when he said that the new Petroliam Nasional Bhd (Petronas) chief executive officer (CEO) must be from within the conglomerate to ensure continuity - strong words coming from the company's adviser. He added that this was also necessary because the new CEO would be familiar with the operations. “Most importantly, we have done business with so many countries. We know heads of governments and an entirely new person will find difficulty in establishing contact with the people we are doing business with,” he added.

Tan Sri Hassan Marican’s tenure as chief executive officer of Petronas is over. He will be replaced next week by Datuk Shamsul Azhar Abbas, a surprise choice given that he, like Hassan, is 57 years old and was not one of the senior Petronas officials identified as part of the succession planning. Besides Shamsul, also considered were Petronas stalwarts Datuk Wan Zulkiflee Wan Ariffin, Anuar Ahmad and Ahmad Nizam Salleh.

By appointing Shamsul, who has had a long history in Petronas, the government will hope to minimise some of the criticisms that could come their way over the manner in which Hassan’s position has been handled. Shamsul retired last January as managing director of MISC, a Petronas subsidiary. Among the senior positions held in Petronas, Shamsul had been vice-president in the petrochemical, oil exploration and production, as well as logistics and maritime businesses. He joined Petronas in 1975, and had served previously as executive assistant to former chairman Tan Sri Azizan Zainal Abidin, who died in 2004.

My verdict on the choice of the new CEO, excellent - judging from his stint at MISC, diligent, professional and astute. Although I wished Hassan Marican could have been engaged to sign on for another 5 years. I think he was one of the best CEOs among all the top oil companies, and this is not just my view but just ask around the industry. He has shored up the reserves and gone into strategic joint ventures to ensure Malaysia's future is secure (to an extent). For all his contribution, I think the government could have treated the non-renewal of his contract a lot better. He certainly deserves to be treated a lot better.

Many of the brickbats thrown at Petronas were unwarranted. People have to learn to distinguish Petronas' role as a custodian, they do not set the prices at the gas pump. If there had been an inefficient allocation and management of resources, blame the right parties, not Petronas. Its like you have a bank account, and then frivolously took the funds out and spent it all "ineffectively", then had the gall to go to the bank and blame the bank for allowing you to spend it all.

The Real Picture Behind 'China Crisis'

There are basically two groups of investors in their opinion of China's economy. In one camp are those who are optimistic on the economy’s strength and its ability to thrive in an otherwise bleak global environment.

The most recent economic data release showed a sharp rebound in the Chinese export sector has further enhanced the positive sentiment

In the other camp are an increasing number who believe that China’s economic
miracle is nothing but a mirage and that 2010 will be a year of painful reckoning. Some analysts are claiming that China’s growth model is fundamentally flawed and the massive stimulus measures adopted since late 2008 have only intensified the economy’s structural imbalances, which will make the inevitable downside adjustment even bigger. The usual worrying features of the economy such as asset bubbles, “mis-investment”, an inefficient banking system, growing social unrest and corrupt governance - some are predicting an imminent economic crash and even social chaos. Some prominent hedge fund managers have reportedly even begun shorting the “China story” in recent months. Well, for every buyer, there has to be a seller... so the story goes.

Is the economy headed toward a sudden collapse, as expected by the “house of cards” camp? The answers to these questions obviously weigh heavy in investors’ decision making. There has never been a lack of skepticism toward the Chinese economy. Even 5, 10, 15 years back, there were the usual China-bashers and permanent-bears who have been proven wrong over and over again by the country’s enormous economic success and social progress over the past three decades. However, the question marks about the country’s fundamental growth model deserve careful assessment. The core argument of this bearish camp is that the Chinese economy is mainly driven by capital spending and exports, both of which have exhausted their potential. The economy is bound to slow sharply due to a lack of new sources of growth. Or is that the full picture?



While there is always a chance of a major collapse in any economy, I think China is going to chug along just fine. I do not think that China’s capital spending is excessive. China’s capital spending boom has mainly been driven by profit incentives rather than government direction. Those who think that China’s capital spending is terribly inefficient and will face an imminent crash will be proven wrong. If you take the data and extrapolate on internal capital returns on the country's projects - China's figure is very much in line with other developing countries.

Second, one may argue that the U.S. consumer sector has entered into a prolonged period of deleveraging, and that its demand for Chinese products will never recover to pre-crisis levels. However, an important fact is that China’s export market has become increasingly diversified. If you refer to the chart, even though the U.S. remains the largest market for Chinese overseas sales, its market share has shrunk from a peak of 22% in the late 1990s to 17% today. In fact, Chinese sales in some of the nontraditional export markets such as Australia, Latin America, Africa and the Middle East have experienced much faster growth in recent years than sales to other developed markets.

Meanwhile, China continues to reduce trade barriers with emerging Asian countries. At the beginning of this year, China and the 10-country Association of South-East Asian Nations (ASEAN) formally established one of the largest regional free-trade zones in the world.

Over the years, the Chinese authorities have worked to boost domestic consumption in an attempt to reduce the economy’s dependence on exports and capital spending. In this sense, slowing capex and exports should be taken as a positive sign, as it means that policy makers’ consumption-boosting initiatives have finally begun to bear fruit.



The Chinese authorities still have a lot of room to boost growth. Infrastructure in the country’s rural regions is still grossly insufficient and needs tremendous government input. Massive domestic savings and the very low public sector debt burden means there is a lot of financial resources the government can utilize to buy a lot of growth, similar to what they have done over the past year. This kind of growth-boosting campaign is of course unsustainable over a prolonged period of time, but China is among the few countries in the world that are most capable of dealing with a crisis scenario with extraordinary policies – and have a significant war chest to do it with.

Hence we should not see a crash or a major crisis of any sorts in 2010. Yes, the markets will have to experience some bumps here and there, in particular when Beijing tries to tighten the screws on lending and rein in liquidity a bit every now and then - but its for the betterment of the economy, not a noose around the economy's neck.

Currently, the authorities are beginning to tighten policies again. The risk factor is the country’s bubble-prone asset markets and potential damage to its banking system. Specifically, as a result of China’s massive household sector savings and highly pro-cyclical global capital inflows, Chinese asset prices are prone to boom-bust cycles. So far the extreme volatility in asset prices, such as the 70% crash in the domestic A-share market and housing price declines in some major metropolitan areas between 2007 and 2008, has inflicted little damage on banks’ overall asset quality, as the above chart would indicate clearly. This is because policymakers have maintained a significant buffer between asset markets and the banking system - banks’ mortgage lending practices have been very conservative, with a mandatory down payment ratio of 20-40% for real estate purchases. Banks’ direct exposure to the stock market is also negligible, as leveraged investments are not allowed.

Recently, the authorities announced that index futures, margin trading and short-selling in the A-share market have been officially approved. Even though it may take months for these instruments to be developed and deployed, and they are undoubtedly positive in terms of improving the efficiency of the domestic capital market.

Structurally, China’s economic performance will most likely continue to outpace that of the rest of the world. This warrants a more positive stance on Chinese assets over global benchmarks, especially as current valuations of Chinese assets are comparable to global and emerging market averages. Have a look at the chart above on China's valuations - its very reasonable still. From a cyclical point of view, it’s important to recognize that there is a disconnect between a country’s economic performance and its stock market. One does not need to be super-bullish on an economy’s immediate growth outlook to be positive on its financial asset prices.

Stock markets are highly sensitive to policy shifts, which is a lagging response to economic performance. Weak growth leads to policy easing, which is stimulative for the stock market. Similarly, strong growth normally leads to tightening policy, which bodes ill for equity prices. In some cases, good economic news turns out to be a headwind for stocks. Currently, China’s strong growth recovery is pushing policymakers to tighten, a critical juncture that is typically associated with heightened volatility in equity prices. While the Chinese A-share market will continue to struggle in the coming months, investors should not take this as a sign of pending economic troubles. These tightening measures are good problems to have.


p/s photos: Gu Chen

Why I Like Premium Nutrients

Premium Nutrients is one of the largest, fully integrated and dedicated lauric and non-lauric refineries in the world - a fact missed by many investors in Malaysia.

The principal activity of PREMIUM is that of investment holding. The principal activities of the subsidiary companies are manufacture and sale of speciality fats based on palm kernel oil, palm oil, coconut oil, rapeseed oil, soya bean oil etc., including those refined and fractionated. PREMIUM is principally involved in two broad categories of activities, such as processing of commodity products and converting processed commodity products.

The activity of processing of commodity products involved in the process of converting the oil palm fresh fruits bunches into crude palm oil and palm kernel. The processed commodity products will be further convert to special fats. The range of processed commodity products produced by PREMIUM are such as crude palm kernel oil, palm kernel pellet, refined, bleached and deodorized palm kernel oil and palm kernel fatty acid distillate.

PREMIUM operates a crude palm kernel oil refinery and a fractionation plant in Pasir Gudang, Johor. The oil refinery has a capacity of 150mt per day, while the fractionation plant has production capacity of 80mt per day. In addition, it also operates a neutralization plant in India. The plant has the capacity to neutralized 100mt of fatty acids per day.

For the three quarters ended September 2009, the company registered RM612m in revenue and a net profit of RM6.39m. What was curious was that they had to whack some RM11.85m from revenue as finance charges. Something is not quite right when finance charges is nearly double your net profit. Some of it was due to their secured borrowings but they also got whacked by the appreciating Indian rupee.

The India operations accounted for almost 1/3 of total revenue and owing to the rupee's strength, the Indian operations posted a net loss of RM1.1m on revenue of RM235m for the 9 months ended 2009. The outlook is a lot better and the company can look forward to a good contribution from India operations for 4Q2009 and 2010.

However, when you look at their cumulative 3 quarters, the company posted a net cash flow of RM29.8m. Granted that 2008 was a difficult year for all, it appears that the company is back on track. Management knows quite well that when you are running good net cashflow, you need to whack down your borrowings as to pay finance charges amounting to twice your net profit is ridiculous.

As things stand the company is on track to record a net EPS of around 2.3 sen for the whole of 2009. In case investors miss out on an important announcement, they have proposed to pay back some of their borrowings via early redemption. That is a good use of cash as finance charges saved will go straight to net profit instantly.



Share Capital: 337m (50 sen)

Type	:	Announcement
Subject	:	Murabahah Underwritten Notes issuance Facility / Islamic Medium Term Notes Up To RM85.0 Million ("MUNIF / IMTN")
Contents	:	The Board of Directors of Premium Nutrients Berhad ("Premium") is pleased to announce the early redemption of the MUNIF/IMTN loan facilities on 23 December 2009. The redemption amount was RM45.0 million. The schedule of repayment in accordance with the Facility Agreement dated 10 February 2004 was as follows: February 2010 - RM15.0 million August 2010 - RM15.0 million February 2011 - RM15.0 million. This announcement is dated 5 January 2010.

Shareholders (percentage ownership)

Updated: December 22, 2009

National Land Finance Co-operative Society Limited	12.33%
National Land Finance Co-operative Society Limited	10.65%
National Land Finance Co-operative Society Limited	9.15%
Tan Sri Dato Dr. K. R. SOMASUNDRAM	7.11%
Mayban Securities Nominees (Tempatan) Sdn. Bhd. (for Antara Consolidated Sdn Bhd)	6.53%
Tan Sri Dato Dr. K. R. SOMASUNDRAM	5.67%
RHB Nominees (Tempatan) Sdn. Bhd. (for Syarikat Parani Sdn. Bhd.)

Its NTA is 51.8 sen. I like its net cash flow progress. Not many have been able to operate in India successfully, and this will be a strong kicker following the unfortunate rupee's strength. To put up over RM200m in revenue from Indian operations showed that the company is doing a lot of things correctly. I think net EPS will surge to 4.5 sen in 2010. A resilient demand will ensure a lot of room to shore up the balance sheet further. A lack of research coverage makes this an undiscovered gem in the making. I expect a number of upside catalysts in the coming weeks: the 4Q results should be a lot better; the contribution from India should be a lot better; the positive monthly net cash flow will give them a lot of room to lower liabilities, which will put interest savings straight to the bottom line; and early redemption of loans cannot be a bad thing.



NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

p/s photos: Ayumi Kinoshita

Seremban Engineering IPO Approved

Proposed Flotation
SUCCESS TRANSFORMER CORPORATION BERHAD (STC)
- Proposed listing of Seremban Engineering Berhad (formerly known as Seremban Engineering Sdn Bhd) (SEB or Company), a wholly owned subsidiary of STC, on the Main Market of Bursa Malaysia Securities Berhad (Bursa Securities) (Proposed Flotation)

We refer to the announcements made on 2 September 2009, 6 October 2009 and 19 November 2009 in relation to the Proposed Flotation (Announcements). Unless otherwise defined, the definitions set out in the Announcements shall apply herein.

On behalf of the Board of Directors of STC, RHB Investment Bank wishes to announce that the SC had, vide its letter dated 29 January 2010, approved the Proposed Flotation pursuant to the following:
(i) Section 212(5) of the Capital Markets and Services Act 2007, subject to the
following conditions:
(a) To allocate 50% of the public spread requirement to Bumiputera investors;
(b) SEB is to obtain the necessary approval from the relevant authority on the open-sided structure of Lot 10383, Mukim of Rantau, District of Seremban, Negeri Sembilan within 6 months from the date of the SCs decision letter;
(c) The directors of SEB to provide the SC with a declaration, confirming that the SEB Group has sufficient working capital for the next 12 months;
(d) RHB Investment Bank to provide a written confirmation on the due diligence steps undertaken to satisfy themselves that the declaration mentioned in (c) above by the directors of SEB has been properly made;
(e) SEB not to declare any dividends prior to its listing on the Main Market of Bursa Securities; and (f) full compliance with all the relevant requirements relating to the implementation of the Proposed Flotation as stipulated in the Equity Guidelines; and

(ii) The equity requirement for public companies.

The SC has also granted the approval-in-principle for the registration of the Prospectus. The Board of Directors of STC will deliberate on the conditions imposed by the SC.
This announcement is dated 29 January 2010.

-----------------

The company's key products include the following:
High-intensity discharge (HID) lighting luminaries
Low voltage transformer
Automatic voltage stabilizers
Battery charger and tester
Energy saving lumens regulator
Phase monitoring relay
Reactor
Running light controller

Catalyst #1: Success Transformer Corp Bhd is proposing to list its wholly-owned subsidiary, Seremban Engineering Bhd, on the main market of Bursa Malaysia. In a filing on behalf of the company, RHB Investment Bank Bhd said Success Transformer’s board had approved the proposed flotation comprising several proposals to facilitate the listing exercise. Can reasonably expect some free shares since its a 100% company that is being listed.

Success Transformer Corporation Bhd’s (STC) subsidiary, Seremban Engineering Bhd (SEB), has entered into a cooperation agreement with Affcom Resources Sdn Bhd towards forming a joint venture (JV) company in the oil and gas (O&G) industry. STC said the objective was to incorporate a JV company to undertake the design and fabrication of equipment, refinery, lube oil plant and engineering and any other related activities.




Malaysia-incorporated Affcom is an affiliate to an independent integrated oil company and its activities cover trading, marketing, refining, and O&G fabrication in Malaysia and abroad.

SEB is mainly involved in the manufacturing and fabrication of process equipment such as unfired pressure vessels, heat exchangers, tanks, silos and other machinery or parts, including mechanical works, maintenance and shutdown works. STC said Affcom would provide the expertise in management, consultancy, market information, and any other contribution in the best interest of the mutual business cooperation.

Catalyst #2: Success Transformer Corp Bhd (STC) says its engineering unit currently has some RM30mil worth of projects in hand and is bidding for new jobs worth about RM40mil. Palm oil and waste management industries remain Seremban Engineering Sdn Bhd’s (SESB) main contributors. SESB has started construction work on its seventh factory by end-September. The new factory will focus on the fabrication of process equipment for the food and pharmaceutical industries. SESB’s factory expansions are on track with the 5th factory being operational and the 6th expected to be operational on 2H FY09. On top of that, Seremban Engineering is in the process of setting up another factory to specifically serve the food industry.Seremban’s current workflow consists of pressure vessels for palm oil refineries.

Key customer, a Singapore based design house is farming substantial business to SESB given the latter’s strong execution capabilities. Visibility is seemingly positive with the key customer guiding for constant workflow till the end of the year. With Plant 5 now fully onstream, capacity is further enhanced by 20%.

Catalyst #3: Earnings visibility and sustainability. The company recorded revenues of RM185 million in the fiscal year ended December 2008. Its net profit was RM23.6 million in fiscal 2008. 1H09 revenue was RM97.4m, while RM12.9m was its net profit. Annualise that, the company is making at least 22 sen a share.

Catalyst #4: Operating margins 18%. For a company that has been making EPS in the 15-28 sen region for the past 3 years (on an uptrend), expanding its facility, and operating at that margins, to trade at low single digit PERs is unbelievable. Obviously many investors have not wised up to this company.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.