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Monday, May 25, 2015

Tiger Synergy sees earnings boost in FY16 (Edge)

KUALA LUMPUR: Tiger Synergy Bhd, which returned to the black last financial year 2014 with a small profit of RM132,000, expects a big boost in earnings from the financial year ending June 30, 2016 (FY16), helped by cost-saving initiatives.

However, before this happens, the property development and construction group will still likely close this FY15 with a small profit or could dip into the red again as most of its development properties have been recognised in the previous financial periods and new projects have not been started yet, said its managing director and major shareholder Datuk William Tan Wei Lian. Tan owns 22.15% of Tiger Synergy as at March 31, 2015.

The group had recently embarked on setting up a RM2 million cement plant in Shah Alam, Selangor for the production of 400 cu m of ready mix concrete, as part of its cost reduction initiative. The new plant will commence operations in two months’ time.

“Cement is one of the major cost components of our property development segment. By setting up our own plant, we can save up to 20% on our raw materials, labour and logistic costs,” Tan told The Edge Financial Daily in an interview.

Additionally, construction work is undertaken by its construction arm, Pembinaan Terasia Sdn Bhd.

“We do everything on our own unlike some developers who have to tender their construction projects to third party companies,” said Tan.

Tiger Synergy has four property developments in Selangor in the pipeline, with a combined gross development value (GDV) of RM550 million. They comprised residential projects in Bukit Serdang, Seri Kembangan, Taman Rowther in Gombak and Alam Impian in Shah Alam.

Tan said the group will launch these projects in phases over the next three years.

He is confident that the projects will be well-received due to their strategic location within a 20km radius of Kuala Lumpur. ..

With these cost savings strategies in place, Tiger Synergy expects to net RM160 million in profit, which is 30% of the total GDV of the four projects, over the next three financial years.

“In other words, the group would be able to realise RM50 million in net profit for each financial year (from FY16),” he added.

For FY14, Tiger Synergy booked a net profit of RM132,000 compared with a net loss of RM1.71 million in FY13. This was achieved despite revenue falling by 63.1% to RM12.59 million from RM34.12 million.

For the six months period ended Dec 31, 2014 (1HFY15), Tiger Synergy however swung back to a net loss of RM877,000 compared with a net profit of RM1.13 million, blaming higher administrative costs and completion of existing projects.

Going forward, Tan said the group will remain focused on the domestic property market and will continue to be on the lookout for further strategic land banking acquisitions in Kuala Lumpur and Penang.

He noted that the group still has 15 acres (6.07ha) of land in Kuala Lumpur yet to be developed. ..

On its ongoing private placement exercise, Tan said the group has identified several “potential investors” for the placement and will place the shares out soon.

On Jan 29, 2015, Tiger Synergy had proposed to undertake a private placement of 138.29 million shares or up to 10% of its issued share capital to third party investors to raise up to RM27.66 million for working capital, property development expenditure and estimated expenses.

Shares in Tiger Synergy (fundamental: 1.2; valuation: 0.9) closed unchanged at 11 sen last Friday, for a market capitalisation of RM87.91 million. The stock has fallen by 21.4% year-to-date.

Thursday, May 21, 2015

IFCA MSC - Buying its Indonesia distributor?

IFCA’s 1QFY15 net profit, at 101% annualised, was in line with our expectations. The higher revenue was due to domestic GST software upgrades before the 1 Apr GST deadline. Last evening, IFCA also announced the proposed business acquisition of is Indonesia distributor, which was a positive surprise. To reflect conservative potential earnings from Indonesia, we raise our FY16-17 EPS forecasts by 8%. Our target price, based on an unchanged 21x 2016 P/E (in line with domestic peers), is also higher. The stock remains an Add. Potential catalysts include completing the acquisition of its higher-than-expected take-up rates for SaaS.

Wednesday, May 6, 2015

WILLOWGLEN MSC BHD (Edge)


Insider Asia’s Stock Of The Day: Willowglen


WILLOWGLEN MSC BHD

insiderasia-logo_theedgemarketsWILLOWGLEN (Fundamental: 3/3, Valuation: 0.9/3) rose as high as 92.5 sen, or up over 25% after it was first highlighted by InsiderAsia at 73.5 sen on October 14, 2014. Since then, the stock retraced to a low of 63 sen, partly due to its 3Q2014 earnings results, before rising again to 89.5 sen.

We still like Willowglen for its highly scalable, asset-light business model and expect double-digit earnings growth going forward.

The change in management at Willowglen back in mid-2013 appears to begin bearing fruit. In the last five months alone, the company has won five contracts worth RM43.8 million from Singapore Power Group (SPG) and its subsidiaries SP PowerAssets and PowerGas, and Public Utilities Board of Singapore.

Wong Ah Chiew, former Managing Director of PJ Development Holdings, took over the helm at Willowglen on August 1, 2013 and set his sights on business expansion. In February 2014, the company acquired a 70% stake in Sentinel Systems Sdn Bhd (SSSB) for RM1.4 million. The main asset of SSSB is an Innowatch system that is able to control operations at remote places, with proven success in managing ports in Korea.

Having built a strong foothold in Singapore, Willowglen intends to not only grow its operations there, but to also focus more on Malaysia, where opportunities abound for the internationally competitive player. Last year, Wong expanded the R&D team in Malaysia by 40%. It is expected to benefit from government infrastructure spending such as the construction of the Klang Valley MRT, LRT extensions and water treatments.

The stock trades at a trailing 12-month P/E of 12.4 times — which is attractive relative to its prospective growth — and 2.17 times book. Dividend totalled 2 sen (ex-date May 13) in 2014, translating into a yield of 2.2%.