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Sunday, February 21, 2021

[Humbled Investor] Malayan Cement Bhd - MCEMENT

[Why MCEMENT is considered a deep value stock that worth your second look?]

[Upside]

1. M&A Synergies (operational, distribution and logistical synergies) resulted in improvement in profit margin. The cost synergies should reflect better than current valuation in the future.

2. Economy recovery would revive property and construction sectors which will then increase demand for cement.

3. Cement has a short shelf life of 3 months. Better inventory management will help to accomodate with incoming demand from the revival of various big infra projects.

4. Cement price will be better managed after sector consolidation (with MCEMENT remains as the market leader with 60% market share).

5. Technical chart wise, the 20-years chart showed a huge support at RM1.80 level and YTL acquired Lafarge (nka MCEMENT) at RM3.75. MCEMENT currently trading at RM2.36.

6. Potential to turn net profit in the next few quarters.
 
[Downside]

1. Demand remains sluggish if MCO continues
with further delay in property/infrastructure projects

2. Coal price has increased from 10-year low of RM210/MT to RM350/MT. However, MCEMENT might be able to transfer the increase in production costs to customers as MCEMENT now has better bargaining power against its customers after sector consolidation.

3. Market risk and volatility risk due to low public shareholding spread at 22.95% (excluding ASB).

4. Huge amount goodwill contributing 35% of total assets which are subject to annual impairment review. However the risk of further impairment is relatively low. This is because the goodwill arising from the acquistion of Lafarge Aggregates back in 2004 amounting to RM9mil has been impaired downwards to RM1.4mil as of June 2020 (-85% impairment) due to the lack of synergies to the existing business.

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All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.

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Sunday, February 7, 2021

[Humbled Investor] Malaysia Smelting Corporation - MSC

[Humbled Investor] Malaysia Smelting Corporation - MSC

[10 Key reasons on why you should relook at MSC]

1. Even without the participation of institutional investors, MSC has surged 230% with minimal selling pressure. When big insti funds starting to notice MSC, potential gains might further be unleashed.

2. Straits Trading, the parent company of MSC (with 54% shareholdings in MSC) has gained more than 80% in less than 3 months.

3. MSC is also dual listed in Singapore. Current share price surged to 71sen. Arbitrage can be applied here.

4. Production curb and output cuts by Top 1 and Top 2 refined tin producers in the world (PT Timah and Yunnan Tin) back in 2019 and first half of 2020 has successfully balanced out the oversupply situation in 2020. Smelters in Yunnan Tin have also taken maintenance downtime to compensate for the shortfall of raw material.

5. Recently in 2021, Myanmar military coup + LME market dwindling tin inventories might have just squeezed the tin supply even further and resulted in tin shortage/deficit. Hence, tin prices could possibly stand above 20k as supply is struggling to meet resurgent demand.

6. Global tin demand is recovering, due to the rising electronic sales as more people stay at home due to the pandemic. With the rollout of 5G networks and EV which require at least 25% more chips and hence demand for tin soldering (which is the biggest use of tin) in order to connect components.

7. China's internal supply dynamics seem to be struggling to keep up with current demand, let alone finding sufficient mine resource to meet future soldering demand.

8. Tin remains as the metals most impacted by new technology with its wide application and storage capability in terms of battery storage. Tin improves conductivity and tin foils could be used instead of copper anode in replacing lithium-ion batteries.

9. MSC Tin Mining segment is expected to contributed positively which is attributed by its new mine at Sungai Lembing and increased daily average production at existing mines. Both are currently operating at full capacity.

10. Both Butterworth and Pulau Indah smelters of MSC are in operations (albeit at 25% capacity for new smelter but refurbished with better efficiency) which will increase refined tin output to meet current high demand.

If you want to learn more, feel free to join us at:
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https://t.me/humbledinvestordiscussion
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_________________________________________________________________

All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.

No buy call. No sell call. No bullshit. Only content.

If you think the article / information is useful to you, you can <SHARE> this article and support us by <LIKE> and <FOLLOW> our Facebook page "Humbled Investor". Thank you so much for supporting.