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Wednesday, 25 January 2017

(Tradeview 2017) Value Pick No. 3 : CCK Consolidated Bhd. (7035)

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Dear fellow readers, 

This is my No. 3 value pick for 2017. Considering CCK is the business of poultry, may the year of the Rooster of 2017 help push the share price up.

Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :

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Value Pick No. 3: CCK Consolidated Holdings Bhd (Intial TP RM 0.80) 

I will start of by clarifying that many of my private subscribers and early readers know I called to enter CCK back in December 2016 when it was 61 sens and set an intial TP of RM0.70 which was achieved in January before retracing. Hence, in interest of transparency, I am writing to let all know in advance. So why am I still writing the article now? I contemplated writing it but as most readers know, Tradeview is value investing group that focuses on investing in companies for the business and to be true shareholder. We do not punt / speculate but aspire to invest in a business that we take pride in. You can see from all my earlier recommendations such as Yee Lee, Magni, Visdynamics, Allianz, EG and now CCK. I am writing to share about CCK simply because I like the company. Period.  

CCK is an East Malaysia company that focuses on poultry, aquaculture and frozen food. The founder is a respectable self made entrepreneur who happens to be the owner of Nam Cheong shipbuilders as well. As of this year, CCK would be celebrating its 20th year being listed on Bursa. The management consist of experienced personnel who have been in the industry and the company for more than 30 years. In short, CCK is well run.

Looking at the latest QR, CCK truly delivered stellar results following their successful acquisition of an associate company which contributed significantly to the topline and bottomline. The best part, CCK used internally generated funds (cash) instead of borrowings to acquire a profit making associate company, Gold Coin Sarawak Sdn. Bhd. With the addition of Gold Coin, CCK's businesses now has expanded to 4 segments namely Poultry, Aquaculture for Export, Retail Consumer Frozen Food and Animal Feed / Grain. Another key reason I like CCK is because their expansion of business moves along the chain of businesses which is textbook Vertical Integration. 


For the past 3 years from 2014-2016, CCK has shown steady growth in terms of Revenue and also Profit. Profit margin has been improving too from 2.2% to 3.2%. Based on the latest QR, for 3 Quarters alone, CCK has achieved a revenue of RM409 Million and Profit of Rm13 Million vs the Full Year 2015 Revenue of RM509 MIllion and Profit of Rm13.8 Million. What I am trying to point out is that CCK will have no problem at all achieving a record year in terms of both topline and bottomline. Such successful showing is exemplary considering they delivered a great year in 2015 resulting in a bonus issue. Having done that, CCK likely can exceed expectation in terms of their performance for the whole of 2016. 

Looking at the numbers, Revenue for each quarter in 2014 averages around RM115 Million, each quarter of 2015 averages around RM125 million and for 2016, following the acquisition of Gold Coin, it would seem that CCK has moved another level to average RM140 million for the quarter. EPS after the dilution impact of bonus issue, stands at average EPS of 2 sens per quarter. If we were to annualise it, I am confident for the full year it would come up to 8 sens for 4 quarters. At 10x PE multiple, the Fair Value of CCK should stand at 80 sens.  Given the difficult economy, the business that CCK is in is very resilient as it is mainly necessity based. Others are catering to export markets which also would thrive under the weak MYR. With Gold Coin part of the business now, CCK has also taken care of their cost (animal feed is key cost component for a poultry business). Such a holistic and well managed business shows the foresight and vision of the company's management. If a company can take care of the cost, anything extra would directly go to the bottomline. Additionally, the company has solid dividend history, hence, I am quite confident for 2016, CCK will declare good dividend as well. 

In my opinion, CCK is also a commonly misunderstood company as the company gives off the impression of a poultry company. While CCK has business in poultry, farming etc, Their key contributor is actually their retail (consumer food, frozen food, meat / poultry). Which means, CCK actually owns the whole value chain from production to final touch point with the consumers through their retail arm. This is extremely powerful business model keeping cost to the lowest possible. 

As we review the performance in their latest QR, what is clear is the retail segment performance + the new associated company helped boost the overall performance of the company. This may be the case, however, the overall increase of the sales is also due to the strong performance in all 4 business segments of CCK. Quite obvious, CCK is on the right track with their business plans and strategy. 

In today's climate, the Management remains confident in their future prospect which to me is a big plus point as most companies are not bold enough to make a declaration of positive indication. From this statement, I think it could not be anymore clearer as the Management has indicated FY 2016 will be better than 2015. 

A small plus point would be that substantial shareholders have been adding position albeit small positions. There is also rarely any sell off by the substantial shareholders of the company which shows the confidence the shareholders have towards the future of the company. 

At current price of RM0.645, CCK is only trading at 8.1x trailing P/E after taking into account of the dilution of bonus issue. For a fully integrated poultry chain, the valuation is indeed cheap. If I choose to be more conservative to take only the last 2Q and annualise it, it would be trading at 8.7x forward P/E. Both valuations shows CCK is undervalued. I believe CCK is a continuing growing business which is well managed with unique business proposition, as such, I would forecast a full year 8 sens EPS. With 10x PE multiple, the Fair Value of CCK should be 80 sens. This valuation excludes potential future growth and dividend to be declared. I will set the initial TP for 2017 to be RM0.80 for ease of reference. Assuming CCK maintain their dividend payout as per last year of 3 sens, at current price, the DY is 4.65%. 

The recent retracement was already within my expectation following the sharp increase from 60 sens to 70 sens which was my intial TP. Therefore, any price weakness, may be a buying opportunity.


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Sunday, 22 January 2017

(Tradeview 2017) - To Buy or Not To Buy Property in 2017?

Dear fellow readers, 

As we move into 2017, we continuously hear various expert opinions across sectors commenting on investment instruments such as equities, commodities, forex and of course PROPERTY. Today, I will share my humble insight on the property market based on 2 recent news articles on the Malaysia property market as a whole.

Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :

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For 90% of the population, the biggest expenditures in a person's lifetime would likely be the following 5 categories :

1. Property 2. Vehicle 3. Healthcare 4. Education 5. Insurance

Today I will be writing specifically on No. 1 - Property, also known as as real estate. Personally, I have two great interest : the real estate market & the financial market. Professionally, I have experience in both sectors.

Suicide to buy a house now, says consultant

 | January 19, 2017
He advises prospective buyers to wait until property prices come down.
PETALING JAYA: A property consultant has advised prospective house buyers to wait until property prices come down, saying making a purchase at current prices and in the face of a bleak economic outlook would be like committing suicide.
Ernest Cheong, who has been a chartered property surveyor and consultant for more than 40 years, said the property market does not exist in isolation and people needed to pay attention to the local and global economic situation.

Read more :

58% likely to buy a house in first half of 2017

 | January 16, 2017
House buyers are now looking for properties that are further away from the city, but with good transport links.
KUALA LUMPUR: Some 58% of Malaysian buyers are more likely to buy a house within the first six months of the year, despite the property sector being sluggish, says a survey by

After reading both the articles, I would say both have strong grounds to argue their respective case. If we were to put both man across one another, I am certain the argument will go on endlessly. Additionally, the Tradeview team has had the opportunity to meet both in person. Today, as an impartial observer, I would like to share some basic insights and preferably paint a clearer picture for fellow readers.

The saying of "having a roof over one's head" refers to one of human's basic necessity to have a safe and secure habitat to sustain living over a long duration of time. Property / Real Estate helps satisfy this basic human necessity. However, due to the ever increasing population of mankind, the limited liveable space (fit for habitat) is always playing catch up in terms of supply to demand. Couple with the effects of inflation, over time, property / real estate becomes another form of investment instrument.

If we were to breakdown the function of property, I will say there are 5 main ones :

1. Habitat 
2. Investment / Hedge against inflation 
3. Sense of belonging 
4. Legacy / Heirloom 
5. Status Symbol

When we read news, articles or opinion pieces, it is vital to consider from which angle we interpret the message. I will elaborate my views based on these 5 points.

The Malaysia property market has been on doldrum since the peak of mid 2013 as per the Housing Price Index Malaysia. Since then, the property market has been on downtrend. In other words, the property market has been "soft".

If we look at the timeline of events, we can attribute this to various factors such as the abolishment of DIBS scheme, revision in RPGT,  increase in loan rejection rate, first US rate hike in Dec 2015 and others. In short, demand side for property was affected by policies introduced by the government and institutions. This has resulted to some extent the correction in property prices since 2013. How about supply side? 

As of August 2016, according to the National Property Information Centre (Napic), 18,908 of the 81,894 units of residential and commercial properties launched in the first quarter of 2016 have yet to be sold. These unsold properties amount to RM9.4 billion and it is an increase of 16% from the value of unsold units in the 4Q 2015. Based on this, there is clear oversupply in the market. Developers have been building and the market is not absorbing.

 In short, in economics 101 terms : Demand Fall while Supply Increase = Price Fall (E1)

Based on these information, it would appear that Mr Earnest Chong is right and PropertyGuru survey is wrong. With property prices on a downtrend + oversupply, maybe renting is the way forward. Then why did PropertyGuru survey showed over 58% of people are looking to buy property in 2017?

Property Function No. 1 - Habitat

In my humble view, it all comes down to the details. While the high level figure does show that there is an oversupply in the market, however, there is in fact an underlying demand for property. This comes to my first point, Habitat. As a household grows from a couple to a nuclear family to extended family, there is the need to move out and build your own nest. This is the actual demand for property. This segment of people usually creates the perpetual need for property be it old or new. I call this segment "New Household Builders". They are the ones supporting the property market through the good and bad times. Property price does not change the fact they need property. It merely affects the timeline they purchase. While they wait for the right timing to purchase, often they continue to stay with their parents otherwise they rent. 

My view : If there is an actual need for a habitat, anytime is a good time to purchase a property provided one has the means to purchase without over leveraging.  

Property Function No. 2 - Investment / Hedge Against Inflation.

Moving on, we can look at the market from my second point, Investment / Hedge Against Inflation. It goes without saying property price appreciates with time. Myth : Manhattan New York today was bought by the Dutch for $24 from the native americans. Fact : Today, a landed terrace house in Bandar Utama, Petaling Jaya cost only RM180k in the 1990s, is valued over RM1 million. With the effects of inflation, property has proven to rise over time. As a result, many with the means would often put their money in property with the hopes of achieving capital gain or act as a hedge against inflation. However, with the downtrending property price, many who bought at the peak of 2013 with Vacant Possession in 2016 are now stuck with the high property purchase price without a buyer or tenant. They continue to service their monthly instalments for empty unit. Those without holding power would have to sell at a loss (firesale) or face foreclosure from the bank.  

My view : If one is looking to buy property for solely investment purposes, one must have the holding power to reap the full benefits. Otherwise, it is suicidal as per what Mr Earnest Chong said. Unlike equities, property transaction takes time. Gains or loss is not easy to be realised without a specific timeframe for the transaction to conclude. Having said that, the market has continuously move downwards in the past 3 years. Those with the means may be able to start looking at property at selected segments and locations (such as Landed property within Klang Valley)

Property Function No. 3 - Sense of Belonging

The 3rd point, Sense of Belonging is one of the most important qualitative factors of owning a property. As one of the 7 billion people living on earth, having a place to call home or a sense of belonging is paramount to justify a sense of self existence. I am sure many of you have travelled overseas for holidays and upon the journey from the airport, you must have said "I cant wait to get home". Owning a property provides the sense of ownership + belonging especially if the title of the property is in your name. It is a place in the world where you feel you feel truly belong. This feeling is not the same as renting. Renting as a tenant however long term will never give you this sense of belonging as in the back of your mind, eventually, you know you will move out. You wouldn't put a 100% into the house decoration, you wouldn't ensure the cleanliness is 100%, if there is a problem with the piping, you wouldn't fork out your own money to repair it. Instead, you will call the landlord.

My view : If money can buy you a sense of belonging or a sense of ownership, it is worth every dime in the world. 

Property Function No. 4 - Legacy / Heirloom

Of all property functions, this is probably least considered by many. Legacy / Heirloom is a feudal concept where landowners and barons of the land focus on inheritance for the family legacy. In today's world, this concept is no longer relevant except for certain ethnic group or social class. Therefore, if one were to purchase a property for this reason, it is actually not necessary. As parents, who have worked hard all their life to put food on the table and a roof over their head, it is important to reward themselves. As we all have limited time in the world, we should always find some little enjoyment instead of worrying over inheritance, legacy etc. 

My view : If your purpose of buying a property is for this purpose, chances are you have the means to hold through bad market and demand or supply issue in the property market matters little to you. Renting also will not be in your vocabulary. 

Property Function No. 5 - Status Symbol

Just like car, watch and yacht, property to some represents a status of luxury.  This brings me to my 5th point,  Status Symbol.  A mansion or a hut, that is the perception people have towards your status and wealth. Few today can be wealthy but remain humble. Warren Buffet, an exception, still lives in his old house in Omaha bought in the 1950s. 

This segment of properties usually falls under luxury property. CBRE forecast "at end 2016, total number of luxury condominiums in Kuala Lumpur amounted to 37,824 units. Upscale condominiums ranging between RM1,001 and RM1,500 per sq ft are expected to see the highest growth averaging 4,000 units per year, accounting for 23% of total condominiums by 2019.” This is a result of developers still looking to sell luxury property as it gives the widest profit margin if the project sells well. Therefore, it is quite clear, there is a mismatch in demand and supply with overhang in supply for luxury property and insufficient supply to meet demand for affordable housing. The government realises this and now starts moving towards affordable housing / property below RM500k. With that, more developers are switching direction towards affordable housing, especially those with high inventory of unsold luxury property units. 

My view : If your purpose of buying a luxury property for own stay or upgrade, this may be a good opportunity as prices have been downtrending. However, if you are opting for luxury property as a status symbol or investment, the price of luxury property is too high to justify the yield. It would mean these property are overvalued. 

My Conclusion : 

Mr. Earnest Chong's view on high property price isn't wrong. I do agree certain segments in our property market is overvalued. His advice to those who are seeking to buy is better off renting is accurate as far as those who do not have the means to pay the monthly instalment. However, if a person has the ability to service the loan while buying a property (place where they call home), I am all for it. Mr Chong's rule that only 25% of the income should be used for monthly instalment payment is also unrealistic. If you are looking to buy a home in Klang Valley, this would be almost impossible. 

With regards to PropertyGuru survey that 58% of the people are looking to buy property in 2017, I think there are some truth to it. The property market has been going downtrend for the past 3 years. Property developers are launching various marketing packages similar to DIBS schemes in the past. Property transactions for the past 3 years have also fallen significantly from the peak. I would say those who actually need to buy a property for Habitat, should go for it as it is very hard to time the bottom. Additionally, I do believe that some level of recovery in the property market will happen soon. I am looking at end 2017 / early 2018. I will save this topic for another day.

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Friday, 20 January 2017

New Website & Facebook Page for 2017


Dear all,

thanks for your support all this while. As a result of your support, we have successfully launched :

website: &

If you find Tradeview value investing a good philosophy, feel free to share and like our website and facebook page.

Lets work towards a successful and prosperous 2017!

Kind regards,


Thursday, 12 January 2017

(Tradeview 2017) Value Pick No. 2 : EG Industries Bhd. 8907

Dear fellow readers, 

This is my No. 2 value pick for 2017. Happy CNY to all. May the year of the Rooster of 2017 be a prosperous and wonderful year ahead for all.
Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :

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Value Pick No. 2: EG Industries Bhd (Intial TP RM 1.10) 

I still remember sometime end 2015, EG Industries was one of the hot stock that moved from 50 sens to RM 1.20 especially after many prominent investors revealed their holdings and view on this counter. After which, EG has been in a consolidation phase for the majority of 2016. There has been many write-ups as well on this stock which actually made me put off writing on EG as one my 2016 Value Picks. Additionally, there was a key factor which delayed my writing - The completion of their move from EMS to Box Building. 

In early 2016, many were bullish about EG and the future prospect. If one pays attention to the news reports, there is a good reason to. Dwelling into the details of the management's indication will show that the issue with EG is the timing. Of course, many would argue, if you are patient enough, any good value stocks would surely move up. I dare say, EG is one of them but with valid reasons. My main reason for putting off writing EG was because I wanted to see if management of EG actually can fulfill their promise and whether the management guidance given is credible. My concerns were addressed in the latest QR released on 30 Nov 2016.

EG recent QR was nothing short of impressive. Revenue stands at RM 234 Mil and net profit stands at RM7 mil. Both figures for Q1 alone stands at 33% of the full year of 2016 Revenue and 40% of the Net Profit. If one were to annualise, EG may return the peak revenue of RM 936 million in Revenue and highest profit in 5 years RM28.4 million. However, I would not annualise as that is too aggressive. Even with a conservative estimation, I am confident that the management new direction will allow sustained increased in the profit margin for the company to around 3%.

Most importantly, I am very impress with the Management's ability to keep to their words. Below was the management guidance on the future prospect 2 quarterly report back. 

Today, the performance delivered shows the management actually kept to their words. 

Fact of the matter is EG management manage to live up to their promise in their transition from  EMS to Box Building. The new product mix helped increased both revenues and profit margin. As such, the company is indeed moving in the right direction. Many have asked me how did I come to discover Visdynamics, my question is look at details in the annual report that people do not. After which, cross check that information and verify if the management is indeed running the business well. Quite clear, EG is on the right track with their business plans and strategy. 

Of course there are two issues I would like to highlight to all. One is the impending rights issue / private placement. Two is the sell off by CIMB Small Cap fund recently.

EG done a rights issue at 50 sens in 2015 and private placement at 80 sens. There is news recently that EG wants to do another round of rights issue / private placement. While I understand the company has financial needs to manage the cashflow, however, both timelines are too close. Raising funds from the public to expand business is good. Nonetheless, I would have preferred if the management plan their fund raising properly and think through a longer term business plan such as coming up with 5-10 years strategy instead. 

Secondly, the sell off by CIMB after this news surfaced does not exactly instill confidence in the market investors. While this is not pleasant, I am of the view that readjusting portfolio by funds are very normal especially at the end and at the start of the new year. EG has not been declaring dividends and the price has been stagnant for the large part of 2016. I cannot blame the fund manager who rather put their money elsewhere. However, as mentioned many times before, Tradeview is a value investing group that look long term beyond the immediate gratification. As such, I believe there is room for EG's business to grow. Measure taken by the company also shows that direction. 

At current price of RM0.86, EG is only trading at 6.5x trailing P/E while on a P/B basis at 0.74x. If I choose to be more conservative and take only the last 2Q and annualise it, it would be trading at 7.6x forward P/E. Both valuations shows EG is undervalued. There is no dividend by EG which is a downside for many funds / institutions. However, buying into growth stock is where one aspire for the capital gain to provide the good return. I believe, if EG continues to sustain the last 2Q's performance, 2017 will likely be the first year EG declares dividend. Nevertheless, management has not established any dividend policy and investors have to be patient on this. Based on the latest QR, I am of the view that EG's Fair Value should be around RM1.13 trading at 10x PE. I will set the initial TP for 2017 to be RM1.10 for ease of reference. 

The recent selldown in price of EG is likely due to portfolio rebalancing by CIMB Small Cap Fund after holding large position of over 2 million shares in the counter. For them to be selling off now probably is because there is 1. No Dividend issued to date 2. EG has been stuck in the narrow band for almost 1 year 3. Due to the impending corporate exercise / private placement / rights issues. In any case, the market is efficient and I feel it have already priced in the negatives. What the market failed to appreciate is the timeline promised by management where earnings start to reflect the new contract + Box Building business growth.  Any price weakness, may be a buying opportunity.

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Wednesday, 4 January 2017

(Tradeview 2017) Value Pick No. 1 : (Allianz Malaysia Bhd.)

Image result for allianz

Dear fellow readers, 

2017 is a brand new year. However, 2016 have been extremely volatile, this is a new year for a fresh start. Together, we look forward to a better year ahead. This is my No.1 value pick for 2017. Let 2017 be a prosperous and wonderful year ahead for all.

Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :

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Value Pick No. 1: Allianz Malaysia Bhd (Intial TP RM 13.68) 

In my opinion, the risk/reward investing in small cap stocks now borders on the downside considering the lack of earnings sustainability and operating in a much challenging business climate. Under such circumstance, allocating your hard earned savings in a blue chip company would be a safer bet. I have identified Allianz as my preferred pick over the medium- to long-term. 

This could be a multigenerational stock that you would buy at any point of time and keep as inheritance for your children or even grandchildren. On a side note, even Warren Buffet loves the insurance business, having acquired National Indemnity Company (in 1967) and GEICO (in 1996) via Berkshire Hathaway.

If you were to put your money into Allianz today, you will be investing in the largest general insurer in Malaysia and it is also ranked top-5 in the life insurance space. To note, Malaysia’s total insurance penetration (life + non-life) is still very low at only 5%, suggesting abundant opportunity for growth. Further, we have a young population (~40% 25-54 y/o), which is supportive of future expansion as well.

At current price of RM10.18, Allianz is only trading at 10-11x P/E while on a P/B basis at 1.2x. Although dividend yield is less than 1%, this trend may change drastically in the future. At some point of time, like many MNC listed on Bursa, I believe Allianz will look to repatriate funds back to its parent company at Germany. 

Currently, Allianz is being very conservative, plowing back huge chunk of earnings back to its business. FYI, Allianz’s payout ratio is less than 10% (so much more room to dish out dividends) vs. peer average of ~30-50% (LPI, Tune Protect, Syarikat Takaful). Assuming Allianz pays out 50% of its earnings, I estimate that its dividend yield could be in the range ~4-5%. Nevertheless, management has not established any dividend policy and investors have to be patient on this.

Although no dividend bonanza for now, I am not perturbed as I am strongly confident that Allianz can grow its book value (BV) every year. Conservatively assume that its BV can expand by RM0.50/share p.a. (fully diluted), share price should increase by the same quantum as well (+5% p.a.). This is because the best method to value a finance-related company is via P/B and not forgetting that whatever accumulated profits will eventually flow back to Germany.

Since there are already research reports out there for you to refer, I am bucking the trend and not going to derive an intrinsic value for Allianz. If insist, sky is the limit as I personally like this stock very much. Of course this is not going to happen overnight but hey, investment takes time right? 

That said, 2017 is panning out to be a very challenging year for Allianz given liberalization of the insurance industry along with the termination of its bancassurance arrangement with CIMB. Again, I am not overly concerned as I believe Allianz will be able to navigate through this resiliently. In any case, the market is efficient and it should have already priced in the negatives as these are not new developments. Any price weakness, is a buying opportunity, in my opinion.

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