#AMA

Hi Everyone, we’re going to have a special Ask-Me-Anything sessions for our new channels!

AMA stands for “Ask-Me-Anything”. AMA is a "crowdsourced interview" where our community asks a host questions, within a specific period of time. For the entire week, from 28 January (Monday) to 3 February (Sunday) 2019, you will get to ask our hosts anything related to their channels!

For this Malaysian Stock Market Channel, you host is @adriantoh Adrian Toh, Vice President of Azure Capital.

Adrian has more than 10 years of financial sector experience, predominantly in fund management and consulting in Malaysia, Hong Kong and Singapore. Adrian spent over 4 years with RHB Asset Management where he was the portfolio manager in charge of various Asia equity mandates. Before that, he spent a year as a generalist covering Asia ex-Japan space, with particular focus in ASEAN and North Asia stocks.

Prior to joining RHB Asset Management, he worked with PwC Hong Kong for more than 3 years as a management consultant, helping organisations to improve their performance, primarily through the analysis of existing organisational problems and development plans for improvement. Prior to that, he worked 2 years at PwC Malaysia as a financial auditor and advisor for IPO listing.
Adrian graduated from Oxford Brookes University with an Honour in Accountings. He is also a member of The Association of Chartered Certified Accountants (ACCA).

Go on, Ask Him Anything related to MY stock market by posting in the comments below for this AMA post and he will reply!

*standard community guidelines apply*

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InvestingNote

Thanks everyone for participating in our first AMA sessions ever. The AMA sessions have now officially come to an end.

A special shout-out to our kind AMA hosts for answering all our community members' questions! They did a great job!

We will have more of such sessions to come, for now Happy CNY everyone!

clementong

Hi adrian,

What are your views on IGB berhad (formerly goldis)

adriantoh

Reply to @clementong : Hi Clement,

For IJM, we have to value the company with sum-of-the-part (SOTP) method. If you dissect it, 67% of its valuation is from IJM Land, 18% from its construction arm, 11-12% from IJM Plantation, 17% from various infra assets such as Kuantan Port, NPE, WCE, Lekas etc, while remaining 7% from industries.

For its property biz, the valuation is fairly straight forward, total valuation of its landbank is circa RM4.44bil which i think 40-45% of RNAV is fair. So this segment will give you around RM1.21 per share.

For construction biz, i think this is the key segment to move the share price. Currently IJM is sitting on more than RM8.8bil orderbooks, but it could face 40% cut in its RM1.1bil LRT3 contract, due to government's cost-cutting measure. They used to have internal target to achieve RM2bil job win in FY19 (their year end is March), however, they managed to secure up to RM550mil of projects YTD only. This figure is also significantly less than RM3bil order wins in FY18. They could potentially achieve RM1bil order win by their financial year end, mainly come from hospital or building jobs.The key catalyst of the construction arm side will be the ECRL project. If the ECRL project could make a comeback at a reduced cost and extended construction period, it could benefit IJM on two fronts – i) IJM is already the nominated supplier for the piles for the ECRL project; and ii) over the long term, ECRL could contribute meaningfully to IJM’s Kuantan Port throughput. We can value this segment with RM2bil of contracts work recognised every year, with steady 6% margin, 10x PE, which will give you a valuation of RM0.36 per share. This excludes any potential win from ECRL which will give a big boost to the share price.

For the plantation biz, its lower Malaysian FFB production for 1H19 was largely caused by lower production from its Sugut estate in Sabah as a result of the delayed effect of El Nino. This, coupled with the lower CPO ASP of RM2,326/t (-14% YoY) and higher cost from replanting activities in 1Y19 resulted in a 26% year-on-year drop in PBT for the Malaysian ops. On the Indonesian front, production cost is likely to remain high in 2H19 from higher depreciation and overheads from its increasing young mature areas in Indonesia. I will value the company with 1x Price to book which will give you circa RM0.21.

With SOTP add on from other small infra projects together with the few key segments above, the company is fairly valued at RM1.87. I think the key catalyst will be from ECRL, so you have to monitor it closely. If government eventually choose to shelve the project, then there will be no key catalyst to move the price further.

metalcorn

what are your thoughts regarding heineken vs carlsberg berhad?

Another 2 companies that may be interesting are dutch lady and airasia berhad vs airasia x, what are your views on them?

leeal

Hi Mr Adrian Toh, what's ur view of construction sector, especially penny stocks short term?

adriantoh

Reply to @leeal : Hi leeal,

Construction companies in Malaysia generally divided into three types:
1. Provision of construction works solely for infrastructure and public projects
2. Provision of construction works solely for private residential projects
3. Provision of construction works for both private and infra projects.

The construction sector used to be very predictable. When the whole property market was at the downturn, there would be lesser residential projects ongoing. However, there will be ample of infrastructure works from government to support the sector. When the infra projects were scaling back, we would however witness more projects in the private space. Thus, different companies will perform differently during the cycle of the construction sector.

Things started to behave differently in 2018 post-election, which most mega projects such as High Speed Rail, MRT3 and ECRL (still pending) were shelved. While sizable infra projects are draining-off, property market does not display any sign of recovery too. Thus, it becomes very tricky for the construction sector as a whole.

Big boys such as Gamuda started to tender for smaller projects in order to improve its operating leverage. As they were low-balling for the project, it literally squeezed out the small players from the market. Some of the projects which used to fetch mid-teen margins are now fetching mid to high single digit only. Thus, I will certainly avoid smaller construction players, and will focus more on solid construction companies such as Gabungan AQRS, Econ Pile or Vertice.

looituck

Hi Mr Adrian Toh, what's your view on Hong Leong Industries?

looituck

Reply to @adriantoh : Hi, forget to get your views on Elsoft.I am too late to ask this question.

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opy

appreciate your view on mayb msia, scientex, and genting msia. thanks.

opy

Reply to @adriantoh : thanks again sir, for such details!! salute !

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avtm

Hi Mr Adrian Toh, I want to look for value-for-money broker to buy Malaysian stocks. There should also be some cost-effective ways to convert between SGD and MYR. I don't feel safe having idle cash in MYR due to track record of ringgit depreciation.

Do you have any broker in mind?

adriantoh

Reply to @avtm : Hi, you may explore Philip Securities or Maybank Kim Eng, which will provide you better forex rate too

InvestingNote

Feel free to ask your host @adriantoh, anything related to the Malaysian stock market!

Teo

Hi, which channel in Mysia will you be? Would like to follow. Tks

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