Plenitude – a new hope

The performance of Bursa Malaysia Plenitude over the past decade was nothing to shout about with an average ROE of 4%. But this was because not all its cylinders were firing. Plenitude had 2 main businesses – property development and hospitality.

The hospitality business used up about half of its capital. For most of the time over the past decade the hospitality business delivered losses. The profits for the group were contributed by property development.

But over the past 8 years, the group had been refurbishing and improving the operating efficiency of the hospitality business. Then in 2023, this business began to deliver profits. I would expect growing contribution from the hospitality business.

Can you imagine the potential returns when both property development and hospitality pull their own weight? I think the market price has yet to reflect Plenitude’s turnaround. https://www.i4value.asia/2023/03/is-plenitude-value-trap.html#more

For more insights refer to page 20 of INVEST https://notice.shareinvestor.com/email/newsletter/invest/pdf/Vol223-Invest-06Sep.pdf

Is this a value trap
https://i.postimg.cc/y63FRtm6/Crest-Builder.png

https://www.i4value.asia/2024/05/is-crest-builder-value-trap.html#more

Is Lysaght a value trap?

Lysaght Galvaized Steel has been able to maintain its revenue and profits over the past 12 years. While not fantastic considering that global demand is projected to grow at around 4% CAGR, the company is profitable.

The company is also financially ok with about half of its total assets in cash form. There is also currently > 30 % margin of safety from its Asset Value and Earnings Value. It is not in a sunset sector and there is no sign of digital disruption. As such I do not think Lysaght is value trap.
https://www.i4value.asia/2024/08/is-lysaght-value-trap.html#more

OSK – will we see a profit boost?

Over the past 8 years, OSK has transformed itself from a financial services company to a property group although financial services still accounted for more than half of the net assets.

Because of this set-up, while OSK's main operation is property development, a big part of the profits still came from its investment in RHB. The Malaysian property market had been soft for many years, but there are signs of recovery. Hopefully we will then have both cylinders firing thereby boosting OSK performance.

For more insights go to page 20 of INVEST https://notice.shareinvestor.com/email/newsletter/invest/pdf/Vol221-Invest-23Aug.pdf

FoundPac – will its share price trend the Notion way?

FoundPac is a precision engineering company. It is in the same sector as Notion. While Notion share price has seen a quantum leap since May of this year, there is no such jump for FoundPac

While FoundPac had been able to deliver revenue growth over the past 9 years, profits were declining. This was because revenue came from the Group venturing into new product segments that did not have good margins.

But its precision engineering business has delivered good returns. But the newer segments such as cables and connectors and even automation are not pulling their weights.

Notion share price uptrended because of the ramp up its precision engineering business. Is FoundPac going to have the same business benefit in the coming few months?
https://www.i4value.asia/2024/08/is-foundpac-value-trap.html#more

CJ Century – has it missed the digital tailwind?

You would think that with the popularity of online businesses, logistics companies would be having a roaring time.

When I looked at the performance of CJ Century, I found that its share price had been trending down since peaking in mid-2022. When I looked at its ROE, I also found that it had declined from its 2014 peak.

CJ Century is focussed on its legacy logistics businesses – total logistics and procurement logistics. The EBIT margins for these 2 businesses have been declining since 2015. The Group needs to improve its operations to arrest the decline. However, it does not have a clear track record of delivering operating improvements.

To deliver a sufficient same margin of safety from the Earnings Value, CJ Century needs to achieve 11% better performance than its past 2 years average. Can it deliver this with just the legacy businesses?

CJ Century ventured into the couriers services sector in 2016 but have since divested this loss making venture. You wonder why it did not tap big into serving the growing online fulfillments services. https://www.i4value.asia/2024/08/is-cj-century-investment-opportunity.html#more

A decade ago, KFIMA manufacturing segment was the key driver for the group due to its supply of travel documents. Unfortunately it lost this lucrative supply contract and the group business suffered so that it did not achieved any revenue growth over the past 12 years.

But the Group had managed to offset this by growing the business in the 3 other segments – Plantation, Food, and Bulking. The returns with the current business profile have yet to reach the levels of that before the loss of the supply contract. But the Group is making progress.

The Group is fundamentally sound. It has managed to deliver returns greater than the cost of capital. At the same time, there is a sufficient margin of safety based on both the Asset Value and Earnings Power Value.
https://www.i4value.asia/2023/12/is-kfima-one-of-better-bursa-stocks.html#more
https://notice.shareinvestor.com/email/newsletter/invest/pdf/Vol219-Invest-09Aug.pdf

In the mid 2010s, Bumi Armada performance deteriorated due to the low crude oil prices. It had to re-organized itself and the company's performance over the past few years had improved.

There were improving gross profitability and contribution margins over the past few years. Its facilities are operating at high utilization levels. It had also improved its financial position. But this is a Group whose performance is tied to the expenditure of the oil and gas companies. This in turn is tied to crude oil prices.

Crude oil prices are cyclical and I do not expect the current high prices to continue forever. So when crude prices decline, I would expect Bumi Armada performance to follow suit. If you are a long-term investor, you should be looking at this performance over the cycle rather than just the current performance.
https://www.i4value.asia/2024/08/is-bumi-armada-investment-opportunity.html#more

Can One – can it remain No 1?

There was a change in the business profile of Can One in 2019. Post-2019, the average returns over the past few years were lower than the respective cost of funds, implying that there was no shareholders’ value creation.

While the Group is financially sound, there are no signs of improving operating performance.
The Group may be the biggest packaging company on Bursa Malaysia but size alone does not mean that it is a wonderful company in the Buffett sense.

Nevertheless, the market is pricing the company below its NTA. From a brick-and-mortar company perspective, this does not make sense unless you think that its assets are going to be impaired. https://www.i4value.asia/2024/07/is-can-one-investment-opportunity.html#more

Astino – slow and steady
When Warren Buffett first started, he focussed on finding “cheap” companies without paying too much attention on the quality of the business. He referred to this as cigar-butt investing. He likens this to finding a cigar butt that still has one or two puffs left.

I would put Bursa Malaysia Astino in the cigar-butt category. This steel roofing companies faced two headwinds over the past decade – soft property market and cyclical steel prices.

Nevertheless, it is a profitable business and is financially sound. Astino delivered single-digit revenue and earnings growth over the past 12 years

While it is in a mature sector, it is not a sunset industry. I do not see any digital or other disruption on the horizon.

Based on the past 12 years' performance, I estimated that there is more than 30% margin of safety from both the NTA and an Earnings Power Value perspective. It is not a value trap but a cigar-butt investing opportunity.

For more insights, refer to Is Astino a value trap? at https://www.i4value.asia/2024/07/is-astino-value-trap.html#more