LTE on YTLP's Yes network (and possibly iPhone?)

Summary: YTL Yes' CEO: "We will be adding LTE... For us, adding LTE is as simple as adding a channel card". Expects Yes to be profitable 18 months from now.

Very interesting article. 

YTL CEO Wing Lee bets on 4G in Malaysia (Q&A) (Cnet)

YTL's network operates on the 2.6Ghz frequency, just noticed on Apple's website that the new iPhone 5S and 5C that landed on our shore (Model A1529 and A1530) support these 2.6Ghz frequency. Not saying that we will see iPhone on Yes anytime soon, but the possibility is at least now technically feasible.

I think there's easy money still to be made buying YTLP at the current level. 

Malaysia small cap highlight - Weida

Summary: Weida is a bargain given its growth outlook. My projected earning for the company (based on management guidance in the news) is RM74 Million, based on today's market capitalisation of RM 225 million, the PE will be about 3X.

Weida is currently one of my favourite local counter for its conservative balance sheet and attractive valuation. I have previously posted about them.

Based on its 2nd quarter result announcement, the company have a net asset of $2.75. Currently it's trading at 1.74 giving them a price to book value of 0.632.

There was an interesting interview given by the managing director of the company, Datuk Lee Choon Chin in The Edge back in September 2013. In it, the MD highlighted its 5 years growth plan including some detail about the expected profit from its property development venture. I've broken down his projection to this simple spreadsheet below:-

I've taken a very simplistic view of the expected profit from these project.

The property project are expected to have a net margin of about 20-22%, based on 20% margin, the property development is likely to earn Weida RM112M.

Weida have "long-term contracts leasing the group's own telecoms towers" to prominent telco including Maxis, Digi and Celcom. "The estimated net rental income in the next 5 years will be about RM 70 million", the MD was quoted to have said.

Water sector - Weida have fixed income from long-term contracts for the management, operations and maintenance of 3 septic sludge treatment plants in Kuching, Sibu and Miri. The concession period for each of these is 25 years. "The estimated concession income in the next 5 years will be about RM 60 million"

Based on the above details, the company is expected to earn a total of RM242M from these 3 business segment in the next five years, or an average of RM48.4M.

The company currently operate in these 4 business segment:-

The manufacturing segment is currently its biggest segment where they specialise in "polyethylene-based building material". According to the article, the company have allocated over RM100M in capex to double its capacity from 20k tonnes/annum to 50k tonnes per annum. The existing plants are running between 70%-80%.

Based on its most recent result announcement, its manufacturing division contributed RM12.8M in the 6 month to June 2013. Assuming a flat earning (despite increasing capex) I expect the manufacturing segment to contribute an annualised earning of RM25.6M.

Based on the above rationale, I expect the company to be earning somewhere around an average of RM74M for the next five years. (3 division projected growth in the article plus flat earning from manufacturing). Its current average earning for the last 5 years is about RM30M.

Currently the company have a market capitalisation of RM225.33 M. This is a PE of 3 based on my estimated earning for the next five years.

The company's have shown increasing revenue and earning over the past five years and the share price have strengthened over the last five years as a result too. But I believe the share still have significant upside in the long run due to its growth orientation in the capacity investment as well as the property venture.

Look for opportunity to add this to your portfolio, I am hoping for a pullback for more opportunity to add to this. It is good value based on current earning and a bargain with the growth.

Land & General - Q2 result

L&G announced a rather impressive set of result on 20th November. The company is trading at price below net cash per share.

The earning per share of the quarter is 3.86 cents or 5.6 cents for the half year to date. 

Simply annualising the quarterly and half-yearly will yield us an annual EPS of 15.44 and 11.2 respectively.

However - earning from property development can be rather "lumpy" due to the nature of its progressive billing, the EPS calculation can't be reliably extrapolated from the historical EPS.

The company have RM293M in cash and approximately RM14M in borrowings - giving them a net cash of RM279M. The market capitalisation is currently RM 248M. The company is trading below its net cash per share.

L&G ICULS is trading at 0.28 cents - up more than 100% from the initial price of 0.13 cents. However I think it still offer value at this price hence I won't be selling. But the easy money would've been made, this is one I will be holding onto for awhile longer.

I am hoping that L&G mother share will hit 70 cents giving a market cap of approximately RM416M.

IBM - accumulating.

I've been accumulating IBM since its last earning report. At its last close it's trading at USD176.08.

The company's stock price have taken a beating due to limited revenue growth in past 2 quarters, but I believe the lack of sales growth is due to the company shedding some high value, low margin hardware business.

Wall street is not paying much attention to this share, and its forward earning is around 10x PE. Paying out a decent 2.16% dividend.

I believe the market is underestimating the innovation coming out of IBM because they can't understand it - just take a look at Watson and do your best to guesstimate the potential, my gut feeling is that this product will be HUGE and more than enough to offset any earning decline in its traditional hardware business.

It's a top investment in Berkshire Hathaway and Mr. Buffett himself praised IBM after its share slump.  I think if your portfolio include shares in the US, you should look at adding some to your position. 

I will accumulate gradually below USD 180, the next earning release may not do the share price much good but I think this is a solid blue chip company for my portfolio for  5-10 years.