WILLOW (0008) - When 2 super investors bought this stock, I decided to dig further!

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The two super investors are Fong siling and Tong Kooi Ong. 
 

Fong siling bought Willowglen last year before the stock rallied to RM1.75. Tong Kooi Ong bough Willowglen last month. 

http://klse.i3investor.com/m/blog/MomentumInvesting88/120184.jsp
 
 

http://www.theedgemarkets.com/aa/tong/portfolio
 
When two super investors bought Willowglen, I decided to dig further.
 
Tong’s Value Investing Portfolio
For readers who are unfamiliar with this relatively low-profile company, Willow provides systems and solutions (through in-house research and development) for Supervisory Control and Data Acquisition (SCADA) as well as integrated video surveillance systems. Essentially, computerised systems for gathering (often from remote and inaccessible locations) and analysing real time data.
 
SCADA and Integrated Monitoring Systems are widely used across industries such as transportation (railways, MRT, LRT, highways) and utilities (gas transmission/distribution pipelines, power stations, port facilities, water and waste water treatment, etc) as well as municipal and housing estate projects.
 
Given the critical nature of such systems, reliability and brand reputation are crucial. In this respect, Willow has a good record.
 
The company’s main market is Singapore (which accounted for roughly 68% of sales in 2016) where its customers include the Housing and Development Board of Singapore (HDB), Singapore Power, Public Utilities Board of Singapore, etc.  
 
It is actively pursuing projects in new industries such as transportation and environment. Last September, the company entered into a JV with Secura Group Ltd, one of the leading providers of integrated suite of security products, services and solutions in Singapore. Secura is listed on Singapore’s Catalist board. Its biggest shareholder is Peter Lim.
 
Willow has also been expanding its customer base in Malaysia, targeting 3 sectors – power, highway and hospitals.
 
Last year, the company clinched a contract to provide Intelligent Transport Systems (ITS) – to supply and install a traffic control and surveillance system – for a highway project.
 
In March 2017, Willow secured its first contract from Tenaga Nasional Berhad (TNB), for the supply, installation, testing and commissioning of Secondary remote terminal unit (RTU). This bodes well as TNB is one of the biggest users of SCADA systems in Malaysia.
 
It is also expanding its geographical footprint. Willow has a team in Indonesia and most recently set up a subsidiary in Vietnam, to tap the potential in this rapidly growing country.
 
Apart from projects, the company earns some 22% of its revenue from the maintenance of installed systems, a steady income base.
 
Willow has a high Fundamental score of 2.55 of the maximum 3.
 
Its valuation score has fallen to 0.5 from 2.4 at the start of the year following its price run up. This is as it should be – an under-researched company will see valuations rise once investors discover its potential.
 
The stock is now trading at roughly 15 times forward earnings – which is, notably, still lower than that for most solution provider companies listed on Bursa.
http://klse.i3investor.com/m/blog/kcchongnz/120775.jsp
 
 
Willowglen closing price was RM1.28 when the above article by Tong was published. Most solution provider companies listed on Bursa was trading above 20 times earnings. 
Assuming a a fair valuation of 20 times earnings, Willowglen should trade at RM1.70. Without any surprise, the stock price hit RM1.75 in July 2017. Will the stock break RM1.70 again?  
 
 

Newsbreak: Willowglen top choice for RM400m LRT3 job

WILLOWGLEN MSC Bhd and its joint-venture partner Huawei have been selected as the front-runners in the race for a RM400 million communications package in the light rail transit 3 (LRT3) project, say sources.
It is understood that Willowglen and China-based Huawei formed a near-equal partnership to bid for the project.
Prasarana’s board has reviewed the bids [for the communications package] and has recommended Huawei-Willowglen. Its choice has been passed on to the Ministry of Finance for its final approval,” says an industry executive familiar with the matter.
For a bit of background, Huawei acted as the systems integrator, assuming the full scope of the railway telecommunications systems, while Willowglen supplied its core speciality — supervisory control and data acquisition (SCADA) subsystems.
For the LRT3 project, however, Huawei and Willowglen are bidding as partners. If successful, Willowglen will add an estimated RM200 million to its order book. For perspective, its revenue for the 12 months ended March 31, 2017, was RM144.6 million while net profit was RM20.66 million.
The LRT3 job will mark a change in the group’s geographic revenue distribution. Keep in mind that Willowglen has also found success with other local clients. Earlier this year, it won a RM7.82 million contract from Tenaga Nasional Bhd — the country’s largest SCADA user.
On a bright note, Willowglen is sitting on net cash of RM32.9 million and has virtually no borrowings on its balance sheet, which puts it in a strong position to take on the sizeable LRT3 job.

http://klse.i3investor.com/blogs/StevenFong8/148459.jsp