CHANGE OF NAME AND CHANGE OF NEW OWNER, SOMETHING’S BREWING?
As at 19th February 2021, Cymao Holdings Berhad had officially changed its name to Annum Berhad (5082). Prior to the name change, we had seen Dato’ Sri Chin Kok Foong and Dato’ Sri Liew Kok Leong had invested into the company heavily. What exactly is brewing behind this company?
From the graph shown above, we could clearly see a temporary consolidation in share price for ANNUM. CYMAO had recently, together with a Memorandum of Understanding with Billion Apex Sdn Bhd had awarded these 2 parties for a contract worth of RM 120 Million. Majority of investors or “goreng kaki(s)” would focus on ANNUM at this juncture. But me, as a long-term investor would choose to focus on Ageson Berhad (AGES) instead. Why?
1. Ultimate winner of the awarded contract
Ultimately, AGES will be the one winning from the mixed development project issued to ANNUM and BASB. This is because we are seeing a strong recovery in the property sector now interms of real sales – which would translate onto AGES’s profit and loss statement directly.
Moreover, with steel and cement price on a uptrend due to sluggish supply and additional demand from China, the costs of construction would be high and it would impact the construction company. Hence, property developer cum construction player would be a much better choice of investment under this circumstance.
2. Solid fundamentals
Property developers, main contractors and sub-contractors are all subjected to progressive billing to account for revenue and net profit. One might think that all these companies’ activities are halted during the Movement Control Order (MCO), this might be true for most of the players in the sector – but not for AGES.
In financial year ended 30th June 2020, the company had reported a net profit of RM 10.3 & RM 17.3 Million for 3rd and 4th quarter respectively – which is really impressvie!
What’s more – AGES did not “just” profit. They are maintaining a high profit margin of 20% - 25% on average. This had greatly proven the management’s competency and high efficiency of the company’s business!
3. Issuance of ICULS
Most investors think that ICULS is bad for the company. Yes, ICULS would potentially dilute the earnings per share of the company. However, if the company were able to utilize the funds to enhance the profitability of the company, do you think it was a mere dilution or added bonus to the company?
Fortunately, another investor had shared good info about ICULS here. You can view the article over here.
4. Trend is always your friend
Upon talking to several dealers and remisiers friend of mine, I had confirmed fund managers are in talk with construction and property companies now. Based on my knowledge, AGES should be approached by several fund managers to purchase their shares before the issuance of ICULS.
Most of the time, investment requires detailed analysis of a company. However if we ride on the right trend, this could shorten our investment horizon and we could re-deploy our capital quicker from the profits. Why not leverage on the current construction and property trend, on this undervalued single digit PER counter?
To summarize, I think AGES is the company that truly “has something brewing”. The current price of RM 0.135 is extremely safe to buy in. If you would like to ride on the trend, do not miss this once in a cycle opportunity!