THIS COMPANY HAD +130% IN SHARE PRICE WITHIN 3 MONTHS, HOW FAR CAN IT GO?
What do you seek in investing in a company?
Is it Dividend? Capital Gain?
Well, ultimately every single investor just wants to maximize their return at a level of risks that they are comfortable with. Most investors, however, are overly risk-adverse or risk-taking. It is extremely hard to strike a balance in between.
But if you are one of those risk-taking guys who are keen to aim for > 100% return, you had come to the right place. This company that I’m going to share with you is being underestimated by most investors – including mainstream medias. This undervalued gem is Pimpinan Ehsan Berhad (“PEB” or the “company”).
In hindsight, you would not find anything interesting about the company itself as it is an empty shell where Bursa has categorized this company as “Cash Company”, and PEB had been tagged as a PN 16 company. To those who are new to the term, PN 16 is merely a grouping by Bursa for companies who do not have a core business or major revenue contributor after disposing their core business. PEB is one of the greatest examples of all.
Now, PEB is having a war chest of RM70.3 million ringgit in cash in the company, pending for potential expansion plans. But what’ so special about a company sitting with a pile of cash?
BUT! A huge but for this company is, PEB is undergoing a reverse takeover (“RTO”) exercise by reNIKOLA group of companies. I do not want to bore with the corporate structure of this company, but PEB is going to go big after the RTO.
The newly injected “assets” are extremely valuable in my personal experience and based on market valuation in its peers. Upon completion of the RTO, PEB will be one of the largest solar renewable energy players in town. You heard me right – LARGEST SOLAR RENEWABLE ENERGY PLAYER.
The term “solar” and “renewable energy” is so hot in the market that, two newly listed companies in 2020 had transformed into multibaggers in a year of time. I do believe you know who are they, right?
Nevertheless, I must stress that PEB is different from the said solar companies. Imagine if the said solar companies are contractors, then PEB is the “developer & asset manager” in a property sense. In fact, PEB is the operator of solar farms that would be constructed by these companies.
Had you noticed that our country is going green?
It is not just “our country”, but the trend is on a global scale. Energy sector is transforming from the traditional coal fire electricity generation to renewable energy generation to reduce carbon emission to prevent further global warming. I like heat, but not in this way!
Factually, PEB currently had 3 in-operation solar photovoltaic plant on hand. The capacity of these plants is 5 MWp, 38 MWp and 45 MWp, respectively. How big is one MWp? An average household would consume approximately 20 kWh per day, and a 10 MWp solar power farm could translate into 14.9 GWh in power for household consumption.
In short, 1 kWh = 0.00000010 GWh. You can do the math.
reNIKOLA group of companies are having a total of 88 MWp of solar assets on hand and another huge solar farm of 330 MWp in capacity in the pipeline. Now do you see the potential of this company?
However, these assumptions are made on a successful RTO of PEB. Can it really be successful?
By no means I’m the seer in stock market. But rationally, the ultimate owners of reNIKOLA had purchased up to 66% of ownership in PEB with their cash. If you are the owner, would you let the deal fail?
I believe not.
Hence, PEB’s RTO case is almost, indefinitely in the bag. Based on the company proposed timeline, the company should have a proper signing of share sales agreement (“SSA”) latest by June. How does that affect us?
I had mentioned that PEB could potentially give a 100% or more in return, right? To achieve that, the company MUST complete the injection of assets by issuing new shares. The market is currently valuing this company with a cash of RM70.3 million ringgit on hand at a total market capitalization of RM 111.0 million ringgit. I bet you couldn’t find any deal as such in the market!
Everyone is waiting for the valuation and dilutive effect of reNIKOLA to be finalized. But let me ask you this – if an information is public, how are you going to benefit from it?
You simply can’t.
This is why, buying PEB now is a potential risky move; but at the same time you could build a position in the company before the market knows about it. Do bear in mind the 66% of the shares are in the new management’s hand. They could not dispose it without making a public announcement, and as you can see from the chart, the share price is consolidating. What does this mean?
It means, someone is collecting PEB’s shares quietly.
If you cannot beat them, simply join them. PEB is one of the rare case where there is still opportunity to double due to lack of knowledge by the general public on the company.
Now, it is up to you to decide.
Do you want to chase after the share price when it spiked a 30% - 50%, or would you like to allocate an acceptable amount of capital for a potential 100% return investment?
I will leave the final decision to you.