Why I like MSC and it will be my largest exposure of stocks in 2017

First, I normally don't recommend stocks. But this rare gem really worth our studies. I share with all here the studies I have done and it is for references purposes only and it doesn't serve as any recommendation to buy or sell.

Why MSC-Malaysia Smelting Corp get my attentions?  A few reasons:

1. This stock is owned by one of the most famous value investors-Dr.Neoh.

From annual report 2015, he owns around 1.40%, another famous fund managers-ICAP owns around 2.90%

10.NEOH CHOO EE & COMPANY SDN BERHAD- 800,000 units=0.80%
13.DYNA􀀳UEST SDN BERHAD-600,000 units=0.60%

The shares are easy to calculate as it has share outstanding structure of 100mil exact. From the 2015 Annual Report, Top 30 shareholders had owned around 72.54% of the shares, making most circulating outside in market estimated to be only 27%

2. Most of the investors would have stop digging more once they have seen their results past 2 years. Most of the time it was volatile, and also at the same time in loos making.  Well I would say digging deeper we might understand more of this company.

This company is the second largest Tin producer in world after one in China (MSC is producing consistenly 30,000 Tonnes every year). Tin prices have been volatile since and MSC wrote off huge losses during last 3 years after the political risks surface in Indonesia and their venture in Indonesia was forced to a halt and they have no choice but to write them off.

Some write off still happens in recent quarter, but I think the amount left to be write off are really not that much anymore.

Look at Q2 2016 result, a one-off RM30mil write-off on associates occur.  Without this, the company is actually in profit for 1H 2016.

A further reading under notes, it states as such:

6. Share of results of associates and joint ventures

The Group’s share of results of associates and joint ventures recorded a net share of losses of RM30.53 million in 1H 2016 compared with a net share of profit of RM0.35 million in 1H 2015. This was mainly due to higher share of losses from KM Resources, Inc. arising from the provision of additional prior years tax liabilities

Without such one-off items, we can estimate the EPS to be around RM0.88 per year. Which makes its P/E look attractive at around 4 now.

MSC
Cash	208,028.00						EY	ROC
Receivables	40,930.00						35.6%	76.90%
Inventory	146,870.50
							Div
Total Liabilities	(367,539.00)	(2.3)	Mkt price	Graham Ratio	50.09		-	0.00%
	28,289.50	0.28	3.410	pie	7.08
Cash from Operation	158,000.00		-91.7%	NAV	2.53
Share Outstanding	100,000.00	1.58	341,000,000.00		1.70		Top30%
		46.3%					72.54%
							Butterworth, 40,000tonnes capacity
Borrowing	229,956.00	1.46					30209tonnes
EPS	0.880
P/E	3.88

Its strong cashflows generation of around 79mil YTD is even more fastinating. Making its EY, ROC at marvellous status.

Its liability is manageable with its strong cashflows generation, while the cash yielding is one of the craziest I have seen recent years beside the earlier identified KESM!
It is yielding even crazier than KESM when I notice it. KESM was yielding near 30% when I discover it in 2015 end. MSC is now yielding around 46% and can even be MORE due to recent TIN price rally, coupled with weakening currency of MYR.

3. TIN PRICE rally!
The most fundamental reason I am positive about MSC is due to recent rally in Tin Price.
Look at AR 2015, the company keep good track record on Tin prices for few years as below
Tin prices traded around range of  USD 20,000 actually recent years. But a crash on prices happen in 2015.

Tin price has since recover in 2016. As below for 2016
http://www.mtpma.org.my/index.php/statistic/2014-07-07-04-56-57
It has recently recover to near range of USD 20,000 which is why I am positive on their near future earnings.

OCTOBER 2016 TIN PRICES 

DATE	USD	RM	EXCHANGE RATE	TURNOVER
3	CLOSED	CLOSED	CLOSED	CLOSED
4	20,000	82,520	4.1260	28
5	19,850	82,276	4.1449	45
6	19,880	82,273	4.1385	44
7	20,020	83,243	4.1580	41
10	20,020	83,119	4.1518	58
11	20,050	83,324	4.1558	42
12	19,880	83,271	4.1887	38
13	19,880	83,794	4.2150	30
14	19,600	82,549	4.2117	46
17	19,580	82,686	4.2230	30
18	19,500	82,261	4.2185	25
19	19,800	83,051	4.1945	30
20	20,000	83,602	4.1801	38
21	19,900	83,560	4.1990	44
24	20,050	83,949	4.1870	23
25	20,100	84,028	4.1805	40
26	20,300	84,539	4.1645	53
27	20,500	85,885	4.1895	36
28	20,500	86,182	4.2040	34

Source : The Kuala Lumpur Tin Market (KLTM)

SEPTEMBER 2016 TIN PRICES 

DATE	USD	RM	EXCHANGE RATE	TURNOVER
1	18,900	77,103	4.0795	30
2	19,180	78,379	4.0865	31
5	19,330	78,741	4.0735	35
6	19,300	78,715	4.0785	43
7	19,450	78,996	4.0615	51
8	19,600	79,600	4.0612	25
9	19,600	79,684	4.0655	41
12	CLOSED	CLOSED	CLOSED	CLOSED
13	19,200	78,826	4.1055	28
14	19,150	79,128	4.1320	27
15	19,200	79,286	4.1295	47
16	CLOSED	CLOSED	CLOSED	CLOSED
19	19,200	79,344	4.1325	38
20	19,400	80,316	4.1400	42
21	19,480	80.676	4.1415	55
22	19,400	79,831	4.1150	66
23	19,450	80,163	4.1215	49
26	19,600	81,164	4.1410	68
27	19,600	81,036	4.1345	55
28	19,800	82,051	4.1440	36
29	19,980	82,288	4.1185	30
30	20,080	83,292	4.1480	52

 Source : The Kuala Lumpur Tin Market (KLTM)

AUGUST 2016 TIN PRICES 

DATE	USD	RM	EXCHANGE RATE	TURNOVER
1	17,900	72,146	4.0305	45
2	17,940	72,729	4.0540	43
3	18,000	73,125	4.0625	30
4	17,970	72,752	4.0485	27
5	18,080	73,070	4.0415	32
8	18,350	74,270	4.0474	42
9	18,200	73,444	4.0354	15
10	18,425	73,811	4.0060	31
11	18,550	74,360	4.0086	48
12	18,400	73,744	4.0078	34
15	18,250	73,553	4.0303	50
16	18,250	72,927	3.9960	31
17	18,300	73,182	3.9990	43
18	18,350	73,354	3.9975	26
19	18,430	74,089	4.0200	30
22	18,430	74,319	4.0325	45
23	18,480	74,484	4.0305	38
24	18,600	74,986	4.0315	40
25	18,600	75,032	4.0340	36
26	18,700	75,286	4.0260	26
29	18,700	75,501	4.0375	65
30	18,850	76,390	4.0525	47
31	CLOSED	CLOSED	CLOSED	CLOSED

JULY 2016 TIN PRICES 

DATE	USD	RM	EXCHANGE RATE	TURNOVER
1	17,080	68,115	3.9880	57
4	17,500	69,939	3.9965	45
5	17,930	71,792	4.0040	26
6	CLOSED	CLOSED	CLOSED	CLOSED
7	CLOSED	CLOSED	CLOSED	CLOSED
8	17,550	70,986	4.0448	28
11	17,901	71,362	3.9865	78
12	17,800	71,191	3.9995	41
13	17,990	71,717	3.9865	31
14	17,900	70,825	3.9567	31
15	17,990	71,186	3.9570	56
18	17,940	71,444	3.9824	31
19	17,850	71,195	3.9885	33
20	17,700	71,101	4.0170	45
21	17,900	72,432	4.0465	32
22	17,870	72,695	4.0680	23
25	17,800	72,677	4.0830	36
26	17,800	72,576	4.0773	31
27	17,900	73,082	4.0828	54
28	17,900	72,737	4.0635	28
29	17,900	72,656	4.0590	52

Source : The Kuala Lumpur Tin Market (KLTM)

4. Selling of lands in Penang factory to unlock value??

I read a recent news from the edge daily. There was rumors where MSC might reallocate their smelting factory from Penang state to Klang as the land in Penang could be redeveloped into properties to unlock their values. If this happen, I am not sure if it might impact their temporary functions? But CEO resigning from company is a big warning sign to me. Could it be tussle of wars among Malaysian and Singaporean? Or is there other things? I wouldn't want to do any estimation. But if reallocate did happen will be extra bonus to us.

5. Price recover back past 2-year record at RM4 range?

Look at its price during 2012 when it was trading at RM4.50 high. I believe with no much write off can be further done on associates, its near future result can be very fascinating.

Its investment in associates as noticed in latest quarter result report is RM49.78mil, compared with Dec15 RM84.47mil. MSC, come and write off the balance. So the price can go further down and next year it will boom like mad.

Assuming next yr no more write off, EPS of 0.80 at P/E 10 can easily give it RM8 TP.

Its cash yielding is around RM1.58 per share per year. By that, it should be easily traded at range of RM15-RM18.

In near term using recent latest results, I think it can challenge EPS of RM1, giving P/E 10=TP RM10

EPS RM1 derived from below

30,000 tonnes capacity per year x Avg price per tonnes USD19,000 x MYR 4 x profit margin around 4.5%=RM102.6mil net profit.

S/O=100mil, so easily EPS=RM1 per year. P/E can be even lower near 3 next yr.

EVEN, we are so pessimistic that It will by Maximum goes back only to 2-3 years high of RM4.50 range, it will still give us around 32% return.



YTD 2016 return 38.71%

It is now end of Oct2016, another 2 months to go.
I'm happy with my return so far.

 

Stock Name		Last Price	Change	Shares	Market Value	%	Average Cost	Per Share	Unrealized Gain	%	Day Gain	%
AIRASIA	MYR	2.82	0.00	10,000	28,200.00	20.33%	12,930.79	1.293	+15,269.21	118.08%	0.00	0.00%
FAVCO	MYR	2.47	+0.07	1,900	4,693.00	3.38%	5,222.13	2.748	-529.13	-10.13%	+133.00	2.92%
GKENT	MYR	2.79	-0.03	6,250	17,437.50	12.57%	8,170.24	1.307	+9,267.26	113.43%	-187.50	-1.06%
IWCITY	MYR	0.91	+0.01	10,000	9,100.00	6.56%	10,124.93	1.012	-1,024.93	-10.12%	+100.00	1.11%
KESM	MYR	9.83	+0.05	5,000	49,150.00	35.43%	26,011.77	5.202	+23,138.23	88.95%	+250.00	0.51%
MJPERAK	MYR	0.28	0.00	27,000	7,560.00	5.45%	8,931.30	0.330	-1,371.30	-15.35%	0.00	0.00%
MUDAJYA	MYR	0.995	+0.005	5,000	4,975.00	3.59%	5,916.36	1.183	-941.36	-15.91%	+25.00	0.51%
PRKCORP	MYR	1.90	-0.04	6,000	11,400.00	8.22%	15,998.00	2.666	-4,598.00	-28.74%	-240.00	-2.06%
WTK	MYR	1.12	+0.03	5,000	5,600.00	4.04%	6,617.58	1.323	-1,017.58	-15.38%	+150.00	2.75%
$CASH					590.60	0.43%
Total					138,706.10	100.00%					+230.50	0.23%

The others Top20 as at Sep 2016 not bad as well

1 Kh Neoh http://klse.i3investor.com/servlets/pfs/53986.jsp 29.81%
2 paperplane2016 http://klse.i3investor.com/servlets/pfs/54177.jsp 28.33%
3 nicholasnwh90 http://klse.i3investor.com/servlets/pfs/54000.jsp 27.04%
4 Up_down http://klse.i3investor.com/servlets/pfs/53985.jsp 25.52%
5 Tan KW http://klse.i3investor.com/servlets/pfs/53892.jsp 25.42%
6 boon1515 http://klse.i3investor.com/servlets/pfs/53988.jsp 22.05%
7 gohkimhock http://klse.i3investor.com/servlets/pfs/54474.jsp 22.02%
8 nam79 http://klse.i3investor.com/servlets/pfs/53979.jsp 19.55%
9 mrk2ca http://klse.i3investor.com/servlets/pfs/54494.jsp 15.96%
10 jester http://klse.i3investor.com/servlets/pfs/53896.jsp 14.38%
11 yeekarwai88 http://klse.i3investor.com/servlets/pfs/53980.jsp 13.97%
12 duitKWSPkita http://klse.i3investor.com/servlets/pfs/53908.jsp 11.67%
13 Tee Tom http://klse.i3investor.com/servlets/pfs/54181.jsp 11.30%
14 CFTrader http://klse.i3investor.com/servlets/pfs/54921.jsp 9.01%
15 Mr. M  http://klse.i3investor.com/servlets/pfs/53998.jsp 5.38%
16 alpha investor http://klse.i3investor.com/servlets/pfs/54001.jsp 5.07%
17 jjunie http://klse.i3investor.com/servlets/pfs/53990.jsp 4.48%
18 noobnnew http://klse.i3investor.com/servlets/pfs/53977.jsp 4.21%
19 YiStock http://klse.i3investor.com/servlets/pfs/54243.jsp 4.17%
20 NOBY http://klse.i3investor.com/servlets/pfs/54689.jsp 3.80%

冷眼前辈的新著<孙子股市兵法>

推介礼回味+热身 - 水星
关于冷眼前辈的新著<孙子股市兵法>推介礼的进一步消息,相信今天大家都从南洋的报章知道了,将于 11月5日9.30am-12.30pm假南洋商报总社礼堂举行, 讲题为<乱像中求突破>,和当下的股市局势很贴切,报名方式是SMS到013-3678960, 不过网友目前的回应是sms了没反应,不懂算是报了名没有?还是最终会像上次的推介礼一样很多人站着完场? 想知道的话, 最好还是自己打个电话去求证吧.

距离上次2011年6月的新书推介礼已有5年的光景, 当时有人在网络上分享了该次推介礼的录音, 真的非常感激他的用心, 让别人也可以受惠, 在这里分享他提供的下载链接冷眼新书推介礼2011年,  让大家在最新的推介礼来临之前, 先回味冷眼上次的分享.

水星熊今天刚试过再次下载, 还是没问题, 原本想直接把为时约30分钟的录音直接上截在此让大家一按就可以听到, 奈何file的容量超过限制, 加上format不对, 再加上自己是IT白痴, 所以无法做到, 还有劳大家自己download.

除了这段正式演说的分享, 也有一些观众问答环节的段落录音, 不过不齐全, 而且大多问题集中在当时的个股评论, 参考价值不高, 就不在这里多言了.

当年已经72岁的冷眼常自嘲自己讲来讲去都是一样的东西, 录音里也有再次提到这点, 但他并不以此为羞而是以此为荣, 证明自己的投资主张没有变过, 怎样写就怎样做. 不懂得来到2016年这次他77岁的分享内容会否也和往常的大同小异? 打算到现场的人不妨做个比较.

上次推介礼分享内容中, 其中一些比较特别的趣事/重点摘要:

~冷眼年轻时身体很差, 现在反而几乎天天都去游泳, 每天来回20趟 (运动和健康很重要)

~股票投资想跑到最后,知识重要, 资金重要, 但最重要最重要的, 是正确的投资概念和哲理.

~冷眼从不掩饰自己打工仔的身份, 从打工仔做到财务自主, 期间曾任职过总编辑, 业务顾问等高职,  退休前的薪金为一万五千元, 别说当时, 即使是以现代水平来比较, 也算是位打工皇帝, 即使如此, 他还是坚持说, 单靠薪水真的没用, 必需懂得投资.

~ 冷眼分享心得的路程中, 也有讲/写得灰心失意的时候, 因为听的人很多, 做的人很少, 可能一星期后就忘了他的内容, 然后继续地投机, 在他太太的鼓励下, 体会到我们不可能100%帮助到所有人,100个听的人当中, 有10~20个最后能够成材, 就已经算是功成身退了. (这段话很想和所有投资理财部落客共勉)

~有 一次和编辑有误会, 结果对方不小心把自己拥有101万股某公司股份的消息公诸于世.

~ 股市虽然龙蛇混杂, 但正经做生意的老板还是比较多, 要从一千多家公司选到三几个好的长期持有总不是难事.

~ 冷眼认为他自己也是没什么耐性的人, 虽然知道长期持有才是王道, 但很多时还是忍不住”只”持有了三五年就卖出手持的股份, 他说如果他更有耐心地持有一些公司的股份, 其实不必做到至今他所做的那么多功课也可以赚到至今他所赚到的钱. (持有三五年也是”只有”而已, 佩服).  谈到这点时他也有提起书中写过的内容, 某位做教师的妈妈以2千元买进1千股大众银行给刚出世的孩子, 最后变成70万的故事.

~冷眼也”心水清”知道怀着来拿tips心态而来的人不少, 他也大方说可以给tips,只是他给的很可能都是在一般人眼中涨得很慢的公司, 别听了他介绍买了两三的月后还没有动静就回来咒骂他.

~选股的标准, 除了盈利成长, 最好也有股息, 少负债,价格合理. 买到好股是可以不花心思少管理,甚至不再打算卖, 但前提必需是盈利可以维持成长, 否则就不能留恋地卖出, 因为和股票可以同甘但不可共苦.     

以上只是一些自己觉得有趣/搞笑的摘录, 其实还有很多值得一听的内容, 所以,可以的话, 大家还是花个半小时, 亲耳听听冷眼他风趣的分享吧,当成是为下个月的推介礼热热身.

另外, 也真心希望来着的这次推介礼,也有有心人能够录音分享, 让在外地无法到场的书迷也可以一”听”为快, 感恩万分

The Oil Market is Bigger Than All Metal Markets Combined

Ever since the invention of the internal combustion engine, oil has been one of the most crucial commodities on Earth. Without it, modern transportation as we know it would not be possible. Industries such as aviation, aerospace, automobiles, shipping, and the military would look nothing like they do today.

Of course, as we now know, this has all come with some extreme drawbacks from an environmental perspective. And while new green technology and the lithium revolution will aid in eventually reducing the role of oil in transportation, the fact is we still use 94 million barrels per day of crude worldwide.
As a result, the energy industry continues to have huge amounts of influence on our lives. Special interest groups with a focus on energy have influence on a domestic level. Meanwhile, from a foreign policy angle, countries like Saudi Arabia and Russia wield additional geopolitical and economic power because of their natural resources. It’s even arguable that everything from the Gulf War to the more recent Middle East interventions in Libya, Syria, and Iraq have been at least partially to do with oil.
This week’s chart of the week aims to help explain the influence that oil has on countries and markets by using a very simple perspective: the size of the oil market vs. all metal markets combined.

The True Size of the Oil Market

While the amount of uses in one barrel of oil is quite incredible, we still need a mind-boggling amount of the natural resource each year to sustain consumption.

Oil production per year: 34 billion barrels (incl. other liquids)
Oil market size at current prices: $1.7 trillion per year
To consider how big this actually is, we compare the annual market sizes of all major metals and minerals that are mined throughout the world:

• Gold: $170 billion
• Iron: $115 billion
• Copper: $91 billion
• Aluminum: $90 billion
• Zinc: $34 billion
• Manganese: $30 billion
• Nickel: $21 billion
• Silver: $20 billion
• Other metals: $67 billion (Including platinum, palladium, titanium, tin, moly, uranium, and more)

The total amount works out to $660 billion – just a tiny fraction of the size of the oil market.
Note: we focus on raw, physical materials in this analysis. We leave out things like gold futures, or alloy markets such as steel in this analysis. To get market size numbers, we used the latest price multiplied by 2015 demand in most cases. We left out the smaller markets for many other metals like bismuth, antimony, or rhodium. Exact sources can be seen in the chart itself. Oil market size includes other liquids such as lease condensate.

The Returns of Every Asset Class So Far in 2014