Stock Review – ARANK (7214) (A-RANK BHD)

Bursa Malaysia - 7214

Bloomberg - ARNK:MK
Yahoo - 7214 .kl
Webpage - http://www.arank.com.my/

Company Profile

ARANK is principally involved in manufacturing and marketing of aluminium billets. ARANK is currently the largest manufacturer and supplier of aluminium billets in Malaysia and one of Asia’s leading suppliers of aluminium extrusion billets.

1) Geographical Information

According to annual report 2017, ARANK revenue are from three segments which are

1)  Malaysia – 68.85 %

2) South East Asia Except Malaysia – 20.96 %

3) Others – 10.18 %

ASIAFLE revenue per asset for each segment are as follows:

1) Malaysia – 2.06

2) South East Asia Except Malaysia – 21.73

3) Others – 0.45

CONS: è Most of revenue are from Malaysia however the revenue per asset of Malaysia is must lower than South East Asia Except Malaysia

Financial Statement

ARANK Inventories has increase by 233% from RM 26,861,793 (2016) to RM 62,589,421(2017). The trade and other receivable did not decrease from RM 38,587,651 (2016) to RM 37,968,565 (2017) of which of which RM 3,602,103 or 9.49 had past due and the cash and bank balances had reduce from RM 25,261,913 (2016) to RM 7,751,660 (2017). However by looking at the Quarter 3 2018 unaudited quarterly report below:

As of April 2018, the inventories had reduce from RM 62,589,000 to RM 47,799,000. The trade and other receivable had increase from RM 37,969,000 to RM 48,644,000 and the cash and bank balance had increase from RM 7,751,000 to RM 36,770,000.

PROS:

è ARANK had increase its inventories in 2017 and had sold 23 % of them within July 2017 to April 2018.

ARANK bank borrowing are foreign currency loan denominated in US Dollar.

CONS

è Bank Borrowing denoted in USD.

Financial Ratio

Description	2017	2016	Different
Gross Profit Margin	0.06	0.06	0.00
Net Profit Margin	0.04	0.04	0.00
Interest Coverage Ratio	35.98	37.98	-2.00
Effective Tax	0.18	0.01	0.17

Dividend and Bonus Issued for the past five year

ASIAFLE had constant dividend for the past five year from 2013 – 2017 with the average dividend of RM 0.0266 with the dividend yield of 3.55 % (base on closing price 24 July 2018 RM 0.75).

PROS: è ASIAFLE has dividend yield of 3.55 % which is higher than fix deposit rate of 3.15%

Market Research

None

Estimated Price

IVKLS Price : RM 0.92

Peers

1)   PMETAL

2)   PMBTECH

3)     PRESTAR

4)   ATTA

5)   LBALUM

6)      LYSAUGHT

7)      FACBIND

8)   ALCOM

9)   EMETALL

10) PA

Summary of Stock Reviews

Stock Review – HEXZA (3298) HEXZA CORPORATION BERHAD

Bursa Malaysia - 3298
Bloomberg - HEX:MK
Yahoo - 3298 .kl
Webpage - http://www.hexza.com.my/

Company Profile

HEXZA had involved in property development and manufacturing of chemical product. HEXZA had manufacture formaldehyde resins, ethyl alcohol, natural vinegar and beverage (Enchante).

Major Product:

HEXZA revenue mainly come from one major product which is formaldehyde based resin and ethanol. These product contributed 91.66 % of HEXZA revenue.

Financial Statement

Base on 2016 annual report, HEXZA had increase in other investments from RM 46,824,851 in 2015 to RM 63,725,550 in 2016. The major change in other investments is contributed by share quoted outside Malaysia which is RM 22,295,885 compare to RM 2,540,847 in 2015. Other investment in Myanmar experience delays in lease rental collection.

Besides that, in 2016 HEXZA reported RM 26,787,284 in finance lease receivable. These is due to a sale & purchase and leaseback agreement to acquire part of the equipment for a 8 MW heavy fuel oil power generator system worth USD 6,000,000 (RM 24,168,000) from Tembusu Industries Pte Ltd. The lease commencing on July 1 2015 with a period of 10 years and monthly lease rental of USD 130,205 (RM 524,466).

HEXZA had other receivable which had past due more than 120 days of RM 54,537.

There is decrease in other asset from RM 20,014,468 in 2015 to RM 357,579 because in 2015 there is progressive payment made by Tembusu Industries Ptd Ltd to acquired 8MW heavy fuel oil generator which is RM 19,671,600.

Although the cash and cash equivalent had decrease from RM 62,150,011 to RM 51,417,413, HEXZA managed to increase the interest for the cash and cash equivalent which are:

1) Fixed and Short term deposit from 1.20% - 3.60% in 2015 to 2.25% - 6.00% in 2016

2) Money market fund from 2.82% - 5.05%  in 2015 to 2.75% to 5.55% in 2016.

PROS:

è HEXZA receive monthly rental of USD 130,205 from Tembusu Industries Pte Ltd until 2025 for leasing of 8 MW generator. è HEXZA manage to increase the interest rate for cash and cash equivalent.

CONS:

è 36% increase in other investments contributed by share quoted outside Malaysia. è Other investment in Myamar experience delays in lease rental collection. è HEXZA capitalise the rental receive from Tembusu Industries Pte Ltd which woud overstated it asset. è Having other receivable which had past due more than 120 days of RM 54,537.

HEXZA had no borrowing as of 30 June 2016

PROS:

è HEXZA had no borrowing

Dividend and Bonus Issued for the past five year

HEXZAhad constant dividend for the past five year from 2012 – 2016 with the average dividend of RM 0.046 with the dividend yield of 4.81 %.

PROS:

è HEXZA had average dividend yield of 4.81 % over the 5 year period which is higher than fix deposit

Summary of Stock Reviews

Stock Review – WTK(4243)(WTK HOLDING BERHAD) - 2

Bursa Malaysia - 4243
Bloomberg - WTKH:MK
Yahoo - 4243 .kl
Webpage - http://www.wtkholdings.com/

Annual Report 2016

From 2016 WTK annual report, WTK operates in five major segments as follows:

1) Timber – 79.16 % of revenue

2) Manufacture – 8.71% of revenue

3) Trading – 6.57% of revenue

4) Oil & Gas – 3.52% of revenue

5) Plantation – 1.52% of revenue

The adjusted earning per share on 2015 after the adjustment for non-recurring income (gain on disposal, foreign currency gain and etc) is 9.72 sen compared to 9.13 sen in 2014 (unadjusted). WTK cash and bank balances for 2015 has increase from RM 272,588,000 to RM 352,626,000. Besides that WTK had enough cash to cover all the loan and borrowing with the amount of RM 310,682,000 as reported in annual report 2015.

However WTK has RM 71,214,000 investment in an associate of which RM 53,465,000. The associate company is Alanya Marine Ventures Sdn Bhd which chartering and managing oil and gas exploration support vessels. Base on annual report 2015 the oil and gas sector making revenue of RM 25,545,000 which contributed to 3.52% of the company 2015 revenue. If the associated company can maintain its revenue WTK can get back the premium they paid for the company in about 2 years.

PROS:

è The adjusted EPS for 2015 is higher than the unadjusted EPS for 2014, 6.46% increase. è Cash and bank balance for 2015 has increase by 29.36%. è WTK had enough cash to settle all the loans and borrowing.

CONS:

è WTK has RM 53,465,000 of Goodwill from the purchase of 49% of the oil and gas associate.

Quarterly Report for First Quarter 2016

WTK quarterly report for period end 31 March 2016 show that its cash and bank balance increase to RM 423,949,000 from RM 352,626,000 as report in annual report 2015. However its loan and borrowing had increase to RM 334,349,000 from RM 310,682,000. The increase of cash is more than increase of loan and borrowing. The cash flow from operation is RM 55,602,000 which is about 61.79% of the cash flow from operation for the entire year 2015.

PROS:

è WTK cash increase by 20.23% in just three months. è The cash flow from operation for the three months in 2016 is about 61.79% of the cash flow from operation for the entire year 2015.

Family Tussle

The news from the Edge Malaysia regarding multiple lawsuits between the family member of the late founder of WTK. According to the news report there are 34 ongoing cases. The lawsuits  is about the share in the family private investment arm W T K Realty Sdn Bhd which owned 13.80% of WTK (base on 2015 annual report).

CONS:

è 34 ongoing lawsuits between the board of director.

Summary of Stock Reviews

Stock Review – WTK(4243) (WTK HOLDING BERHAD)

Bursa Malaysia - 4243
Bloomberg - WTKH:MK
Yahoo - 4243 .kl
Webpage - http://www.wtkholdings.com/

Key Value Investor Criteria: -

Description	Value	Criteria	Point
Price to Tangible Book Ratio	0.52*	< 1	5/5
Return on Asset	1.36*	> 0	3/5
Return on Common Equity	3.11*	> 0	3/5
Quick Ratio	1.61*	>1	3/5
Long term Debt / Total Capital	25.13*	<50%	3/5
Continue Dividend over Past 10 Years / Since Inception	Yes	Yes	1/1
Historical Dividend Yield	2.1%	>3%	0/2
Cash From Operation	Positive > 5 years	Positive	5/5
P/E	18.25	10	0/2
Total Point			23/35

Note:

 *            Data obtain from Bursa Marketplace on 14/2/2016

Company Profile

WTK had four major business segments as follows:

1)   Timber (80.92% of 2014 revenue)

2)   Manufacturing and trading (17.96% 0f 2014 revenue)

3)   Plantation (0.56% of 2014 revenue)

4)   Offshore Support Vessel (new business)

1) Timber

This division extract and sale timber, manufacture and sale plywood, veneer and sawn timber. This division have log pond, sawmill in Sarawak. This division start in 2007 and contributed the most revenue to the company in 2014. The top three country which this division export round logs to are India (73%), China (15%), Vietnam (8%). While the major plywood products were Japan (81%), Taiwan (18%).

PROS:

WTK export most their timber product the depreciation of Ringgit Malaysia might benefit the company.

CONS:

WTK export most of the plywood product to Japan. The economy slowdown in Japan might affect the sale of plywood to Japan.

2) Manufacturing and trading

This division manufacturing and trading of aluminium foil. This division just upgraded to comply with FSSC 22000 quality certification for food product packaging this might attract more customers to do business with WTK. The lower on demand for foil and flexible packaging will affect the revenue of the company.

PROS:

WTK is now complied with FSSC 22000 quality certification

CONS:

Lower demand in foil and flexible packaging

3) Plantation

WTK had 11,800 hectares of oil palm plantation but only 1,300 hectares are matured in 2014 annual report. Due to the low FFB and palm oil price these division is making loss in 2014 and up to 3^rd quarter of 2015.

PROS:

WTK have large palm oil plantation which is not mature yet once mature these will increase the revenue of these division.

CONS:

Lower oil price will decrease the demand of oil palm as alternative fuel hence these will decrease the price of oil palm.

4) Offsore Support Vessel

This is a new business for WTK which operating in 2014. From the 3^rd Quarter 2015 financial report. This investment has contributed profit to the company.

CONS:

Lower oil price will affect the customer of this division mainly on Oil and Gas (Petronas).

Financial Statement

From the annual report 2014, WTK had increase the investment in associate from RM 0 to RM 70,377,000. Of the RM 70,377,000, RM 53,465,000 is Goodwill. In the 2014 report there is an increase in other investment from RM 1,312,000 to RM 12,752,000. This is mainly because there is an increase in investment in preference share.

Base on 3^rd Quarter 2015 report, current borrowing for WTK is RM 203,259,000 however WTK had enough cash reserve to cover these borrowing and loan.

PROS:

WTK had enough cash reserve to cover the current borrowing and loan.

CONS:

RM 70,377,000 investment in associate of which Rm 53,465,000 is goodwill.

Director and Shareholder

WTK is a family business run by the Wong family who lead by Pemanca Datuk Wong Kie Yik. Pemanca is a title given by the State Government of Sarawak as a leader just below the Temenggung. He is actively involves in the Malaysia Timber Industry and Chairman of Sarawak Timber Industry.

PROS:

Pemanca Datuk Wong Kie Yik, chairman of WTK is actively involves in the timber industry in Malaysia where the most of revenues of WTK come from.

Summary of Stock Reviews