Re: KSeng Bonus Issue Plus Special Dividend !
« Reply #59 on: January 24, 2011, 02:08:43 AM »
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 This article had been out quite sometime back & I need to rekindle members interest here again .....wonder if any members are still interested in this counter now.......please read it out & figure it for yourself. 
KSeng poised for a bullish breakout
KSeng had rallied strongly over the past one year. The main reason for this rally was various articles or reports that valued KSeng at RM17.00 or more. One such article is "Time for Keck Seng's value to emerge" which appear in the March 8 issue of the Edge newsletter. Since the publication of that article, KSeng has ceased to rise & instead it has been consolidating in an "ascending triangle" .
Yesterday, it went to an intra-day high of RM6.15 but closed at RM6.09- just shy off the upside breakout level of RM6.10. This morning, Kseng again went above the RM6.10 breakout level- going as high as RM6.14 before pulling back to the present price of RM6.09 (as at 10.40am). KSeng's yesterday move was on big volume but the volume has dwindled substantially.
If KSeng can break above the RM6.10 level, it could rally significantly in a technical 'blue sky' scenario. KSeng's share price could potentially go as high as RM10.00-20.00. This target is arrived at by adding the trading range (A) to the breakout point (RM6.10). If we based on a logarithmic chart, the target price could be about RM15.00-20.00 (such as the one below). If we used a linear chart, the target price is about RM9.70-10.00.
hxxp://nexttrade.blogspot.com/2010/10/ksen...h-breakout.html
And to those who miss the article "Time for Keck Seng's value to emerge", here is it......sound too good to miss.
QUOTE
Time for Keck Seng’s value to emerge
Written by Yong Yen Nie
Monday, 08 March 2010 00:00
Keck Seng (Malaysia) Bhd, a low-profile oil palm planter and property developer, may be ripe for a higher dividend payout given that its reserves have been building up, analysts say.
Keck Seng is a cash and assets-rich company. As at Dec 31, 2009, the group was sitting on a cash pile of RM332.6 million with zero gearing. Its reserves stood at RM951.9 million as at Dec 31, made up mostly of retained earnings. It also had high unutilised tax credit of RM427.6 million to be franked as dividends before end-2013.
However, executive director Lee Hwee Leng says the group has accumulated a huge cash pile for several years now, as it is waiting for acquisition opportunities. “Given the uncertainty in the global economy last year, we wanted to wait for the right time before we embark on acquisitions of properties and land,” she tells The Edge in a rare telephone interview.
Nevertheless, Lee declines to reveal if Keck Seng will make any acquisitions this year. She says that as Keck Seng has until 2013 to utilise its tax credits, the group is not in a hurry to unlock the dividend income to its shareholders.
Analysts believe Keck Seng’s real value may begin to emerge from this financial year onwards, thanks to the compulsory disclosures of the market value of its financial assets beginning this year.
Keck Seng, which has a sizeable share investment portfolio, benefited strongly from the improvement in global equity markets with income from share investments increasing 62.3% q-o-q to RM37.8 million from RM23.3 million in 4QFY2009.
But there may be more to come. Under the Financial Reporting Standard 139 (FRS 139) that has been effective since Jan 1 this year, public-listed companies are required to fair value their equity investments and reflect unrealised gains or losses in quarterly financial statements.
A glance at Keck Seng’s 4QFY2009 notes accompanying its financial results show that although the total book value of its quoted securities is RM245.4 million, the market value as at Dec 31, 2009, stood at RM672.7 million. This translates to 2.74 times surplus over its book value, or an increase in net assets of RM1.78 per share.
However, up to FY2009, the market value was only disclosed as part of the notes to accounts and not reflected yet in its net asset value.
It is learnt that Keck Seng has interests in various local and foreign companies, including a 3% stake in Singapore’s Parkways Holdings Ltd, a 0.4% stake in PPB Group Bhd, a 3.04% stake in Chin Teck Plantations Bhd and a 1.1% stake in Shangri-La (Hong Kong) Ltd. Keck Seng is not required to disclose its interests in companies if its shareholding is below 5%.
An analyst says that based on calculations that incorporate the market value of share investments, Keck Seng’s NAV per share will balloon to RM6.76 from RM4.98 currently. The stock closed at RM4.14 last Thursday, below its NAV per share.
Keck Seng’s Lee says the group’s NAV will reflect the fair value of its share investments in the 1QFY2010 financial results, which will be announced in May. She says the impact will depend on the classification of its share investments, which the group’s auditors are still working on.
Should Keck Seng’s share investments be classified under “held for trading”, the unrealised gains or losses on the investments will be reflected in its income statement. But if they are held under the available-for-sale portfolio, it will impact the group’s balance sheet.
Lee declines to comment on the classification of the company’s share investments, but says they are held for the long term.
However, an analyst says that whether or not the quoted securities are parked under “held for trading” or “available for sale”, the impact will be reflected in Keck Seng’s net assets.
Additionally, the new estimated NAV does not take into account the market value of Keck Seng’s investment properties and landbank.
“We may only revalue some of the landbank in the first quarter, hence the impact on the NAV may not be as significant,” Lee says, reflecting on the group’s conservative outlook.
Keck Seng is still using the cost method to value its landbank and properties, but when the land is developed, the group will have to fair value the land to market prices.
According to its FY2008 annual report, the group’s land for agriculture and housing development, with various parcels in Johor, have not been revalued since 1980.
The book value of the land stood at RM147.7 million as at Dec 31, 2008, but conservative estimates show that the parcels of land could be valued at more than RM2.46 billion, representing a surplus of RM2.3 billion, an analyst says.
Based on estimates and recent transactions, should Keck Seng’s entire landbank, properties and equity investments be revalued, it can lead to a revised NAV per share of RM17.10, or an absolute amount of RM4 billion — a far cry from the RM4.98 as at Dec 31, 2009, she notes
However, few take note of Keck Seng’s strong balance sheet, as it is not required to revalue its properties and landbanks according to market value unless it plans to sell or develop them.
“Keck Seng has not unlocked the value of its assets, hence it does not create the excitement that it ought to among investors,” an analyst says.
Another analyst says the group’s dividend payout is also not impressive, given that the payout ratio for the past three years range from 25% to 30% of net profit.
Keck Seng could still generate excitement this year, especially as the time to unlock potential draws near. |
