myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Tuesday 12 September 2017

Pentamaster’s PIL valued at RM321mil

Proposed IPO in Hong Kong involves sale of 23% stake in the unit

StarBiz
12 Sep 2017

PETALING JAYA: Pentamaster Corp Bhd is planning to list its most profitable subsidiary, valued at RM321mil, on the main board of the Hong Kong Stock Exchange to raise funds for the expansion of its smart home applications and Internet of things (IoT) business.

The proposed initial public offering (IPO) involves the sale of a 23% stake in Pentamaster International Ltd (PIL) to investors at a price to be determined at a later date, the company said in a filing with Bursa Malaysia. Pentamaster owns 92.6% of PIL.

The share sale will reduce its stake in the unit, which generated all its profits in the financial year ended Dec 31, 2016, to 63%.

Pentamaster will be required to seek its shareholders’ approval in a general meeting for the proposed dilution.

The IPO exercise is expected to be completed in the first quarter of next year.

“The proposed listing will provide the company and its automated solutions business with a diverse fund-raising platform in the future, which, in turn, will increase its financing flexibility to fund its future growth,” Pentamaster said in the statement yesterday.

The company said the offer price for PIL would be determined at a later date.

Pentamaster had announced the plan to spin off its unit in June this year. The planned fund-raising scheme had helped propel the stock 250% higher this year at yesterday’s close of RM4.73.

At this level, the company has a market capitalisation of RM693mil.

The valuation for PIL was ascribed by McMillan Woods Partners in Singapore.

McMillan Woods was appointed as the independent valuer to provide its valuation on the fair market value of the PIL Group to the board.

Pentamaster said it intended to use the proceeds from the share sale exercise to pay for future expansion of the group’s smart building solutions or building management system, and/or property development projects applying such solutions and system, as well as the IoT solutions with applications covering digital mobile software, payment gateway, secured software and/or building construction applications and solutions.

In addition, the fund will be utilised for technology-related investments in business applications covering healthcare, bioscience, aviation, information and communications technology, finance, social environment, energy and infrastructure.

The proceeds will also be allocated for working capital to carry out the new initiatives, including research and development, the hiring of employees, marketing and administrative expenses.

Meanwhile, the net proceeds to be raised by PIL from the public issue of new shares are proposed to be utilised for capital investment and costs in relation to the construction of a new production plant in Batu Kawan Industrial Park, Penang, and the expansion of its existing production plant in Bayan Lepas, Penang.

The net proceeds will also be used for working capital, business expansion into the Greater China region (comprising China, Hong Kong, Macau and Taiwan), the establishment of an office in California in the United States, as well as for marketing, branding and promotional activities.

The details of the proposed listing, including the size and structure of the proposed share offer, the offer price and the amount of proceeds to be raised, will be determined at a later date upon approval being obtained from the Hong Kong Stock Exchange, closer to the launch of the prospectus of PIL and after taking into account the prevailing equity market and industry conditions in which the PIL Group is operating.

Pentamaster, which closed 0.4% higher at RM4.73, traded on a volume of 405,000 shares.

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Pentamaster to list automated solution arm on HK exchange

PETALING JAYA: Pentamaster Corp Bhd (PCB) proposes to list its automated solution business, Pentamaster International Limited (PIL), on the main board of The Stock Exchange of Hong Kong Ltd (HKEX).

While the exact details of the proposed listing, including size and structure of the proposed share offer, the offer price and amount of proceeds to be raised, are yet to be determined, PBC did say that its equity interest in PIL is expected to reduce from 92.60% as at Aug 30, 2017 to 63.10% upon completion of the exercise.

The entire exercise comprises of a share award scheme for eligible employees of PIL and its subsidiaries; proposed listing of the PIL and proposed dilution of PCB’s equity interest in PIL.

Profit after tax attributable to owners of PIL amounted to RM17.77 million for the financial period ended June 30, 2017.

The proposals are subjected to approvals being obtained from the shareholders of PCB at an EGM to be convened.

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Pentamaster to inject 3 units into Hong Kong-bound arm

Author: moneyKing | Publish Date: 18 Jul 2017, 10:07 AM

Wong Ee Lin/theedgemarkets.com
July 17, 2017 21:43 pm MYT

KUALA LUMPUR (July 17): Pentamaster Corp Bhd plans to inject three of its automated solution subsidiaries into Pentamaster International Ltd (PIL), which it intends to list on the Hong Kong Stock Exchange.

The three wholly-owned subsidiaries are Pentamaster Technology (M) Sdn Bhd, Pentamaster Equipment Manufacturing Sdn Bhd and Pentamaster Instrumentation Sdn Bhd.

The three units will be injected into PIL for a collective RM86.78 million, which will be satisfied via the issuance of 999 PIL shares to Pentamaster.

"The internal reorganisation will facilitate a more efficient group structure by way of promoting a better segregation of business responsibilities and operations for Pentamaster’s existing automated solution business and its other smart control solution system business," said Pentamaster in a filing with Bursa Malaysia today.

"This will in turn enable the management of the automated solution business and smart control solution system business to efficiently allocate resources and focus on their respective businesses.
"In addition, the internal reorganisation will also facilitate PIL to act as the listing entity for the proposed listing," it added.

Following the internal reorganisation, Pentamaster will proceed to dispose of a 7.4% stake in PIL to Singapore-based private equity fund GEMS Opportunities Limited Partnership RM25.5 million.
The proposed disposal is expected to result in a gain on disposal of RM19.08 million.

Pentamaster said it intends to use the proceeds from the proposed disposal for expenses in relation to the proposed listing, to repay borrowings, for staff and other general administrative and operating related expenses and sales and marketing expenses.

The disposal consideration of RM25.5 million in PIL represents a price to earnings (PE) multiple of 10.4 times to the audited combined net profit of Pentamaster Technology, Pentamaster Equipment and Pentamaster Instrumentation of RM33.14 million for the financial year ended Dec 31, 2016.
The PE multiple falls within the range of the high (17.96 times) and low (6.45 times) of Pentamaster’s traded PE multiple for the past 12 months up to the date of this announcement.
Barring any unforeseen circumstances, the proposals are expected to be completed by the third quarter of 2017.

In June, Pentamaster announced that it is pursuing a separate listing for its automated solution business in Hong Kong.

Pentamaster shares closed down eight sen or 2.13% to RM3.68 today for a market capitalisation of RM539.37 million.

http://www.theedgemarkets.com/article/pentamaster-inject-3-units-hong-kongbound-arm

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Pentamaster to gain RM19mil from sale of 7.4% in PIL
CORPORATE NEWS
Monday, 17 Jul 2017

KUALA LUMPUR: Pentamaster Corp Bhd

, which seeks to list its automated solution business in Hong Kong held under holding company Pentamaster International Ltd (PIL), is selling a 7.4% stake in PIL to GEMS Opportunities Ltd Partnership for RM25.5mil.

In a filing with Bursa Malaysia, Pentamaster said it stood to gain RM19.08mil from selling the equity interest in newly-incorporated PIL to GEMS, a Singapore-based private equity fund.

Pentamaster had on Monday signed agreements to transfer its entire equity interest in three wholly-owned subsidiaries involved in the automated solution business to PIL and, afterwards, to sell 7.4% equity interest in PIL to GEMS for RM25.5mil in cash.

It said the internal reorganisation would lead to a more efficient group structure separating PCB’s existing automated solution business and its other smart control solution system business.

Besides for raising funds, Pentamaster said its proposed disposal of PIL shares to GEMS would broaden PIL’s shareholder base by exposing it to international institutional investors.

It added that GEMS’ positioning as strategic investor of PIL, coupled with fund manager GEMS Capital Pte Ltd’s extensive investment experience and network, would add value to the proposed listing.

On the use of the RM25.5mil proceeds, Pentamaster said the bulk - RM15mil - would go towards paying the listing expenses while RM7.5mil would be for repaying bank borrowings.

Read more at http://www.thestar.com.my/business/business-news/2017/07/17/pentamaster-to-gain-rm19mil-from-sale-of-7pt4pc-in-pil/#HcHdSuczADQuAwPX.99

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Pentamaster eyes HK listing of automated solution business
CORPORATE NEWS
Tuesday, 13 Jun 2017

KUALA LUMPUR: Pentamaster Corp Bhd is pursuing a separate listing for its automated solution business in Hong Kong.

In a filing with Bursa Malaysia, the company said it had appointed advisers for the purpose of listing the business on the main board of the Stock Exchange of Hong Kong Ltd, including financial advisory firm Altus Capital Ltd as the sponsor.

It said the automated solution business would gain recognition and corporate stature through having its own listing status, hence allowing it to expand of its customer base.

The proposed listing is also expected to enhance efficiency by way of promoting a clearer segregation of business responsibilities and operations for Pentamaster’s existing automated solution business, thereby enabling the respective management teams to focus on opportunities specific to each of the automated solution business.

Pentamaster said the proposed exercise would also unlock shareholders’ value and provide the company and its automated solution business with a diverse fund-raising platform in the future.

The group has three operating segments: automated equipment (its biggest revenue and profit contributor), automated manufacturing solution, and smart control solution system.

“Prior to the completion of the proposed listing, Pentamaster will undertake a reorganisation of its subsidiaries involved in the automated solution business and these subsidiaries will continue to remain as its subsidiaries on completion of the proposed listing,” the company said.

It said a detailed announcement would be made in due course after it had finalised and approved the structure of the proposed listing.

To facilitate the proposed listing, Pentamaster has applied to incorporate a wholly-owned subsidiary in the Cayman Islands, namely Pentamaster International Ltd (PIL), on Monday. PIL’s principal activity is that of investment holding.

Pentamaster said the board wished to highlight to its shareholders that the proposed listing was at a preliminary stage and fairly extensive preparatory work was required and that such preparatory work might involve an uncertain time frame.

“Shareholders should note that the proposed listing may or may not materialise,” it said.

The company noted that the exercise was subject to, among others, satisfactory due diligence and assessment of suitability for listing by the Hong Kong sponsor and other professional advisers, approvals being obtained from the relevant authorities in Hong Kong and Malaysia (where required), as well as the shareholders at an EGM to be convened.

In addition, the proposed listing depends on assessment of other factors such as general economic and capital market conditions.

Read more at http://www.thestar.com.my/business/business-news/2017/06/13/pentamaster-eyes-hk-listing-of-automated-solution-business/#mSKS5z4zH64Mv8QA.99

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Tuesday 12 September 2017

Pentamaster’s PIL valued at RM321mil

Pentamaster’s PIL valued at RM321mil

Proposed IPO in Hong Kong involves sale of 23% stake in the unit

Pentamaster to list automated solution arm on HK exchange

Pentamaster to inject 3 units into Hong Kong-bound arm

No comments:

All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

Interesting Blogs