Petronas Gas - Benefits from Natural Gas Hike?

Company : Petronas Gas Berhad

Business :

A gas infrastructure company rather than a pure natural gas selling company. The company has the infrastructure of processing gas, transport gas, LNG regasification and provide utilities to other petrochemical plants. There 4 business units and the summaries are as follow:

 Gas processing

Gas transportation

LNG regasification Terminals

Note: LNG – Gas is cool down for easy transportation. Regasification is turning LNG to gas again.

 

 

Utilities

 

 Good profit margin but very small CAGR in revenue and PAT.

 

10 years revenue record:

Profit margin stable at around 35%.

 

Growth opportunity

• The price is regulated by EC, so no growth even natural gas spike up. See note from the CEO.
• New gas power plants.
• Construction of Cogen plants.
• Building LNG storage tank no.3 in Pengerang (not sure any financial contribution).

 

 

Risk

• No risk business.
• Not even effected by COVID or any lockdown!

 

Dividen History

Attractive and pay dividen every quarter as business is super stable. Total for FY 2021 should be at least 82 cents and potential higher!

 

Technical Analysis on Chart

Not much of fluctuation on price as major shareholders are big institutions.  Any price near RM16 is good to accumulate for its dividen. This is very stable business for the company. Gas is still relevant for many years to come.

 

At time of writing, I don’t have any PetGas share.

Superlon - The Insulation Company

 

Company : Superlon Holding Berhad

Business : Manufacture and sales of insulation tubes, nitrile butadiene rubber for HVAC&R industry. Company also doing trading HVAC&R parts (copper pipes). Products are mainly for export market with factory in Malaysia and Vietnam. See note below. It is a Taiwanese managed company.

 

 

Manufacturing locations

 

Company is in net cash position. However, no growth in CAGR on profit after tax. Small cap company with maximum revenue of RM100 million.

 

10 years revenue

Revenue stagnant at RM100 million and profit margin is declining after FY 2017. It seems that cost is rising up and eroding their margins.

 

Geographical breakdown of revenue as follow:

 

Breakdown of Malaysia revenue.

 

Lates Q1 result:

Q1 result dropped when compared YoY and QoQ. The worst is not over yet as Q2 is from August to October where Vietnam plant has shutdown.

 

 

Prospect:

• Market penetration to Oceania and Africa but not sure the contribution.

 

Risk:

• Vietnam plant shutdown
• Soft global demand
• Raw material butadiene cost – synthetic rubber rising?

 

Dividen:

Dividen is stable as company still have RM20 million cash but will drop. Pay-out ratio is 30%. See dividen chart below.

 

 

 Technical Analysis on Chart

Forming triangle but will take long time before breakout.

 

At time of writing, I don’t have Superlon share. However, it is interesting to know that Cold-Eye is major shareholder of this company.

 

Technical Analysis - Parabolic Curves

 Parabolic Curves

Accumulate (buy) at the bottom of the curve.  Usually 3 steps moving up.

Parabolic Curve - Symmetric

Example : INNOPRISE

Parabolic Curve - Skewed Right

Example: PESTECH

Parabolic Curve - Skewed Right

Example: SCOMNET

Parabolic Curve - ??

Example : LIIHEN

Parabolic Curve - ??

Example : POHUAT

Scientex Berhad - Big Bro in Flexible Packaging

 

Company : Scientex Berhad   

Business:

Manufacture and sales of stretch film and flexible packaging as well as building affordable houses in Malaysia. The company has vision to double the revenue in every five years. So far they doing well to achieve the mission.

Company is in the list of Asia’s 200 best company under a billion by Forbes.

 

 

 

Clear strategy to grow the company and revenue is rising every year.

 

Packaging Division:

Year 2020 has produced 295,000 metric tonnes with 18 new extrusion machines. The nearest peer is Thong Guan who capacity of 150,000 metric tonnes.

 

Factory and sales office location. Products are mainly for export market.

 

 

Property Division:

 

Below is the housing project locations. Quite a few located in Johor. Overall, affordable houses (landed property) enjoy very good take up rate.

 

Latest result:

Q4 seems picking up but Q1 2022 will be affected by FMCO. Property division is doing well despite challenging environment due to various MCO imposed. However, the packaging division revenue is lower which is a surprise as other packaging companies like BPPLAS and Thong Guan are doing well. The main cause is the consumer-based packaging is affected (such as retail). It seems that Stretch Film is performing very well across the whole packaging industry.

 

Cash flow

Cash flow from operation is very strong and bulk of the money is used to purchase lands for future development.

 

Prospect:

• Acquired Daibochi Berhad which has present in Myanmar (Export from Myanmar to EU has lower import duty).
• Open up retail sector that will spur their consumer packaging sales.
• Continuation of land acquisitions in various states such as Johor, Penang and Selangor.
• Very strong take-up rate of affordable houses in Penang, Melaka and Selangor.

 

 

Dividen is stable but not very attractive (lower than bank FD ! ). Company needs money for expansion (buying land and acquire companies).

 

Technical Analysis on Chart:

 

Since bonus issue in Dec 2020, the price has been sleeping. Don’t see any speculation on this counter. Big company is very difficult to move. Hence it is a long long term investment. At time of writing, I don’t have Scientex share yet.