EDEN (7471) - If you suck in stock investing, read this to understand why
Today, I am going to share with you another one of my secret on how I do my market analysis. As you would know, the market had 2 general analysis - Fundamental Analysis and Technical Analysis. But as for me, I always go beyond Fundamental and Technical Analysis, because I believe that in order to out perform the market, there are much more stuff required to learn. To me, one of the most important factor is the study of Psychological effect towards human being in reacting to news and it's underlying intention.
As you would see, if you are able to crack this great code, you will definitely be at the upper hand because you are able to analyze a market event different from the others, which is the herd.
One of my biggest reveal in the market is being the "Secret behind the Take Over Offers". You could had read a lot of investment journal, investment and trading courses, Warren Buffet books, Peter Jack or Jill trading strategy and etc... But I have to tell you that you will be in no where at any corner of the world that gave you a free education on cracking the secret behind take over offers.
If you had been reading my article and journal word by word, you will notice that I had teach you how a Take Over Offer without intention of delisting the company will result in the company share price doubling up from the take over price. Not even any prominent investor, trader, guru in the world would had taught you this, but only me, and giving you for free.
Plenty of example of take over offer, and share price doubling up. For instant, Euro, Denko, Halex, Gwplast, Iwcity, Alcom. You can check them out on your own as your own research. Of course, when REX (take over RM 1.65) goes to RM 3.30 in the coming future, then my basket will add in another proof of event.
Today, I am going to release another secret weapon of my analysis to you - FOR FREE AGAIN!!! But if you think I am putting up another BS talk, and thinking that Free stuff is never good stuff, then for goodness sake, you can close the browser and don't let me poison your mind. I have to tell you my poison is highly toxic, and will poison your investment mind forever. Haha..
Now, I am going to teach you, how to see beyond a bad news, which is actually a good news. As usual, I will give you a good example of this case for your understanding.
I am going to study the case of Masteel with you.
As you can see, during the year 2015, Masteel had a shocking event that put great fear on investor. That event is a delay in submission of financial report, which had resulted in the counter being suspended for 3 months. As a company running more than 10 years, suddenly slapped with trading suspension because of delay in submission of financial report ??? Weird, funny? I don't know.
Honestly, there hasn't been much change in the fundamental of the company, but the effect of the counter being suspended for 3 mths trading due to delay in submission of financial report is loud enough a story to shake up the weak investor. Adding salt into wound, the period of 2015 to 2016 is the year where Malaysian equity market are suffering, especially from weakening exchange rate and exit of foreign funds. The share price drop 60%, from 90 cents to trade at 35 cents.
But now, 2 years after this event, Masteel is enjoying windfall from selling steel bar when MITI implemented some trade protection on certain steel products which had greatly benefited them.
Now, let's put it this way to think. If there is no such suspension, I would reckon that Masteel will definitely not be trading at 35 cents region. At most, it would be lingering at the range of 80 cents. As you can see, comparing the percentage of rise from 80 cents to the current RM 1.20, and 35 cents to the current RM 1.20, you know how to do the math.
Alright, but I am not painting a picture that the management deliberately make this happen by intention. Honestly, I do not know, and also don't want to know. But as far as I know, they delay, they got suspended, they pay the fine or penalty and do the require submission, and things are done. All I can say is, they are playing within the rules of the playground. Not white nor black, it is grey.
As of now, you might be able to put up an argument - what are some other underlying factor that I can back up on seeing Masteel being able to perform better in the future ? Of course, I had to tell you that this one really do not come easy. If you had been following the steel sector closely, you would know that the local steel industry player had been actively seeking for protection from imports since 2014. If this is a standalone news, there might not be any click. But if you would put this news together with the temporary suspension order, now there might be a click.
So now, did you get it ?
If you don't get it, then go to sleep now, wake up later and read again, repeat until you understand.
With the above case as reference, now I am going to show you one potential case.
This is the case of Eden Inc Berhad (Eden - 7471)
I know you might not even know such company even exist. So, I will give you a brief background of what Eden is doing. Basically, this company is the holding company for Garden of Eden, where you can find a tree that grows apple. As this mysterious apple is so tempting, entry ticket to the garden of Eden is selling at unknown prices - And I will cut the crap now. Haha...
Now jokes aside. Eden is a company that had been bleeding cash for many years. Despite that, the bleeding got worst when their power plant unit got flooded during a wet season in 2014. Not only incurring lost of revenue, it comes with additional cost for repair and maintenance as well. You might be asking, so how bad is it ?
In short, it is so bad that the external auditor from Ernst & Young had issued a qualified opinion that the company had material uncertainty related to going concern.
Ah ? What material uncertainty ? What going concern ? Alright, unless you have accounting background, you will not understand what is going concern. As for me with "rojak" background, I am going to explain to you in a very simple manner.
Going concern means - Can the company continue to operate properly for a period of time, say the next 6 mths or 12 mths. If a company keep losing money, it will reach to a stage where there is no more money in the bank, and no cash flow, and everything stuck and boom and bankrupt.
So, on 31st May 2017, Eden is slapped with going concern issue! Waah..... If it get worst, default in banks payment, then it can potentially slip into Pn17, and that is a big big warning.
So, should a share price drop when there are potential of slipping into Pn17 ? Obviously, a human with rational mind will think that manner. But according to the chart, Eden had broke away from a long term down trend, and the down trend resistant line had become a temporary support line for Eden now. Now, this is very interesting.
For a company rich in asset, if got cash flow issue, the first thing to do is to dispose off the asset and convert into liquid cash. You do not need a PhD to teach you this step.
So what kind of asset that Eden really have ?
Of course, if you browse through the list, the highest possibly is definitely the investment land at Gebeng, Pahang. First the land is vacant, secondly, it is for investment purpose. Since it is for investment purpose, then I don't assume that they want to develop the land, and will be looking to sell it off when the time comes. Make sense to you ? Well I don't know, but it makes sense to me at least, haha.
But I had to tell you that this is not enough. If you are doing your analysis research, you should not stop here. You should dig further to know where is this piece of land actually.
For this case, I will dig for you.
Since it is 450 acres, it is very big. I had no idea how big is 450 acres in this map, but I had plot out 2 potential location which is near to Sungai Karang, Gebeng.
By looking at it, this is just a piece of land, situated at Pahang, near the sea, and nothing much. But I have to tell you that if you are thinking so, you are wrong. First, you must notice that this land is very near to Kuantan Port. And do you know how valuable is the land near Kuantan Port. Go and study the case of Tenaga Nasional Berhad taking Integrax private.
Not only that, now we already know about the development of ECRL (East Cost Railway Line), with major eastern hub at Kuantan Port. And to have big development, we talk about big big piece of land. And 450 acres of Industrial land is actually very big.
Since this land is so good, let's talk about RM 12 psf for the land, reasonable or not? Reasonable la, because KL land all talking 500 to 800 per square foot, some talk 2000 per square foot. So Pahang talk RM 12 per square foot, very reasonable, maybe undervalue.... Haha
Based on 450 acre (x 43560) = 19,602,000 square foot, then x RM 12 psf to get the potential selling price.
Wow, a freaking RM 235 million !!!
land is selling at RM 526 million for 928 acre, which work out to RM 13 psf.
So I assume RM 12, and reality check is RM 13psf. Reasonable assumption ?
Just the land alone, it is worth 75 cents for a share in Eden. So by selling the land at RM 235 million, I don't know if you want to smile or laugh, because I scared this company later will limit up.
As a conclusion, you know why you are still reading this blog ? Because, you will never find another site, or another guru, or another prominent investor teaching you such thing step by step for FREE. Everything is here for you to study as a reference.
Eden now slapped with going concern issue, but your decision to take the rocket or not, is your own choice.
Limit up to Moon? Mars? Saturn? or Pluto ? It is your choice also.
EDEN (7471) - If you suck in stock investing, read this to understand why
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