1. Introduction
( i ) Background
Wzsatu
was previously a manufacturer of steel products. The performance was
not well back then due to the stiff competitions and dropping of the
steel price.
However,
thing had changed in Oct 2013 where there was a major transformation of
company from the emergence of new management team and substantial share
holder, Dato Seri Tengku Uzir bin Tengku Dato Ubaidillah to the
acquisition of new business. Since then, the company had became the
limelight of the investors and the stock price had increased from RM 0.
32 to RM 2.4.
Now, the company is trading at the price around RM 1.0-1.10.
2. Core Business
- Civil Engineering and Construction
This segment contributes the main revenue of the company (50%) which included the construction and maintenance of highway.
- Oil & Gas
Onshore oil & gas service provider and most of the jobs come from RAPID.
O& G segment contributes 30% of the revenue.
- Mining
Bauxite mining in Kelantan.
- Manufacturing and others business
It
also involves in steel manufacturing and trading of cold drawn bright
steel and set up a factory recently in Indonesia to reduce the costs and
expand its market.
( I ) Impressive Growth of Revenue and Profit before Tax ( PBT )
- 2014 winessed the turning point of its business where it diversified its business into O & G and construction sectors. The revenue and profit have grown tremendously since then.
- Revenue up from 86millions in 2013 to 465millions in 2016. ( 447%)
- PBT up from 2 millions in 2013 to 27 millions in 2016. ( 1,250% )
( II ) Strong Order Book
- The group is involved in government major projects such as PR1MA, West Coast Expressway and Duta Ulu Kelang Expressway.
- Order book now is around 1.23 billion which can sustain the group from upcoming three years.
- Based on the news, more projects are expected to be awarded in future.
( iii ) Rapid Project
- Despite the current turmoil of O&G sector, the group's O & G sector still manage to deliver decent result.
- It can be seen by the latest quater report of the group whereby the revenue of O & G sector has increased 6.6 millions.
( iv ) Low PE
- The group is currently trading at around RM 1.10 ( PE 13) which is considered very low compares with other construction companies PE which are around PE 18-20.
- Currently trading near its 52 weeks low ( RM 0.995 )
3. Disadvatage
( i ) Ban on Bauxite Mining
- Bauxite mining has been banned by the government since 15 January until now.
- According to the latest news, it has extended until 31 December 2017.
- It will definitely undermine the profit of the group in long term.
4. Comment
- It is in the writer's humble opinion that WZSATU is indeed an undervalued construction company by looking at its current price and its strong financialperformance.
- Despite the ban on Bauxite minning, It can still be offset by the strong order book of its O&G and construction sector.
- Furthermore, it is impossible for government to ban bauxite mining permanently due to the strong demands of bauxite in global market. Once it is unbanned, it will for sure further enchance the group's profits.
# It is sheerly my own humble opinion.
Purely for the purpose of reasearch and discussion.
Buy At Your Own RISK
http://klse.i3investor.com/blogs/topshare94.blogspot.my//128743.jsp
