ECOHLDS (0059) ECOBUILT HOLDINGS BERHAD THIS STOCK SHOULD BE RECATEGORIZED INTO CONSTRUCTION !!! EARNINGS QUADRUPLED IN LATEST QR !!!
THIS STOCK SHOULD BE RECATEGORIZED INTO CONSTRUCTION !!! EARNINGS QUADRUPLED IN LATEST QR !!!
Hello
to all readers out there. The CONSTRUCTION sector had been robust and
resilient as among the earliest sector allowed to operate by the
government under the MCO.
Having said the above, the stock which I'd like to talk about today which I feel was overlooked by the masses is ECOBUILT HOLDINGS BERHAD (ECOHLDS - Stock Code 0059, Main Market, Telco & Media)
BASIC INFORMATION ABOUT ECOHLDS
ECOHLDS core business:
i) Civil Engineering, Building Contracting and Construction
ii) Property Development
iii) Digital Content
Market Capitalization : RM 48.6 million
Shares Float : 313.56 million
1. ECOHLDS SHOULD BE RECATEGORIZED INTO CONSTRUCTION AS IT CONTRIBUTED 93.4% TO TOTAL REVENUE
Refer below latest QR on the segmental information.
As
we can see, Construction sector recorded revenue of RM 36.67 mil
(93.4%) as compared to Digital sector with revenue RM 2.59 mil.
As such, I believe ECOHLDS should be looked at mainly as a CONSTRUCTION company, instead of a telco/media company.
I am amazed that no
MEDIA outlet has picked up on this matter and covered in the news. I
believe investors out there deserve to know more about this company
hence why I am taking the effort to do this write up and share my
findings.
2. ACQUISITION OF REXALLENT CONSTRUCTION SDN BHD (RCSB) VIA ISSUANCE OF SHARES AT 24.5 CENTS IN SEPTEMBER 2019
Refer
below news article by The Edge in April 2019. The acquisition of
construction arm was completed via cash & issuance of new shares of
102 million units priced at 24.5c per share to Kilau Makmur Sdn Bhd
(refer image below), which was completed in September 2019.
Since
then, due to the US-China trade war, our local political uncertainties,
oil price crash and COVID19 pandemic, the price of ECOHLDS has dropped
to a very attractive price.
Even
at the latest closing price of 15.5c, this is still 9c discount (36.7%
discount) to the price of the new major shareholders which took up
shares at 24.5c a piece.
3. CONSTRUCTION ARM STARTING TO BEAR FRUITS - EARNINGS QUADRUPLED IN LATEST QR
Refer below QR summary for ECOHLDS. As we can see, in the latest QR, improvement as below:
i) Revenue Up to RM 39.26 mil from RM 23.87 mil (jump of RM 15.39 mil or 64.5% increase)
ii) Net Profit Up to RM 1.81 mil from RM 442k (jump of RM 1.368 mil or 309% increase)
This
shows how the acquistion of the CONSTRUCTION arm is starting to bear
fruits for ECOHLDS. I checked the latest news in 2020 and it seems that
no media outlet had written about this company's earnings improvement
and outlook.
I
urge my friends in The Edge, The Star, Focus Malaysia and other
financial news outlets, to sincerely take a look into this company and
provide some fair coverage for all the existing shareholders and also to
outside potential investors.
Also, if we look at the ASSETS VS LIABILITY summary below, we can see below notable points:
i) Total cash holdings at RM 21.4 mil, which is about 44% of the latest market cap
ii) Total Assets stood at RM 181.97 mil or 35.37c per share
iii) Total Liabilities stood at RM 69.47 mil
iv) Total Assets RM 181.97 mil versus Total Liabilities RM 69.47 mil (which means assets surplus of RM 112.5 mil)
4. TECHNICAL ANALYSIS - HIGH UPSIDE BASED ON MONTHLY CHART, BREAKOUT OF KEY EMAS ON DAILY CHART
Refer below the basic price and volume chart with key EMAs for ECOHLDS monthly chart :
A few observations on the monthly chart:
i. Refer Circlr 1, ECOHLDS hit a peak of 82c in 2014, before price trended downwards
ii. Refer Circle 2, price hit a low of 7.5c in March 2020, during COVID19 pandemic peak flash crash
iii.
Refer Circle 2 & 3, since hitting the low, price and volume started
to significantly improve with better trading interest seen in ECOHLDS
iv. Key EMA14 at 18c and EMA43 at 25c
v. Low downside is seen, and very high potential upside towards its historical high
Refer below the basic price and volume chart with key EMAs for ECOHLDS daily chart :
A few observations on the daily chart:
i.
When the price hit low of 7.5c in March 2020, the selling volume was
also very low (Refer Circle 1 & 2). This indicates no major
shareholders were exiting the company during this flash crash
ii.
After hitting the low, significant improvent was seen in the trading
volume, indicating buyers are rejecting low prices and keen to buy
upwards
iii.
The Price had broken key EMAs of EMA14 and EMA43 at 14c, and to test
the next EMA200 at 16.5c and EMA365 at 20c in the short to medium term
CONCLUSION
Considering all the above, I opine that current price for ECOHLDS is attractive due to below:
i) Miscategorization
of this stock in TELCO/MEDIA whereas it should be seen as CONSTRUCTION
as it contributed 93.4% of total revenue in latest QR
ii)
Acquisition of CONSTRUCTION ARM was done via issuance of cash & 104
million new shares to Kilau Makmur at price of 24.5c. Latest closing
price of 15.5c is still 9c discount to the issuance price
iii) In latest QR, earnings had quadrupled due to constribution from Construction arm
iv) Assets RM 181.97 mil versus Liabilities RM 69.47 mil (asset surplus of RM 112.5 mil)
v) Low downside and high upside potential on monthly chart, breakout of key EMAs on daily chart
LET’S SEE HOW THE SHARE PRICE MOVEMENT IN THE NEAR FUTURE FORBEARING ANY GOOD CORPORATE NEWS.
Disclaimer
: The above opinion is never intended to be a BUY CALL whatsoever. I am
sharing my observations ONLY based on fundamental; past history;
current trading pattern; charts etc. Please make your own informed
decision before buying this share or whatever share for that matter.
BURSAMASTER
https://klse.i3investor.com/blogs/Bursa_Master/2020-06-07-story-h1508668865-THIS_STOCK_SHOULD_BE_RECATEGORIZED_INTO_CONSTRUCTION_EARNINGS_QUADRUPLE.jsp
