I have held the stock, WCE for a long time since 2014 and this drop largely to do with fear of termination of most tolled highways in Malaysia, I think is overdone. There is no denying that any government of the day can do whatever they like - or could they?
More than 50% of tolled highway assets are owned by government linked organizations such as EPF, PNB, Khazanah. Those examples are PLUS Expressway, AKLEH, LKSA, SILK and several more under Prolintas. Many investors do not differentiate the difference between government linked and government. These highways are not owned by government but by the people. Best example is PLUS which is 51% owned through Khazanah and 49% by EPF. The government does not hold ownership of EPF but run the organization on the people's behalf.
By terminating PLUS without fair compensation towards EPF especially will be bad for the governance and future investment profile of the country.
WCE Sdn Bhd is indirectly semi-private and public, as I call it. 20% of the highway is owned by IJM direct, and the largest shareholder for IJM is EPF (yet again). Although it is professionally run by a set of managers, its 2nd and 3rd largest shareholders are Amanah Saham Bumiputera and Tabung Haji respectively. Besides that IJM also holds 26% of WCE Holdings, the listed company which I am buying.
In the event the government is exercising its pitch of eliminating toll highways, it will hugely impact the stock market - and not just tolled highway stocks.
At the price of RM0.75, I think the market is already putting the company on the huge assumption that the highway will not continue. Todate, WCE is 51% completed and it seems that they are continuing with the project without stopping.
On the other hand, as it seems MWE - the other 26% shareholder is picking up its shares of the additional funds - through rights - that is to be raised for the company in the next few months. If the project is affected, usually no one will inject more money. MWE is actually going private which means its company's largest shareholder is now having a larger effective stake of WCEHB.
On the merit of the highway, I do not think there is much change. The government could hold back on price toll increases in the long run which may affect WCE. I still think at RM750 million valuation, it is compensated for whatever that may be negative.
5 comments:
RE: Air Asia
(sorry to post the comment here rather than the Air asia post)
The problem with air asia for me is that they have a credibility problem. In the early days they used to treat their customers badly. I think things have improved but they still have that stigma floating over their heads.
Even now they are behaving badly by charging to use credit cards. They even charge for direct bank to bank transfer. This contravenes bank negara policy and it is especially bad since most of these transactions are below RM500.
Thirdly the half baked insurance they offer with flights suck. There is no medical component. Travel insurance is about baggage loss, medical and flight delay. Furthermore with Air Asia, given their history, I feel good luck trying to claim insurance (are there any metrics for the insurance industry to compare claims rejected etc?)
Which is why I am skeptical about Tunepro as a stoc
Yes digital has huge potential but how do you rate a company where most of their customers use it in spite of rather than because they like it.
I would gladly use MH and I do except they have their head up their rectum
krug88
krug88@gmx.us
As an investor, one has the right to choose over investing in one company over another due to principles. I do that sometimes such as I divested from malaysia airport due to its monopolistic behavior and I thought that the management were not doing what's right for shareholders - especially in its overseas endeavor. So is the recent debacle over Sapura Energy even though it may be a good company - if it is?
Anyway, if one reads Airasia versus its other competitors, I guess the opinion of buying MAS over Airasia is always an individual's preference. However, ticket pricing does come into play as well as availability of flights.
More often, a wise decision as an investor is being realistic over what works for certain business over another. As it is, I am not saying that MAS is not a good airline but it is a defeated airline. So are many others such as SIA. Today, many travellers are picking flights as a convenient than comfort (except for perhaps long distance) and even that is changing.
On insurance, yes I agree but that is what is offered and one can opt not to pick the service.
On digital, I think there are more things on its digital than the one that is promoted heavily i.e. its Big Pay. Airasia itself is using and more advance than its competitors in terms of digital adoption. That is obvious as being a low costs airline it will find ways to reduce human personnel costs and implement more digitisation in its business. People whom are travelling through Airasia are also more acceptable towards this as full fledged airline passengers demand more personalised service than self-service.
So, with the world moving towards digital, over time a company that adopts technology will eventually become bigger winner. And that is more probably Airasia than many others. This industry will continue to consolidate and we have the chance to invest into a winner.
How about Ekovest?
The price seems very low now.
I think Ekovest is cheap. Although it has deteriorated after the GE14 in terms of its intrinsic value, its current valuation which has dropped to RM1.5 billion is just valuing one of its holdings in toll concession asset and it has 2.
People have fear on toll concessionaire to the extent that they have put almost zero value towards these businesses which is uncalled for.
Felicity , the counter keep dropping to 66sen , what do think ? People is afraid will dilute the earning , the dilute after price around 62sen
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