Ecoworld International - 2000 units

Ecoworld International is to be listed on 3 April 2017. I have just been allocated 2000 units of the shares as I have held Ecoworld Development prior to this. The subscription price is RM1.20 per share.

Below is the details. Additionally, Ecoworld International comes with 2 for 5 warrants.

Latest update for the portfolio is here.

Buying Gamuda-WE and selling Ecoworld and Insas-WB

I have to admit, I trade much lesser than many. Usually, my style is to buy and lay low during bad market times. When it gets hot like what it is right now, I will try to reposition some of my holdings. I can do this because I see stocks as a long term investment and if you read most of articles, these money that I put in is meant to be held long term.

For those that have need for the shorter term, such as children's education needs, medical, house deposits, car deposits, my style of investment is not really ideal. You can however still invest based on the percentage that you are comfortable with.

All these while, if you have looked at my past records, all of those purchases that are made are really fundamental stocks except for a small handful which fundamental have changed. Among those are YFG and Parkson and maybe even AEON.

Over the last 2 days, besides buying Freight Management, I have also done the following:

1. sold all of my Ecoworld at RM1.50.

I thought that since there are potentially other stocks which may be more attractive, I can opt to let go EcoWorld and revisit this stock later. There is no doubt that EcoWorld is still a very attractive stock. It has the best management, which is why I have bought them, and this company will be one of the best property players (if not the best) in the years to come.

In selling, Ecoworld, I have also opt to take the offer for shareholders to take up EcoWorld International which is going for IPO soon. I was offered only 700 units but I did apply for excess and I will report when if I am provided more.

2. sold all of Insas-WB

I think this is because of the premium of about 41 sen and perhaps it is a little too high for my liking. I will still hold Insas.

3. Purchase 3500 of Gamuda-WE

If Insas-WB has a high premium, Gamuda-WE (exercise price-RM4.05) on the other hand, has a 3.21% premium and it has 4 more years (6 March 2021) to expiry. In purchasing Gamuda-WE, I obviously am confident of the parent company. It is trading at RM5.29 now. To be in the money, Gamuda has to move to RM5.44. I am confident of it able to move beyond RM5.50 or more, in the next few years considering the projects that it has gotten. One of the largest, where Gamuda is the project delivery partner - MRT2, has just commenced.

As compared to many of my other holdings, I do not think I will need to introduce Gamuda much. Most of the analysis done are about to what I believe. It owns toll concession assets - Litrak, Kesas, SPRINT. It is trying to sell its water concession - SPLASH.

Has many construction projects on hand - MRT2, completing MRT1, Pan Borneo  (to the tune of RM8 billion order book) and many are speculating the company is in very good position to at least get future rail projects such as Gemas-JB rail, East Coast Rail Line. Basically, this is one of the best construction firm in Malaysia and currently construction theme is still pretty hot.

On Airasia's private placement to the founders

I have written a lot about private placements. Some I am positive, most of them, I am negative. I have written about Airasia's private placement (PP) the day after the announcement of the PP to the founders on 2 April 2016. If you read many of my articles on Airasia, I actually prefer for a rights issue - and I meant it (why not), but if one is to study the exercise during then - 1 April 2016 (please look at the below chart) - they can't do rights issue at that point of time. The share price was climbing from a low of RM0.78 where many would have thought Airasia was a candidate for bankruptcy due to its debt. There was not going to be any bankruptcy as their debts are really long term with strong positive cashflow to support - period.

It will be deemed as Airasia was desperate for funds (from its public shareholders) and that would have been detrimental towards the company. Then, if the founders decided to put in and committed their own money, nobody can complain. If one can remember, the closing price for Airasia on 1 April 2016 was RM1.84 - and that was what the price for PP. There was no discount, unlike many of the PP that are announced i.e. up to 10% discount.

Again, I do not like the PP as I knew the founders gotten them for a good price and based on that article I wrote, if one know how to read the action well, investors could have purchased Airasia then at RM1.84. One would have gotten the shares similar to the PP price.

Again, on PP - one of my holdings - Ecoworld, actually is currently doing a huge PP of 30% (yet to complete as there are many rounds). Theirs to me is very fair. Why? The founders cum controlling shareholders commit themselves first at RM1.30. At one point of time, their shares were traded at RM1.22 and the founders still put in cash for more shares at RM1.30. That makes the entire exercise looks fair.

The one PP that is really bad is WCT's and I still keep my opinion to it.

I hope this explains.

EcoWorld's land purchase

EcoWorld has just announced a land purchase at RM35 per sq foot from Tropicana. That piece of land is adjacent to Bandar Rimbayu, now a IJM project with Keuro owning effectively 28% of that piece. The piece that is owned through Rimbayu is around 1,870 acres and that translate to 43,560 x 1,870 = 81,457,200 sq ft. Assuming we are taking at RM35 per sq ft as what EcoWorld is paying, the piece is worth around RM2.851 billion. This means Keuro's stake on the land alone is worth around RM798 million.

The Rimbayu's piece has a huge lake which although is a discount, will still be worth something. Buyers like houses overlooking a nice lake, which Rimbayu has.

Now you know why I was pissed off...

Note:
Keuro's effective stake in Bandar Rimbayu Sdn Bhd which is derived from 2013 Annual Report.

Another which shows that the effective ownership of Rimbayu (formerly known as Canal City Construction) is 28% and used to be 35% (Between financial year 2012 and 2013, there was no shareholding change for Rimbayu) is as below:

From Annual Report 2012, the one provided under Annual Report 2013 is probably wrong