Skip to main content

A Walk in the Park with Cypark Resources Berhad (5184)

Lately, I have been searching for a company which has good profit margins, a business model which is non-conventional (i.e., not manufacturing, banking, plantation, and trading in nature), and resilient to external market shocks. I hope I have found the right company!


This week I will be looking at Cypark Resources Berhad (5184). Cypark is a company that is involved with the provision of environmental solutions. It has 4 main business segments which are:
1. Environmental engineering: Provision of nature conservation and environmental improvement services.
2. Landscaping and infrastructure: Provision of landscape services, project management services, and infrastructure development.
3. Maintenance: Provision of specialist maintenance works on leachate treatment plants, landscape services for parks, and maintenance of public amenities.
4. Green technology & renewable energy: Solar panel, biogas, biomass, waste-to-energy, and other renewable energy projects.
The business segment with…

Chronicles of Kronologi Asia Berhad

Kronologi Asia Berhad (0176) is an electronic data management solutions provider listed on the ACE Market of Bursa Malaysia. This company has garnered much attention as its share price jumped from RM 0.36 per share in late April 2017 to RM 1.10 per share in early-November 2017 – a remarkable 300% gain!

Chart 1: Kronology Asia Berhad Share Price


What does it do?
Its prospectus pretty much sums up what it does “To achieve data assurance and protection through the systematic backup, storage and recovery of enterprise data to ensure business continuity.” In short, it is a computer data storage systems provider. It provides data storage solutions to its customer by tailoring their needs to its products.

Its products are categorized into 2 segments:

1. Enterprise data management infrastructure technology (EDM Infrastructure Technology) – the physical hardware, software and/or equipment components of EDM

2. Enterprise data management managed services (EDM MS) – backup, health checks, storage, recovery and restoration of enterprise data, disaster recovery planning. Its business approach is based on a subscription-based model.

Chart 1: Breakdown of Revenue Category


So, does Kronologi manufacture its own brand of products?
Apparently, it does not. Kronologi through its fully owned subsidiary Quantum Storage (South Asia) Pte Ltd (“QSA”) has a Strategic Marketing Agreement (SMA) with Quantum Corporation (US) to market and sell “Quantum” branded EDM infrastructure technology to the South-east Asia region: Singapore, Malaysia, Indonesia, Philippines, Cambodia, Thailand, and Vietnam.

Recent corporate developments
In October 2016, Kronologi fully acquired 100% of Quantum Storage (India) Pvt. Ltd. (“QSI”), previously an associate of Kronologi. With this acquisition, Kronologi has full control of its operating decisions and financial results from India.

Recently in October 2017, Kronologi entered into a conditional sale and purchase agreement to acquire a 100% stake in Quantum Storage (Hong Kong) Limited (“QHK”) for a purchase consideration of up to RM45 million. This consideration is to be satisfied through a combination of shares (up to 40.8 million shares at RM0.98 per share) and cash (up to RM5 million). QHK, according to Kronologi’s announcement, predominantly supplies Quantum branded EDM technology to Hong Kong, Taiwan, and “other countries.” “Other countries” was not defined but I suspect these countries are China and other Asia Pacific countries.

A noteworthy point is that QHK warrants that it will achieve a profit after tax of USD1.2 million for the financial year ended 2017. In the event QHK fails to achieve its profit warranty, its purchase price will be revised downwards.

Financial Summary
Chart 1: Financial Performance Summary

Revenue has been growing, doubling in 7 years since 2011. The compounded annual growth rate (CAGR) from 2011 – 2016 was 16%. In addition, its Q3 2017 revenue was RM101.6 million; its 2017 revenue stands to exceed its 2016 revenue by a factor of 2 times. About 60% of its revenue come from Singapore, 15% from South East Asia (excluding Singapore) and 11% from India. It is noted that Singapore is its primary market.

The performance of its profit margins on the other hand has been as decent as its growth in revenue. Both PBT and PAT margins are roughly about 9%.

Kronologi enjoys low tax rates as its subsidiaries are entitled to a 400% tax allowance (2011 – 2018) for investment in innovation and productivity improvements from the Inland Revenue Authority of Singapore. It is worth noting that Singaporean companies enjoy a slightly lower tax rate at 17%, compared to Malaysian entities at 18% (SME) – 24% (standard corporate tax rates).

Chart 2: Financial Position

Its balance sheet is relatively healthy as its cash balance is able to cover its obligations. A healthy current ratio –current assets are more than 1.78 times its current liabilities.

The only downside that I can think of is its valuation; Kronologi’s share price is almost 30 times its earnings per share. But it’s a known fact that high growth companies do not come cheap.

So is this a great investment then?
I would think that if you have a higher risk appetite, then this would be an investment for you. Reason being, at RM1.09, you are paying a premium of:

1. Approximately 3.6 times its book value (September 2017 book value: RM 0.30); and

2. A price to earnings ratio of approximately 30 times its historic cumulative 4 quarters EPS (3.86 cents).

Despite the higher valuation for this counter, growth in terms of revenue has been stellar. Refer Chart 1 on the financial results of Kronologi. For a fast growing company, margins are compressed during the initial stages; however, as the company gets more mature, it will work on improving its profit margins. As of now, Kronologi is still in its growth phase.

What do you think? With the ever increasing volume of digital data from daily business operations, is data management, back-up and security a key component in business infrastructure?

Previously, I reviewed the FBMKLCI, I believe my analysis is still valid as the bearish trend is still persisting. Do check out my analysis HERE


If you like my posts and this blog please SUBSCRIBE in the link above or follow me on Google+ !!!    THANKS
Note: This is not a recommendation to buy or sell this stock. The writer does not own shares in this company. The writer intends to share his view point on this stock’s potential investment value, any decision to invest or sell shares in this company is entirely at the reader’s own risk.

Comments

Popular posts from this blog

Heveaboard Bhd (5095) Update (11 May 2018)

This week I will be reviewing Heveaboard. This is a follow-up review to my previous Heveaboard posts. 

As you are aware, many stocks on Bursa Malaysia were beaten down to its lows recently. Now, after a historic win in the 14th Malaysian General Elections by Pakatan Harapan (Alliance of Hope), will the stock market bounce back? 

The General Election held on May 9,2018, was by and large peaceful and went on without a hitch.  Malaysians are hoping for a clean, fair, and just government. This positive perception will be echoed in the stock market and will bring back market confidence.

We now turn our focus to the annual report of Hevea  that was recently published on April 30, 2018. I thought it would be a good time to perform a follow-up review of this stock. 

Technically, it is showing signs that its share price has bottomed out and has formed a base. The share price has retraced from a high of RM1.72 in October 2017 to RM0.88 in May 8, 2018, a retracement of about 50% !!  See Chart 1: Hev…

A Walk in the Park with Cypark Resources Berhad (5184)

Lately, I have been searching for a company which has good profit margins, a business model which is non-conventional (i.e., not manufacturing, banking, plantation, and trading in nature), and resilient to external market shocks. I hope I have found the right company!


This week I will be looking at Cypark Resources Berhad (5184). Cypark is a company that is involved with the provision of environmental solutions. It has 4 main business segments which are:
1. Environmental engineering: Provision of nature conservation and environmental improvement services.
2. Landscaping and infrastructure: Provision of landscape services, project management services, and infrastructure development.
3. Maintenance: Provision of specialist maintenance works on leachate treatment plants, landscape services for parks, and maintenance of public amenities.
4. Green technology & renewable energy: Solar panel, biogas, biomass, waste-to-energy, and other renewable energy projects.
The business segment with…

Apollo Food Holdings Bhd (6432)

Is investing in Apollo Food Holdings Berhad (6432) a secure and risk-free investment? If you are not sure what Apollo Food Holdings does, you would at least have come across its products in your childhood. Do these snacks below ring a bell?

Who would have thought that this company is listed on the Malaysian Stock Exchange? Based on the BCG growth share matrix, Apollo Food is categorized as a “cash cow.” Milking cash from its day-to-day operations. There has not been much excitement in its share price; it has been in a trading range of RM4.50 – RM6.00 for over 2 years.

This stock will ultimately disappoint investors who are seeking growth companies with quick capital appreciation. However, those who are seeking a safe haven for their capital, or intend to protect their capital may consider this stock in their portfolio.

To invest in Apollo, an investor ought to look at a longer time horizon. Hence, I will be looking at a time frame of 5 years.

Chart 1: Key Financial and Investment Stati…

Technical Review of Econpile Holdings Bhd (5253, 16/6/2018)

The markets have not been exciting lately, but I have an interesting stock to share. For investors who are looking for a stock to trade, I recommend Econpile Holdings Bhd (5253).  Its share price seems to be oversold and is ready for a bullish rebound.   

Based on its technical price chart, its share price started to dip at the beginning of 2018. The 30-day exponential moving average (EMA) has been its overhead resistance since early February 2018 until now. In this article, I will explore the likelihood of it breaking above its 30-day EMA overhead resistance. The 30-day exponential moving average overhead resistance could mean that this stock is in a downtrend as well. 
Pakatan Harapan, Malaysia's newly elected political party's victory in the General Elections in May 2018 had an adverse effect on its share price. Upon the opening bell of the Malaysian market on May 14, 2018, its share price gaped down 8 cents, and closed at RM .788, a decline of 22.7 cents or 22% of its…

Zhulian Corporation Berhad (5131) -- Follow-up review (21/7/2018)

This is a follow-up review of my previous post on Zhulian back on February 2, 2018. Previously, I opined that this counter should begin to consolidate after a significant price retracement as it had been trading close to its Net Assets per share price of around RM1.30. Six months after my previous review and it seems like its share price has started to consolidate.

My last post was based on the financial results of Q4 2017. The company has since released the financial results for 2 quarters. Based on its latest financial results, there seems to be some improvement in its profit after tax margin. Profit after tax in Q2 2018 was about RM12 million, was higher than Q1 2018 and Q4 2017, but generally lower than PAT in 2017, see Table 1: Quarterly Financial Results of Zhulian. 
It has been reporting the same story in its quarterly reports that its decline in revenue was due to a drop in sales in its Thai business operations. Cumulatively, its financials fared much worse, see Table 2: Cumul…