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 project

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: Cumulative Quarterly Financial Results of Zhulian. Revenue, Operating profit, and Profit After Tax declined by 10%, 33%, and 21% respectively. Its operating profit and profit after tax margins have declined as well from 26% and 28% respectively in Q2 2017 to 19% and 24% in Q2 2018. As Thailand is its biggest revenue contributor at about 65% of total revenue, a decline in market demand is seen as negative. 

Table 1: Quarterly Financial Results of Zhulian 

Table 2: Cumulative Quarterly Financial Results of Zhulian 

Dividends anybody? 
Zhulian pays dividends quarterly. In the past, its dividends were 1.5 cents every quarter, and in Financial Year (FY) 2018, it increased its dividends to 2 cents. It paid special dividends of 1.5 cents in FY 2017, bringing its total dividends paid in FY 2017 to 7.5 cents, see Table 3: Zhulian Annual Dividends. 

Based on my dividend yield scenario analysis of Zhulian for FY 2018, at its current price of RM1.50, assuming no special dividends in FY 2018, its dividend yield would be 5%. However, if special dividends of 2 cents are paid, its dividend yield would rise to 7%. In view of its high cash pile and zero borrowings, I think it is possible Zhulian will continue to declare special dividends in FY 2018. 

Table 3: Zhulian Annual Dividends 

Technical Analysis Review 
Recently, Zhulian has picked up some bullish momentum on July 9, 2018. Its share price rose from a low of RM1.40 to a high of RM1.50 on July 20, 2018. Its last 2trading days have broken through the 60-day exponential moving average which has been its dynamic overhead resistance for the past 7 months. This move is, however, not supported with strong trading volume. 

From my observation, a key takeaway point is that trading volume has declined significantly over the past seven months of 2018 compared to 2017. This is probably due to Zhulian recording unfavorable business performance and operating in a weak environment. I think this rally may not be sustainable as its financials and business environment does not support it. 

Chart 1: Zhulian Price Chart 

In my view, the main challenge for this company is to grow its top line. Considering growing revenue is an arduous effort, overcoming this hurdle would mean increasing profits, which would translate into better share price performance. I am sure there are many alternative channels other than through multi-level marketing that Zhulian's products can reach potential customers. 

Based on its past few quarters, it can be seen that the company has some difficulties in sustaining growth. It is hard to foresee future growth in its business unless there is a substantial improvement in its business model.

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 Char

Technical Analysis Review: HeveaBoard (5095) 25/10/2017

This counter had recently rallied and closed at a high of RM1.75 on October 23, 2017. What followed in the subsequent days were 2 straight days of profit taking. This was evident by the 2 significant black bodied candles which closed lower until October 25, 2017. Refer Picture 1 below on the technical chart of HeveaBoard. Picture 1:HeveaBoard Chart 25/10/2017 For any investor, testing a high 3 times at RM1.75 in 3 months would be an important indicator of a potential change in trend. Currently, HeveaBoard is trading at an important price "zone" - immediate medium term support level of RM 1.62 . Knowledge sharing For all support/resistance levels, there is a +/- variance of approximately 1% from the support line indicated. Hence, support at RM 1.62, can be interpreted as support at RM1.61 or RM 1.63. Can the support zone hold? Probably, because prices retraced about 50% from its previous rally . Note that the previous rally began in the highlighted RED rectangle - September 2

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 Stat

Technical Analysis Review: Hiap Teck Venture Bhd (5072) - 12/11/2017

I recently found out about this company -- Hiap Teck Venture Bhd (5072) -- through a friend of mine, and I thought I should take a look at it. I have not performed my fundamental analysis on this company yet, but I wanted to write about my observations on the price action of this company.  Based on a surface level review of its financials, I noted that its joint venture company -- Eastern Steel Sdn Bhd -- recorded an impairment loss on its property, plant and equipment of about RM 266 million in its latest Q4 2017 financial result that was announced on September 28, 2017. As Hiap Teck's interest in the joint venture company was 55%, its share of losses from Eastern Steel was roughly RM 155 million. See Picture 1 below on the summary of its quarterly results: Picture 1: Summary Hiap Teck's Quarterly Results (Source: i3investor) Technical Analysis Review of its Share Price Picture 2: Price Chart of Hiap Teck Based on my observations of the price chart

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 project