Integrax - All are WINNERS!

Integrax

- All are

WINNERS!

Some of you might have been disappointed that there was no posting from me especially the Iast week of March. I managed to post one blog only last month as I normally would have posted two. The reason is because of the Integrax Berhad's issues, especially the last few days of the month.

My earlier blog : Sometimes Up, Sometimes Down was due for posting on the last few days in March. But events such as the late night announcement by Tenaga Nasional Berhad that it has secured over 50% shares of Integrax Berhad meant my pre-written blog had to be altered. Then as it was due to be posted the next evening, came the news that our "David" Amin has decided to throw in the towels and that also meant my just-altered blog must be re-written again to reflect the latest situation.

As I said, I needed time to digest all those successive nights of important announcement regarding the situation of Integrax.

So now, it is 100% clear that Tenaga - the "Goliath" has defeated minorities' hero Amin - the "David" in this battle for Integrax Berhad.

Investors must understand that right from the start, both had different agenda in this battle. While Tenaga's mission is to secure control or total control of Integrax (at all cost?), Amin's mission is to protect his and minorities' interest in getting a higher price.

From reports initially, Amin has argued that Integrax is worth at least RM5 per share and any offer price near to that would be pleasing music to the ears.

It was actually a battle of "buy from me at a higher price that is deemed good in my opinion" rather than "I wound not be selling to you at all at any price".

Interesting, valuation is always a sticky point to judge and argue. While Perak Corp Berhad's Independent Advisor values Integrax at RM3.25, Integrax's Independent Advisor values it at RM3.66.

If you are the offeror, having seen the first offer of RM2.75 rejected, you would surely revised it to RM3.25 rather than RM3.66. Unless of course, Perak Corp decided that they would sell their stakes to Tenaga at RM3.66 based on Integrax's valuation. If Perak Corp had done that, would Tenaga revise the price to RM3.66? That is a million ringgit question we all will never know.

Gracious in defeat, Encik Amin

There is a saying that if you think it can't be done in this way, then don't stand on the way of someone else who think it can be done.

Obviously Amin didn't see the same direction as the "new" boss Tenaga over the future direction of Integrax. As such, it would be very uncomfortable in the board's room when it comes to key decisions making. Amin would surely feel like a lonely ranger in there.

So as a gentleman, Amin makes the most honourable decision, that is selling all his stakes of 24.8% to Tenaga. Is Amin a loser in this Integrax episode? No, in my opinion, conceding defeat doesn't always means a person is a loser. In many situation, saying sorry or admitting an error or defeat does not mean you are the loser. In fact, you could be a winner for just admitting that!

From a financial point of view, Amin would be pocketing a cool RM240 Million plus! That is not a small amount of money. Amin also makes additional gains from his investment in Integrax when he was buying aggressively around RM2.75 to RM3.00 during the first offer of RM2.75 from Tenaga.

Tenaga crossed the 90% threshold!

Initially, I thought that the most Tenaga can win in this battle is management control of Integrax as Amin with his huge stakes would be the main stumbling block. But now that out of the blue unexpectedly with Amin's stakes in as well, Tenaga ended up with huge percentage of Integrax shares.

Tenaga has managed to secure more than 90% shares from all the shareholders, then the offer will become Mandatory Take Over for all. That means even if you refuse to go the stock broking company and sign the necessary document forms to transfer your shares, Tenaga will still be able to "track" you from the list and send you a check, whether you like it or not.

We must bear in mind that there are always hardcore "investors" who are daring enough to hold on to their shares even if Tenaga is to delist Integrax. These type of investors are those who believe that one day eventually, Integrax will be relisted back with a richer valuations or Integrax corporated in a merger excercise and listed in a different entity.

And I am not ashamed to admit that I am one of those! Truth is I did not even make the trip to the stock broking firm to sign the documents to sell my Integrax shares to Tenaga! And I believe I won't be alone!

Tenaga's closing date for the revised offer price of RM3.25 (of course to minus the 7.5 sen dividend paid out earlier) was April 13. Integrax was delisted on April 21, 2015.

All are WINNERS in the end!

As this saga of take over of Integrax came to an end, I must congratulate all investors as most are winners in the end.

Tenaga got what they want, Amin walked away with huge profits, other minorities groups example Perak Corp also pocketed huge gains and that also included all other shareholders who invested below the Revised Offer price of RM3.25.

Truly this is one good battle where all are WINNERS in the end! How nice if there are other future battles such as this. And there will always be. You have just got to be able to spot-on very early .... like me.

Profits from Integrax is ....

My total original amount for investing in Integrax is RM33,231.65.

Dividends received in year 2014 is RM900.00 (RM50 x 18,000 shares).

Dividends received in year 2015 is RM1350.00 (RM75 x 18,000 shares).

Compulsory acquitsition by Tenaga at RM3.175 x 18,000 shares is RM57,150.00.

Total to be received is RM59,400.00 (from Tenaga and two dividends).

Total to be received of RM59,400.00 to minus RM33,231.65 (original amount invested) shows a profit of RM26,168.35 or a return of around 78% for an investment less than two years.

Terima Kasih, Tenaga for this windfall.

  

 

Buying Focus Lumber shares

Buying Focus Lumber shares

Cash rich companies with stable earnings and paying good dividends with a focus management team are companies that would usually attract conservative investors who don't mind much about the share price, but rather the consistent good dividends dished out every year.

Sometimes, such companies' share price are stable or on a steady slow gradual chart. Over a period of times, its share price could even be at its new or near new high or 52-week high.

At this price, how many investors would be jumping into the wagon. The adage that "buy low sell high" or better to buy near its 52-week low than near its 52-week high" would deter many an investor.

But if that company is able to repeat and maintain its stable earnings or better still, improved earnings, then nature will take its course. Its share price would move higher again in tandem with rising earnings.

One such stock that is trading near its 52-week high is Sabah-based plywood manufacturer Focus Lumber Bhd. The company was recently featured in The Edge issue on Mar 30, 2015.

Having read the feature and digested it, it is not difficult to understand why it is trading near its 52-week high.

As Focus Lumber's exports over 90% to the world, and  almost all is mainly denominated in US dollars, the current weak ringgit exchange is indeed a BIG boon to the company.

The US is the largest market which over 67% of Focus Lumber's products were exported there. India, South Korea and Taiwan are the other markets. Also as the weak ringgit again the greenback situation looks likely to persist for months to come, the bottom-line become more favorable for Focus Lumber in the longer run.

Steady & rising dividends

Dividends of 8 sen for Financial year 2013 and 2014 translate to a dividend yield of around 5% at the current price of RM1.50 plus minus. This is considered a very attractive one for conservative investors. Looking forward, I also believed the management will slowly increase the dividend payout to 10 sen in the coming years and that would increase the yield even more attractive to 6%.

Cash hoard keeps on increasing

Focus Lumber's cash hoard has been increasing since 2010. From 2010, its cash was RM25.8 Million. But by the end of 2014, its cash hoard has been more than double at RM59 Million. Such astonishing rise of cash is indeed good for the company and shareholders because it can be used for merger or acquire another company or well, for conservative investors is to reward with special dividends or one off bumper dividends.

At the current rate, Focus Lumber's cash is set to rise even higher from a cash per share of 57.5 sen.

Less men more share

There are only a total of 103,200,00 shares of Focus Lumber. Surprisingly and much to my delight, the top thirty largest shareholders "cornered" up to a staggering of 91.47% shares or 94,382,400 shares (according to its Annual Report 2013).

This leaves only a mere number of 9,427,920 shares left in the open market. As the saying say, Less Men More Share means there are less shares in the open market, the greater demand will result in stronger share price.

But there are some investors who are worried due to this low liquidity stock. I beg to differ as based on my experience, this is really not true. Readers will remember that another of my favorites company Mercury Industries Berhad also has a low liquidity trading activity. But due to its stable earnings and good dividends, the share price has also appreciated gradually from below RM1 to the RM1.40 - RM1.50 levels - low liquidity or not.

The "Leng Kam" feeling is there!

The Hokkien people has a saying that when one feels the "Leng Kam", then  that motivation to act is at a very high level. One must be brave enough to go for it. "Leng Kam" means one feels that this is it, do not wait anymore, be bold enough to do it or buy it or bet on it.

In this case, when I finished reading the Focus Lumber  article, my body was full of "Leng Kam" feeling for this stock. Never mind that it is now trading near its 52-week high.

When I first invested in Integrax in July 2013, the stock was already trading near its 52-week high and the new high of the last 8 years. But the "Leng Kam" feeling was so powerful inside me that I went for the kill and invested not one, but to the tune of 18,000 shares!

For the average man in the street, the amount is rather quiet a big sum. But my "Leng Kam" was proven to be very right in the end as we all know that Integrax is being offered at RM3.25 by Tenaga Nasional Berhad.

Buying 10,000 shares of

Focus Lumber Berhad

at RM1.52.

On Apr 3, 2015, my strong "Leng Kam" feeling told me what to do. I have decided to invest in this cash rich company at RM1.52 even though I know that it is trading near its 52-week high.

Based on its current business direction with the prolonged weak ringgit against the greenback, Focus Lumber should be poised to report higher earnings in the several coming quarters and hence, the good performance will be reflected in its share price ....  meaning new 52-week high again!

So dear friends, after reading this

and if you have the "Leng Kam" feeling,

go ahead and be brave just like me.

Together we will ride this new journey

with Focus Lumber.

Please take note that this posting supercedes an article about Integrax Berhad which I wanted to post, because I want readers to know as fast as possible the timing of my purchase of Focus Lumber shares.

I shall be posting my contract notes in the next blog.