Mercury turning into a construction player

Mercury turning

into a construction

player

Mercury Industries Berhad recently announced it has entered into a conditional share sale agreement (“SSA”) with Interglobal Dynasty Sdn Bhd for its disposal of auto refinish business.

Mercury's reasons were that its auto refinish business has become increasingly challenging as a result of the slowing domestic economy, uncertainties in the global economies and weaker Ringgit.

Instead, Mercury will be banking on its 70% owned construction company, Paramount Bounty Sdn Bhd (PBSB) for its new revenue and profits. PBSB was acquired during the second half of 2015.

Some readers who followed my early blogs would recall when I first posted about Mercury on Sept 23, 2013 : Walk the talk with Mercury Industries Berhad with me. Dare you? Since then, I continued to make several more subsequent purchase of Mercury stocks until 36,000 shares.

There were several reasons why I was interested in Mercury. Way back in 2013, total vehicles sales in Malaysia were rising. Car paint business seemed like a resilient one with consumers needing to repaint their cars after several years of usage. Besides, any car sent in for repairing after an accident is likely to require some spraying of paint too. Incidentally, accidents in Malaysia are rather high compared to many other countries.

Another reason was its good dividends payout which not many other counters can rival. Since 2011, it has paid out 8 sen for 2011, 2012, 2013, 10 sen for 2014, 6 sen for 2015, 6 sen paid in July 2016 and a further 6 sen payable in January 2017, total 12 sen for Financial year 2016.

Remarkably, despite its high dividends payout, since 2011, the highest its share price touched was only at 1.70 done on June 11, 2012. Why dividends lovers shunned Mercury is rather a mystery to me until today.

Perhaps there are other ares of concerns about Mercury others investors see which I don't see. Mind you, I am just an ordinary Joe investor who are perhaps more lucky to be in the right place right time most of the times.

Now that the management of Mercury has decided to exit its auto refinish business and focus on construction, the most important question ordinary  investors like me to ask is should I stay on or sell out my 36,000 shares?

I am sharing this now because it was me who challenged readers to buy Mercury shares and stay together with me for long term investment. I am pretty sure there must be some followers who bought Mercury shares and are still with me.

If I am to sell, I would be making sure I would be posting my blog the very next day to make this selling decision as promptly as possible so that my followers will be able to make a  better informed decision on themselves.

So far, the construction division has been performing better than the paints division. It contributed the lion's share of revenue and pre-tax profits as well in the latest 3rd Quarter Result (July to September).

In fact, its pre-tax profits surged 25% compared to its corresponding quarter  in 2015. Note that PBSB was acquired in August 2015.

Granted that PBSB is a smallish construction company that is nothing compared to the giants like SP Setia or IJM Berhad. In fact, many mid-size property companies are even bigger than PBSB.

But then again, many of these giants properties companies at one time ago started as a little unknown company first. Who knows, PBSB might one day becomes a giant company as well.

At the moment, I have decided to stay on and take my chances and see how PBSB will carry Mercury to the next forte.

I have decided to add in more shares to my Basket of Defensive Stocks.

Buying 3,000 shares of Advanced

Packaging Technology (M) Bhd

on Dec 16, 2016 at RM2.28

Advanced Packaging Technology (Advanced Pack) is a very small cash rich company that has a good record of paying dividends since 2004. At this price, the dividend yield is around between 5.5% to 6% which is higher than banks' current fixed deposit rate of 3% or 4%.

Buying 4,000 shares of JCBNEXT Berhad

on Dec 16, 2016 at RM1.76

JCBNEXT Berhad (JCBNext) is formerly known as Jobstreets. Actually I am considered very late into buying into this company. (It has rewarded earlier investors with hefty payouts of over more than two thousand ringgits after it disposed of its main business).

But nevertheless, it still has substantial cash in its kitty and a strong presence recruitment business in Taiwan. It is also another consistent dividends paying company.

Have a wonderful Christmas and Happy New Year.