Tuesday, June 25, 2013

Trading Thoughts: What's brewing at Salcon???

Now this is one company which should not be within the radar of a fundamentalist - hence defies what I practice. Its PE is about 25x or even more. Revenue trend is unsure. The only saving grace is that the share price of RM0.62 is currently below the NA price of RM0.80.

What causes the stock to have a recent uptrend or attracting some attention is the signing of contract with Eco-World Development ("Eco-World"). Most people know (or speculate) that Eco-World is the proxy to Tan Sri Liew who has his son as a director and several of his ex-partners from SP Setia. He is after all leaving SP Setia come 2015. Definitely need something to carrying his brand and cash he has gotten from his sale of SP Setia's shares.

Eco-World is also in a hurry as it has bought up land worth hundreds of millions from MMC and DRB-Hicom and one or two more if not mistaken. What is not said in the article if we turn it around is the deal with DRB-HICOM, where Eco-World is allowed to do staggered payment which is going to be beneficial to the latter. Why would Eco-World negotiate for staggered payment? Cashflow! From this term, Eco-World would need to be aggressive NOW, hence the major launches and hiring of staffs in a hurry. Now we know that the third, fourth and fifth payment is over the next three years (as below) which could become significant in terms how much in a hurry Eco-World must be to get as much as possible from launches.

Trying to piece up together - one of the ex-director in SP Setia - Datuk Leong Kok Wah is a director in Salcon.

Cashflow is fundamental to Eco-World, as through the namesake and people involved, I think selling properties is not going to be a big issue given the vast experience these group has. One should also note that some of these guys have sold SP Setia's shares to the tune of hundreds of millions. Eco-World may need a vehicle though. Salcon is one company which behind the scene, there are some very rich people. Look through the Chairman's CV (who owns the largest chunk) as well as the second largest shareholder. They will not have problems raising funds. On top of that, it is not controlled by one major shareholder - as below - which is attractive for any party as large as Eco-World.

I sincerely do not know what's happening but these trend and connection - be it they want us to know or just pure speculation, I definitely am not able to confirm.

But yet again, these guys behind Salcon are rich, they do not need or I would think even bother about the play. What Salcon needs though is the boost in its business as it has been struggling to grow - although some reports say that they are in the midst of building a decent concession business. This I am not in the know to evaluate.

Notice another thing, after all these while, until recently some of the directors have started to exercise their ESOS at RM0.50 - could there be something brewing?


Teoh said...

TSL is indeed going to be behind Ecoworld. Half of the team from Sp is there. There are intentions to list Eco world... Perhap through a reverse takeover like how sp setia was done?

Teoh said...
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