Saturday, March 7, 2015

Sarawak Election stocks (Part 1)

Theme: Bumi Kenyalang

I seldom write but when I write, I will make sure it is right!
Recently there are lots of video and news about the Chief Minister of Sarawak Adenan Satem giving speeches as well as recognition for Unified Examination Certificate (UEC) of the Independent Chinese School (独中 and he mentioned that whether the Federal government agree or not, Sarawak will still recognize the status of this Independent Chinese School. What does that mean? As I noticed, there are more and more Chinese voters started to love their CM now! Why? Its because of the election is coming again! Please be aware that Sarawak State Assembly doesn't follow the west Malaysia due date.

Recognition of UEC news:

The last 10th state election of Sarawak were held in 16th April 2011, according to our law the state assembly have to dissolve after 5 years and have another election within 60 days after the state assembly dissolve.  As a result, Sarawak will have to held their election before June 2016. From the past election, we can see that the federal government will always distribute candies before the election which we believe it will be the same for this time.,_2011 

For example, candy that had being distributed recently: 

Pestech to build RM48m electricity substation for Sarawak Energy 


Taib launches Laila- Taib College in his hometown Mukah

What Candy this time?

As what being mentioned in the 2015 budget, our prime minister announced that there will be a highway from Sabah to Sarawak which is the Pan Borneo highway 1633 km worth RM 27 billion. 936km is in Sarawak and we knew that the Sarawak will be having election on 2016 hence it is a must to distribute this project as candy to the construction player there hence construction companies in Sarawak will be benefited.

When will they distribute the candy?
As we know, the election has to held before June 2016, hence they will have to distribute the candy 1 year before. This is because the distribute now and the people there will start to get job and will have better life few months before the election and this feel good effect may causes the voters to choose them! Hence they have to give candy no later than 2015!

So who will be benefited?

What’s the most important ingredients to build a high way? Tar , Stone, Cements, Steel are all essential and as this highway will have lots of bridges (cause Sarawak and Sarawak has lots of rivers) hence cement and steel are as important as Tar. As a result, the sole cement producer in Sarawak Cahya Mata Sarawak Berhand CMSB (Monopoly I would say) which is own by the Taib family will sure get benefit from the highway building even not winning the construction part. I would say this company as the biggest winner as they are the cement producer and has their quarry, where to get cement to build road and fly over if you don't get from the sole producer?

On the other hand, the others construction players that will be benefit are HSL (biggest road builder in Sarawak), Naim (construction players related to Taib as well), Weida, TRC, Zecon who has their foot step in Sarawak.  KKB a steel pipe producer in Sarawak will also benefited.


Do government have the funds to build the highway since oil price is low?

1st of all, we have got confirmation from our PM in the amended budget announcement that they won’t cut any budget for constructions that they have planned .

2nd this project will be a government and private sector collaboration where the private sector will raise their funding and own the concession. After then, they will appoint the construction players to build the road. As government doesn't need to come out that much of money, hence there is no issue about not building the highway.

We saw that those CMSB, HSL NAIM has got some movement recently where the volume had came in.  While Naim looks like bottom building.

Volume coming while the price is upward bias

Bottom forming by having triple bottom with higher low.

Bottom building with upward bias as well as higher low.

Why is the volume so low now?
Smart money don't create volume when they are collecting, they create volume when they wanted to dispose!

Will we spoil their plan if we were to buy some and keep now?
Yes and No, Yes as they might push it later if they don't have enough ticket. No as the project will be announcing soon.

Please like my Facebook Page if you think my analysis does make sense : The Big Canon Finance

Part 1 Summary
Theme: Sarawak Election Candies
  1.  Companies that will be benefit from the candies are: Shin Yang Not listed),HSLWeidaTRCNAIMZeconKKB
  2. Biggest Winner : CMSB as they are the sole cement producer and supply stones (Taib related), Naim and KKB is their subsidiary.
  3. HSL road builder in Sarawak, had built 700km of roads in there.

Safe bet Top Pick : CMSB, HSL, NAIM
*you won't die by holding the mother shares

High Risk High Return:

CMSB – CJ ( Expiry : 30/10/2015; Conversion: 7 to 1; Exercise : 4.05)
HSL – CC    ( Expiry : 28/08/2015; Conversion: 3 to 1; Exercise : 1.88)

Why not CMSB -CK ?
Expiry on 5th May 2015, what if the project announcement is not being announce before May?
Conversion :  4 to 1 (good)
Exercise price : RM4.50 the mother price is now 4.27, what if the candies are not announce before May? The warrant is out of money at that time and you will be losing everything!
Issuer: Macquarie: the issuer is good but the condition above is just too risky!

Caution: Please be aware of the risk for call warrant as you will be losing everything for betting on it. Please call your dealer for more details. 

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions 


1 comment:

Unknown said...

This is nice informative blog in which you discuss about Sarawak Election Stocks which is related to canon finance. Thanks for sharing this and keep sharing.

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