BJ CORP & MUI BHD – The Twin Pillars of Great Latent Value Stocks in KLSE
Good evening Friends & Fellow Investors,
Both Bj Corp & Mui Bhd have been listed for more than 20 years in KLSE. Both have fallen in prices through these exciting times. While Bj Corp experienced Cyclical Boom & Bust in Share Prices Mui Bhd has been on a permanent downtrend. Now why should Calvin Tan Research be interested in these 2 downtrodden forsaken stocks.
Well, these are our reasons :
- BJ CORP IS NOW MOVING & STIRRING AGAIN DUE TO ITS MANY & VARIED CORPORATE DEALINGS.
2. FOR MUI BHD THERE WILL BE THE IMPENDING ASSET SALES TO UNLOCK VALUE DUE TO DIVORCE SETTLEMENT.
SO BOTH AS ON THE RADAR SCREEN OF CALVIN TAN RESEARCH.
But first. Let Calvin explain the DEEP HIDDEN VALUE Of Many Years & Where The Investment Angle Comes From?
Both The Assets of BJ CORP & MUI BHD Were acquired many many years ago while prices were still dirt cheap. For now they are sitting on literal gold mines. If the Assets were sold they both will unleash Tremendous Value to the surprise of all.
Let Calvin relates from experience by way of illustrations after illustrations so that at the end of it you will get to see the LIGHT while others are still in the dark.
Illustrations are like pulling back the curtains in a darkened room to let the sunshine in so that we could SEE BETTER & get a clearer picture!
So here you go:
- Calvin’s Own experience in Life
We lived in a slum in year 1969 in KL Bukit Bintang area (Today it is replaced by a shopping complex inside the Golden Triangle)
In year 1969 My family bought a first floor apartment in Jalan Kenanga, KL for Rm18,000 while my neighbour bought a 2 Storey house in Bangsar Park for Rm20,000. That was 48 years ago.
Today the first floor apt (converted to commercial use is worth Rm1 millions while my neighbour’s house in Bangsar Park has gone up from Rm20,000 to a whopping Rm2 millions today.
This is in spite of 3 great market crashes or recessions
One. The 1985 to 1987 rubber & tin price crash & recession
Two. The 1997/8 Asian Financial Crisis
Three. The 2007/8 Lehman Brothers’ Sub prime Crisis
So Assets do go up and appreciate longer term if we just buy and hold
2. My younger sister bought a single storey house in Tmn Bkt Maluri, Kepong, KL in year 1980 for Rm55,000
Price appreciated to Rm180,000 in the late eighties or early 1990s. So she sold it after it has gone up by more than 200% in value, hoping that price would crash back lower for her to buy back later.
It never did! In fact it went on and appreciated in price to cross Rm600,000 today. So she shifted to stay in a cheap flat in Port Klang laterr. So after selling her house price still moved up another 200% or more again due to inflation.
3. My elder brother was smarter. He bought several properties. One of them was a 2 storey house in Taman Kepong, KL for Rm120,000 in the 1980s.
It was an old 2 storey house with really old design. Upstair is only half covered & half open like those old shophouses on first floor. I thought it won’t go up much in price. But to my surprise he said it’s worth Rm600,000 to over Rm700,000 today as it is located near Train Station. And because houses in Desa Park City nearby have gone up in value over Rm1 millions so his house also gone up in tandem.
4. In year 1975 I was in Singapore for my study in Theology. I met a friend in Singapore. They bought a 3 room HDB Flat for S$9,000 from the Singapore Govt. It is actually a 2 room one bath Flat. They called it 3 room because they counted the kitchen as another “extra” room in Spore.
Beyond my wildest surprise this same type of HDB Flat is now worth about S$300,000 in Singapore. In year 1974 when I first arrived in Singapore Rm100 can exchange for S$103 Sing dollars. After that the ringgit has gone down hill until today S$100 is now worth over Rm310 in stead.
So my friend who bought HDB for S$9,000 in the 70s now has seen price gone up near Rm1 millions. Amazing?
5. In 1990s I had a Friend in Perak who bought a 5 acres land for Rm150,000 an acres for a total of Rm750,000 to store and sell Used Cars. I just called him last week. He said today these lands are worth Rm2 millions an acre or Rm10 millions (for 5 acres)
So even if his actual Used Car Business might be good or bad for the last 20 years he is sitting on a gold mine in Land Banking. He made a cool Rm9 millions doing nothing if he wanted by leaving those lands idle until now. On its own the Value goes up year after year.
5. I have another friend called Mr Chia in Kapar Road who sells Lorries. In the early 1990s when he heard Subang Airport will be shifed to Sepang he acted ahead of time by buying 5 Acres agricultural lands in Sepang for Rm5,000 an acre (Total 5 acres cost him Rm25,000 then). When I phoned him last week from Singapore he said he is still keeping those lands and doing nothing with it. He replied that he also does not know the exact value of those lands in Sepang today as they are still left idle as “raw lands”. But he guessed they are now worth many millions. By percentage Mr Chia from Kelang made even more than my friend from Perak.
Now all these 5 above are from Calvin’s own experience and observations.
Of course, many cannot relate to these as you could be still in your early 20s or 30s. So let Calvin points to some Land Marks which you might be familiar with.
6. Last time in Bukit Bintang there was a BBGS (Bukit Bintang Girls’ School) Since School fees was only Rm4.00 a year this place generates little commercial profit for its owners. Not anymore, today it is converted to a Modern Shopping Complex called PAVILION MALL BKT BINTANG. Last time I was there they charged me Rm12.00 per hour for parking near their front foyer. Just imagine – it was Rm4.00 per year for one student’s yearly fee when it was a School. Today they charge Rm12 by the hour (120 minutes only).
7. PUDU JAIL
As a jail in the heart of Pudu Road what is the commercial value operating as a Prison? Nil or negative.
Not anymore. Something Big is planned for Pudu Jail in near future.
8) Sungei Besi Military Airport.
Ha! How much profit could this Airport generate? Negative returns as money is used for training soldiers & defense of Malaysia.
Not any more. New this is Bandar Malaysia & The Heart of High Speed Rail HQ in KL. It will be worth lots more when this place is turned into “A GLITTERING GEM IN THE ASIAN SILK ROUTE” soon.
Now people say BJ CORP has little profit. And Mui Bhd even has negative quarter after negative quarter.
But what is the ACTUAL VALUE OF BOTH BJ CORP & MUI BHD ASSETS TODAY?
BBGS Girls School, Pudu Prison & Sungei Besi Military Airports were bleeding with operational losses after losses for many decades.
But through it all the UNDERLYING VALUE OF ITS VERY PRIME LANDS HAVE APPRECIATED MANY MANIFOLD.
So its accumulated losses TURN VERY POSITIVE WHEN LANDS ARE REVALUED & SOLD TODAY.
The same applies to BJ CORP & MUI BHD ASSETS
Now uppermost in the Minds of Doubters are
- Both Bj Corp & Mui Bhd are lousy stocks in down trending mode for many years. So there is no logic in buying into such poor quality stocks.
The answer is this. Both Bj Corp & Mui Bhd were sold down due to apparent reasons of being neglected stocks. As Value Investors this is an opportunity to buy on the cheap. The time to buy is when there is maximum pessimism. And certainly it will no longer be a time to buy after all have turned bullish.
Calvin called for a buy on steel stocks when prices were cheap
Prestar at 46 sen was a buy when nobody wanted. Now Prestar is over Rm1.30. Certainly we must refrain from chasing it.
Masteel was 66 sen. Now over Rm1.50
2. Both Bj Corp & Mui Bhd are doing poorly in their business operations. So how to buy?
Let me relate another real life example.
In Booming Iskandar one guy bought 40 shop houses around year 2,008 to 2012 when prices of these Shophouses were cheap (He bought all from Johor High Court Auctions when few people were interested.)
Then he converted these Shops into Bird Nest Houses for Swiftlets. After 5 to 9 years have passed. And out of these 40 shophouses converted Bird Nest Houses only 10 of the 40 Bird Nest Houses were doing very well. Making him many tens of thousands profits harvesting these Bird Nests.
What about the other 30 less successful Bird Nest Houses? He is now offering these 30 Shophouses for sale at current Market prices of the Commercial Shophouses. Some of them already have tens or even up to 300 Bird Nests in the premises now. The tens or even up to 300 Bird nests are offered free along with the purchase of the Shophouses. He only asked for the current market price of the Shophouses alone.
And although Bird Nests rearing didn’t do well even these 30 Shophouses on their own have appreciated in Value by Up to 200% & 300%
Why prices up?
Well cement per 50 kg bag was Rm12 then. Now price has gone up to Rm18
Indon & local construction workers daily wage was Rm60 to Rm80 a day. Today Rm100 to Rm150 and still cannot find enough legal workers.
With 6% GST, High China Yuan due to Ringgit Crash every type of construction material And also Land prices have all gone up. Asking price for New 3 Storey Shophouse easily cost Rm1.3 Millions per unit now. In year 2008 3 Storey Shop house could be bought from JB High Court Auction for only Rm300,000 a unit then
So although he made little or even made a loss in some in business operation THE RISE OF ASSET VALUE BY 200% to 300% more than make up for it!
This is how Calvin view BJ Corp & Mui Bhd IMMENSE ASSETS OF GREAT VALUE
To be continued…..
Coming up next
Future Wealth, Past Wealth & Present Wealth. What is the Difference
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