Revenue increased by 10%

Profit jumps by 94% from 0.57 sen to 1.05 sen

NAV also increased slightly

 

Will this strong growth of EPS be sustainable?

Yes.

 

2) VERY STRONG GROWTH IS POSSIBLE DUE TO 3 REASONS

i) Tun Dr. M propensition towards education. If fact after the election Tun Dr M wanted to be the Education Minister. But as it turned out someone else took that position. But that did not deter him. Why

 

ii) Because Education got the Lion Share of the PH Budget

 

Budget 2019: RM60.2 billion allocated for schools and education

KUALA LUMPUR: The Education Ministry will receive RM60.2 billion under Budget 2019 – the biggest allocation ever in the federal government’s spending plan.

Finance Minister Lim Guan Eng yesterday announced that RM652 million is allocated for all school types in the country.

Prime Minister Tun Dr Mahathir, who wanted to become the Minister of Education before but was not allowed, said that the huge RM60.24 billion allocations for schools and education by PH are due to the fact that the future generation needs to have more knowledge.

He said the government has prioritised education to prepare students to face the future.

“Education is extremely important.

“I wanted to be Education Minister, but they didn’t allow me to,” he joked.

Dr Mahathir stressed that the knowledge field has changed considerably and that nowadays students need to learn more things.

3) Education is important because Malaysia must upgrade itself from a low cost labour intensive economy to one that is high knowledge & high skill.

Japan, China, Korea, Singapore’s GDP have gone up 3X to 5X more than Malaysia. Only by Knowledge (know how) can Malaysia catch up. So education is not an option but a neccessity.

And if just 10% of the Rm62 Billions go into more Printed or Digital Books that means Rm620 Millions new orders. If 20% that would be a Whopping Rm1.24 Billions Revenue for all Publishers. The cake is big enough for all

 

3) EDUCATION is Non Cyclical & Recession Proof

No matter how bad times are our children still go to Schools.

In Subang people convert homes into multiple rooms for students.

In Germany the Singapore Govt invested in Student Accommodations

Why? Because this business is Recession Proof

So Sasbadi is in a recession proof business.

 

4) At 21.5 sen with NTA of 37 sen Sasbadi is selling at 42% discount to NTA

There is now a huge margin of safety as price has fallen to very attractive level

 

5) SASBADI IS NOW A BUY LOW CLASSIC OPPORTUNITY

EPF first reported its entry purchase at Rm2.60 to Rm2.70 for Sasbadi

After Capital Exercise Two for One Split & One for Two Bonus

EPF holding cost is 90 Sen

Now EPF is disposing Sasbadi at 21.5 sen for more than 75% discount. EPF loss will be the gains of those brave enough to buy at near Rock Bottom

Last time EPF suddenly sold down Ajiya to Rm1.25. Both my Johor Sifu & Johor buddies bought. Ajiya later powered to over Rm4.30 & split – making my Johor Sifu Rm1.5 Millions

Another thing to note is Director’s purchase price

See

MR LAW KING HUI	09-Feb-2018	Acquired	500,000	0.470
MR LAW KING HUI	07-Feb-2018	Acquired	400,000	0.493
MR LAW KING HUI	06-Feb-2018	Acquired	300,000	0.553
MR LAW KING HUI	26-Jan-2018	Acquired	300,000	0.583
MR LAW KING HUI	25-Jan-2018	Acquired	404,700	0.591
MR LAW KING HUI	24-Jan-2018	Acquired	142,200	0.600
MR LAW KING HUI	22-Jan-2018	Acquired	50,000	0.600
MR LAW KING HUI	19-Jan-2018	Acquired	303,100	0.600
MR LAW KING HUI	30-Aug-2017	Acquired	105,000	0.804

 

Insider buying price after ex-bonus ranges from 47 sen to 80 sen

So at 21.5 sen we are buying at a Huge 50% to 74% Discount!

 

So far so bullish

Now what are the downsides?

 

1) The profit of Sasbadi depends on Govt Tenders which are fixed in prices. But cost of production is not. If newsprint & ink price go up then Sasbadi will make less profit. If paper prices spike up too high then Sasbadi night even incur a loss.

However, Sasbadi can ask for a higher price since tender process is year by year or semester by semester.

 

2) With the sanguine management (Directors are fully aware of the Rm60.2 Billions : please note IT IS RM60.2 BILLIONS and not Rm60.2 Millions) And Rm60.2 Billions is about the cost of High Speed Rail which was postponed.

So Directors have gone into added production & pile up even more inventories due to glowing prospects

Now if there is cash flow constrain Company might go into borrowings or even issue RI to raise capital

 

3) EPF entrust the selling or buying of shares to outsourced entities. So there in no certainty whether EPF will continue to sell down Sasbadi shares or start buying back again.

 

So there are positives and there are negatives about Sasbadi.

I cannot say buy or sell for you

 

You have to decide with this information

 

Good luck

 

Best Wishes for All in Year 2019

 

Calvin Tan

Jurong West, Singapore