Why Bj Corp at 34 sen is now a Real Bargain (Calvin Tan Research)
Dear friends who visit here,
It’s been some time since I posted on Dutaland. And by now all who bought Dutaland at 40 sen have made a nice 50% gain at over 60 sen. Congratulations!
Now Calvin thinks Bj Corp at 34 sen is a Great Value Buy
These are the reasons for buying Bj Corp:
1) Tan Sri Vincent Tan (TSVT) stated buying Bj Corp in earnest from 90 sen in year 2012 to last year when Bj Corp was 50 sen. Bursa filing showed TSVT owned 45% of Bj Corp shares. And TSVT is holding Bj Corp Iculs D & also lots of Bj Corp warrant. The average cost of TSVT for Bj Corp is as high as 70 sen
So at 34 sen we are buying at a nice 50% to TSVT buying price.
2) Bj Corp at 34 sen with NTA of Rm1.40 is selling at a Huge Discount of 76% Discount to NTA – giving a Huge Margin of safety. This is more than twice the 30% Discount that Ben Graham required as a Margin of safety.
3) And Company Share Buybacks was from 72 sen to 36 sen. The average price of SBB (Share buy back) was 54 sen. A Again at 34 sen we are getting Bj Corp shares at below Company treasury share cost.
4) Last year Bj Corp Iculs C expired at 20 sen. 2 Iculs were converted into One Bj Corp share. So TSVT Bj Corp Iculs C were converted into Bj Corp mother share at 40 sen each. Again at 34 sen we are getting it at a nice 28% discount.
So there are now 4 levels of defense buying into Bj Corp at 34 sen
i) 50% discount to TSVT open market purchase
ii) A 76% Whopping Discount to NTA
iii) Cheaper by 38% than SBB
iv) And a nice 28% Discount to Conversion of Bj Corp Iculs C to Bj Corp mother share.
5) CASHING OUT HIGH PROFIT COMPANIES
Bj Corp has already disposed Magni Tech, Bj Auto & Atlan shares for huge profits. Latest disposal is wastewater pant in China for Rm50.3 millions Cash
So Bj Corp is now Cashing Out its Investments. Bj Corp bought Bj Land on the downtrend. And sold Bj Assets into strength. This is an excellent strategy of buying Low & Selling High. It is the good fortune that Bj Corp owns the Inter Pacific Security Firm which help to pick out good investments for TSVT & Bj Corp
6) Bj Corp Invests in HIGH VALUE REAL ESTATE ASSETS
People have questioned why Bj Corp generates so little profits while incurring such high debt
This is Calvin Tan Research’s findings
Bj Corp borrows money to invest in Appreciating Assets like Lands, Properties & Hotel. The latest being Four Season Hotel in Kyoto, Japan.
And if price is right Bj Corp will sell off any shares or Assets. Just like the disposal of the Great Mall of China for over RMB2 Billions
7)COMING CASH WINDFALL OF OVER RM540 MILLIONS (Balance Payment from Great Mall of China Sale)
This November BJ CORP will stand to receive the balance payment of Great Mall sale at more than RMB900 Millions or another Rm540 MILLIONS CASH Coming it. Latest report for Dutaland sale of Kenny Hill Assets turned Dutaland Price into the positive And Dutaland prices jumped from 42.5 sen to a high of 66 sen. So expect Bj Corp share price to go up likewise. (So this is the time to buy as Mr. Market still unaware)
What are the objections?
1)OBJECTION DUE TO HIGH DEBT OF RM6 BILLIONS
- Bj Corp has huge debt of over Rm6 Billions.
The debts are mostly in Assets purchase. Borrowings by Bj Lands. If the Assets of Bj Corp are sold there will be more than Rm10 Billions to as high as Rm20 Billions. More than enough to cover all outstanding debts
From the Annual Report. The balance proceeds for Great Mall of China Sale (Total over RMB2 Billions) The balance sum should be in by November 2017
(17) On 16 December 2016, BLand announced the completion of the disposal by Berjaya (China) Great
Mall Co Ltd (“GMOC”), a 51.00% owned subsidiary company of the BLand group, of the Berjaya
(China) Great Mall Recreation Centre located in Sanhe City, Hebei Province, the People’s
Republic of China for a cash consideration of RMB2.08 billion (or about RM1.39 billion) to Beijing
Upon signing of the construction project transfer agreement (“CPTA”), Beijing SkyOcean paid
RMB50.00 million to GMOC. GMOC further received RMB1,015 million following the fulfilment of
all the conditions precedent of the CPTA. The balance of the purchase consideration of RMB1,015
million (or about RM711.32 million) (“Balance Proceeds”) will be received by November 2017.
On 28 April 2017, BLand announced that GMOC has entered into a supplementary agreement with
Beijing SkyOcean to adjust the total cash consideration from RMB2.08 billion (or about RM1.31
billion) to about RMB2.04 billion (or about RM1.28 billion) (“Consideration Adjustment”).
Accordingly, the Balance Proceeds is revised to RMB974.07 million (or about RM613.70 million).
The Consideration Adjustment was due to part of the land was regained by Sanhe Land and
Resource Bureau, reimbursement of theme park equipment and shared expenses relating to
certain electrical works
This RM613.70 CASH INFUSION INTO BJ LAND Balance sheet should boost Bj Corp’s overall performance.
2) Bj Corp also loan out monies to subsidiaries with interest
(3) an amount receivable of RM598,884,000 being the balance of the consideration for the
disposal of the Great Mall Project (Note 46(17)).
The amounts due from subsidiary companies are unsecured and repayable on demand. Amounts
totalling RM1,346,739,000 (2016: RM564,766,000) bear interest, while the rest are non-interest
This Rm1.34 Billions are Cash loaned out. Bj Corp like Pm Corp are Corporations.
3) BJ CORP ALSO HAS LOANS TO ASSOCIATES’ COMPANIES
The amounts owing by associated companies of the Group are unsecured, repayable on demand
and non-interest bearing except for a gross amount totalling RM77,513,000 (2016: RM8,297,000)
which are interest bearing.
Here’s another Rm77.5 Billions
OBJECTIONS DUE TO LOW RETURN OF ASSETS OR LITTLE PROFIT?
- Why Bj Corp earns so little money in spite of its Huge Holdings of Investments & Assets?
The answer could be found in the these 2TSVT constantly redeploy Cash into other Investments & other Assets of Value with Future Potential
- Constant reinvest Cash into shares of Redtone, Bj Land, Bj Food, Bj Assets & Other promising Investments that will generate even more profits for Bj Corp
2. Buying into Assets like Lands in Kyoto, Japan to build an Iconic Hotel. Buying Lands (under the seafront) in Berjaya Water Front City to construct Buildings of High Value.
OBJECTIONS DUE TO WHY BJ CORP SHARE PRICE PERFORMS SO BADLY IN BULL RUN YEARS OF 2012 to 2017?
Going down from Rm1.00 in year 2012 to 2017 now at only 34 sen?
The answer is in the game play of TSVT. TSVT bought & bought lots of Bj Corp from 10 sen to 50 sen in year 2005 to 2006. After Goldman Sachs joined in at 50 sen Bj Corp powered to cross Rm1.00. And it reached the high price of Rm1.50. for over 1,000% upside.
Both Goldman Sachs & TSVT later cashed out at peak prices. Then when Bj Corp retraced to Rm1.00 TSVT started accumulating again. By year end 2012 TSVT already bought about 40% of Bj Corp at above 90 sen. He addedd another 5% when Bj Corp weakened from 90 sen to a low of 50 sen.
Although TSVT does not hold more than 50% of Bj Corp he holds Bj Corp by proxy through Bj Iculs D, Bj Corp wb & Bj Corp wc. So he is still in full control together with his son Robin.
Bj Corp is a cyclical stock. If you bought it at 10 sen in year 2006 & sold it at peak like my Johor Sifu you would have made more than a 1,000%
But if you chased over Rm1.80 & held until now you would have suffered immense losses. So now Bj Corp has almost hit rock bottom.
Do people think Bj Corp can fall back to the 10 sen low?
Calvin thinks this is quite impossible as the Assets of Bj Corp in year 2006 & 2017 (after 11 years) would have appreciated far far more.
To be continued….\
THE IMMENSE HIGH VALUE ASSETS OF BJ CORP
ALL BOUGHT WHEN CHEAP. STILL AT OLD BOOK VALUE.
Calvin will go through them one by one later
Please stay tuned….
By your own experience & from where you are now : Melaka, KL, Perak, Penang, Pahang or East Malaysia or anywhere else
What was the price of your house/land/shop/factory in year 2006?
In year 2006 cement was about Rm10 to Rm13 a bag. Now Rm18 to Rm20 a bag
Construction daily wage for Indonesian was Rm50 to Rm60 a day. Now Rm100 to Rm120 a day.
Red bricks was 28 sen. Today red bricks around 45 sen.
So there is high inflation.
What is the current prices of your house/shop/factory or land?
For houses in Iskandar they have appreciated by 100%, 200% or even 300%.
Please visit www.johorinvestment.com
So think of the Myriad & Immense Assets of Bj Corp still sitting & listed at book value of past 10, 20 or more years ago?
If revalued & sold?
The Value of Berjaya Hill Resort in Bukit Tinggi
To be continued…..
A true story first
Some time in year 1992, I think. One of my Used Car Dealer Friend bought a 5 Acres Land in his hometown.
The land has a mainroad frontage and cost Rm150,000 an acre. So 5 Acres cost Rm750,000 then
He has been buying & selling Used Cars as a Business on his lands. Finance Companies also store their repossessed cars in his store yard.
So it was an ongoing business. And my Friend did very well.
Now today I just phoned him to check on his lands. (I own many houses but not lands)
He told me current value of his lands are worth Rm2 millions an acre or Rm10 millions for 5 acres in total. And he has happily converted some of his lands into Housing Development to extract even more value.
So let calculate
Original purchase price
Rm150,000 per acre =
150,000 divides by 43,560 (acre to feet) = Rm3.44 sen
Today at Rm2,000,000 divides by 43,560 = Rm45.90 psf
So price has gone up from Rm3.44 to Rm45.90
or up a Whopping 1,334%
So which is the better investment
My Friend’s Car Business or His Land Purchase as Showroom to store his Used Cars?
If he did nothing after buying those lands and just sitting idle he would have made more than Rm9 millions (just by Land Banking)
And so this is why Calvin is BULLISH ON BJ CORP
ITS BUKIT TINGGI LANDS ARE LESS THAN RM2.00 BOOK VALUE.
HOW MUCH TODAY?
HOW MUCH HIDDEN WEALTH IS LATENT IN BJ CORP?
To be continued…
Going to Booming Iskandar soon
Please view my Iskandar activities at www.johorinvestment.com
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