CaseStudy:

EkovestBhd
(May4,2017)

Step #1:
What does it do?

Ekovest Bhd derives income from construction, property development, and

operation of the DUKE Highway in Malaysia.

Step #2:
Check Financial Results

Figures in RM 000
Year 2012 2013 2014 2015 2016

Sales 208,948 140,966 229,126 438,015 793,582

FV Gain n/a 6,438 40 4,630 123,014

Earnings 72,644 50,071 13,200 18,512 155,412

ROE 17.69% 6.42% 1.20% 1.57% 11.80%

Observations:

1. Ekovest Bhd has achieved growth in sales from RM 140.97 Million

in 2013 to RM 793.58 Million in 2016. This is because Ekovest Bhd
has embarked on the construction of Phase 2 of the DUKE Highway
and launched the EkoCheras property project in 2013.

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 2. Despite sales growth, Ekovest Bhd has recorded low profits in 2014
and 2015. This is because Ekovest Bhd has incurred substantially
high finance costs since 2014 as it received RM 1.12 Billion in
proceeds from issuance of Islamic Medium Term Notes in 2014.

3. In 2016, Ekovest Bhd has reported high shareholders earnings of

RM 155.41 Million. This is because Ekovest Bhd has recorded RM
123.01 Million in fair value gain on investment properties.

4. Ekovest Bhd has not generate consistent growth in profits over the
last 5 years. Thus, it is not meaningful to calculate its ROE Average,
ROI and dividend yields.

Step #3:
Check Future Prospects

EkoRiverConstructionSdnBhd
On November 8, 2016, EkoRiver Construction Sdn Bhd has received a letter
of acceptance from DBKL for the proposed improvement and beautification
works which include Dataran Merdeka, Jalan Tun Razak, Jalan Tun Tan
Cheng Lock, and Masjid Jamek. The contract sum is worth RM 157.25
Million excluding GST and the completion period for this work is for 104
weeks.

Setiawangsa-PantaiExpressway
Ekovest Bhd is awarded the master contract for the SPE amounting to RM
3.96 Billion. Ekovest Bhd is expecting this project to contribute to the
groups turnover and profitability over 3 years of construction period. The
concession agreement is for duration of 53 years starting from January 15,
2016.

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EkovestPropertiesSdnBhd
On April 7, 2017, Ekovest Properties Sdn Bhd has acquired 2 parcels of
freehold land measuring 2,403 square meters and 2,290 square meters
respectively in Kuala Lumpur. The cost for both lands is RM 26.77 Million.
Ekovest intends to engage in a mixed development project known as
EkoQuay. The total expected gross development value (GDV) of EkoQuay
is RM 293.82 Million.

EkoRiverConstructionSdnBhd
On April 17, 2017, EkoRiver Construction Sdn Bhd has received a letter of
acceptance from DBKL for the appointment as design and build contractor
to undertake the vicinity of the River of Life Precinct 7 - Masjid Jamek
Kuala Lumpur Zone. The project is for a period of 18 weeks and shall be
completed before August 30, 2017. The total contract value is RM 79
Million which is inclusive of a 5-year operations and maintenance period
for the project.

Step #4:
Check Quarterly Results

Figures in RM 000
Period Sales Earnings

2015 Q3 125,254 5,197

2015 Q4 119,795 7,964

2016 Q1 134,178 2,998

2016 Q2 183,567 6,188

2016 Q3 184,765 11,081

2016 Q4 291,072 136,173

2017 Q1 203,546 40,096

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 2017 Q2 274,956 41,032

Observations:

1. Ekovest Bhd has achieved consistent growth in quarterly sales as a

result of the construction work for Setiawangsa-Pantai Expressway.

2. Ekovest Bhd has recorded RM 113 Million in fair value gain on

investment properties in 2016 Q4. This has contributed to
substantially high quarterly earnings in 2016 Q4.

3. Over the past 8 quarters, Ekovest has achieved growth in quarterly

earnings. Its a significant improvement from quarterly profits in
2015 and the 1st half of 2016.

4. Still, its meaningless to calculate Ekovest Bhds ROE Average, ROI

and Dividend Yields as these are calculated based on their yearly
performances.

5. Thus, it is recommendable to have both long-term and short-term

views when assessing a stock deal.

Step #5:
Share Split

As I write (May 4, 2017), Ekovest Bhd is trading at RM 1.17 a share.

In a glance, it is a substantial decline from RM 2.33 a share when I first

wrote a case study on Ekovest Bhd on November 25, 2016.

What happened?

The answer is a share split has taken place on February 28, 2017. For every
existing 2 ordinary shares, these shares are subdivided into 5 ordinary

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shares. As a result, from 855.448 Million shares, Ekovest Bhd now has
2,138.620 Million shares.

On February 28, 2017, Ekovest Bhds share price has revised from:

Split Share Price No. of Shares Market Cap

Before RM 2.93 855.448 Million RM 2.50 Billion

After RM 1.17 2,138,620 Million RM 2.50 Billion

As you can see, the share split (theoretically) has minimal impact on
Ekovest Bhds market capitalization. The share split exercise is often
welcomed by investors as shares of Ekovest Bhd are now more affordable to
trade.

Step #6:
Check P/B Ratio

As at December 31, 2016, Ekovest Bhd has reported to have RM 1,398.266

Million in shareholders equity. With 2,138.620 Million shares, Ekovest Bhd
has RM 0.654 in net assets a share.

Thus, at current price of RM 1.17 a share, Ekovest Bhds current P/B Ratio
works out to be 1.79 (RM 1.17 / RM 0.654). It is the highest P/B Ratio
recorded over the last 5 years.

Year 2013 2014 2015 2016 4/5/17

P/B 1.11 0.88 0.74 0.97 1.79

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Step #7:
Check SMA-Crossover Method

Screenshot of Bursamarketplace.com

Blue Line = Actual Stock Price

Black Line = SMA-40 Line (Tracks Short-Term Price Trend)
Green Line = SMA-100 Line (Tracks Long-Term Price Trend)

Observations:

1. Prior to Point A, Ekovest Bhd has been moving on an uptrend. This

is evident as the Black Line moved above the Green Line. All 3 lines:
Blue, Black and Green Lines were moving upwards.

2. At Point A, there was a share split. This has caused a straight line as
highlighted in yellow. Remember. It has minimal impact on Ekovest
Bhds market capitalization.

3. However, heres a flaw of the SMA-Crossover Method. This graph

has yet to be adjusted to reflect the share split on February 28, 2017.
Thus, beyond Point A, the indicator is inaccurate.

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 4. Without the share split, Ekovest Bhds current stock price would be
RM 2.93 a share. (RM 1.17 x 5 / 2). It is a price nearly 3 times of RM
1.06 recorded on April 1, 2016.

Question:
Yesterday, Ekovest Bhd was trading at RM 1.43 a share. Today, it
dropped to RM 1.17 a share. What happened?

First, without the share split, Ekovest Bhd was trading at RM 3.58 (RM 1.43
x 5 / 2) on May 3, 2017 which is yesterday. Ekovest Bhds stock price on
May 3, 2017 has already risen by 3.4 times from stock price of RM 1.06 on
April 1, 2016.

Second, I read a news article which attempted to explain the selldown of

Ekovest Bhd. Heres what Ive discovered.

1. First, it is related to Iskandar Waterfront Holdings Sdn Bhd (IWH)

which is the largest shareholder of Iskandar Waterfront City Bhd.
IWH has a joint venture company with China Railway Engineering
Corporation (M) Sdn Bhd known as IWH CERC Sdn Bhd. IWH
owns 60% equity interest in IWH CERC Sdn Bhd.

2. IWH CERC Sdn Bhd signed a share sale agreement to buy 60%
stake in Bandar Malaysia project for RM 7.41 Billion on December
2015.

3. Yesterday, the Ministry of Finance (MoF) has decided to call off the
share sale agreement with IWH CERC Sdn Bhd.

What is the relationship between Iskandar Waterfront Holdings Sdn Bhd

with Ekovest Bhd?

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1. The answer is Tan Sri Dato Lim Kang Hoo. He has 32.38%
shareholdings in Ekovest Bhd and 38.35% shareholdings in Iskandar
Waterfront City Bhd.

2. However, Ive discovered that Ekovest Bhd has reported to have no

shareholdings in Iskandar Waterfront City Bhd or Iskandar
Waterfront Holdings Sdn Bhd.

3. Thus, based on materials sourced, I couldnt relate to how the

events experienced by Iskandar Waterfront Holdings Sdn Bhd could
have impacted the stock price of Ekovest Bhd.

Screenshot of Page 89 of Annual Report 2016

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Question:
So, should I sell Ekovest Bhd or top-up more?

Instead of answers, perhaps, you may take some time to answer these
questions before deciding your next course of action.

1. Why do you buy Ekovest Bhd in the first place?

2. Can you find better stock deals than Ekovest Bhd?

3. What price are you willing to sell Ekovest Bhd?

4. If Ekovest Bhd drops further, are you willing to hold on its shares?

I cant give a conclusive answer as I dont know the following:

a. What price did you buy Ekovest Bhd?

b. Your investment plan and reason of buying Ekovest Bhd

Personally, Im not into investment advisory and dont intend to be one. I

would ask myself these questions if an investment happens to turn bad.

If you are worried, I would suggest you to take some time of reflection. I
believe, you know better on your next course of action once youve digested
the events. Its better not to react, buying & selling shares based on news,
rumours, comments and sudden major movements in the stock market.

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Regards
IanTai
CreatorofBursaking.com.my

Disclaimer:

The strategies outlined in this article / report / written material is intended

for education & illustration purposes. It is strictly not intended to be an
investment advice & must not be relied upon as personal financial advice. If
you need specific investment advices, please consult the relevant
professional investment advisors.

No warranty is made with respect to the accuracy, adequacy, reliability,

suitability, applicability, or completeness of the information contained.

The author disclaims any reward or responsibility for any gains or losses
arising from direct and indirect use & application of any contents of the
article / report / written material.

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