While the fundamental of the market still remains intact as monetary policy from the West had been committed to adapt the loose monetary policy, it could be the best moment now to pick up some of the shares that had been hit down from their peak, or with a good catalyst that will drive the share further. For this, I would say that Tadmax Resources Berhad (formerly known as Wijaya Baru) could be a good counter to be looked into.
Let's have a quick outlook at Tadmax Resources Berhad
Tadmax had saw it's share price spiraling upwards until hitting a high of RM 0.65 after the news on the sale of the 310 acres of land at Pulau Indah at a tag price of RM 317.3 million (RM23.50 psf) to Ivory Merge Sdn Bhd, a wholly owned subsidiary by 1MDB Berhad goes public. As the share had cool off after a 4mth period, consolidating at the range of RM 0.50, the share will be looking back to see a set of fresh volume again as it march forward from the saturated point of RM 0.50. Should Tadmax be able to break above RM 0.50 in a convincing manner, Tadmax will be likely be putting a foothold at RM 0.55.
Tadmax - Awaiting a savior
Previously, Tadmax (formerly known as Wijaya Bary) had been remaining in a lowly manner as the company had been reporting losses since 2009. The company had saw it's business dwindling south as the competition from the timber business had been very competitive and challenging. Tadmax, in need of a turnaround, had no choice but to materialize some of it's asset for cash, while had boil down to a controversial 310 acre land sale at Pulau Indah with a tag price of RM 317.3 million, in which some of the public might questioned over the purchase of 1MBD, whether it had been paying on a huge premium.
Tadmax land sale will result in a large amount of cash. At the price tag of RM 317.3 million, the revenue generated from the land sale for each share of Tadmax is worth RM 0.85 per share. While Tadmax will be using a huge portion of the land sale, approximately RM 260 million, in clearing off the debts, this will translate to a net gain of RM57.3 million, equivalent to RM 0.153 net gain per share from the disposal (based on outstanding shares of 373,231,746 shares).
While many might be thinking what will be Tadmax be using on the net gains of RM 57.3 million, internal sources had been looking for a special dividend of around 5 cents which will be paid back to the shareholder.
Upcoming Catalyst
The current ban of log export from Myammar had definitely leave a hole in the supply chain of the logging industry. This will also be the best time for Tadmax to unlock the 80,000 ha of timber land in Indonesia. Coupled together with the recovering economy from the west, this will be the best time for Tadmax to unlock the value from the land with the harvest, and the later part will be replanting the land with palm oil plantation in order to create a sustainable source of income.
Tadmax might also be seeing emergence of new shareholder that will be injecting business and asset into the company. The group will be looking forward to explore the palm oil sector.
I believe Tadmax will be an interesting company to look into. The land sale will be putting the company balance sheet back into the black which will make it attractive enough for investor to inject asset or business.
Tadmax can be attractive to both trader or high risk investor based on:
- Land sale to 1MDB, marking on off gain of RM317m, of which RM260m will be used to pare down debts and interest, and RM 57.3 million will be used to pay a special dividend and also soldier
- Special dividend rumored to be around 5 cents per share
- Unlocking value from the 80,000 ha of Timber land in Indonesia that could worth more than RM200 million
- Becoming a palm oil plantation player
Tadmax will be looking to break above RM 0.50 in the coming days, while a longer tenure outlook will see Tadmax retest RM 0.65.
Bone's short term TP: RM 0.55
Cheers and have a nice day
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