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Felicity Investing

Author: Felicity75   |   Latest post: Fri, 9 Oct 2020, 4:27 AM

 

5 things I learned at JCB's 2017 AGM

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1. JCBNext's equity portfolio greatly outperformed the benchmark KLCI over the last 8 years. Based on presentation slides by CFO Greg Poarch, the equity portfolio achieved annualised return of 12.4% from 2008 to 2016 vs 5% for KLCI. Total market value of JCBNext's equity portfolio had doubled to RM 222 million in 2016 vs cost of RM 113 million.

 

 

2. JCBNext's largest equity investment is 23% stake in 104 Corp which had market value of RM 149 million as at 31 December 2016 vs cost of RM 75 million. The Chief Investment Officer of 104 Corp was present to give a presentation on the company background and expansion strategies. 104 Corp is the largest online job portal in Taiwan with over 70% market share. 104 Corp has very good track record, pay dividends every year since listed, and has over RM 270 million cash with zero debts. Here is the track record of 104 Corp's dividend payment. (JCBNext should receive around RM 10 million cash dividend from 104 Corp this month.)

 

 Source: 104 Corp

 

 

3. Would JCBNext share part of its earnings in the form of dividends? JCBNext has very good track record of dividend payment. The management mentioned they will preserve cash for acquisition so that they can pay more dividends in the future. The company had paid over RM 2 billion dividends since 2000.

 

4. JCBNext is looking to acquire operating businesses that can generate good free cash flow and distribute dividends back to shareholders. The management said they have looked into many investment opportunities but the high pricing prevent them from making investments. CEO Mark Chang said they are glad that they did not invest because prices have come down a lot. They will continue to look for good investment opportunities but only at the right price. Recently, they have looked into the healthcare services as a potential investment.

 

 

5.  The stock trades at a substantial discount to revised net asset value. Market price is RM 1.78 per share and there is RM 2.65 per share of net assets with the majority in cash and investments. The management will consider share buybacks as a way to return value to shareholders. JCBNext has a good track record in share buybacks and cancellations which create value for shareholders.

 

Cash and investments in money market funds: RM 132 million 

Investment in associates and other long term investments (fair value): RM 222 million

Investment properties: RM 20 million 

Other assets: RM 1.51 million

-Total liabilities: RM 2.37 million 

Net assets: RM 372 million (RM2.65 per share)

 

 

I think JCBNext's book value will grow steadily over time through the growing earnings of its investments and the cash that it can deploy into new investments and/or operating businesses. Another thing is Mark Chang owns 54% stake worth roughly RM 140 million. He is well known as a shrewd investor and a frugal CEO. I am confident he will do what is right and good for the shareholders as he had done for the shareholders of Jobstreet.com. 

 

 

 
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Labels: JCBNEXT

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Chart Stock Name Last Change Volume 
JCBNEXT 1.40 0.00 (0.00%)

  2 people like this.
 
Nadalchong I like Mark Chang. Made tons of money investing in jobstreet. Mark is one of the top CEOs in Malaysia. Good price to buy more.
06/08/2017 9:00 PM
MrPauper Revenue and profit are secondary objectives. Dividend is the priority. If the management is too conservative and not enough revenue thus profit are generated, how will there be justifiable dividend return be paid out?
06/08/2017 9:15 PM


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