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Monday, March 21, 2016

HSL - GOOD BUSINESS 30 YEARS AND BEST 2016




Hock Seng Lee Berhad (HSL)'s origins date back to the mid-1960s when the three eldest brothers of the Yii family established what was principally a sand dredging and land fill operation.
The company was named after the first timber dredging vessel, Hock Seng Lee which the brothers purchased to start their partnership. Hock Seng Lee sounds like "good business" in the local Hokkien dialect and indeed it was.
Hock Seng Lee Development Company Sendirian Berhad, as the company was first known, grew rapidly and was incorporated in January 1979.
For more than thirty years, HSL has taken on land reclamation projects of increasing size and complexity acquiring complementary expertise in soil improvement works, shore protection, drainage and water reticulation activities.
On 10 June 1996, HSL was listed on the Main Market of Bursa Malaysia on the construction counter and it has been profitable every year since its listing.
It has diversified into a wide range of civil engineering and construction works, including prestigious road works and new township developments, tunnel boring and complex infrastructure projects.
Today, HSL some over 800 full time staff, thirty per cent of whom hold tertiary or technical qualifications. Its headquarters is in Kuching and its operations extend throughout the state of Sarawak.





Lets look back on the company price performance, ever since after the shoot up on 5 May 2013, it has been super huge sideways consolidate until last week 18 March finally super "strong breakout" with super volume. There are few things to highlight why this strong breakout happens:

1. Manage to increase order book to triple ! Worth Roughly RM 1.82 Billions Order Book
RM 58 Mil + RM 563 Mil + RM 1.2 Billions = RM 1.82 Billions
Add existing order book RM 621 Mil = RM 2.44 Billions Order Book



2. Bank Research upgrade to BUY  from HONG LEONG Research (RM 2.53) and MAYBANK Research (RM 2.40) - Both calculation seems not yet factor in the latest RM 1.7 Billions Pan Borneo Projects. 

After getting latest awards PAN BORNEO for RM 1.70 Billions, I am expecting more BANK research house will upgrade to BUY due to high order book and high potential to get more awards again.

3. SARAWAK ELECTION is almost around the corner ! Expecting APRIL - MAY

Why is this important? Although everybody think the same party will win, nothing to be surprise, but it can be a extra vitamin to kick this stock move higher. Trader likes story and theme related. Not just HSL, other Sarawak counter will possible goreng up before ELECTION or After election. This can obviously see from 3 years back, after 5 May 2013 Election, price shoot up immediately !

That's is jut not convinces enough for a real investor because construction company usually very high in debt, therefore many earning usually gone into bank interest payment. However extra bonus given investor to consider HSL is because its 100% Debt free company, and Cash Rich ! 


Besides construction, HSL also developing housing project, latest project seems doing pretty well:
http://www.lapromenade.com.my/development/

High end housing selling each roughly RM 1 Mil, 44 units = RM 44 Millions revenue. (80% sold)

Still have other mid range housing if you check their website.

Lets us sneak peak some on going project: 



I think, with their current order book, and new order book, HSL seems going to continue GOOD BUSINESS until Years 2020 !!

With such, as a conclusion: 

1. Very strong History Construction Company In Sarawak
2. Financially sound and it's a Nett Cash company, Debt free

2. Dividend payout ratio about 20%

3. Latest Value of projects in hand roughtly stands at RM 2.44 billion 

4. Expecting to continue to be benefit from Pan-Borneo Highway Project (RM 16 Billions Total) 

5. Expecting to continue benefit from Kuching sewerage project worth RM 4 Billions that would be implemented in 8 phases. (1 & 2 phases awarded to HSL) 

6. After listing of 20 years, every quarter make handsome profit

7. Very strong relationship with Sarawak Government

8. Best Sarawak Election Theme Counter, latest April-May

9. Finally breakout with strong volume closing high at RM 2.10

10. Major Bank upgrade BUY with high TP RM 2.53, RM 2.40, may more will upgrade. 



My personal target for short term RM 2.20, mid term RM 2.50, long term to be re review RM 2.80.

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