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This stock got the potential to go up to the support at RM0.280. Again, this is not my usual execution as my plan usually exclude the company with current weak fundamentals. However, it is clear that Fast is selling of its old business and venture into solar and oil trading and bunkering services as well as the solar business. Start from the beginning of the year, it acquired 35% stake in CCK Petroleum with a profit guarantee of RM1.75mil per year, equivalent to about RM0.44mil per quarter. We see about RM0.276mil profit before tax (PBT) this quarter and expect the profit to go up in near term on global recovery.
From the current results, it can be seen roughly that the profit margin for this oil trading and bunkering services segment stood at about 0.5%. Fast has secured about RM4.22bil of contract value (on varying oil prices) to be satisfied in 3 year term, which translate to RM21.1mil PBT for 3 years or equivalently RM1.76mil per quarter. The PBT shall increase with the hike in oil price. If everything materialised, this should bring Fast to its peak performance. (This analysis excluded the solar business, which is definitely another source of income for Fast.)
I planned to do the following:
Execution plan (Long term):
Entry: RM0.200
TP: RM0.280 (near term), RM0.350 (mid term), RM0.460 and RM0.650 (long term)
CL: any price on announcement of a bad QR (meaning I am wrong on my view).
Potentially 40% upside near term, 75% upside in mid term and >100% upside in long term.
If you like my post, do help to follow me here. I am having 123 followers now, am aiming to grow it to unlock the post idea features. Note that this is not buy/sell recommendation, you should do your own research, form your own view for any buy/sell action in the market. Thank you.
@United Peace: I viewed it as the transition of the company to embark on the petroleum business. As I can recall, the company did 2 rounds of private placements, one in the end of 2020 and one in the beginning of 2021. The first one is nothing related to the petroleum business while the second one is for the purchase of CCK Petroleum.
3 revenue streams for Fast: Fastener, Rubber sheet and LED epoxy encapsulant materials as well as the petroleum business. The disposal of Fastener and pumping of capital to petroleum business is happening now. Profit margin is around 0.5%, similar to Straits. The rubber sheet and LED with profit margin around 8%. The major contribution of revenue would come from petroleum but the profit from rubber sheet for now given that petroleum business just got started.
If we look at the latest QR, disregard the fastener business, net profit is around 1.1mil. So from EPS perspective, STRAITS and FAST are kind of comparable and FAST is better in the sense that it has another revenue stream, coupled with the just started petroleum business.
The right issue is not to lower gearing but to give the petroleum business more working capital and if favorable enough, to keep cash for future acquisition if any attractive business opportunity found. Nothing unusual can be seen based on my limited knowledge. Feel free to highlight anything of concern to you.
@Jayden Wong: looking forward!
@Mellon Lim: you're most welcome. Feel free to voice out if you find anything that I might have missed out.
@Haqimi: Thanks for highlighting that bro, the sharing is not meant for any buy sell recommendation, it is solely my personal opinion based on my limited knowledge.
