Hong Chew Eu

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Retired Group CEO of i-Bhd. Now a full time blogger

Joined Aug 2020

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Recasting the Business: How Mayu Global Left Steel Behind

Mayu Global, formerly a steel-centric industrial group prior to 2020, has transformed into a diversified entity with property development now a central pillar of its business.

In 2019, the steel segment generated approximately RM150 million in revenue. However, this has declined by about two-thirds to an average of RM50 million annually over the past three years. This shift away from steel is understandable, as the segment has been consistently unprofitable over the past six years.

While the move into property development was initiated by the previous board in 2018, the change in controlling shareholders around 2022/23 appears to have solidified the group’s strategic pivot. Under the new leadership, there has been a marked increase in execution focus and capital commitment toward property projects.

In 2023, property development accounted for about ¾ of the group’s total revenue. Although this reduced to half in 2024, the property development segment still accounted for a big part of the profits in 2024.

Given the business mix today, peer comparisons would be more meaningful against property developers rather than steel manufacturers.

Hot rolled steel prices have risen by about 20% since the start of the year. Will this boost the performance of the steel flat companies? If you want to understand more about the impact of the steel price on other Bursa flat steel companies, join me this at this Thursday podcast

Date: 22 May 2025 (Thu)
Time: 8:30pm
Link: https://www.facebook.com/xifu.my
3 hours · translate
Can Exports Forge a Stronger Future for Mycron?

Mycron operates in both the midstream and downstream segments of the steel value chain, supplying Cold Rolled Coil (CRC) products, steel tubes, and related steel items to domestic and international markets.

Over the past six years, CRC has consistently contributed the largest share of revenue but has shown greater earnings volatility. In contrast, the steel tube segment has provided more stable profitability, particularly during downturns in the CRC business.

The Group was profitable in only three of the past six years, with earnings closely tied to favourable pricing and volume dynamics:

• In 2021 and 2022, profits peaked alongside the global steel price cycle, driven by elevated selling prices and strong gross margins.

• In 2024, despite gross margins being about half of those in 2021–2022, profit rebounded due to a 50% surge in sales - largely from export-driven growth in CRC. Mycron capitalised on trade disruptions, particularly benefiting from CPTPP market access as competitors like China and Vietnam faced tariff barriers.

If Mycron sustains its export momentum, especially in CRC, its performance in the next steel price cycle could surpass that of the last, enhancing its turnaround prospects.

If you want to understand more about the impact of the steel price on other Bursa flat steel companies, join me this at this Thursday podcast

Date: 22 May 2025 (Thu)
Time: 8:30pm
Link: https://www.facebook.com/xifu.my
1 day · translate
Hiap Teck: When Half the Profit Lies Off the Balance Sheet

Hiap Teck derives the bulk of its revenue from two main segments: trading and manufacturing.

• The trading segment focuses on the import, export, general distribution, and leasing of steel products, hardware, and building materials.

• The manufacturing segment covers the production, sale, and rental of pipes, hollow sections, scaffolding equipment, and other steel-related products.

Although Hiap Teck holds a 27.3% stake in a steel plant in Terengganu that produces slabs and billets, this investment is accounted for using the equity method - its share of profit or loss appears as a single line item in the income statement.

Ironically, from FY2019 to FY2024, nearly half of Hiap Teck’s cumulative profit after tax came from this associate. As such, evaluating Hiap Teck’s business outlook and intrinsic value likely calls for a sum-of-the-parts valuation approach rather than relying solely on consolidated figures.

Along this line, looking at operating profit and returns based only on NOPAT from the consolidated segments provides only half the picture. To gain a true sense of value and performance, the contribution from the associate should be considered separately.
6 days · translate
Sapura Energy Berhad is a Malaysia-based global energy services provider, operating in over 10 countries with core businesses in EPCIC (engineering and construction), operations and maintenance, and tender-assist drilling.

Financial strain began in late 2019, driven by unprofitable legacy fixed-price contracts, a heavy debt burden from earlier expansion, and tightening working capital. The COVID-19 pandemic worsened the situation, causing delays, cost overruns, and liquidity stress.

While the company generated operating profits in most of the past 6 years, net losses were driven by significant write-offs, impairments, and high interest expenses. The positive PAT in 2025 was primarily due to gains from the disposal of investments.

By 2022, Sapura Energy was classified as a PN17 issuer, prompting a comprehensive Reset Plan focused on debt restructuring, exiting loss-making segments - particularly exploration and production - and refocusing on core operations. It also launched Kitar Solutions, a joint venture offering offshore decommissioning services, aligning with its sustainability goals and energy transition strategy.

However, the turnaround and restructuring plan did not anticipate renewed oil price declines stemming from tariff-related tensions. Lower prices now add pressure on revenue and cash flows, with recovery hinging on timing, execution discipline, and continued stakeholder support.

For most retail investors, Sapura Energy remains a high-risk proposition - best approached by those with expertise in financial restructuring and the oil and gas sector.

If not Sapura Energy, what about others? If you want to find out about investing in the Petronas group of companies, join me at today’s podcast

Date: 6 May 2025 (Tue)

Time: 2030pm Malaysian time.

Link: https://www.facebook.com/xifu.my
2 weeks · translate
Reach Energy: A Turnaround at a Crossroads

Reach’s core business is the exploration, development, and sale of crude oil and petroleum products. Since 2019, the company has been in turnaround mode, and while losses have narrowed significantly, it still remained in the red in 2024.

A major shift came in 2023 when Super Racer Limited, a Hong Kong-based investor, became the controlling shareholder through a debt-to-equity swap. The board was restructured, and strategic control shifted from Malaysian operators to Hong Kong financial professionals.

Reach began repositioning itself - from a technically driven E&P operator to a financially driven energy investment platform. The focus shifted from field expansion to balance sheet repair and asset optimization.

Now, just as the turnaround seemed to be gaining traction, the company faces a new challenge: declining crude oil prices triggered by tariff pressures. This may force Reach to accelerate its repositioning - prioritizing:

• Cost containment and operational downsizing

• Asset monetization or divestment

• Strategic partnerships

• Diversification beyond upstream oil and gas


In short, Reach Energy is no longer a straightforward oil producer. For fundamental investors, unless there is high conviction in a clear catalyst or turnaround outcome, it remains a speculative and special situation play.

If not Reach, what about others? If you want to find out about investing in the Petronas group of companies, join me at this week’s podcast

Date: 6 May 2025 (Tue)

Time: 8:30pm

Link: https://www.facebook.com/xifu.my
2 weeks · translate
Can Hibiscus Withstand the Slide in Oil Prices?

In 2024, Hibiscus can be described as a regionally focused, independent upstream oil and gas company. It has operatorship control over a diversified portfolio of producing and development assets across Malaysia, Vietnam, and the United Kingdom.

This marks a significant evolution from just six years ago, when Hibiscus had only two core assets. Since then, its total assets have nearly tripled, from RM2.4 billion in 2019 to RM6.6 billion in 2023, reflecting the company’s strategic acquisition-led growth.

To fund this expansion, Hibiscus has tapped both debt and equity markets. Between 2019 and 2024:

• Total debt increased from RM5 million to RM749 million

• Total equity expanded from RM1.2 billion to RM3.1 billion


While ROA improved from 11.6% in 2019 to 13.1% in 2024, the enlarged capital base has diluted returns to shareholders. ROE declined to 16.1% in 2024, down from 20.6% in 2019, despite a spike to 35.5% in 2022 following the Repsol acquisition and elevated oil prices.

With crude oil prices declining in the wake of ongoing trade tensions and tariff-related uncertainties, there are concerns about Hibiscus’s ability to sustain its current profit levels.

Lower demand and weaker pricing could pressure margins, particularly given the company’s increased cost base. The declining share price since the start of the year may be a reflection of these market concerns.

However, one mitigating factor is the historically moderate correlation between oil prices and Hibiscus’s ROE. Over the past 12 years, the correlation between year-end Brent crude prices and the company’s ROE has only been about 40%.

This suggests that while oil prices do influence profitability, ROE is shaped by a more complex mix of factors — including production volume, capital discipline, cost control, and timing of investments. As such, the potential profit impact of lower oil prices may not be as severe as feared.
2 weeks · translate
MISC: A Transformation in Progress, Returns Yet to Follow

Between 2019 and 2024, MISC Berhad transitioned from a conventional energy shipping company into a forward-looking provider of sustainable maritime and energy solutions. This transformation was shaped by decarbonisation trends, the energy transition, and a strategic push toward innovation.

A key milestone was the successful commissioning of the FPSO Marechal Duque de Caxias in Brazil, with the Offshore Business contributing about 12% of Group revenue in 2024.

Despite these strategic shifts - global expansion, entry into deepwater markets, and fleet modernisation - financial returns have yet to show meaningful improvement.

ROE in 2024 stood at 3.2%, below the 4.0% recorded in 2019, despite a brief rebound during 2022–2023. This reflects a transitional earnings phase, as capital-intensive projects like FPSOs and low-emission tankers are only beginning to contribute materially to earnings.

Legacy challenges, especially in Marine & Heavy Engineering, and a large equity base have also suppressed ROE. As a result, MISC currently maps into the Quicksand quadrant in the Fundamental Mapper—where strategic intent is clear, but financial outcomes lag.

However, this should not be mistaken for a failed transformation. With new assets now operational and legacy drag expected to ease, MISC is well-positioned to improve its returns - though the market has yet to fully price in this potential.

In the context of the Fundamental Mapper, MISC could move out of its current position in the Quicksand quadrant once improving returns begin to materialise. The recent decline in its share price suggests that the market has not yet recognised this trajectory.
3 weeks · translate
From Shipbuilder to Profit Machine: How Coastal Contracts Reinvented Itself

On a weekly chart for Bursa Coastal Contracts, the technical picture remains bearish. The stock is in a long-term downtrend, with selling pressure evident in the momentum indicators and weak participation reflected in below-average trading volume.

However, the fundamentals tell a different story.

In 2019, Coastal was primarily engaged in shipbuilding, ship repair, and vessel chartering. Yard operations and marine-related activities were the core of its business. Since then, the company has undergone a strategic transformation:

• 2021–2023: Coastal significantly reduced its emphasis on shipbuilding and shifted its focus toward offshore gas infrastructure, particularly in gas processing and compression services.

• 2024: Coastal is now predominantly involved in energy infrastructure support services, delivered through long-term contracts under joint ventures - most notably the Perdiz and EMC gas compression projects in Mexico.

This transformation has placed the company in a stronger profit position. Return on equity rose from 1.2% in 2019 to 9.3% in 2024, reflecting improved capital efficiency and a more resilient income base.

Importantly, this change in business model is fortuitous, given the declining crude oil prices following the global tariff war. In 2019, Coastal's performance was closely tied to oil prices, as demand for newbuild vessels and charter services moved in tandem with offshore exploration activity.

By contrast, in 2024, while it still serves the upstream oil and gas sector via PEMEX, its exposure to volatile crude prices is now indirect.

Yet, the recent decline in Coastal’s stock price appears disconnected from its improved fundamentals and reduced risk profile - as illustrated in the Fundamental Mapper.

If you want to understand more about the impact of declining crude oil prices on other Bursa E&P companies, join me this at today’s podcast

Date: 24 April 2025 (Thu)

Time: 8:30pm

Link: https://www.facebook.com/xifu.my
3 weeks · translate
Yinson’s FPSO Fortress: Immune to Oil Price Swings?

On a weekly chart, Yinson stock is in a clear downtrend with negative momentum, but the volume spike may signal growing investor attention — either panic selling or the start of bottom fishing. Watch closely for price stabilization or divergence in MACD to confirm a possible reversal.

Fundamentally, Yinson remains anchored by a resilient FPSO business that has grown stronger, more tech-driven, and better aligned with ESG priorities over the past six years. Its foray into renewables has de-risked the business without diluting its FPSO identity, which continues to serve as the financial and operational core.

Yinson’s FPSO revenue is contract-driven, offering long-term stability and earnings visibility with minimal sensitivity to crude oil prices. Revenue growth is primarily driven by project execution, fleet expansion, and operational performance - not oil price movements.

As such, a short-term decline in crude oil prices due to tariff-driven macro concerns should not materially affect Yinson’s profitability in the immediate to short term.

However, it is important to note that future demand for FPSO projects is indirectly tied to crude oil prices, as lower prices can reduce upstream investment appetite. If prices remain depressed over a prolonged period, this could slow the award of new FPSO contracts and affect long-term growth prospects.

Given this context, the recent decline in Yinson’s share price could reflect market concerns over a potential prolonged downturn in crude oil prices and its implications for future contract flow, even if near-term earnings remain stable.

If you want to understand more about the impact of declining crude oil prices on other Bursa E&P companies, join me this at this Thursday podcast

Date: 24 April 2025 (Thu)
Time: 8:30pm
Link: https://www.facebook.com/xifu.my
4 weeks · translate
Is the Market Sleeping on Bumi Armada’s Turnaround?

Over the past six years, Bumi Armada has transitioned from a dual-segment model - comprising FPSO operations and Offshore Marine Services - into a focused, integrated offshore production business.

The offshore support vessel segment was gradually scaled down, and by 2022, all operational assets were consolidated under a single Operations unit. A new Technology, Engineering & Projects unit was also established to provide engineering consultancy and project support services.

Geographically, Bumi Armada streamlined its footprint while maintaining a presence in key offshore regions across Asia, Africa, and Europe. By 2023, its operations spanned five continents, but with fewer, more strategically aligned assets focused on high-value, long-term production contracts.

These strategic shifts have yielded strong results. Net profit surged from RM 38 million in 2019 to RM 656 million in 2024, while ROE improved from 1.2% to 11.3%. This improvement is reflected in its Goldmine quadrant in the Fundamental Mapper.

Can this performance be sustained amid declining crude oil prices triggered by the current tariff war?

According to the company, its core revenue is not directly tied to crude oil prices. This is due to its long-term, fixed-rate FPSO contracts, which provide stable cash flows regardless of short-term oil price movements.

While broader market conditions - such as lower crude prices - may affect future contract opportunities or investment cycles, Bumi Armada’s current revenue base remains largely insulated from these fluctuations.

Has the market missed this picture, given the declining stock price since the start of the year?

If you want to understand more about the impact of declining crude oil prices on other Bursa E&P companies, join me this at this Thursday podcast

Date: 24 April 2025 (Thu)
Time: 8:30pm
Link: https://www.facebook.com/xifu.my
1 month · translate
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