Get Rid of Omedia Already

I know I have yet to talk about Omedia, but I have decided to get rid of Omedia. The wait is too long and too risky. Although, the fundamental and the RTO story by Bina Puri is still intact, I needed the money to purchase more of MBSB-WA if the needs arise on the 7th of June.

Fortunately, I get rid of Omedia at a 4.35%  profit including the trading cost. Not too bad for me. I am thankful for every gain I make for my investment… After my experience in Omedia, I would suggest enter at RM0.075 or better. While monitoring the stock, I could see great interest at RM0.08 level. A lot of liquidity at RM0.08 level. Buying anything above RM0.075 will either make you hold the stock for a long time before selling at a profit or selling on purchase price while losing your transaction cost. The wait is just too long and not worth it.

To fulfill my promise but since I have sold this stock, I will talk a little bit on why I am keen of the stock in the beginning. The interest stem from the corporate exercise by Bina Puri, where it plans to Reverse Take Over (RTO) Omedia by injecting all its power plants in Indonesia and Polyol plant into Omedia in exchange of 60% share in Omedia. By doing that, Bina Puri will own 60% of Omedia. What really interest me, is not the RTO but valuation for Omedia once the RTO is completed. Bina Puri claims this year, the power plant business will contribute 20-30% of its bottom line. And that represent RM3-4mil a year from the power plant business and Bina Puri is keen in securing more project of building small (2-5MW) power plant in Indonesia and be the operator. When I bought into Omedia, Bina Puri has only 3 small power plants in Indonesia. True enough, in June 1, Bina Puri announced the company received contracts to operate two units of two megawatts (2MW) power plants in Indonesia through its 80 per cent subsidiary, PT Megapower Makmur. That add, the total power plant to 5 in total…

I have known the Bina Puri management before, they are very transparent when they give the guidance. They do not over-promised . So what is the valuation of Omedia with RM3-4mil? At market capitalization of RM13mil, Omedia will trade at merely P/E of 3.25x (assuming RM4mil/year). That is quite promising. From a loss making company to a profitable company and trade at P/E of just 3.25x, there is really nothing to lose. At RM0.09 (my entry price), I think there is really not much downside anymore… However, the stock did drifted down to RM0.08, which represent 11.11% paper loss to me at one point. That is when I decided, I will not hold on to this stock at price higher than RM0.08… The wait is too long, too painful and when there is no liquidity, the pain is even more..

Both companies are expected to give clearer picture on June 16th. And with Bina Puri securing 2 more projects in Indonesia (coincidently in June), I think the visibility has gotten better. However, any deal will fell through. This stock is suitable for risk taker. If you are up to the challenge.. making an easy 15-20% just in the month on June itself shouldn’t be a problem…

I have compiled a list of online newspaper related to this corporate exercise.. Have a read:-

1. 22 Febuary 2011 – Oriented Media in Reverse Takeover

2. 28 February 2011 – Bina Puri to hold 60% in Omedia

3. 9 May 2011 – Bina Puri: Injecting power concessions into OMedia

4. 18 May 2011 – Bina Puri powers up in Indonesia

5. June 3 20011 – Bina Puri to operates two power plant in Indonesia

My only question which will remain unanswered until the deal is done is:-

1. Why Bina Puri wanna go through RTO? If the power asset is worth RM25-30mil, why would Bina Puri wants to RTO a listed company that has market capitalization of RM13mil and in exchange of 60% share which is valued at RM9.8mil for Bina Puri? Why exchange for something for less? They could just do an IPO instead, even though it will take longer time to list the power asset. The only way I could  think of is Bina Puri can go in Omedia and force sell all the asset, but the problem is Omedia doesn’t have any valuable asset. So why?

So would you Investlah?

It’s Green in United States and Europe

Woke up this morning and found its all green on U.S. and Europe indices. Can Malaysia perform the same today? Could it be a bargain hunting day? Or profit taking day? We will see…

I was contemplating to include my portfolio in this blog or not. I guess I will start with entry price first and see how well have I performed.

Benalec – RM1.40
Iris – RM0.21
MBSB – RM2.15 (1 mother share + 1 warrant to be listed on June 7)
Glomac – RM1.75
Omedia – RM0.09

So, only MBSB and Benalec are doing well. Iris was a mistake and waiting for opportunity to dispose but only have very small position. Glomac still under selling pressure by institutional but price supported by management. Omedia is unchanged and it is a speculative stock.

Let’s HUAT ar… Like all the Investlah members always say. Damn I becoming more like them.

Today’s Trade (20/5/2011)

I just bought into OMedia at RM0.09 today.

Simply do not have enough time to look at the fundamental. Just a quick read on Bina Puri + OMedia and I started to key in my order at 1.30am this morning. I also look at the chart and decided to buy. However I am mindful there is no point looking at chart when the stock is thinly traded. So I won’t comment much yet on the technical. I just bought this after seeing the price dropping to 20D MA lower band. 

For now I will be using chart to put my cut loss price and potential Target Price. Cut Loss @ RM0.075 and Target Price @ RM0.11. Cut loss is rigid and won’t change but I will let the stock run above my Target Price if there is volume and more clarity in the chart.

I promise I will talk about the fundamental and reason why I bought in this stock soon.